Proceedings of the Standing Senate Committee on
Transport and
Communications
Issue 31 - Evidence
OTTAWA, Tuesday, May 25, 1999
The Standing Senate Committee on Transport and Communications, to which was referred Bill C-55, respecting advertising services supplied by foreign periodical publishers, met this day at 3:37 p.m. to give consideration to the bill.
Senator Marie-P. Poulin (Chairman) in the Chair.
[English]
The Chairman: Honourable senators, as we continue our study of Bill C-55, today we will hear from the Minister of International Trade, the Honourable Sergio Marchi, and Mr. John Gero from the Department of International Trade.
As you know, we have been hearing from all stakeholders who have an interest in Bill C-55. This bill has captured much public attention. We have heard over 30 witnesses from the magazine industry, the cultural milieu, the legal profession, the lumber industry, the manufacturing industry, as well as from trade specialists.
I received a letter from the Deputy Minister from the Department of International Trade requesting that we delay hearing the presentation from the minister and from representatives of the department since they were otherwise occupied.
However, today we welcome Minister Marchi. I believe you have an opening presentation, after which we will move to questions.
The Honourable Sergio Marchi, Minister of International Trade: Let me say at the very outset how much I appreciate this opportunity to come before your committee today to discuss the international trade side of the Bill C-55 coin. I have followed, with interest, your deliberations on Bill C-55 and the different perspectives put forward by the various witnesses who appeared before your committee.
[Translation]
I have also read with care the comments made to this committee by my colleague the Minister of Canadian Heritage, Ms Sheila Copps. I share her view that there is nothing inconsistent or incompatible about a vigorous and open trade policy and an equally strong defence of one's own culture.
[English]
Let there be no doubt: This government stands behind Bill C-55, and we are determined to see it passed into law. I will quickly review how we came to be where we are now.
Honourable senators will know that, back in 1997, the World Trade Organization found certain of Canada's policies with respect to our publishing industry to be inconsistent with our obligations under international trade rules. As a result, we responded quickly and in full to that ruling by removing the four specific measures that were found to be inconsistent, according to the panel decision. The WTO and, of course, the United States recognized the steps that we took to comply with that WTO ruling.
In October of last year, the Minister of Heritage introduced Bill C-55 which proposes that only Canadian periodical publishers will be able to sell advertising services to Canadian advertisers directed primarily at the Canadian marketplace. We believe that Bill C-55 complies with the WTO ruling, as it is a measure aimed at restricting access to certain services and not goods. Under the WTO regime, we are not obliged to provide national treatment for advertising services. The United States, however, did not share our view.
[Translation]
And so we began a series of discussions aimed at resolving our differences. Since January, a series of meetings have been held between Canadian and US officials, and I have been in touch with trade representative Charlene Barshefsky on an ongoing basis.
[English]
While honourable senators will no doubt appreciate that I cannot go into the details of those discussions this afternoon, I will say that we have made substantial progress. I expect that we will come to a meeting of minds very soon.
I can say, however, that both sides have approached this issue in good faith, for neither side desires a trade war. We are, after all, each other's best customers. More than $1.5 billion in trade crosses our border every day. Indeed, it is the world's biggest and best trading partnership. That is why we have sought to resolve these issues through dialogue at the table. That is how neighbours, friends, and trading partners should do things.
We should also remember that, in the past, Canada and the United States have settled many disputes in our commercial relationship through dialogue. Indeed, that has been the rule, not the exception. Most recently, for example, we were able to work out our differences over actions taken by some mid-western states in the area of agriculture and commodities.
Therefore, we saw our present discussion with respect to Bill C-55 with the United States as an opportunity to advance our cultural objectives as a government and as a nation while, at the same time, avoiding a potentially damaging confrontation on the trade front.
This desire to resolve disputes through discussion is not only a matter of preference between friends, it is also a practical approach between commercial partners, for the consequences of a trade war would be immediate, its resolution protracted, and its consequences harmful.
If the United States did take trade action against those industries that are reported targets -- such as steel, apparel, plastics and lumber -- there would be a chilling effect on new export contracts and investments in those key sectors across our country.
Certainly, while we would have the right to challenge the United States under the NAFTA dispute settlement procedures, until a decision was rendered by a panel, Canadian exporters would suffer, any expansion plans would be put on hold, and Canadian jobs would be imperilled.
For all these reasons, the Government of Canada has preferred a negotiated solution -- not a solution at any price, or one that plays one sector in Canadian society off against another but, rather, a mutually satisfactory and balanced agreement. Indeed, I remain confident that such a way will be found.
However, it has been Canada's long-held and consistent position throughout that, should an agreement elude us, the matter should be referred to the WTO for an independent review, after all, that is one of the reasons that we have multilateral institutions like the WTO. As an institution, the rules of the WTO need to be respected and, more importantly, its dispute settlement mechanism needs to be the ultimate court of appeal for any two differing parties. It is a question of using it rather than abusing it.
In addition, this overall dispute has highlighted the need for clear rules on culture and trade at the multilateral level. Since my appointment to this job by the Prime Minister, I have maintained that the WTO needs to address this gap which is of increasing interest to a growing number of member nations.
As we approach the launching of a new round at the WTO by the end of this year, I believe, as an international community, we should give more thoughtful consideration to how we can develop a more certain and secure framework for promoting and protecting cultural industries within the global trading system. Some would argue that that is difficult, and I would agree. However, would it be more difficult than squaring the circle on trade and environment or trade and labour? I would point to the situation respecting agriculture this year which will severely test member countries of the WTO. Simply because it may be difficult, does not mean that this goal should not be pursued. I believe that increasingly more countries will share this goal.
