Proceedings of the Standing Senate Committee on
Banking, Trade and
Commerce
Issue 5 - Evidence
OTTAWA, Thursday, June 6, 1996
The Standing Senate Committee on Banking, Trade and Commerce, to which was referred Bill C-19, to implement the agreement on Internal Trade, met this day at 11:00 a.m. to give consideration to the bill.
Senator Michael Kirby (Chairman) in the Chair.
[English]
The Chairman: Senators, today we are dealing with Bill C-19, the internal trade bill. It is also known as "the bill to attempt to create a Canadian common market within the country."
Our witnesses are from the Department of Industry and the Internal Trade Secretariat, which is separate from the federal government.
I will ask Konrad von Finckenstein, who is an ADM in the Department of Industry and who has appeared before the committee before, to introduce his colleagues. I will then ask all three of the witnesses whether they have any opening comments to make and, having done that, we will then turn to questions.
Mr. Konrad von Finckenstein, Q.C., ADM (Business Law), Department of Justice: With me is Mr. Tom Wallace, Director General, Internal Trade, Department of Industry. I am from the Department of Justice.
The Chairman: You have appeared before us representing the Department of Industry Canada.
Mr. von Finckenstein: Industry is my major client, but I am with the Department of Justice.
Perhaps Mr. André Dimitrijevic, Executive Director, Internal Trade Secretariat, would go first. Following his presentation, although we have no opening statements, Mr. Wallace and I will guide you through the act and answer your questions.
The Chairman: In your opening comments perhaps you would tell us a little bit about the Internal Trade Secretariat. I know you are housed in Winnipeg, but details of what you do and how you are structured would be helpful. Then you could comment specifically on the bill.
Mr. André Dimitrijevic, Executive Director, Internal Trade Secretariat: In my brief presentation this morning I will try to address three issues: the structure of the Agreement on Internal Trade; the progress to date; and the implementation and the administration of the agreement. I have no comments specifically on the bill itself.
By way of background, on July 18, 1994, the first ministers signed an agreement on internal trade to eliminate barriers to the free movement of persons, goods, services and investments within Canada, and to establish an open, efficient and stable domestic market in Canada. On July 1, 1995, the agreement came into force.
To accomplish its objective, the Agreement on Internal Trade provides for a number of structures. One is six general rules which prevent governments from enacting new trade barriers and which require the reduction of existing ones. The six rules include a non-discrimination rule, right of entry and exit, no unnecessary obstacles, legitimate objectives -- in other words governments would have, under special circumstances, the opportunity to deviate from the rules -- reconciliation of standards and transparency.
The agreement provides specific obligations in ten economic sectors: procurement, investments, labour mobility, consumer-related measures in standards, agriculture and food goods, alcoholic beverages, natural resources, processing, communications, transportation and environmental protection.
The agreement also deals with the streamlining and harmonization of regulations and standards. It provides a dispute settlement mechanism with access from the private sector to the dispute settlement mechanism. It has commitments to further liberalize internal trade through continuing negotiations, and it provides for a secretariat to support the implementation of the agreement.
In terms of progress to date, since July 1, 1995, the following have been implemented: There is open tendering for government procurement of goods over $25,000 and for services and construction over $100,000. There are procedures that guarantee non-discrimination for government procurement. There is a code of conduct prohibiting incentives for relocation of industry, which is poaching. Local residency requirements have been eliminated for investments, labour mobility and consumer-related measures. There is a process in place for reconciling extra provincial corporate registration reporting requirements across the country. There is a work plan for the implementation of the labour mobility chapter. There is an agreement to recognize occupational qualifications and a process for reconciling differences. There are reconciled provincial transportation regulations, particularly regarding weights and measures, and a national bill of lading. Recently, a national wine classification system was developed.
As I indicated earlier, there is access for private parties to the dispute resolution process in place with cost recovery provisions. Consultations have been undertaken with the parties to the agreement to establish an agenda for future negotiations and, as I mentioned earlier, the Internal Trade Secretariat was established.
In terms of current activities in the implementation of the chapter, the Council of Energy Ministers is working on the completion of an energy chapter to be added to the agreement. The extension of the procurement chapter to what is referred to as the "MASH" sector, that is municipalities, academic institutions and publicly funded social services and hospitals, is still being negotiated among the parties. Work is also being done regarding the extension of the procurement provisions to Crown corporations and other excluded government entities. There is work being done on the reduction, there is a list of excluded services and there is work being done on the use of that list, as well as the preparation of the required annual reports and reviews which the agreement provides for, and other obligations.
I will now turn to the administration of the agreement. Chapter 16 of the agreement deals with institutional provisions and provides as follows: The Committee on Internal Trade, which is made up of a ministerial representative from the federal government, the provinces and territories, is charged with establishing a secretariat and appointing a secretary to head the secretariat. The secretariat itself is funded by contributions from the parties based on the following method of apportionment: federal government 50 per cent of total budget, provinces and territories 50 per cent of total budget. The share of each province and territory is determined on a per-capita basis.
In order to provide further specific direction on the nature of the secretariat, the parties to the agreement also entered into an agreement on the establishment of the Internal Trade Secretariat in the fall of 1995. In that agreement the parties agreed that the Secretariat would be established as an unincorporated association. A management board composed of each party's internal trade representative was also established to provide overall direction to the secretariat. The agreement set out the functions of the management board, the responsibilities of the executive director, and the financial requirements for the management board and for the operation of the secretariat.
I was appointed as the executive director to the secretariat on August 8, 1995. I essence, the secretariat has been in existence since then. My primary task has been to set up an office, and an organizational structure is necessary to undertake the work. The secretariat currently consists of the executive director, two policy advisors, a finance officer, an MIS officer and an administrative officer. I expect that the total complement of the secretariat will be somewhere between five and seven people.
As stated in the agreement, the role of the secretariat is to provide administrative and operational support to the Committee on Internal Trade, working groups and other committees, and such other support as the committee may direct. More specifically, the activities will focus on operational support. The secretariat will facilitate meeting arrangements, the preparation of agendas, the distribution of material, the preparation of records of decisions, and provide follow-up to meetings and working groups. The secretariat will also provide assistance to set up dispute settlement panels and other committees established by the agreement.
The secretariat will undertake research and consultation as directed by the committee. To date, we have undertaken two sets of consultations across the country. One was with various parties to discuss the inclusion of the MASH sector in the procurement agreement, and the other one was a recent meeting with all the parties to discuss their views on future negotiations and what needs to be done to deepen and broaden the agreement.
Reporting requirements is another area of activity for the secretariat. The secretariat will ensure that all reporting requirements under the agreement are met and, more specifically, we will gather and analyze information and prepare reports for the consideration of the committee and the management board. The agreement prescribes the number of reports that must be completed.
The secretariat will provide information about the agreement to the private sector, business groups, industry associations, et cetera, and to the public at large.
