Proceedings of the Standing Senate Committee on
Foreign Affairs
Issue 3 - Evidence
OTTAWA, Tuesday, November 2, 1999
The Standing Senate Committee on Foreign Affairs met this day at 4:37 p.m. to examine the ramifications to Canada of the changed mandate of the North Atlantic Treaty Organization (NATO) and Canada's role in NATO since the demise of the Warsaw Pact, the end of the Cold War and the recent addition to membership in NATO of Hungary, Poland and the Czech Republic; and of peacekeeping, with particular reference to Canada's ability to participate in it under the auspices of any international body of which Canada is a member.
Senator John B. Stewart (Chairman) in the Chair.
[English]
The Chairman: Honourable senators we are meeting to examine the ramifications to Canada of the changed mandate of the North Atlantic Treaty Organization and Canada's role in NATO.
As honourable senators will be aware, when the committee had discussions in Europe, the question of the relationship between our participation in NATO operations in Europe and Canadian trade with the European Union countries was raised repeatedly.
Professor Donald Barry of the University of Calgary has made a study of the possibility of improving trade relations with the countries of the European Union. He is with us this afternoon to give us the benefit of his intensive work on that topic.
After we have heard from him, we will continue in camera to discuss our draft report.
Professor Donald Barry, University of Calgary: Honourable senators, thank you for inviting me to appear before your committee today.
Europe has long occupied an important place in Canadian foreign policy. Not only is this a region in which major Canadian interests converge, but it is also a counterweight to our imbalanced relationship with the United States. During the Cold War years, NATO was the principal link between Canada and Europe.
However, as the Cold War receded and as European integration widened and deepened, the European Community, now known as the European Union, became an increasing focus of Canadian policy. This could be seen as early as 1976 when Canada and the EC concluded the contractual link accord, which formalized economic consultations between them. In 1988, Canada established a political dialogue with the EC, which provided a link to the community's developing European political co-operation process.
The 1991, the transatlantic declaration institutionalized high-level political contacts between the two sides. In recent years, the Canadian government has emerged as a visible proponent of free trade between NAFTA and the European Union. However, its efforts have not met with success.
Canada's ability to play a leadership role in this area is constrained because it lacks the economic and political weight of the U.S. and the EU whose support is essential to bring such a project to fruition. For similar reasons, Canada is unlikely to achieve bilateral free trade with the union. However, Canada should continue to encourage transatlantic free trade, but it should focus its efforts on broadening and strengthening its own relationships with the EU.
Canada's efforts to promote transatlantic free trade began in the fall of 1994 when the then trade minister, Roy MacLaren, proposed the negotiation of a Canada-EU free trade pact which could pave the way for a more ambitious North American-EU accord. Prime Minister Chrétien raised the idea in a speech to the French Senate in December in which he called for a NAFTA-EU free trade agreement. These overtures had the dual objective of establishing a new foundation for the relationship in the post-Cold War era and of sustaining the momentum for global trade liberalization.
The European Commission, which was preparing a plan to strengthen the EU's relations with Mexico, expressed interest in North American-EU free trade, as did several member states, including Spain which was due to assume the presidency of the council in the second half of 1995. By the spring of 1995, however, Canada's relations with the EU had deteriorated as a result of the turbot war. Not surprisingly, when the invitation to renew the transatlantic relationship was extended, Canada was not included.
The Clinton administration was interested in upgrading U.S. relations with the EU. However, the administration -- its position weakened because of deep divisions in Congress that prevented the president from securing fast-track authority to negotiate trade agreements -- showed no enthusiasm for free trade. Relations between the North American countries and the unions would proceed along three separate tracks.
When U.S. and EU officials began working on an agreement in the fall of 1995, Canada pressed for tri-lateralization of the negotiations, but its efforts were rebuffed. At their December 1995 summit meeting in Madrid, President Clinton, commission President Jacques Santer, and Spanish Prime Minister Felipe Gonzales signed a new Transatlantic Agenda and a joint U.S.-EU action plan. This plan consisted of a political statement on the overall relationship and a list of more than 150 specific issues on which the two sides agreed to work in their bilateral relationship and in multilateral fora.
Contained in the list was the creation of a new transatlantic marketplace which would include a joint study of ways of facilitating trade in goods and services, and further reducing or eliminating tariff and non-tariff barriers.
Negotiations for a Canada-EU agreement got underway in March of 1996 and were largely completed by June of that year. Spain, however, held up the accord until December when it was finally signed.
The Canada-EU agreement was similar to its U.S.-EU counterpart. A noteworthy departure, in addition to a joint trade study, was that Canada and the EU would consider, with the U.S., on a case-by-case basis, tri-lateralization between the European Union, Canada and the United States, for subjects contained in the new transatlantic marketplace.