As to Bill C-55, let me be clear: We will not make a deal with the United States at any price. There are lines that this government is not prepared to cross, concessions that we are not prepared to make, and principles that we are not prepared to abandon. Culture is too important and fundamental to our character as a nation. The fact is that culture need not be sacrificed to commercial considerations. The two can constructively co-exist.
[Translation]
Now I know that some would argue that the assertion of cultural integrity is inconsistent with our strong advocacy of open trade policies and that to support freer trade is to allow unrestricted access to our market.
[English]
While I understand these arguments, I do not share them. In the remainder of my time with you this afternoon, I should like to explain why I believe that freer trade and the assertion of our culture are, indeed, compatible.
First, the argument that freer trade means no restrictions is patently false. Every trade agreement contains exceptions. Every country has particular interests it seeks to defend. While economic theory may suggest an all-or-nothing approach, the world in which we all live operates somewhat differently.
A corollary of the all-or-nothing argument is that globalization is about sameness, that we must abandon our differences if we are to trade with one another, or that, because we trade with one another, we become more alike.
Honourable senators, my view of globalization is not one in which everyone wears Nike shoes, drinks Pepsi or Coke, and shops at the Gap. Trade liberalization does not mean sameness or assimilation, it means that countries can and should promote their uniqueness. It means that a country does not surrender its sovereignty over that which is most basic to it, namely, its culture, simply by virtue of it having entered into a free trade agreement in the first place. I have said many times in many different parts of the world that a country should not have to sell its soul in order to sell its goods.
These then are the principles that have guided our conduct on the issue of split-run magazines. These are the principles that Canadians can expect us to honour in whatever arrangement is finally reached.
As I close, let me say this: As Minister of International Trade, I fully understand and support the benefits that freer trade brings to our country. Canadians recognize that our economic success as a country is inextricably linked to our ability to venture beyond our borders in search of new opportunities. However, in the context of the Bill C-55 discussions, we must also recall that it was an American poet, Robert Frost, who observed that: "Good fences make good neighbors." Madam chair, I am not referring to fences to keep our neighbours out but, rather, fences to preserve that which is within.
Senator Lynch-Staunton: I would welcome both you Mr. Minister and Mr. Gero to our committee. I am not sure whether your colleague Minister Copps would be pleased that, in your closing remarks, you quoted an American poet. She may believe that it diluted the Canadian content of your presentation.
I shall send a copy of your intervention to the former prime minister Brian Mulroney so that he may add it to his collection of your presentations.
However, I have difficulty tying that in with Bill C-55. In your third paragraph, you say:
Let there be no doubt: This government stands behind Bill C-55, and we are determined to see it passed into law.
We are determined as well, so what are we doing here? Why do we not go to clause-by-clause study and pass it into law? Are you here to ask us to pass it into law or to not pass it into law at this stage?
Mr. Marchi: Senator, you can send the speech to whomever you want, and Mr. Mulroney is certainly a good starting point.
You will also recall that, during his leadership campaign, Mr. Mulroney swore never to have a free trade agreement, so Mr. Crosbie was certainly consistent. I know that they will get together and set the record straight.
As to your role, I will not tell this committee what it should do or how it should do it. I was invited by this committee to speak on the trade angle of Bill C-55. I have been happy to do that; I have made my presentation. It is up to you to decide where to go from here. It is to be hoped that you will move to clause-by-clause consideration very soon.
Senator Lynch-Staunton: In speaking for the government, you say that you stand behind Bill C-55 and are determined to see it passed into law. Are you satisfied that Bill C-55 should be passed into law as presently drafted and that, therefore, we should get on with it?
Mr. Marchi: Since January, we have been in discussions with the Americans regarding bridging the differences between our two interpretations. That is Plan A. Obviously, we prefer to settle matters through negotiations rather than threatening sectors in a trade war -- where no one wins. We prefer a negotiated settlement, which will keep the magazine industry vibrant in the future while at the same time avoiding a nasty dispute.
If an arrangement could be arrived at, which, with modifications, would meet that test, I would accept modifications to the bill. However, the basic bill certainly remains.
Senator Lynch-Staunton: Bill C-55 has gone through three readings in the House of Commons and is now at the committee stage in the Senate, having gone through two readings here. Nevertheless, it appears that amendments to the bill are being negotiated in another country. We are waiting for the Americans to tell us what they would like to see in the bill to avoid a trade war. Your colleague, the Minister of Canadian Heritage, made a very eloquent plea on behalf of Canadian culture and identity about the necessity of Canadian stories being told to Canadians by Canadians, and we bought into that. Although we believe that there are flaws in the bill, when it comes to the protection of our identity, which is so fragile, we are all one. We have gone this far with the bill and in your text you say that you stand behind the bill. Yet, now you say that you are in discussions with the Americans and that something may happen.
Why do we not adjourn this meeting, wait for the amendments to come, then reconvene and get on with the serious part of our business. This is a farce. You are wasting our time and your time, which is probably even more valuable. What are we doing here? If you want the bill passed, after you leave I will propose that we go into clause-by-clause consideration and pass it. If it is the wish of the government to hold off because negotiations have made substantial progress and you expect a meeting of the minds very soon, why do we not adjourn, wait for the amendments, reconvene, and carry on with our work?
I do not understand the process you are making us go through. As I have said before, it is demeaning to the entire parliamentary process.
The Chairman: Senator Lynch-Staunton, I believe that your question is to the Chair because it is a question of process. We have all agreed to hear today the Honourable Sergio Marchi, Minister for International Trade. If you wish, after the minister leaves we can discuss process.
Senator Lynch-Staunton: Chairman, my statement to the minister is that if the government wishes us to pass this bill quickly, as is, we are ready to move to clause-by-clause consideration. If he believes that the negotiations that are currently taking place in Washington will lead to amendments that will not destroy the main thrust of the bill, we are willing to wait for them. I should like him to tell us what should be our course of action.
