Proceedings of the Standing Senate Committee on
Banking, Trade and Commerce
Issue 24 - Evidence - June 6, 2007
OTTAWA, Wednesday, June 6, 2007
The Standing Senate Committee on Banking, Trade and Commerce met this day at 4:15 p.m. to examine and report on issues dealing with interprovincial barriers to trade.
Senator W. David Angus (Deputy Chairman) in the chair.
[English]
The Deputy Chairman: Ladies and gentlemen, we are here today to continue our examination of the interprovincial trade barriers that we understand exist in Canada and, more particularly, the extent to which interprovincial trade barriers are limiting the growth and profitability of the affected sectors as well as the ability of businesses and affected provinces of Canada, jointly and with relevant U.S. states, to form the economic regions that may enhance prosperity.
I believe the topic of internal barriers to trade is critically important as we seek a prosperous future for Canada. Such barriers, in my view, often increase costs for business and perhaps ultimately for consumers and may lead to inefficiencies that reduce competitiveness and productivity. Accordingly, we need to be focused on actions that will enhance competitiveness and productivity and remove internal barriers to trade that are harmful. This is one way to achieve the goal.
We have with us today two witnesses, one here in person and the other by video conference from Saskatoon. Representing the Saskatchewan Federation of Labour is Larry Hubich, President; and with us here in Ottawa we have Larry Brown, Secretary-Treasurer of the National Union of Public and General Employees.
I might say for the information of our two witnesses that we are not only here with the senators present, whom I will introduce in a moment, but we are also being webcast and are out there in television land courtesy of CPAC.
I am David Angus, a senator from Montreal, Quebec, the deputy chairman, filling in today for our esteemed chairman, Senator Grafstein, who was detained in Toronto.
From Montreal we have the distinguished attorney and senator, Senator Goldstein. Following along, we have Senator Harb, representing Ontario, and beside him a relatively new member but a dynamic senator from British Columbia, Senator Campbell. Last but not least, we have from Toronto, formerly of Montreal, a senator of Ontario, Senator Meighen.
Today we are constrained slightly because there is a vote in the Senate at 5:30 that we must attend. We have just an hour. Hopefully we can get our business done. I would like to ask you, Mr. Hubich, to go first. We will hear what you have to say and then we will hear what Mr. Brown has to say, and then we will be open to questions.
Larry Hubich, President, Saskatchewan Federation of Labour: Thank you for the opportunity to appear before this committee. I represent over 93,500 members from the province of Saskatchewan, a province currently undergoing a thorough review of the potential effects of signing on to the B.C.-Alberta Trade, Investment and Labour Mobility Agreement, better known as TILMA. Our federation has studied carefully the issue of internal trade barriers and barriers to labour mobility. We have reached several key conclusions that I would like to share with you.
First is that independent economic research suggests that the barriers to internal trade are not particularly significant.
I have provided the senators with a number of documents. I refer you here to Brian Copeland's study, Interprovincial Barriers to Trade: An updated review of the evidence; Erin Weir and Marc Lee's study, The Myth of Interprovincial Trade Barriers and TILMA's Alleged Economic Benefits; and Kathleen Macmillan and Patrick Grady's Inter-provincial Barriers to Internal Trade in Goods, Services and Flows of Capital: Policy, Knowledge Gaps and Research Issues, in addition to another half dozen or so documents I have provided to the Senate.
Lee and Weir conclude that with the possible exception of Quebec's prohibition on coloured margarine and Ontario's restriction on vegetable-oil based substitutes, ``Genuine trade barriers are quite small and exist in only a few areas.'' Copeland concludes that the economic inefficiency caused by these barriers is small — about less than one tenth of 1 per cent of GDP. Macmillan and Grady review the academic research of the last 25 years and conclude that ``internal trade barriers have a minimal effect on overall gross domestic product''; that is from page 2 of their analysis.
We argue that there is no crisis in internal trade relations in Canada. Since the Agreement on Internal Trade, AIT, was signed in 1994, many pre-existing trade barriers have been addressed. The AIT, designed to facilitate freer trade and increased labour mobility within Canada and led by the Council of the Federation, has thus far dealt with only 22 disputes involving goods, services and capital, which in our humble opinion is further evidence that there is no emergency.
We believe the AIT has made significant progress in liberalizing procurement practices in the public sector and in the free flow of alcoholic beverages, for instance. The provinces should be encouraged to meet their commitments under the AIT and to enforce it properly, but we do not believe that a TILMA type of agreement is necessary.
