Debates of Nov. 28th, 2002

The Environment

[The Speaker]

The hon. member for Lanark—Carleton.

Softwood Lumber

[Scott Reid, Canadian Alliance, Lanark—Carleton, ON]

Mr. Speaker, after the lumber giant Weyerhauser came out in favour of a tax at the border, the Quebec minister of natural resources agreed this was a good idea.

Of course, most companies involved in the softwood lumber war, including the Association des manufacturiers de bois de sciage du Québec, see this as voluntary taxation and something that will never be collected.

Why is the federal minister allowing the various factions to fragment the united front we are presenting to the United States?

[Pierre Pettigrew, Liberal, Minister for International Trade]

Mr. Speaker, on the contrary, I am extremely attached to the united front we presented to the United States. I congratulate the governments of British Columbia and Quebec on their extraordinary contribution.

As for the strategy, I would say the opposite, that we are still on the same wavelength. Canada is open to negotiation with the U.S. but not capitulation. We do not want to find ourselves being charged a 25% tax in order to avoid a 27% countervailing duty, and required as a result to pull from the courts a case that is going very well for Canada.

This is what we want, to be open to negotiation. To back up our negotiation, however, the court challenges will continue.

[Scott Reid, Canadian Alliance, Lanark—Carleton, ON]

Mr. Speaker, the Minister for International Trade is allowing the fear of a lengthy siege to ruin our united front in the courts.

Why does he not propose a better plan to help workers out while the legal proceedings drag on?

[Pierre Pettigrew, Liberal, Minister for International Trade]

Mr. Speaker, our government has responded very well to the situation. My colleagues, the Minister of Human Resources Development, the Minister of Industry and the Minister of Natural Resources, have put several million dollars into the development of new markets around the world. We will continue with our approach.

We will fight the pine beetle in British Columbia. We believe in this industry. We stand by our workers and our communities, and we will prevail. We see that the American producer associations are in trouble. They are the ones that now realize their strategy has backfired.

[The Speaker]

That will conclude question period for today. I know we have not finished the list for the first time in months, but there was too much noise.

Points of Order

[Jim Pankiw, Canadian Alliance, Saskatoon—Humboldt, SK]

Mr. Speaker, with respect to your ruling yesterday, I wish to apologize for not respecting the authority of the Chair. Having spoken to you afterward and as you pointed out, the technical and procedural points I was attempting to make could have been made when I first responded to this matter. I wish to highlight that disregarding your authority was not my objective.

Furthermore, with respect to your determination that language used was unparliamentary, I withdraw those words.

[The Speaker]

I thank the hon. member.

Business of the House

[John Reynolds, Canadian Alliance, West Vancouver—Sunshine Coast, BC]

Mr. Speaker, I notice today that we have 12 days left in the calendar until we take the Christmas break. I know of the government House leader's ability for music and bands. I do not know if he wants to sing us The Twelve Days of Christmas , but I wonder if he wants to tell us what we will put on the parliamentary tree in each of the last 12 days we are here.

[Don Boudria, Liberal, Minister of State and Leader of the Government in the House of Commons]

Mr. Speaker, the short answer is a partridge.

[Kevin Sorenson, Canadian Alliance, Crowfoot, AB]

That's not a partridge. That's a turkey.

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

Even I have to admit that is a good comeback.

This afternoon we will debate the third reading of Bill S-2 respecting a number of tax treaties. Tomorrow we shall consider report stage and if possible third reading of Bill C-4 respecting nuclear safety. If necessary we will continue with this bill on Monday. We will then return to the debate on the Kyoto protocol.

A little later next week we will deal with Bill C-3, the Canada pension plan amendments. Thursday, December 5 shall be an allotted day.

I am in the process of consulting with colleagues and other parties with a view to having one or more take note debates starting early next week.

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

Mr. Speaker, in his 12 allotted gifts that he will give us, will he include fish rather than partridge and ensure that during the first possible opportunity we will debate the serious issue of the Atlantic cod closure?

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

Mr. Speaker, the hon. member has expressed an interest in one possible topic. Others have been expressed by other House leaders. I will not get into a detailed discussion of that on the floor of the House but his interest in that topic is noted.

[Dick Proctor, NDP, Palliser, SK]

Mr. Speaker, will the possible take note debates to which the hon. government House leader referred take place in the evening or during the day?