Our side wants to get on with this bill, and I am sure that there are many on the other side who want to get on with it as well. If the government believes that we can improve the bill, I suggest that we suspend our hearings and carry on when the government comes back with the appropriate amendments.
I want direction from you, Mr. Minister.
Mr. Marchi: Senator, I have been candid in my brief presentation to you. You either accept that candour or not. That is entirely your right.
Second, the process of the Senate committee is more your business than mine. I was invited to speak to the trade aspect of the bill, and that is what I am trying to do, in good faith.
Third, I disagree with the preamble to your question. This bill is not being negotiated in another country. You know that as well as I. The talks have taken place in both capitals. We are not awaiting American direction on what to do with the bill. As I stated in my presentation, there is a government bottom line, not a Department of Canadian Heritage or a Department of International Trade bottom line. We have negotiated in good faith, creatively and assertively. If we get an arrangement that meets the threshold, that will be fine. If we do not get such an arrangement, there will be no deal.
Senator Lynch-Staunton: Have you told the Americans that there is a deadline for these discussions after which we must proceed with the bill or accept amendments? How long will the government entertain these discussions? Surely Canada is putting its foot down and saying that we are serious about Bill C-55, that we will see what we can do if they have problems with it, but on our terms, not American terms.
From what I hear, the Americans are gaining ground on this. I do not know what we are getting in return. That is my interpretation. You have said that you do not want to go into the details of the discussions, and I respect that, but surely Canada can set a deadline, saying that Parliament will adjourn sometime in June and we want this bill passed by then.
If the government is serious about this bill, it should tell the Americans that it will pass it, amended or unamended, by a certain date, and preferably before we adjourn for the summer recess. Can the government make that commitment or make that clear to the Americans?
Mr. Marchi: This process has gone on for a couple of years and negotiations started in January. I said at one of the last meetings between officials that we need to bring closure to these discussions. It is to be hoped that that closure will be positive. However, either way, we must have closure because of the uncertainty facing the Canadian magazine industry as well as all the other sectors facing unfair American trade threats. Ultimately, our government wants to get on with it and see whether an arrangement is possible.
Clearly, we do not have the luxury of time. We are also respectful of the fact that the bill is now before the Senate. We are cognizant of the upcoming adjournment of both houses. That has been spelled out clearly to the Americans.
I believe that we will be able to make a decision, one way or the other, in time to respect the adjournment of both the Senate and the House of Commons.
Senator Callbeck: Our committee has heard from many witnesses, including some who told us that the U.S. publishing industry is not too concerned about Bill C-55. In fact, in the November 15, 1998 edition of Folio, an American magazine which bills itself as a magazine for magazine management, it was indicated that U.S. publishers are not terribly upset with the bill. They could not entice people to go to Washington to testify about Bill C-55.
There is also other evidence which indicates that the publishing industry in the states is not concerned about Bill C-55. Some witnesses have suggested that the opposition has come from other U.S. interests.
Are your discussions in Washington to which you have referred limited solely to finding an acceptable deal for magazines?
Mr. Marchi: The interests of the American publishing industry would probably be better determined by Madam Barshevsky and others. Certainly, I do not think it is on their radar screen as much as it is on ours. That is a given. That means we do not apologize to the Americans for making this the issue we believe it is because it is important to us. For us, culture is a big arena. The magazine industry is only one subset of "culture," although it is probably one of the most vulnerable aspects of culture.
While Céline Dion can fill any stadium in the world or Margaret Atwood's books can be translated into a host of different languages, Canadian magazines are essentially for Canadians and by Canadians. They do not compete the way Time, Newsweek or Paris Match compete.
Therefore, to expand on my analogy of two radar screens, our screen probably has the bigger pulse.
Based on what we are hearing from our American counterparts -- and I take them at face value on this -- from their perspective, the interest in this has increased dramatically in the last month or so. All of a sudden, their publishing industry is taking a greater interest in the matter.
Quite apart from their interest in what happens in Canada, the Americans have an interest in what precedents are set around the world. I mentioned in my opening statement that I believe we should have rules at the WTO which clearly delineate between illegitimate and legitimate forms of cultural promotion, namely, the "go" zones and the "no-go" zones.
From the American viewpoint, culture is a business and, as such, it is treated like any other commodity. We view the situation differently.
The discussions between the two governments have only dealt with the magazine issue.
Senator Callbeck: Are you satisfied, then, that the arrangements or conditions that are being talked about would ensure a viable and strong magazine industry here in Canada?
Mr. Marchi: I believe the right agreement is there. We would only sign the right agreement. If the Americans were to force upon us an agreement that we think would make this industry unviable, then we simply would not sign it, and we would proceed to plan B which is recourse to the WTO. There is an arrangement to be had. It will be built on balance, fairness, and a sense of compromise on both sides.
Senator Forrestall: Normally, I would not have entered into this debate which involves trade, since I am usually most concerned with matters involving transport. However, I am concerned about the consequences of any agreement you may sign to certain industries such as the softwood industry. Witnesses appeared before us and talked about the consequences of the passage of this bill on their industry.
Up until now, witnesses from the government, including your colleague Minister Copps, have used the term "could" in connection with dispute settlement procedures and all of the difficulties that might come about which would cause Canadian industries to be in jeopardy or imperilled. You used the phrase, "would be imperilled." Would you care to elaborate on that, and perhaps run through the two or three which exist? It is a matter of some concern to us.
Mr. Marchi: I appreciate the concerns expressed by the industries that made representations either directly to you, senator, or through this committee, about them having to pay the price for the different perspectives the two governments take on Bill C-55. That is in part why we have been at the table so long.
