Debates of Feb. 7th, 2005

Department of International Trade Act

[Some hon. members]

Agreed.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Madam Speaker, in speaking to Bill C-31, an act to establish the Department of International Trade, I would like to start by expressing my concern about the need for this division into two sectors.

In 1982 we integrated Canada's trade commissioner service into the then department of external affairs. At that time we had the integration of trade policy with our external affairs policy, foreign affairs, including our commitment to human rights. It took about 15 years under both the Conservative and Liberal regimes to actually get that integration working well. It did take some time but everyone does believe now, and comments from very qualified observers have indicated, that integrated relationship has now worked. Subsequent to finally getting it right, we are now looking at splitting them into two separate ministries. It does not make a whole lot of sense.

In the Speech from the Throne there was a comment from the Prime Minister, “Just as Canada's domestic and international policies must work in concert, so too must our defence, diplomacy, development and trade efforts work in concert”.

Subsequent to that there is Bill C-31 which will actually divide the two ministries. Therefore we are looking at less concert between those two divisions and those two important thrusts of Canadian foreign policy rather than more. Concerns have been raised from a variety of sources around this approach.

Bill Clark, a former ambassador in several senior postings, has said that many observers are wondering why this change is happening. He added that it is questionable whether a good open discussion was held before this bill was presented to the House. That was in the January/February 2005 issue of Diplomat & International Canada .

The Canadian Retired Heads of Mission Association, RHOMA, a group that could have provided very important information, a needed neutral perspective on this bill, has not been consulted. In fact the bill has come under criticism from that association as well.

This bill has been brought forward and those who should have been consulted are criticizing it. Many observers are wondering why this is happening at all because it does not make a lot of sense.

This is what is to be found in the bill and in the decision that is being proposed in the House of Commons. But this move is unjustified, because it contradicts what has been said in the throne speech.

It is hard to imagine why we should separate these two aspects of our foreign policy, international trade and foreign affairs.

Jeffrey Simpson wrote a column. I would like to read part of it into the record:

New governments like things that are, well, new. Newness and a political desire to be different often blind them to reality. Foreign affairs and international trade, joined together in one department in 1982, had their problems, but none had much to do with the fact of being together. Rather, their problems largely arose from a systematic dilution...of the assets needed to protect Canada's interests and project its values through diplomacy, defence and aid. Money, not structure, was the fundamental problem. New governments, however, are sometimes tempted to seek the wrong solution for the wrong problem, because it creates the impression of action, newness, fresh approaches. Empty action can sometimes camouflage a discouraging reality.

Mr. Simpson added that it is not possible, in the real world, to separate trade from foreign policy. When the trade minister complains about the lack of legal protection for investment, a trade matter, he is also raising a political question about how China views its obligations as a member of the international community. He concluded by saying:

Stripped of responsibility for trade, deprived of control over foreign aid, tussling with defence, bowing to other agencies for national security, helpless with immigration, and now subservient to central agencies for Canada-U.S. relations, Foreign Affairs is trying to determine what's left and how to do their job. So Foreign Affairs will soon announce another internal reorganization to do foreign policy better--which, of course, it cannot do now that international trade has gone away.

That was in the Globe and Mail just a couple of weeks ago.

This is the difficulty that we are encountering. We have a bill that is being put forward, that is being criticized by those who know best in the community. At the same time we do not see adequate justification for this bill.

Madam Speaker, I will conclude my remarks at our next sitting.

A motion to adjourn the House under Standing Order 38 deemed to have been moved.

[Paul Crête, Bloc, Rivière-Du-Loup—Montmagny, QC]

Madam Speaker, I spoke in this House on October 21, 2004, when the purchase of Noranda Inc. by a Chinese company was a threat, without the federal government being truly prepared to intervene and without it having adopted an approach to reviewing or analyzing such cases, which reflect the new reality.

Back then, we talked, among other things, about human rights, but we had also talked about the security of supply. In fact, China is now a world power. It is seeking massive investments, particularly in the area of natural resources. With regard to steel, oil and gas or any other natural resource, China wants to ensure that it will be able to supply its massive economy, which is growing by leaps and bounds. We are talking about 8%, 9% or 10% economic growth per year over the past few years, a trend that will continue in the future.

Back then, I called on the Minister of Industry to see if he would take human rights into consideration with regard to his position and his analysis.

Since that time, things have calmed down somewhat. Now, Noranda is negotiating with Minmetals as well as with other groups. Still, the question remains the same. The minister made statements saying he was preparing to propose amendments to the investment act to modernize it, to make it more practical, efficient and effective, which would enable him to take positions that would be clear and would make it clear to countries that wanted to buy from us in this sector in what way their investments would be managed and in what conditions they could expect sales to be finalized.

I have just come out of a meeting with Canadian manufacturers and exporters. They have a very dynamic association that aims to ensure that our export market and our trade in the new international market will develop in the most favourable conditions.

