House of Commons Hansard #130 of the 36th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was defence.


HousingOral Question Period

2:55 p.m.

Moncton New Brunswick


Claudette Bradshaw LiberalMinister of Labour

Mr. Speaker, first, I want to tell the hon. member that our member will be voted in soon and he will be in the House very soon.

Having said that, I want to inform the hon. member that the group in Halifax and the community groups have been meeting. Their community plan is completed. I signed off last week, which means that funding will be given to communities in Nova Scotia immediately.

National DefenceOral Question Period

October 17th, 2000 / 2:55 p.m.

Progressive Conservative

Rick Borotsik Progressive Conservative Brandon—Souris, MB

Mr. Speaker, the decision on the future of Manitoba's land forces was supposed to be made months ago. The military has tabled a business case which has now been confirmed by a third party business case from KPMG as being the right decision.

Why will the Minister of National Defence not accept the recommendations of his own military and make this decision now, before the election is called?

National DefenceOral Question Period

3 p.m.

York Centre Ontario


Art Eggleton LiberalMinister of National Defence

Mr. Speaker, there is also another consultant's report that has come up with some different views on the matter. It is a credible consultant. I and the department are examining that report to reconcile the different points of view.

As soon as we do that we will make a decision that will be in the interests of the land forces and the regiment to help ensure that their operational effectiveness is best met and that we bear in mind the quality of life of our soldiers and their families.

Correctional Service CanadaOral Question Period

3 p.m.


Ivan Grose Liberal Oshawa, ON

Mr. Speaker, as the House knows I do not often rise on a government question of this sort, but this one has a personal interest. As well, it passes my validity test.

Some people are saying that prison conditions are too soft. I would suggest to them that they might try it for a day or so. What assurance can the Parliamentary Secretary to the Solicitor General give that prisoners are not living a life of luxury?

Correctional Service CanadaOral Question Period

3 p.m.

Waterloo—Wellington Ontario


Lynn Myers LiberalParliamentary Secretary to Solicitor General of Canada

Mr. Speaker, I have visited prisons across Canada and I can tell the House first-hand that this government is committed to incarcerating offenders and doing justice in Canada. More to the point, unlike the opposition members who do not want to work with the government in this very important area, we not only rehabilitate but punish offenders in the most effective way.

Instead of caterwauling away, they should be congratulating Correctional Service Canada.

Presence In GalleryOral Question Period

3 p.m.

The Deputy Speaker

I draw the attention of hon. members to the presence in the gallery of Lord Russell Johnston, President of the Parliamentary Assembly of the Council of Europe.

Presence In GalleryOral Question Period

3 p.m.

Some hon. members

Hear, hear.

Business Of The HouseOral Question Period

3 p.m.

Glengarry—Prescott—Russell Ontario


Don Boudria LiberalLeader of the Government in the House of Commons

Mr. Speaker, there have been further consultations among all parties in the House pursuant to an issue I raised earlier this morning.

I believe you would now find unanimous consent for the passage of the following motion without debate. It is the same motion that I read into the record today. I move:

That, at the ordinary time of daily adjournment on Tuesday, October 17, 2000, no proceedings pursuant to Standing Order 38 shall be taken up and that the House shall continue to sit for the purpose of considering of a motion “That this House take note of possible Canadian peacekeeping activities in Ethiopia and Eritrea”;

That, during the debate on the said motion, Members may speak for no more than twenty minutes, with a ten minute question and comment period, provided that two members may divide one speaking period;

That, during the debate on the said motion, the Chair shall not receive any dilatory motions, quorum calls or requests for unanimous consent to propose any motions; and

That, at 10.00 p.m. or when no Member rises to speak, whichever is earlier, the House shall adjourn to the next sitting day.

Business Of The HouseOral Question Period

3:05 p.m.

The Acting Speaker (Mr. McClelland)

Does the House give its unanimous consent for the government House leader to present the motion?

Business Of The HouseOral Question Period

3:05 p.m.

Some hon. members


Business Of The HouseOral Question Period

3:05 p.m.

The Acting Speaker (Mr. McClelland)

The House has heard the terms of the motion. Is it the pleasure of the House to adopt the motion?

Business Of The HouseOral Question Period

3:05 p.m.

Some hon. members


(Motion agreed to)

Business Of The HouseOral Question Period

3:05 p.m.


Don Boudria Liberal Glengarry—Prescott—Russell, ON

Mr. Speaker, there has been consultation for the following motion which I would like to share with the House as well. I believe you would find unanimous consent for the following:

That, on Wednesday, October 18, 2000, the House shall not proceed to private members' business nor shall it adjourn until the Minister of Finance and a spokesman for each of the opposition parties has spoken in debate on a motion: That this House support the economic policies of the government provided that the ordinary time of daily adjournment may be adjusted by the Chair if required for the purposes of this order and to permit a full hour of private members' business that day; and: That, on Thursday, October 19, 2000, the House shall sit at 9.00 a.m. and shall consider private members' business from 9.00 a.m. to 10.00 a.m., provided that any division requested thereon shall be deferred until immediately after the division to be held on a motion to concur in a notice of Ways and Means, to be proposed as the first government order considered after 3.00 p.m. that day.

Business Of The HouseOral Question Period

3:05 p.m.

The Acting Speaker (Mr. McClelland)

Does the House give its consent for the government House leader to present the motion?

Business Of The HouseOral Question Period

3:05 p.m.

Some hon. members


Business Of The HouseOral Question Period

3:05 p.m.

