Standing Senate Committee on Foreign Affairs and International Trade
 

THE STANDING SENATE COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE

EVIDENCE


OTTAWA, Tuesday, November 27, 2018

The Standing Senate Committee on Foreign Affairs and International Trade, to which was referred Bill C-47, An Act to amend the Export and Import Permits Act and the Criminal Code (amendments permitting the accession to the Arms Trade Treaty and other amendments), met this day at 4 p.m. to give consideration to the bill.

Senator A. Raynell Andreychuk (Chair) in the chair.

[English]

The Chair: Honourable senators, before I turn to further study of Bill C-47, I want to clarify information that was conveyed during our last committee meeting on Thursday, November 22. During that meeting, it was suggested that the clause in Bill C-47 amending the reporting requirements under the Export and Import Permits Act had been amended in the House of Commons. In fact, after some further clarifications, clause 21 of Bill C-47 was not amended in the House of Commons.

The first clause that was read during the committee meeting was, in fact, the wording of the current reporting requirements set by section 27 of the Export and Import Permits Act. The second clause that was read was the wording of the proposed amendment included in Bill C-47, clause 21, since its introduction in the House of Commons.

I hope that wasn’t too confusing. If we need to get more clarification, we can do so. But we’ve gotten the clarification now of that clause, and that was the reporting one. What you see in the bill is how the government presented the bill. It was not amended in the house; that is basically what we’re saying.

I’m very pleased to have a full house today. Before I turn to it, I understand now I can welcome Senator Boehm as a regular standing committee member. Welcome to the committee. I think I’ve welcomed everyone else to the committee, including Senator Dean, at a previous meeting. We now have a full complement.

We will turn to the continuance of our study, Bill C-47, An Act to amend the Export and Import Permits Act and the Criminal Code (amendments permitting the accession to the Arms Trade Treaty and other amendments).

Before I welcome the minister and the other members of Global Affairs, I’m going to ask senators to introduce themselves.

Senator Ataullahjan: Salma Ataullahjan from Toronto, Ontario.

Senator Boehm: Peter Boehm from Ontario.

[Translation]

Senator Massicotte: Paul Massicotte from Quebec.

[English]

Senator Ngo: Thanh Hai Ngo from Ontario.

Senator Dean: Tony Dean from Ontario.

Senator Bovey: Patricia Bovey from Manitoba.

Senator Greene: Stephen Greene from Nova Scotia.

[Translation]

Senator Dawson: Dennis Dawson from Quebec.

Senator Saint-Germain: Raymonde Saint-Germain from Quebec.

[English]

The Chair: And I am Raynell Andreychuk from Saskatchewan.

I’d like to welcome the Honourable Chrystia Freeland, Minister of Foreign Affairs. Minister Freeland, can you introduce those who are accompanying you, or would you wish me to do that?

Hon. Chrystia Freeland, P.C., M.P., Minister of Foreign Affairs: I am happy to do that.

The Chair: Thank you all for accepting our invitation to come before us. It’s important that we hear from you, minister, as to the reasons you believe we should accept the bill as drafted, and I’m sure the senators will have questions.

I’m not sure what our time frames are, but we’ll do the best we can and I’ll try to get in all the questions and your presentation. Welcome to the committee.

Ms. Freeland: It is great to be here with this committee. I really appreciate the work that we’ve done together in the past, notably on the Magnitsky legislation.

I want to welcome our new senator, Senator Boehm. I feel he should be sitting next to me, not with you guys. Any tough questions, we’ll ask Peter because he is a long-serving diplomat, as everyone knows. He has graduated. Yes, you’re making Ian feel bad.

Ian Shugart, my fine Deputy Minister, is here. We also Rouben Khatchadourian, Director General, Trade and Export Controls Bureau. Beside him is Cindy Termorshuizen, most recently of our Beijing embassy. I can personally attest to the excellence of her Mandarin; I’ve seen it at work. She is now Director General, International Security Policy Bureau; and we have Kevin Thompson, Executive Director, Market Access and Trade Remedies Law.

[Translation]

I would particularly like to thank Senator Saint-Germain for her hard work on this legislation. Thank you very much.

[English]

With permission of the committee, I’d like to begin with a few formal remarks and then I will try to satisfy you and answer your questions.

[Translation]

Madam Chair and honourable senators, thank you for inviting me to appear before the Standing Senate Committee on Foreign Affairs and International Trade to discuss Bill C-47.