Our second concern is related to labour mobility. We believe there is no crisis in labour mobility in this country. Currently four fifths of employment is not regulated or in regulated professions or occupations where regulatory barriers exist; that is a full 80 per cent. I refer you to a second companion paper by Macmillan and Grady, Inter- provincial Barriers to Labour Mobility in Canada: Policy, Knowledge Gaps and Research Issues.
Chapter 7 from the AIT outlines measures to resolve labour mobility questions. I am sure you are aware that Premier Gary Doer from Manitoba is leading the forum of labour market ministers to ensure all that regulated occupations meet their AIT commitments by April 2009. That process is ongoing.
We also note that in the 12 years since the AIT was signed, only 23 labour-mobility complaints have been filed. Just two of those were upheld, both in the field of accountancy. Most have been resolved or withdrawn. A large number of complaints have been dealt with informally.
Mutual recognition agreements are a key method of reducing barriers. This approach, we would argue and submit, is working. Macmillan and Grady note that as of January 2007, 30 of 50 occupations regulated in more than one jurisdiction have mutual recognition agreements covering most of their regulating jurisdictions. Sixteen have MRAs signed by all regulating jurisdictions, and only four do not yet have MRAs.
The Saskatchewan Federation of Labour and our affiliates fully support the Red Seal Program, which works well in ensuring labour mobility for many trade workers and maintaining high-quality standards.
TILMA, by its design and intent, threatens to weaken or drive down professional standards. I refer you here to a legal analysis by Steven Shrybman which demonstrates that where there is a dispute under TILMA between two occupational qualifications, the onus is on the province with the higher qualification to justify its higher standard. In fact, in the analysis, Mr. Shrybman refers to a presentation by the Canadian Institute of Chartered Accountants before your committee that reinforces the concern of that organization on the downward pressure on qualifications in their industry.
The Canadian Federation of Independent Business and other business organizations cite Conference Board of Canada studies done for the B.C. and Saskatchewan governments about the supposed economic benefits of signing on to TILMA, but the methodology and conclusions of both those studies have been challenged by several economists, including Lee and Weir.
I refer you also to Patrick Grady's The Conference Board of Canada's $4.8-Billion Estimate of the Impact of the BC- Alberta TILMA is not Credible and John Helliwell's Assessing the Impact of Saskatchewan Joining the BC-Alberta Trade, Investment and Labour Mobility Agreement. Both of those documents bring into question the accuracy and methodology used by the Conference Board of Canada to attribute economic benefit of signing on to TILMA.
In our opinion, TILMA is the most far-reaching trade agreement we have seen. I refer you here to Ellen Gould's paper, Asking for Trouble: The Trade, Investment and Labour Mobility Agreement. All measures that restrict or impair trade, investment and labour mobility are subject to TILMA unless they have been excluded. We argue that this top- down approach is clearly not necessary to correct what, in our opinion, is not an urgent problem to begin with.
We believe with all sincerity that the real issue at stake for business organizations is regulatory reform. Businesses want easy access to as many open markets as possible at the lowest possible rates of taxation. We appreciate fully that businesses may face unnecessary regulatory irritants when trying to conduct business across provinces, and as a result we support efforts to reduce those irritants where there are redundancies or unnecessary red tape.
We believe that governments regulate in order to meet local community needs. Provinces and other governing entities in a democracy may have compelling public policy rationale and reasons for favouring local hiring and procurement, for example. In a nation as vast and diverse as Canada, there are bound to be some differences in provincial policies and regulations in response to local realities. We would submit that that is what democracy is all about.
We are deeply concerned that under TILMA the ability for parties to challenge other parties in front of trade dispute panels, with financial penalties of up to $5 million, will pressure democratically elected governments to favour corporate interests over the protection and promotion of public good.
I submit that to you for your consideration and look forward to a dialogue and answering any questions or discussion we might have.
The Deputy Chairman: Thank you very much, Mr. Hubich. Since you commenced your learned remarks we have been joined by two further senators, Senator Paul Massicotte, from Quebec, and Senator Trevor Eyton, from Toronto, Ontario.
Larry Brown, Secretary-Treasurer, National Union of Public and General Employees: Thank you for agreeing to hear our submission. Like Mr. Hubich, we are dealing with the Trade, Investment and Labour Mobility Agreement. I will make some observations before getting into the actual content of the agreement.
It is a bit of a curious phenomenon in a federated country like Canada that we continually hear the assertion that freer trade between the provinces and the elimination of any kind of restriction between provinces is automatically a good thing. It strikes us that if we want to be absolutely a unitary system without any provincial barriers or boundaries at all, there is a way to do that, and that is to eliminate the provinces and have one centralized system. That would have be the logical conclusion of all these calls for fewer restrictions between the provinces.