[Don Boudria, Liberal, Glengarry—Prescott—Russell, ON]

Mr. Speaker, in view of the fact that there are several items on the parliamentary agenda, as the hon. member knows, these take note debates would take place if they are held, and I believe some will be held, in the evening.

Points of Order

[Greg Thompson, Progressive Conservative, New Brunswick Southwest, NB]

Mr. Speaker, I noted that you had some concern that you did not work through the entire list of questioners during question period. I want to respectfully suggest why that happened.

The Minister of Health was on her feet today at least 15 to 20 times. Every one of those responses went overtime. You had to consistently get up, and I know you are generous to us when we all do that. However when a minister of the Crown, who we knew would be up quite a bit today because of the Romanow report and some of the other health issues out there, consistently does that over and over again, then that is why you do not get to the end of your list. Who gets punished? Not the government side, but the opposition parties, particularly the smaller opposition parties located at this end of the chamber.

I know I have to be very careful, Mr. Speaker, because I do not want to be critical of you. In your generosity I know you are reluctant sometimes to stand and cut off a minister, or in fact some of us, which you could do at any moment with me. However the fact of the matter is that even some of her colleagues today were wincing. They understood that she was going overtime. The minister understood, but she did it consistently.

What I am saying is if you want to get to the end of that list every day, would you exercise your authority over the Minister of Health when she continues to do this day in and day out in this place.

[The Speaker]

I appreciate the generous assistance of the hon. member for New Brunswick Southwest and his suggestions. I must say he is correct when he says the Minister of Health was consistent in going overtime, but I think the Speaker was consistent in cutting her off. I appreciate the fact that the questions that were asked were ones that the minister had lengthy answers to and that she wanted to go on obviously at greater length. However there are rules.

The problem today it seemed to me was the noise. I had to interrupt the proceedings so frequently to try to get some order so I could hear the minister and other members asking their questions because of the constant noise in the chamber. I would not accuse the hon. member for New Brunswick Southwest of uttering a single word during question period, but there was noise certainly from his end of the chamber and it made it almost impossible for the Chair to hear.

When the Chair stands up and delays things by appealing for order and urging hon. members to assist the Chair, as the hon. member is doing with his shoe at the moment, I know that while the assistance is appreciated it does take a lot of time away from questions.

To answer one other point the hon. member made, yes it is true that parties do lose questions but I assure the hon. member that had we completed the list today the two members who would have had a question were one from the Bloc Quebecois and one from the government. Therefore it was not just the opposition that lost out, the government missed a question, and I know the member was bitterly disappointed, and the hon. member for the Bloc Quebecois was completely disappointed to have missed her opportunity to pose a question.

While we might have gotten a few extras in, which I am sure would have included members from the hon. member's party, if not the hon. member for New Brunswick Southwest himself, in the circumstances we did reasonably well considering the brouhaha.

I can only say that if hon. members would cooperate with the Chair and be quiet during question period, as they were for example during the hon. member for Lanark--Carleton's question, we would have gotten through the thing in record time and would have had a lot of extras as well, which of course is the Chair's preference in these matters, if the Chair can have a preference in any matter.

I thank the hon. member for his intervention. I am sure his colleagues will all pay close attention to his suggestion that we all stay quiet, which I know is really at the bottom of his remarks.

[The Deputy Speaker]

I would now like to deal with the point of order raised on November 25 by the hon. Leader of the Opposition relating to Government Motion No. 9, standing in the name of the Minister of the Environment.

The hon. member argued that the motion calling upon the government to ratify the Kyoto protocol on climate change was out of order and should not be received by the Chair.

I would like to thank the hon. Leader of the Opposition for raising the matter, the hon. Leader of the Government in the House of Commons, the hon. Parliamentary Secretary to the Minister of Public Works and Government Services, the right hon. member for Calgary Centre, the hon. member for Fraser Valley and the hon. member for Kootenay--Columbia for their contributions on this matter.

The hon. Leader of the Opposition in raising the matter argued that it was both a requirement of international law and established Canadian practice for the government not to ratify a treaty that required legislation for its implementation until the legislation itself had been passed by this House. He claimed that in order for the Kyoto protocol to be implemented, enabling legislation must first be passed by Parliament, followed by ratification. He therefore asked the Chair to consider the motion out of order and to remove it from the Order Paper.