As you all know, our government has committed to taking a stronger and more robust position on arms exports. That’s why I am proud of Bill C-47, the purpose of which is to amend the Export and Import Permits Act to allow Canada’s accession to the UN Arms Trade Treaty, which is the first treaty to deal directly with the illegal trade in conventional arms and which establishes standards for the international community. It is a historic treaty, and we are doing very important work for Canada.

[English]

The illicit trade of small arms, light weapons and ammunition is one of the most serious threats to global peace and security today. Easy access to these weapons leads to violence, weakens stability and development efforts, and furthers terrorism and organized crime.

The Arms Trade Treaty, or ATT, is crucial to making the world more peaceful. It sets a global standard that countries must follow when regulating the trade of arms. It commits its signatories to ensuring that arms do not flow to countries, conflicts and groups that pose these serious risks.

Madam Chair and honourable senators, I absolutely believe it is long overdue that Canada join the ATT. We are the only NATO or G7 country that has failed to sign or ratify the treaty. We remain among the last of the OECD countries to have not signed the ATT.

[Translation]

The importance of setting high international standards for the arms trade should not be underestimated. Lebanon, for example, shows how important this treaty is. When Lebanon’s parliament recently ratified the Arms Trade Treaty, Hezbollah’s legislators left the parliament in protest, claiming it encroached on their organization’s access to arms. We know that illegally armed groups view the treaty as a threat, which is precisely why we believe in the potential of this instrument to establish greater stability in emerging countries plagued by violence. We strongly believe that Canada should be part of this global effort to reduce violence, prevent human rights violations and protect lives.

The treaty has specific and significant objectives. Its purpose is to guarantee that countries effectively regulate the international arms trade to ensure it is not used to support terrorism, international organized crime, gender-based violence, human rights violations or violations of international humanitarian law. This treaty can establish a genuine global standard and thus help prevent human rights violations and protect lives.

[English]

On that topic, I would especially like to thank the Standing Senate Committee on Human Rights for its diligent work and report, Promoting Human Rights: Canada’s Approach to its Export Sector. I know some of the committee members here are also part of that committee, and I greatly appreciate your work in promoting the centrality of human rights to exports. We welcomed your recommendations and analysis, and I’m pleased to say that we have already taken action to meet many of them.

It is in that vein that we have heard support for the Arms Trade Treaty from civil society, from NGOs and from Canadians. Civil society has been an essential partner on this journey, and I do want to thank the many civil society leaders who have pushed us to raise the bar of what Canada can achieve.

Our government has also heard the clear desire to ensure a higher standard for Canadian arms exports, one that fully meets our commitment to human rights around the world. Our government strongly agrees.

That is why we accepted important amendments in the House of Commons that significantly strengthen Bill C-47. We had originally planned to place the criteria by which exports are judged, including human rights, into regulation. But we heard from parliamentarians and civil society that they wanted the arms trade criteria placed directly into legislation. We heard these requests and we acted on them. That is why the bill before this committee contains these specific criteria, including the requirement that the government consider serious violations of human rights law, peace and security, and gender-based violence before authorizing export permits.

My officials have been clearly instructed to start adapting their policies and tools to ensure this is applied carefully and diligently. I do want to thank Canada’s officials, starting with Ian, for the very serious work they’ve already begun to do on this.

Madam Chair, we also supported the inclusion of a substantial risk clause in the legislation, which is now the new clause 7.4. This clause means that our government and future governments would not be allowed to grant a permit for the export of arms if there were a substantial risk that it could be used to commit human rights violations.

The substantial risk clause means that my department would need to ensure, before the export of controlled goods, that we have a high level of confidence that those exports will not be used to commit human rights abuses. This is a significant decision. It will mean changes in how Canada regulates selling weapons. This is the right thing to do. Canadians fundamentally care about human rights, and Canadians are right to expect that exports are not used to commit human rights violations.

Overall, Bill C-47 would allow us to hold us to a higher standard on the export of controlled goods from Canada and to finally join the Arms Trade Treaty.

I’d like to thank the committee for your study of Bill C-47 and for moving us one step closer to becoming part of the Arms Trade Treaty, which, as I said, is a historic and long overdue step. Canada should be part of the Arms Trade Treaty.

I want to thank the committee for inviting me to appear today, and I’d be pleased to answer your questions.

The Chair: Thank you, minister. You’ve generated a lot of questions. I’m putting that on the record because I’m going to, perhaps, have to cut some senators off. I’m going to let you ask as many questions, but I want to be sure that all senators get a chance.

Senator Saint-Germain: I’ll ask a very short question because I don’t want to be cut off.

