Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 7 - Evidence, November 22, 2006
OTTAWA, Wednesday, November 22, 2006
The Standing Senate Committee on Foreign Affairs and International Trade met
this day at 4:08 p.m. to examine the Canada-United States agreement on softwood
Senator Hugh Segal (Chairman) in the chair.
The Chairman: I will represent the other side pending the arrival of
my distinguished Tory co-religionists. Professor Helliwell and Professor Harris,
thank you for being there.
Welcome to this meeting of the Senate Committee on Foreign Affairs and
International Trade. Today, we continue our study on the Softwood Lumber
Agreement and on the dispute resolution mechanism.
Today we are fortunate to have with us two professors from British Columbia
appearing together via video conference: Professor Helliwell, Professor Emeritus
of Economics at the University of British Columbia; and Professor Harris,
Professor of Economics at Simon Fraser University. Both appeared before the
committee when this committee was under the chairmanship of Senator Stollery.
Professor Helliwell's research has covered many aspects of economics and
public policy. He is currently research fellow and program coordinator of the
Canadian Institute of Advanced Research's program Social Interactions, Identity
and Well-Being. He is a research associate of the National Bureau of Economic
Research and a member of the board of the Institute for Research on Public
Policy. His published books include How Much Do National Borders Matter?
and Globalization and Well-Being.
Professor Harris specializes in international economics and, in particular,
the economics of integration. From 1985 to 1988 he was a special advisor to the
Canadian government on the negotiations leading to the Canada-U.S. Free Trade
Agreement. He has published books and articles on Canada-U.S. free trade,
international macroeconomics, economic growth and Canadian public policy.
I would ask Professor Helliwell to please go ahead; he will be followed by
Professor Harris. After that we will have an opportunity to ask them questions.
John Helliwell, Professor Emeritus of Economics, University of British
Columbia: Mr. Chairman, I have been asked to discuss the effects of the
softwood lumber agreement, SLA, on the operation of the dispute resolution
mechanisms of NAFTA as they apply to trade between Canada and the United States.
My view on this question is straightforward and based on fundamental principles.
The SLA, and especially that part permitting the U.S. lumber producers to
keep 20 per cent of the duties paid during the dispute period, will inevitably
cause serious damage to the credibility and hence the effectiveness of the NAFTA
dispute resolution procedures. The reason for that is simple.
The NAFTA dispute resolution panels have continued to support the Canadian
case that the softwood lumber duties charged were not justified. This was also
the case during previous softwood lumber disputes. In the preceding instances,
however, cessation of the duties was generally accompanied by full return of the
duties paid, plus interest accrued during the periods those funds were held by
the United States. I understand the only exception was in 1996 when the dispute
resolution process was politically overridden by an agreement that involved less
than complete refund of the duties paid.
The Chairman: Mr. Helliwell, I wonder if I could impose upon you to
speak a little slower to facilitate our interpreters catching up and being at
speed with you.
Mr. Helliwell: To help them, I am in fact reading the document that
was sent to them this morning.
When the process was allowed to run its course, the injured parties were
repaid in full. This time that basic principle has been abandoned, hence
increasing the expected reward to those U.S. producers contemplating similar
actions in this or any other industry in the future.
More fundamentally, the purpose of trade agreements accompanied by their
dispute resolution procedures is to de- politicize trade and hence to make more
predictable the rules under which trade is undertaken. If the findings of trade
dispute panels are overridden by the political process, then the trade dispute
panels lose credibility and hence their value to the trading system.
What is the point of establishing an extensive dispute resolution process if
the government of the injured party abandons the system when the going gets
tough? Canada has invested heavily in the trade disputes resolution system in
the past, patiently fighting and winning case after case in a series of softwood
lumber disputes, each time having the patience to see the process to a just
All of this past investment is put at risk, and arguably lost forever, by the
current SLA under which the dispute resolution process was abandoned. The
sine qua non for maintaining the credibility of the dispute resolutions
process, given the series of decisions favouring the Canadian position, would
have been the full return of duties paid, plus interest, just as happened
generally in previous cases. The overall losses to the credibility of the
dispute resolution process are in my view likely to be even larger than the very
substantial sums directly involved.
The foregoing paragraphs were drafted to reflect general principles. I have
since had time to go over the unheralded decisions of the United States Court of
International Trade on July 21 and October 13, 2006. Together, these two
decisions show that complete vindication of the Canadian position and complete
refund of all duties paid was already in the cards, requiring only a few months
of patience. The July 21 judgment, based on the court's interpretation of the
NAFTA dispute resolution process, held that the duties were invalid, deferring
until later the determination of an appropriate remedy.
On October 13, 2006, one day after the rushed implementation of the SLA, the
United States Court of International Trade announced the remedy that all of the
duties collected, plus interest, were to be returned to Canada. This will
apparently now not happen because the agreement simply gives to the United
States $1 billion, plus interest, of the duties that their own United States
Court of International Trade was about to order fully returned to Canada.
If the Canadian government had not let politics trump the dispute resolution
mechanisms of NAFTA, the long process would have ended with the 100 per cent
return of duties, plus interest. Instead, the SLA has not only given up more
than $1 billion of unwarranted duties, but also accepted a number of other
provisions that will constrain the ability of Canadian softwood lumber producers
to trade freely into the United States. If my reading of these decisions is
correct, there has been a double loss for Canada. The NAFTA dispute resolution
process has lost credibility through being politically overridden and the
failure to wait out the process for only a few months longer has cost more than
$1 billion and the imposition of a number of unnecessary trade restraints.
The Chairman: I will now ask Professor Harris to give us his
perspective. We will then open the floor to questions.
Richard Harris, Professor of Economics, Simon Fraser University: Good
afternoon. As I understand it, this afternoon we are talking about the
interaction between the softwood lumber dispute and the NAFTA dispute resolution
procedure, in particular chapter 19.
The softwood lumber dispute has been the most visible and probably the worst
in economic terms of the various Canada-U.S. trade disputes subsequent to the
signing of NAFTA that have tested the proposition that NAFTA resembles anything
close to free trade. It is clear that most of the softwood lumber agreements are
de facto managed trade agreements and therefore represent a substantial
departure from the more general principles of free trade.