They also want the government to make the rules of the game public as soon as possible. This is really a supplementary question I am asking the department's representative, the parliamentary secretary. Is the federal government going to make up its mind to propose legislation on the topic of foreign investment? The legislation must be dusted off and reviewed. In the end, we might have an appropriate tool to manage our natural resources.

We can see it in practical terms in the petroleum, mining and steel sectors. We can even see it with respect to water. We must be better equipped than we are now in order to face such demands. These demands may come to us from China or other developing countries. It is as if we were still using an old recipe, while the entire working environment has changed.

Is the federal government going to suggest a new recipe, a new way of doing things? Is it going to consult the public and the economic stakeholders in order to create foreign investment legislation that corresponds to 21st century reality?

[Jerry Pickard, Liberal, Parliamentary Secretary to the Minister of Industry]

Madam Speaker, we can all agree that foreign direct investment is an important part of the Canadian economy.

Foreign direct investment helps Canadians participate in the global economy. We benefit as foreign firms bring their knowledge, abilities, and increased productivity, efficiency and technical development. Of course, foreign direct investment increases the economy of Canada. All of this means the creation of higher quality jobs, higher quality wages, and that Canadians will maintain the highest standards of living in the world.

Canada faces intense international competition to attract foreign direct investment because of the advantages that it brings. It is our job to ensure we create and maintain a positive environment that gives the message to the rest of the world that Canada is a great place to do business.

Investment flows both in and out of Canada, and this too benefits Canada. Canadian companies have in fact been quite active in acquiring foreign firms. In 2003 the flow of foreign direct investment into Canada reached $358 billion, while the flow of Canadian direct investment abroad reached $399 billion. Also, according to Statistics Canada, for the period 1997 to 2002, although foreign companies acquired 345 Canadian firms, Canadian companies acquired 447 foreign companies valued at $124 billion.

This being said, let me assure the hon. members of the House that, in the Investment Canada Act, Canada has a mechanism in place to review significant acquisitions of Canadian enterprises by foreign companies.

Although the confidentiality provisions of the act do not permit me to comment on a specific transaction, generally the acquisition of a Canadian business by a World Trade Organization member enterprise involving assets in excess of $237 million is subject to review under the act. In order to obtain approval from the Minister of Industry, the minister responsible for the act, an acquisition by a foreign enterprise must demonstrate a net benefit to Canada.

The act lists the factors considered in the determination of net benefit. These include: the effect of the investment on the economy, productivity, industrial efficiency, product innovation and competition, participation by Canadians, compatibility with economic and cultural policies, and contribution to Canada's ability to compete in world markets.

Under the act it is not just a simple yes or no decision. Under the Investment Canada Act, we have the power to demand enforceable undertakings from the investor to shape the final deal so that it provides net benefit to Canada. I can assure every member of the House that every application that comes to Canada will be closely observed and monitored by the Government of Canada.

As part of the review process, the minister consults with other federal government departments, the provinces, Canadian businesses and all those who are affected. Canada wants and needs foreign investment. I can assure the House that acquisitions by foreign investors are only approved where, on balance, they demonstrate a net benefit to Canada.

[Paul Crête, Bloc, Rivière-Du-Loup—Montmagny, QC]

Madam Speaker, I appreciated the information given us by the Parliamentary Secretary to the Minister of Industry on how the present legislation works. At last the Minister of Industry has announced that the legislation would be revised and that he wanted certain criteria, some important additional information, added.

The parliamentary secretary has clearly explained how applications are handled at the present time. There are some aspects that work very well, but there are others that relate to the new economic reality. For example, we are part of a global market, and each time we authorize a foreign country to invest here—one like China, which has a highly developed governmental approach—would it not be appropriate to be able to go and evaluate how the workers in these companies in China or wherever are treated, what kind of work they do, what their working conditions are, what the environmental conditions are like? Aspects like that are not hindrances to foreign investment, but they do specify the rules within which we are prepared to operate.

I must admit that I am somewhat surprised about something, and I will ask the Parliamentary Secretary to the Minister of Industry about it. Has he just said that the minister has given up on his wish to review the legislation and has decided to operate under the current law, because the Minmetals business has quietened down? But are there not other situations where proactive action would be required, and do we not need to act now to come up with a new legislative framework for new investments?

[Jerry Pickard, Liberal, Chatham-Kent—Essex, ON]

Madam Speaker, Canada is very concerned about foreign investment. We ensure that under the act we are protected. Acquisitions by foreign investors are only approved when they demonstrate a net benefit to Canada, and only after a thorough review has been performed.

The situation where a foreign investor fails to live up to the commitments under the Investment Canada Act, the minister has the power to demand compliance and commitment. There is absolutely no question that this Canadian government makes certain that investment coming into Canada is allowed. The government also ensures that it will protect Canadians and Canadian companies where it needs to.

[The Acting Speaker (Hon. Jean Augustine)]

The motion to adjourn the House is now deemed to have been adopted. Accordingly, the House stands adjourned until tomorrow at 10 a.m. pursuant to Standing Order 24(1).

(The House adjourned at 6:41 p.m.)