[Translation]

Madam Minister, I want to take this opportunity to acknowledge the senior officials accompanying you who were very professional in answering the many questions my associates and I put to them. One of the essential elements of this bill is the control of brokering. In previous meetings, we asked a number of questions about the definition of “brokering”, but I feel there is still a lack of understanding of the need and importance of controlling brokering.

Can you explain to us the importance of this controlling framework for Canada, and what are the current consequences for Canada of not controlling brokering?

Ms. Freeland: Thank you for that question. I know it’s an important question because it concerns an important element of the act. To prepare the brokering control list, the government will draw up a list of goods and technologies for which businesses will be required to obtain permits if they wish to negotiate transactions involving those goods. That list will be based on elements already appearing on the export control list. It will be developed on the basis of consultations with the industry. We are starting public consultations on Canada’s arms export controls that will guide the implementation of Bill C-47, and this is important because it includes brokering controls. I also want to emphasize that provision for this formal brokering control is an essential factor in the signing of this treaty.

[English]

Senator Ngo: Thank you, minister. The Human Rights Committee studied the EIPA and presented several recommendations to enhance the human rights implications on our export regime. You responded to one of them in June 2018 that you did not agree with the recommendation that would place additional controls on the end use of Canadian goods by foreign customers to ensure they are not part of serious violations of rights or international humanitarian law. You stated that taking unilateral measures not aligned with the export controls of our allies and partners could severely limit the impact we can have in protecting international human rights and humanitarian law, while putting legitimate Canadian exporters at a significant competitive disadvantage.

You know that China, Russia and India are not members of the ATT. Instead, those states will self-determine whether they are complying with the treaty.

I have two questions for you, minister. How is Canada planning to work with its allies who self-police their arms exports? Second, given the serious limitations in the treaty, why do we expect that the agreement will be effective in upholding international human rights?

Ms. Freeland: Thank you for those questions. As I said in my opening remarks, one of the reasons that this legislation is so important to me is it will seriously strengthen the role that human rights considerations play in Canada’s arms exports. I believe there is a broad national consensus around the need for us to do so.

As I said in my opening remarks, we have included directly in legislation the serious strengthening of human rights consideration.

To your question of work with allies, I think that is very important and, frankly, that is the reason I believe it’s so important for us to finally accede to this international treaty, which is the core piece of international legislation that regulates arms exports.

On the question of how we can guarantee that human rights are not violated, I sought to address that in my opening remarks. In including the substantial risk clause, we are seriously raising the bar of the considerations that the government and officials must take into account in granting an export permit.

I feel very comfortable in saying that if we pass this legislation, Canada will have among the most stringent export controls in the world. I see my officials nodding. It’s absolutely true, particularly when it comes to human rights considerations in arms exports.

Senator, to go back to your first question, in a way, by introducing such a standard-setting piece of legislation, we’ll be having an impact on the behaviour of like-minded countries around the world. I really believe that we’ll be setting a new standard with this legislation.

Rouben Khatchadourian, Director General, Trade and Export Controls Bureau, Global Affairs Canada: Just to complement what the minister said, to show the level and rigour, it’s almost like a two-part test. One, in the assessment criteria proper, we will have a human rights consideration and, if we cannot mitigate that and if there’s still a substantive risk, then there’s a second sort of tripwire for the permit to be denied. This is how rigorous it will be in the legislation, which is unique in the global system.

Ms. Freeland: If I could add to Rouben’s addition, I was quite intentional in my opening remarks in saying that we are already working with officials to raise the bar so that we will be ready to behave according to the standards set by this new law, if it becomes law, precisely because it will require significant changes to how we work. We’re already getting ready for those changes. That is an important part of the answer to your question, senator, because that says we’re doing things differently, because we’re setting a higher standard.

[Translation]

Senator Dawson: First of all, Minister, allow me to congratulate you on being named by your peers as the hardest working MP on the Hill. We know everyone works hard, but, when your peers say you work harder than they do, that says a lot. I believe your officials recognize that as well because it puts a burden on them too.

[English]

Bill C-47 makes it easier to add countries to the Automatic Firearms Country Control List. Could you explain why you thought this was necessary? Will it mean that Canada will start sending automatic weapons to far more countries than we did before?

Ms. Freeland: That’s a very good question, and the answer is “no.”

Being added to the Automatic Firearms Country Control List — first of all, it’s not just automatic firearms; it’s weapons in general — that doesn’t mean that a country has a blanket right to be sold anything by Canada. Export permits still need to be granted.

It means it is a country in a category of countries to which we are prepared to sell weapons. An example of a country that was recently added to this list — and I know Senator Andreychuk is very aware of this — is Ukraine.