It is interesting to us that most of the forces that appear to be arguing for the elimination of interprovincial trade barriers are the same forces that argue for provincial power and responsibility and for a decentralized country. People who argue that the federal government is playing too much of a role in the economy seem, oddly enough, to be the same people who argue that interprovincial trade barriers should be eliminated. We have trouble understanding that. That could be a form of contradiction.
It is also interesting to us that all of this work is almost automatically cast in the negative, that any move to cooperate on eliminating barriers between provinces is good. If it eliminates, lowers or removes barriers, it is a negative proposition, but any kind of cooperation between the provinces that might elevate standards does not enter into the discussion. Any kind of interprovincial cooperation that would improve our social systems or improve our social benefits is not part of the equation. The only thing that seems to enter into the discussion is the negative: how to lower and reduce standards and barriers. We do not understand why interprovincial cooperation is on the agenda so strongly.
It is fascinating to us that the Alberta government, as it was saying publicly that the rest of Canada had to keep its hands off Alberta's oil money — which is pretty close to a direct quote — was at the same time signing TILMA, which gave away a lot of provincial powers. Those two ideas seem to us a strange fit.
In our printed submission we go through a lot of the same material that Mr. Hubich did, so I will not touch on that. We have other points on the same material and can address them if it comes up in the question period.
I want to focus more directly on what the Trade, Investment and Labour Mobility Agreement actually does. We argue that it does three things. As Mr. Hubich said, it gives private businesses the right to challenge virtually any government action that they choose to. That does not mean that all challenges would be successful, but we know of phenomena such as libel chill that say that if you are going to be challenged, the freedom to take the action in the first place is constricted by having to fight off the challenge.
Under TILMA, governments are put under the ability of private companies to challenge them on virtually anything they do. All the company need do is say that this is restricting their interprovincial trade ability. Once the challenge is made, everyone will have to go through the process of defending the activity they wanted to undertake. We think, first, that there will be a lot of successful challenges. Second, the ability of governments to govern will be hampered by the fact that these challenges can be made, and they are broad in scope.
On the same point, we have real concerns about the process by which these challenges will be heard. The Trade, Investment and Labour Mobility Agreement says that the hearings will be public subject to some other conditions, which means that whether they are public will be open to question. There is no requirement in the agreement with respect to who will make up the dispute panels. It could be that the panels will be made up of trade professionals, and they will be hearing disputes on all kinds of things that have nothing to do with trade. We have seen that with the World Trade Organization and the North American Free Trade Agreement. Trade specialists have to make rulings under these challenges in areas that are not within their competence.
The appeal process that is spelled out in TILMA is quite limited. It is the same appeal rights that one has under arbitration law, with which we are familiar in the trade union movement, which means that the right to appeal a dispute panel decision under TILMA will be very limited. We think the process of the dispute panels will cause serious constraints for governments, far beyond what is anticipated on the face of the agreement.
Our second serious concern is that it covers every level of government, which includes municipalities, school boards and hospital boards, any governmental entity within the province. The City of Regina has already obtained a legal opinion that says that the ability of the city to make decisions will be seriously constrained by TILMA. That is true, and it applies to all levels of government, levels that have not even read the agreement and that would not know what has been given away on their behalf.
Finally, and more important, we think that this agreement gives away the right of provincial governments to govern on behalf of their citizens and the right of sub-governments to govern on behalf of the people who elected them.
We put two quotations in our submission. One is from someone from the Canada West Foundation who says basically that TILMA erases all provincial boundaries except for the colour of licence plates. I am not doing justice to the quote, but that is the effect of it. Maclean's magazine said it effectively does away with provincial boundaries.
That circles back to my opening point. If we are going to do away with provincial boundaries, why are we electing governments and having them go to the trouble of pretending to govern if all they will be doing after TILMA is deciding on the colour of licence plates?
This is put forward by proponents of TILMA, and if that is what they say TILMA does, we should at least respect that they have presumably read the agreement and come to that conclusion learnedly. Even if it is not quite that extreme, and it probably is not, the ability of governments to make decisions on behalf of their constituents is being severely constrained, and there is no way to get around that. That is what TILMA is all about.
In our submission we have gone through a number of subdivisions of that, even, for example, with respect to the environment. TILMA covers environmental regulations. The only thing exempted from TILMA with respect to environmental protection is the handling of waste products. The environment is much broader than that, so even something as fundamental as the environment will be subject to the dragging-down effect that TILMA has on the regulatory authority of the provinces. If the environment is covered, not much will be exempted from the agreement in practice.
