Proceedings of the Standing Senate Committee on
Agriculture and
Forestry
Issue 2 - Evidence
OTTAWA, Thursday, December 11, 1997
The Standing Senate Committee on Agriculture and Forestry met this day at 9:09 a.m. to study the present state and future of agriculture in Canada (NAFTA fast-track proposition).
Senator Leonard J. Gustafson (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, on our agenda this morning we have discussions on trade, including what fast-track trade would mean to Canadian agriculture and forestry. We have with us this morning Mr. Michael Leir and Mr. Phil Douglas.
My understanding is that Mr. Leir will give us a run down on fast-track trade possibilities and what that would mean, and trade in general. We will begin with a statement and then we will go to questions later on.
Mr. Leir, the floor is yours.
Mr. Michael Leir, Director General, United States Bureau, Department of Foreign Affairs and International Trade: Mr. Chairman, I would like to provide the committee with a brief overview on fast-track authority being sought by the U.S. administration and why it is important for trade liberalization world-wide. My colleague will address issues related to agriculture itself.
Overall, Mr. Chairman, we are hopeful that the President of the United States will succeed in developing a bipartisan package on fast track that Congress will pass before the Summit of the Americas in Santiago in April. As such, an important message would be sent to the world that the United States will play a leadership role in liberalizing trade. However, the delay in any fast-track negotiating authority would not defer us from pursuing our own trade policy agenda.
Canada is better served by a system based on rules rather than power to provide the certainty and predictability that a precondition for long-term business planning requires. Guaranteed access to markets sufficiently large to permit economies of scale and dynamic efficiencies and expansion of export and investment markets are prerequisites for commitments to investment in plant, equipment, services, and production that generate jobs. Agriculture and agri-food processing is very much part of that equation.
Canadian trade policy reflects certain basic goals: promoting continuous improvement in quality and precision and expansion of the coverage of international rules governing trade and investment; seeking guaranteed access to the U.S. and other foreign markets; and ensuring that Canada can continue to exercise its policy choices.
At the end of the Uruguay Round, participants agreed on a work program that includes negotiations in agriculture beginning in 1999. Member states are also expected to begin new negotiations on services by the year 2000. Review of agreements on standards or technical barriers to trade, on sanitary measures, on such customs procedures as valuation and rules of origin and on procurement have also begun. As well, the recent conclusion of negotiations on telecommunications services and a commitment to conclude financial service talks this year are underway.
At Singapore last December, ministers added a work program on trade and competition, on trade and investment, and on transparency in government procurement. By doing so, they have now put into place all the elements of a work program to address the full range of trade-related issues affecting international business. By the turn of the century, new WTO negotiations are therefore in a position to begin. Those negotiations will test the resolve and commitment of governments, but it is our expectation that the momentum for liberalized trade will continue and that the multilateral trading system will be up to that challenge.
As you are well aware, appropriate fast track authority is central to the United States advancing its trade policy agenda. However, on November 10, President Clinton asked the House of Representatives to postpone its scheduled vote on fast track when it became clear that there were insufficient votes on side.
Several factors worked against the administration's efforts to have the draft legislation passed, not the least of which was a series of delays in presenting the actual bill to Capitol Hill. It is now widely accepted that the administration waited until too late to transmit a draft bill to Capitol Hill and that the White House expended the greatest effort only in the last weeks leading up to the expected vote.
A previous attempt to renew fast track authority failed in 1994. That failure was a key reason why the business community in the United States was slow to sign up to the new drive for fast track. Associations and chambers of commerce, and various other businesses, had mobilized their memberships in 1994 and found themselves out in front when Washington retreated. This time, they were much more cautious.
In contrast, opposition to fast track was high profile and focused, led in particular by organized labour. Labour and environmental groups were still upset about their loss over NAFTA. Opponents began their campaign early, while supporters of fast track waited to see the draft language of the administration bill. As a result, supporters found themselves on the defensive from the start.
As well as difficulties of a Democratic administration facing a Republican controlled Congress, both parties in the United States were divided on the issue of the fast track and on the merits of trade liberalization. House Democrats, many of whom looked to labour interests for support in the upcoming 1998 elections, became the toughest sell for the administration. Furthermore, to add to the complexity, House Democratic Leader Richard Gephardt is expected to run for the Democratic nomination in 2000, as is Vice-President Gore, and Mr. Gephardt came out in opposition to the administration's position.
In the last days of the administration lobbying, fast track became entangled in a debate over funding for family planning, and the administration's refusal to yield may have cost them further crucial votes.
The administration is now reviewing its strategic position but has indicated that it intends to seek authority once Congress returns after the recess. Questions are now being raised as to what form a revised proposal might take. Furthermore, the administration will also have to develop a strategy that engages the president in convincing Americans outside Washington of the importance to the United States of fast track and trade liberalization.
The top trade priorities for the U.S. administration, once given fast track authority, would likely be to attempt to reach an agreement with Chile, to start FTA negotiations in Santiago, and to prepare for the built-in WTO agenda, especially in agriculture for 1999.
Canada believes that fast track authority is vital for continued trade liberalization world-wide and particularly in the western hemisphere in the run-up to the launch of the FTAA. The continued delay in fast track negotiating authority limits the U.S.'s ability to fully participate in moving the trade agenda forward expeditiously.
FTAA negotiations could begin without fast track, that is clear. After all, the Uruguay Round of negotiations went for three and-a-half years before an administration headed into fast track. However, within the hemisphere, some countries would be reluctant to offer serious concessions and enter into serious negotiations if they thought deals they had struck could be renegotiated by U.S. Congress without the fast track authority.
Globally, the absence of fast track does not completely tie U.S. hands to continue trade liberalization. The current negotiations on financial services and the implementation of the WTO basic agreement on telecommunications will proceed. Besides FTAA, though, APEC and the commitment to begin negotiations on the WTO could potentially slow down. The absence of fast track does not affect Canada's trade policy agenda. While we have a strong preference for the administration to obtain fast track, it is not an impediment to advancing important trade policy objectives, as our negotiation of the Chile Free Trade Agreement demonstrated recently.
If the administration were unsuccessful next spring, we would review where Canada could continue to make progress on the agenda, whether with MERCOSUR countries or elsewhere. As you well know, Prime Minister Chrétien and the Minister of International Trade will be in Latin America on a Team Canada trade mission in January and they will be reinforcing our relationship with the MERCOSUR countries in addition to the business-to-business ventures that will be signed.
In closing, Mr. Chairman, we believe that while the U.S. administration's recent setback in obtaining fast track negotiating authority may affect the pace on which a ruled-based global liberalizing trading order is advanced, it does not change the importance or the necessity, nor Canada's commitment to liberalized trade.