I also believe we can attain a number of cultural firsts vis-à-vis a possible arrangement. Obviously, we are at the table to achieve a good arrangement which will keep the magazine industry viable. Representatives of those industries have spoken to you, as they have spoken to us. They are worried about the consequences and the fallout from any arrangement.
The Americans have told us that they will target four important sectors of our economy. They include national sectors and others which annually export, primarily to the United States, between $4 billion and $5 billion worth of products. If those products were to face barriers, then that would have national as well as a local consequences.
If the Americans were to follow through on their threats, then I would not mislead Canadians by saying that there might be no harm done. I think harm would be done. I do not think it is right that they have threatened us in this manner. That is why we have consistently reminded them that they helped build the WTO, as they did the GATT.
This is not the way for the two best trading partners in the world to be proceeding, especially when we are on the eve of launching a new round of negotiations in Seattle, Washington later this year. I agree that the impact will be serious.
It also needs to be said that the businessmen and women in these sectors have been very supportive and extremely responsible. It would have been easy and understandable for those sectors to state publicly day after day what the ramifications on their industries would be. The fact that they have not done that is not because they do not care about their industry. They, too, happen to be passionate Canadians who also believe in their culture. However, they also believe that reasonable people will come to a reasonable conclusion. They should be applauded for the way they have been quiet in their support rather than becoming animated, which would have made the situation even more complex than it already is.
Senator Forrestall: Minister, you have used the word "would." Does that arise from some meaningful awareness within your department regarding the lengthy delays? You suggest that it would have serious implications for Canadian industry, and I agree, but not only for the four sectors that are under threat. I would think there would be serious implications for virtually everything that had to do with any expansion of present exports to our largest trading partner. Did you, in appearing before the standing committee of the House of Commons, use the word "would" or "could"? In the draft of your comments, the word "could" is used but you said "would" in your testimony. I am sure you appreciate the difference between the two. Which word was used at the house committee?
The situations are entirely different. If one is problematic, then my leader is correct, we should get on with this and pass the bill. If, on the other hand, there will be serious consequences, then both the Senate and the House deserve some explanation.
Mr. Marchi: I do not want to play word games with you. I do not recall which word I used in the house committee testimony. I can certainly check and get back, through the Chair, to you.
Senator Forrestall: How did you feel at the time?
Mr. Marchi: Whether one minister says "could" have a detrimental impact and another minister, namely the Minister of International Trade, says "would," the message is pretty clear. The message is that if we get into a trade war with our biggest market, a country ten times the size of Canada, for over 85 per cent of our products, and if that superpower were abdicating rules and an independent way of arbitrating, which is in part why we have been able to do so well, initially under the FTA and then NAFTA, then of course there would be an impact. It is impossible to predict, senator, how bad it will be or how long it will last or where we go from here.
It is understandable that these sectors, and Canadians at large, are concerned. Our government has been trying to resolve this issue through dialogue rather than through threats. I think there is a consensus in the country that, if we could come to the right arrangement, we should try to avoid finding out how bad a trade war could be between our two countries.
Senator Forrestall: I will end there. What my leader has had to say is very clear and deserves our attention.
Senator Kinsella: Mr. Minister, I have three small areas to cover.
First, did the government foresee this kind of a reaction from our friends in the United States when you were examining models to deal with the magazine issue in the light of the WTO ruling? Has this file got a bit out of control? You talk about a trade war of unpredictable magnitude, and I agree that it would be devastating for the Canadian economy. Did the government foresee this unfolding in the way it has?
Mr. Marchi: There has been a cultural divide between our two countries, and this divide preceded not only the two ministers currently in charge of trade and heritage but also our government. It is fair to say that previous governments of different stripes were sensitive to that cultural divide. There has always been a healthy balance between doing what is right and sovereign and doing what is going to be right for other industries. I thought the previous administration, when they were working on the NAFTA arrangement, spent a lot of capital and currency on trying to arrange for that cultural exemption. We in the Canadian government know how deep this runs with the United States, but we were not prepared to run in the opposite direction. When the WTO ruled against us on the publishing panel, we did not squawk, we did not delay, and we did not argue. We complied. There were four different requests by the WTO and, by last summer, this government responded in full on all four fronts.
Shortly after that, the heritage minister brought in a bill, Bill C-55, which is based on advertising services and not on the goods. We believe that we are within our international rights and obligations. The Americans, while respecting our changes because of the WTO panel decision, have a different view of the issue, and that is why we have been at the table.
We know how wide the gap has been, but we know we have to try to bridge it. As we all know, 96 per cent of our trade moves every day without any problem. The last 4 per cent or 5 per cent -- trees, fish, commodities and culture -- have been the subject of problems and disagreements again and again, and we have to try to bridge the gap.
That is what we are trying to do -- from a position of strength, not a position of weakness. I believe we are close to bringing this dispute to an end. In doing so, I am hoping that we will be able to strike the right agreement so that we can start a new era, such that each country can understand better what culture means in each country.
Senator Kinsella: In your opinion, is much of the negotiation, subsequent to the introduction of this bill in Parliament, a result of the model of legislation that the government chose? It was clear in your view and the government's view that there had to be legislation. It is not clear in my mind, as I watched the progress and participated in the analysis of this bill, as to whether or not this is the best model of a bill, because we are not sure we have all the cards on the table.
That leads me to my second question. Could you not get your U.S. counterpart to agree with you to take some kind of a stated case to the WTO, presenting the model of Bill C-55, thereby getting an assessment from the WTO before we go down this road, which is causing you difficulty as minister, and which is causing a great deal of concern, not only in the cultural sector but also in these other particular industrial sectors? Was that vehicle not available? If not, should some kind of conciliatory mechanism be part of the WTO process?