More recently, however, the ultimate resolution of this particular dispute is
being cast by some observers as a nail in the coffin of the chapter 19
The series of chapter 19 disputes under softwood lumber, and then ultimately
the extraordinary challenge raised by the U.S. government and the politicization
of that process, added significantly to the pessimism about the prospects for a
better dispute resolution procedure and a more substantial freeing of trade
between Canada and the United States. I share some of that pessimism.
It is also unfortunate from a timing perspective relative to what is
happening within the United States on the broader issue of trade liberalization.
I think there is a conjunction of events that are quite ominous with respect to
trade relations between Canada and the United States. More generally, we have a
virtual tsunami of Asian imports in the United States, which is raising
Democratic and Republican interest in pursuing protectionist agendas. Twenty-
seven of the Democrats who were elected in the most recent election campaigned
specifically on protectionist platforms. This in conjunction with very little
progress on improving living standards of average workers has led to the rapid
rise in polling results that show a substantial drop in American public support
for free trade.
If one puts that in conjunction with the potentially dramatic slowing of
economic growth, we are faced with a situation not unlike the early 1980s where
we saw a very considerable rise in U.S. pressures and protectionism. It will be
a severe testing of the NAFTA arrangements one way or another. That is
unfortunate, but that is how things seem to be working.
At the broader level, I am interested in Professor Helliwell's comments
regarding the fact that we had to abandon the NAFTA mechanism. We did abandon
the NAFTA process and pursue negotiations of managed trade in this sector. We
can talk about the net effect of that, but that was the result.
This might have very serious consequences one way or the other. One
consequence might be that if what I am talking about happens, we will see many
other sectors potentially pursue the same political routes to secure the same
agenda, which would be very unfortunate.
In the Canadian perspective, we have at this point very little alternative
but to muddle through. This is one of those cases where as a small country in an
asymmetric relationship, we do not have much choice.
We may be able to think seriously about the lessons learned from this
particular set of events. One of the lessons I take away is that if the chapter
19 procedure could all be reformed in the sense of elevating it from disputes
between private parties to raising it up a notch so we could push more disputes
to Chapter 20 where there are state-to-state negotiations involving national
interests, that would be a good thing. Other people have discussed that, but I
do not think it is likely in the immediate future. Perhaps that is something we
should think about.
On balance, I have made some pessimistic comments, but I think we should
close on a more optimistic note. Realistically, trade is still relatively free
with the United States. I think the chapter 19 procedure is viewed by most
people as having worked, on average, relatively well and in Canada's best
Anything we could do to secure and promote that dispute settlement process,
which is generally regarded as one of the best still in most regional free trade
agreements around the world, we should do.
The Chairman: I will take the chairman's prerogative and ask one
question of both of you.
We heard from distinguished academics yesterday from Georgetown University as
well as Gordon Ritchie, the former deputy trade ambassador. I think it is fair
to typify their assessment that while the SLA was not the best of all possible
arrangements, it made pretty substantial sense in the context of the changing
economic and trade political environment we now face.
I think it is fair to say that their concern about the Canadian International
Trade Tribunal, CITT, and those kinds of victories is that we have had many of
them on this issue over a long period of time. A successful litigation and a
case won produces for certain more litigation, which is great for lawyers but
does not produce resolution. There are benefits to be gained.
I do not want necessarily to buy into their assessment. However, I think it
is fair to say that that was the substantive part of the assessment they
offered. Dr. Helliwell, is it your judgment that those witnesses simply
Mr. Helliwell: If my understanding of those cases is correct, those
witnesses are absolutely incorrect to take that view. One way of describing what
has gone on here is seizing capitulation from the jaws of victory.
With regard to the hearing process, as I understand it, for the next steps
out of the October 13 judgment in the United States Court of International
Trade, the only appeal could have been to the Supreme Court or an intermediate
court. Therefore, the political process was not to come back into play.
One could simply play it straight, and the likelihood of its being
overturned, in my guess, is very small. They were very close to reaching the
right resolution. It is ironic, so soon after almost giving up the apparent
resolution, which would have vindicated the procedures and received all the
The Chairman: Assuming for a moment that the people on both sides of
the referenced political agreement had the best interests of their countries at
heart in the agreement they reached, would you attribute the profound
misjudgement on the Canadian side to incompetence?
I want to follow the line here. If they did something that was very wrong, do
you think they did so because they were incompetent?
Mr. Helliwell: There was a thirst to have a deal and get this behind
us. That is always the difficulty in these circumstances. It may be that people
thought the U.S. regime would be tougher to deal with later on.
However, if my interpretation of the role of the United States Court of
International Trade in the process and the subsequent steps available for those
judgments is correct, the repoliticization was not likely to happen. In that
context, patience has much to be said for it.
Of course, there was a substantial group of people in the industry arguing
the same thing, that it was a mistake on principle for Canada to have invested
years and years and millions of dollars in building the credibility of this
process to abandon it before its completion. The irony is that this particular
set of court decisions appears to have made that case more right than others
The Chairman: Professor Harris, would you like to add any reflection
to this discussion?
Mr. Harris: I disagree with Professor Helliwell on this. I think the
negotiators played the best hand they were dealt given the current
circumstances. I would not accuse them of incompetence at this point.
Senator Austin: It is good to see both of you again. Professor
Helliwell, I agree with your chronology. As Senator Segal has said, the
government is justifying this decision on the basis that there is an
asymmetrical relationship between Canada and the United States, whether it is
economic or political. In other words, the implied premise is that when the
chips are down, there is no way Canada could win no matter what the rules of the
That, as you say, Professor Helliwell, does not suggest much credibility for
the United States in Doha and its bilateral trade game negotiation with other
countries. I will make another point and then ask you to comment on my two
We have also seen the concession by Canada of the freedom of the owners of
resources, the provinces, to manage and govern their own forest policy. Both of
you are familiar with the forest industry.
Do you see any serious constraints to our economic advantage in the way in
which we have allowed the United States to audit and claim infraction if in any
way we amend our forest policies in our agreement to allow virtually the
unrestricted export of logs from British Columbia to U.S. mills? I put those
three questions to you, Professor Helliwell.
Mr. Helliwell: I heard two questions. There was one about the
credibility of the U.S. in other trading arrangements, and the other was about
the restrictions on the Canadian industry. Is there a third question I missed?
Senator Austin: Yes, the economics of the Canadian forest industry of
allowing relatively free log exports to the United States, which practice seems
to be rebuilding U.S. mills while Canadian mills are closing down.