I intended this brief preparation would serve to provide the Senate committee with an overview on the progress to date and implementation of the agreement. I expect the secretariat will go through an evolutionary process, and that it will evolve as the implementation of the agreement proceeds and as the agreement itself evolves and changes through future discussions and negotiations.
I will be pleased to answer any questions you may have.
The Chairman: Just before turning to Mr. von Finckenstein, you did not specifically mention the details of the dispute resolution mechanism. Are you part of the dispute resolution mechanism?
Mr. Dimitrijevic: Only in the sense of providing support to the panels. There are two levels of dispute settlement mechanisms in the agreement. One is at the individual chapter level so procurement will have its own dispute settlement, and another chapter deals with labour mobility. Then there is an overall chapter for dispute settlement, Chapter 17 to the agreement, which provides for the establishment of panels. Those panels will consist of five members chosen from a roster of members across the country. In other words, each of the parties to the agreement nominates five members. That results in a group of 65 people out of which you draw your five-member panel. If there is a dispute between two parties, each party chooses two members of the panel, provided they are not their own members, and then those four choose a chairman. If they cannot agree on a chairman, the secretariat will choose a chairman.
The Chairman: From the pool of 65?
Mr. Dimitrijevic: From the pool of 65.
Senator Stewart: When you use the word "party" do you mean a provincial government or do you mean a corporation or other private person?
Mr. Dimitrijevic: When I use the word "party" I mean the 13 governments who signed the agreement -- the federal government, ten provinces and two territories.
Senator Stewart: Is there no provision by which, let us say, a corporation could initiate a dispute settlement?
Mr. Dimitrijevic: Yes, there is. There is provision for a private sector or a private person to initiate dispute settlement. That is specifically provided for in the agreement. The agreement encourages private people to go through their province, but, if that process does not satisfy them, the agreement also provides for private persons to directly ask that a panel be set up.
The Chairman: Has the dispute resolution mechanism process been triggered at all in the ten months you have been there?
Mr. Dimitrijevic: One case has been referred to the dispute settlement provisions of Chapter 17. It has not reached the panel stage as yet, but it comes under that process.
The Chairman: What is the case?
Mr. Dimitrijevic: It is a case between British Columbia and New Brunswick related to the UPS transfer from British Columbia to New Brunswick.
The Chairman: Has the question of labour mobility between Quebec and Ontario not reached you yet?
Mr. Dimitrijevic: That has not reached us. A number of complaints have been raised, but that is only the one that has reached the overall Chapter 17 process.
The Chairman: We have more questions for you but we will allow Mr. von Finckenstein to make his opening remarks first.
Mr. von Finckenstein: I have no opening remarks, but I would like to give you some background details of the bill.
The bill is to implement the internal trade agreement and, like all our trade legislation, we follow two basic principles. It is a minimalist approach. It only contains those provisions that are absolutely necessary in order to give the Government of Canada the power to take the necessary action to live up to its commitments under the agreement. Most of the necessary powers already exist in statutes and legislation, it is just where there is no coverage in existing legislation that this bill comes into play.
As a corollary, there are no free riders. There is nothing in the bill that is not required for the implementation of the internal trade agreement. Every single clause is related to the internal trade agreement. It is a very short bill, as you can see, and I can walk you through it clause by clause or answer your questions as you prefer.
The Chairman: Is there mirror legislation in the two territories and the ten provinces?
Mr. von Finckenstein: No. The requirements in each province are different depending on the status of their local legislation. There is legislation before the Quebec National Assembly right now in order to implement the agreement and give the Government of Quebec power to live up to it. Nova Scotia and Newfoundland have also introduced bills on internal trade to give themselves whatever powers they need to live up to the terms of this agreement.
The Chairman: What is happening across the country? You have said it is before the Quebec National Assembly and two other provinces have introduced bills, but there are 12 governments out there. What are the other nine doing?
Mr. von Finckenstein: Presumably they have gone through the agreement assessed whether they can live up to the terms of the existing legislation and powers, and have come to the conclusion that they can do it.
The Chairman: You say "presumably." Having been involved in federal-provincial relations the word "presumably" almost invariably has no application in practice. Do we not know what the situation is?
Mr. von Finckenstein: I do not purport to speak for the provincial governments and what they require.
The Chairman: Mr. Wallace, you presumably have looked into it with your federal-provincial relations hat with the Department of Industry, right?
Mr. Tom Wallace, Director General, Internal Trade, Consultation and Federal-Provincial Relations, Department of Industry Canada: We have not conducted a detailed examination of what is on the provincial government legislative books and assessed what they must do to implement the agreement. The agreement basically leaves each government the responsibility to review its own legislation and come up with whatever changes it feels necessary to implement the agreement, so we have not done any kind of exhaustive examination of what provincial governments may or may not need to do to implement the agreement.
Senator Angus: The question really is do you know whether it is going well? Is it being implemented or not?
Mr. Wallace: In his presentation, Mr. Dimitrijevic outlined a number of areas that are indeed being implemented. There is an open tendering process now in the country for goods above $25,000 and for services above $100,000. All governments are meeting the commitments in that agreement to advertise opportunities through one of three advertising means so that the agreement is operational to that extent, and a number of work programs have been launched pursuant to the agreement.
Mr. Dimitrijevic mentioned labour mobility. There is a very active work program to reconcile occupational standards in this country. There is work being done, for example, in the investment chapter. It provides, in the first instance, for governments to list their local residency requirements and then to go through a process of getting them off the books as established under the agreement. If the question is: Is there work being done pursuant to the agreement; is it being implemented? The answer is, yes, it is.
Senator Angus: I do not think the question is as complex as perhaps you are making it. We think there is probably a lot of cooperation between the 13 parties. They all got together in an act of faith and signed this agreement knowing that there would be some ongoing liaison, probably through the secretariat. The question is: Are there any problems? Is there resistance, or is everything going well?
Mr. von Finckenstein: There is an assumption behind your question that does not apply in this case. This agreement provides, in Article 1814:
...this Agreement shall enter into force July 1, 1995, by which date all Parties shall have taken all measures in order to give effect to this Agreement.
There is no overt act required by any of the parties to submit a list, to give notice or any triggering mechanism of the sort that we had in other federal-provincial arrangements. Therefore, as of July 1, 1995, it is in effect. If a party finds that another party has not lived up to the agreement, then it is actionable and a party can commence dispute settlement proceedings under Chapter 17. It is a self-regulating agreement and it does not require a trigger.
If we seem to not be answering your question directly it is because of the way the agreement has been set up and the way it enters into force.
Senator Angus: As far as you know, the federal government feels it needs to pass Bill C-19 to live up to its obligation, is that right?
Mr. von Finckenstein: Yes.
Senator Angus: As one of the 13 parties has it heard of any other party who is not taking the necessary steps? Is the answer no?
