[Recorded by Electronic Apparatus]
Thursday, May 18, 1995
.1700 
[English]
The Vice-Chairman (Mr. Volpe): I call this meeting to order. We are pleased to welcome the Hon. Roy MacLaren, Minister of International Trade. We are pleased that he could make some time to meet with this committee as it goes into the last session of its consideration of the estimates and other matters.
The minister is not familiar with presentations before committees, so we won't belabour the point. We will just turn the microphone immediately to him and he can choose if he wishes to give a very brief statement and then we can go into question and answer.
I might warn the minister just before he begins that we expect to have a motion once we get a quorum, so we might interrupt the question and answer just to hear the motion.
Hon. Roy MacLaren (Minister for International Trade): Thank you, Mr. Chairman. I will indeed be brief.
First I want to introduce Allen Kilpatrick, the Deputy Minister for International Trade; and Hugh Stephens, who is the Director General of Resource Planning and Management.
I will say only one or two words myself, Mr. Chairman, and then we might get into the more interesting part of the discussion.
When I last appeared before the committee, which was indeed some time ago, I talked in terms of trade policy issues and the steps Canada was taking with other countries to provide further impetus to liberalize global trade, bringing down trade barriers wherever they are. Today I'd rather start at the other end and say a word or two about what we're trying to do here at home to take advantage of, and to assist our businesses to take advantage of, the emerging opportunities that result from reduced trade barriers around the world.
We've set ourselves several goals, several directions, one of which is to rationalize our services to business with the provinces and indeed in some cases even with regional governments. We've set as another priority to identify how we can best work with the business community in preparing companies, especially smaller businesses, to be ready for the rigours of the international trade world.
We've been working with a number of organizations across the country to assist us in developing better ways to deliver our support services for business. I'd be pleased to talk about that issue at some greater length if that interests members of the committee.
I would want to add now that one of the essential elements in that total effort to rationalize our business support activities, here in Ottawa and with the provinces, concerns the question of financing of exports. Since coming to office a year and a half ago, we have been working closely not only with our own export development corporation but with the financial institutions in Canada to identify ways in which we can better support the Canadian exports, principally through the assistance to smaller and medium-sized enterprises.
We've had a certain success - and I'll just close on this note, Mr. Chairman - in our trade promotion policies and certainly our trade liberalization policies, which I think is well reflected in our current trade statistics. March statistics were released today, and they show a year-to-year increase of approximately 35% over the same period last year - in terms of our trade not only with the United States, which is in substantial surplus, but also with Japan, which in the case of merchandise trade is also in surplus.
.1705
The trade story is a very good one, and although we have much more to do in this dynamic and changing trade world, I think we can all be pleased with the achievements of Canadian businesses as they engage more and more in the international trade world.
The Vice-Chairman (Mr. Volpe): Thank you, Mr. Minister.
I think Mr. Mills has a point of order.
Mr. Mills (Red Deer): Just a point of order, Mr. Chairman. I explained prior to this the purpose of it, simply because of some problems that have occurred in at least one committee today that we feel are of great concern to our future involvement in committees. I've given you a copy of the motion and I believe it's being circulated. If I could just read it very quickly....
By the way, this has never happened in this committee, so I'm not referring to it, and I should make that very clear.
I move that the committee ensure that the chairman uphold all rules and practices of this committee and in particular a member's privileges to debate each issue before committee as provided for in the Standing Orders; a member's right to question witnesses; a member's right to seek advice from legal counsel; a member's right to request input from committee research staff; and a member's right to move motions in his or her language pursuant to Standing Order 65.
These basically are all things that have always been conducted in order in this committee. Not having been part of other committees particularly other than today, I couldn't comment on others.
However, I did witness today a committee that did not follow these rules. We find that terribly offensive and undemocratic, and we don't intend to participate in committees that do this sort of thing.
The Vice-Chairman (Mr. Volpe): Thank you, Mr. Mills. The motion is in order, and I'm glad you noted that it really doesn't change anything with this committee, either in its practices or in its Standing Orders.
Do you have a seconder for that motion? Yes, he does.
