Skip to content

Proceedings of the Standing Senate Committee on 
Foreign Affairs

Issue 3 - Evidence - Meeting of December 15, 2004

OTTAWA, Wednesday, December 15, 2004

The Standing Senate Committee on Foreign Affairs met this day at 5:00 p.m. to examine the Performance Reports for the period ending March 31, 2004, of: a) Foreign Affairs Canada; b) International Trade Canada; and c) Canadian International Development Agency, tabled in the Senate on October 28, 2004.

Senator Peter A. Stollery (Chairman) in the chair.


The Chairman: On your behalf, I am welcoming the Minister for International Trade, the Honourable Jim Peterson, — known to most of us — who has been very gracious and he was to have appeared a couple of weeks ago, but could not do it. Something came up — I cannot remember what — it certainly wasn't anybody's fault. He has been very easy to deal with in terms of appearing before our committee.

I remind everyone that we are examining the performance reports for the period ending March 31, 2004 of (a) Foreign Affairs Canada, (b) International Trade Canada and (c) the Canadian International Development Agency tabled in the Senate on October28, 2004. This will conclude with Mr. Peterson. The other two ministers have appeared. Mr. Peterson was our first witness, but there was a problem.

Our procedure is well known. The minister will make a statement and we will open the floor for questions. We will try to wrap this up, if it is agreeable to everyone, at six o'clock. I am reminded that the Bush visit was the reason that Mr. Peterson could not appear before us.

Mr. Peterson, would you like to lead off.


The Honourable James Scott Peterson, P.C., M.P., Minister of International Trade: Honourable senators, I am very happy to be with you this evening. Your committee's work is very important.


I have a prepared speech, but rather than read that, it might be better if  I said a couple of words, because I would rather respond to your questions.

The Chairman: That would be perfect.

Mr. Peterson: I will take all your easy questions. I have three brilliant experts with me to take your difficult ones.

We have gone through a major transformation in that we have the Siamese twins, trade and foreign affairs, that have been severed from one another, not without some difficulty, but by and large it has been a very good move. I want to commend people from all departments for the way they pulled together and made this a success.

Our major efforts going ahead are naturally on the Canada-U.S. relationship, the largest trading relationship the world has ever seen. In addition, we are looking at new and emerging markets that offer incredible challenges for Canadian producers, but also the prospect of great new opportunity.

On the trade policy front, the WTO, our multilateral approach remains our number-one priority. As you know, at the end of July we were able to form a framework agreement in Geneva that is not necessarily to our total satisfaction, but is a great step forward. Over one year ago, you will recall at Cancun how the talks broke down. The G90 and the G20 walked out basically. There were many people, who thought that the WTO was finished. Due to the efforts of U. S. trade representative Robert Zellic in early January, they were able to restart these talks. He deserves great credit. Why is the WTO so important to us? It is the only instrumentality we have for dealing with the obscenely high U.S. and European Union subsidies to agriculture. If we can deal with these subsidies that are estimated by the OECD to be in the neighbourhood of $1 billion a day, or six to seven times the total of all development assistance that we give to developing countries, then we will not only create a level playing field for our Canadian producers, who can compete with the best, but developing countries will have world markets for their goods and their products. If they are going to develop, it is absolutely critical that they have access to foreign exchange and capital.

In addition to this WTO, which will be our major thrust this year ending in the ministerial in Hong Kong next December, we will also undertake a very vigorous and ambitious round of bilateral and regional trade talks with the Free Trade Area of the Americas, FTAA; the Central American Four, CA4; the Caribbean Community and Common Market, CARICOM, and bilateral talks with countries such as South Korea, Singapore and others.

In a nutshell, that is what we are looking forward to for the next year, Mr.Chairman. I look forward to your comments and your questions as well as to working with your committee during the next year.

The Chairman: Thank you very much, minister.

Senator Poy: Thank you very much, minister, for coming today. I have a number of questions, but since you touched on South Korea and Singapore, do you have any plans to expand Canadian trade towards the future block that is equivalent to the European Union, but in Asia, such as China, India, Japan and the other Asian countries? Could you comment on that, please?