I’ll talk you through what we’re changing. Currently, a country can only be added to this list if we have a defence cooperation agreement in place with that country. Thoroughly thinking about this has been like cleaning our closet, in a way, thinking thoroughly of our provisions, and what makes sense and what doesn’t. We realized that there may be some countries in the world to which we would be comfortable selling arms, provided the other bars that need to be met for an export permit to be issued are met.

An example is Switzerland. Switzerland is a neutral country, so it therefore cannot enter into a defence cooperation agreement, but I think we would all agree that, a priori, there should be no reservation that Canadians have on selling weapons to the Swiss, provided the other criteria were met.

That’s the reason for the change. In looking at it, we felt that a defence cooperation agreement should not be a necessary condition for a country to be considered as a country to which arms could be exported from Canada.

Senator Greene: Welcome to our committee. As I think I mentioned to you once before, you are my favourite minister.

Ms. Freeland: You say that to all the ministers.

Senator Greene: I wish I could, but I can’t.

I was interested in your comment about Ukraine. Are you saying there’s nothing in this piece of legislation that would hinder or hamper us from selling arms to Ukraine?

Ms. Freeland: Bill C-47 has no specific bearing on Ukraine, but the Automatic Firearms Country Control List, to which Senator Dawson was referring, is a list to which Ukraine has been added.

Again, let me be clear that a country needs to be on that list for us to engage in certain transactions with them. But being on the list doesn’t require you to and neither is it sufficient. It’s a necessary condition, but it’s not a sufficient one. Other bars have to be met in order for that decision to be taken; for example, the issuing of an export permit.

Senator Greene: Is Saudi Arabia on that list, or is it eligible to be on that list?

Ms. Freeland: As is well known by Canadians, we do sell weapons to Saudi Arabia. Let me be clear: At the moment — and this has nothing to do with the particular legislation — but in connection with the absolutely horrific murder of Jamal Khashoggi and long-standing concerns about the absolutely atrocious humanitarian crisis in Yemen, our government is currently reviewing arms exports to Saudi Arabia. During this period of review, we have taken the decision that it makes sense not to be issuing new export permits. But in theory, there exists no legal bar to issuing export permits at the moment.

Senator Greene: Thank you very much.

Ms. Freeland: We have already discussed human rights concerns and the ways in which this legislation will strengthen the legal duty of all of us, both officials and politicians, to take into account human rights concerns when issuing export permits. I think that is absolutely the right thing to do.

We should be clear with ourselves that this legislation will have a meaningful impact on Canadian arms exports.

Senator Ataullahjan: Thank you, minister, for appearing before us.

I want to talk about the concerns raised by Amnesty International. One of their concerns was that the Canadian arms sales to the United States will continue to be exempt from Canada’s arms control regime, with the related concern that this bill does not guard against arms sales to one country being unlawfully diverted to another country.

Professor Simpson said — and I’m glad you addressed this a little bit — that if we continue to sell them arms for cash, we’re propping up the regime until to 2028. You’re saying you’re not going to be —

Ms. Freeland: Which regime?

Senator Ataullahjan: The Saudi regime.

You’re not signing any new export permits, but we have ones that we signed earlier. Will we continue to honour those?

The critics argue that the exclusion of the Saudi arms sale and Canada’s arms exports to the U.S. are major gaps in the implementation of this treaty. Can you address these concerns?

Ms. Freeland: I’ll try. Let me start with Saudi Arabia, because that’s where we left off.

You’re quite right that there is a difference between the decision to issue new export permits and exports that happen under existing export permits. In the past, our government and I, personally, have taken a decision to suspend existing export permits. That is something we have done in the past, and that is something that, if the circumstances warrant, we are prepared to do in the future. The Prime Minister has spoken about that, also.

Regarding the U.S., I am very aware of the concerns you voiced, and I’ve also spoken to Canadian civil society leaders who have shared their concerns around that, along with other legislators. I think it’s one of the issues Canadians are talking about — well, probably not people on the street. People talk to me about NAFTA on the street. People don’t talk to me about the Arms Trade Treaty on the street, but an arms-trade wonkish-type Canadian would be interested in this aspect of things.

The reasons I believe we are handling the U.S. relationship properly are as follows: First, and I think this is very important, we are confident that the way our relationship works with the U.S. is not in violation of the Arms Trade Treaty. The Arms Trade Treaty is written with an understanding that countries have lots of different arrangements, and we are extremely confident that this long-standing historic arrangement Canada and the United States have absolutely would not in any way contradict the Arms Trade Treaty. That’s an important first thing to establish.