The Chairman: You might remember that Mr. Douglas was with us on the trip to Washington last February. Honourable senators, Mr. Douglas will address us and then we will go to questions.
Mr. Phil Douglas, Deputy Director, Canada-U.S. Trade Policy, Western Hemisphere Division, Market and Industry Services Branch, Department of Agriculture and Agri-Food Canada: Mr. Chairman, I understand the committee would probably prefer to ask questions than to have me give a long introduction, so I would like to confine my remarks to a few key considerations and, of course, I welcome questions.
As Mr. Leir has indicated, there is some question as to whether the current version of the fast track legislation that is still in Congress would remain as it is or whether it might be modified. Be that as it may, at the moment, the main provisions that are of interest to agriculture are with respect to the tariff-cutting authority that would be given to the president, and to the process for congressional consideration, as well as the negotiating mandate that would be given to the administration for future trade agreements.
On tariff-cutting authority, the Congress would give the president authority to eliminate tariffs under 5 per cent across the board and to reduce higher tariffs by up to 50 per cent. That would be authority that would be given to the president; he would not have to return to Congress to implement tariff cuts of those magnitudes.
For anything beyond that, and for any agreements related to non-tariff measures, there is an elaborate process that would be put in place under the legislation that would require the administration to consult with Congress prior to, during, and just before concluding negotiations, and that would also commit Congress to enact necessary legislation on a straight "yes" or "no" vote within certain defined time limits.
All of the parameters around those various processes and procedures are subject to change, so I am not sure that it would be terribly productive at this point to go into too much detail on that aspect until the legislation is finally passed.
At the moment, the objectives specifically set out for agriculture in the proposed U.S. legislation aim to achieve, on an expedited basis, more open and fair conditions for trade in agricultural commodities.
The issues that they cite specifically are market access issues, tariffs, the administration of tariff-rate quotas, support measures, whether it is domestic support or export-subsidy measures, obtaining improved and better rules on state trading enterprises -- and they include a reference in the legislation to obtaining improved price transparency -- obtaining better rules for products generated by biotechnology, and ensuring that the rules related to sanitary and phyto-sanitary measures are maintained and effective. That is the nub of the negotiating mandate that the administration would carry into any future trade agreement negotiations.
In terms of immediate impacts on Canadian agriculture, until there is a new negotiation that is concluded, Canada-U.S. trade relations continue to be governed by the WTO and by the NAFTA, which means that in effect -- I think it is three weeks today -- essentially all our tariffs will be eliminated on both sides of the border, the exception being, of course, tariff-rate quotas that were negotiated in the context of the Uruguay Round on both sides of the border. Whether in the absence or presence of fast track, Canada-U.S. trade relations continue to be governed by existing trade agreements.
The other element in the fast track process that has been rather interesting to observe is that in the process of negotiations between the administration and members of Congress, the administration has undertaken some commitments for action. Some of those do or could have implications for Canada. The administration has indicated, for example, that it would want to discuss with Canada improvements in statistics on beef and cattle production and trade. As well, USTR Charlene Barshefsky has written a letter to the senator from Maine indicating that the United States will seek to discuss with us the question of ministerial exemptions under the Canadian Agriculture Products Act for importation of potatoes in bulk.
Ms Barshefsky has also written a letter to Congressman Pomeroy from North Dakota in which she indicated that she would seek an annual audit of Canadian Wheat Board pricing of durum sales into the U.S. consistent with Canada's FTA undertakings. The USTR has also indicated that if the United States were to find evidence of pricing practices by the Canadian Wheat Board which it found to be offensive, they would seek to enter into negotiations with Canada on those practices; and if the negotiations were not successful, they would consider taking action consistent with trade law.
Those are the major commitments that we are aware of at this time, Mr. Chairman. We have not been approached by the United States on any of those issues. Certainly, some of the letters we have seen can lead to all kinds of interpretations as to what might or might not have been meant. We will need to wait and see what the Americans ask us. Of course, we will take a position that is consistent with the defence of our interests.
The Chairman: Mr. Douglas, you said that the tariffs come off in three weeks. Do you think that they will come right off or will they continue the way they have been going until negotiations can be achieved?
Mr. Douglas: As between Canada and the United States, tariffs are governed by the bilateral Free Trade Agreement which came into effect in 1989. This coming January will be the last step in the phase-in of the tariff elimination. Under that agreement, all tariffs will be eliminated.
The exceptions to which I referred were a limited number of tariff items which were negotiated in the Uruguay Round in the context of tariffication of Article 11 quantitative restrictions, on our side, and in the context, on the U.S. side, of tariffication of measures in support of their sugar and sugar-containing product items which had been under quota as well. Those are fairly limited exceptions.
Within the tariff quota, quantities where tariff quotas do apply, our bilateral trade will be exempt of tariffs but there is an over-quota tariff that would apply.
Senator Spivak: First of all, I do not know whether you have made a really convincing case, from what you have said, about why Canada should be so interested in fast track. I say that in the context of the idea now that regional agreements are so important, as I thought that the WTO agreement would be more in our interest.
I make this comment because, recently, there has been a report put out by the Environment Commission which shows that, in reality, the North American Free Trade Agreement has been disastrous from the point of view of labour issues and environment. Things have not improved and the commission has had no success in influencing any adherence to it. Really, why is Canada so interested in fast tracking?
Second, why is Canada not making the environment and human rights and labour issues part of its very forceful agenda in terms of what the U.S. may or may not do? I find that surprising, looking at the European Union and the way in which they have managed their regional agreement.
Mr. Leir: On the first question, fast track would apply also to regional agreements. Indeed, this is one of the discussions that is going on in the administration at the moment. The current proposal covers fast track for WTO agreements, the built-in agenda; it also covers regional agreements, such as, perhaps, an agreement between the United States and Chile. Also, it would cover the Free Trade Agreement with the Americas, which is a regional agreement. That is the breadth and the scope of the fast track authority being sought at the moment. That issue is now being debated within the administration; that is, when they do go back in the spring with a new proposal on fast track, should it be as broad as that or should it be more focused on other particular issues.
We are really talking here about a process, that is, the extent to which there would be fast tract and to what agreements would have fast track protection. The importance to Canada of the U.S. having fast track authority is that we know that if we do enter into a particular round of negotiations, whether it is the WTO, the FTAA, or the expansion of NAFTA, once we come to an agreement with the administration, we have our deal. It does not get picked apart when it goes through the Congress because the procedures limit the ability of the Congress to amend that arrangement. Hence, we are not put in a position of having to negotiate twice.
On your second question, we are very much committed to environment and human rights. We have been active in the NAFTA commissions and we believe that they have been effective in trying to do their jobs. One can always make improvements, and that is, indeed, the purpose of the commissions, but Canada believes that each country should enforce their labour and environmental standards.