Mr. Peterson: Very much so. Even though in the throne speech there were three specific emerging markets identified, Brazil, India and China, it is absolutely essential that we look to where the economic opportunities are for Canadian business. The only reason we are here is to assist Canadian business produce the wealth that we need to have the prosperous society here in Canada.

Japan remains very important to us. In terms of trade policy, we have had discussions about entering into a type of economic framework agreement with them, and those will start this year.

For Singapore, we have already gone a long way in terms of concluding a free trade agreement. We have been stuck with them on the issue that they have given to the United States greater protection against expropriation without fair market value compensation than they are prepared to give to anybody else. This is because of a local law they have. They are land-challenged and they want to be able to confiscate land for the purpose of their subway. There is some question as to whether Canadians on land would get the fair market value compensation that the Americans would. Based on preliminary talks with Singapore in Santiago, there could be grounds for accommodating some of their concerns while meeting our concerns.

Korea has asked us to look at a free trade agreement, and we have undertaken that. We will start discussions with them immediately on it. It is potentially a huge market for us.

As you pointed out, the economic potential for Southeast and Northeast Asian economies is huge. We have great advantages in Canada. We have over three million Canadians from that part of the world. What is more natural than to look at trade expansion with that part of the world?

Senator Poy: We heard from Minister Pettigrew that we now have 22 consulates in the U.S. I do not know how many we have in India or China. Are there plans of increasing the number of consulates to help with trade?

Mr. Peterson: I have forgotten exactly how many we have. I think we have four and we are expanding to one more in China. In India, we have three or four, and we are expanding by one more.

I take it from your question, senator, that perhaps you are wondering whether we have the resources to expand our consulates to the United States by seven this year, which we have done as part of our enhanced representation initiative. We feel that there are so many parts to the U.S., particularly in the south and southwest, where the development has taken place, and yet we have not followed with consulates. We have to follow the business opportunities there.

At the same time as we are expanding in the U.S., we are making these bold new initiatives abroad that we feel are critical to our economic future. We do not have enough representation abroad to do the job that I would like to see done, quite frankly. I will be asking for added resources to help us better tackle these incredible opportunities that we see, particularly on the Pacific Rim and the Asian side.

Senator Di Nino: Welcome, minister. It is always a pleasure to see you.

I would like to concentrate on the relationship we have with China in two ways. If you folks have the information, can you give me the statistics for import/export with China approximately ten years ago and today?

Mr. Peterson: Last year, our trade was $23 billion. I do not know what the figures were ten years ago. I will get that for you, Senator Di Nino.

We are missing the boat in China. Over the past four year, the Chinese economy has grown by 40 per cent. During that period of time, our trade with China has expanded only 17 per cent. That of the United States has gone up 53 per cent, Australia 58 per cent and Japan close to 70 per cent. We are not taking advantage of even the normal growth that we see in the Chinese economy.

Senator Di Nino: I stand to be corrected, because I am going by memory. The figures were balanced trade with maybe a 10 per cent benefit one way or the other in 1993. Having spent a great deal of resources, many visits and a number of trade missions to China, if  I am not mistaken, we are now basically three to one in a deficit with China. We have succeeded in creating jobs in China, which is good. However, it has not helped our economy much.

Mr. Peterson: I agree with you. We are running a huge trade deficit now and that deficit with China is increasing all the time. We are seeing how the Chinese can manufacture more effectively and efficiently than just about anybody else in the world. I will give you one example.

There is a small Canadian producer of sporting goods equipment with 90 employees. What costs him $45 to produce here in Canada, he could have produced in China and landed in Canada for $7, with the same or better quality.

That is the type of challenge that our producers face. What are we going to do about it? Erect barriers such as the Democrats were proposing in the United States during the last election, or are we going to recognize this dynamic new challenge from that other part of the world?