An hon. member


Defence Production ActGovernment Orders

3:05 p.m.

Saint-Léonard—Saint-Michel Québec


Alfonso Gagliano LiberalMinister of Public Works and Government Services

moved that Bill S-25, an act to amend the Defence Production Act, be read the second time and referred to a committee.

Mr. Speaker, I would like to begin by thanking members of all parties for their co-operation with respect to this very important bill.

It is very important for two reasons. First, it will facilitate a solution with the United States with respect to ITAR, but more importantly still, it will ensure the implementation in Canada of an effective control system that will support our interests and those of the Americans in matters of security.

The environment is changing. New threats to security, such as intranational conflicts, the proliferation of weapons of mass destruction, and international terrorism, have appeared.

These new challenges are causing western countries, including Canada, to look at their defence needs in new ways. In the U.S. the changed perception of this threat, especially in congress, has led to an increased focus on domestic security issues. As a global response to this increased risk of diversion, the U.S. tightened up its export control over sensitive goods and technology.

Canada was sideswiped by these broad concerns of new perceived security threats when the U.S. department of state amended the Canadian exemption provisions under ITAR. Many of the preferential elements that had previously been available to Canadian firms were removed and the definition of who could take advantage of Canadian exemptions was also narrowed considerably.

This had major repercussions for Canada's industrial sector, in particular, defence, aerospace and satellite industries. The result of this action did, however, provide Canada and the U.S. with a convenient and timely opportunity to pursue extensive discussions on export controls of sensitive goods.

Among other things, the amendments have eliminated the earlier preferential status of Canadian companies and imposed new permit requirements for a vast range of goods and technologies. The amendments have also tightened up the definition of who can enjoy a Canadian exemption.

For our industry, the amendments add administrative formalities, costs and significant delays that mean lost business opportunities.

This is why we need this bill. Canada must establish appropriate safeguards to assure both ourselves and our U.S. defence partners that certain controlled goods and technology, as set out in Canada's exports control list, are available to only authorized individuals and companies. We need such assurances not only to protect certain controlled goods and associated technology of the North American defence, aerospace and satellite infrastructure, but also to encourage trade and improve Canada's national economic stability.

Putting these safeguards in place will be an important step toward reinstating the ITAR exemption for Canadian firms, allowing again for licence free cross-border transfer of most U.S. origin controlled goods and technology.

A big part of this new system of safeguards is the proposed controlled goods registration program. This Canadian made registration system will be housed within my department and will ensure effective control of access to and the transfer within Canada of controlled goods and technology.

Very briefly, the registration system will work as follows. Companies or individuals that wish to be registered or companies that wish to have a temporary worker or visitor exempt from registration must apply directly to the minister. Registration will authorize the registered company's directors, officers and employees to access controlled goods provided they are screened by the company. If the application is approved it will be up to the company to ensure ongoing compliance with the new regulations and to establish a compliance system that can be inspected.

Companies will also be required to submit reports to the Department of Public Works and Government Services and to submit to periodic inspection by my department. As minister, I will have the power to deny, suspend, amend or revoke registration and exemptions on the basis of a security assessment. I will also have the authority to request necessary information from applicants for registration or exemption.

The bottom line is that when the bill becomes law, the transfer of controlled goods in Canada may occur only between registered persons and certain individuals or classes of individuals who may be exempt from registration. U.S. visitors who are already registered with the U.S. government are an example of the type of individual that could be exempted.

As I have just mentioned, the bill will create a new part 3 in the Defence Production Act, providing for appropriate sanctions, including imprisonment, for people and companies contravening the act.

In conclusion, I thank all colleagues for helping to give this important bill speedy passage. It will protect the security of our North American defence system and in the meantime will allow the defence sector to continue to do business with its defence partners in the U.S.

Defence Production ActGovernment Orders

3:15 p.m.


Werner Schmidt Reform Kelowna, BC

Mr. Speaker, it is a privilege to enter debate on the particular bill. I am very happy with the hon. member opposite who just outlined some of the provisions of the bill. I will go into the bill in a little more detail and perhaps suggest exactly its purpose and why it is needed in Canada today.

At the outset I assure the minister that we are here to support the bill. Although we have some questions about it, essentially we will support it.

Bill S-25 amends the Defence Production Act, as already indicated, to establish a new regulatory system which will regulate access by Canadian defence industries to certain controls, military goods or goods with military application. The bill reflects a new Canada-U.S. agreement on co-ordinated legislative measures to strengthen our control over trade in defence related goods and technologies.

The proposed regulatory regime will be administered by the minister of public works from whom we have just heard. It will ensure effective controls to have access to and the transfer within Canada of controlled goods and technologies. Under the proposed system persons would have to be registered by the minister or be exempt from registration under the regulations to have access to such goods.

I am sure some people listening to the debate will ask why we need the bill. On April 12, 1999, the United States state department amended the international traffic and arms regulations and removed many of the preferential elements in the Canadian exemptions contained in part 126.5 of ITAR. The amendments reduce the scope of the Canadian exemptions by imposing licensing requirements on a broad range of goods and technologies that had been licence free before April.

In addition, the U.S. narrowed the definition of a Canadian citizen and ruled that Canadians with dual citizenship could no longer take advantage of the Canadian exemptions. These amendments and the stricter interpretation of a Canadian citizen have significantly and adversely affected access to U.S. goods and technology, thereby affecting the competitiveness of the Canadian defence, aerospace and satellite sectors.