Seven months later, in July 1997, the EU and Mexico concluded two agreements that institutionalized their political dialogue and laid the basis for formal free trade negotiations. The agreements were signed the following December.
Canadian decision makers continued to champion a NAFTA-EU free trade accord. In a speech in London in October, 1997, the Prime Minister called again for the creation of a transatlantic free trade zone. He also expressed interest in concluding a free trade agreement with the European Free Trade Association. The EFTA countries responded favourably, but there was no reaction from the U.S., Mexico or the EU.
Although Washington and Brussels showed no interest in free trade between NAFTA and the EU, they were prepared to consider liberalizing trade with each other. At their summit meeting in Washington in December 1997, the two sides agreed to explore the prospects for a bilateral accord. The idea was the brain child of commission Vice-President Sir Leon Brittan who believed that strengthening the relationship required a grand political project that would enable Brussels and Washington to go beyond their traditional gradualist approach. Such an initiative would also allow the EU and the U.S. to take a leadership role in a new round of global trade negotiations scheduled to begin in late 1999.
The Clinton administration, wary of undertaking any major deals without fast-track authority, was cautiously receptive to the overture.
The issue was not raised at a Canada-EU ministerial meeting in Ottawa in January 1998. When queried about the prospects for a Canada-EU free trade accord at that time, Brittan replied that a deal with Canada would not be feasible because it would lead to a similar demand from the United States and would encourage a bilateral, rather than a multilateral, approach to trade.
Subsequent press reports about the EU-U.S. trade discussions led to the inevitable questions about Canadian participation. It was clear, however, that neither the U.S. nor the EU was interested in broadening the talks. As major powers, they wanted to deal with each other.
In addition, American officials were concerned that, if Canada were included, it would align itself with the EU against the U.S. or try to play the U.S. and the EU off against each other. For its part, the EU, given its limited trade with Canada, had little incentive to bring Canada into the talks, nor was it about to do anything that would make it more difficult for the U.S. to negotiate.
Brittan's plan for a new transatlantic marketplace, carefully crafted to avoid the issues of agriculture and culture, both of which were troublesome for the union, especially France, won commission approval in March of 1998. The plan, however, was effectively vetoed by the French, ostensibly because it would undermine multilateral trade liberalization, but more likely because Paris feared that agriculture and culture would be targeted by U.S. negotiators and Congress.
Member states accordingly settled on a compromise that would upgrade relations with the U.S. by building on the transatlantic agenda.
In May, however, France joined other member states in approving a directive that enabled the European Commission to negotiate a free-trade pact with Mexico.
Concerned about the prospect of new U.S.-EU advances, and the pending launch of EU-Mexican free trade talks, Chrétien pressed the case for more broadly based discussions with British Prime Minister Tony Blair at their London summit in mid-May, 1998. The U.K. held the presidency of the EU council at the time. Blair reportedly indicated that he understood Canada's position and held out the prospect of progress on the Canada-EU front after discussions with the U.S. were completed.
At the U.S.-EU summit, shortly after, American and EU leaders agreed on a transatlantic economic partnership which would see them join forces to improve market access for goods, services and agricultural products and to promote bilateral and multilateral trade reform.
In December 1998, Canada and the union launched an EU-Canada trade initiative similar to the transatlantic economic partnership. It was designed to further joint action on multilateral matters and to enhance bilateral cooperation in a variety of areas.
At this point, the Canadian and U.S. positions appeared to be coming together. However, as Denis Stairs has observed, "...this convergence was more, perhaps, because European-American aspirations had receded than because European-Canadian aspirations had gained ground."
I would like to conclude this presentation with the following observations. First, a Canada-EU free trade agreement seems unlikely. Quite apart from the fact that the focus of their attention, and that of the U.S. in the next while, will be on the approaching millennium round of WTO trade negotiations, the EU's trade with Canada is not sufficient from its standpoint to justify the time and resources that would be required to conclude an agreement.
Second, it is not likely that Canada would be included in any U.S.-EU trade liberalization discussions. As major trade powers, they would want to conclude a deal of their own. Canada's inclusion would likely complicate any such negotiation. It has been argued, however, that the U.S. could not reach a major trade deal with the EU without negotiating with Canada because the two economies are so closely linked.
Third, thus far, countervailing pressures from European or Canadian business leaders have not offset the difficulties that I have just described. Unlike the U.S.-EU relationship, which includes a major input from business through the Transatlantic Business Dialogue, which was set up in 1995, Canadian-EU relations have largely been a government-to-government affair.