Our producers have to do what that small Canadian did. They have to look at how they can access those value changes in other parts of the world including China so that they can remain globally competitive. Protection would be, at best, a temporary stop gap. It would increase the prices for Canadian consumers.

Ultimately we have to be globally competitive. We cannot shut ourselves out.

Senator Di Nino: I agree with you. Protectionism does not work.

One of the criticisms directed at us is that we have not been particularly attentive to how some of these costs are being reduced, particularly in the area of labour laws, child labour and the strong human abuses that occur in China. Amnesty International has put out a call for Canada to undertake a thorough analysis of our relationship with China because of serious human rights abuses in every corner. That is an issue that needs to be dealt with as well.

I was tremendously happy to hear the Prime Minister, at the Canada-Asia business forum, make a strong point that the issue will be explored during his and your visit to China. Could you confirm that it will be one of the main points that you, as a representative of our government, would have at the front of the agenda when you meet with the Chinese. We would like to have a level of comfort that we are not buying products made through child labour or labour laws that are hurting the Chinese people. We do not want to support the continuing abuses that have been going on for a long time.

Mr. Peterson: Senator, I could not agree with you more. When the Prime Minister met with President Hu in Santiago a few weeks ago, he raised the human rights issue. He will raise it consistently during his next trip to China, which takes place in mid to late January. I will accompany him on a trade mission that takes Canadians with us.

We would welcome the presence of any senators who might wish to join us. We will raise the human rights issues at every opportunity.

Senator Di Nino: Thank you.

Senator Grafstein: Minister, welcome. I welcome your staff. I am familiar with Mr. Fonberg's excellent work in the PCO, and I am delighted to see him here. He saved my bacon more than once, and I want to publicly thank him for that.

Minister, you know of my interest in bilateral free trade. I have sent you speeches and papers that I have given. The committee agrees that while we want to intensify our trade relationships with the United States, as we are doing in an excellent fashion, a big issue is trade diversification. We are too dependent on the United States. How do we wean ourselves off the United States so that we truly have an independent policy that is based not only on politics but also on economics. This is an objective we share. I see honourable senators nodding their heads in agreement.

I want to talk to you about two developing countrieswhere Canada's role might not be economical to us but is usually economically beneficial to these countries.

One is Georgia. Georgia has moved dramatically due to the Rose Revolution.

I have spoken to officials there. You know that I have spoken to them, including the speaker of the assembly who is an old colleague of ours through the OSC. They are all very anxious to enter into a bilateral free trade agreement with Canada, which would cost us literally nothing. There would be no negative impact for us but great positive economic impact for them. Is there any thought to entering into a free trade agreement with Georgia.

Hopefully, there will be a democratic result in the upcoming election in the Ukraine. I will travel with a number of Canadians to the Ukraine next week. Given a democratic outcome, we should immediately enter into free trade negotiations with them to pre-empt the slowness of the WTO, which is moving too slowly for these developing countries to get ahead.

I want to focus on those two, and then I want to turn to the Arab Middle East.

Mr. Peterson: Before I respond, I have been negligent, honourable senators, in not introducing you to the officials who are with me. On my left is Ron Fonberg, the deputy minister. On his left is Paul Thoppil who is the Director General of Corporate Planning. On my right is Kathryn McCallion, ADM, Corporate Services.

Mr. Chairman, if I go on too long, do not hesitate to cut me off.

The Chairman: Go right ahead, minister.

Mr. Peterson: In terms of which countries we select for free trade agreements, much is done in consultation with the Canadian business communities, including the Canadian Chamber of Commerce, the Canadian Council of Chief Executives, and the National Federation of Independent Business. They help us determine which countries are in most demand in order to protect trade and investment.

We are continually re-examining that. We followed the suggestions of Senator Poy in looking to the Pacific region. I would welcome an ongoing dialogue with the committee as to where you see our priorities lying.

I can see the diplomatic advantage, senator, in entering into a number of these agreements, even if they have no impact on trade and investment. Having said that, we are focussing for now on these other more urgent areas. They are ones that have been identified by previous prime ministers and the current prime minister as being a priority, including the CA4 and the Free Trade Area of the Americas.