It has impacted these sectors very significantly in that this is a major part of the Canadian economy. There is a lot of trade between Canada and the United States in these sectors. It is essential that this part be secured because national security is at issue to a large degree.

The United States had reason to take action on April 12 of last year, despite the claim of the Minister of Foreign Affairs that decreasing the export of Canadian military related goods and materials controlled unrestricted defence related technology, which was being sent by private companies in Canada to places where it should not have been sent.

This was not some kind of willy-nilly action by the United States. It had a basis in fact. The hon. senator observed certain things in the action by the United States. For example, he had heard the suggestion that components of our frigate program found their way to the People's Liberation Army of China.

Additionally there was no provision under Canadian law to prevent controlled unrestricted technology, including data and other information, from being transferred between civilian companies and others within Canada. That was the instigator, the lever that caused the Americans to question whether they could trust Canadians to maintain secrecy and to assure national security both in Canada and the United States.

This state of affairs and insecurity in our defence production sector caused grave concerns. Our partner, the United States, said that it wanted to protect its security. If we would not do it, the Americans would protect theirs. The U.S. has threatened to relieve Canada and did so.

There was a reason why the Americans did this. The hon. minister mentioned just a moment ago that it gave us the opportunity to do something. The interesting comment I would like to make is that the Liberal government, over and over again, needs to be prodded to do something meaningful.

A government that is concerned about governing the country and its security would take and have the necessary precautions to ensure the security of the nation and ensure that the secrets of our technology and such intimate information would not be made available to anybody.

There was a good reason for the Americans to do this. I am very happy the government has now taken a step. I am also sad to say that it took an outside country to draw attention to a weakness that existed in our country.

On October 8, 1999, a Canada-U.S. agreement in principle was announced, recognizing a shared commitment of both governments to protect against illegal transfers or retransfers of controlled goods and technology from North America and to maintain a strong, integrated North American defence and industrial base. The U.S. provided assurance that it was prepared to reinstate many Canadian exemptions and enhance others in tandem with Canada's harmonizing controls in the USML items within Canada and introducing appropriate legal sanctions for infractions.

Is it not interesting that our government did not have the initiative or the courage to do the things it is now threatened with because it missed the point? As part of the agreement Canada has put forward new legislation, which is before us today. It will put forward new regulatory provisions that will strengthen Canadian defence export controls as a result of these changes. The Canadian export council list will control the same defence goods and technologies as identified in the U.S. munitions list.

The United States concurred with Canadian legislative and regulatory changes. It intends to revise its defence trade control regulations to reinstate most of the pre-April 1999 Canadian exemptions, allowing for licence free transfer for most U.S. origin unclassified defence goods and technology.

The United States confirmed its intent to expand the exemption to allow for licensed access to such U.S. origin exports by Canadian citizens, including Canadian dual nationals and Canadian permanent residents. The United States also intends to expand the prior exemptions to permit the export without licence of certain additional defence goods and technical data.

If this goes ahead we can be reasonably assured that we will now have the same kind of reciprocal relationship that we had before. Perhaps it will be even a little smoother than it was. That is good.

It is interesting that the bill originated in the Senate. Why did it not come from the government? It should have come from the Prime Minister's party because it should have been done at that level.

Why then is the legislation required? The bill is required to reinstate special exemption for Canadian firms under the U.S. ITAR so that permits for the export of defence goods and services are not required. Without special exemption Canadian companies are hampered from competing. An estimated $1 billion of the $5 billion business done by high technology, aerospace and other defence industry companies located in Canada have been potentially affected by the U.S. regulatory changes.

The bill will ensure a continued access to U.S. defence market and related technology. The Canadian defence industry stated that the Canadian exemption would be largely reinstated if there was evidence that three major issues were being addressed: first, the tightening up of our own export controls; second, the harmonization of the Canadian export control list with the American counterpart, which the joint agreement on October 8 states will be the case; and, third, the implementation of a registration system. All three elements would come into play with the passage of the legislation.

We are on good ground at this point in time to ensure there will be a smooth transition. The defence industry will be well served with this legislation.

According to the government the legislation is further required so that Canada establishes appropriate safeguards. It is not just good enough to make the statements, but safeguards are required to assure both ourselves and our U.S. defence partners that the controlled goods and technologies as set out in the Canada export control list are available only to authorized individuals and companies.

We need such assurance not only to protect certain controlled goods and associate technology of North American defence aerospace and satellite infrastructure but also to encourage trade and improve Canada's national economic stability. Since about 85% of our export market is with the Americans to the south, it is a very good idea to have good relations with them. That is precisely what is being set out.

We have the provisions of the bill pretty clearly in mind, but some other questions need to be addressed. Will the new regulations be costly to Canadian industries? The minister has already alluded to the fact that it will cost them something. The estimate is between $2.5 million to $3 million annually, but the cost to industry would be quite minor because a large percentage of the companies that have control of goods are already in the government's classified industrial security program. Thus government has already screened a number of their employees.

Under this program, however, industry would have to appoint a designated official to ensure that controlled goods are properly controlled within companies. That would be the main cost to industry. We do not know exactly what the additional cost will be.

Does the Access to Information Act apply to the provisions of the bill and to the Defence Production Act as a whole? The answer is yes. However, so too do the protections for commercially confidential information, as well as the possibility of applying coverage for national security purposes. That is important to recognize, but it places a tremendous onus on the minister and his personnel to be sure the national security is preserved.