Second, I think it’s important for us to start with the historic reality that Canada’s fundamental security relationship is with the United States. We are partners, not only in NATO, but also in NORAD. NORAD is the closest security relationship that the United States is part of, with a joint U.S.-Canadian command. The closeness of that security relationship makes sense based not only on our historic social, cultural and economic ties, but also based on our shared geography. Our two countries share the longest unmilitarized border in the world. We can sometimes take that for granted, but when you look at troubles on other borders, I think the success of that relationship is non-trivial.

One important element of that relationship is our defence cooperation, which includes particularly close cooperation of our defence industries. So I think that it is absolutely reasonable and a reflection of Canadian and American realities for us to have a special, privileged defence relationship with the United States.

Putting on my Canada-U.S. economic relationship hat for a moment, a very important element of our very vigorous objection to the illegal and unjustified section 232 tariffs on steel and aluminum is our privileged military and defence relationship with the United States, our military industrial relationship with the United States. We are making the case very forcefully also in our formal appeals that Canada can’t pose a national security threat to the United States. How could we pose a security threat to the United States when we are, by their law and our own, integrated in their military industrial complex?

I believe that this special relationship with the United States is foundational, and that’s why we believe it needs to be retained in Bill C-47.

[Translation]

Senator Massicotte: Thanks to you all for being with us this afternoon. It’s very much appreciated.

Madam Minister, I would like to continue discussing Saudi Arabia. A contract has been in place for several years. In other words, we are freezing future permits. I’d like to talk about the cases in which buyers are using arms in a way that was not intended. My understanding is that the proposed act doesn’t give you the authority to terminate an existing permit. Is that the case? If so, perhaps we should request that the act allow our government to terminate a contract if the goods are not being used in a manner consistent with the initial representations that were given, notwithstanding the fact that a contract is in force for a number of years. I’d like to hear your comments on that point.

Ms. Freeland: I know the government has a right to freeze or cancel an existing permit. The government has that right, and that’s essential. As you well know, these permits can grant a right to export over a long period of time. If the government discovers a problem, it is absolutely necessary that it have the power to cancel the agreement and terminate the exports. This act now exists, and this right will exist under Bill C-47.

Senator Massicotte: Regardless of the circumstances? In 2012, the United States filed a claim against Pratt & Whitney for a breach of a valid contract. A $75 million fine was levied. However, Canada decided not to pursue the matter. One might think we’re not entitled to do so because we aren’t acting accordingly.

Ms. Freeland: That’s a good question, and it’s an important question. The act gives us that authority, and, as a sovereign country, we must have that authority at any time to control, freeze or completely cancel arms exports. At the same time, it may be that there is an existing contract and that, by freezing it or cancelling a permit, we breach that contract. That’s entirely logical. Canada signs contracts, and the federal government doesn’t have a right to cancel. These are legal agreements entered into with other parties.

Senator Massicotte: That’s the case even if the contract is breached with respect to the definition of end user or end use.

Ms. Freeland: It all depends on the contracts.

Senator Massicotte: In the Pratt & Whitney case in 2012, the United States decided to fine the company $75 million for a major breach of contract. However, we felt that they were “nice boys” and that we would do nothing. It seems to me that sends the wrong message. Perhaps that explains why we’re doing nothing with Saudi Arabia today.

Ms. Freeland: You’ve asked several questions. It all depends on the contracts. You make a very important point. I think it will be important for Canada’s military industry to understand the significant changes associated with this act and to think about those changes when signing new contracts. That’s absolutely the case.

I also want to emphasize that it isn’t true that we’re doing nothing about the Saudi Arabia situation. We take that situation very seriously. Our government is working with our allies. I spoke with Turkey’s minister of foreign affairs on Monday, and we decided not to issue any new export permits during our review. Our decision isn’t final because we have to continue our work with our allies and consider our review and the circumstances.

[English]

The Chair: Thank you, minister. As you know, we have a vote which will take place at 5:30, and I will try to cut off in enough time so that we can all get back to the chamber. I am keeping track of that for you.

Senator Bovey: Thank you, minister. It was a pleasure hearing you when you were before us before, and I’m delighted you are here to discuss this today. I was very pleased to see clause 7.4, the substantial risk clause, and the higher standards.

I have a niggle, I guess is the best way to say it, about the Canadian Commercial Corporation. It was two months ago that Minister Carr asked the CCC to “closely study Canada’s pending accession to the Arms Trade Treaty” and to “undertake a thorough review of CCC’s ongoing risk assessments and transaction due diligence to ensure that human rights, transparency, and responsible business . . .” and on it goes.