I will leave it at that for now. I hope the comments of Mr. Hubich and I will lead to some questions and discussion.
The Deputy Chairman: Thank you very much, Mr. Brown.
I take it from the materials you have submitted that you are both leaders in the trade union movement in Canada.
Mr. Hubich, perhaps you could give us an idea of how many members the Saskatchewan Federation of Labour represents.
Mr. Hubich: Thirty-six affiliated unions are members of the Saskatchewan Federation of Labour. They cover all occupational classifications — white collar, blue collar and professional. We represent the nurses and firefighters. We represent people who work for Crown corporations and private sector employees. Most occupations that exist across the country are members of the Federation of Labour. Our affiliated number is 93,500. We participate closely with a number of other unions on initiatives that are not formally affiliated to the Federation of Labour, but we represent in excess of 100,000 working people in a province of 1 million people. It is a significant group because we expand our reach then into their families and homes. We would argue that we represent 250,000 people in the province of Saskatchewan.
The Deputy Chairman: That was the point I wanted to make. It is all in Saskatchewan and it is a dominant percentage. How about you, Mr. Brown?
Mr. Brown: I did not cover that and I appreciate the question. We are the second largest union in Canada. We have about 350,000 members. We are better known by the names of some of our component members. We are a federated- style union. For Senator Campbell, we represent the B.C. Government and Service Employees' Union and the Health Sciences Association of British Columbia. In Ontario, we represent the Ontario Public Service Employees Union. About 55 per cent of our members are direct employees of provincial governments and the others are everyone from people who make beer to people who work in hotels and health care. We started as a public sector union and we decided that people who make beer were in fact delivering a public service so we let them in as well.
The Deputy Chairman: Then you are not only in Ontario; you are across Canada; is that right?
Mr. Brown: We are across the country.
The Deputy Chairman: Are you in Quebec as well?
Mr. Brown: We are in every province except Quebec.
Senator Goldstein: Thank you for coming, Mr. Brown and Mr. Hubich, and for the excellent written material that you have given us. I note from the written material that the authorities you cite to support the positions that you have taken are, with one exception, authorities that are at least 10 years old. There does not seem to be anything written recently that does anything other than repeat some of the material from 1998 and earlier. There is significant criticism of the Conference Board of Canada's manner of proceeding and the way that it did its research. There does not appear to be anything from 2005, which is when the Conference Board its work, or 2006 or this year that establishes anything other than what the Conference Board appears to be saying.
Ignoring what the Conference Board says for the moment but not accepting the material that is 10 years old, because many things have happened in 10 years, are you aware of anything current written by economists or submitted by economists that would take the position that you have taken regarding the concerns you have expressed about TILMA?
I have two more questions that can probably all be answered in the same answer. These questions are for both witnesses. My second concern is that you have spent a great deal of time criticizing many of the provisions of TILMA, and you may well be justified in that criticism, but the concept of reducing trade barriers is something that you have not really spent a great deal of time on except to indicate that some aspects of provincial jurisdiction may be adversely affected and, in one case, in your paper, Mr. Hubich, you have directed your attention to the reduction of labour standards; you do not quite say it, but effectively you mean that labour standards would ultimately be reduced to the lowest common denominator because of the manner in which TILMA is drafted.
We have heard testimony here that indicates that trade barriers do indeed have an adverse effect on the economy as a whole. You have not really addressed that. You have both said that there might well be adverse effects — and I do not think we have had empirical evidence on that so far — with respect to other matters such as environmental and labour standards. I am confused about the fact that virtually everyone we heard from appears to be support the reduction and elimination of trade barriers. The only people who appear to be opposed to TILMA and the reduction of barriers are labour. I am confused about why this should be so. Can either of you help me with that?
Mr. Hubich: That was a pretty broad question, so I will do my best to respond, maybe first to the suggestion that the lowest common denominator relative to standards would prevail. My submission does not specifically refer to labour standards but to all standards that would be negatively impacted by the Trade, Investment and Labour Mobility Agreement. That is reinforced by a number of people, including people who normally do not line up on the side of labour on this issue. I am referring specifically to the Canadian Institute of Chartered Accountants, which I believe, unless my information is incorrect, made a presentation before the Senate Banking Committee. They are concerned as well that TILMA, in its current form, will result in pressure to reduce standards to the lowest common denominator. I would argue then that if that is the case for the standards vis-à-vis these individuals, it would certainly apply to labour standards, notwithstanding that there is a temporary exemption in TILMA for labour standards.