We have to admit that although this part of the legislation is necessary and essential and although we will support it, the integrity, honesty, stability and accountability of the government and its officials will be very significant and important in terms of making the legislation provide for the security we want in Canada.

Will the regulations in question be printed in The Canada Gazette and therefore open to parliamentary review and comment? This is an interesting question because, as we heard this morning, much of this is done in secret behind closed doors. Because cabinet has the authority to make regulations under this act, it can make amendments to these regulations without making them transparent.

According to the Department of Justice the regulations to be made under the new part 2 of the act would have to be published in the ordinary way. It would require pre-publication in part I of The Canada Gazette to allow for comment and consultation and to take views of affected parties into consideration for revision of the proposed regulations. That would then be followed by publication of the ultimate regulations in part II of The Canada Gazette . The Department of Justice says that they will be available. Then the defence industry and the public will know that these are the regulations that have to be met.

Members in the committee proceedings in the Senate requested that the minister undertake to deposit the regulations with the committee once a year. The minister is on record as saying that he had no problem with the request. The minister spoke to the bill just before I rose to speak. We suspect he will do exactly that. If we become the government, we would undertake to do the very same.

Regulations respecting ongoing compliance would allow the department to conduct inspections and gather information on those registered. Would this give the government unreasonable access to information which could be used in a manner that would violate privacy? It is very easy to assume that could be the case. What is the assurance that the information gathered when these inspectors are in the highly secure industries will not be used by the government for other purposes?

Registration will authorize the registered company's directors, officers and employees to access controlled goods provided they are screened by the company. If an application is approved, it will be their responsibility to ensure ongoing compliance with the new regulations and to establish their compliance so it can be inspected. Companies will also be required to submit reports to the Department of Public Works and Government Services and to submit to periodic inspections by the department.

Specifically, then, the department officials responded this way. The intent, and I draw the attention of the House to the word intent, of using administrative inspection is to enable the inspector to look at the security systems in place and suggest alternatives that will be helpful, which is the normal practice of inspectors and other regimes throughout the government. The intention is not to have the inspectors do anything in connection with a criminal search.

If the inspector found something in the course of an ordinary administration inspection that he believed was appropriate for a criminal investigation, the inspector would have to present himself in the ordinary way to obtain a search warrant. Thus, he would have to withdraw from the premises and then, on reasonable and probable grounds, assert evidence sufficient to obtain a search warrant under the criminal code. That is absolutely critical and essential.

The difficulty will be that there is a judgment factor involved here and the person doing the inspection will have to make that kind of decision. The incumbent will have to be very careful and aware of what the security requirements are, what the regulations are and what criminal offences could be perpetrated by certain individuals or by certain companies.

In summary, the main provision in Bill S-25 is clause 5, which would add a series of new provisions to the Defence Production Act in the form of new parts 2 and 3 of the act.

The new part 2 of the act proposed in clause 5 of the bill would provide for the control of access to certain defence related goods. Essentially, part 2 would restrict access to such goods to those persons who were registered by the Minister of Public Works and Government Services or who were exempt from such registration.

Pursuant to the new section 35, the controlled goods subject to the proposed regime would be set out in a new schedule to the act which would be added to clause 7 of the bill.

By virtue of new section 36, the new regime would not apply to most public sector employees in Canada, when acting in good faith, in the course of their employment duties or to any member of a class of persons to be prescribed in the regulations.

New section 37 would make it an offence for a non-registered and non-exempt person to knowingly examine or possess controlled goods or to transfer controlled goods to another person. This section would also make it an offence for any registered or exempt person to knowingly transfer a controlled good to or permit the examination of such a good by a non-registered and non-exempt person. The section would clarify that transfer would mean to dispose or disclose the contents of a controlled good in any manner.

Section 37 would also clarify that a person's registration extends to authorized corporate officers and directors as well as authorized employees of the registered person.

New section 38 of the act would provide for a scheme of registration of persons by the minister for access to controlled goods. The minister would furnish registered persons with a certificate. Registration and renewal of registration would be subject to conditions to be prescribed in regulations made under the act in addition to those that the minister considered appropriate.

Moreover, the minister would be able to request any information from applicants for registration which the minister deemed necessary. The minister would be able to deny any application for registration or suspend, amend or revoke a registration on the basis of a security assessment to be prescribed in the regulations. We can see the significance of the minister's role in this operation.

New sections 39 and 39.1 would provide for a system of ministerial exemptions for individuals or classes of individuals.

Under new section 40, registered persons would be required to provide the minister with information, as prescribed by the regulations.

New section 41 would provide for the designation of inspectors to ensure compliance with the proposed rules.

New section 42 would give such inspectors the power to enter and to inspect any place; to require the attendance of and question any person; to require any person to produce for inspection a document; to detain or remove any controlled goods until satisfied that it was in compliance with the requirements of the act and regulations; and to require any individual in charge of a place that is the subject of an inspection to take any measures that the inspector considers appropriate. While exercising the authority under this new part, inspectors could be accompanied by another person.

New section 43 would provide the governor in council with authority to make regulations for carrying out the purposes of the provisions of this new act including: prescribing classes of persons to whom the new restricted access regime to be established by the purposed new part 2 of the act would not apply; prescribing procedures for authorizing employees, corporate directors and officers of registered persons to have access to controlled goods; prescribing various matters pertaining to registrations and exemptions under this proposed new part. This would include: eligibility conditions; applications procedures; the factors to be considered by the minister in deciding on registrations or exemptions; the minister's power to renew, suspend, amend or revoke registrations or exemptions and make regulations of conditions of registration or their renewal; conditions of exemptions and their renewal; security assessments; and amending the schedule of controlled goods on the joint recommendation of the minister and the Minister of Foreign Affairs.