There is in my view one fundamental issue that needs to be addressed in the case before us: Is there anything in Canadian parliamentary procedure or practice to require that the motion before the House be preceded by enabling legislation? Put another way, in the absence of enabling legislation, must the Speaker find that the motion is not in order?

I have examined with great care the arguments raised by the hon. Leader of the Opposition in this regard and wish to make the following points.

First, it is the view of the Chair that the intent of the motion put by the Minister of the Environment is clearly not in and of itself a ratification of the Kyoto protocol. The power of ratification lies with the Crown, not with Parliament nor with this House. Rather the motion allows for debate in this House on the issue of ratification of the Kyoto protocol.

The adoption of this motion would constitute a show of support for the government to move forward to ratify and implement the agreement.

As has been pointed out in some of the arguments made by members over the course of the debate, it is one of the prerogatives of the Crown to make treaties without the necessity of parliamentary approval. As R. McGregor Dawson explains on page 205 of the Government of Canada :

Parliament may be consulted and even asked to approve international agreements and treaties, but this is largely a matter of convenience and political strategy: the actual ratification is purely an executive act.

There is no legal or constitutional requirement for parliamentary approval of ratification of international agreements. The government could choose however to table an agreement in the House. It may also choose to move resolutions in the Commons and the Senate to seek approval for such an agreement. The government has a third option: to seek approval from the House to introduce enabling legislation to change Canada's statutes in order to implement the agreement. It is on the latter point that I will focus my comments.

The hon. Leader of the Opposition argues that all necessary legislation to implement the terms of a treaty should be in place prior to ratification. A study of past events would suggest that there may be treaties that actually need no legislation for their implementation. It is also possible that the Canadian government signs a treaty and never ratifies it or ratifies a treaty and later decides not to implement it for whatever reason. The essential point here is that treaty ratification is an executive action, a prerogative of the Crown. It is not conditional on Parliament first adopting implementing legislation.

A review of House records shows that the House, by resolution, approved the 1965 Auto Pact between Canada and the United States without first seeing implementing legislation. It may be the case that a treaty, whether or not already ratified by the government, requires legislation if it is to be implemented as a matter of Canadian domestic law. In this regard the Canada-U.S. Free Trade Agreement of 1988 and the North American Free Trade Agreement of 1993, came before the House as appendices to implementing legislation. The bills in each case stated that the Government of Canada had already entered into the free trade agreements. The title of each bill indicated that the bill was to “implement” the free trade agreement. Each implementing bill contained provisions amending the federal laws of Canada so as to give effect to the free trade agreement already entered into and attached to each bill. There was no indication in these bills that the government was seeking parliamentary approval of the treaties in order to ratify them.

The issue is whether implementing legislation must be adopted before a treaty is ratified. This does not appear to be a rule of procedure or a practice of this House.

To illustrate with another example, during the second session of the 36th Parliament, the House and the Senate passed Bill C-19, enabling legislation which was required to enact or implement Canada's obligations under the treaty entitled the “Rome Statute of the International Criminal Court”. The bill listed new offences under the Criminal Code and amended our extradition and mutual assistance legislation.

As I noted previously, many international agreements do not require enabling legislation. Enabling or implementing legislation is required only when an agreement necessitates amendments to Canadian statute law. Of the more than 1,400 international agreements entered into by Canada from 1928 to 1978, only 111 required enabling legislation and of these 47 dealt with taxation matters. From 1979 to 1986 another 500 agreements were entered into and of these only 33 required legislation.

It is also worth noting that the United Nations Framework Convention on Climate Change, adopted at Rio de Janeiro in 1992, was signed by a minister and ratified by Canada, without any enabling legislation.

When the government last week tabled its plan to implement the Kyoto protocol, it did not include as part of its package any enabling legislation. One can only assume that the government, through consultations with its legal advisers across the relevant departments, has determined that no enabling legislation is necessary at this time.

I join with many of my predecessors in pointing out that it is not part of the Speaker's mandate to comment on points of law. In a ruling delivered on April 9, 1991, Speaker Fraser stated:

The Speaker has no role in interpreting matters of either a constitutional or legal nature.

This principle is clearly outlined as well in the 4th edition of Bourinot at page 180, which states:

The Speaker...will not give a decision upon a constitutional question, nor decide a question of law, though the same be raised on a point of order or privilege.