Efforts to establish business-to-business contacts have had mixed results. A group of Canadian CEOs, brought together by the Business Council on National Issues, participated in the 1997 Transatlantic Business Dialogue meeting in Rome. Efforts to arrange a follow-up Canada-EU business summit in 1998 were unsuccessful. It remains to be seen whether the Canada-Europe round table, launched in June of this year, will alter the dynamics of the relationship.
Fourth, although Canada's high profile free trade overtures have not been successful, Canada and the EU have concluded eight sectoral agreements since 1995 to enhance cooperation and to ease barriers to trade. Although these agreements may facilitate Canada-EU interaction, they are unlikely to reverse the long-term decline in Canada's trade with Europe.
Does any of this matter as far as Canada's interests are concerned? I believe it does. Although Canada has global interests, its linkages with the United States are growing steadily. The more Canada integrates with the United States, the less visible it becomes elsewhere. Thus, there is a need to emphasize the importance of other ties, including our European connections.
Canada needs to develop a broader agenda to engage and hold the EU's attention. A new Canada-EU agenda should go beyond economic matters to take account of the union's growing importance as a political actor.
One promising area is circumpolar affairs which arises out of Canada's interests in the Arctic region and the emerging northern dimension of EU policy.
A second area involves a cluster of issues, including migration of refugees, the illicit drug trade, terrorism and international crime, that is closely linked to Canada's human security agenda and the EU's developing policies in justice and home affairs. I note that the committee suggested this in its 1996 report on European integration.
A third area might include crisis prevention, humanitarian intervention, and peace building that grow out of Canada's long-standing interest in peacekeeping and the EU's incipient common foreign and security policy.
Cooperation has begun on some of these issues on an ad hoc basis. However, the issues need to be brought together in a larger package that would raise Canada's profile vis-à-vis the EU.
Closer and more concerted cooperation would also give each side an important ally in the pursuit of its policy objectives.
That completes my opening statement, Mr. Chairman.
Senator Carney: Honourable senators, I was about to congratulate our witness, who is from the University of Calgary, for being here as a westerner. However, I understand from the chair that he does have Nova Scotia ties.
Thank you for your presentation which is a succinct summary of the relationship we are studying. I am very interested in the circumpolar aspect of your presentation. As the chair knows, I have suggested asking our ambassador, who deals with circumpolar events, to appear before our committee to explain Canada's position.
Most circumpolar meetings deal with environmental issues such as pollution. What aspects of the circumpolar relationship do you think could be stressed by Canada?
Mr. Barry: The agenda is quite broad. The initiative for cooperation on circumpolar matters, from an EU-Canada standpoint, came from the Finns when they assumed the presidency of the council a few months ago. Their term expires in December. The first steps were taken on October 20, at a meeting here in Ottawa involving various experts and interested people from both sides. I have not had a report on the meeting, so I do not know exactly what agenda is being carved out. However, they are in the process of developing one.
Senator Carney: From your perspective and given your expertise, what are the likely areas of interest between the circumpolar nations that would directly affect our trade and political relationship?
Environmental issues and Arctic Council issues would affect those relationships.
Senator Carney: Are there any trade-related issues?
Mr. Barry: Not that I am aware of.
Senator Carney: What about security issues? There is a nuclear waste problem.
Mr. Barry: Yes, there would be security concerns with the Russian vessels in the northern ports.
Senator Grafstein: I would thank our witness for his presentation. Our witness pointed out the appropriateness of trade links with the EU. In reviewing these various steps, in my view it amounts to the absence of political will to develop or to search out the appropriate links to develop a closer relationship on a trade front with the EU. I have been watching this from the perspective of a Canada-U.S. relationship for half a decade and I believe there appears to be an absence of a larger agenda that can overcome some of the smaller issues.
With regard to the circumpolar issue, the Russians are very anxious to utilize the circumpolar grouping from an economic standpoint to develop a shorter ceiling between Europe and North America. According to the analysis that has been made, the ceiling can be between 30 and 60 per cent faster if you take a Russian link through the north. Are you familiar with that?
Mr. Barry: No, I am not.
Senator Grafstein: I will turn to other levers, because you have asked what the appropriate levers are that we might use to crack forfeiture. You have touched on our inability at this moment, perhaps, to focus on the EU as we approach the WTO negotiations.
What would you make of an approach that would say to the EU, in the WTO negotiations, that we in Canada -- and I am sure we would be joined by our colleagues in the United States -- are not prepared to accelerate that agenda until we can deal with the common agricultural policy, as an example, which is probably the most protectionist of any entity in the WTO ambit? What would you make of us becoming much more politically active on that front? We have heard echoes of it from various sources in the United States and in Canada.