Senator Spivak: Is Canada seeking a certain level of standards, and are they going to be enforceable, or are you looking at the model of NAFTA as a toothless wonder? That is the point. I beg to differ with you, but the reports on the degree of improvement from the Environment Commission do not show improvement. They show that, indeed, there are gross violations at the border between Maquiladora and the U.S. There are still terrible things going on there, both in terms of the environment and in terms of labour. Where is your evidence that it is better?
Mr. Leir: The purpose of the side agreements was to ensure the enforcement of the labour laws and the environmental laws. I believe that is going on. There can always be a debate on whether it can be improved or strengthened and the side agreements provide the avenue on which to discuss those issues. That is, I think, the achievement of the side agreements, that you now can talk to those issues.
Senator Spivak: Is NAFTA the model you looking at or are you looking at something that has better enforcement, some sort of standard? I understand that that is the way the European Union has reached their agreements.
Mr. Leir: I am not an expert on the European Union but, of course, that is a customs union and Brussels has much greater authority to regulate cross-border situations. That, I think, is a completely different type of an agreement.
Mr. Douglas: I would add, Mr. Chairman, that with respect to the European Union, I think it would be worth looking into the extent to which the standards are applied internally, as part of the Treaty of Rome and the successor agreements to it, on one hand, and what it is seeking in terms of its relationship with the rest of the world. There may be differences in that respect. However, I am not an expert on the European Union. I do not know the answer to that.
Senator Spivak: In other words, your answer to my question is that Canada is looking at the NAFTA model in terms of environment and labour, not anything in any of the other arrangements.
Mr. Leir: We always work on our environmental agenda and that is done through a variety of other arrangements. You look to improve environmental standards around the world through environmental agreements. That is where we work to increase environmental standards on an international level around the world.
Mr. Douglas: If I might add one additional comment, Mr. Chairman. I am somewhat out of my depth but I am aware that there is within the WTO a committee that is looking at issues related to trade and the environment.
Senator Spivak: Yes, there is, but again with no enforcement powers or anything like that.
Mr. Douglas: I am not sure where their discussions are at this point, but I know there are discussions.
Senator Whelan: Could you briefly tell us what fast track really means?
Mr. Leir: I will try. Under the U.S. Constitution, the authority to enter into trade agreements actually rests with the Congress. The Congress then traditionally delegates to the administration the responsibility to negotiate those agreements. The U.S. administration goes out, negotiates a trade agreement, and brings that agreement back to the Congress for implementation, just as any other democracy does. In our system, we introduce parliamentary legislation to meet our international trade obligations.
What the Congress has done up until 20 years ago was treat that legislation like any other normal piece of legislation, which means that it is amenable to amendment, so that other countries saw agreements that they thought were negotiated being picked apart by a Congress. As a result of that, the administration, working with the Congress, adapted a procedural regime whereby the Congress voluntarily restricts its ability to amend those agreements. It is usually done through what is known as up or down votes. There is an expedited procedure to put the legislation through the Congress so that the trade legislation does not get trapped in committees and buried. Also, there are time limits. There are limitations on the ability to amend, so that Congress as a whole can only vote "yes" or "no" for the legislation. Then, together with that, there are consultative procedures that allow Congress to supervise and provide advice to the administration as those negotiations are ongoing, so that would hopefully educate the Congress such that when the administration returns with legislation, it would successfully pass.
Senator Whelan: Mr. Chairman, our witness has partly answered my question. But really, a short answer would have been: It gives them the authority to bypass the elected representatives. Under the legislation, if they do not get fast track, they have to hold public meetings to discuss it, so they bypass the elected representatives. It means the bureaucrats and others are going to tell the president what they are going to do. So my short interpretation of fast track is: Bypass the elected representatives.
Mr. Leir: I would have to disagree with you there, senator, on two counts. First, the hearing procedures still apply. There are still hearings by the committees of jurisdiction on the hill; they get their full examination.
Second, this is something that is agreed to by the Congress. All they are doing is accepting and establishing a procedure. That procedure is time-bound and they can change that at any time. That is, indeed, why they go back, at fairly regular periods, to seek renewed fast track.
Senator Whelan: Last night I watched a man on CBC . He asked: "How many know what is in this?" He had a very thick book, and it was the NAFTA. There would not be two of us around this table who would know what it is. I doubt if the majority of your people would know everything that is in that NAFTA book.
Mr. Klassen was a witness before the Foreign Affairs committee yesterday, where global trade and the WTO were discussed. He stated that Japan says that they will not negotiate anything. The door is closed on agriculture and fishery products in Japan, for example, yet in Canada we have been led to believe that that door is open.
When we talk about free trade, 80 per cent of our agricultural products always traded free in Canada, not like the United States. When our fruit and vegetables are not in production, we do not have a tariff here. The United States has a tariff 12 months of the year. I am appalled when we go to these meetings and we are continually led to believe, even by the government here, that this is global, a new enterprise. You would almost think that the people who went around the world like Marco Polo were tourists or something, and that global trade is something brand-new that we are talking about.
The thing that we are examining here is fast tracking. You are talking about the great benefits of NAFTA. I come from an area where we lost nearly 100 food processing plants because of NAFTA. With reference to the Uruguay Round, I cannot find any political party or government motion that said that we are going to negotiate to get rid of section 11 of GATT. Under GATT, food was so important, it was never supposed to be negotiated on a world system. The idea was to protect your own perishable food production system and to guarantee your consumers a supply of food.
The World Trade Organization has gone quite far in this direction. Dairy and poultry products are under supply management, and I am sure the senator from Prince Edward Island will talk about potatoes. Only big business and the United States of America take our market. Japan has said "to heck with you" to them. Why did we not we say that to them?
Mr. Douglas: Mr. Chairman, certainly there has been, since the passage of the FTA, a major restructuring of the food processing sector in Canada. I believe Mr. Gifford spoke to that issue when he was here last week. The bottom line is that whereas prior to 1989 we consistently ran bilateral trade deficits with the United States, since 1991 or 1992, we have been running bilateral trade surpluses. For 1996, the last complete year for which we updated, that trade surplus was in excess of $2 billion. The figures for 1997 suggest that the surplus will be increased again this year.
The Chairman: That $2 billion, is that just in agricultural products or are you talking about total trade?
Mr. Douglas: I am talking about agriculture and agri-food, Mr. Chairman.
Senator Whelan: Most of those products would not be traded here. Grain and pork have experienced big increases because of our 70-cent dollar. Any of us who say that they have increased because of that agreement is being dishonest because, if our dollar were at par, we would not sell them a thing.
The Chairman: I thought Senator Whelan was going to give Brian Mulroney the credit for the balance that we have in the treasury today.