Mr. Helliwell: I do not have any profound comments on the links
between this particular agreement and the credibility of the U.S. in
international tribunals, generally. I regarded these two judgments, the second
one of which I did not find any reference to in the press, to be very
encouraging to that process. The U.S. courts reported back to say that these
agreements have legal force in the United States. Now, that might have been
something that would not have been repeated in other areas. Looking ahead, the
bits about the U.S. role in the broader trade agreements depends much more on
the politics of that time and probably less on the details of the particular
operation of the SLA. Therefore, I do not see any implications of this
particular agreement for that.
The key restrictions that matter are the ones referred to be Professor
Harris. By the way, I do not want to be thought to say that I thought there was
ill will or incompetence on the part of the Canadian negotiators on this. They
might or might not have been able to foresee those judgments coming. I might or
might not have been misinterpreting their importance. However, given their
importance, there appeared to be a good return to waiting a little longer.
The agreement contains a number of restrictions. I agree with Professor
Harris that the most important ones relate to the quotas and the duties. The
economics of those duties essentially make the Canadian producers the ones that
are shut down when times are bad and the American producers carry on. That is
the nature of the way those duties operate. It is bad news for the Canadian
industry. Given that trees keep growing when they are not being cut, the overall
losses of that are much less than they would be if it were some other industry
that was not harvesting trees and selling them. The bank is still there but, in
fact, it makes it difficult for the cutting communities to keep a stable pattern
of employment. Taking the long view, the overall value of the forest resource is
not so badly affected.
Senator Austin: Subject to the pine beetle.
Mr. Helliwell: You are absolutely right about that. The push of that
pine beetle means cut now or never and makes these much more expensive than they
otherwise would be. Thank you for that qualification because it is enormously
important for a large number of the producers. My long-term point is in some
ways less important than the short-term one you raise about the real waste that
is likely to be entailed or the high cost of getting those trees into U.S.
If you constrain the normal lumber trade, then that naturally causes the
alternative open channels, in this case the raw log exports into the United
States and, of course, diversification of trade into other markets, to look more
attractive. In the long run, the idea of gradually moving toward a more
sophisticated product sold in the global market is probably a good idea.
Exporting raw log is, perhaps, a way of covering some of the difficulties posed
by quota plus the tariff system, but it is not the right way to run an industry
over the long term.
Senator Austin: I guess the bottom line question is whether the B.C.
forest industry is better off or worse off as a result of the softwood lumber
Mr. Helliwell: If my interpretation of the U.S. cases is accurate,
then the B.C. industry is much worse off. If all the duties had been returned
and the U.S. was constrained from levying such duties in the future, then they
would have had a much better run than they will get either financially or in
terms of future quotas and taxes under the SLA.
Senator Austin: Thank you. I would ask you, Professor Harris, to
respond to the same series of questions.
Mr. Harris: They are great questions. I will say that when the
agreement was signed, the price of lumber was around $355. It is now down to
about $215 or $220, although it may have gone up a bit recently. We are already
in a regime where we will have to go to these managed trade solutions. Given the
way that things are going in the U.S. housing market, it is likely that this
will be the case for a considerable period of time into the future.
Is the U.S. forest or lumber sector better or worse off? Well, my hypothesis
is that the alternative would be something similar to what was already going on
and that it would persist. Therefore, the agreement does represent an
improvement for all the forest product companies and their workers in Canada
relative to what was likely to happen. However, if you were to take the point of
view that we were going to get free trade in lumber, then you could come to a
different conclusion, and I accept that.
The export of logs issue is interesting. In general, it is extremely
difficult, once you start trying to assess the economics of these managed trade
agreements without the details of each of these individual components. Probably
it would not be difficult to make the case, however — famous proposition of the
theory of the second best — that it is not inconceivable that we are worse off
from having given up control of log exports, given that we do not have genuine
free trade. If we had complete free trade, then we could probably come to the
opposite conclusion. In this instance, I think we are suffering what we call
"terms of trade deterioration'' in this sector, with reduced access.
Essentially, we are giving up another instrument with which we could effectively
improve the situation of the industry. I would have to conclude, without doing a
detailed analysis, that we are probably worse off with that particular
Senator Corbin: Does the U.S. court ruling still create a legal
precedent in terms of being useful in future litigation?
Mr. Helliwell: I regarded the July 21 decision followed by the October
13 decision — 6109 and 6152 — to refer to the long term and not only to this
situation. They strengthened the arm of the dispute resolution panels. There is
some possibility of learning from mistakes, of benefiting from these
advantageous decisions in the United States Court of International Trade and of
having a stronger hand to play in the future.
Senator Corbin: You hesitate to qualify the Canadian negotiators as
incompetent. I suppose you were not party to those negotiations, but do you
think that the Canadian negotiators were bullied by their American counterparts?
Mr. Helliwell: I do not know. What they came up with is not what I
would have come up with, but it is hard for me to say what their reasons were or
and what went on in the meetings.
Senator Corbin: Is it not strange for a common onlooker like me or the
guy who works at one of my local sawmills to find, after days, weeks or a month
or two of the expectation that the court would fall on the side of Canadian
complainants, that suddenly we would seed the ground that leaves the impression
that the Canadians somehow were bullied? You might not want to comment on that
but that is what I sense.
Mr. Helliwell: It was either bad luck, bad management or forces of the
sort that you describe. Those are probably the options.
Senator Corbin: We will leave it at that for now.
Senator Di Nino: Professor Helliwell, I believe you said that NAFTA
represents anything but free trade. I wanted to clarify what you meant by that.
Do you agree with the opinion that has been expressed by numerous witnesses from
whom we have heard that, in effect, the free trade agreement between the U.S.
and Canada has been a great boon to Canada and any disputes that we have had
through the dispute settlement mechanism have worked predominantly in our
favour? In fact, Mr. Ritchie said yesterday that chapter 19 has done just that.
Could you comment on that?
Mr. Helliwell: I do not think I said that NAFTA is about anything but
free trade. Perhaps that was Mr. Harris.
It is possible to make a general comment about the dispute resolutions
process. My interpretation of these most recent decisions is a big vote of
confidence in that process, of which I was previously rather sceptical partly
because it was treated in a bit of a scofflaw way by the United States.
If you want me to discuss NAFTA in general, that is another set of questions.
Senator Di Nino: I thought the comment had been made by you, but
perhaps it was Professor Harris. I was taking notes and I could have made an
error. I thought I heard that NAFTA represents anything but free trade. If that
was not the case, then I withdraw my question.