Mr. Barry: I do not think we have the leverage to do that by ourselves. The EU is quite determined that the common agricultural policy be dealt with in the forthcoming millennium round. There is no pressure from the United States, as far as I am aware, to proceed with the resolution. I am sure Congress would like to proceed with this issue on a bilateral basis. All of the energy at this time is focused on Seattle.
Senator Grafstein: On the WTO?
Mr. Barry: Yes.
Senator Grafstein: How does that benefit us vis-à-vis the protectionist elements in the EU?
Mr. Barry: Anything that breaks down barriers will benefit us.
Senator Grafstein: Agriculture will not be an issue.
Mr. Barry: It is clear that it will have to be addressed. The European Union is finding the same problems in its negotiations with MERCOSUR that are about to get underway. The MERCOSUR countries want the agricultural issue addressed. My understanding is that it will go forward in the WTO negotiations.
Senator Grafstein: You mentioned the northern relationship. I think that is still a slender thread at this moment. What about intensifying our bilateral relations with the non-EU European countries?
Mr. Barry: We are currently in the process of doing that. There is an ongoing EFTA negotiation that I think is nearing its conclusion. In view of the multilateral trade negotiations, however, it is more likely to be a shallow agreement rather than a deep one.
Senator Grafstein: You do not see us doing something that we did in South America; that is, developing a trade agreement with the EFTA groups, the outside groups?
Mr. Barry: We have a free trade agreement with the Chileans and we have an agreement that might set the stage for a free trade agreement with MERCOSUR.
Senator Grafstein: I am talking about the non-EU members in the European geography.
Mr. Barry: There is the European Free Trade Association negotiation that is currently ongoing.
Senator Grafstein: How close do you think we are to concluding that, and how deep will it be?
Mr. Barry: We do not know the details yet, but my understanding is that it will not be a very deep agreement. It will be a shallow one because both sides want to focus their energies on the WTO negotiations.
One area in which the EU is negotiating trade right now in which agriculture is not an issue is Mexico. That has made it easier to conduct that negotiation, but there are other issues that make that negotiation difficult.
Senator Grafstein: You touched on something that I came across and I should like you to give us your insight into this. Whereas the original free trade agreement with the United States was very much driven by business interests, why the absence of business will, particularly Mr. d'Aquino's organization? I have spoken to him about this and queried him as to why there is not a deeper and wider private sector impulse to support a political initiative. Why has big business failed on this front as well?
Mr. Barry: It is a long-standing problem. It is one of the problems that bedevilled the contractual link agreement in the 1970s as well. I think the convenience and ease of dealing with the U.S. market is the explanation.
Senator Andreychuk: Some people around this table and some witnesses in some of our studies have indicated that we should use what we have in Europe as levers to improve our trade position, and certainly our commitment to NATO, that is in constant dialogue and flux, and our commitment to initiatives in the European arena should bring us something back on the trade side. Some people have advocated discussing this openly and frankly. I think it would be very difficult to trade that in an open environment.
Do you believe that using that as a lever gives us any strength at all in improving our trade position with our European partners?
Mr. Barry: I do not think so, because the EU is unlikely to take on any common defence responsibilities, nor is it likely to become a global security power. The reason the line is drawn at common defence, which separates the EU from NATO, is the presence of foreign neutrals in the European Union -- Austria, Finland, Ireland and Sweden -- who have no interest at all in defence cooperation. To the extent that the EU develops a common security policy, I think it would probably be confined to the region, and it would probably involve crisis prevention and crisis management.
Senator Andreychuk: We have been told that a European defence strategy is more likely now and that it is absolutely necessary that Canada continue in NATO because Europe will not be able to defend itself; it will always need to call on some capacity of NATO. Therefore, we are well positioned to stay there. If we do not stay there, the Americans are not likely to stay either. Therefore, we are told that it is absolutely imperative that we remain in NATO.
That does not seem to translate into any goodwill. Even though we seem to be on the horizon of more commonality on defence in Europe than ever, we do not seem to be able to translate that to any benefit beyond common security.
Senator Carney: For the record, to whom are you referring when you say "we have been told"?
Senator Andreychuk: This committee.
Senator Carney: By whom?
Senator Andreychuk: By witnesses.
Senator Grafstein: By many witnesses.
Mr. Barry: My understanding is that defence issues will likely continue to be dealt with through NATO as a separate organization. I think we will find that the EU's security functions, even when they mature -- and they are far from that now --will be much more limited.
The Chairman: Much more limited in what way?
Mr. Barry: They will be restricted to these issues of crisis prevention and crisis management in nearby regions. In part, this could conceivably involve peace enforcement.