He set an end-of-November date for this risk assessment to be done by the CCC, and I know there are few days left. Do you know where that assessment is?

The other day, Amnesty International voiced concern about where the CCC fits in all of this. That’s my niggle. If you could address that, I’d be grateful.

Ms. Freeland: Yes, I think I can, at least in part.

As you clearly know well, the CCC falls under the authority of Minister Carr.

Senator Bovey: Yes.

Ms. Freeland: As you also have noted, he is working very closely with them, and he is aware of the new obligations which Bill C-47 will impose.

I believe that there were some questions asked in various forums about whether the CCC would need to comply with the standards, with the measures, introduced in Bill C-47. I feel very comfortable categorically answering yes, as will all arms exporters from Canada. A deal done through the CCC, like any other deal to export weapons through Canada, will need to be done with an export permit, and those export permits will need to comply with the conditions set by Bill C-47.

The fact that a deal is done through the CCC perhaps imposes additional responsibilities of different groups of officials. It means the trade minister, as well as the foreign minister, are very intimately engaged, but, at the end of the day, the standards that need to be met for an export permit to be granted, or for it not to be suspended or not to be cancelled, are going to apply equally, whether this is a deal done by the CCC or without the CCC.

I see Rouben nodding his head.

Senator Bovey: My concern is a very simple one. It doesn’t look as if they’re going to be appearing before us and, as a Crown corporation, some seem to have longer arms of distance than others. I’m looking for assurances and wonder if the assessment they’re doing for Minister Carr will indeed be made public.

Ms. Freeland: I know that Jim is in Edmonton, which is a great city to be in today. I can promise you that I will share with him the fact that that was raised here at committee and your concern and request.

I’ve said now a couple of times, because it is really significant, that we are not kidding ourselves about the significant implications of this legislation. It is going to be a meaningful change in our arms export regime, and that means that all elements of government, Crown corporations and the private sector engaged in arms exports are going to need to change the way they work.

Again, I really do want to thank Ian and his team, because it has involved getting ready to change the standards that are applied. That will also apply to the CCC.

As I said in some of my earlier answers, that’s going to apply to the way that Canadian defence companies do business in the world.

Senator Bovey: Thank you.

The Chair: I should put on the record that CCC was invited to come. We have some time constraints, and they will either be filing a written submission or we can, in fact, look at the submission and call them, but I think that should be on the record. Whether their submission will be sufficient, we’ll have to assess that as we go along.

Senator Dean: I think I speak on behalf of many Canadians, if not all Canadians, in thanking you for the way you have represented Canada on the world stage globally. It hasn’t just caught the attention of people in this country. So thank you for that.

I have a question about U.S. exports and permits. I understand that the position of the government and the background to the position of the government is that export permits are not required for U.S. transfers. We’ve already heard about the diversion question, so I won’t revisit that.

In any of the deliberations at the policy level — I’m thinking about the crafting of this bill — was any consideration given to some degree of reporting in section 27 on U.S. exports? I look at section 27 and it would seem to preclude reporting on U.S. exports by virtue of the reference to export permits.

I’m not suggesting. I’m asking a question about whether this was considered and, if so, if it was rejected, what would the reasons for that be?

Ms. Freeland: That is an excellent question and one which we have spent a lot of time thinking about.

You will know that in last year’s report for the first time we included data on exports to the U.S. that do require permits, but you’re also quite right to point out that that doesn’t cover everything. Indeed, that covers only a very small slice of things. We really do believe that part of the job we’re trying to do together here with Bill C-47 is to have more transparency in our arms exports.

We know, as I’m sure you do, too, that Statistics Canada publishes export statistics for all designations, including the United States, based on declarations made to CBSA. It is less exact than the export permit data, and it doesn’t match up precisely, but if the committee would find it helpful, we can examine whether there’s a way to use that Statistics Canada data on exports to the U.S. in the next annual report.

Senator Dean: Thank you. That’s a terrific response. I’ll leave it to the committee to determine whether or not it wants it. I certainly would be interested in that on a personal level.

Senator Boehm: Minister Freeland, it is good to see you, as always.

My question relates to the international climate on all of this. There is public policy debate on arms sales in almost every country that is an exporter. These countries also have organizations or entities like the CCC, for example, that facilitate exports for their businesses. We are in partnership with these countries. We consult with them on a lot of things, but they’re also our competitors.

If we’re assuming Bill C-47 comes into law, what measures would you and your department take to facilitate a more constant dialogue with some of our closest allies in terms of how to approach arms sales, or is this still going to be the cloaked area that no one really talks about but everyone engages in?