Mr. Helliwell: I do not think I said that, but there is a sense in
which I agree with it. There is an important feature of NAFTA that has to do
with the rules of origin which in fact are antithetical to free trade by cutting
out third countries in a way that would not have happened without the agreement.
It is a general feature of preferential trading agreements. They are made worse
when the rules of origin are more subject to the control of industry groups.
Unfortunately, that is what has happened both in the original FTA and in NAFTA.
These rules of origin became more and more under the control of the North
American industries, which has then allowed them to use the provisions of NAFTA
to damage free trade at the global level, which of course is what everyone would
prefer to see.
Senator Di Nino: I have three quick questions that I would like to
pose to both Professor Helliwell and Professor Harris.
First, once the United States Court of International Trade decision came
down, could it not be challenged?
Second, it has been quite emphatically suggested by witnesses that the
dispute settlement mechanisms contained in NAFTA and the FTA are actually a
better vehicle to use as opposed to the remedies available in the World Trade
Third, are there other remedies, other things that we may or may not have
done, or things we should be doing to lessen these kinds of irritants that
happen in the trade relationships between our two countries?
Mr. Harris: It was I who said that NAFTA was not free trade. The
reasons are simple. The first is because of the preferential aspects the rule of
origin. The second is because of the fact that we do not have a commitment to
free trade given the application of administrative trade rules by both Canada
and the United States. We have had many disputes. When the deal was originally
signed, the great failing on the part of the negotiators, particularly on the
Canadian seat, was not to secure release from those types of arrangements.
However, that did not work and we ended up with the dispute settlement
mechanism, particularly chapter 19 instead, which covered countervail and
The Court of International Trade decision can be appealed to the Supreme
Court of Canada. I am not a lawyer. Thus I have no comment about that.
As to NAFTA versus the WTO, if you look at the functioning of the panels, the
mechanisms and the disputes that are brought forward in the literature on
international trading disputes, you can make the case that the NAFTA dispute
mechanism has been one of the best functioning in the industrial world. The WTO
procedures occasionally work. However, they are extremely cumbersome. It is
never timely. Unfortunately, there are many cases in which the participants or
the parties end up for extended periods in abrogation. I think there is some
disenchantment with what is going on with the WTO at the moment. That may
represent, in part, a broader phenomenon.
I will now address other remedies to lessen irritation around trade between
Canada and the U.S. Broadly speaking, 90 per cent of the trade between the
countries has basically been irritant free. We have a history, in particular in
agriculture and lumber. There are old, political, long-time interests in both
countries, but in particular in the United States, that have made progress in
these areas very difficult.
In the immediate future, I do not think there is any prospect for doing
anything about lumber. However, I think there are reasons to be optimistic about
what might happen in agriculture. The agricultural sectors in both Canada and
the United States have gone through a long period of structural adjustment.
There is some rationalization going on. World prices for agricultural products
are increasing significantly. Thus we might see a sea change in attitude,
particularly on the U.S. side, regarding doing something about agriculture.
In my view, that would be enormous progress. It would be enormous, first, for
its demonstration effect for the rest of the world. The reality is that we were
not able to make any progress on this important sector either in the FTA
negotiations or NAFTA and it was a bit of a block. That is one way to proceed.
Mr. Helliwell: My understanding is that the next route would be to the
Supreme Court of Canada with, perhaps, an intermediate stop. Another unfortunate
feature of the SLA was that that process was not allowed to work itself out.
Thus we do not have, as it were, the final definitive word yet. It will be
important to take that last step in order to settle the strength or not of these
NAFTA procedures once and for all. It would have been nice to have that done and
locked up if it worked out as I thought. It would have then been a big extra
strength in the NAFTA procedures.
If that had been done, or when it is done, if it goes through to support the
current judgments of the Court of International Trade and hence the NAFTA
procedures, that will be a big mark of confidence in those NAFTA procedures. In
general, it will make them stronger than the WTO procedures for the reasons that
Mr. Harris suggested. If not, then it is a more open situation.
As to other options or remedies, the most advantageous thing you can do, if
you are dealing with a very large partner, is to ensure that you keep your
options open. I have thought for many years that Canadian firms and governments
alike were ignoring the fact that economic growth in the rest of the world is
bound to be faster than it is in North America. If you wanted to hitch your
trade patterns to people who have different comparative advantages and are
faster growing than the United States, that is where the long-term advantages
were likely to be. At the same time, an offshoot of that is that by giving you
more options it strengthens your bargaining hand when dealing with a larger
Senator Mahovlich: I am seeing this not as incompetence but as
political. Politics trumps economics. I think when the new government took over,
they said, "Let us get this settled. We will send Ambassador Wilson and Minister
Emerson and get this deal done at any cost,'' and the cost was $1 billion. Is
that what it was?
We had Gordon Ritchie as a witness and he thought that the NAFTA dispute
settlements that we have are in order; he has confidence in NAFTA. He seems to
think that it should not change, that we should keep it the way it is. How
should Canada view this? Every time a problem comes up now will we solve it
Mr. Helliwell: The case I was making was that to turn to politics and
away from the established process is almost surely going to cost money and
long-term credibility, both of the process and of the trade relations. It is a
very costly thing to do. The costs are paid not just in the current agreement,
which seems to have been the case, but for the long term, because it then
strengthens the hand of those industry groups that have the capacity to go to
congressional members and launch another action. It is enormously important for
countries like Canada, the smaller partner and more dependent on the openness,
to support and play out the objective, independent dispute resolution processes.
There is also a long-term advantage to not making a politically inspired
agreement. In this situation it rather looks like there were losses, both in the
agreement itself as well as for the future. It is not just the $1.25 billion,
which it is with interest, but also the accepting of a very highly regulated
lumber trade at the current time, which is not only regulated but also not in
the Canadian interest.
Senator Stollery: I welcome our two witnesses. We met last time in
Vancouver when we were reviewing the free trade agreement a couple of years ago.
I recall a question at the time and it seemed to me that most of our trade with
the U.S. had historically been relatively dispute free. The whole reason for the
free trade agreement was because of the fear of oncoming American protectionism.
That was the raison d'être for Mr. McDonald's proposals, as I recall.
When we last met we were discussing whether the free trade agreement or the
exchange rate was actually a major factor in the 10 per cent increase in our
trade with the U.S. between the time of the signing of the agreement when the
Canadian dollar was at roughly 80 cents or a bit more and then dropped to 63
cents. I remember those conversations with our witnesses.