Mr. Wallace: Yes, the answer is no. If the question were: Is it being implemented effectively? I think the general answer would be yes. Areas that were supposed to have been negotiated by a certain date are still under negotiation. Some deadlines have not been met, but people are working on those now. Mr. Dimitrijevic mentioned that the energy negotiations are ongoing. We have not been able to conclude an energy chapter in the time frame contemplated in the agreement. Similarly, ministers are still discussing the extension of the procurement chapter to municipalities, academic institutions, schools, hospitals, so not every deadline has necessarily been met, but there is active work going on in all of these areas to try to move forward as much as possible.
The Chairman: I think your exact words a minute ago were that every deadline has not been met. The fact of the matter is the agreement says that, by July 1, 1995 -- July 1 past -- every government would have done whatever it was required to do in order to put the agreement into effect. Is that what the agreement says?
Mr. von Finckenstein: Yes.
The Chairman: Am I right?
Mr. von Finckenstein: Yes.
The Chairman: From the federal point of view, this act is required to put the agreement into effect; is that correct?
Mr. von Finckenstein: From our point of view the agreement binds the federal government right now. The federal government, however, does not have the necessary powers to do everything that it is required to do.
The Chairman: Are you saying that we never met the deadline set out in the agreement?
Mr. von Finckenstein: That is correct. We started the legislative process last year prior to the deadline. We have not completed it yet. We have missed the deadline.
Senator Stewart: First I will ask a pedantic question concerning clause 6, which at least to a laymen appears to be unnecessary. Why did you want clause 6? Let me just for the record read what it says.
For greater certainty, nothing in this Act, by specific mention or omission, limits in any manner the right of Parliament to enact legislation to implement any provision of the Agreement or fulfil any of the obligations of the Government of Canada under the Agreement.
I would have thought that that was a constitutional fact which did not need to be reasserted. Presumably there is some subtle reason why "for greater certainty" it was felt necessary to put in a statute a basic principle of constitutional law.
Mr. von Finckenstein: Yes, senator, there is a reason. The same clause appears in all our trade legislation and in this context it is meant to do two things. First, it is an interpretation clause which states that nothing in this act limits or takes away from the obligation that the Government of Canada has assumed under the agreement. It is an interpretation clause for the assistance of the reader, for judges, when they interpret this.
Second, the part which reads, "to enact legislation to implement any provision of the agreement," is really an indication that, where it is required by the federal government to pass some legislation in order to enact some of the provisions of this agreement -- where the federal government has to use its constitutional federal authority -- it will do so to make the agreement become a reality.
You have actually in this bill one instance of that. You have the provisions in clauses 17 and 18 relating to the Interest Act. These are there in order to support an agreement between the provinces on the cost of credit. In the event that they make an agreement on the cost of credit, since interest is in the federal realm of jurisdiction, the federal government is amending its Interest Act to allow that agreement to come to fruition and be implemented. The provinces on their own could not do it.
Clause 6 states that, in order to give effect to an interprovincial agreement, where a federal legislative support within the federal sphere of jurisdiction is required, the federal government will act in that way.
Senator Stewart: Could we turn now to clause 9? I assume that when we read the words "a province" we mean the government in a province?
Mr. von Finckenstein: Yes.
Senator Stewart: As I understand it, there is federal jurisdiction within provinces, for example, in the criminal law. I am making the distinction between the government in a province and a province of Canada.
Am I correct that Chapter 17 of the agreement refers to the dispute settlement process?
Mr. von Finckenstein: Correct.
Senator Stewart: What we are saying here is that, for the purpose of suspending benefits or imposing retaliatory measures of equivalent effect against the government of a province, pursuant to article 1710 of the agreement, the Governor in Council may do certain things. Is that a reasonable gloss on clause 9?
Mr. von Finckenstein: Yes, that clause, senator, was pursuant to article 1710. Article 1710 does not kick in very easily. You must have a dispute between the provinces which they have tried to resolve first of all by the specific dispute resolution. If they cannot resolve it, they then turn to Chapter 17. First, there is consultation. If consultation does not succeed, the parties then go before a panel. If the panel makes a positive finding and the offending province does not live up to the findings of the panel, does not remedy, the matter will be referred to the Committee on Internal Trade. The matter is before them for one year. If no action is taken, at that point, the aggrieved province may take some action. However, the action that it may take is then circumscribed by the provision of article 1710. That is also set out in clause 9(3). That means you must take this withdrawal of benefit in the same area, if possible, only to the extent of your economic health. If it cannot be done in the same area, only in another area covered by the agreement, it must be discontinued the moment there is remedy by the offending province.
It is a very circumscribed right and all of it, of course, falls within constitutional bounds. There is nothing that allows the federal government to do something which, constitutionally, it is otherwise not allowed to do.
Senator Stewart: Yes, but in this case the executive, the Government of Canada, is coming to Parliament asking for authority to do certain things in the circumstances you have described. It would be authorized to suspend rights or privileges granted by the Government of Canada to a province, and that means a provincial government. Could you give us an example of a right or privilege granted by the Government of Canada to a provincial government?
Mr. von Finckenstein: You are asking me to speculate because, as I mentioned, it has to be chapter specific. You must start with a dispute in one of the areas covered by this agreement, for example, in the area of natural resources or interprovincial mobility. It has to be an area where the federal government would be aggrieved.
The federal government does not act as a policeman under this agreement. It can only act in areas where a party is aggrieved by virtue of its federal status, incorporation or regulation. It is difficult to posit a situation first of all where that would happen, and, second, what withdrawal of benefit would be equivalent in order to make up for it. Without having the specifics of a case I find it very difficult to answer your question.
Senator Stewart: Yes, I understand, and I was not really asking you to speculate about possible factual situations. My question related to the implication that there are rights or privileges granted by the Government of Canada to provincial governments. I was seeking some kind of general statement with, perhaps, some examples of rights and privileges granted by the Government of Canada to provincial governments which might be the basis for the suspension.
Mr. von Finckenstein: There are areas where we allow provinces to exercise powers for the federal government by virtue of an agreement. For instance, tax collection. We have agreements with some provinces where we collect for them or they collect for us. I happen to know that, for instance, the Province of Quebec collects GST on behalf of the federal government. That is not a right they have, that is a privilege, an agreement that they have made. One could revoke that.
That is an example, albeit a bad example. You must look at all of the administrative arrangements that have been made federally and provincially, and there are dozens of them, and then decide which one you want to pick and to what extent.
Senator Stewart: What you are saying is that there is a sufficient list of rights or privileges so that, in the situation where a provincial government has failed to conform to the terms of the agreement, the Governor in Council does have at least some muscle; is that correct?
Mr. von Finckenstein: Yes.
Senator Stewart: Let us go to paragraph (b) of subclause 9(1), which authorizes the Governor in Council to modify or suspend the application of any federal law with respect to the province. I assume by "the province" you mean the government in a province, and that, "modify or suspend the application of any federal law" could mean, for example, the established programs financing statute.
Mr. von Finckenstein: There are many statutes which have a provision whereby the Governor in Council may proclaim it into force province by province, depending on all sorts of pre-conditions. For example, you could revoke, either temporarily or indefinitely, a statute which has been declared to be in force in the Province of Alberta.