Ms. Freeland: That is a great question, Peter, and I’m going to start with your concluding point about it being a cloaked area.

We are in a moment where it’s not all that cloaked. Within the past four months I have had detailed conversations about arms exports and about national approaches to arms exports with the foreign ministers of Sweden, the Netherlands, Germany, the U.K., France, the U.S. and Federica Mogherini, the High Representative of the EU to the world — and I mean truly substantive. We spent a lot of time talking about what the right thing to do is, and also about our domestic politics.

This is an area where I certainly believe Canadian public opinion is quite seized of it. I think that’s one reason you are all here and you’re asking such detailed questions, and public opinion in many other countries is seized of this issue.

I would put it like this. I cannot say to you that we have achieved an agreement among all our economic competitors in this space and that we will all abide by exactly the same standards. Indeed, if the only consideration a country had was to sell as many weapons as possible, a race-to-the-bottom approach might be the one that would be recommended.

I am very confident that is not a position the vast majority of Canadians would be comfortable with.

As Senator Dean said, and as you, Senator Boehm, are well aware and have contributed to this, people are watching what Canada does. One of the reasons that I have been having these conversations with the counterparts that I mentioned is that they want to know what we’re doing. They are of the view, which I share, that if Canada, for example, were to introduce more rigorous standards with regards to human rights, it would be noticed by civil society in their countries and would create public pressure.

I think that while a race to the bottom is one option, a race to the top is also a possibility and that is the kind of international race that Canada should be engaged in.

Senator Frum: Thank you, minister.

I’ve prefaced my question by noting that the Canadian defence industries contribute to the employment of more than 60,000 Canadians and generate $10 billion of annual revenue, 60 per cent of which comes from exports.

On November 21, Professor Christian Leuprecht of the Royal Military College appeared before this committee on this bill and noted that, in your time as minister, the issuance of Canadian defence and export security permits has slowed. Is this accurate?

Ms. Freeland: I’m not going to refer to the data because I don’t have it before me, but, as I said, there have been times when we have frozen existing permits to give the department time to do an investigation. We did that when there were serious allegations that Canadian weapons were being used to commit human rights abuses. When you freeze existing permits and don’t issue new ones, that slows things down.

Senator Frum: Yesterday, your department tabled a report on exports of military goods with this committee from 2017, and on page 15 of that report it notes that 5,569 permits were issued in 2017 and only four were denied, but it also notes that 162 were returned without action and 413 were withdrawn.

That’s 575 dead-end permit applications. Of those 575, can you assure us that the reasons for those non-issuances had nothing to do with the slowing of the process?

Ms. Freeland: Rouben has a view, so I’m going to let him answer specifically and then I’ll also offer an answer.

Mr. Khatchadourian: Thank you, senator. I would say, again, that’s a lot of cases, as you can imagine, that 500 and some. What I can tell you with confidence is the majority of those do not reflect a denial. It’s sometimes a company itself that will withdraw its application for contractual reasons or delayed shipment, whatever that may be.

For the earlier part of your question, I would note that 95 per cent of the permits are still being serviced within our service standards. It’s a very high ratio, but sometimes, exceptionally, some cases are thorny, complex and require rigorous scientific and technological assessments. I don’t know if that helps answer your question.

Ms. Freeland: I want to add two things. One is that it is very much my view that the international environment is becoming rougher. I think we’re living in a time when dictators are on the rise and non-state terrorist organizations are posing challenges directly to states. Our country has recognized that a genocide has been committed against the Rohingya.

I believe, as I’ve said in other contexts, that we’re living at a moment when that post-World War II rules-based international order is under threat in a way it hasn’t been since the Second World War. That inevitably means that, even absent Bill C-47, we need to take particular care in issuing export permits into this rougher world.

I would like, senator, to say one more thing and I want us all to be very clear about this: I have spoken very directly about the fact that Bill C-47 raises the bar for issuing arms export permits. It means that considerations, including human rights considerations, will need to be weighed significantly more seriously than they are today. That absolutely will have consequences. We are very clear that is our government’s choice.

There may well be Canadians and there may well be Canadian politicians who feel caring about human rights in our arms export regime isn’t worth it and that it is more important to issue a lot of permits quickly. That is a reasonable argument, and there are jobs connected to it.

I want to be very clear that the argument I’m making to all of you in urging you to support Bill C-47 is an argument that is very clearly and openly about setting our country to a higher and, indeed, more rigorous standard when it comes to whom we choose to sell weapons, which, after all, are designed to kill people.