This last point is significant. We now have a countervailing balance of one department with another department. It cannot be done unilaterally by one minister alone. That is a wise thing to do.

The proposed new part 3 of the act would create a new offence to cover various acts of obstruction in relation to the inspection and reporting scheme proposed in the act.

New section 44 would make it an offence to: provide false or misleading information; destroy any record or document required to be kept under the act or the regulations; make a false record or document which the act or regulations required to be kept; interfere with anything detained or removed by an inspector; or fail to comply with any reasonable request of an inspector or otherwise obstruct an inspector in the performance of his or her functions.

It is a comprehensive act. There are very significant powers given to the cabinet and to the minister in particular.

Pursuant to new section 45(2), violation of new section 44 and any other provision of the act would be punishable on summary conviction by a fine of up to $25,000 or imprisonment for up to 12 months or both.

Pursuant to new section 45(1), the punishment for violating new section 37, that is, the access to controlled goods by a non-registered and non-exempt person, would be on summary conviction a fine of up to $100,000 or imprisonment for up to two years or both, and on an indictment, a fine of up to $2 million or imprisonment for up to two years or both.

There is now a punishment or a fine that is given to people who violate the provisions of the act. That is a significant impact that gives the minister some power to do things and make it meaningful.

There are two other sections that I would like to look at but I will skip that for now.

I will conclude by saying that while we support the bill and the provisions of the bill, we also recognize that there are some serious questions with regard to the bill.

I appeal to the minister and to all members in the House that something as significant as this, which deals with the national security of a nation, cannot be treated seriously enough. The threat can come from people giving information, technology and access to controlled goods. This could fall into the wrong hands and be used against our nation, which would make us less secure.

I commend the government for doing this. At the same time, the record of this government does not give me the kind of assurance that the minister will be open and accountable for all the things that are in this act. I have some doubt about this because of the results of the last report of the auditor general. I begin to wonder sometimes just exactly how open and how forthcoming this government will be about information like this. I wish it well and I certainly want to give it a try.

Defence Production ActGovernment Orders

3:40 p.m.


René Laurin Bloc Joliette, QC

Mr. Speaker, Bill S-25 amends the Defence Production Act. It indicates in its summary that the Minister of Public Works and Government Services is responsible for administering the new regime, which requires a person to be registered or exempted from registration by the minister to have legal access to these goods.

One's first reaction to the bill is that it might as well have been written in Latin. We need a translation for just about every sentence, because it is not exactly clear.

Sections 26 to 29 are repealed and replaced. These referred to anyone committing an offence and making a false declaration, which carried a $500 fine. The old act ended at section 34. This one goes to 46, where it indicates rather flatly a list of controlled goods, that is, prohibited firearms and ammunition with a calibre greater than 12.7 mm.

It is moreover stipulated in subclause 37(1) that “No person shall knowingly examine or possess a controlled good or transfer a controlled good to another person”. Subclause 37(2) further states, and I quote:

No person registered or exempt from registration shall knowingly transfer a controlled good to or permit the examination of a controlled good by a person who is not registered or exempt from registration.

I shall try to translate these provisions from Latin into plain English.

Then, in subclause 38(3), it is stated that “The minister may deny an application for registration or suspend, amend or revoke a registration on the basis of a security assessment—”. The minister may also designate inspectors. In other words, the Minister of Public Works and Government Services has considerable power as far as the import and export of military materiel is concerned. He also has absolute power over the designation and selection of inspectors.

As we know, absolute power without the imposition of regulations or criteria sometimes creates inequalities and opens up the possibility for patronage and for finding jobs for the party faithful.

That is the weak point of the bill. Is it necessary, in order to accomplish our objectives, to give so much discretionary power to the minister?

Clause 43, under Regulations, states that the governor in council may authorize officers, directors and employees to examine, possess or transfer controlled goods. It seems to be mainly the penalties that are changing. Suclause 45(1) states, and I quote:

Every person who contravenes section 37 is guilty of a ) an offence punishable on summary conviction and liable to a fine not exceeding $100,000 or to imprisonment for a term not exceeding two years, or to both; or b ) an indictable offence and liable to a fine not exceeding $2,000,000 or to imprisonment for a term not exceeding 10 years, or to both.

In short, this is a warning to those thinking of diverting goods from their ultimate destination.

My comments will be very brief. As I already said at the very beginning of my speech, Bill S-25 cannot be praised for its great clarity.

We would have liked the powers of the Minister of Public Works and Government Services to be more clearly defined in relation to those of the Minister of National Defence.

We would also have liked the minister's powers to be a bit more limited, less discretionary and less conducive to unfairness.

Nonetheless, the tightening of controls on the middlemen in the import and export of these arms would seem to us to be appropriate. The penalties for offences become serious, where before they were merely symbolic. I think that this will also be a valid measure that we will approve.

This is important, because importing sophisticated weapons requires that middlemen be above any tampering. In future, however, bills having to do with national defence ought to be much clearer.

Despite these reservations, we are prepared to support in good faith the procedure for rapid passage of this bill, given the particular political circumstances in which we find ourselves.

Defence Production ActGovernment Orders

3:45 p.m.