Mr. Harb (Ottawa Centre): I understand that perhaps nobody is seconding the motion, but in fairness to the hon. member, I think what we should do is receive it as the member's inquiry and have a look at it and find out if our practices are in fact in contradiction to what the member is proposing. If they are not in contradiction, then I don't see that there's is any necessity for it to be even proposed. If it's already in the Standing Orders of the committee. I don't understand why we would have to put any motion, because tomorrow some other member will come up and say, ``Notwithstanding what is in the Standing Orders, I would like to propose the following...''. If it's already in the Standing Orders, then I would go along with my colleague in order to make sure that the Standing Order is enforced by the chair as it relates to the members of the committee.
I have no objection whatsoever to anything in the motion, but I don't want to see some precedent being set here so other committees will say ``Your committee has done this'' and will do the same thing.
If the Standing Order protects the right of the member, if it's already in the Standing Order, then I would suggest that it's the duty and the responsibility of the chair, with the assistance of the legal counsel and the clerk, to uphold the Standing Order.
I sympathize very much.
Mr. Mills: That's all we're asking for.
Mr. Harb: Then there's no point, really, in adding an extra burden on the system.
Mr. Regan (Halifax West): It seems to me that this motion is redundant; it's asking us to apply the rules.
I gather there was a problem last night, or a concern struck by the Reform members after a meeting last night of the human rights committee, and a point of privilege was raised this morning on which the Speaker has reserved his judgment and will be providing a ruling. If in fact the rules were not followed last night, then I'm sure the Speaker will rule accordingly.
.1710
Obviously we have to follow the rules, but to pass a motion when we do what we already do and what we're required to do seems a bit ridiculous to me.
The Vice-Chairman (Mr. Volpe): Thank you.
Mr. Regan: Also, it says a member has a right to move a motion in his or her language. If my language were Inuktitut I would need more translators here. I don't know if that's what's intended.
Mr. Mills: Standing Order 65 says French or English.
Mr. Regan: That's not what it says here.
Mr. Mills: Oh well....
Mr. Flis (Parkdale - High Park): I'm actually surprised that this came before us. Every committee runs a little differently, and what happened in another committee should have no reflection on this committee. What the motion is saying is that our chairman is not doing a proper job. Our chairman and vice-chairman are following Standing Order 65 to a ``t''.
By all means, if there are any complaints in this committee, bring such a motion forward to this committee, but if something happened in another committee.... The Standing Orders override and give us the rules to follow. If the chairman is not following the rules, the point of order is raised in that committee at that time.
You can't go to another committee and ask for a motion like this. I feel it's out of order.
[Translation]
Mr. Bergeron (Verchères): Mr. Chairman, I must agree with my colleagues. If Mr. Mills himself admits that such a problem has never arisen in this committee, what then is the point of having us pass a motion asking that we follow the Standing Ordrers when he himself admits that we have always followed them?
I agree with Mr. Flis. If members believe the Rules have not been followed, they may bring this to the attention of the chairman when such a breach occurs by raising a point of order. However,I don't see the point of passing such a motion here, particularly as I have the impression that this whole operation on the part of Reform Party members is being repeated in every committee. As for ensuring the consistency of procedures followed in all committees, it seems to me we must first determine what the practices of each of those committes are.
Since we have already agreed that this committee's practices are fully consistent with the Standing Orders, there hardly seems to be any point in passing this motion.
[English]
The Vice-Chairman (Mr. Volpe): Mr. Mills, I wonder if, given the comments you've heard around the table, you would be happy to have this referred to this committee's committee of procedures?
Mr. Mills: We're not afraid of the rules. I'd rather have it voted on. It has been voted on in two other committees today, and basically it's the cooperation I'm asking for. If there's not going to be that cooperation, I guess we won't play in the game.
The Vice-Chairman (Mr. Volpe): I'm not sure you can make that leap of logic there,Mr. Mills. As you indicated -
Mr. Mills: A chairman of a committee said that he did not have to follow those Standing Orders. He clearly stated that.
Mr. Flis: Not in this committee.
Mr. Mills: Not in this committee, no.
The Vice-Chairman (Mr. Volpe): Mr. Jackson.
Mr. Jackson (Bruce - Grey): Mr. Chairman, I can appreciate my colleague's concern, butI think that if we've got a Standing Order 65, that's where the change will have to be made. It's not made in the climate we have here. I think the avenue that Mr. Mills is using is not the correct one.