Mr. Douglas: Mr. Chairman, again, we are ranging well beyond Canada-U.S. issues. My recollection, albeit limited, of the results of the Uruguay Round is that when we signed the Uruguay Round package, Japan agreed and is currently implementing some fairly significant liberalization measures, including in the red meats area.
Mr. Douglas: It is well known that they start from the negotiating position, as Senator Whelan was indicating, that they are not going to give anything up no matter what, but at the end of the day, they end up participating in the liberalization process.
Senator Whelan: Mr. Chairman, Mr. Klassen clearly stated that the door is closed. They are not going to negotiate anything on agriculture and fisheries. What I am trying to get at here is that these witnesses say this is beyond NAFTA. They brought up Uruguay, they brought up WTO; I did not. Now it goes to the MAI. There will be no need to have parliament or anything because bureaucrats and big business will run the whole thing.
Senator Callbeck: As Senator Whelan has said, yes, I am interested in potatoes. Our province grows the best potatoes in the world and we want to keep the industry.
I want to explore subsidy because every so often the farmers from Maine say that our farmers on Prince Edward Island are getting a subsidy. In 1988 in the Free Trade Agreement, there was supposed to be a definition of that developed within seven years, I believe. Where does this stand?
Mr. Douglas: Mr. Chairman, my understanding is that the process that was initiated under the FTA, in effect, got rolled into the Uruguay Round agreements and the WTO ended up defining subsidization and permissible agricultural subsidies in a clearer way than had been the case in the past.
Mr. Chairman, I do not want to prolong the discussion with Senator Whelan needlessly, but there was one point on which I would like to return, if I might.
My understanding of what the Japanese are saying right now is that they are certainly not going to enter or participate in any discussions in the WTO, that the mandate in the WTO is to initiate negotiations in 1999 and not a second before. Clearly, they are not willing to contemplate any changes prior to that, but all countries agreed when we signed on to the Uruguay Round package that there would be new negotiations in the WTO in 1999.
Senator Whelan: You had better talk to Mr. Klassen then because it was my understanding from what he said that the Japanese are ready to negotiate on other things but that they are not ready to negotiate agriculture and fisheries.
Senator Callbeck: Mr. Chairman, I come back to the subsidy. Is there a definition that has been developed yet or not? Anytime something comes up on Prince Edward Island, there is always great confusion as to whether or not this is really defined. I know that when the government contributes in any way to a potato processing plant, or whatever, then there is a big uproar from the farmers down in Maine. There have been various opinions on this.
Mr. Douglas: Mr. Chairman, I would like to apologize to Senator Callbeck for a rather incomplete answer because I wanted to come back to Senator Whelan's question at the same time. The rest of my answer slipped my mind.
What I should have added is that in the WTO, there have been three sets of definitions, if you will. First of all, there has been a clarification of the definition of export subsidies, that is subsidies contingent upon exportation. For the first time, WTO countries have agreed to limit their export subsidies. That definition is certainly a clarification over the situation that existed previously.
The second and perhaps more innovative aspect is that the WTO agreed to define what has come to be referred to as a "green box" of types of support measures or subsidies which are deemed not to be trade distorting and therefore deemed not to be subject to countervailing duties. There is a fairly elaborate definition of the criteria for green box programs or subsidies in the WTO. We could certainly provide that to you if you wish.
The final and perhaps most innovative part of the WTO agreement is that countries also agreed on means of measuring support to agriculture outside of what is green and outside of the export subsidies and have undertaken commitments to reduce that level of support. Those commitments were based on average expenditures or the value of programs in 1986-1988. At the moment, for other non-trade reasons, we are well below our commitments with respect to what we are allowed to do under the WTO. There has been some considerable clarification of what an allowable or green box subsidy is. There has also been an undertaking as to the extent to which we would support agriculture. Not only Canada but all of the countries who are signatories to the WTO have undertaken those commitments.
Senator Callbeck: Could I have a copy then so I could see on paper what constitutes a subsidy?
Mr. Douglas: Certainly.
Senator Callbeck: You mentioned that there would be several issues that the U.S. administration would want to discuss with Canada. I believe the second one you mentioned was potatoes. Can you elaborate on that?
Mr. Douglas: All I can say, senator, is that Charlene Barshefsky has written to Senator Collins in Maine. The letter refers, to use Ms Barshefsky's words, to Canada's regulations governing inter-provincial and import shipments of potatoes for repackaging and processing. It refers to administerial exemptions and notes that U.S. exporters object to the manner in which the system operates and indicates that USTR Ms Barshefsky will engage Canadian officials in bilateral talks no later than March 1998.
We have not received any approach pursuant to that letter, so I am not in a position to speculate as to what that means. We will find out when they come to talk to us.
Senator Hays: Mr. Chairman, I wanted to explore a bit more what Canada should do in the face of what I hear you saying is the American position that it is unlikely that fast track is going to be possible for the administration until after the next presidential election. You might use Chile as an example. There was no accession of Chile to the NAFTA but we have added them on for our purposes. It is a good experience. What I am most interested in is what we are going to do, from your point of view. What is our strategy? Using Chile as an example, was that a good idea? Is that working? Have we had a good enough experience from that to pursue this matter further?
Mr. Leir: I would not go so far as to say that the administration will fail to get fast track. They have indicated that they want to go back in the spring and try to get it. I think that will be a challenge for them. Our hope is that they will be able to get it. I would not be as pessimistic as your comment suggests, but if they are unsuccessful, as I indicated in my comments, that should not limit our ability to proceed with our trade policy agenda. I think the Canada-Chile agreement is very much an example of that. It is a little early to say how that agreement, which has just come into force, is working but all the signs are that it is very positive. It certainly had the effect of focusing our attention on Latin America and Central America.
We are proceeding along those lines by exploring discussions with MERCOSUR on how we can strengthen our relations with them. The Prime Minister and Minister Marchi will be part of a team going down there. Also, the Prime Minister indicated that we will be opening discussions with the EFTA countries to see what we can do to liberalize our trade with them. There are, therefore, a number of initiatives that we can take in the absence of fast track.
Even if fast track were not obtained by the U.S. administration, there are still things that can be achieved in the WTO process to proceed with trade liberalization, so I do not think we would give up on that track either. Much work can be achieved of a preparatory nature. As we know from the Uruguay Round and previous rounds, these multilateral negotiations run for quite a number of years, and a lot of initial work can be done. Even if this administration were unsuccessful come spring, our expectation is that the next administration would definitely have fast track, and much work can be achieved between now and then to lay the groundwork for a round of negotiations. Hence, there are many different opportunities.
Senator Hays: Some of the signs are that it has us interested in Latin America, and so on. Are there any statistical signals, in terms of improved trade, an improved trade balance, or improved job creation, as a result of the Chile experience?