Gordon Earle NDP Halifax West, NS

Mr. Speaker, I am pleased to have the opportunity to rise today to address Bill S-25, an act to amend the Defence Production Act. At the outset I would reiterate a point made earlier by a colleague that we have some concern about this bill originating from the other place rather than coming through the House, with its duly elected representatives, and then moving on to the other place, which is normally the process. That aside, the NDP will be supporting the bill.

I want to give a bit of background information on the bill for the sake of the people watching and listening to this debate. The bill is an attempt to establish a new regime for regulating access to certain controlled military goods or goods with a military application. Persons involved in this kind of work would have to be registered by the minister or be exempt from registration under the regulations in order to have access to such goods.

Bill S-25 seeks to address a situation that emerged when the United States revoked Canada's special exemption from U.S. arms control regulations. The bill reflects a new Canada-U.S. agreement on co-ordinated legislative measures to strengthen control over trade in defence related goods and technologies.

Historically speaking Canada had been exempt from many of the provisions of the U.S. international trade in arms regulations, known as ITAR. Permits for the export of defence goods and services from the U.S. to Canada traditionally have not been required except for a small category of particularly sensitive goods and technologies, including those pertaining to nuclear weapons, strategic delivery systems, nuclear propulsion systems and submarines.

Most defence technology and unclassified technical data from the U.S. could be exchanged freely between the U.S. and Canadian governments and private sectors. As a result, Canadian and U.S. defence industries have operated more or less as a single market since World War II. Many U.S. companies established subsidiaries in Canada. Companies on both sides of the border frequently bid on contracts in the other country.

On April 12, 1999, the U.S. state department made unilateral changes to ITAR that significantly narrowed Canada's exemption from the licensing of U.S. origin defence goods and services. Until that time Canada was the only country granted an exemption under all but 5 of the 19 categories of goods and services covered by ITAR. The changes required Canadian companies to obtain export licences for 11 of 19 categories, effectively ending the special treatment for the Canadian defence industry.

According to the U.S. government the new measures were necessary because of U.S. companies misusing the Canada exemptions and concerns regarding the effectiveness of Canadian export controls. The Canadian government denied that Washington's concerns were justified.

Beyond the procedural impediments, additions to ITAR caused restricted access to technological data based on citizenship. This is a very important one. Let us take note of what was happening here.

Only personnel holding Canadian or U.S. citizenship to the exclusion of other nationalities could have access to the information or technology in question. The U.S. does not recognize dual citizenship. However, many Canadian high technology firms employ foreign born specialists because of the skill shortages in these areas.

Moreover, our Canadian human rights laws, including the Canadian Charter of Rights and Freedoms, would preclude government restrictions on the hiring of such persons purely on the basis of nationality or country of origin. We certainly would have concerns about that restriction being placed on any relationship between the United States and Canada with respect to defence production and the goods and services involved.

On October 8, 1999, a Canada-U.S. agreement in principle was announced. It recognized a shared commitment by both governments to protect against illegal retransfers of controlled goods and technology from North America and to maintain a strong, integrated North American defence industrial base.

The U.S. provided assurance that it was prepared to reinstate many of the Canadian exemptions and enhance others if Canada harmonized its export control list with the U.S. munitions list and if Canada strengthened controls on these items within Canada and introduced appropriate legal sanctions.

In March 2000 cabinet agreed to the establishment of a strengthened transfer and access control system for certain controlled goods and technologies. It directed the Department of Justice to begin drafting the legislative and regulatory framework conditional on a successful conclusion to bilateral negotiations. On June 16, 2000, the two governments resolved any outstanding issues.

Under the new agreement the U.S. agreed to reinstate most of the pre-April 1999 Canadian exemptions on the transfer of most U.S. origin unclassified defence goods to Canadians, including to Canadians of dual nationality and permanent residents with third country nationality.

For its part Canada agreed to establish a new regime that would require persons having access to controlled goods to be registered with Public Works and Government Services or to qualify for an exemption from registration as set out in the regulations. The new access control provisions include significant penalties for breaches.

This is what Bill S-25 is all about. It is a system of regulation and legislation that sets forth conditions to better control the export and re-export of defence goods and technology, particularly those of U.S. origin.

Under this legislation, by virtue of proposed section 36, the new regime would not apply to most Canadian public sector employees when acting in good faith in the course of their employment duties or to any member of a class of persons to be prescribed in the regulations. Proposed section 37 would make it an offence for a non-registered and non-exempt person to knowingly examine or possess controlled goods or to transfer controlled goods to another person.

I understand that representatives from the affected industries in Canada, in particular the Aerospace Industries Association of Canada, have spoken out in favour of quick passage of Bill S-25 and the implementation of a new agreement between the U.S. and Canada to ensure continued Canadian access to the U.S. defence market and related technology.

While I have indicated that we will be supporting the legislation, I want to make it clear that we are supporting the legislation because we recognize that certain aspects of defence production have spinoff effects beyond simple defence applications, such as various satellite communications, rockets, aircraft engines and navigational, gyroscopic, chemical and biological applications. Quite often in the research and development around these items there is a spinoff benefit that goes beyond a military application.

I want to add another dimension to this debate. While we support the legislation, I have grave concerns that when we look at the whole issue of defence production and the production of goods geared toward defence we sometimes are talking about nuclear weapons and other systems of mass destruction.

We know there is a lot of money in the defence industry. Earlier an hon. member on the other side of the House talked about the importance of defence production to business and the economy in Canada and thus the importance of good relations. I sometimes become very concerned that we might allow our concern about business and economy to overshadow the need to work hard toward a peaceful society that does not engage in guns and arms and the production of those types of goods.