Senator Grafstein: Minister, sometimes business is behind the eight ball not ahead of the eight ball. They move behind the curve, not ahead of the curve.

In Georgia, the largest pipeline investment was the Transcaucasian pipeline. Canada's greatest expertise is the pipelines. We were not there. I was there. We were not there, and they wondered why we were not there. I just make that as a comment.

Business leadership is not necessarily leadership. Business sometimes falls behind the eight ball.

Let me talk about an area more sensitive to members of this committee. That is the Middle East and North Africa, MENA, which will be part of our study. As you know, —

Senator Prud'homme: You mean the second part.

Senator Grafstein: It will be part of our ongoing study. Middle East and North Africa is part of our study.

The United States wants to intensify and accelerate the democratization of that area, which I believe is on the edge of moving towards democratic reforms. The U.S. has accelerated that process by entering into a bilateral free trade agreement with Morocco. Morocco is anxious to enter into a free trade agreement with us.

On the other side of the Mediterranean Basin is Jordan. We have had a very successful free trade agreement with Israel. It is working very well to our mutual benefit. Jordan, is anxious to enter into a free trade agreement with Canada as well.

Where are we on both of those issues? Some of us believe they will accelerate a solution to the intractable problem of the Middle East, which is the political track. We can move very quickly on the economic track, and there are no objections from anybody to do that. Where are we in those negotiations?

Mr. Peterson: We have not entered into negotiations with them. As far as I know, we have not received a request from them to enter into those negotiations.

Again, I would await the recommendations of your committee as to what the advantages to Canada might be of going into these areas. I certainly know for Morocco that there is some Canadian wheat sales at risk if we do not act quickly. This is why the Prime Minister is stopping in at Libya.

Senator Grafstein: The Jordanians are anxious for a free trade agreement. They want to parallel the free trade agreement with the U.S. and the one that Canada has with Israel. This would be a tremendous step forward because the government has announced diplomatically that they want to play an increasing role in that region to produce a result.

The Chairman: That is a representation.

Senator Grafstein: It is not a representation. It is a political fact. I hope you will not await our committee to make a further representation. This is my representation as a member of this committee who has been in the region and know that they are anxious to negotiate with us in an agreement, which will cost us economically very little and will help them.

Mr. Peterson: As part of your report, you might want to look at what resources we have for negotiating this agreement and how many people we can put on the road at any one time.

Senator Grafstein: I want to deal with that.

The Chairman: Senator Grafstein, you have had your time.

Senator Grafstein: That is not a problem.

Senator Andreychuk: I want to talk about some practical points. First, I am preoccupied that we are separating trade from the rest of foreign policy. This is not the first time that we have questioned whether trade is doing its thing and the Department of Foreign Affairs is doing its thing. How can we be assured that we have one foreign policy that includes trade, and how will you see that it happens? We often have businesses that go in and then hit all these other areas, whether it is human rights or other issues.

How will you ensure that we have one Canadian policy that can be articulated?

Mr. Peterson: I am not sure what your precise concerns are, but this is something we are wrestling with in the whole government. For example, there is the international policy review to coordinate the efforts particularly of defence, development and diplomacy.

My mission and goal is to work with Canadians to increase Canadian prosperity through enhanced trade and enhanced investment. That will be my mandate.

There will be concerns at certain points such as what types of goods we can trade with certain countries. Can we trade to countries that have not signed non-proliferation agreements? That will be an overriding policy that comes from the diplomatic side. However, I want to be at the table to make the case that we should be considering certain trading options, without having them considered before they get to the trade desk.

In the past when we were all one department, any type of trade with certain parts of the world was just automatically vetoed. We saw that in India following their testing of a nuclear bomb. Trade should be at the table to say that it may not be contributing to proliferation; it may be contributing humanitarian things; it may be helping Canadians, so that we at least have a debate on those issues. Ultimately, it will be the cabinet and the Prime Minister that decide this type of thing.