Mr. Marchi: That mechanism was and is available, but it takes two to tango. I mentioned that our first recourse, given the two different takes, would be to see if we could bridge that gap in an honourable and balanced way between two friends, two allies and two partners. Failing that, we have always said to the Americans that we must have the option to go to the WTO. That is why Canada is always insistent on a rules-based, independent mechanism to break deadlocks in all our trade arrangements. Otherwise, with the size of Canada's economy, we would be far too vulnerable to the laws of the jungle. We have done exceedingly well when there are predictable rules and an independent way of arbitrating.
While the Americans have never said a final "no" to Plan B, they have not been entirely positive in recent months about the WTO. They have argued, for example, that they have lost a case to the WTO and that they have gone down that road already and are not ready to repeat the process. However, we are arguing that we have complied in full with the decision.
This is not a case of the bananas issue in the European context. We have responded in full to the complaints that were made. The bill that is before us is based on rules that were in place previously, which have been removed. At times, however, the Americans, because of the congressional pressure that they are under, feel that the WTO is extraterritorial. That is how the bananas issue between Europe and the United States blew up, namely, because the Americans went to the WTO.
We have always told the Americans that they cannot afford to take a G-1 view of the world, that they cannot afford to build multilateral institutions and then choose to use them only when it is convenient or to their purpose. We have told them that they cannot argue, in one case, that the WTO is good because it ruled in their favour but that, in another case, there is no need to go before the WTO. As the only superpower left, that is a dangerous message to be sending. The Americans must look outward and not inward. It would be a knock against a WTO institution that we are trying to build. When two parties differ, we need to use the devices of the WTO to break that logjam.
The Americans have not said "no" to that plan, but they certainly have not been enthusiastic about using it as a way out of this impasse.
Senator Kinsella:In your judgment, will Canadian culture, as expressed through magazines, be better protected by Bill C-55 as presently drafted, or will Canadian culture, as expressed through the magazines, be better protected by agreeing to the kinds of changes that your officials are negotiating and are the subject of the negotiations with our American friends?
Mr. Marchi: I said in my statement and in answer to some previous questions that I believe that an agreement can be reached between the two governments. The right agreement exists, from my perspective, for both our magazine interests as well as our national interests. I also believe that we can obtain some cultural firsts if the Americans agree with us on that particular agreement. In the long term, yes, I think the right agreement will promote the Canadian magazine industry.
As I mentioned, this has been a useful demonstration of what could happen in the event of an absence of any rules at the WTO that address the increasingly interesting area of culture. Countries who once thought that because they have a different language or a different history or a different socio-economic system they were afforded some sort of protection against their culture being eroded no longer think that way. Today, because of technology, you can literally download culture. That will push countries into thinking differently about culture.
Culture, which means the dignity of who you are and what you are, is at the heart of any country, poor or rich, north or south, big or small. The Americans can say that they have either a national interest or on a particular issue -- and I respect them for that -- but other countries, including Canada, can say, "Here is our national interest."
We do not need any lectures from the Americans on how to trade. Approximately 40 per cent of our GDP is export-driven. We trade four or five times per capita what the Americans trade. We are an outward-looking country. We know what it means to have a small economy and to go beyond our borders to look for opportunities.
What we are trying to articulate in the WTO regarding trade is that there may be some "no-go" zones with respect to culture that meet our objectives of not wanting a world that is homogeneous but, rather, a world that allows those differences to flourish. In other words, the fence will not block our friends from coming into our country but it will preserve the uniqueness that makes all countries different and special. Eventually, there will be a consensus on that. I do not know how quick and whether it will happen in the next round, but I think it will come.
Senator Stewart: I want to take up a line of thought that emerged from your answer to Senator Kinsella.
The Standing Senate Committee on Foreign Affairs is, even now, examining NATO's role in peacekeeping. One of the suggestions that has been implied in some of the testimony that we have heard is that, unfortunately, given the American structure of government, the United States is not well equipped to provide the leadership for a major security organization such as NATO. You spoke about suspicion in Washington regarding the extraterritorial competence of the World Trade Organization, and you attribute that to congressional suspicion or hostility.
One could say that there is a parallel here. On the one hand, here is a country that is trying to lead NATO, while, on the other hand, here is a country that has been very active in promoting international free trade. Yet, when we come to certain points, there is a breakdown of the specific interests within the United States. For one reason or another -- whether it is getting re-elected or representation of a particular industry, or whatever -- the leadership role of the United States becomes questionable.
Insofar as trade is concerned -- and taking this specific case as an example -- is there ground for some suspicion as to the competence of the U.S. to be the leader in a free trade world, given their system of government?
Mr. Marchi: A difference exists between the perspective of the administration and that of the Congress regarding trade and some of the other issues that you mentioned. The perspective of Congress may be somewhat lacking, as opposed the ability of America, which embodies its administration and a society that has led the world and will foreseeably lead it into the future.
When I talk about this being shaky ground for Congress, I would note that, for instance, I find it astounding that close to 10 per cent of all Congressmen and women do not own passports. They campaign as if it is a virtue. That tells me that they do not only push "America first" -- which is fine because we all push "Canada first" -- but that they are also saying "America only."
Another example is found in their debates on United Nations issues. Again, I find it astounding that someone like Jesse Helms can delay the payment of $1 billion in arrears to the United Nations by the only superpower left. In the process, around the world, goodwill worth 10 times that value melts away from the Americans.
When the Americans talk about a UN flag for use in any military action, you always hear the congressional pressures: Not under a UN general but only an American general.
I see the congressional ground as shaky. I do not say that because I want to be arrogant or superior. I just find it strange that, at a time when they are the only superpower left, their Congress can be so incredibly inward-looking. Meanwhile, they have a record economy and they lead in productivity and other measures of excellence.