Mr. Leir: I have not seen any figures on that, Mr. Chairman. As I said, the agreement is quite new. However, a number of trade missions have gone to Chile and they have come back with very positive indications of the opportunities down there. Certainly, one of the concerns of the administration is that the tariff advantage that Canadian companies now have vis-à-vis Chile as compared to American companies has generated a great deal of concern. So there is a tariff advantage to us in those type of arrangements.
Senator Hays: Mr. Chairman, Senator Whelan referred to Mr. Klassen's comment, and while I was not there, I am sure it was a reference to the position of Japan, Korea and some other APEC countries on the nine sectors that were targeted for early voluntary sectoral liberalization, which included food and fish, but Japan, Korea and these others made it clear that they would not be able to do anything themselves.
To get back to Senator Whelan's point, what are some of the positive signs there? He is a sceptic and many share that scepticism. I will give you a chance to tell us some good news on that, if you have any.
Mr. Leir: I am not an APEC expert but I think that one of the achievements coming out of Vancouver is that they have identified a number of sectors for early discussions and conclusions, and so they have now created a process to move along that track. They have an agenda that I believe will lead to results next year. In many of these negotiations, you are often dealing with reluctant partners, but once you enter into the process, you can start moving towards results. So I think the achievements at the APEC negotiations were positive. We knew going in that there was some reluctance by those countries to take on this area but I think we made significant progress there. We will just have to continue to push that.
Senator Hays: I make the observation that it is an important trading area for us. Our second- and third-largest trading partners are Japan and China, when you include Hong Kong. If we are going to benefit, while Latin America is important to us, Asia is probably the most important area for us to target.
Mr. Leir: My references to Latin America were not to exclude Asia. On the contrary, we have been focusing a lot of our interests and activities out there. The activities of Team Canada show the importance that we attach to the APEC exercise.
The Chairman: On that subject, though, with Maple Leaf moving to Brandon, Manitoba, you have pig barns going up with export intentions on the part of the farmers being very positive. Somebody is going to get burnt very badly if Senator Whelan is right -- and I am not sure that he is -- on the market. How do you see this relating to these type of activities that are in fact practically taking place today in Saskatchewan, Alberta, and, in particular, Manitoba? A former mayor from Brandon told me that there were 14 new, large, productive hog barns going up within just a short distance of Brandon.
Mr. Douglas: Mr. Chairman, what we are seeing is the result of a number of events in the past, including concessions granted in the WTO, and market-opening measures that have taken place and are being phased in in Asia, on the one hand; on the other hand, I think some of those developments are being prompted or encouraged by the termination of the Western Grain Transportation Act, which certainly appears to have encouraged the development and growth of the livestock industry in Western Canada. That being said, there are also other events. I understand that in Chinese Taipei there was an outbreak of hog foot and mouth disease that severely curtailed exports of pork products out of Taiwan. Hence, a number of different developments are going on at the same time.
Senator Stratton: I would like to get back to the topic of fast track. You alluded to the fact that the president is going to try again. What do you think the probability is of that succeeding? I know it is a personal opinion but it is fairly critical.
Second, if he succeeds, he is obviously going to have to do some deal-making to make it succeed, particularly with labour and the environmentalists. In your view, is that taking place now, and to what degree are they going to make the deals with labour and the environmentalists to make this happen?
Mr. Leir: That is the conundrum that the administration has faced all along. On the one hand, their Democratic critics, particularly in the house, have criticized that labour and environmental interests are not being adequately reflected in the fast track proposal; on the other hand, many Republicans think that what is there is too much. The problem is trying to put together the coalition that will get them enough votes to get them through. They are now looking at the current proposal to try to determine whether they can fine-tune it to allow them to keep their Republican support and yet capture those additional Democratic votes in order to get it through.
The administration has not finished the analysis to determine whether they are going to alter the scope of the fast track. At the moment, the general feeling among leading commentators is that the administration would probably be better served by not trying to alter the scope much of the current proposal.
All of that is highly speculative; it is the views of the commentators only. But if the administration plays around too much with it, they will risk losing more Republican support than gaining Democrats. That is the debate that is going on presently, both within the administration and on Capitol Hill.
As to whether they will be successful in the spring, one never knows. They came within a dozen votes. One never knows about these things until the vote actually occurs, but the feeling is that it will be a challenge because there are several factors to consider. First, in the house in particular, all of the members are up, so the kind of political concerns that members had now are probably still going to be there in the spring when the bill comes back.
On the other hand, it was recognized that the administration just did not do a good enough selling job, and that is selling both outside the beltway and inside the beltway. The feeling is that if the president becomes engaged and takes a very active role, he can act as the chief spokesman in pushing that though. Where the situation changes slightly between now and the spring is that he has to go to Santiago for the FTAA launch in April. I think it becomes a question of prestige. Up until now, it has not been vitally important that the administration have fast track. I think it becomes more important that they have that when the president goes to the FTAA launch. So that will be playing in their own minds, too, as a factor. I think they will put it to a number of the members that you really cannot have the president go to a major international conference without the appropriate fast track authority. If, on the other hand, their assessment is that politically it is running against them, I think they will make a decision not to proceed. Having gone to the well once, they will only go again if they know they can be successful.
Senator Stratton: There is an election in the fall.
Mr. Leir: That is right.
Senator Stratton: I would think that that decreases the odds of this succeeding.
Mr. Leir: It can be a factor. That was my point regarding the president needing to become engaged and go outside the beltway to convince Americans that it is in the interest of the U.S. to have fast track' and indeed, that is an information campaign that the administration will have to engage in.
Senator Stratton: So I cannot get you to say it is 50-50 or 60-40 or 30-70?
Mr. Leir: I could say all of that, but I am only one individual. I can say that it will be an equal challenge, that they came very close this time. I think it will probably be the same kind of discussion/debate as in November.
Senator Taylor: I find it most interesting. I just got back from a business trip, not a political trip, to the Middle East. Some countries, such as Iran and Iraq, are quite interested in doing business with us agriculturally, too. I thought it was quite intriguing how our farmers and agriculture people get around. A year or so ago I went to Iran, over the disapproval of some people in government, talking about the oil industry, and who did I meet over there but neighbouring farmers selling hay and dairy cattle. Sometimes they go ahead without politicians.
I know a bit about the U.S. system. Obviously, in order to get fast track, the administration, as they always have done, makes side deals with Congress, either with the senators or representatives. In other words, the deals may not be up front; they may be underneath. They will have made a deal to support fast track provided this and this and this gets done.
