Mr. Speaker, it is a pleasure today to debate Bill C-61, which is in keeping with our government's commitment to work with Canadian industry to ensure that we work on behalf of Canadian industry in removing tariff and non-tariff barriers to trade in markets that are of concern to Canada. Quite clearly this free trade deal with Israel is an area that Canada has worked on over the last number of years. It was with great anticipation in some industry sectors that Canada actually started the negotiations to remove the tariff barriers to trade. The Prime Minister initiated these discussions with the former prime minister of Israel in 1994. Some people have asked why Canada would want to conclude a free trade deal with Israel. Why is Israel an important state? At committee we were told that the trade figures are not so high as to make this an obvious priority.
The Canadian government proceeded in 1994 with the initial discussions with the Israeli government. A number of Canadian companies, many resident in the province of Quebec, were having great difficulty competing in the Israeli market. This was happening because the United States and the European Union had entered into free trade arrangements with the state of Israel.
In many cases Canadian businesses found their products were in a less competitive position than they would have been. They were not getting the preferential tariff treatment that goods provided from the United States and the European Union were getting because of the free trade deals that had been negotiated between those partners.
The Canadian government felt that this market, although small, was where Canadian companies could grow. It was a market in the Middle East where we are extremely interested in expanding trading and investment activity.
The House knows the importance of trade to Canada. Anyone who has been here or has worked in industry recognizes that the health of the Canadian economy, the jobs that must grow in this economy, are going to come by encouraging our incredibly competitive companies in the sectors in which they operate to look abroad for new markets. As most people in this House know, maybe some outside do not know, Canada is the leader in the G-7 countries with respect to our percentage of GDP that comes from trade.
The job creation record of this government since it came into power a few years ago shows that over 600,000 jobs have been created in the economy. Most jobs are related to trading activities, not just with the United States and Mexico but abroad. It is the fundamental belief of the government that if we want to see the economy grow, want to create jobs for Canadians from coast to coast to coast, then we must be outward looking, we must work with companies and other governments to ensure that those companies have an even footing when it comes to competing in foreign markets.
This was clearly the case with Israel. The agreement was signed in July 1996 after an almost unprecedented level of consultation with Canadian industry. I will refer to that very briefly.
We have in Canada what are called sectoral advisory groups and international trade. We also have groups with the provinces. Starting November 23, 1994 when the news release first came out literally dozens of meetings-I have pages of meetings-that took place with various sectoral advisory groups leading up to July 31, 1996 when it was announced that Canada and Israel had signed the free trade agreement.
Quite clearly this was not done on the back of a matchbook. It was a very complex set of negotiations. There were some areas which the Israeli government was very slow to move on but our negotiators were firm in their resolve. We were flexible in our approach but at the end of the day we knew that in order for Canadian companies to be competitive in the Israeli market Canadian companies had to be dealing on a level playing field.
With the special treatment afforded the United States and the European Union it meant that Canadian companies could not be as competitive as they had to be in order to get those contracts, service that market and create jobs in Canada.
I remember hearing a member from Quebec tell us a real story. A lot of times the bureaucrats will tell us that this has to be done for this or that reason but this was a real story. It was about a company in Montreal that was exporting into the Israeli market. Its problem was that it could not compete with American produced goods because of the preferential tariff afforded under the U.S.-Israel free trade agreement. The company did as much processing of the product in Canada as it could and then shipped a semi-finished
product to the United States. In that way the value add could be done in the United States and those goods would then qualify under the rules of origin in the U.S.-Israel free trade deal. Those goods then could be shipped into the Israeli market as U.S. goods. That meant real jobs for Canadians.
We understand on our side of the House that the Montreal economy for a whole variety of reasons is not performing at the level at which we would like. However, for that one company and dozens of others which employ Canadians who live in and around the great city of Montreal, this bill gives them a level playing field. It means that they do not have to semi-finish their product and ship it to the United States where citizens of the United States gain the economic benefit and employment and the U.S. municipalities, states and federal government get the taxes that go with that type of economic activity. Under this deal that particular company and dozens of others like it can make sure that all of the product and all of the value add is done in Canada and that Canadians get 100 per cent of the net economic benefit for the competitiveness of the product and the entrepreneurship of the owners of those companies.