I would hope that the administration can overcome that shaky ground so that America, too, can consistently believe in its multilateral institutions and know that they are not above international law. They are a part of it, and an important part.
Senator Stewart: My next question arises from the exchange between the minister and Senator Callbeck. She suggested that, at the beginning of this international dialogue, the American magazine publishers were not as aggressive as the American trade representatives. Those are not Senator Callbeck's words.
In your reply, you implied that someone in Washington, presumably the trade representative or those who work with her, regard this as a test case for relations on other topics with Canada and indeed with other countries.
Are you referring specifically to the cultural industries in other countries? You seem to imply that by your eloquent defence of Canadian cultural identity. Are there other areas where you know or expect that the United States will use the outcome of this particular incident, if they win, as a precedent?
Mr. Marchi: I was thinking exclusively of the cultural domain. I repeat that, the American administration, without telling us so in black and white, would view this as being more than a bilateral issue. One of the United States major exports around the world has consistently been American pop culture.
For them, this a test case on our relationship; that is, will we find the resolve to overcome the impasse? They see it also as a test case internationally. If they reach an agreement with Canada, what will a country such as Brazil or France say 12 months later at a WTO meeting?
Ultimately, this is also a test case for us. Are we able to pass the test and gain some firsts? I think the answer to all three questions is, "yes."
Senator Stewart: What are the implications for other countries if the United States wins? The United States is being difficult with Canada right now. Have you talked with the governments of other countries to see if they are farsighted enough to see that, in this particular instance, Canada is being targeted, but that they may be the next target? What are the French saying; what are the Japanese saying relative to this particular case setting a precedent that may be applied to themselves?
Mr. Marchi: I have had conversations with trade counterparts from a number of different countries. It is fair to say that they are certainly interested in this case. Perhaps "fascinated" would be a better description.
For the most part, they also see Canada's perspective. They recognize that this is an example of how liberalized trade, with specific rules, can allow countries of different sizes to do not only well, but also exceedingly well. I am not sure they are saying they are worried about the U.S. coming after them next, but I think they recognize the increasing importance of culture within the trade arena. They understand what is at stake internationally, and they would hope that the test case would be resolved in such a way that Canada retains its cultural sovereignty while, at the same time, retaining this great trade relationship.
There is a lot of interest in the big picture. Hopefully we can arrive at an arrangement which will render some lessons in this bilateral situation, and which will allow those lessons to be applied multilaterally so that we can know what we can or should not do.
Senator Butts: Thank you for your most helpful presentation, Minister Marchi.
You say that, in 1997, the WTO complained about our policies in the publishing industry. Was the U.S. a complainant then? Are you satisfied that Bill C-55 does not give them anything else to complain about?
Mr. Marchi: The Americans will always find a reason to complain, but that is the best and the worst of worlds. We live next to the most powerful country, but if we could choose our neighbours, we would probably choose the U.S. 10 times out of 10. By and large, things work well.
Yes, the United States was a complainant at the WTO. They initiated the WTO complaint which resulted in the panel decision, and we responded in full.
Do I believe that the Americans forever and a day will respect the arrangement? It is tough for me to predict the actions of subsequent administrations, but I am fairly confident that, if we can strike the arrangement that Canada is seeking, the Americans will respect their commitment not to take any trade remedies against the passage of Bill C-55. That must clearly be part of the arrangement.
Senator Robichaud: Thank you, minister, for your splendid presentation. Seasoned politicians know that consistency in politics consists of the art of being consistently inconsistent. I am not suggesting that you have been inconsistent. However, as a result of the dialogue taking place or after a reference to the WTO, could there be suggested amendments to the current bill?
Mr. Marchi: If we were to conclude an agreement, yes, I think amendments could be suggested to this bill.
Senator Robichaud: The reason we cannot pass the bill at the moment is that amendments could be suggested.
Mr. Marchi: I believe there has been substantial progress on the discussions related to trying to bridge the gap between the two countries rather than face the prospect of a trade war between our two countries.
Is the wait worth it? Once we have concluded the discussion about workers across this country who do not want to pay an unfair price, yes, I think the wait will be worth it.
Will there be a deal at any cost? Absolutely not. We are prepared to stand the test of time, as well as the test of our bottom line. I believe an arrangement can be agreed to between the two countries, and that may necessitate modifications. If we do not have such an arrangement, then obviously this bill will proceed as is.
Senator Kinsella: Minister Copps told us that this is the best thing since sliced bread. Obviously you do not agree with her. You think that if an agreement can be reached with the Americans on the technical side, the bill could be improved, and our trade relations with the United States could also be improved. At the same time, we will protect our cultural industries via magazines.
Mr. Marchi: I read her speech, and I am not sure she put it in those terms. It was an elegant address. We are saying the same thing.
Senator Lynch-Staunton: Mr. Minister, I am not the only one puzzled by the story of this bill. Can you help me and others understand where we go after this?
The bill was given first reading in the House of Commons in October, and the Americans protested. Talks started in January and are still going on. Why was the bill rushed through the House of Commons, knowing full well that, after the discussions, there would be amendments to the bill? Why were the amendments that have been confirmed by you -- Minister Copps called them "proposals" -- not presented in the House of Commons, where they belong? It is not for the Senate to write new legislation on such an important subject as this. It is for the elected representatives. We try to improve legislation, but we do not have to originate it. Why did you not halt the bill, wait for the proposals that would lead to amendments, integrate them into the bill, and send the whole package to the Senate? Things are being done upside down.
Mr. Marchi: I do not agree with that, senator. You are looking at this issue now with 20/20 vision.