I think you already have used the correct one by asking the Speaker to rule on it. That's the procedure. If you want to change the Standing Order, then it has to be done in the House committee where that Standing Order is made. It's a rather redundant motion.
We understand what you said. I think you've made your point. I think you should wait for the Speaker and see what he says.
Mr. Mills: I understand the Speaker has refused to rule on it. I'm not sure of that.
The Vice-Chairman (Mr. Volpe): Rather than continue the debate in a climate of uncertainty, we know the Speaker is deliberating on it. We don't know whether he has said yes or no on it, so we have that avenue that's already being explored.
The second one I offer to you is to refer it to our committee on procedures. The third item is that everyone around the table has agreed with you that this is a motion that doesn't really apply here, that we receive your motion as a question of concern, and that we can wait for either one of the other two options available to you.
.1715
Mr. Mills: I'll accept that.
The Vice-Chairman (Mr. Volpe): Thank you very much.
Can we go then to questions?
Mr. Minister, thank you for your patience and your assistance.
[Translation]
Mr. Bergeron: Mr. Minister, allow me to welcome you once again to the committee. It's always a pleasure to have you with us; unfortunately, the opportunities we have to meet are far too infrequent.
My first question for you has to do with the overtures Canada has been making in various regions of the world such as Asia, through the creation of a sort of a free trade zone there, and also with Europe. As you may recall, during his recent trip to Paris, Mr. Chrétien mentioned the possibility in a speech before the French Senate of creating a free trade zone with the European Union.
Does this idea put forward by Mr. Chrétien flow in any way from a desire on the part of European authorities to move in that direction? Was Prime Minister Chrétien simply trying to reassure our European allies that Canada has no intention of turning away from Europe simply because it is currently giving priority to its relations with Asia and Latin America, or is the intention in fact to create a large free trade zone extending to the entire northern hemisphere - in other words, Europe, North America and Asia - thereby excluding all developing countries.
[English]
Mr. MacLaren: That's a very interesting question. I think we could spend the rest of the afternoon on that alone.
The Prime Minister, in speaking to the French Senate, had in mind two factors. One is that in the post-Cold War era, the transatlantic linkages hitherto provided principally by NATO, by security concerns, and by common security goals have understandably been reduced. It is not of such paramountcy as it has been in the past.
The question in the Prime Minister's mind, and indeed in my mind, was whether we should look for an additional structure to sustain the transatlantic relation, the North Atlantic relationship. The obvious one to examine is the economic ties, whether we could facilitate further trade and investment between North America and Europe and whether that in time could be embodied and symbolized, if you wish, by a free trade agreement.
The second element that no doubt was in the Prime Minister's mind was that there can indeed be some real advantages in further measures toward freer trade, measures that are certainly advocated by the Canadian business community, among other business communities.
I don't doubt that those were the two primary interests in the Prime Minister's mind, but you do rightly raise the question of our parallel commitment to free trade in Asia Pacific and in the western hemisphere.
If I might speak for my part, it does seem to me somewhat incongruous that we as a country with an Atlantic seaboard would commit ourselves, along with the United States and other countries, to free trade in Asia Pacific by 2010 - well, there are two stages, 2010 and 2020 - and to free trade in the western hemisphere within 10 years, the year 2005.
It seems to me that the recognition of the benefits that freer trade can bring in Asia Pacific and in the western hemisphere should have a parallel and an initiative in the North Atlantic. Whether that in time leads to yet a more global concept of free trade remains to be seen.
.1720
[Translation]
Mr. Bergeron: I would like to raise a different topic now, Minister. Last September, you received from the Canadian business community a report, often called the Wilson Report, looking at government support programs and services aimed at promoting international trade.
One of the recommendations of that report was that provincial delegations posted abroad be made part of the Canadian Government's delegation or, in a case where a province wished to maintain a presence in a specific country, that its delegation actually be housed in federal facilities.I would like to know whether you endorse that recommendation and whether you intend to pressure the provinces to go along with it by agreeing to merge their activities, particularly in the area of international trade, with those of the federal government.
I know that you have already consulted your provincial counterparts on this idea, and particularly the Quebec Minister for International Affairs, for which I thank you. Now that you've consulted provincial ministers, have you actually taken a firm decision as to how you intend to proceed?