It disturbs me to read in the paper or to see on television a boy of 12 years old being shielded by his father's arms to avoid bullets and in the end being shot dead because of the conflict between two nations. There is so much of this happening worldwide. There is so much conflict, destruction and death. A lot of it is tied into and enabled by the arms involved. That boy did not die because someone was handling a toy. It was a deadly weapon. It was probably from some arms trade or part of defence production in some way or another.

So much of this is happening around the world. We have to concentrate on building a society that looks at all the money spent on defence production, that big industry found worldwide, and on asking ourselves what kinds of things that money could do if we applied it to help the homeless who sleep outside, without any shelter overhead. How much good would that money do if we applied it to child poverty, which is a curse in our society but has existed for so long and continues to exist? How much good would that money do if we applied it to training and other programs to help the unemployed? How much good would it do if we applied it to our aboriginal communities, which quite often have a lower social and economic status than the rest of our communities?

There is a lot of money involved in the arms trade and the defence industry. I am in no way taking away from the fact that every country must have an adequately resourced military to protect its borders and engage in domestic activities to assist its citizens. I am saying, however, that sometimes we allow the economic interests associated with some of these industries to overshadow and overpower the need to get to the human and social concerns within our society.

I make that point strongly because I think it quite often gets lost in the midst of debate. We want things to go smoothly so that we can have greater trade, greater economic stability, and more money flowing in. However, what is happening with all the money flowing in? Where is it going?

I read a piece in the paper a couple of days ago, probably the plane when I was coming here, about the fact that the term millionaire no longer means what it meant 30 or 40 years ago. If one was a millionaire then one was a member of an exclusive club. Now more and more people, numbering in the thousands, can claim to be millionaires, a lot of them at a very young age. The article also mentioned that there are 300 billionaires in the world.

We should look at where that concentration of wealth is going. Much wealth and prosperity exists today but remains concentrated in the hands of a few. A lot of that wealth comes from such things as defence production industries and various other industries where the money flows through big corporate interests from one country to the other.

Arms are getting into the hands of children and women. I talked to the Eritrean ambassador last night. She told me something I was unaware of. A large number of the Eritrean soldiers fighting in the war between Eritrea and Ethiopia were women. I asked specifically if there were any child soldiers involved and was told no, they protect their children. However, women are fighting on the frontlines, laying down their lives in a conflict between nations. What are they using? They are using guns and arms off which someone has made money.

I raise it here in the House because we are elected people. We are elected to represent our constituents. We are elected with a responsibility to try to build a better society, to try to do something to elevate ourselves beyond the realm of the killing and fighting we see day by day.

A good part of that will come about if we start to look honestly at some of the things involved which we take for granted as being a natural part of our economy. We can have a thriving economy but we can have an economy that is based on things other than weapons of destruction.

I make that point even though we are supporting the legislation to enable a smoother relationship between Canada and the U.S. It is better to have some controls around this kind of technology rather than no controls at all. I really would implore us to work for the day when the ultimate goal will be that we put less emphasis on the production of arms and weapons of destruction and things that kill people and more emphasis on the kinds of things that breathe life into our society and give our society a sense of purpose, meaning, and a true sense of destiny.

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4 p.m.

Progressive Conservative

André Bachand Progressive Conservative Richmond—Arthabaska, QC

Mr. Speaker, I will be very brief. We are not allergic to a bill from the other place. I would like to pay tribute to the work done by our party's team in the other place, which worked very hard on this important bill.

Many things have been said about it. I would like to provide a brief historical overview.

Discussions were held prior to World War II, but later, in the mid 1940s, the U.S. and Canada decided to have a free trade zone for arms in general.

It was not really an economic free trade zone. It was more the whole American and North American continental defence strategy. It was a far cry from the free trade agreement signed by the Conservative government and developed, I have to admit, by the Liberal government. I have to admit that.

That said, the United States wanted to combine continental forces. Canada, in the north, was politically stable. In terms of the continental defence strategy, with Russia being so close, the Americans could ask certain favours of Canada, and would do some in return.

The arms industry was allowed to freely cross the border because it was exempted more readily than was the case for other countries, and this arrangement benefited Canada's economy. Canadian know how, which was developing at that point—they talk about the Avro Arrow, which the Diefenbaker government unfortunately dropped—could have benefited the Americans as well.

Therefore, Canada's technological efforts would have benefited the States before others, because there was a trading market. It was advantageous. It did change. Canada and the U.S. are special trading partners in a number of areas, but that started before.

But in 1999 the States said “Whoops. We are starting to have some problems, including security problems”. I would remind hon. members that it is not just with weapons, but also with immigration. Last year, a bill had to be passed for Canada to keep illegal immigrants wanting to enter the U.S. through Canada. Because the Americans do not want them, the legal responsibility is ours.

So we did them a favour, in return for which we got Canadian visitors over the U.S. border quickly. That was part of the negotiations.

In connection with Bill S-25, I wish to point out the contribution of the Canadian ambassador to the United States, the good lobbying by Canadian industry, and the excellent historical co-operation between the two countries, which have made it possible to design a bill and to convince the U.S. authorities that we would do what had to be done as far as security was concerned.

I believe that the Americans are going to be pleased with this, as will our industry, because Canada has developed enormously since World War II as far as technology is concerned.