Senator Stewart: I am attracted to the provision because it looks very heavy, especially when I see the word "suspend." I think back to the Bill of Rights which was proclaimed at the end of the 17th century, one of the main provisions of which was to stop the executive government from suspending the statute law. I am also drawn to the use of the word "modify." Is there any provision in the bill for reporting to Parliament where parliamentary enactments have been set aside either by modification or suspension?
Mr. von Finckenstein: No, senator, there is no such provision in the bill. However, it does specify, "pursuant to article 1710" and, while the paragraph you are quoting says "suspend," any such suspension is severely circumscribed by the limits set out in article 1710. It is only for the duration of the violation, and only to the extent of the hurt that violation causes.
Senator Stewart: I understand that. My concern has to do with the notion that the Government of Canada could be a party to a dispute which was not satisfactorily settled, and that it is armed in this way to act against a provincial government. That is the difficulty I have. There seems to be no reporting requirement to Parliament which is authorizing the suspension of federal statute law.
Mr. von Finckenstein: There is no reporting requirement. All I can say is, senator, is that we have a section similar to this one in both the agreement implementing the World Trade Organization and the NAFTA. This is much more restrictive. The NAFTA and WTO sections are much broader and much more powerful.
Senator Angus: Mr. von Finckenstein, am I correct that this is an implementation bill and that it does not affect the merits of the internal trade agreement?
People are criticizing Bill C-19, saying that it will not remove trade barriers and that it only goes halfway and so on. We are not here to discuss policy -- whether the internal trade agreement is a good agreement or not from the federal point of view, our job is to consider this bill and whether it will be effective in implementing the agreement. Is that correct?
Mr. von Finckenstein: Exactly.
Senator Angus: Having said that, what would happen if we did not implement the bill?
Mr. von Finckenstein: If you did not implement it I guess the federal government would be in breach of the obligation that it signed to implement everything by July 1 last year.
Senator Meighen: Just like all the provinces that have not implemented it, right?
Mr. von Finckenstein: Yes. To give you a practical example, the federal government is supposed to appoint a panel of five people to settle disputes. That has not been done because the authority to do that will come from this act. To my knowledge, only two provinces have made those appointments. Therefore, rather than there being 65 panellists from which one can draw right now, there are ten from which one can draw. That is one of the negative effects.
Senator Angus: If Parliament, for whatever reason, decides that the internal trade agreement does not go far enough because it has so many exemptions in it, and it fails to pass this bill, would that serve as a positive protest or would it make no difference?
Mr. von Finckenstein: Senator, I can only answer legal questions, not political ones.
Senator Angus: It was not meant to be political, it is a practical question.
During second reading debate of this bill in the Senate -- and you I am sure have read that in preparation for today -- one senator stated that this is a flagrant abuse of process because the bill only came to us after the internal trade agreement was passed and agreed upon in 1994. Am I correct in assuming that there must have been some technical problems?
Mr. von Finckenstein: They are legislative, not technical. The bill did not move through the two Houses of Parliament in sufficient time for us to be able to proclaim it by July 1.
Senator Angus: Could you explain why there was such a delay in getting it here to us? You said that there were legislative problems last year.
Mr. von Finckenstein: Yes. If you pass the bill now and it is proclaimed in force, you will be, basically, curing the breach. There will be no negative effect by virtue of the fact that we are a year late in passing this. Tardiness is quite common when trade obligations are assumed. There is a certain leeway that one allows.
Senator Angus: Mr. Dimitrijevic, am I correct that the secretariat is based in Winnipeg?
Mr. Dimitrijevic: Yes.
Senator Angus: Who finances that secretariat?
Mr. Dimitrijevic: It is financed by the federal government, ten provinces and two territories jointly.
Senator Angus: In equal amounts or is a formula set out in the agreement?
Mr. Dimitrijevic: The federal government covers 50 per cent, and the provinces and territories share the other 50 per cent on a per-capita basis.
Senator Angus: Who do you report to? You are the CEO, in effect, of the secretariat and you say you have up to seven or eight colleagues. You must be accountable to somebody.
Mr. Dimitrijevic: The Committee on Internal Trade, which is made up of ministers from the federal government, ten provinces and two territories, has set up a management board made up of representatives of each of the 13 jurisdictions party to the agreement.
Senator Angus: A management board analogous to a management board of a corporation?
Mr. Dimitrijevic: Yes, although we are an unincorporated entity.
Senator Angus: Are you obliged, under the process, to file written reports on a regular basis?
Mr. Dimitrijevic: We are obliged to file an annual report, to file an audit, to have an external auditor look after the financial affairs and report, yes.
Senator Angus: Is this audit subject to review by external auditors or by the auditor general?
Mr. Dimitrijevic: Under the terms of the agreement the auditor is to be approved by the management board, so by all 13 parties. It is an external auditor in this case, and that report will be presented to ministers under the provisions of the agreement to establish the Internal Trade Secretariat.
Senator Angus: Is there any mechanism or any intention that you will be reporting to this committee, the Standing Senate Committee on Banking, Trade and Commerce, on a regular basis; or is that not part of the process?
Mr. Dimitrijevic: I am not aware that there is a requirement to report regularly to this committee.
The Chairman: Is the report that goes to the federal government and the 12 other governments a public document or a confidential document?
Mr. Dimitrijevic: That is a good question. It is a report to the 13 ministers from the secretariat. There is no provision in the agreement that stipulates that it is to be a public report or a private report, it is simply a requirement to provide financial information to the 13 parties.
The Chairman: This report will not only contain financial information. I would presume that in your annual report you will provide what might be called a "state-of-the-nation" assessment, in which you will outline the assessments that have been made, the disputes that have been settled, and give a substantive rundown on all the issues you are working on. Am I correct in that presumption?
Mr. Dimitrijevic: Yes, that is correct, and that information would be made available. Part of the responsibilities of the secretariat is to inform the public on the process under the agreement. I understood your question to be specifically related to the audit itself being available. Yes, of course, reports would be available to the public.
The Chairman: Are you saying they are available to the public?
Mr. Dimitrijevic: They will be available. We have not prepared one yet.
The Chairman: Even if there is no explicit provision, if this committee were to call you as a witness then you would have to appear. I was trying to find out whether the report would be formally given to us or not, and whether we have authority to discuss this.
Senator Meighen: From your point of view it is not a public document or a settled document until it has been approved by all 13 parties; is that correct?
Mr. Dimitrijevic: Exactly.
The Chairman: Will the public document be a watered-down version?
Senator Meighen: It will be one that has taken 13 agreements to get. Until the 13 parties reach an agreement, it will be an internal document that you, presumably, would not feel free to give to the this committee or any other body; is that correct?
Mr. Dimitrijevic: Exactly. I report to 13 parties and I must take my directions from the committee. By the same token, when I submit a report to the 13 parties they may elect to do whatever they wish with that report.