It is not up to the Speaker to rule on the constitutionality or legality of measures before the House. The Chair cannot assume that the Kyoto protocol will require implementing legislation. Perhaps it will. At the moment, the House is being asked to consider a resolution calling upon the government to ratify the treaty. If members object to this resolution being before the House when no implementing legislation has been adopted, this might be argued in the debate on the resolution and taken into account when the time comes to vote on the resolution.

While the hon. Leader of the Opposition has raised an interesting point concerning the motion currently before the House, the Chair must conclude that Canadian practice does not support his premise that the ratification of all international treaties necessitates the prior passage of enabling legislation. Accordingly, I must conclude that the motion of the Minister of the Environment is properly before the House.

[Joe Clark, Progressive Conservative, Calgary Centre, AB]

Mr. Speaker, I listened very carefully to your ruling. As I understand it, in quick summary of its major elements, the precedents say that the requirement of enabling legislation does not apply to all treaties but that when it does apply certain rules of the House are then put into effect. You subsequently said that you have come to the conclusion, since no enabling legislation has been presented, that the government has consulted its law officers and that there is no enabling legislation necessary at this time.

I draw the Speaker's attention to the statement made formerly in debate, in question period, in the other place, when the leader of the government in the other place said some weeks ago that there would be implementing legislation with respect to this treaty introduced in the early spring. I think she said only the early spring. She did not specify a date. However she was categoric about the fact that there would be enabling legislation. She was categoric about the fact that this is a ratification that requires enabling legislation.

If the Speaker is ruling that the Leader of the Opposition's motion does not apply because there is not a requirement for enabling legislation, then that argument is undercut by the words of the government's representative, the government's leader in the other place. I would ask for clarification on that fact.

It seems to me that her statement makes the case quite clearly that this is a ratification of which enabling legislation is, without any doubt, a consequence.

[The Deputy Speaker]

Respectfully to the hon. member for Calgary Centre on his intervention, I believe my ruling deals with the matter quite adequately. I would encourage the member, and others who might have the same keen interest, to obtain a copy of my ruling from the table. I would hope and I believe that upon closer scrutiny he will find that those concerns have been addressed in the ruling.

I will only repeat in part a very short few lines from the ruling. It states:

There is no legal or constitutional requirement for parliamentary approval of ratification of international agreements. The government could choose however to table an agreement in the House.

I know the hon. member for Calgary Centre was not trying to draw the Chair into a debate over the ruling. The Chair will leave that matter as it is and will now call for orders of the day.

The hon. member for Calgary Centre very briefly.

[Joe Clark, Progressive Conservative, Calgary Centre, AB]

Mr. Speaker, I simply want to reserve my right, after I have taken the opportunity, as you have suggested, to read the ruling, to raise the matter if I then believe it is worth raising.

[The Deputy Speaker]

Those rights are always available to members at all times.

Tax Conventions Implementation Act, 2002

[Pierre Pettigrew, Liberal, for the Minister of Finance]

moved that Bill S-2, an act to implement an agreement, conventions and protocols concluded between Canada and Kuwait, Mongolia, the United Arab Emirates, Moldova, Norway, Belgium and Italy for the avoidance of double taxation and the prevention of fiscal evasion and to amend the enacted text of three tax treaties, be read the third time and passed.

[Bryon Wilfert, Liberal, Parliamentary Secretary to the Minister of Finance]

Mr. Speaker, I rise today to speak to the third reading of Bill S-2, the Tax Conventions Implementation Act, 2002. The legislation would enact tax treaties that Canada has recently concluded with seven countries.

As hon. members know, Canada's economy relies significantly on international trade. In fact, Canada's exports account for more than 40% of our annual GDP. What is more, Canada's economic wealth depends on direct foreign investment to Canada as well as inflows of information, capital and technology.

Tax treaties impact on the Canadian economy, particularly because they help facilitate international trade and investment by improving the tax landscape as it related to cross-border dealings.

This is significant because Canada's economy is likely to become more intertwined in the world economy. Fortunately, Canada is well positioned in that it currently has over 75 tax treaties in force with other countries. Passage of the bill will of course see the number increase.

Canada benefits substantially from having tax treaties in force with other countries. Our tax treaties, for example, assure us of how Canadians will be taxed abroad. At the same time, they assure our treaty partners of how their residents will be treated here in Canada.