We went ahead and did that. In the free trade deal with Israel we made sure that it also applies to the Palestinian territories. This has been a concern of the Canadian government, of most members of the House and of most people who are observers of what is going on in the Middle East.
When these negotiations began we had great hopes that the peace process, which was going on in fits and starts, would gain some steam. Indeed, Canadians and most people around the world were very happy with what had happened as the peace process gained some steam and that the former administration in Israel had started to make some real progress toward eliminating some of the outstanding issues and solving some of the problems so that at long last the world there would be peace in the Middle East.
One of the things Canada said from the very beginning was that if a free trade deal was negotiated with Israel, it was absolutely fundamental that goods that were produced in the occupied territories should also benefit from the preferential tariff that free trade would bring. Indeed, it has been the government's intention from the first meetings that took place with the Israelis that the Palestinian authorities would also be consulted to ensure that any benefit that accrued to Israel would also accrue to goods produced in the Palestinian territories.
All through that peace, and most particularly starting on January 12, 1995, Canada's chief negotiator was speaking with senior Palestinian officials to ensure that they understood that we had negotiated the CITA, the Canada-Israeli trade agreement, in principle and that the benefits would be extended to goods produced in the West Bank and Gaza as was agreed to in the earlier meetings and teleconferences that senior overseas officials had with the Palestinian authorities.
Again, in July and August the head of the mission in Israel had met with senior ministers in the Palestinian authority to ensure that they knew full well the terms and conditions of the Canada-Israel free trade deal and reaffirmed Canada's commitment to enact the necessary regulations after this legislation was ratified through the House and Senate of Canada so that the Palestinian territory would be included in any benefit that was given.
Again in September a commercial counsellor from our embassy and our second secretariat met with senior Palestinian ministers of the economy and trade and deputy ministers to provide a hard copy of the Canada-Israel free trade agreement.
On October 20 Ambassador Berger, a former member of this place, made sure that if the Palestinian officials had any questions that the questions were properly couched so our officials could respond appropriately to any concerns that they had.
On October 27 meetings took place because the Canadian government was very concerned about some comments that had been made during the legislative process that somehow the Palestinians were excluded from the benefits of this deal.
Nothing could be further from the truth. As we speak meetings are going on in the occupied territories, in Palestine, which have been co-sponsored by the Palestinian ministry of trade and industry and the Canadian government via the Canadian embassy in Israel. The object of the meetings is to try to disseminate information to Palestinian businesses about the benefits of this free trade deal for goods that are produced in the occupied territories by Palestinian entrepreneurs.
All through this peace process the Canadian government has been extremely clear that it has always been its intention that any economic benefit that accrues to goods produced by entrepreneurs operating out of Israel proper would also be extended to entrepreneurs for goods produced in the occupied territories.
To ensure transparency I should tell the House about another thing we have done. At committee the other day, on behalf of the government, I gave the committee a number of undertakings with the assumption that the House passes this legislation, the Senate deals with it in an appropriately hasty fashion, it is proclaimed in law by the end of the year so we can live up to the timetable of the agreement and have it enacted on January 1, 1997.
In order to provide members of the standing committee with the assurance they needed that this deal will apply to the occupied
Palestinian territories, I have agreed on behalf of the government to do three things. First, I have agreed to put the draft regulations to the House committee, which is unusual because the regulations would normally be gazetted after the bill was passed at the end of December.
The committee has deliberated and added to our understanding and discussion of not only the economic circumstances surrounding this deal but also of the larger geopolitical circumstances within which this deal has been constructed. I would hope that by next week the members of the standing committee on foreign affairs would have at their disposal the draft regulations so they can satisfy themselves that after this bill is passed into law, the regulations will do what the officials said they would do, which is de facto extend the benefits of the Canada-Israeli free trade deal to the Palestinian territories.
Second, on behalf of the government I have undertaken to file the letters we have received to date from the Israeli authorities with the clerk of the committee thus making them public documents. These letters indicate that the Israelis understand and agree that this deal applies to the Palestinian territories and for the purposes of this deal they will treat any goods produced in the occupied territories the same and give them the same passage as if they were produced within the sovereign state of Israel.