Senator Andreychuk: You think it is better by having two departments and two ministers who will have to wrestle this out, rather than one department?

Mr. Peterson: Yes I do. I will turn it over to Mr. Fonberg who has been, if not the architect, the contractor in affecting the separation.

Senator Andreychuk: Now we know. Now I am really worried.

Mr. Robert Fonberg, Deputy Minister of International Trade, International Trade Canada: One comment to elaborate. I have been puzzled, to be honest, about some of the debate as to the question of foreign policy and the separation of the two departments on the one hand, as opposed to the role of foreign affairs and the role of international trade.

I think the minister put it eloquently by saying effectively that the Department of Foreign Affairs never did foreign policy per se in the past. Foreign policy is the amalgamation of CIDA and development, security and defence, trade, and citizenship and immigration. The act of separating the departments, which clarified the minister's and the department's mandate to focus exclusively on Canada's commercial interests on the one hand, and to do the international policy review, which should be out shortly, on the other, really tells you that just as there is no department of domestic policy, there is no department of foreign policy. The cabinet and the Prime Minister ultimately own domestic and foreign policy.

Seen in that light, it is easy to understand that the separation of the two departments was not about disintegrating foreign policy; it was about giving clarity and focus to each of elements that go into the development of a foreign policy, which the cabinet and the Prime Minister ultimately own.

Senator Andreychuk: Mr. Fonberg has put that eloquently also. However, some of us have been around a long time and know the competitiveness of trade issues and other foreign policy issues. Ultimately, someone has to decide whether we go into a country, whether we do a deal, whether trade trumps human rights or human rights trumps trade. The fear is, how will those play out now that we have split the departments? I think the signal and the warning is that some of us are looking at those issues.

In my limited time, I wish to say that I agree with you that the WTO is our best resource at the moment to try to stop the subsidies to agriculture by Europe and the United States. Again, however, this has been an ongoing issue. We always say that we will get them to lower their subsidies and to understand what the Canadian Wheat Board is, et cetera. It is a long-term goal, however.

What will we do bilaterally with these countries and in the interim, while we fix the WTO into a fully working mechanism, because they continue their subsidies? I remember 10 years ago, being in Geneva when I was told Europe and the United States will undertake to lower their subsidies but, of course, it has not happened and Canadian agriculture suffers while the two continue massive subsidies.

Mr. Peterson: I agree with you, senator, that this is a huge problem for our agricultural producers.

One thing we are doing with the EU — and it is not dealing with agricultural subsidies or market access — but it is called the Canada EU Trade and Investment Enhancement Agreement, which goes beyond these traditional free trade issues. If we get that in place in conjunction with the WTO, we will have one of the most modern, up-to-date systems dealing with a number of very important issues in terms of trade liberalization.

I do not see any way of knocking down the U.S. subsidies without going through the WTO. We can oppose them; we can countervail them in terms of goods coming into Canada and taking away our markets; but that is a drop in the bucket compared to what we would like to see happen through the WTO.

How long the WTO will take is another issue. We have the WTO ministerial next December. That is where we hope to put the flesh and bones and the modalities on the skeleton that we created last July.

I want to see a very ambitious result. Will we get one? There are no guarantees, but we have been talking with the Americans and I will be talking with Peter Mendelson from the EU next week. We are looking at the concept of mini-ministerials along the way so that we do not leave it all to the Hong Kong ministerial, so that we can test whether we are making progress along the way and really measure it. I think that is our best way to proceed.

Senator Downe: Thank you, minister. I have a question about the lack of resources for your department. I am concerned that in the United States, the Mexican government has more trade offices and consulates than we do. Some of your offices overseas — in Chong Ching, for example, in China, you have one Canadian locally engaged for an area of about 30 million people.

Do you have any optimism that the expenditure review program will reallocate some of the resources to your department from other departments?

Mr. Peterson: I have more optimism now that you have asked that question in public.

Senator Grafstein: We will support you.

Mr. Peterson: I will welcome your help in this.