I suspect you would have some moles or some good intelligence reports which might indicate what are in any of those side deals that the administration may have made, and which obviously will come back again if they go back to fast tracking, in the fields of agriculture or maybe even lumber. I am thinking mainly of Western Canada exports.
Mr. Douglas: We are aware of some deals that have entered into the public domain. I was mentioning earlier that USTR Charlene Barshefsky has written to the senator from Maine indicating her intention to pursue some issues relating to the potato trade. There is also a letter from Ms Barshefsky to North Dakota Congressman Pomeroy indicating that the USTR will be seeking to have an annual audit of Canadian Wheat Board pricing of durum on sales into the United States pursuant to the FTA, at a panel that was established under the FTA and which reported in the early 1990s, and that the USTR will also pursue other pricing issues and will pursue the general issue of rules applicable to state trading enterprises in the next round of negotiations in the World Trade Organization.
We are also aware that the administration has indicated that it will want to talk to Canada about exchanging statistical information on production and trade of cattle and beef between Canada and the U.S. I also understand that the USDA has been asked to develop a system for the voluntary labelling of U.S.-origin meat as being U.S. origin. I am not sure that we would necessarily have a complete catalogue but those are the deals of which we are aware at the moment.
Senator Taylor: A congressional shopping list.
Mr. Douglas: In effect, they are commitments by the administration to undertake actions at some point. At this moment, we have not been approached by the United States on any of those issues, so it would be highly speculative to suggest what they might mean. I think our best course is to wait until we are approached, to see exactly what it is that they would be looking for. We will then take a position on the merits of the issue.
As you were suggesting, it is possible that there are other deals, but at the moment those are the ones that we know about.
Senator Taylor: Has the environmental lobby in the U.S. been able to put on the agenda the environmental problems we are having with pork and beef production in Canada, with the question of pollution of our table waters and our sub-surface and surface waters in the west? Has the environmental lobby down there been able to get something started towards restricting some of our beef and pork exports if we do not get our environmental problems in line?
Mr. Douglas: I am not aware of any pressures of that nature, senator. In any event, if the pressure were to lead to suggestions of restricting Canadian trade, we would certainly vigorously defend our access rights to the U.S. market under both the WTO and the NAFTA.
Senator Taylor: To get the fast tracking that we seem to want, in spite of the fact that all these side deals may have been made with the Congress, is there any indication that the box is restricted to agriculture or are they swapping some things in agriculture for, say, lumbering or manufacturing? After all, the administration has more than agriculture on its plate.
Mr. Leir: Most of the arrangements to encourage votes actually have nothing to do with trade. The administration goes in with a very long shopping list and often talks about infrastructure development in districts. Their deals are not necessarily restricted to trade issues at all. They cover a wide range of things, most of which are of no interest to foreign countries because they are purely domestic.
The Chairman: Regarding the ability to pay, we heard that Iraq, for instance, owes the Canadian Wheat Board $400 million and that there is about $1 billion that the Wheat Board has owing that they have not been able to collect. Certainly, this whole global trade situation has to come down somewhere in terms of the country's ability to pay.
As an active farmer myself, I know that the prices we are getting for our products, in comparison to the cost of production, are being squeezed, it seems to me, tighter every year. Unless we can get some money for these products, agricultural food is going to be in major difficulty. The farmers are now moving with the freight rate problems, where it take the value of a third of a bushel of wheat just to get it to market, and they are saying we have to get into some added value somewhere where we can make a dollar. I would like to hear your comments on that whole area. It would seem to me that the ability to pay in the global market is very important. Russia at one time was a major buyer of Canadian product, especially grain. It seems that that market has dried up. Where are we at in this area?
Mr. Douglas: Mr. Chairman, I am not quite sure how to answer your question because I am not in a position to know a lot of the factual elements necessary to reply. They go well beyond Canada-U.S. trade.
Certainly, in principle, if countries are not in a position to pay their debts, then obviously there is a problem. It seems to me that the way countries earn the foreign exchange to be able to pay off their debts is by exporting themselves, by trading. Trade liberalization presumably should help to facilitate rather than hinder a country's ability to pay for international transactions.
That is about the only observation I could make.
The Chairman: Mr. Leir, do you care to comment on that?
Mr. Leir: Obviously, whenever Canadian business does business overseas, they have to be very cognizant of the creditworthiness of who they are dealing with. I think as our companies become more attuned to international circumstances and the circumstances in particular countries, they will be very conscious of the creditworthiness of the partners with whom they are entering into arrangements.
Senator Whelan: You mentioned sanitary rules. In my world travels, Mr. Chairman, I never saw a meat packing plant, a poultry packing plant, a food processing plant that came even close to what we demanded of our own people in Canada. When we are talking about importing products like butteroil from New Zealand and sugar from Mexico being put together in Mexico and then shipped through the United States into Canada, how do we guarantee the safety of those and other food products under this new free movement of trade? How do we guarantee the safety for the consumers?
Mr. Douglas: Mr. Chairman, the requirement under both NAFTA and the WTO on SPS measures or sanitary measures is that we have science-based measures, so that the restrictions that we impose are scientifically justifiable, that they represent an acceptable -- acceptable to us -- level of risk of importation.
As Senator Whelan knows, we have a very strong science capacity in this country. Our sanitary and phyto-sanitary measures are science-based and are consistent with the WTO and NAFTA. There are ongoing programs to ensure the safety of our food imports. Those programs are administered by the Canadian Food Inspection Agency and I understand that they seem to be working quite well.
Senator Whelan: I have some strong reservations when I read what an inspector says about the Windsor border regarding a truckload of some kind of nuts from Iraq. He found them polluted so he rejected them, so they left and crossed the border in Sarnia and got through. That truck went on to Toronto. They only inspect the odd truck. I have strong reservations on inspections and the safety of our food.
I have another area of concern, Mr. Chairman. This committee should make sure that people understand that our broiler chickens are not raised in pens. Those chickens they eat in McDonald's run at large. Everybody thinks they are locked up in a little pen and that we force-feed them. We make sure that the barns are cleaned and sanitized once that group of broilers is moved out. They have to be empty for four days, I believe.
In the United States, they just run another bunch of chickens in on the manure and feed them antibiotics so they do not get sick. By the time the year is over, they may be running around on three feet of manure. They clean the barns out once a year. When we talk about sanitation, I know that Tyson and these multi-nationals do not give a damn about what happens to the consumer or anybody else. We get chickens full of antibiotics coming in from the United States, while ours are fed differently and they are raised differently here. People talk of this great equalization factor. We are going to have chickens raised the same way as in the United States. Is that not what we are trying to do with our program, trying to make ours like theirs so they can move easier?
Mr. Douglas: Mr. Chairman, my understanding of our obligations under the SPS agreements, whether in the WTO or the NAFTA, is that we have retained the capacity to define our level of risk, to define what is acceptable practice in Canada, and to enforce that at the border.