We have a letter from the Israelis on file, which we will reconfirm. It indicates quite clearly that they will do what they have to do with respect to rules of origin but they will do what they have to do under this deal to ensure the goods produced in the Palestinian territories flow seamlessly through Israel and into the Canadian market, and vice versa that goods which are covered under this deal from the Canadian market will flow seamlessly through Israel and into the occupied territories.
That is a very strong document which has legal force. It is an undertaking from one government to the other to not impede the goods that are produced in the occupied territories or that are produced in Canada and destined for the occupied territories.
It is also our hope that by that time we will have a letter back from the Palestinian authority with whom we are in almost daily contact. We hope the letter expresses agreement that the benefits and terms of the Canada-Israeli deal do indeed flow into the occupied territories.
All of those letters will be made public when they are deposited with the clerk of the committee. Then the members of the foreign affairs committee who have raised some very good suggestions and legitimate concerns will be able to examine in the light of day how everything we said would be done to extend this deal to the territories indeed will have been done.
We must not lose sight of the fact that this deal first and foremost has been done not to benefit the Israelis, not to benefit the Palestinians, but to benefit Canadian companies that are active in that region.
We must recognize that there are very major and disturbing issues which are yet to be settled in the Middle East with respect to the peace process in Israel, the status of the West Bank and Gaza. However, to date nobody on the Palestinian side has told us this is not a good deal, that it should not go forward and that they do not want the benefits of the Canada-Israel free trade deal to be equally applied to goods produced in the Palestinian territories.
We on the government side continue at the diplomatic level and government to government to encourage the Israeli government to put the peace process back on track. To date we have done everything we can in meetings and discussions between our foreign affairs minister and heads of state to indicate quite clearly it is Canada's desire that the peace process which was started and seems to have faltered of late be put back on track. It is the logic of the Canadian government that it is only through peace in the Middle East, no matter if they are Palestinians or Israelis, no matter who they are, that they will be able to live to their full potential. The region will be able to grow and stability will be long lasting when the outstanding issues with respect to the peace process are determined.
Canada continues to support a very strong effort by the international community. We are part of that community. We are part of the effort to see the peace process concluded properly.
At the same time we know that for the Palestinians, those individuals who seek to have their political situation defined properly in the international context, who seek peace and for the Israelis who seek peace and security, that once this is all done, peace and security will only be long lasting if the economic potential of the region is realized. Then the individuals, Palestinians, Israelis, or whoever they are will be able to live and to prosper in the region with the type of jobs and wealth that are required for internal and external stability.
This free trade deal is timely. We believe in spite of the fact that the peace process appears to have slowed, that the benefits which are in this deal are not one sided. The benefits, because they will apply equally to the goods produced in the occupied territories and Israeli goods, will be working on a parallel track to the peace process. As peace comes to the Middle East we will have a greater economic input in building the required economic stability for all the states concerned.
Those who have been critical have said that the timing is bad. The timing may not be the way we wanted it but it still is timely. For those individuals who are living in the occupied territories and find themselves cut off from international trade, even though we do
not do a great deal of trade, this is an opportunity for them to find new markets in Canada. For Canadian companies that are working in the Middle East, this gives them equal access. It gives them a level playing field so that their goods can compete on an equal footing with European goods and with goods from the United States in the Israeli market.
Further, as this free trade deal gets implemented, more and more Canadian companies will become involved in that market. It will open a window of opportunity for further trade in all of the European countries and further investment by Canadian companies in industries in Israel, in the occupied territories, in Egypt, in Jordan, in all the states in the Middle East.
In conclusion, it is my hope that the consensus we seemed to have in this House at second reading will continue at report stage and third reading of this bill. I hope we will be able to dispatch this bill to the other place. I hope when it does get to the other place that they recognize that this bill has been carefully crafted. It has taken over two years of negotiation. It is supported by over 20 different sectoral advisor groups on international trade which the government has put up.
First and foremost, the agreement will give Canadian companies operating in the region a level playing field. It will give them equal access to those markets with their American and European counterparts. In the long term it will assist in some small way in ensuring that once the peace process is concluded, that Canadian companies and Canadian investment will add to the stability of the Middle East.