With respect to the suggestion about new material, I believe that the analysis that has been done by people like Helliwell, by Grady, by Erin Weir and Marc Lee, who are economists, is based on analysis of the current numbers being advocated and suggested by the Conference Board of Canada. There is a suggestion, uncontradicted elsewhere, that even the Conference Board has stopped relying on the numbers that they used, most notably to project that TILMA would result in a $4.8-billion infusion to the economy of B.C. and increase GDP by 3.8 per cent. They appear to have backed away from that original economic analysis. There is some suggestion that their numbers were flawed and the arguments that have been advanced by people like Grady, Weir and Lee are in fact accurate assessments of the flaws in the analysis by the Conference Board.
A further and final point — and I think this was your question — is why we are opposed to the elimination of barriers. The Saskatchewan Federation of Labour is not. First, we support trade; we support investment; and certainly in Saskatchewan the reason we support trade is because we are a trade-based economy, agricultural in nature, and most of our economy and economic activity is a result of trade. We are very supportive of trade. We are very supportive of a positive investment climate because our members' pensions, for instance, rely on a strong investment climate. Certainly we invest in RRSPs, stocks and bonds and the equity market. We invest in labour-sponsored venture capital. A strong investment climate is important and essential to our members.
Finally, on labour mobility, working people in this province and elsewhere in this country have long been mobile and will travel many miles to work, so we are not opposed to proper labour mobility and provisions that recognize credentials in a standard way across various jurisdictions.
We are opposed to this top-down agreement of TILMA, because in our estimation it is too big a price to pay to deal with a few of what we determine to be irritants from the perspective of regulatory framework for business. There are much more appropriate vehicles and mechanisms to deal with removing those barriers where they exist. We think they should be removed but not by sacrificing democracy in the pursuit of removal of barriers to business.
The Deputy Chairman: Before I go to Mr. Brown, Senator Goldstein had a point of clarification.
Senator Goldstein: You keep telling us about the defects of TILMA. You may be right. We are not terribly interested in imposing a national TILMA. We are interested in reducing barriers. How we go about doing that may be a TILMA-like model or some other kind of model, but I take it from what you are telling us that you agree there should be a reduction of trade barriers. You are saying that you agree with mobility of labour and reduction of limitation, and you seem to agree with a number of other areas that TILMA addresses but not adequately. Am I misunderstanding what you are telling us?
Mr. Hubich: We are not in favour of unnecessary regulatory frameworks, and we do not believe that it is in the best interests of Canada, of the citizenry, of business or of the population to have unnecessary and frivolous regulations. In that regard, we are supportive of doing what we can to streamline regulatory regimes and have consistent application of standards, if that is possible. However, we also recognize the democratic authority and right of governments, provincially and municipally, to legislate and regulate in the public interest.
Trade agreements, in our opinion, are meant to operate inside a democracy, not the other way around of a democracy operating inside a trade agreement. It is not as simple as trying to establish an ideological point of view and not deviating from that. The trade union movement and members of the Federation of Labour — I am sure Mr. Brown will concur with this — have a long history of negotiating compromise and solutions to complex, difficult problems employers experience vis-à-vis their competitiveness and so on. Very sincerely, we think that TILMA is the wrong way to go because it is too much of a price to pay.
I would argue there is not a company on the planet that would agree to sign a collective agreement with the people who work for them that handed the kind of control of the corporation over to the employees as we would argue TILMA hands over the control of government to private enterprise. We see it as being a serious flaw.
Mr. Brown: First, with respect to why we are focusing on TILMA, the federal government in its last budget said that its model of how to accomplish interprovincial mobility was TILMA, so we think it is a serious issue, and we think it would be a serious mistake to adopt it. We compliment the Senate for having the courage to look at that question instead of just accepting the vague statements that are coming forward to defend it.
Second, as to why there is so much focus on the Conference Board of Canada study, in effect, your question is almost reversed. There no empirical evidence other than the Conference Board study to say that interprovincial trade will somehow be amplified to the extent that they claim. The two governments quoted the Conference Board of Canada as their evidence for why they wanted to proceed. There is no other evidence. We do not have a lot of stuff to debunk other studies because there are no other studies to debunk. Most people assume that the supposed benefit of interprovincial trade is much more modest than that one study claims, so that is why we focus on that and say it does not look to us to be true.