Senator Grafstein: We are with you.

Mr. Peterson: I truly agree that you are on the right track.

We have about 1,800 people who are trade officers around the world in total, and 250 of them are Canadian-based. We would like to see more people in the field. This is where they can actually do the job.

I am so impressed by the quality of people that we have been able to recruit. I think we truly have the best and brightest and the hardest working, but they cannot do it all. The opportunities, and I think the return on investment, that we can get from having these highly motivated people out in the field — making the connections between Canadian investors, Canadian vendors, and whatever; helping us get the new science and technology that is necessary; and steering them through the difficulties of investing in an economy like China, which is not particularly straightforward — I cannot think of any better way to generate the wealth that we need to sustain our domestic prosperity. Anything that the honourable senators might do to assist us in this regard would be greatly appreciated.

Senator Downe: I think the importance of emerging markets has been expressed here. I share that view as well. However, it is equally important to hold what we have.

I am concerned about the situation in the United States. This underfunding throughout your department does not seem to allow you to focus your resources because you simply do not have enough resources. I have heard on this expenditure review reallocation about the reductions and the cuts, and I look forward in the budget to seeing some reallocation to the priorities of the government.

Mr. Peterson: Thank you very much, Senator Downe. Amen.

The Chairman: I have a question as well. I cannot help but comment on Senator Andreychuk and the business of the trade and foreign affairs departments now being separated. I think I heard the same arguments when trade and foreign affairs were put together. It always amazes me as the departments come together and go apart, and always there is some argument.

My question is about the WTO Doha Round. I know that you are working hard on these negotiations that we have been talking about. Also, I would like to bring to your attention — I go to Wilton Park to the conference on the Doha Round and I follow it with some interest. I know in Canada we always say that it is basically agricultural subsidies.

I think it is much more than that. This committee, minister, has reviewed the free trade agreement and particularly, the NAFTA. We discovered the problems in Mexico, such as the decimation of subsistence farmers. This will have to be dealt with as well as subsidies in the agricultural negotiations, or it will not work.

We are also arguing to keep our marketing boards in some form. There are other things besides subsidies. I have listened as I go abroad. People tar Canada with the argument that all we do is talk about subsidies, but there are other things. Subsidies are important, and I am not questioning that.

However, what group do we work with now? It was the Cairns Group in the last round. Where are we now in terms of our alliances in these negotiations?

Mr. Peterson: That is good question. The Cairns Group is still a very important group to us. These are the agricultural producers that are exporters.

Canada, among all the developed countries, is more dependent upon exports than any other. Fully 38 per cent of our GDP consists of exports. This is almost four times that of the United States. The only way that we can maintain our prosperity is to be outward looking and be able to sell our goods and services around the world.

You are absolutely right. We have to have alliances. The Cairns Group is still a major one for us. We will continue to ally ourselves with those countries that want market access to be their number-one goal, including the Cairns Group.

The Chairman: I want to follow my advice and not make representations to you. However, in the last round, we were a leading member of the Cairns Group. That is it not the case at this point.

Mr. Peterson: You are absolutely right. We were part of the quad. It was Europe, Japan, Canada and the U.S. A different alliance emerged in Geneva. We were not part of the inner group. It was the U.S., EU, Australia, India and Brazil.

This did not happen because of shortcomings on our part. It was far more due to the fact that we needed Brazil and India at the table after the failure at Cancun. I do not know if that was your reading at Cancun? I do not know if you were there.

The Chairman: No, I was not but Senator Austin was there. We had a representative.

Mr. Peterson: It was absolutely critical in getting the G20 on side that Brazil and India be there. It was also critical that we get the G90 on. In getting Brazil and India, we had better access to G90, which includes the developing countries of the world.

They drafted the initial document that was placed in front of us in Geneva. We were fighting to ensure that we were protecting our own defensive interests, enhancing market access and getting rid of these agricultural subsidies.

The emerging world has changed. I would say we are probably number six. We are working closely with the EU and the U.S. We have demonstrated to the world that we can live with the elephant and yet have an independent existence and unique values. This still makes us very valuable. We will take our offensive interests to the WTO very seriously.