The EU also attempts to influence developments, not only in its immediate region but elsewhere, by using its economic power to gain political leverage. This is done through conditionality clauses in its agreements with other countries that make aid and investment conditional on protection of human rights, democracy, economic reforms and respect for treaty obligations. In the short-run, certainly, that is where you will find the focus of the EU's efforts.
Senator Bolduc: Am I correct is saying that the Europeans are incapable of fighting a war and one of the reasons for that is that their technology is not up to date? As you know, each country had traditional armed forces, but they did not procure sophisticated technological equipment to deal with what may be required in the next 10 years. That relates specifically to the problem of procurement. The Europeans have dealt with defence on a national basis instead of a continental basis.
The European Union gives money to the poorer countries in the form of a stabilization program that deals with agriculture and some other areas. That involves huge amounts of money, approximately $45 or $50 billion a year. However, they invest very few dollars in research and development as it relates to defence. The money is used for agriculture, not defence. The pressure may be on them to lower the subsidies for agriculture and to transfer that money to defence. However, it is not a popular move to take money allocated to the farmers and to use it for research and development. How do you see that situation developing in the next five years?
How can Canada find an opportunity to participate?
Mr. Barry: That is not an area with which I am familiar. My understanding is that the Europeans are moving toward cooperative defence production, but that is about as much as I can tell you.
Senator Stollery: Mr. Chairman, this testimony is most interesting because it brings us up to date on the various steps that have been taken and that we may have forgotten. Mr. Barry has refreshed our memories.
Is the EU is consciously avoiding dealing with Canada? EU is working with Mexico. The French have a long-standing interest in Mexico dating back to the French revolution. MERCOSUR and the French also have a long-standing interest in Brazilian trade. In fact the Concorde used to make a daily flight to Brazil.
They seem to be avoiding a country with a population of 31 million people, a country which we know is very important to European defence. Leaving aside the arguments over military budgets, we are an important part of European defence. It would appear to me to be unwise to consciously avoid dealing with our country. Is that because they see us as a part of the U.S., or is there some other reason?
Mr. Barry: Honourable senators, we are developing a visability problem in Europe as we move closer to the U.S. We had the same problem in the 1970s when we negotiated the contractual link. One of the important consequences of the link is that it enhanced our profile vis-à-vis the Europeans.
Fundamentally, in terms of their economic relations, we are simply not seen as a large enough player to justify the expenditure of the time and resources that they would have to spend in a trade negotiation with us.
The economic and defence aspects of the argument are compartmentalized between the EU and NATO. The real question is whether it is possible to try to find ways to link those two together to extend leverage from one to the other. I am afraid I have no good answers to that.
Senator Stollery: I understand that they have tried to keep defence and trade separate. However, as I recall, in the 1970s the population of Canada was about 26 million, considerably less than it is now. In another not so many years, it will be 40 million people, more than all of Scandinavia, plus Holland and Belgium, I suspect.
Canada and Russia are the two largest circumpolar countries. Greenland which is only 200 miles off our coast, is part of the European Union. I find the positioning difficult to understand.
Mr. Barry: In the 1970s, we managed to attract the European Community's attention for two reasons. First, we held out the prospect of access to resources to community countries at a time of resource scarcity. Second, we were the first developed country that went to the community seeking a consultative relationship. This offered the commission the chance to break new ground, to expand its powers. The commission very skilfully played this inside the community to move toward this arrangement, while at the same time reassuring community members that this would not operate to their detriment. At the same time, Canada was assuring the United States that they would not be disadvantaged by any agreement that Canada and the EU would conclude.
I suggested that we might wish to strengthen our cooperation with the union in non-economic areas because that may find a resonance among the publics of member states. These human security or "soft" issues, as they are sometimes called, have an emerging constituency support in Europe.
At the same time, it seems to me that the commission, in order to give expression to the commitment to adopt common policies in justice and home affairs, and perhaps in some aspects of the common foreign and security policy, may have an interest in responding positively to any overtures that we might make. It seems to me that there is perhaps an opening.
Following Senator Grafstein's question about the economic advantage that we might have over the community, I thought of one other thing. There is, perhaps, one possibility on the economic side, in addition to encouragement from the business community, if this dialogue ever starts to move. Our investment in the community is increasing. I think the Euro is accelerating that investment, which might be another possible source of encouragement for expanding ties on the other side.
Senator Grafstein: Concerning leverage, there are two legal documents before us. The first is Article 2 of the NATO charter. It is Mr. Pearson's article, which requires the member states of NATO to cooperate economically with Canada, something that they are not doing. That is a legal issue.
The other legal issue is the Helsinki Accord, which requires us, in exchange for cooperation on soft security issues, to enter into economic cooperation. We are a full member of the Organization for Security and Cooperation in Europe.