Admittedly, with respect to TILMA, there is not yet any empirical evidence that our claims are true. It has only been in place since April of 2007. Unfortunately, we are in the position of saying if you give us a year, we will be able to prove it. I would love to be wrong, but I do not think I am. I think in a year we will be able to come back and say that we told you so, in effect.
Finally, let us assume for the sake of argument that some matters between provinces in Canada could be called ``trade barriers.'' There is an old saying about using a hammer to kill a fly. It is an overreaction. If the problem is like that, then why would we not deal with the problem like that? Why would we say there is a little problem here about something that may be a barrier, so therefore we will sweep away the right of government to govern in the way that TILMA does? It is a reaction that has no relevance to the initial event. It is saying that maybe there is something we cannot put our fingers on, so just in case there is, we will sweep away the right of governments and sub-governments to regulate. I do not see the logic of that.
Senator Meighen: I will address my comments to both of you. I have been one of those who over the years have been seduced by what would appear to be the generally accepted view that Canada suffered from undue internal barriers to trade. We have had any number of conferences and any amount of hand wringing about this terrible situation and we had the premiers forming the Council of the Federation to deal with this matter. Forgive me if I was labouring under the impression it was a problem. I have appreciated your presentations very much. I am not totally disabused of the notion, though, that there is a problem. If you can do that, then that puts a whole new light on the question.
I still think there is a problem, starting with the inability to get a national securities regulator and go from there to the requirement to build a brewery to produce beer or not in a province, and regulation, duplication and contradiction are certainly matters that, prima facie, are a problem in Canada.
I assume that neither of you is challenging the right of the respective governments to negotiate that agreement, or maybe you are. I would like an answer to that. If it is sweeping away the right of government to govern, why has no legal challenge to TILMA been mounted?
Mr. Brown, you mentioned, and I wonder if Mr. Hubich agrees, that within a year you would have a definitive opinion as to whether TILMA was as bad as you think it is. Is that a fair time frame in which to judge the agreement?
Mr. Brown: My response was to Senator Goldstein's comments that we did not yet have empirical proof, and I am saying within a year I suspect we will be able to prove that some of the negative things in TILMA are not theories but facts. I do not know whether it is a 12-month period precisely, but if TILMA is as bad as we think it may be, then the evidence will come to light pretty quickly, and it is a hell of an experiment to run on the Canadian system just in case we are right.
Senator Eyton: I can argue that it is not a bad experiment in case you are wrong.
Mr. Brown: That would assume that none of the possible consequences we have identified are valid. I think you said you were not totally convinced, and that may have been somewhat disingenuous on your part. It may be less than not totally convinced. However, we have identified some serious concerns about TILMA, and unless governments are able to answer the concerns and say it is not possible they are that bad, then we are saying to you and others, let us stop this rush into the process. Let us step back.
That gets me to your second question about whether we thought the governments had the right to do it. The two governments negotiated TILMA without any public consultation or public debate. They signed TILMA, they took it into legislatures after it was signed and an attempt was made to have basically no public debate all. It was not until the trade union movement got hold of it and said they wanted a discussion about it that there was any public debate taking place outside the narrow confines of business associations and cabinets.
Do I think governments have the right to do that with such a sweeping agreement? No, I do not, to be honest. I do not think the governments have the right to endorse such a sweeping agreement that fundamentally, according to many lawyers we have quoted to you, does in fact challenge the right of governments to govern in the usual sense that we understand that. They do not have the right to do that without the permission of their population through some sort of a public consultation and debate, which is why we applaud you folks for actually starting that kind of public discussion before TILMA is somehow pushed across the rest of the country.
Mr. Hubich: I have nothing much to add, except perhaps to respond to the question of why there has been no legal challenge. I expect it is because this agreement came into effect on April 1, 2007, so it is only two months old. There may well be legal challenges. I am not sure what is being contemplated in the two provinces that are signatory to the agreement. In Saskatchewan, we were successful in convincing our government, which was being courted by the governments of B.C. and Alberta to sign on to TILMA, to engage in broad-based public consultation with respect to this agreement. That process started this week, and there are hearings in Regina this week and in Saskatoon next week seeking input from a broad cross-section of citizens and groups in Saskatchewan. Ultimately, our province will make a determination. I think some people in Saskatchewan are taking a look at what all the legal ramifications would be if the province were to sign on.
Senator Meighen: I think you said that you were in favour of trying your best to implement regulatory reform. You did not like TILMA obviously and you did not like the process in place. If you think regulatory reform is necessary, what vehicle would you adopt to get on with the job of streamlining the contradictory and overlapping regulations?