[English]
Mr. MacLaren: We have discussed it, not collectively but individually, with provincial ministers responsible for commerce. Some have taken up the opportunity to house their representatives in the Canadian nation and city. Others have preferred to maintain their own offices. For example, the Province of Alberta's representative in Korea is housed in the embassy in Seoul.I believe the Alberta representative in Tokyo is also in the Canadian embassy in Tokyo.
In the case of Ontario, they did something rather more decisive. They simply closed all their offices abroad; there are no more Ontario offices abroad. Other provinces have chosen to house their representatives in some of our consulates in the United States, but essentially it's a question for the provinces to decide, I think.
We have made the opportunity available and we think there is merit in it, in the sense of a one-stop shopping centre for visiting Canadians. By going to a Canadian chancery, they can see not only the federal or the national representatives but also the provincial. I think there's merit in that, but it's entirely up to the provinces whether they wish to take advantage of that.
[Translation]
Mr. Bergeron: If I understand you correctly then, Minister, you do not necessarily intend to force the provinces to go along with that recommendation. You are prepared to allow those provinces that wish to do so the option of looking after those areas of jurisdiction that fall to them under the Constitution on the international scene, including international trade.
[English]
Mr. MacLaren: What I'm saying is that I recognize that some provinces wish to continue their present practice and other provinces do not.
The Vice-Chairman (Mr. Volpe): Merci.
Mr. Jackson.
Mr. Jackson: Mr. Minister, I was glad to see the Americans having to put some pressure on the Japanese by doubling the price on some of their imports. They see what it feels like; Canadians do that all the time. I get asked the question all the time, particularly from farmers, with regard to why it is that the Americans always object to things and they slow down the process or they find some way to give us a hard time.
My question is about the NAFTA side agreements, which were designed to protect labour and environmental standards in Canada, the United States and Mexico and went into effect on January 1, 1994. What progress has been made in setting up the respective secretariats for the commission of labour cooperation and the commission on environmental cooperation? How many complaints about labour or environmental standards have been filed under the side agreements and what has been the outcome? How many Canadian provinces have signed on to the NAFTA side agreements?
.1725
Mr. MacLaren: Mr. Jackson, to answer your first question, what progress has been made in setting up the respective secretariats, they are up and running. The environmental commission in Montreal has begun its work. The labour office is in Dallas and is now engaged in its work. But they have only begun.
I don't know how many complaints about labour or environmental standards have been filed under the side agreements. Let me try to return to you on that. I simply don't know. I wouldn't have thought there'd be very many yet, in that the offices have just begun, and indeed to a very real degree NAFTA has only recently begun, on January 1, 1994.
How many provinces have signed on to the NAFTA side agreements...it's not quite the formulation I'd use, but in any event, I know what you mean. Several provinces have indicated their intention to bring legislation forward. The Province of Quebec, the Province of Alberta, and other provinces have indicated in a more general way their intention to proceed in due course, whatever that may mean. We would welcome their early action and I hope we'll see that soon.
Mr. Jackson: Thank you, Mr. Minister.
Mr. MacLaren: Let me get back to you with a specific answer on the question of how many complaints have been filed. I simply don't know. I wouldn't have thought many.
The Vice-Chairman (Mr. Volpe): Mr. Minister, you can make that available through the chair. Thank you.
Mr. Mills.
Mr. Mills: I have three things. Has the EDC recently been audited by the Auditor General, or is there a program whereby it's audited? Can that be made available to us through the chair?
Mr. Harb: We deposited the annual report not too long ago, actually.
Mr. Mills: The Auditor General?
Mr. Harb: No, the EDC annual report. If you want to obtain a copy from the clerk, you'd be able to get a copy of that.
[Translation]
Mr. Bergeron: The EDC's Report.
Mr. Harb: Yes, its annual report.
Mr. Bergeron: It was tabled here in Committee.
Mr. Harb: No, it was tabled in the House of Commons. I believe an annual report was tabled two or two and a half weeks ago. If you are interested in getting a copy, I would suggest that you should get in touch with the Clerk of the House of Commons.
[English]
Mr. Mills: I'll go on from there, then.
Mr. MacLaren: I could answer the question in a little more detail. The Auditor General did carry out an audit toward the end of last year and reported at the end of the year. It was the best audit, as it were, EDC has ever received. The Auditor General was complimentary in his review of EDC.
Mr. Mills: And that is available?