Once again, I congratulate those in the other place on their good work. I also want to congratulate the minister responsible and the government for co-operating with the other parties in order to protect thousands of jobs in Canada.

The Progressive Conservative Party supports Bill S-25. We are pleased to facilitate its rapid passage.

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4:05 p.m.

Progressive Conservative

Loyola Hearn Progressive Conservative St. John's West, NL

Mr. Speaker, I have a question. It was coincidental perhaps that as my colleague was speaking I was reading an excerpt from the press that says “Canada gets duty free zones” and talks about Liberal MPs supporting it.

In the case of my own province of Newfoundland, we are the most easterly point in the country, the nearest point of entry into Europe from the western side. We see what is happening in Ireland because of their geographic location, even though it is not necessarily duty free. Does the member think that the creation of free trade zones would benefit specifically a place so strategically geographically located as the province of Newfoundland?

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4:05 p.m.

Progressive Conservative

André Bachand Progressive Conservative Richmond—Arthabaska, QC

Mr. Speaker, my answer is yes. The people of Newfoundland and Labrador are used to working in their corner of the country, to coming up with solutions and original ideas.

As my colleague from Newfoundland says, I am sure that we can do so with government support. Will the arrival of a new minister from Newfoundland help? I suspect so, but that said, the people of Newfoundland must reap the benefit of these programs, just like the people of all the other provinces of Canada.

This is why a regional spirit, the spirit of helping the provinces, must be maintained at all cost, contrary to what the Canadian Alliance members say. We must keep the tools to ensure that in all of Canada's regions, from St. John's, Newfoundland, to Vancouver, by way of Quebec and Ontario, wealth may be spread around with the tools that belong to the elected representatives of the provinces and the people of the country.

Newfoundland is a province of the future, I firmly believe. Things will go a lot better when there are a few members sporting the colour of the ocean.

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4:05 p.m.


Jim Abbott Reform Kootenay—Columbia, BC

Mr. Speaker, I hope to be very brief with my comments, but I would like to make a connection here between an issue that I have consistently been bringing to the House, that is, the issue of Canada's national security.

This particular bill comes about as a very direct result of the lack of attention that the government and its predecessor have paid to the issue of national security in Canada. It is a concern to the people of the United States, to the people responsible for the defence industry of the United States.

We have to remember this. Whether we like it or not, the fact of the matter is that in Canada we have the ability to have expenditures of many types on many things where we basically do not have to put out the money for the defence we are getting from the country to the south of us.

These people of course have their own vested interest. We act as a buffer. We recognize to a certain extent that we are the meat in the sandwich between them and other people who would be adversaries to them. They do have their own vested interest, but the fact of the matter is that we as Canadians have the ability to have a defence budget significantly smaller than we would need if we did not have the level of co-operation we have with the people in the United States.

Secondly, they have a very legitimate concern and interest in the transfer of technology, information and intelligence. Even within the confines of the lower 48 states, the United States has seen many of its facilities ending up being compromised by people who have come into its own territory. As it tried to bring that into focus and regain control of that, the United States naturally took a look at the sources of these malevolent forces coming toward it. Many of those sources were coming through a very porous 49th parallel.

We must pay far more attention to the entire issue of national security. Interestingly, this issue of intelligence gathering and management has everything in the world to do with the difficulties that this nation and indeed many nations around the world are having with respect to organized crime and the fact that in many instances terrorism is bought and paid for by the proceeds of organized crime. Organized criminals and terrorists have the ability to go across boundaries literally at the speed of light, at the flick of a computer switch.

This particular agreement, which came about, I believe, in good faith between our nation and the nation of the United States, is a good example of how when we come across a problem we can work together and work our way around the problem.

The necessity of this legislation is due to our charter of rights and freedoms. The necessity of this legislation is due to the way in which our country is configured and the way in which we welcome immigrants to our country to be part of this great nation of Canada. As we give those immigrants opportunities within our society and as they in turn help to construct our society, to build our society and to add to our intellectual wealth and the quality and fabric of our society, these people are building our society. At the same time, because of the concerns that the defence industry was having in the United States, it felt that this was a step away from its ability to be able to control people who would have access to its very highly valued, highly confidential secret information.

Our caucus had the opportunity, through the good auspices of our defence critic, to have two or three meetings with the defence industry while this was coming to resolution. I thank the member, but I also thank the defence industry for taking the time and interest to inform us and our caucus as to what was going on.

As the industry came to us, it was made very evident that there must be a connection. There must be a management of information among the solicitor general, who would be responsible for CSIS and the RCMP, immigration, foreign affairs, industry and foreign trade. All of these and more of our departments must do a far better job of sharing and managing information and intelligence as it is being gathered.

I am very pleased that between the two nations we have arrived at this bill, at this accommodation. As I say, it shows goodwill between the two nations, which bodes well for the future. However, I say to the government, we must pay attention to the fact that we had to do this bill in the first place. The reason we had to do this bill is that the government unfortunately is not paying anywhere near the attention that it should be to the issue of information gathering and management in Canada for the sake of our national security.

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4:10 p.m.


Werner Schmidt Reform Kelowna, BC

Mr. Speaker, I really appreciate the comments by my hon. colleague who said so much about the management and control of information.

The minister of public works shall have the right, authority and responsibility to identify people and give certificates to them so that they have access to information on the goods and technology involved in the defence industry. These people must then ensure that the provisions of the act are met, and there will be an inspection process as well.

Could the hon. member comment on the significance of the minister's authority respecting the control of information?