Senator Angus: Our job is to ensure that there is transparency, and that the public, who is interested, I believe, in the liberalization of interprovincial trading can understand how this will work.
This particular bill does not deal with public policy and the substance of the internal trade agreement. However, it has been written, I gather by David Schwanen of the C.D. Howe Institute, that it is hoped that, over time, your secretariat will evolve into a policy development body. Could you share your thoughts with us on this because it seems to me that you have a real opportunity to move towards more barrier removal than is contemplated in the current agreement.
Mr. Dimitrijevic: I think you are quite correct. The provisions relating to what the secretariat shall do under the agreement is a one-liner -- it is to provide operational and administrative support -- and that can be interpreted in many ways. From my perspective, it is a question of balancing the direction from the committee as to what I can do, with interpreting "administrative and operational support" in terms of the promotion and the implementation of the agreement. My feeling is that the role of the secretariat will evolve. As a new entity, the parties do not know what the secretariat will be able to do or not do, therefore, a certain level of comfort needs to be established.
When I look at other secretariats of a somewhat similar nature, such as the Canadian Council of Ministers of the Environment which has existed for a long time, my colleagues in those departments tell me about the shift in the functions they performed at the beginning as opposed to what they do now. There has been an increase in the level of the policy work that they do. To some extent, pushing for that is a function of the secretariat, and of the parties themselves accepting the fact that this body can provide those services to them.
Senator Angus: I am certain that when you were going through the process of being hired you had a vision of your own. What strategy do you have in mind, and does it include being a watchdog of the 13 partners?
Perhaps I will include my last question as part of this and then let you respond. Earlier you referred to "poaching," where you have a premier of one province procuring business from another province. That is quite prevalent today. I can think of at least two premiers who have been making aggressive moves in this regard, with some success. Is it part of your function to remind them that that is against the spirit of the agreement?
Mr. Dimitrijevic: In a way you are correct, there is a watchdog function in that the secretariat really is the only body that has a comprehensive and overall view of what is happening across all 13 jurisdictions and, therefore, we are in the position of being able to know as much as possible, as much as we are being told, about what is happening and being able to raise these issues with the parties.
You suggested that there is a fair bit of poaching going on. There is also something else going on that I hear about when talking with my colleagues. On many occasions something is not done that would have been done in the past because of the provisions of the agreement, particularly as they relate to poaching. They will remember that certain incentives are no longer allowed and therefore they will pull back. There is that positive effect.
As to the role of the secretariat, yes, I think the role of a secretariat is also to push for implementation. I am there to implement the agreement itself and the agreement is to reduce interprovincial trade barriers. Therefore, my job is to pursue the implementation of the agreement, to ensure as much as possible that all parties meet their obligations, that panel members are nominated, and that, in fact, their internal policies are reviewed. We work with every working group. We sit with the chair of every working group. We advice them of the meetings and what is going on.
There is this push from our end to promote the implementation of the agreement and on the other side, as I said, there is also the direction we will receive from the committee in terms of what they want us to do and not do. There is a sort of dynamic tension between us.
Senator Angus: Would there be in your vision at least a move towards removing some of the exceptions and broadening the base?
Mr. Dimitrijevic: Interestingly, as I said, I am concluding a tour where I met with all the parties and consulted with their departments on future negotiation, and a general review of the exemptions and exceptions has been suggested as an activity that needs to be done at some stage by more than one party. As time progresses the exemptions and exceptions will be reviewed and they will come up in fact for analysis and for determination as to whether they should remain in place.
Senator Kenny: If I could come back to that one line you have and how you will deal with it. Do you anticipate publishing a list of barriers by sector? Do you see that as part of your role?
Mr. Dimitrijevic: It is an interesting question. In some dealings I have had with bodies like the Canadian Chamber of Commerce, and the Canadian Federation of Independent Business, they have suggested to me that they would like to see examples of barriers. This is brought to my attention. I am considering putting out a list of some examples but it is not necessarily one of the requirements. On the other hand, the annual report will cover progress to date and any complaints that may have been made.
Senator Kenny: One is an historical perspective, and the other is your view of the world, I guess. You will inevitably find ways to collect information about problems and, as you do, it would be interesting to people like us if you did catalogue where you perceive barriers developing. If you only report on the issues you are asked to deal with it will be a reactive situation. However, if you identify, on an ongoing basis, your top ten barriers each year, then people may want to focus on those.
Mr. Dimitrijevic: The intention in the secretariat is to bring to the attention of the members issues and problems that arise, particularly the important ones.
Senator Kenny: Without having somebody formally approach you about it; in other words on your own initiative?
Mr. Dimitrijevic: Yes. I take the direction as being a fairly broad one from the committee. I do have some leeway in terms of what I do.
Senator Kenny: It would be helpful if you walked us through an example of how you might work. I would like to illustrate an example that came to the attention of another committee yesterday in Calgary. It had to do with Bill C-29, the "MMT" bill, which in essence prohibits the transportation and importation of that substance in Canada. One of the premiers, Premier Kline to be specific, has expressed his concern that the provisions of that bill appear to contradict the environment chapter of the internal trade agreement. If Premier Kline chose to make this an issue, how would he go about it, and how would the system work if he wanted to bring this into play?
Mr. Dimitrijevic: I believe that Alberta has already, at the officials level, written to Ontario on this issue requesting a response or an explanation of the provisions regarding MMT. As the agreement is set up, it encourages the resolution of any disputes or complaints at the level of the parties initially. The agreement is set up to try to resolve as many of the complaints between the two parties involved, in this case the provinces, or a province and the federal government as the case may be. At all steps the secretariat is apprised of the process. If a letter is sent from Alberta to another province or to the federal government, we will be apprised of the process, we will keep up with the progress, but in essence the activity takes place between the two parties, not the parties and the secretariat.
Senator Kenny: Basically, Premier Kline would write to Mr. Marchi and tell him that his government has a problem with the bill because they think it violates a particular section, and a copy would be sent to you. Is that how it would work?
Mr. Dimitrijevic: Yes.
Senator Kenny: You will know what is happening but it will not affect you at all; is that correct?
Mr. Dimitrijevic: That is correct.
Senator Kenny: At what point, as an interested party, do you become involved?
Mr. Dimitrijevic: I will become involved in two ways. One, if the issue gets to the level of the ministers, the Committee of Internal Trade, I must provide a briefing to the ministers on the issue. The secretariat does not have a police or a watchdog function. It is to offer assistance in implementing the agreement. As I said, if the issue makes it to the ministerial level, there are provisions for the ministers to be consulted. Two, if the issue makes it to a panel, then the secretariat will be responsible for ensuring that the panel takes place, that they follow rules of procedures, and that their decision is put forward. That would be the involvement of the secretariat.
Senator Kenny: How do you determine whether or not this does interfere with the internal trade agreement? Does the panel do that or do you folks do that? How do you decide whether you are in the game or not?