At the start of this process, we believed in Bill C-55, and we still do. That was the response of the Minister of Heritage as a complement to the decision of the WTO. We removed certain provisions, and Ms Copps moved forward with Bill C-55 on behalf of the government. Of course we proceeded in the House of Commons.
Senator Lynch-Staunton: You agreed with Bill C-55 at the time.
Mr. Marchi: I am a member of the government, and I support a government bill. I never shy away from that.
Senator Lynch-Staunton: But you do not agree with it.
Mr. Marchi: As we proceeded in the House of Commons, the Americans clearly had a different view.
We were not prepared to stop the bill or to yank the bill. We were prepared to have the bill move through the legislative process, while at the same time opening up a dialogue with the Americans.
This debate has gone on since January, but I think there has been substantial progress. When I think of what my officials and Heritage officials reported to me and Ms Copps at our first meeting, it was clear that we needed to continue to move forward with the bill because the two sides were not even close. However, that was not reason enough to walk away and not reason enough to buckle. You need to stand your ground and not walk away from the table if you believe, at the end of the day, in what can possibly be achieved.
As we progressed through those meetings, senator, it was evident to me that the gap was being bridged. Then there were a few bumpy meetings. There were some tough meetings where I thought we went backwards, but we went back at it. As we were making that progress, the bill was moving through the House.
Someone asked why the bill was being negotiated in the United States and why we were allowing the United States to dictate the terms. I think there is a contradiction in them saying that if we knew the Americans had a problem, why did we not stop the bill? No, I think we should negotiate from a point of strength.
The bill is moving forward, and they want to talk, so let's talk. The legislative train is coming down the track. That is wise negotiating, in addition to standing up for Canada, as you advocated we should.
Senator Lynch-Staunton: I have never heard of a bill which is before one or the other house being negotiated and amendments being prepared by one of the two parties directly affected by the bill and the Senate being kept, in this case, in the dark. We have the unheard of situation of two government ministers coming to this committee within a month of each other telling us to please not push this government bill too hard. A government bill has been in front of Parliament since October. It has moved through the House of Commons, is now before the much-maligned unelected Senate, and we are told to please hold off and not do anything. We are told, "We may come back to you with something which may please our American friends." That is unheard of, minister.
Senator Robichaud: What is wrong with that?
Senator Lynch-Staunton: What is wrong with that is that we do not know what we are talking about.
I suggest to you and your colleagues, minister, that you drop the bill, forget it; that you draft a brand new bill incorporating all the proposals and agreements, and introduce it in the House of Commons. As it is, we will end up with a patchwork which may or may not respect the principle of Bill C-55.
That is my recommendation. I feel you will get a much better hearing here than if you make last-minute amendments and try to rush them through.
Mr. Marchi: With all due respect, senator, I do not share the view that yanking the bill would, somehow, have sent a message of strength. If we believe in culture and in what Ms Copps and I have said, then the bill must proceed.
There is also nothing wrong, senator, with these two countries trying to resolve what has been an impasse for many years, to be at the table, and to be progressively close to an agreement. There is nothing wrong with taking an extra month or two to get it right.
If we cannot get it right, then I suggest that the Americans do not want to respect our bottom line. If that is correct, and if Canadians believe in their bottom line, then we should proceed with the legislation and let the chips fall where they may. Before they fall, if we are getting closer, as I believe we are, and if a deal is reachable, as I believe it is, that is a win-win situation.
If we get the Americans to agree in general to Bill C-55, that is a pretty good day. If we get them to agree to content, that is a pretty good day. If we get them to agree on a number of other fronts, that is not bad, as we would say in Canada. I think that is worth the wait.
In the end, if the agreement is not on, Bill C-55 will be passed before we adjourn. What we hope to achieve is an agreement that speaks to the magazine industry as well as the other industries under threat.
Senator Lynch-Staunton: I fail to see what message of strength you will send to the Americans by saying, "We will not pass the bill until we incorporate solutions to your concerns. If that is win-win, it is win-win for the U.S.; it is not win-win for Canada.
Mr. Marchi: A loss would have been, "If you object, of course, we will withdraw the bill." We have not said that. We have said that we will not stop our legislative process.
Senator Lynch-Staunton: You are stopping it now.
Mr. Marchi: The legislative process and the bill continue. If you want to discuss a way out between two partners and allies, let us do that.
The Americans have known that we have been serious. The Canadian industry knows that. That is a point of strength.
If we withdraw something, with all due respect, we will have blinked. We are not in the business of starting to blink now, nor should we be.
Senator Lynch-Staunton: Your win-win would be to let this bill go through, give it Royal Assent, proclaim it and tell the Americans we are serious about protecting Canadian cultural identity. As it is, you are caving into them and the Canadian publishers are already on your back. Minister Copps is extraordinarily silent on this subject.
Mr. Marchi: Fifteen seconds ago, you wanted a new bill.
Senator Lynch-Staunton: I said scrap this bad bill and bring in a clean bill with the amendments. As it is, you will pretend that this one, as amended, is the original bill. You know darn well what will go into it will not do that at all.
Mr. Marchi: Senator, if we are able to get the agreement that I think we are, the end will more than justify the means.
Senator Lynch-Staunton: If you were serious about the bill, as Minister Copps was, this bill would have gone through by now and the Americans would have been challenged. If their retaliation is unlawful, there is compensation in the long run. You do not want to take the risk. Your government is abdicating.
Mr. Marchi: I am serious about the bill. We are not abdicating. We are taking our relationship seriously. If they were to move into a position of trade retaliation, we would not stand still. Ask yourself what price Canadian workers and families in these sectors across this country would be in while we argue the niceties of who is right and wrong.
Senator Lynch-Staunton: You knew that a year ago.
Mr. Marchi: Then ask yourself who would be abdicating responsibility.