I believe I am the last one here who was a member of the committee when the
discussions took place about the free trade agreement and who accompanied the
committee to Washington when Mr. MacEachen went after Congressman Gibbons, who
was the U.S. promoter of the free trade agreement. It was a very dramatic
meeting. Senator MacEachen talked very effectively about the fact that the
dispute settlement mechanism would at some point break down. I am sure that
anyone who was at that meeting will remember that.
In terms of the lumber business, people are asking who is responsible. Some
are saying it is the bankers. The lumber companies were in such debt to their
bankers that the bankers really dictated the agreement. Whether you like the
agreement or not, it seems the bankers had a lot to do with it.
I am getting around to my question. It is complex. It seems to me what
Professor Helliwell says is very important. We are dealing with a country that
in population is nine times larger than we are. I know from conversations with
experts on the WTO that one reason the dispute settlement mechanism is not
tougher is because of the fear that the U.S. political system, which does not
like to lose, will leave the trading system. This is really what happened with
the softwood lumber agreement; is it not? They left the agreement and refused to
subscribe to the agreement that they signed.
Our major trade agreement is with our neighbour and biggest trading partner,
but where does that leave us? Long before the free trade agreement, our disputes
have always been over primary products. We heard in Winnipeg of 11 different
challenges against the Canadian Wheat Board. The Americans used legal fees as a
way of penalizing us; if they lost a case, they would immediately start another.
I believe we were told, and Senator Di Nino would remember, they brought the
same case 11 times against the Canadian Wheat Board.
Where does this leave Canada, which is so dependent on trade? We have not had
a discussion about trade since the MacDonald commission and that is now 20-some
This is my question: All countries have problems with their neighbours, not
just Canada, but when our neighbour and our big trading partner is a country
that may actually leave the trading system if they start losing too many cases
at the WTO, what do we do? Where does that leave us?
The Chairman: A rich range of questions is implicit in my colleague's
reflection and questions, so please feel free to share your perspective with us.
We will benefit immensely from that.
Mr. Helliwell: There are two remedies available to countries like
Canada in that uncertain trade environment. One is to keep investing in the
process. It is always true that investments in the international institutional
network always pay bigger dividends to the smaller countries than the larger
ones. The problem is always to get the larger ones to play by those rules
because often they have more to gain by simply waving their large stick.
If you ask how many years it will be before the United States is no longer
the world's largest economy, the answer is probably within 10 years. At current
growth rate differences between China and the United States, the Chinese
economy, at purchasing power parody measures, which are the real ones to measure
the size of the economy, will pass the United States within, I think, seven
years. Because the largest part of the world's population is starting out
poorer, they have the potential, once the resources within them, essentially
human, are unlocked, to grow faster. What also happens is that countries' trade
shares grow even faster than their GDP. As a share of world trade, the non-North
American countries are growing incredibly quickly. I have been arguing for years
that in this country we play too much to historical trade ratios and not enough
to looking further down the pike at the possibilities for the future outside
This applies elsewhere as well, not only in the policy arena. I think it is
turning around in most trading countries of the world. You will find countries
explicitly opening their doors to the faster growing areas and making
investments that count; in other words, establishing knowledge exchanges, human
capital exchanges and the relations that make trusted trade work. The
international framework will always be part of that.
That is a broad picture of where we should be heading to diversify. In the
bilateral case, we must continue investing in those procedures. NAFTA should be
carried right through the procedures.
We must remember that these actions before the Court of International Trade
were launched by Canada, by the producing provinces and by the firms. We could
say the industry did not have deep enough pockets to carry on. Many did have
deep pockets, but that is what governments are for, to backstop the necessary
costs of building and maintaining the credibility of the international system.
Just as the government is paid for negotiating the treaty in the first place in
order to ensure the dispute resolution mechanisms are worth something, the
government must in turn pay the major costs of taking them through the legal
In my interpretation of those cases, they were very close to reaching a point
where those procedures would have looked good and that money would have come
back. Now we are saying it should fall back, but I would not give up. I would
try to re-establish the fundamentals and invest heavily in the procedures. In
the future, I would not allow Canada's interest in a fast settlement to dominate
the overriding long-term interest in a better system.
Mr. Harris: This is a very big question to address. It is true that
these cases arise in Canada every 30 years or so. Central Canada is in a lot of
As a result of the forces Professor Helliwell talked about, the primary
resource-producing provinces are in very good shape. That future is pretty
clear, and I do not see much in the way of hiccups no matter what happens by way
of Canada-U.S. relations.
If you were to contemplate a very serious disruption in Canada-U.S. trade
relations, I think it would put our entire manufacturing sector into crisis. We
have a situation now where the automobile industry is on the edge of
technological competitiveness. The industry must go through a great deal of
rationalization. We do not know what the U.S. will do. Whatever the solution, it
will either be a made-in-North America solution or a made-in-U.S. solution. If
it is a made-in-U.S. solution and Canada is out, then our auto industry is
basically gone. Those are the decisions one must face.
That does not mean that looking 10 or 15 years down the road you could not
come out the other side and Central Canada might look like Finland, but that
would be a very tough go, at least a decade or more, to get to that side.
We have a lot invested in this trade relation. The fact is, we will have to
invest more in the medium term and hope that politics in the United States turns
around. There are reasons to be optimistic in the longer run.
Senator Downe: On the topic of trade, it has always struck me that
Canadians are quite rightly concerned about the large volume of trade we do with
the United States, but we underestimate the large volume of trade Americans do
With respect to your comment that Central Canada could end up looking like
Finland, I am not sure whether that was a compliment or a criticism.
What is your view of the U.S. concern that their trade may be blocked at the
Canadian border? According to the last figures I saw, they sell 25 per cent to
30 per cent to Canada.
The Chairman: We are the primary export market for 37 American states.
Senator Downe: Do you know the percentage?
The Chairman: The problem is that exports are not as important to the
United States compared to their domestic market requirement, so that is the
countervailing proposition. I will let the genuine experts reflect on your
Senator Downe: You are from the West Coast and may be better informed.
According to the recent figures I saw, there is about $20 billion worth of trade
with California alone. That seems to me a significant figure.