The purpose of those agreements is to prevent technical regulations of that order being used as an excuse to prohibit trade. There is a requirement in the trade agreements that our norms and standards be scientifically justifiable. As Senator Whelan has indicated, we have, in the area he was referring to as well as in many other areas, different standards from other countries, and we enforce those at the border.
With respect to meat, my understanding is that before a foreign plant can export meat product to Canada, it must be inspected by Canadian inspectors and it must be demonstrated to be able to meet acceptable requirements to Canada.
Senator Whelan: If I understand correctly the way we operate in Canada, we can supersede any fast track there is in the world, because we do not have to go to Parliament. The Prime Minister and the Minister of International Trade can make all kinds of deals without saying a thing to you within the legislation that we have now; is that not right? We are in a much better position than the President of the United States. We claim that we are a great parliamentary democracy but we can just run ahead with these programs like we did in Chile. We made the agreements, the legislation was passed, and so on. The average parliamentarian in the Senate or the House did not know a thing about it. A few bureaucrats went down and made a deal. The minister made a big speech saying that we got a new deal with Chile. To me, that is not democracy as I was taught it. In the World Trade Organization or the MAI, they are a big step from moving in that direction.
I would suggest that we get the man I saw on TV -- I cannot remember his name -- who held the book up on NAFTA and asked: How many people know what is in this book?
Senator Taylor: It was not Maude Barlow, was it?
Senator Whelan: She was on the program, too. She has been right more than she has been wrong, although I am not a great defender of hers. Why do we not have somebody like that come before this committee and lay it on the line? Can our steering committee not have a meeting? The steering committee is here right now.
The Chairman: We will leave that to the steering committee.
Senator Whelan: Is it not true that we do not have to worry about Congress or the Senate with any deals we make?
Mr. Leir: The legislation for the Chile agreement was handled and passed by Parliament, so there was full parliamentary examination of the legislation.
Senator Whelan: What bill was that?
Mr. Leir: The Canada-Chile Free Trade Agreement. I cannot give you the number of the bill.
The Chairman: I have a question, Mr. Leir, on the fast track. What products do you think will affect Canadians the most?
Senator Taylor: Potatoes and wheat sound like they are on the block.
The Chairman: That is what I am wondering. The durum movement across the border right now is a major point of discussion, as is pricing and so on. Is there going to be any change there for Canadian farmers if the Americans bring the fast track in?
Mr. Leir: The fast track procedures themselves are just a series of procedures. The reference to particular commitments that the administration may or may not have given are just exactly that. As Mr. Douglas indicated, we have not heard from the United States on any of these, so it is premature to see what it actually adds up to. When we do hear, if and when we hear from them, we will do an assessment on what our position will be. Clearly, that will be vigorously protecting our interest in these areas, as we do at any other time.
The Americans have raised these types of issues with us previously. No matter what is happening on fast track or any other trade policy issues, it is the normal give and take in trade when there are all these particular sectors that may or may not feel aggrieved.
The Chairman: We have the phasing out of the tariffs, which was alluded to earlier. We also have the rules of the NAFTA which are phasing out certain aspects of the marketing board concept. What kind of an impact is this going to have on Canada in a year or two from now?
Mr. Douglas: I am sorry, Mr. Chairman, I must confess that I am a bit puzzled because I am not aware of anything in NAFTA that would require us to phase out marketing boards or change marketing boards. My recollection is that when Mr. Gifford was here last week he indicated that those kinds of decisions are particular decisions that we make within Canada. How we market our products is basically our decision.
The Chairman: I will give you a practical example of what is happening, and I will use Saskatchewan. I understand that the Saskatchewan chicken producers are saying that they have to change their thinking. They must change their direction. They have to get into this export market. Is that going to take major changes?
In talking to a very knowledgeable person from Saskatchewan, I understand that even the Romanow government is considering looking at this. It is holding discussions on it right now because of the earlier point that you made in regards to freight, added value, quotas, and so on. They are beginning to explore other avenues. They are asking whether they are missing something here, whether they are going to be left out of the global economy.
Mr. Douglas: Mr. Chairman, if I could hark back once again to my boss, Mr. Gifford, when he was here last week, I think he mentioned that there are certainly many changes taking place in the supply management area domestically. Those are decisions that are being made by producers as they assess their options in where they want to go. Once again, there is nothing in NAFTA that would force us to abandon supply management or marketing boards. I think Mr. Gifford was certainly much more eloquent than I could be in his affirmation that Canada will continue to affirm its right to have state trading enterprise involved in trading as is currently provided in the WTO.
The Chairman: I will put it another way: Are there any restrictions? What are the restrictions in the marketing board acts, if you will, or in NAFTA, that will keep a producer in Saskatchewan from exercising an opportunity to access a global market? Can he do it? Can a producer in Saskatchewan say, "I am going to start producing chickens. I am going to put in a plant. I am going to bring capital together, and we are going to produce X-number of chickens and access the global market"? Can he do it?
Mr. Douglas: He can do it in a way that is consistent with Canadian law.
Senator Taylor: To his share of the quota.
Mr. Douglas: That is right, whatever the law applies. That is a domestic issue, Mr. Chairman.
The Chairman: If he has no quota, his hands are tied.
Mr. Douglas: If I could just back up, I would make it a very clear and essential distinction between, on the one hand, what a producer might want to do, the fact that he has to operate within Canadian law, and on the other hand, what NAFTA requires, provide for, or constrains. On the latter point, clearly, NAFTA does not require us to eliminate any marketing boards. It is silent on that issue. We do have, as we had pre-1989, marketing boards in a number of areas. We have a single desk for Canadian wheat and barley. There is nothing in NAFTA or the WTO that would require that to be changed.
Clearly, as Mr. Gifford was suggesting when he was here, if producers come to a different view as to what the best marketing arrangements are in terms of their interests and want to change those arrangements, then that is a decision for them to make. Presumably, if that requires some change in domestic law, they would ensure that that would happen. However, that is an issue separate from our trade agreement obligations.
The Chairman: Then you would have to come to the conclusion that a province like Saskatchewan's hands are tied even though their freight rates have been changed. They now are faced with at least a third of the cost of a bushel of wheat or barley being used up in just getting it to the global market. They have no choice to move to added value because they cannot.
Senator Taylor: Mr. Chairman, I think you are mixing apples and oranges here. It is provincial governments that decide the marketing board. In Alberta, for instance, there is a quota system for broilers and fryers and all the different categories of poultry. I do not know what the Province of Saskatchewan does but I think producer quotas and producer management of production is more in the hands of the provincial government.
The Chairman: I do not know the answer to that.