In terms of a legalistic position, Article 2 and the Helsinki Accord are, by omission, being breached by their member states. Does this give us any advantage to respond to Lord Robertson by saying, "You want us to do more for NATO when you have delinked Article 2 of the NATO charter"?
Mr. Barry: Article 2 was pretty much delinked from the time it was created.
Senator Grafstein: It is still there.
Mr. Barry: Yes, it is still there. However, it is not a binding obligation. Canada was virtually the only country during the NATO negotiations that wanted Article 2. It was agreed to, with great reluctance, by the other participants only after Canada threatened to reconsider its participation in the whole project.
By this time the Europeans had already embarked upon their own course of economic cooperation, as they were mandated to do by the promise of Marshall Plan assistance, which led to the OEEC -- one of the links leading to the establishment of the European Coal and Steel Community and other institutions.
I cannot comment on the injunctions in the Helsinki agreement.
Senator Carney: My colleagues have pointed out that, if Canada is important in NATO to the Europeans, Canada should be important in trade terms to the Europeans, that it is a case of leverage. One important area in our relationship is the agriculture issue, which is very critical right now.
Are you happy with the Canadian opening position at the WTO meeting in Seattle, which was very strong, a position that called for complete elimination of export subsidies as soon as possible, substantial reductions in trade-distorting domestic support, and substantial improvements in market access? The agricultural negotiations will be launched at the Seattle ministerial conference.
Do you have any suggestions beyond this as to what the committee ought to be recommending on this issue? Do you support this position? Should the committee be supporting something else?
Mr. Barry: It is an opening position. However, I am sure it is in everyone's interest to have these subsidies ratcheted down.
Senator Carney: Do you think it is a realistic position?
Mr. Barry: I think it will be easier for the community to give way on subsidies as part of a larger trade deal than it would be to do it bilaterally.
Senator Carney: In that way, the emphasis in the WTO could be in our interest.
Mr. Barry: Yes. The issue of subsidies was a tough nut to crack during the Uruguay Round as well. It took almost six years. Agriculture was the key to completing the agreement. It seems to that me that the Europeans are looking to resolve this issue or to make progress on the issue in the WTO negotiations, where it can be subsumed in a larger package of concessions and tradeoffs. In short, it will make it easier for them.
Senator Andreychuk: One of the dilemmas in the Uruguay Round was that, inevitably, regardless of what strategy we had, it broke down in the negotiations between the U.S. and Europe. It was as if the committee was meeting but the subcommittee was doing the real negotiations and we were being systematically excluded. At that time, we had a conscious plan to join with others to break through that cycle. I do not see that building up for this round of talks. It seems as though we are still looking at the grander picture. People I have talked to feel that it will come down to what the U.S. and the Europeans will do.
Do we have another strategy that we can put forward in the actual negotiations to break that?
Senator Carney: Are you talking about our participation in the Cairns Group, of which Canada was a member and where we pushed the agriculture issues?
Senator Andreychuk: There does not seem to be that strength in numbers. Inevitably, will we not be held to the will of the Americans and Europeans? Should we not be developing some strategy to break that?
Mr. Barry: It is question of leverage. For better or for worse, the United States has the leverage.
Senator Andreychuk: Therefore, you do not see us as having a strategy to overcome that leverage.
Mr. Barry: The impact would result from associating with the other smaller producers, as we did at Cairns. At the end of the day, it will be the large powers that will strike the deal on this.
The Chairman: My first question goes back to the problem that some of us spoke about extensively when we were in Europe last June and July. On the one hand, we are being harangued -- I do not think that is too strong a term -- to do more in NATO. It is not NATO with the global focus in which the United States is interested; it is NATO insofar as it contributes to European defence and security. "Do more. Do your duty, Canada," I think was the message we heard in London. However, when we raised the point that it would be nice if we could be heard more efficaciously in the economic dialogue, we were told, "No, that is a different matter altogether."
Is this disassociation the result of the fact that we are talking to different organizations and to different people? Or is it that the Europeans are, in effect, saying that they have such terrible problems related to agricultural production that they simply cannot afford to recognize Canada's interest in improved trade in agricultural commodities? Do they expect us to understand that and to continue to make a heavy contribution to their defence and security?
Mr. Barry: The question is how one uses the leverage of defence contributions in one organization to extract political concessions in the other.
The two organizations are separate, in the sense that NATO deals with common defence issues and the EU does not. The EU does not because it has the problem of the neutrals. That pretty much limits its activity to other forms of security co-operation with which we can associate ourselves, it seems to me. It is quite true that it would be very difficult for the EU to make agricultural concessions to us on a bilateral basis. I believe that the forum to move on that issue would be the WTO.