Senator Frum: But that means another way to look at these numbers is that, out of 5,569 approvals, your department only denied four applications. So, in terms of setting the bar higher, how do you feel about that ratio? That was 2017 and there were four out of 5,569.

Ms. Freeland: Senator, if I were perfectly happy with the current arms export regime, I would not be proposing Bill C-47. I believe we should and we must set a higher standard, and that’s what we’re advocating today.

The Chair: I just have two things to follow up. The arms treaty has been around for a while, so we’re doing it now and I think we will always have to weigh economic benefits against human rights, our political position and our national interests.

In other words, we’re trying to achieve an evaluation by the government of the day as to what is in the best interests of Canada. It isn’t just human rights; it’s all of them. It’s trying to find, in each particular deal, whether it is one that Canada should put its name to. You do it through the permit system. I think what we’re struggling with is that we’re hearing different points of view on Bill C-47.

One area that we haven’t touched but which was raised by some of the witnesses is this: Do you feel you have the authority now to suspend or cancel any permit in midstream if the facts change?

Ms. Freeland: Yes. It should be for a good reason, but yes.

The Chair: So, whether you’re evaluating the Saudi situation or other situations, you would be able to stop the sale midstream? There would be consequences, of course, and you’d have to weigh that.

Ms. Freeland: Absolutely, Senator Andreychuk. I have said this in the House of Commons, as has the Prime Minister. Our government has, in the past, frozen existing export permits, and we are prepared to do so in the future. It is certainly within the government’s authority to freeze or entirely cancel an export permit.

As we discussed in our contract discussion, the existence of an export permit is simply what authorizes the permitted good to leave Canada. It is not the instrument that determines whether a contract exists, is being violated, or is cancelled. But it is essential for us, as a matter of our national sovereignty, to be able to control the movement of these goods out of our country.

As you know, often a contract lasts for a very long time. We can all imagine a hypothetical situation — even one that is extremely hypothetical — in which an export permit were granted to sell weapons to country A over a long period, and in the course of that period, we were to find ourselves at war with country A.

In the history of international relations, it’s not unknown to have been allies and then to go to war with erstwhile allies. In such circumstances, we would not want to be bound by a historic export permit such that we continue to let those weapons leave our shores.

The Chair: The extreme is not the obvious one, because with the extreme, other conventions and agreements, et cetera, come into play. It’s really when you reach a point where you think Canada should no longer be part of that contract and suspend it. It’s the middle ground.

I think what Parliament is looking for — at least what I’ve heard from my colleagues here — is the ability to assess our national interest as we go forward. We have an oversight role on that. That’s really what we’re talking about. It’s not when we go to war.

Ms. Freeland: For sure. I was offering an extreme hypothetical to explain why it is important to have that right.

As questions from senators underscore, these are complicated judgments involving our values, economic interests and geopolitical interests. If they were not so complicated, we would not need Bill C-47. If they were not so complicated, we would not have an export permit regime.

For me, the value of Bill C-47 is in actually having this national discussion. I would say there are two values. One is that it’s high time we joined the ATT. It is rather shocking we haven’t already. As Senator Boehm pointed out, achieving international agreement on this, while incredibly difficult to reach, is an important part of moving from a world where things are nasty, brutish and short to something a little more civilized. That’s point one.

I’ll finish quickly. Point two is that it’s important for us to be having this national discussion — this discussion here in the Senate and in the House of Commons — about what standard we want to hold ourselves to. It will not be infallible. It will not be like a recipe that tells us in each case what the right answer is. But, by having this conversation, we are together deciding to what standards do we want to hold ourselves and our country. That’s important.

The Chair: It is 5:05. There is a vote at 5:30. Technically, we could go to 5:15, but there will be a problem of transport at this hour. Should we go to a second round, or do we stop at this point?

Senator Dawson: Senator Massicotte was responsible for transportation on the Hill. He knows that at this hour, it takes more than the required 15 minutes to get to the chamber.

The Chair: Some of us can’t walk, so I’m defending our rights.

Minister, I’m getting a bit of a majority opinion. I have a full list here for a second round. Is it the will of the group that we stop at this point?

Hon. Senators: Agreed.

The Chair: Agreed? Okay. There was a bit of dissenting opinion. However, I’m going to take it that it is the will of the majority to adjourn.

Minister, I want to thank you for coming. I wish we had more time. This is an extremely important issue. It is tied to the arms treaty. I trust this committee will take your comments into account, as we will those of all other witnesses. Then we will see, as expeditiously as we can, a conclusion on our study of this bill.

Thank you for coming. Thank you, officials, who are, as usual, always ready to come before us.

(The committee adjourned.)