On the flip side, tax treaties do not impose tax, nor do they generally restrict countries from taxing their own residents as they see fit under their domestic laws. Rather, tax treaties pay attention to setting out the rules under which one country can tax the income of a resident of another country.

When considering the treaties contained in this bill, it is important to know that the absence of a tax treaty makes unrelieved double taxation a real possibility. Unrelieved double taxation occurs when a taxpayer who is a resident of one country earns income in another and both countries exercise their right to tax the income without offering any form of relief in respect of the foreign tax paid.

Taxation of the same item of income twice without relief is understandably a situation that produces unfair results and which can give rise to adverse economic impacts.

The bill legislates seven tax treaties. The new treaties with Kuwait, Moldova, Mongolia and the United Arab Emirates are the first comprehensive tax treaties Canada has ever signed with these four countries.

In addition, our tax treaties with Belgium, Italy and Norway are updated to ensure that our bilateral tax arrangements are consistent with current Canadian tax policy.

Enacting these seven treaties will provide taxpayers and businesses in Canada and these countries with more predictable and equitable tax results in their cross-border dealings.

Canada's domestic law, like that of most countries, contains provisions that provide relief from double taxation. Our tax treaties give taxpayers the added comfort that Canada and its treaty partners will not depart from providing the relief from double taxation that they have, quite frankly, come to expect.

To alleviate the potential for double taxation, the treaties resort to one of two general methods. They either grant the exclusive right to tax certain income to the country where the taxpayer resides, or the taxing right is shared, but the country of residence is required to eliminate double taxation by providing relief for the tax paid in the other country.

For example, Canada will have the exclusive right to tax the employment income of a Canadian resident employed by a Canadian company who is sent on a short term assignment, say for three months, to any one of the seven treaty countries in the bill.

If, on the other hand, the same person is employed abroad for a longer period of time, such as a year, then the source country can also tax the employment income, and Canada must credit the tax paid in the other country against the tax otherwise payable here on the income.

Beyond the basic commitment to relieve double taxation, the treaties in the bill foster cooperation and establish other important mutual understandings as to how each tax regime would interface with Canada's system and vice versa.

In this vein, a short discussion of how the treaties in the bill affect the rates of withholding tax is warranted. Each treaty establishes limits on the amount of withholding tax that could be levied in respect of certain payments. In all cases where maximum rates of withholding tax are set out in Canadian tax treaties, they are always established at a rate lower than the 25% rate provided under our domestic law.

Withholding taxes apply to interest, dividend, royalty and other types of payments that Canadian residents make to non-residents. For example, a maximum withholding tax rate of 15% would be levied on portfolio dividends paid to non-residents under each treaty in the bill. There would also be a maximum withholding tax rate as low as 5% on dividends paid by subsidiaries to their parent companies.

With respect to interest and royalty payments, each treaty would cap the maximum withholding tax at 10%.

As for periodic pension payments, the maximum rate would be set at 15% for all countries, except that, in the case of Belgium and the United Arab Emirates, no cap has been established. Without tax treaties in place, Canada could tax these particular payments at the general 25% rate, as set out under the Income Tax Act.

Like those that have come before them, the tax treaties contained in the bill are also designed to encourage cooperation between tax authorities in Canada and the treaty countries to prevent fiscal evasion. These treaties would prove to be an important tool in protecting Canada's tax base as they would allow for consultations and exchange of information between our revenue authorities and their counterparts in the seven countries. The tax authorities would be able to deal directly with each other to solve international transfer pricing issues, to reach satisfactory solutions to concerns raised by taxpayers, to complete audits, and to engage in other discussions aimed at improving tax administration.

I would also point out that the new treaty with Norway contains an assistance in collection article that would provide for the mutual assistance in the collection of taxes. Canada has similar arrangements already in place with the United States, the Netherlands and Germany.

In closing, let me summarize some of the benefits for taxpayers and businesses alike that would ensue with the passage of this bill.

Canada would be assured as to how Canadians would be taxed in the seven countries included in the bill. At the same time, these countries would be assured as to how their residents would be treated here.

In addition, the bill provides measures that would facilitate trade and investment, promote certainty and stability, and produce a better business climate between Canada and these countries.

I encourage all hon. members to pass the bill without delay.