Senator Robichaud: You spoke of China, an awakening giant, that is trying to attain the same living standards as other countries. We know that they have a long way to go but already wield significant power in the trade area. You mentioned that countries such as the United States and Australia have been able to take better advantage of that country's emergence than we have. Were you able to determine what correlation there might exist between Canadian trade missions and those of other countries?

I have been to China a few times and the Chinese told me that our visits are very limited while Australia had almost a permanent delegation going on promotional tours.

Mr. Peterson: What you say is true. For example, Australia spent $280 million this year to promote trade. That's a lot more than Canada's $168 million. A country much smaller than Canada spent about 70per cent more than our country did, focussing their efforts on China and the East. They do not promote trade everywhere at this time. This indicates that we need more funds to promote trade.

Senator Robichaud: When you organize trade missions, you invite researchers and industry representatives from all regions of the country. How do you get people from distant regions? They often work in the shadows and are unable to participate in these missions. Am I wrong?

Mr. Peterson: For this trip, I invited counterparts from each province to join us. Industry representatives and business people from any part of Canada can join in.

Senator Robichaud: Are university representatives, who are at the heart of research in Canada, also invited?

Mr. Peterson: A few universities have already indicated that they would like to participate in these trade missions, not only for scientific exchanges but also to attract Eastern students to Canada. That is very important, giving us over $3.5 billion and establishing very important personal relations between the countries. In my view, this will be one of the objectives of the trip to China.


Senator Mahovlich: I was wondering about President Bush's visit to Canada. Did anything come of it? Has he influenced Congress or senators about the softwood lumber problem or BSE?

Canada and U.S. trade has increased by 152 per cent since 1989. That is considerable stress on all our borders' infrastructure and traffic capacity. What will the minister do to ensure that border infrastructure receives adequate funding to maximize the benefits of trade?

In June 2003, this committee recommended to the Government of Canada that considerably greater financial resources over and above the border infrastructure funds be injected into the construction of border infrastructure, including additional bridges and tunnel crossings into the U.S.

What progress, if any, has been made in this area?

Mr. Peterson: Those are two important questions. In terms of the President Bush visit, the meeting between the Prime Minister and President Bush in Santiago resulted in the President announcing that the BSE issue would go from agriculture to the Office of Management and Budget. That was great news for us because it meant under U.S. law there was a specific time frame for reporting out. There was a light at the end of the tunnel. We knew there was an end to the tunnel.

There was no such luck in terms of softwood lumber. There is so much out of the President's control in terms of the softwood lumber. So much of it lies in Congress, including the odious Byrd Amendment, which is supported by a majority of senators. Apparently, 65 per cent of the senators support the Byrd Amendment, which confiscates our producers' duties that are paid, and they go to the competition. This is why the WTO has ruled that it is illegal. It is double jeopardy for our producers. Nevertheless, if we are to get rid of it, it will have to be by virtue of efforts in the U.S. Congress.

That is where honourable senators could play a great role with us because of the respect that our senators have in the United States. If you could work with us or on your own — many of you have assumed roles of advocacy in the United States — I make a plea to you to help us there because even the President cannot dictate what Congress does.

On the issue of border infrastructure, you are referring to the $300 million border infrastructure fund and saying that we might need more. I am not disagreeing with you. I find it very frustrating, for example, that we have not been able to get the local consensus that we needed in Windsor to proceed with additional structures and doing what we have to do.

Whenever we delay putting in the necessary infrastructure to ensure smooth operation of the border and trade, we are putting jobs at risk.

Senator Mahovlich: Are trades increasing still with the Americans?

Mr. Peterson: We are down a bit because of the level of the dollar, but we are still maintaining a very healthy trade surplus.

Senator Mahovlich: We could run into a real problem in the future.

Mr. Peterson: That is why I could not agree with you more that we have to pay so much attention to that border infrastructure. That is why I am pleased that the Deputy Prime Minister is working so closely with Homeland Security.