Senator Taylor: NAFTA does not have any rules on that. But any chickens that come out of Saskatchewan can enter the North American market, if farmers decide to go to a free market. If they decide to go to a quota market like Alberta does, so be it, is it; but that is Romanow's problem, not a federal government problem.
The Chairman: Are you saying then, Senator Taylor, that Saskatchewan can move independently provincially outside for export?
Senator Taylor: Yes, for export. There is a national consideration, though. It is up to the province how they spread that national thing. When it comes to export, they can almost do whatever they want. Am I wrong?
The Chairman: It was my understanding that the dairy industry, for example, has to operate according to quotas allotted to the province. If you do not have any quota, there is no opportunity for expansion.
Senator Taylor: I do not know who would buy our dairy exports, because they are priced so high; but if for some reason Canadian milk had more vitamins than anything else and we could invade markets around the world, I think we could do that.
The Chairman: My understanding is that these are the discussions that are going on with producers now. Is it more beneficial for us to move to a capacity of production that will give us an opportunity to challenge the global market or are we better to stay with the rules that we have had for 25 years and just feed our own people? That is the question.
Senator Taylor: Yes, I think that is the question, but the provinces have become very involved in that.
Senator Whelan: Mr. Chairman, the current system includes a two-price system for dairy products and they are getting into trouble with that. So much production is allowed for export.
I want to go back to this system of trying to get fast track. The United States uses a system of blackmail, pay-offs, and so on, to get members to comply. The say, "If you do not do this, we will not build you that bridge" and that type of thing. The Canadian Parliament never has to do that.
Senator Taylor: We never move the repair depots for our airlines. We never buy our military equipment where the votes are, anything like that.
Senator Whelan: Not like they do in the United States, not to get this legislation through like they are trying to do. They are trying to get the legislation through so they are making commitments to people. Senators and congressmen are subject to having a scheduled project in their riding cut off, et cetera. Then they make deals on the Canadian wheat, poultry and dairy sectors, saying that they are going to rectify those issues.
What many congressmen are saying is that the president lied to them on fast track the last time because he did not follow up on what he was going to do. Now they do not believe him. I doubt, Mr. Chairman, if they will ever get fast track through with the present administration.
You made the statement that a new administration comes in. President Clinton has a little over two years to go. If a new administration comes in, they may get it. There is no guarantee of that either. It may be another Democratic administration. It may be stronger against world trade.
I saw the results of a survey in the United States which asked if people knew what NAFTA meant; less than 5 per cent of the people had any idea what NAFTA meant. They did not know a thing about it. Some of the labour people come on strong, that type of thing.
Mr. Leir: Various administrations have had fast track, going back to President Ford, and each of those fast tracks has been for a fixed period of time and they have lapsed. Sometimes they have taken a little time to get it back. I believe, and this is speculation, of course, that either the Clinton administration or a successor administration will get fast track in some form or other. It is just a question of when.
It has become recognized as being extremely important for the United States in trying to engage foreign countries in trade negotiations. Many countries around the world, recognizing the nature of the U.S. political system, have said that they cannot enter into negotiations, cannot complete negotiations, unless they have an assurance that the agreements that they have agreed to will, indeed, be implemented as negotiated. I think there is general recognition both internationally and domestically as to why fast track is of value.
Senator Whelan: I have done research on this previously, when section 11 was changed at Uruguay, where we gave away dairy at that time and it was the start of giving away supply management. You say it is going to be guaranteed. There are not many farmers who believe that because of what is happening with the tariffs. They know they are high.
No political party of any stripe in Canada asked for it to be changed, no farm organization asked for it to be changed, no government asked for it to be changed, but it was changed. This is why I am so suspicious.
I attended a lot of world organizations meetings. I remember an OECD meeting where, on the first day of that meeting, I found a press release dated three days hence. Needless to say, I raised hell.
The Minister of Agriculture for France at that time was a man by the name of Chirac. He was on my side because we were fighting the U.S.'s attempts to run the food world. The only market they can really get for dairy and poultry is the 30 million people who are their northern neighbours. Do we adhere to their wishes and wants?
We are saying that we are concerned about fast track. Our legislation can surpass anything on the Indianapolis Speedway with the way we can operate separately. We can bring in products from Chile and these other places where they have cheap labour and re-export those products into the United States. We can make a lot of money.
The Chairman: It would appear to me that it is fair to say that there are opportunities and access to that tremendous American market, whether it is in grain or beef, or other products; that Canadians are accessing that market to a benefit of a balance of trade that is quite superior to what it had been in years past. It would be in our best interest to co-operate. We are moving into a North American situation, as well as a global situation, which we have to recognize. To underbid each other on either side of the border, whether it is grain or whatever, is not in the best interests of either the Canadians or the Americans. I think we have to recognize that.
Senator Whelan: You and I can have a debate about this, but if we talking about trade, the sector that is the biggest trading factor and provides one out of seven jobs in Canada is not free trade but the Auto Pact, the auto industry. We make twice as many cars as we need in Canada; we export the balance, and we continue to do that. In contrast to grain price, the average price of an automobile has increased 40 per cent since 1994. Imagine if the price of eggs or chickens increased to that extent. Eggs and chicken have maintained the most stable price of anything that we consume in Canada under the dairy and the poultry industries.
Senator Taylor: Mr. Chairman, you should make sure that you thank the witnesses for coming here to listen to our debate.
The Chairman: Senator Taylor, I was about to ask Mr. Leir and Mr. Douglas if they have any closing remarks they would like to make before we draw this committee meeting to a close.
Mr. Leir: No, thank you, Mr. Chairman.
Mr. Douglas: I am debating whether I really should say this, Mr. Chairman. To follow up on one of Senator Whelan's comments, my recollection of the end period of the Uruguay Round negotiations is that we did, indeed, continue to press very hard for what had been, and what was, the Canadian position for the strengthening and clarification of Article 11. At the end of the day, my understanding is that we were alone in a crowd of 100-plus countries; that the United States, the European Union, Japan, and any of the other GATT member countries were opposed to our position.
I think it is useful to keep that in the back of our minds. I am sure that Senator Whelan and I could probably prolong this discussion for some length of time. I was not hoping to induce that. I thought it would be useful to remind ourselves of that fact.
Senator Whelan: Mr. Chairman, Mr. Douglas has raised another point of argument here. They always quote that number of 100-plus countries. Some of these countries are so poor, they could not export a chicken.
When you quote Japan, I really become excited because, as Senator Taylor pointed out, it is one of our biggest trading partners. They said that there is no way we are going to sell a chicken or any food product into their country. That is protected. They want to protect their own producers because they have gone through a period of starvation before.
The Chairman: Thank you, Mr. Douglas and Mr. Leir, for a very informative morning.
The committee adjourned.