Senator Callbeck: Mr. Minister, an article appeared in Business Week written by Jeffrey Garten. He was the Under Secretary of Commerce for International Trade in the first Clinton administration. He is now the Dean of Yale School of Management.
In that article, he writes about the growing international reaction to the global invasion of U.S. culture and about how that is harmful to the Americans. He writes that they should be more sensitive to that issue.
Do you think there is a growing sympathy in the United States to international concerns about culture, or is this a minority view?
Mr. Marchi: As a minister looking at the American landscape, we have miles to go before we can sleep. I do not think their constituency is prepared to accept that. That does not make it right; but it does not make it timely.
We still have work to do with the American administration and with the American public in trying to put forward why we feel passionately about some of the things we do. It is our right to feel passionately about those things. We can get along extremely well if we are able to understand each other better when we say the word "culture."
The Chairman: Mr. Minister, thank you for your presentation and for answering our questions.
Senator Kinsella: Madam chair, I move that Bill C-55 be reported without amendment.
The Chairman: Honourable senators, there is a motion on the floor.
Senator Stewart: Is this consistent with the agenda of today's meeting?
The Chairman: Yes, it is. Actually, the steering committee met 10 days ago. We were three senators at the time. We agreed that we would meet with Minister Marchi today and that we would invite Minister Copps to come on Monday and proceed to clause-by-clause next Monday.
Senator Stewart: You may not have heard my question, Madam Chair. My question is: Is Senator Kinsella's proposed motion consistent with the agenda established for this particular meeting?
The Chairman: It is not. Therefore, it is an agenda question.
Senator Stewart: If we are discussing future business of the committee, we ought to deal with that in camera.
The Chairman: Is there agreement to deal with this subject in camera?
Senator Forrestall: We then deal with the steering committee and not with everyone else, or we deal with this subject in camera and we deal with the question.
Madam Chair, you are not correct. I did not agree that we would invite Minister Copps. There was a suggestion that she wanted to come, not that I wanted to hear from her. I did not agree to it and I would not have agreed to that had anyone put that to me.
Senator Kinsella: Madam Chair, if I can be helpful to Senator Stewart.
The Chairman: We have three questions on the floor.
Senator Stewart: Following on something that Senator Forrestall said, I think he said the question of how we should proceed now should be a matter either for the steering committee or for the committee as a whole. I would have thought it was obvious that that would be a matter for the steering committee.
Senator Kinsella: To that point, Senator Stewart, at the meeting of this committee, as recorded in the minutes of this committee, when it was agreed upon that the committee would call Minister Marchi, you will find, at page 90019, I said that if there is agreement to have Minister Marchi testify, we must set the agenda. I continued by saying that, once that is done, we must proceed to clause-by-clause consideration of the bill.
In that meeting, we had an undertaking that Minister Marchi would appear before the committee as soon as possible. We were thinking of Thursday. It ended up being today.
In the minutes, it is clear that, on that agenda, item 1 would be to hear from Minister Marchi and item 2 would be clause-by-clause consideration of the bill. That was the agreement that was reached in this committee.
I, like you, when I saw this agenda, was expecting not to see the adjournment as item 2 but rather clause-by-clause consideration as item 2.
At that same meeting, the Chair has ruled, and now we have a precedent, that once we commence a meeting with a printed agenda, we proceed with that. It is part of the record here. It was the understanding that there be clause-by-clause consideration. That is what the minutes say.
The Chairman: Senator Kinsella, I have the minutes.
Senator Kinsella: What page are you on?
The Chairman: I am on page 14.
Senator Kinsella: This was the discussion we had at the end of our last meeting.
The Chairman: I remember that discussion.
Senator Kinsella: You made a ruling that my request for clause-by-clause consideration was not in order, though it was on the agenda.
Senator Rompkey made an intervention with a motion, and I said that I would agree to withdraw my challenge to your ruling. I said that I would withdraw that because we had reached an agreement.
What these minutes reflect is my clear understanding with Senator Rompkey and colleagues opposite that we would hear from Minister Marchi. That would be item 1 on the agenda. Item 2 would be clause by clause. That is what is written down. I do not know what is happening with the steering committee of this committee. The vice-chair recites the story differently, but I would point out that the steering committee is a subcommittee, and the decision was made by the full committee.
The Chairman: I believe this is an agenda item. Colleagues, I suggest, as has Senator Stewart, that we continue this discussion in camera.
Senator Lynch-Staunton: Why?
The Chairman: According to our rules, we discuss business in camera.
Senator Kinsella: There is a motion on the floor to report this bill without amendment.
The Chairman: We can vote on that motion immediately, and then discuss the future business of this committee in camera.
Senator Kinsella: My motion must be discussed in public.
The Chairman: Yes, we can discuss the motion in public, but we can discuss future business of the committee in camera.
The motion on the floor is that the committee report the bill without amendment.
Senator Forrestall: Excuse me. You have applied a condition to the motion.
The Chairman: I have restated the motion of Senator Kinsella.
Senator Forrestall: Perhaps the senator could restate his motion, to which I believe I heard you attach a condition. That is not acceptable to me. Let us not do by one means that which we cannot do by another.
The Chairman: The motion of Senator Kinsella is that the committee report this bill without amendment.
Will those in favour of the motion please indicate.
Senator Forrestall: Why did you include a condition?
The Chairman: There is no condition.
Senator Forrestall: You have anticipated the defeat of that motion.
The Chairman: I would not dare anticipate.
There is a motion on the floor. Will those in favour of the motion please indicate.
I see four hands.
Will those opposed to the motion please indicate.
I see six hands.
The motion is defeated.
It has been suggested by Senator Stewart that we continue in camera to discuss our future agenda. I believe we are all agreed on that.
The committee continued in camera.