Mr. Dimitrijevic: The panel would do that. The panel will give their decision on whether it interferes. The panel can in fact call technical or legal experts to advise them if necessary, and we will provide whatever advice we can, but they will determine whether this, in fact, contravenes the agreement itself.
Senator Kenny: Then the panel reports. Is it simply a question of moral suasion at that point?
Mr. Dimitrijevic: Moral suasion and eventually some retaliatory action is provided for in the agreement under certain conditions.
Senator Kenny: In this example how would a province retaliate against the federal government?
Mr. Dimitrijevic: That is a good point, senator. I was talking generally as opposed to specifically to that example.
Senator Kenny: I was giving you this example of a province complaining to the federal government about a piece of legislation that is going through the system.
Mr. Dimitrijevic: A substantial portion of the dispute settlement process is the fact that the decision is made public, so there is a moral suasion aspect to it and that is where they depend on the implementation of the decision.
Senator Kenny: At the end of the day, if Mr. Kline is successful, he will be taking comfort in the fact that the matter was considered by an independent panel and they supported his position; is that correct?
Mr. Dimitrijevic: That is right. The decision will be made public and if no changes are made by the federal government in accordance with the decision from the panel, the item could be then brought back to the committee on internal trade for further discussion.
Senator Hervieux-Payette: I know of a federal government contract which was executed in Alberta where the requirement in the bidding process was that the consortium had to have had a similar contract previously in that province. Of course, nobody outside of the province could pretend to qualify under those requirements. They were excluded, along with some Albertans. This was a construction contract. Eventually I managed to have the rule changed in that instance.
Supply and Services establishes all sorts of rules and requirements. Sometimes they set some strange standards that automatically disqualify some provinces from bidding. How can we put our own house in order?
Senator Stewart: May I add a supplementary to that so we will have one consolidated answer?
We have provisions in clause 9 as to what the Government of Canada can do where a provincial government has been found to be at variance with the decision of a panel. We have had a general case put forward by Senator Kenny, and we have a historical example given by Senator Hervieux-Payette. What could a provincial government do where it is the Government of Canada which is ignoring the decision of the panel? Is there some retaliatory device?
Senator Kenny: That was the original question.
Mr. Wallace: I can answer at least the procurement side of the question. The agreement provides for disputes against the federal government. The case you mentioned seemed to concern a procurement issue. The agreement provides for complaints, if a certain practice is in violation of the agreement, to be reviewed by the Procurement Review Board of the Canadian International Trade Tribunal. There is a clause which provides that that reviewing authority, which in this case is the CITT, can make recommendations to award compensation, or take various actions to rectify the situation. At least in the case of a procurement violation by the federal government procedures exist for violations of the internal trade agreement, and, I believe, violations of other federal government procurement policies, to be addressed through that process.
Senator Hervieux-Payette: Is it a mechanism that goes fast enough to correct the request for proposals so that it is not in violation of the rules?
Mr. Wallace: I am not familiar with the detailed administrative procedures of the tribunal but the agreement states that the reviewing authority may recommend, where, appropriate, a delay in the awarding of a proposed contract pending the resolution of the bid process.
The tribunal does have the capability, assuming it has administrative procedures in place, to act quickly enough to do that.
Senator Meighen: I would like to revisit the implementation question. As far as this piece of implementing legislation is concerned I would be interested to know whether anything is being held up pending passage of this bill.
With respect to the provinces that have or have not adopted implementing legislation, my understanding from your answer is that it is not necessarily required to pass such legislation because the provinces may already have the necessary legislation. Do I conclude from that, in order to find out whether that is so or not, we must wait for a specific example to arise and, if the province is found wanting in terms of legislative authority, then we will know that it ought to have passed implementing legislation?
Are you aware of any particular example of something now being stymied because of the absence of provincial implementing legislation?
Mr. von Finckenstein: I do not know whether I can answer all three questions, but I can certainly answer the first one.
You asked whether something is being held up. The act has all sorts of enabling provisions. We cannot appoint panels right now. There is a proposed provision allowing the Governor in Council to give directives to Crown corporations asking them to comply with the internal trade agreement. If it came to the attention of the government right now that a Crown corporation was not complying with it, in effect, there is no power to force it to comply. This bill would give that power.
There is a provision for payment of costs in case there is a successful claim against the federal government by a private party. The authority to pay for it would come under section 15 of this proposed act. None of these events have happened, but they could happen at any time. The only thing that is being held up right now, as I suggested, is the making of some appointments.
In terms of provincial implementation, when this agreement was negotiated there was considerable discussion on this implementation clause entering into force. There was a strong feeling by all of the parties that providing for a process, a triggering mechanism and submission of compliant legislation or regulation, given the contacts of previous federal-provincial constitutional initiatives, would be a problem and that it was not the way to go. Rather, it was felt that each agreement would enter into force on a given date, all parties would take the necessary steps to implement it, and if somebody did not, then they would be subject to the dispute settlement mechanism. As yet, I am not aware of any province coming forward, or the federal government, and pointing the finger and saying that another party has failed to live up to this and that the failure is causing damage. Whether that is because of lack of complaint from an affected industry, lack of knowledge, or because there has been compliance, I do not know.
Senator Meighen: If that were to occur, would it be the job of the secretariat or the job of government to raise that question with the provincial authority? Do you see it as your job, Mr. Dimitrijevic, to raise the fact that a province does not have the legislative muscle to do what it said it could do?
Mr. Dimitrijevic: I see it as my job to raise the subject with a province if they have not complied with any obligations, and to ask them to advise me why they have not complied. I would also ask when they will be complying with an obligation under the agreement as opposed to telling them that they require to amend legislation. My job is to go to the provinces, point out the outstanding obligations that they have not complied with, and ask them to advise me on that.
Senator Meighen: They all have an outstanding obligation to pass implementing legislation.
Mr. Dimitrijevic: From my perspective, some provinces have in fact indicated that, in their view, they do not need to do anything.
Senator Meighen: We will only know whether that is so when a specific case comes before them.
Mr. Dimitrijevic: Correct.
Senator Meighen: Do you see yourself as having any role as a secretariat in promoting bilateral trade between some of the 13 parties? I am referring to agreements on labour or other such things. Quebec and Ontario have just entered into some such arrangement, for example, and some people feel that is probably a more effective approach to reducing interprovincial barriers than the approach taken under this piece of legislation.
Mr. Dimitrijevic: I do not thing promoting trade is a responsibility of the secretariat, senator. The agreement certainly recognizes that there will be bilateral and multi-lateral agreements. That is recognized as valuable. In fact, where bilateral agreements are entered into, that will have some value to us because there may be some provisions in those agreements that may be useful for other parties to consider. However, I am not sure the promotion of such an activity would be a responsibility of the secretariat.
Senator Meighen: When this committee was dealing with the CDIC legislation came to it, we discussed the question of stacking, which is a practice of dividing a larger deposit into smaller amounts so as to enable each deposit to be covered by insurance provisions. This piece of legislation will cover government contracts of $25,000 and above. Is there any anti-stacking provision? My understanding is that, in the past, it has been a practice in some jurisdictions to split a contract. Can you do anything about that?