Mr. Hubich: What first needs to be identified is where there are legitimate barriers, because the jury is still out on what they are; like you, senator, we have heard the suggestion that there are a multitude of barriers. However, every time I ask what specifically we are talking about, all I get is anecdotal evidence of what those barriers are. First and foremost, it is important to identify what are being considered impediments or barriers. Once we have gone through that process there are a number of things we can do.
If we are talking about reforming the qualification standards or negotiating a consistent application for professional designations, then that is something we can do through vehicles like mutual recognition agreements where they exist. I am talking specifically about labour mobility. The Red Seal Program is a classic example of how that is done in this country and it has served the industry partners well, business, labour and government, for many decades. There is a whole host of things.
The Agreement on Internal Trade, with its faults and its problems, has made significant strides towards rationalization of standards across provincial jurisdictions in this country. If I read the criticism of the AIT correctly, it is not happening fast enough for some and there are no teeth, according to individuals who think they should be able to force governments to fulfil their obligations under the AIT.
That is where the problem is and there are ways to sit down in a room and negotiate solutions to some of these difficult problems. The structure of TILMA is counterintuitive to that process because it is top-down and it sweeps everything in and says the only way you get something outside of TILMA is to negotiate an exemption. In our humble opinion, democracy is too important to be an exemption in some trade agreement. Therefore we need to be mature about the dialogue that we need to have in this country to ensure that business can flourish, that there are not unnecessary regulatory frameworks, and that the complaints being alleged are actually real and not simply anecdotal complaints about a little bit of a regulatory difference between one jurisdiction and another.
The Deputy Chairman: Being from British Columbia, Senator Campbell knows a lot about this subject. He may want to ask you if you have read all the evidence we have heard on this issue.
Senator Campbell: As a former steelworker, I have certain feelings towards the labour movement. I have to ask a couple of questions here. First, there was the issue of Regina's getting an opinion that said this would effectively take away their regulatory powers. If I am not mistaken, Vancouver also got an opinion and it was the opposite. I suppose, as always, it is a question of whose ox is getting gored when you get yourself an opinion.
Do we have to go to the lowest common denominator in this? Are we always going to the lowest common denominator when we deal with this agreement? It seems in a sense that we always drop our standards. Is that true?
Mr. Brown: There are two answers to that. The simple answer is that we have another legal opinion that says that there is a legal pressure downwards, that in fact within TILMA that is exactly the consequence — the lowest common denominator will have to be sought — that that is a legal requirement. If someone wants to go above the lowest common denominator they will have to prove that that is an acceptable exemption before they can do it. On the short form the answer to that is yes.
The downward pressure is much more compelling even than the legal argument. The whole point of TILMA, like other trade agreements we have seen, is to deregulate. The whole point is to get rid of regulations to make it easier for companies to move between jurisdictions. Frankly, as I said in my opening, and it comes back to your question, if we want pure, absolute free market within Canada then we have a whole bunch of things called provincial governments that are in the way. At some point, if we have the right of provincial governments to exist in Canada, there may be barriers, but those are barriers because people are governing.
The whole point of TILMA is to say there need to be fewer regulations, fewer barriers, fewer things that could possibly stand in the way of companies and their ability to make profit as they choose to in either of the two provinces. We have seen it in other trade agreements. It is an automatic end product of that kind of pressure.
Mr. Hubich: The reference to the city in Saskatchewan I believe should have been Saskatoon. The Saskatoon city solicitor actually did a legal analysis of TILMA from the perspective of municipal governance, what they could do and what the impact of that would be. You referenced a similar analysis by the City of Vancouver. There has been one just released this past week that is on the City of Vancouver's website currently that raises serious concerns from the perspective of the City of Vancouver vis-à-vis the impact and the implications of the trade of TILMA on the City of Vancouver's ability as well. There is significant and growing evidence of concern, particularly from municipal governments and other government entities that are being affected by this agreement with zero input into its crafting.
Senator Campbell: Thank you; I was not aware of the new opinion in Vancouver.
Let us move to the point that Mr. Brown made that a year from now we will be able to see who is right and who is wrong on this. What are the remedies allowed under TILMA? Are there any remedies to back out, to change or to alter?
Mr. Brown: That is a fascinating question. Not only is it very difficult for a government to get out of TILMA, but let us say for the sake of argument that in one or the other province the government that signed TILMA is defeated by a government that does not believe in TILMA. Technically, as I read the agreement, the new government can in fact pull out of it. I am not entirely clear on that, but I think that it is not stated and therefore is implied that a new government can in fact end the agreement. However, as you would know, the pressure on a government to stay in that agreement will be immense. Technically, Canada can get out of NAFTA, but every time anyone raises that as even a point of discussion, a huge amount of pressure comes to bear saying that it would be the end of the world and most economies would flame into bits and so on. The pressure on governments to stay in TILMA as it stands would be immense. As a practical matter, getting out of TILMA will be much more difficult than getting into it.