Mr. MacLaren: I would assume the auditor's report would be embraced in the annual report, would it not?
Our colleague is from the EDC, if you have any further questions.
Mr. Mills: There are $2.6 billion of non-performing loans. Are those going to be written down or written off? What's happening with those?
Mr. Roger Pruneau (Executive Vice-President, Operations, Export Development Corporation): I'm the executive vice-president of operations at the EDC.
These loans will not be written off, and most of them will eventually be paid off. From time to time countries or projects will come into delays. After a period of time these become viable projects again. So it's a cycle.
Over the last ten years very little money has been written down by the corporation itself. It's in the neighbourhood of $16 million, over projects embracing about $100 billion.
.1730
Mr. Mills: So you feel that $2.6 billion, then, is safe?
Mr. Pruneau: It's quite safe; we've reserved against it and we believe most of it will eventually be repaid.
Mr. Mills: This is something for the minister, I think. I've visited a number of embassies and realized that a lot of those embassies have trade offices. When I think of the numbers, it seems -
Mr. MacLaren: A lot of our trade offices have embassies.
Mr. Mills: I was going to say that from what I've seen, about 60% of their work is trade. I'm talking about Los Angeles, which is a major one, and certainly Paris and London.
What I wonder about is this. They're doing a lot of work, a lot of in-depth studies, market research for companies. I don't believe companies pay for that. I know that Australia, New Zealand, Germany, a lot of other countries, do charge for that service. Do you have a plan to get into the user-pay concept?
Mr. MacLaren: Not at the present time. We have looked at the Australian and New Zealand practices, both of which do engage in a user-pay of sorts, as you've noted. I'm not sure it is an effective system; I'm not sure it brings any real benefits either in fiscal terms or indeed in terms of dissemination of the information.
What we are trying to do is improve our market intelligence services and target our information in ways that can be of more direct benefit, particularly to small and medium-sized businesses. But I'd like to ask our deputy minister if he'd say a word about all of this trade and whatever the expression is for the New Zealand trade, kiwi trade, I suppose. But whatever it is, the deputy minister, who's had a good look at their practices, can respond.
Mr. Allen Kilpatrick (Deputy Minister for International Trade): Mr. Mills, we've looked at that often over the years and I would note two things. One is that we recover quite a lot of costs now. For example, our trade fair program is on a cost-shared basis and it's on a scale where the companies get a large amount of support the first year they participate and it's scaled down if they participate in subsequent years. A variety of our other programs...trade missions now are entirely cost-recoverable. Businessmen pay their entire cost for trade missions.
In terms of the service provided by our embassies, when we've looked at that, there are two or three comments I'd make.
One is that we do a lot of our work for small and medium-sized enterprises, and a fee for service, we believe, would discourage the very companies we're trying to encourage in the export business.
Secondly, when you look closely at what other countries do, it's not quite the way it appears. When we looked at Australia, for example, despite what they say, the amount they recover of their total expenditures is 8%, and they admit that there is a cost of recovery in the disputes they get into with companies about whether they've had value for money or what have you. The German system, likewise, is funded to a large degree by chambers of commerce, but there's mandatory membership for all companies and chambers of commerce, and in addition to that, there's a significant amount of government money.
So I think the short answer to your question is that from to time, including quite recently, we've had another look at fee-for-service. We've increased the cost recovery of a number of our programs, but we have not yet moved, nor do we have any immediate intentions to move, to charging for the routine help and assistance that is provided by our trade commissioners abroad.
Mr. Mills: I have another really short question. Obviously having one major trade partner that accounts for 80% has to be a concern. If we do get in a major dispute or political change in either country or whatever, we seem to have a lot of our eggs in one basket. I don't have any solution for that problem. I wonder, just from the minister's point of view, how much weight you put on that sort of thing and if you do have some long-term plan in terms of how we might get that down to 60% or whatever.
.1735
I'm not saying it's a bad relationship.
Mr. MacLaren: No.
Mr. Mills: I'm just saying it a worrying one.
Mr. MacLaren: Clearly we don't want to do anything that in dollar terms jeopardizes our market opportunities in the United States in terms of the volume of trade with the United States, butI think you're talking in terms of proportions rather than -
Mr. Mills: Yes, it's the long term.