Mr. Dimitrijevic: There are no specific provisions in the agreement that address the issue of somebody splitting a contract into $25,000 bids. However, if there is evidence that this is occurring on a regular basis, and the system is being abused, then there are two ways of dealing with it: One party can raise the issue as a complaint, and that is justifiable; or, if it comes to the attention of the secretariat, we can raise it with them.
It was pointed out by my colleague that there is a provision that stipulates that is not to be done -- you are not to circumvent the process.
Senator Meighen: I take great comfort from the fact that you say you see it as part of your job to wave a flag if nobody else does.
Mr. Dimitrijevic: If it comes to our attention that in fact it has been circumvented, yes, that is what we will do.
Mr. von Finckenstein: There is a specific anti-stacking provision in the agreement. Specifically, it is article 505, paragraph 3 of the agreement.
Senator Meighen: It was rushed through at the last minute in such haste that I missed it.
Mr. von Finckenstein: If there is contract splitting, as Mr. Dimitrijevic pointed out, the party could take the offender to a dispute settlement.
Senator Meighen: I do not know any subject that has more universal approval and less practical effect. I mean everybody is in agreement with what you are trying to do except if they are in government or if their ox is being gored. If you are able to succeed, I think the questions that Senator Angus was addressing to you in terms of publicity and reporting and making situations known, are absolutely critical to your success. If you beaver away in anonymity without becoming politically involved -- though I think you can certainly state the facts and let the public decide what should be done -- you will vanish and never be heard of again, and that would be a great shame.
Senator Hervieux-Payette: I agree. This reminds me of a situation where you would have a building painted floor by floor and awarding the contract floor by floor. You would have to keep a close eye on the painting contract.
The Chairman: Having had experience in provincial governments, I can think of jurisdictions that would do this.
Senator Hervieux-Payette: In the Throne Speech the federal government stated its intention to devolve to the provincial jurisdiction, matters to do with mining, the environmental, and so on. Of course, we must ensure that companies will not lower standards of safety and security, particularly where mining is concerned. We have seen some examples of that lately. I do not know your agreement by heart. Is there provision in it to deal with safety issues?
My concern is that, if the federal government does devolve powers, as it has said it will, we will have a free-for-all. Is this agreement the proper framework to deal with these questions? Will it level the field so that every party will have a fair chance when they decide to invest? There is a major big dollar component involved.
Mr. Wallace: This may be a partial answer to your question. In the environment chapter, for example, there is a provision for the reconciliation of environmental regulations through harmonization, mutual recognition or other means. There is also a clause in there designed to prevent a race to the bottom, as it were. The agreement states that each party shall ensure that measures provide for high levels of environmental protection.
Senator Hervieux-Payette: The same situation would apply to the sale of particular types of hazardous equipment where the lowering of safety standards may lead to a competitive advantage for one company over another.
Mr. Wallace: Article 1505, paragraph 5 states:
No party shall waive or otherwise derogate from, or offer to waive or otherwise derogate from, its environmental measures as an encouragement for the establishment, acquisition, expansion, ongoing business activities or retention in its territory of an enterprise.
The environment chapter was negotiated by officials of the Department of the Environment and they were, I know, quite concerned about this "race to the bottom" idea. That paragraph and others are designed to try to ensure that the harmonization process does not lead to the lowest common denominator.
Mr. von Finckenstein: That provision is found both in the environmental chapter and in the investment chapter, article 610. For investment purposes or for environmental purposes, there cannot be a race to the bottom, in effect, removing pollution standards to attract industry or whatever.
Senator Hervieux-Payette: I think that is a good start. It is an important consideration.
Mr. Wallace: I would also refer to article 1508, paragraph 2 which states:
In harmonizing environmental measures, the Parties shall maintain and endeavour to strengthen existing levels of environmental protection. The Parties shall not, through such harmonization, lower the levels of environmental protection.
That is a relatively strong and its purpose is to make it clear that there should not be the lowering of overall environmental standards.
Senator Hervieux-Payette: I agree with my colleague that transparency is the key to the success of the whole process. My concern relates to the function of the Auditor General and his ability to oversee adequately so that the public in general and our political leaders are well informed.
Senator Stewart: I have two questions of a different nature. My first question is a technical one. Clause 11 provides:
The Government of Canada shall pay its portion of the annual budget of the Secretariat referred to in Article 1603...
Then clause 14 states:
(1) The Governor in Council may, by order, appoint any person to fill any position that may be necessary or advisable, in the opinion of the Governor in Council, for carrying out the purposes of the Agreement.
Then there is provision for the paying of such person or persons.
Am I correct in assuming that these are not statutory expenditures as distinct from expenditures which would be included in the annual estimate process?
Mr. von Finckenstein: Once clause 11 becomes law, it will be a statutory expenditure.
Senator Stewart: So it would not be included in the money to be voted?
Mr. von Finckenstein: No.
Senator Stewart: Can we have an idea of how large an annual expenditure we are authorizing by this clause?
Mr. von Finckenstein: The federal proportion is set out in the agreement.
Senator Stewart: What about the amount?
Mr. Dimitrijevic: The budget for the first year of the secretariat was $750,000. The federal share is 50 per cent, $375,000. The second-year budget has the potential of going to a maximum of $823,000, so the federal share will be $411,500.
Senator Stewart: Would you turn now to the other clause, which is more speculative. We do not know how many persons or how much they will be paid under the proposed provisions of clause 14.
Mr. von Finckenstein: That is a sort of a "basket" appointment clause which is required for the functioning of the agreement. The agreement provides for the appointment of panels the parties of which will perform certain functions. For instance, we must appoint a screener who will look at private complaints to see whether they are valid before they can proceed to the dispute settlement process. That proposed section will cover such positions.
In most cases an attempt will be made to appoint somebody who is already on the government payroll. He or she will execute that duty in addition to the one already being undertaken, so there will be no additional cost. However, in those cases where there is a necessity to bring somebody in who is not presently on the government payroll, this provision would allow the Governor in Council to fix the fees for such a person.
Senator Stewart: I do not want to vent my reserved wrath on the present witnesses, Mr. Chairman, the estimates process has become so unsatisfactory -- and it is not entirely the fault of the executive government, it is more largely the fault of the House of Commons -- that when we are asked to confer this kind of authority one becomes uneasy. However, I cannot ask you to cure that problem this morning.
Let me turn to another question. One gets two impressions from the agreement and the bill. One impression is that this is a very important initiative; the other is that we are dealing with minor irritations. I have just returned from seeing what is happening in the European Union where they are "perfecting the market." I do not think we would use that language, rather, I think we would say we are trying to "improve the market." Do we have any idea of the importance of this? How much distortion is there? What is the cost of the distortion under the prevailing regime? How much money will be saved by provincial governments? What is the potential effect upon investment in Canada of this improvement of the Canadian internal market?