The Chairman: Is there not an inconsistency in the argument that you seem to be attributing to the Europeans. The Europeans are claiming that they cannot do it because the membership of NATO in Europe is different from the membership in the European Union. Are they using that simply as a credible excuse for failing to listen to our demands, let us say, in agricultural trade?
Mr. Barry: I do not think they could ever negotiate an agreement in agricultural trade with us that would not force them to extend concessions to the United States, which is the major player.
Even in the MERCOSUR negotiations, agriculture is a key issue. They have agreed to go forward, but they will not move on that until after the WTO round is completed.
Returning to the security link, I wonder if there is any possibility of moving closer to the EU concerning the possible security functions that it will take on, perhaps in the area of peacekeeping, if that develops. It seems to me that there are grounds for possible cooperation concerning the sharing of expertise and cooperation at the United Nations to establish a firmer basis for the humanitarian intervention. There could be collaboration on specific kinds of operations. Indeed, we do have a tradition of collaboration on these matters with some of the countries that are members of the EU, most notably Sweden and Finland.
It seems to me is that there is potential for the two sides to develop an agenda of their own in the security sphere and a parallel, if not intersecting, agenda dealing with the human security issues in which we are so interested. They are developing a substantive interest of their own in security issues, an interest that resonates with that of the European public. It also provides an incentive for the commission itself to respond to and, in the process, expand the community's competence in this area.
Senator Bolduc: Mr. Barry, could you suggest to us a proposal in terms of international trade with Europe. For example, should we stress business relations with Ireland? We have done a lot with Ireland, but perhaps we could do more. Perhaps we could push the business people a little harder, so that they can make a decision in information technology, tourism, or telecommunication with the eastern part of Europe. Perhaps our strategy should be to concentrate either on a country, like Germany, Ireland or the U.K, or on a business sector, say, like tourism.
Each time I go to Europe I am struck by the high density of people. I believe it would be good for them to come to Canada. We have plenty of space here. The fact that we have low-density population is a fantastic advantage. After 15 days in Europe, I do not want to live there any more, I am ready to come back. Their population density is so high.
Mr. Barry: The role that governments can play in this is to try to facilitate trade by easing regulatory barriers and so on. As I mentioned, since 1995 the EU and Canada have concluded eight sectoral agreements, involving things like mutual recognition, product standards, services, government procurement, intellectual property, and competition. These sectoral agreements extend to cultural co-operation and business contacts as well. That is government's role.
The Chairman: You mentioned Spain and the impact of the turbot war on our relations with the European Union. Has that impact disappeared entirely, or is it still haunting the relationship to some extent?
Mr. Barry: I think it has disappeared. The Europeans still seem to be concerned about Bill C-27. However, I really cannot do any better than to go beyond what Mr. Wiseman said in his earlier testimony before the committee. One would expect the fisheries area to be the most contentious one. There has been more cooperation in Canada-EU relations on the fisheries side since 1995 than there was in the previous decade. If that is a barometer of the state of the relationship, I would say that while the turbot war may be a source of background noise it is not acting as an important impediment to developing further relations.
Senator Di Nino: At the Canada-Europe committee, we are often meeting with parliamentarians from the European states. There is never a gathering where the fish issue is not brought up. It is always an irritant in the discussions that take place. I am glad to hear your comment that there seems to be some lessening of the friction. However, as recently as two weeks ago, this was an issue that was once again brought to the fore as a major irritant, not only with the Spaniards but supported by other members of the European states. I am not trying to disagree with you, but over the past number of months, when we have had these gatherings, that issue has arisen every time.
The Chairman: Yes. As Dr. Barry suggests, we have the testimony of Mr. Wiseman from DFO on our record, and we heard from the European Union ambassador. If I recall correctly, the recorded disagreement relates to the specific language in Bill C-27, by which Canada gives legal effect within Canada to the United Nations Convention on Straddling Stocks.
Senator Corbin: I should like to ask the witness to expand on the note he presented with respect to France's reticence about agricultural subsidies and culture. I am quite aware of what it is the French are trying to protect and preserve when they talk about culture. In a North American sense, the culture has a different meaning. I wonder if he could be candid with us and indicate if, in his view, it would not be beneficial also for Canada to focus more carefully on the cultural components of international deals that may be in the making, especially with the globalization conference in Seattle.
Mr. Barry: I understand that the problem of culture -- and it is really the audio-visual sector -- is a particular problem for France and perhaps one or two of the smaller countries, such as Belgium. However, it is not a major item for the union as a whole.
Senator Corbin: Culture is becoming a matter of increasing concern for the Germans. For example, the choice of official or working languages at their European meetings is taking a certain hit these days, and Germans are refusing to attend some of the meetings because of that. I do not see it as a frozen matter, or a compartmentalized matter. Other countries are now awakening to the all-invasive possibilities of globalization and what it will do with their heritage. The question is: Should we in Canada not be concerned about that as well?