Mr. Harris: The United States is and remains Canada's largest trading
partner, but we are also one of their slowest growers. That was Mr. Helliwell's
Americans face the same dynamics we do in the sense that, if you look at
where trade growth is likely to occur, it is unlikely to be Canada. Given our
current state, the level of trade between the two countries is very high and
persistence in the trade pattern is very stable. It is unlikely to change
quickly, barring a catastrophic event.
The fact is that Canada is not on a world scale one of the fast growers and
is not likely to become a fast grower. Therefore, the U.S., as most other
industrial countries, will be looking to China, India, Brazil and such places to
increase their export market share. Over time, at the margin that will become
Mr. Helliwell: On the question of the car industry, there is another
way of thinking that one out, which may involve reinventing the North American
Behind the scenes, there has essentially been a rebuilding of the North
American industry, which are the Toyotas and Hondas, which are more or less at
the world level being more at the technological front. They have a deep and
abiding presence in both Canada and the United States. Even if relations between
Canada and the U.S. did become worse, Toyota and Honda are not likely to decamp.
There may be difficulties posed with respect to supply management if it becomes
tougher across the border. However, I think that kind of relationship of plants
owned by other countries in North America in general and in Canada is a big
offset to what we have in terms of reliance on the old big three.
There was a question about U.S. dependence on our trade. One point Mr. Harris
did not make with respect to this topic is one that I make frequently. Borders
still matter an enormous amount. Countries trade about ten times as intensely
within their borders as across borders. When you combine that with the fact that
there are a great many big, separate economies within the United States — the
states themselves — the actual share of GDP or total shipments by a firm in the
United States that actually go to Canada is pretty small. There are obviously
some exceptions to that.
It means that countries like the U.S. on one hand and China or India on the
other hand have huge domestic markets that permit them to be more strategic in
their use of foreign trade than is either desirable or politically possible for
the more open and smaller countries like Canada. Possibilities in structure will
always make us hostage to the fortunes of politics in the big powers.
Senator Eyton: I have had quite an intense involvement with the
softwood industry, including in British Columbia, going back to the 1980s. I
recall vividly that even at that time softwood lumber was an issue. Over the 20
intervening years, it has continued to be an issue with constant debate, some
interim agreements, adjustments and provisions but always on one side the
Canadian industry and Canadian government and on the other side the U.S.
government funded and propelled by very rich and determined American
competition. Based on my experience, I consider softwood lumber to be special or
different from many of the other issues simply because it has been around so
long and seems so difficult to deal with.
Finally, we have come to a softwood lumber agreement between the two
governments. It has been accepted by the rich and determined American
competition for good and bad reasons. However, that agreement is also supported
by a great majority of the Canadian industry players.
Given all of that history and the continuous difficulty we have had in
dealing with softwood lumber, I wonder, in particular, at Professor Helliwell's
faith that the legal process to which he refers was in fact going to work. That
seems a touching faith that things will work out as they should. I cannot
imagine that other actions will not have been taken by the American industry in
particular so as to pre-empt the effect of the resolutions you referred to.
Professor Helliwell, can you comment?
Mr. Helliwell: The longer the dispute goes on the more that kind of
pessimism becomes rational. People say, "How long can we carry on?''
It rather appears we were closer to a longer-term resolution that would have
been rules-based rather than politics- based than we had been in the past. The
actual nature of the solution, as Professor Harris said, was not good for the
industry in terms of the managed trade we are in now to the disadvantage of the
Canadian industry. In fact, half of that $1 billion is going right back to the
industry group that was responsible for proposing the duties in the first place.
Thus their hand is strengthened doubly. They get an agreement that is good for
them and full payment for all their past expenses. Thus the likelihood of their
trying again is greater.
The only thing that can make me at all optimistic about the future not being
too badly damaged is that at least some of these cases seem to have been
establishing a precedent that would mean that it is possible in the future to
have more confidence in the system and to push it through. That would be good,
not just for softwood lumber but, of course, for all the other industries that
rely on these NAFTA dispute resolution procedures.
Senator Eyton: It seems to me the alternative is to fight on forever
with no cash down, as opposed to something in the order of $4 billion being paid
to Canadians now, with continued harassment and ongoing litigation and with
adverse affects to a variety of our relationships with the U.S., trade and
otherwise. Under the circumstance, the agreement, although not perfect — and we
all recognize it is not perfect — represented the best alternative.
To that, I would add that the Canadian industry does not need to sell to the
U.S. There is a great big world out there. If in fact you choose not to play the
American game, there are vast markets, particularly in Asia, available for
producers in the West. I think a scenario with the cash and some settlement with
the U.S. and some ongoing resolution of that difficulty is managed, and they
still have an option to go.
Can you comment on that, please?
Mr. Helliwell: I am an optimist, so I think you start from where you
are and make the best of it. One helpful consequence is that it probably will
force or encourage the industry to be more global and less tied to the U.S.
market than it was before. That will impose some adjustment costs and new
thinking for them. In the long run, that will help their strength and stability.
If the agreement itself had been better, not just in the distribution of who
got the duties that had been lodged, but in terms of the efficiency of the trade
that will come about under the agreement, I would have rested easier than I am.
In other words, was it worthwhile giving up on the credibility of the process in
order to get this rather specially good agreement? I do not think so.
Hindsight is easier than foresight, but the point is the agreement is there
now. You do the best you can under the circumstances we are in.
Senator Eyton: Would you agree that softwood lumber was an unusual and
Mr. Helliwell: Absolutely. A couple of years ago I would not have
thought that the softwood lumber rulings of NAFTA panels in Canada's favour
would have found full and authoritative support within the U.S. court system,
which is what is required to make it best. You have to have something whereby
the government has to override its own Supreme Court in order to reimpose
something or to let the industry come back and start again.
This is all hypothetical. However, my guess is that had this been allowed to
go through to the Supreme Court and these duties been returned and hence
obviously dropped, I do not think the industry could simply have rolled out the
same tools and tried them again, because they had been so explicitly and so
recently ruled out of court. There may well have been other harassments
available to them, which is something you have to guess about, and I am not able
to do so.
The Chairman: Professor Harris, did you want to reflect on either of
the senator's questions?
Mr. Harris: As to the question of the uniqueness of the situation, I
think it is unique in a historical context in the sense that it represents a
series of decisions and political circumstances that led to this particular
outcome. However, it is certainly not unique in terms of the economics. We can
imagine many of our industries being potentially put at the same risk. Prior to
the FTA, the steel industry in Canada was in similar circumstances.