Mr. Wallace: I do not think we have any definitive studies on the size of the barriers. There has been a number of attempts to make that assessment by royal commissions which have studied the economy. The most widely publicized estimate is $7 billion, or one per cent of GDP, by the Canadian Manufacturers Association, which was made in the early 1990s before the Agreement on Internal Trade. In other studies people have concluded that the cost may be very much lower than that.
The kinds of activities that have traditionally been pinpointed in the economic analysis as contributing to these economic costs are things like preferential government procurement policies, and policies in the alcohol and beverages sector. Both of those areas have been addressed to a large extent through our international agreements and our Agreement on Internal Trade.
Most studies conclude that there is a lot of unquantifiable aspects to this problem that are difficult to get a handle on, and that one of the key costs of internal trade barriers is the restrictions they place on the ability of businesses to expand across the country and reach an efficient size so they can compete in international markets. That is something that I think everybody realizes is out there and is a very important aspect of what we are trying to get at. However, it is very difficult to get a precise quantitative estimate of what that barrier is costing the country.
Senator Angus: My question is addressed to you, Mr. von Finckenstein. Bill C-19, this present bill is the successor to C-88; is that correct?
The Chairman: Bill C-88, in other words, was this bill in the previous session?
Mr. von Finckenstein: Yes, it says so on the front page actually.
Senator Angus: I wanted to clarify the earlier questions I asked about the delay. I understand that Bill C-88 went through the legislative process to the committee stage and that many provinces objected strenuously to some of the onerous powers contained in the bill, particularly the enforcement provisions, and that, therefore, amendments were suggested. Then Parliament prorogued and, after prorogation, this bill was introduced, and this bill addresses those earlier concerns raised by the provinces. Am I correct in that?
Mr. von Finckenstein: You are correct. Clause 9 was amended from what was contained in Bill C-88 by deleting certain subparagraphs and adding sub-clause 3, which states that, for greater certainty, all of this has to be done in conformity with chapter 17 and, in particular, article 1710.
Senator Angus: The point I wanted to make was that in the case of Bill C-88 the provinces made known their objections to the legislation, whereas, with the revised bill, Bill C-19, no such objections have been forthcoming. Is that correct?
Perhaps Mr. Wallace should answer that question.
Mr. Wallace: Since the changes were made, we have not detected any degree of provincial opposition to that clause. It has been addressed at meetings of ministers. We felt that the changes that were made clarified, to a large extent, what was contained in the previous bill, and that the retaliatory powers apply only to the circumstances contemplated in the agreement. Those are quite restricted and narrowly circumscribe the actions that could be taken pursuant to that part of the proposed act. Since we have made the changes to make it even more crystal-clear that it is only within the circumstances of the agreement, we do not detect a significant continued opposition to this bill.
Senator Angus: In particular, is Quebec comfortable with it as far as you know?
Mr. Wallace: They have not sent us a letter saying they are comfortable, but they have not been continuing to press their case.
Senator Angus: My last question relates to the provisions in the bill which tend to confirm a denial of access to the courts in certain circumstances -- I believe it is clause 5 -- not only to parties to the agreement but to individuals. Some people, and I would not necessarily subscribe to these views, believe that the present government has a reprehensible tendency to deny access to the courts to the citizens of Canada. Could you explain the purport of the clause which touches on that and the extent to which there is a denial?
Mr. von Finckenstein: Clause 5 is what you are talking about. The first part says you cannot bring an action under clauses 9 or 11 without the consent of the Attorney General. Clause 9 is the retaliation clause; and clause 11 is the annual budget appropriation. Basically the agreement provides that, if there is to be enforcement, it is between the parties and, in the ultimate event, it will be by retaliation between the parties. Under this clause basically the parties have agreed that a private individuals cannot avail themselves of the right to retaliate against a provincial government. Nothing should be read into this and, for greater certainty, we say here that it cannot be done unless the Attorney General consents. The same applies in terms of the annual budget. It basically means that a province cannot sue the federal government if it does not pay its contribution to the secretariat, nor can a private party.
The second part deals with the exception under Part B of chapter 17, which relates to a private party. There is nothing in this agreement that gives a private party a right of action because the agreement is an intergovernmental agreement, it does not create any private rights, and no court should read them into it. Again, it carries out the intent of the parties when entering this agreement. This is an intergovernmental agreement, it does not create any rights for a private party per se, it is through the government, except in chapter 17, Part B, where a private right arises.
Senator Angus: I appreciate that clarification. Just for the record, can you give this committee comfort and tell us that, as counsel from the Department of Justice, from a constitutional law point, that you and the other attorneys are comfortable that this legislation does not breach any rules of natural justice or constitutional rights of access to the courts?
Mr. von Finckenstein: Any legislation that the Department of Justice drafts has to go through an internal filter. In the first filtering process, it has to be examined in terms of compliance with the Constitution and with the Charter, and this has been done in this case.
The Chairman: Mr. Dimitrijevic, when do you expect your first annual report to be ready?
Mr. Dimitrijevic: I believe the agreement was that it has to be filed 60 days after year end, so it should be ready in the near future.
The Chairman: Year end being the fiscal year end?
Mr. Dimitrijevic: Yes, it is the fiscal year end.
The Chairman: So you will do it some time this summer?
Mr. Dimitrijevic: Yes.
The Chairman: Mr. Wallace, you are the senior federal official on this file. Is that correct?
Mr. Wallace: I am the internal trade representative, who is responsible for coordinating the federal activities under the agreement.
The Chairman: Given the nature of the discussion, which focused as much on the policy as on the success of its implementation, that Mr. Wallace and Mr. Dimitrijevic can probably expect an invitation from this committee in the fall to come back and discuss your unexpurgated annual report and a number of the issues related to the policy and its substance, rather than the legality of the matter. Perhaps you should take that as notice. We will be in touch with you in the fall.
Since there are no further questions of the witness may I assume we can report the bill back to the Senate without amendment?
Senator Stewart: I have no problem with that, and I do not think that I have any uneasiness, in this particular instance, with clause 9(1)(b), but I do hope that in our report to the Senate we point out that this is a very extensive power which has been delegated by the Parliament of Canada to the Government of Canada, that is, the right to modify or suspend the application of any federal law with respect to the province within the circumstances. That is almost a constitutional matter, and I think we ought to alert the Senate to the fact that we are aware that this is a very heavy delegation of legislative authority by the Parliament to the executive government.
The Chairman: We will do that. We will not report the bill today, we will report it at the beginning of next week. I will draft some comments along that line and go over them with you before we report the bill.
Mr. von Finckenstein: On that point, senator, just to underline, subclause 9(3) states it has to be in accordance with chapter 17, article 1710 which is a reaffirmation of the constitutional powers. It states that anything you do has to be within constitutional limits. Clause 9(3) makes specific reference to that.
Senator Stewart: Of course we understand that.
The Chairman: Thank you, gentlemen.