The Chairman: I remind everyone that this committee has repeatedly argued in favour of fixing up this border infrastructure. I think it was one of the recommendations in our last report.

Senator Prud'homme: First, I wish to address Canada-China. I had the honour to create the first Canada-China Parliamentary Association over 25 years ago. Senator Molgat was then a senator and not the Speaker. He was the first chair. I go to China less now because of my symbol as an independent. I still go anyway, but less often.

There is something that seems to escape everyone, namely, the parliamentary aspect to trade in China. I will make only a suggestion to you to have some active parliamentarians in Canada-China. I am not making an invitation to myself, but some of us have close contacts with the leadership and know how China functions. You could be using them for the glory of Canada. I am serious when I say that.


Canada's strength would further develop if you would inject a political aspect to your deliberations and invitations. If you choose the right representatives, you will have my support.


There are people who would be happy to represent Canada and help Canada by accompanying you.

Second, you rejoiced, and I think you were right, except I am not sure, so I would like you to give me the figures some time, not necessarily today. You will remember we had quite a debate in the Senate, if not in the House of Commons, on the free trade agreement. We signed a free trade agreement with Israel. It was not a priority at that time. External Affairs was very surprised to see it jump from place X to first place. The background is clear. It was the personal engagement of a good friend of ours, Jean Chrétien, and YitzhakRabin. It was a sign of encouragement toward peace. That was the raison d'être of free trade. That free trade, we were told, in order to pass the Senate, we had commitments. Your staff can find the speeches that were made at that time. We were told that it was a great thing, and it is, but only for one part.

In the agreement we had in the Senate during the vigorous debate,in the interests of Canada and in the interest of peace, it was supposed to bring bonanza to the Palestinian side. Unfortunately, only one side seems to have profited from a good free trade agreement.

I am very happy for all the Canadians who are doing extremely well with the Israeli part, but nothing really matches the help we could have done for the Palestinians. You are aware that in the name of all kinds of security, and so on, they can have a truck full of tomatoes wait three days. There is free trade, but I suggest, sir, that you cannot have a truck of tomatoes three days under the sun waiting to be processed before they go to Jordan, for instance. Of course, it went rotten.

I am told, but I do not believe it, that it seems now there may be some developments that take place. I hope and I pray, so that we can talk about something else.

The Chairman: Give the minister a chance to reply, senator.

Senator Prud'homme: I would like you to re-evaluate what has happened since that was signed, and the commitment was strong in the Senate.

I am not particularly in a hurry. I will be speaking in the Senate on this issue in February only, but I would be appreciative if your staff could provide a maximum of information concerning that aspect of both sides.

Mr. Peterson: I would be happy to provide you with that. I look forward to the day when there is a separate Palestinian state living in peace with its neighbours, and the prosperity that could flow to all the people in that area, what it could do in terms of bringing an end to a situation which plagues all of us and which is violent. I am cautiously more optimistic today than I was six months ago. I will keep my fingers crossed. I have been optimistic before and been let down.

Senator Prud'homme: What about China?


Mr. Peterson: I wholeheartedly accept your offer, your support and your diplomacy. Contacts are very important. It is not easy to establish a relationship and to hold in-depth talks with the Chinese. That requires a lot of work and I appreciate your offer and your experience.


The Chairman: Thank you very much, minister. It is sixo'clock. I have three other senators on my list. The subject has certainly interested members of the committee. However, this is the hour that we were allotted.

We want to thank you for completing the three ministers with whom our committee deals, and for coming before us.

Mr. Peterson: I appreciate the opportunity to be here to share some of my concerns with you and to hear yours. There is incredible experience here, not only with the Canada-U.S. issue but with other countries in the world. I will welcome your ongoing input. I believe that you can help us do a job in the United States in working with the Senate on issues such as softwood lumber and the Byrd Amendment. I believe you can probably do more to help us than even George Bush can. Anything you can do will be greatly appreciated.

The committee adjourned.

Back to top