The other thing about the managed trade business is that this may be the
thin-edge-of-the-wedge problem that I referred to in my opening remarks.
Historically, we have had many managed trade relationships. The automobile
industry was initially a managed trade relationship. It could be that the
response to these forces will be a backing off from what we call free trade. In
fact, the industries may start to seek managed trade solutions on a
sector-by-sector basis. That is not inconceivable. There is a long history of
In many ways, the history of those arrangements is much longer than the
political history of free trade. The lumber case is a very important object
lesson in many ways, one being that it could repeat itself. Therefore, you must
be cautious on that front.
The Chairman: The question I want to ask both our guests is with
respect to the diversification of our trade patterns. I am thinking in
particular of the work done by Professor Helliwell on the effect of borders and
the prospect of our diminishing our reliance on the U.S. marketplace by
increasing our focus on places like China and India and accepting the principle
of path dependency, which works in politics and economics where it is tough to
get out of an existing furrow that is quite comfortable to begin a new furrow
simply because the transition costs are quite substantive.
I am interested in both your reflections on this point. If there were to be a
consummate decision by a Canadian government to focus intensely on China and
India, what would you recommend as some of the instruments to facilitate that
kind of constructive transition? What would you see as some of the transition
costs, given the proximity of the American market, the relative ease of access,
with all the difficulties we have reflected upon, as opposed to other markets
which, while growing rapidly and tantalizing in many ways, do have some of their
own barriers to entry that are not without cost to Canadian exporters,
manufacturers and the like?
That is a large question but take any part that you feel comfortable with
because it would help the committee in its deliberations and recommendations.
Mr. Helliwell: I have done some modelling of the trade densities among
countries to determine whether they are uniquely high between Canada and the
United States compared to Canada and other countries after adjusting for size
and distance. The answer is that they are not dramatically so. By and large,
trade decisions are made by individual firms the way they ought to be made.
Trade decisions are not a direct response to government policy. Governments are
framework builders and should remain as such.
In talking about the increased concentration that I advocate to form markets,
I say to policy-makers: Do not focus preferentially on the Canada-U.S. link but
treat all of your links to frame and build the system so that the doors are as
open to the rest of the world as they are to the United States. That does not
mean building preferential trading agreements with any country. I am not a fan
of such a system. I want an open system where individual firms will move on
their own opportunities and contacts.
I understand from my work on borders on the one hand and migration,
off-shoring and other similar things on the other hand, that productive,
low-risk trading relationships take a long time to build successfully. You
cannot expect things to happen immediately. Should they be pushed by government?
No. Will they or should they be managed by government? No. Should the government
be open to listening to industries and individual firms about blockages they
might be facing or about contacts that might help, because sometimes
government-to-government arrangements can help business and industry to move
forward? Yes. The whole idea behind many trade offices is to provide better
knowledge and understanding than the industries might have obtained on their
The migration and education patterns in the world are such that most of these
linkages are being generated industry- by-industry and by the connected
individuals and firms. They quickly develop links of identity and quality that
could not be dreamed of at the government level. It pays for the government to
have a baseline set of services that they will offer and join a team at times.
However, the private sector ought to direct this and the government ought not to
emphasize preferentially the North-South linkages in the way they have been
doing. Government should be more symmetric.
Canadian trade will become more global and less North-South because of the
difference in growth rates, which is what will drive it. The rest of the world
is opening up and growing faster. Both of those will take our trade where it
was. Should that then be treated as a bad or good thing? With respect to
management of Canada-U.S. trade, it is a good thing because your eggs are not in
one basket. Do I recommend countervailing agreements with other countries? No.
Let us make the whole system as open as possible.
Mr. Harris: To be honest, you are asking a difficult question. If you
let market forces dictate where things go, you would pick up on two trends. In
primary commodities it is clear that our trade will become more diversified in
any event because of the growth phenomena that Professor Helliwell referred to.
Even if we sell natural gas into the Chicago hub of the U.S., the reality is
that it will be at a globally determined price. Therefore, the particular
geographic composition of the trade is not important.
With respect to manufactured processes and services, I have a different view
than that of Professor Helliwell. The primary drivers are large global
corporations and Canadians will be employed in those industries. The value-added
generated in those industries will be based on decisions that are based on those
large corporations. It is unfortunate, but the fact is that the linkages held by
Canadian firms to the broader networks will determine whether we succeed or
fail. Much more will matter than whether the government has trading issues.
Unfortunately, that likely means that in the technology sector and high
value-added industries, the linkages with the United States will become deeper.
Back to the absence of government intervention. The chances of that happening
are slim to none. For example, energy could become incredibly politicized. All
the signs point to that happening now. There will be big strategic decisions
down the road about what to do in energy, given Canada's role in that market. I
do not think we can take it as a done deal that India and China will be free
traders. History has examples of large, fast-growing countries turning inward
and not outward to the markets. One can imagine the ends of this particular
cycle being about U.S. protectionism followed by India and China bowing out and
moving to the domestic model. In both cases, Canada would be on the outside of
that. It would be useful to develop a political dialogue to help us now.
Certainly, we could not control it and we would be a very small player in that
Senator Stollery: This has been an extremely useful discussion.
Clearly, some of us thought that the softwood lumber agreement would lead us
into the whole area of Canada's trade direction for the future and what Canada
should do about trade policy. Over the next little while, the committee will
look at this from time to time. I thank our witnesses for appearing this
The Chairman: I express profound thanks to Professor Helliwell and
Professor Harris. I should tell viewers and others that these two scholars give
their time to this committee on a pro bono basis, which we appreciate very much.
Professors, our understanding of the issue has been helped immensely by your
intervention. We thank you for the time you have taken to share your perspective
and your experience on these issues with us.
Honourable senators, we have a small administrative matter to address. We
have a prophylactic budget of $4,500 in the event we are asked to consider other
matters such as Bill C-24 that may come before us. This is advice from committee
staff as to what might be necessary for us to do in some constructive way. That
is the bill dealing with softwood lumber. We do not know.
Just in case, as they say, whether it happens or not, we want to be at least
prepared and to have the authority to spend these quite reduced amounts for our
Senator Stollery: I move the adoption of this budget.
The Chairman: Do we have a seconder? All in favour? Contrary minded,
Hon. Senators: Agreed.
The Chairman: Passed. Thank you very much.
Senator Stollery made a fascinating, thoughtful comment with respect to the
broader trade issue which is clearly emerging in the discussions we are having.