Mr. Barry: We are concerned about it.
Senator Corbin: I thought we joined on the front with France and Mexico early in the fall.
Mr. Barry: I had assumed we were talking about trade negotiations in the WTO and whether or not the community is taking a strong stand on this issue. I do not get that sense at this point, but I could be wrong.
The Chairman: We know that the idea of European security and defence identity goes back a long way. The idea is there, but it is not realized, for some understandable reasons. The recent operation in Yugoslavia and Kosovo seems to have created a new zeal in some parts of Europe, I think notably in France, for the ESDI -- European security and defence identity. The ESDI is not to be independent of NATO; rather, it will be a pillar of NATO. What NATO would be contributing to ESDI operations would be intelligence, heavy lift, and command and control structures. If the European pillar does what it seems to be committing itself to do, and if the U.S. provides intelligence, heavy lift, and command structure, what, in this aspect of NATO's operation, is the role of Canada, if any?
Mr. Barry: I do not have a good answer for you, senator. It is not an area I work in, unfortunately, so I am afraid I am not very well informed.
The Chairman: Then let me get your reaction to a question. It seems to me that one might well answer that there is no obvious role for Canada, unless, of course, we are just going to tag along with the Americans. Superficially at least, does that seem to be a reasonable comment?
Mr. Barry: Perhaps so. My suggestion for security cooperation with the Europeans really had more to do with the emerging European Union functions in the area of crisis prevention and crisis management in the region. Some of the peace enforcement function of the WEU has been moved over into the EU, and this is one thing on which it is easier for all of the members of the EU to come to a common position because it does not involve common defence. In that area, it seemed to me that, for Canada and the EU, there were prospects with regard to sharing expertise and indeed peace enforcement issues of one kind or another.
The Chairman: A question was asked in Europe, I think by Senator Stollery, as to whether they believed that European countries that are members of NATO should help with regard to troubles in Central America, let us say human security troubles. We were told, quite emphatically, and without any hesitation, "certainly not." It appears as if they are concerned with human security only in their own countries or area.
Mr. Barry: In its agreements with the countries of Latin America, including Mexico, the conditionality clause is present, a clause that ties assistance and investment to human rights practices and democratic development, and so on. Therefore, they are not entirely absent; they are present in a different way.
The Chairman: But outside NATO.
Mr. Barry: Yes, outside NATO.
Senator Grafstein: Going back in history, as a student of Europe you obviously studied Canada's linkages on the trade side through the Commonwealth. At one time, we had a Commonwealth preference, which was the successor to the imperial preferences, and that was one of our strong linkages, economically, culturally, with the Crown and with mother England. For many reasons, the Commonwealth preferences were given up, with the exception, I think, of New Zealand, which made a very spirited defence of retaining some ongoing rights, when Britain decided to join the EU. This is well documented in a wonderful, recent book by Hugo Young, entitled This Blessed Plot.
Let us look at the Commonwealth based on the prism that you have asked us to examine; that is, looking at the human security prism upon which we might have a larger political agenda and upon which we might build some economic leverage because of kindred political spirits and so on. Our minister has just engaged in this particular effort on behalf of the Commonwealth in Pakistan. I do not know if he has returned yet, but he is on an interesting human security mission supported by our friends and colleagues in the Commonwealth. Britain is a major player in the EU.
Is there any way that we can utilize your analysis to leverage our role in Commonwealth human security and to develop leverage with the EU through the U.K.? As the chairman has indicated, we have been told to delink -- send our troops, send our money, send our military security, but do not talk about economic relations because we have a different agenda. That is what we were told by our parallel committee in London.
Would you take us through your analysis? Is there a possibility or a probability that we might use the Commonwealth linkage, joining together with Australia, South Africa, New Zealand, who have common issues with us as it applies to the EU, and use that as a leverage to batter our way into a more forceful economic relationship with the EU?
Mr. Barry: I do not know. We have made common cause with the Australians and others on issues of agricultural policy through the WTO negotiations.
Senator Grafstein: You refer to the Cairns Group.
Mr. Barry: Yes. However, it is not clear to me how we could mobilize them in support of new kinds of overtures towards the EU. It is not clear to me exactly how we would do that.
The Chairman: Honourable senators, we are indebted to Dr. Barry for his concise opening remarks and for his thoughtful answers. On behalf of the committee, I express the thankfulness that we all feel.
Honourable senators, we will continue our meeting in camera, but we must pause so that the electronic media can make the appropriate arrangements.
The committee continued in camera.