Senator Campbell: I am not suggesting getting out of TILMA. Every agreement is an experiment. Everyone can come up with figures, but it is a work-in-progress.
If there are difficulties with TILMA, how do we go about altering them? Can they be easily altered or are we locked into a position where we cannot move? Maybe Mr. Hubich, from Saskatchewan, could answer that.
Mr. Hubich: I am certainly not a lawyer.
Senator Campbell: You do not have to apologize for that.
Mr. Hubich: I never apologize for that; I am just making a statement. My other brother, Larry, is a lawyer, so maybe I will defer the legal questions to him.
I can give you an answer with respect to what has been portrayed as possible for other provinces to get into TILMA. Whether or not there is an ability of provincial governments, Saskatchewan, for instance, to get into this bilateral agreement between B.C. and Alberta, would the doors be open for a province like Saskatchewan to negotiate amendments to TILMA? The information I have is that B.C. and Alberta are saying that they might be prepared to tinker a little with this agreement, but really if you want in, you come in on their terms.
If that is the case, and if that is what is being suggested by the jurisdictions of B.C. and Alberta, I do not know why another province would want to get in, certainly not without the ability to negotiate. Personally, I do not know why they would want to do it in any event. If they are prepared to go to that extent, then I am doubtful about whether there is an opportunity for people to negotiate modifications.
There is a two-year phase-in process under TILMA to negotiate exemptions from the agreement. We think the whole process is flawed because it assumes that everything is in and the only way you are not covered by this agreement is if you negotiate things out. We have a fundamental problem with that as a concept: broad, sweeping, top-down agreements that cover everyone and that everyone is swept into, and the only way you get out is by making an argument that somehow democracy should prevail over this trade agreement. We think that is wrong-headed and anti- democratic.
The Deputy Chairman: Gentlemen, it is 5:15. I propose, subject to your further indulgence, that we adjourn for half an hour and reconvene.
Senator Goldstein: That is not enough time. From what I understand, there will be a standing vote.
The Deputy Chairman: In any event, we need to adjourn to go to a vote. A number of senators have not yet had an opportunity to ask questions. Our chairman, Senator Grafstein, is anxious to have the benefit of your answers to his questions. Your testimony is key to our study. As you will know from your own research, it is not at all in accord with the majority of the evidence we have heard, but it is cogent. You have supplied us with lots of backup and I think we need to investigate fully.
Colleagues, I take it you are ready to come back after the vote?
Some Hon. Senators: Agreed.
The Deputy Chairman: Gentlemen, it is up to you. Can we ask you to be available probably an hour from now?
Senator Eyton: Or another day. I have other committees coming along.
The Deputy Chairman: Mr. Hubich, can you be available?
Mr. Hubich: I am not sure. I am at the Saskatoon Club and I did not make the arrangements for the video hookup here. I am not sure whether someone else will be using the video or whether this room needs to be used by someone else. I would need to make some inquiries about what is possible. Certainly, if it is possible, I can come back. Alternatively, we could schedule another day and I could make myself available. I could come back to Saskatoon and we could resume the meeting, if that were preferable to the Senate. Whatever your wishes are, I will do my best to accommodate you.
Mr. Brown: Either alternative is fine with me.
Senator Eyton: It is very difficult.
Senator Goldstein: It is a very busy night. There is a Commonwealth meeting, the Canada-U.S. meeting. It does not make sense.
The Deputy Chairman: I hear the consensus that we should adjourn, but I would hope we can bring the witnesses back. I have some questions.
Each of us, as you will see, has been following these issues carefully. We have done a productivity study that demonstrates beyond a reasonable doubt that Canada is lagging behind in terms of productivity. We are trying to get at the roots of it and we believe that this is one of the areas that we have to focus on. We agree with you that this is a very complex area and we want to get the benefit of your wisdom before we decide what we should do.
We will adjourn, but at a convenient time we will bring you both back to continue this dialogue, if that is okay with you.
Mr. Brown: Could I give a quick answer? Sections 20 and 21 of TILMA do allow for either further negotiations or after 12 months' notice you can get out of it. I did not want to leave that incomplete.
The Deputy Chairman: Thank you very much. We will be in touch with you to fix another date.
The committee adjourned.