I am the last person to offer any authoritative review or opinion on what
constitutes the nature of our reference from the Senate, but my understanding of
the reference under which we are operating now is to deal with softwood lumber.
I am not troubled by going back to the Senate for a reference for a broader
discussion, but I do not believe that the present reference — that the committee
analyze, among other things, the impact of Canada's resource management on
sovereignty, the impact on the interpretation of NAFTA chapter 11, and the
provisions contained in the SLA agreement with regard to financial support for
the industry and its workers — would necessarily be broad enough to have a much
more detailed discussion. If colleagues have a view on the matter, they could
share that view with the members of the steering committee so that we can
benefit from your advice and counsel. I am in the committee's hands.
Senator Di Nino: I think you should review the general mandate of the
committee. I suspect you may find that, particularly under the newly changed
moniker of the committee, which is Foreign Affairs and International Trade, we
have some broad authority under which we may be able to conduct business. That
is just a suggestion.
The Chairman: Without a separate reference?
Senator Di Nino: If you are to do specifics, you may need a reference.
Within the mandate, we, as a committee, have certain authority to initiate
actions dealing with issues that fall under the broad mandate, and international
trade is certainly quite specific.
The Chairman: Other views, colleagues?
Senator Corbin: The question left to be resolved is whether we ask you
to seek an extension or respect the date on this reference.
The Chairman: That is a very good question. The date we now have for a
report on the existing reference with respect to softwood lumber is November 30,
which is eight or nine days from now. We have finished, I think, all the
scheduled hearings on this matter, and we certainly have enough information to
do a report narrowly on the matter we are asked to reflect upon, but I am in
Senator Stollery: I do not know if I have spoken to everyone. I am
working with Peter Berg on our Africa report. I talked with him about it earlier
Why do we not just ask for an extension of this reference? I think what
Senator Di Nino says is right. We can poke around with this. We have had a
couple of very interesting meetings with very interesting witnesses. I do not
think that we need another reference to pursue this from time to time. We may
decide that we want to have a reference, but why do we not just get an extension
on this reference? That, combined with the fact that we are the Standing Senate
Committee on Foreign Affairs and International Trade, would allow us to pursue
it and then decide whether we want to get a reference. Does anyone else have any
thoughts? This is maybe something the steering committee can decide.
The Chairman: I am glad to get the views.
Senator Downe: I have a contrary view in the sense that I believe that
we should finish the mandate we have been given. At the same time, I think
Senator Stollery raised a good point about the importance of international
trade, particularly considering what we heard today and knowing the emerging
markets and what the government is doing to advance Canada in those markets.
I was shocked when I had the opportunity to go to Chongqing, China, where
there are 30 million people and one trade person in an office trying to deal
with that type of economy. We heard yesterday about how Mexico has a massive
expansion of diplomatic consular trade officials in the U.S. One witness spoke
about how the Mexicans are flooding congressmen and senators with additional
information, more than Canadians are doing. If we cannot even keep up our trade
presence in the U.S. as compared to the Mexicans, what are we doing in emerging
I think Senator Stollery raised an issue that the steering committee may want
to consider as a future study for this committee. It is a much bigger issue than
an add-on to what we are now doing. Therefore, I would recommend we wrap it up
and the steering committee can come back with a recommendation about future
Senator Eyton: I agree entirely with that. It seems to me we have a
pretty good understanding of the softwood lumber agreement. We have had
witnesses and I think we can write an intelligent and useful report.
The description of international trade, of course, is a vast subject and it
seems to me to be useful in any further study. We should focus on some aspect of
international trade so that we can render a useful report. Perhaps your
suggestion in terms of the efforts we are making now to promote trade with our
countries and the deficiencies that may exist would be a useful one.
Senator Corbin: Why not take note of these comments and discuss the
matter further in Internal Economy and then report back?
The Chairman: The steering committee. I am glad to do that. That is
very good advice.
I want to encapsulate what I hear colleagues saying. I hear essentially that
there is value in bringing this narrow- gauge study on softwood lumber to an end
on time. We have already sought one extension on it. Then we consider, at
steering committee as well, what the frame of reference might be for a larger
study on the brick and notional trade development issues in other fast-growing
economies and that we consider that as an area of potential study down the road.
I want to be clear that that is what I am hearing and that that is what the
steering committee can consider on your behalf.
Senator Di Nino: I do not have a problem with that. I do not want to
prolong this. The comment I am making is that as a committee we have a mandate
to look at foreign affairs and international trade. If you are going to look for
a specific mandate, it should be wide enough and large enough so you do not have
to go back each time you want to add something, other than that you have to go
with the budget, obviously. That in itself brings a certain discipline; we do
not have carte blanche to spend whatever we want. We still have to go through
the process. We need a mandate that would allow us, if the committee so felt, to
conduct investigations or look at issues dealing with foreign affairs or
The Chairman: Just so colleagues are aware, the matter of the Lebanese
evacuation question we can deal with in the coming year. That deadline is in the
spring. The Africa matter we have the option of concluding and reporting on,
depending on how that goes, before the end of the calendar year. If we did
decide at the steering committee to recommend that we close the proposition with
respect to softwood lumber quickly, we would then have an opportunity to
consider as a committee what our agenda for the coming year might be beyond the
Lebanese inquiry, which would not take up necessarily the lion's share of our
time going forward. Thus there is an opportunity for that.
Senator Downe: I would remind you as well that we had some discussion
at this committee about interest in exploring Central and South American foreign
relations with Canada. That is under consideration as well.
The Chairman: Yes, indeed. Colleagues, I have no other matters for us
to consider as a committee. Do others wish to raise any matters?
Senator Stollery: We are in camera.
The Chairman: No, we are not in camera.
Senator Stollery: It does not matter. It is not a matter for which we
have to be in camera. I am trying to stave off the idea of doing the softwood
lumber report because, frankly, I have been meeting regularly, as everyone
knows, preparing the Africa report. It is 60-some-odd pages at the moment. We
are going along very well and I hope to have something shortly, but I do not
want the staff to have to do something that is not as important right now. I do
not want to overwork them.
The Chairman: It is a work-planning issue.
Senator Stollery: Yes. The steering committee can discuss that.
The Chairman: We will sort that through. I think making the committee
aware of the pressures on staff is a good thing to do, because we will try to
deal with that constructively.
I declare the committee adjourned until next week.