Mr. MacLaren: One obvious way to increase our trade with other areas of the world is to seek further trade liberalization. We were speaking a moment ago of our commitment to reduce barriers in Latin America and Asia-Pacific and, I hope, in the transatlantic region.
From such a reduction in trade barriers will flow that increased trade with other areas of the world that you and I seek. Look at what we have had, despite the fact that 80% of our trade, roughly, is with the United States. Our trade has been growing rapidly with many other countries. Japan is an obvious example. I noted earlier that we are now in a merchandise trade surplus with Japan. Mexico, despite its recent economic difficulties, has proven to be a major and growing market for Canadian goods and services.
The other thing, however, that I want to touch on just for a moment is the encouragement we've attempted to provide to Canadian entrepreneurs to engage in joint ventures in third countries. This is not only the United States but beyond. From that support or encouragement that we tried to provide for joint ventures, trade has grown. Trade today often grows out of investment. We've found that an increasingly productive way to increase our trade with other countries.
Mr. Mills: Will the U.S. put Chile on the fast track?
Mr. MacLaren: The question was brief. I'll try to be equally brief in my answer. In principle, yes. As I understand the situation, while there seems to be broad consensus in the U.S. Congress to proceed with Chile as the next partner in NAFTA, there is opposition among some congressmen - I suppose these are new Republicans, in particular - to the inclusion of the side agreements on labour and on the environment, which we were talking about earlier, in the negotiation with Chile such that Chile would not need to ascribe to those side agreements.
I find it a little difficult to conceive how you'd have three countries in an agreement committed to one set of rules, with the fourth country having another set. That question has only just begun to be engaged in the U.S. Congress. I think we'll hear some more from it in the time ahead. I hope we'll finish the Chilean accession so it can become a member of NAFTA by the end of this year.
The Vice-Chairman (Mr. Volpe): Thank you, Mr. Minister.
Before I turn to Mr. Regan, I wonder whether we could get a response to one of Mr. Mills' earlier questions about whether the Auditor General's report on the EDC would be made available to the committee?
Mr. Pruneau: Actually, Mr. Chairman, it is part of the annual report. Just in front of the financial part you will have the statement the Auditor General made and management's response to that statement.
The Vice-Chairman (Mr. Volpe): Great. I think we have a copy of that already. Thank you.
Mr. Regan.
Mr. Regan: I was pleased to hear the last question and the response, because that was a question that I had in mind about Chile. I guess I'm pleased that the minister would find it inconceivable that we wouldn't have the same kind of rules applying. I think Canadians consider those side agreements on labour and environmental standards to be very important to us. I hope we would be insisting on those.
I guess I would be concerned that there would be a strong challenge to that, considering the view of the Republican Congress about including these kinds of side agreements on labour and environment standards in trade agreements.
However, I would like to ask you two questions about Chile and the accession negotiations. First, what are Canada's key objectives in those negotiations? Second, what efforts and financial resources are being targeted toward those negotiations?
Mr. MacLaren: You mean our own resources with Chile?
Mr. Regan: Yes.
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Mr. MacLaren: On the first, clearly Canada will benefit from the phasing out of the remaining trade barriers that exist between Canada and Chile. Chile is a highly dynamic economy. It's one in which Canadian companies have now invested, or have undertaken to invest, a total of about$5 billion.
The possibilities for the provision of Canadian goods and services, as a result of that investment we were speaking about earlier, underline the opportunities for Canadians in Chile. It's our view that those opportunities are best enshrined or best encompassed in a free trade agreement. That basically is why we want Chile in.
Chile, for its part, is the country in Latin America that's pre-eminently qualified to accept the disciplines of free trade, to accept the regime of free trade. As I said a moment ago, unless there's some difficulty in the U.S. Congress, I think we can expect early conclusion of the talks. They begin formally in Toronto on June 7.
Our resources that we're putting into the negotiation consist of staff, senior officials from several departments led by an official of my department. The talks at the official level have been under way for several months. I can't tell you any ballpark number for the costs of the time of the officials and travel and that sort of support. I assume that's what you have in mind, but I don't know that any....
Mr. Stephens reminds me that there are, in addition to the direct costs that I mentioned, legal costs that are involved, and for this year or for the project itself we've set aside $500,000.
Mr. Regan: In terms of Mexico and the crisis with the Mexican peso last year, there have been those who have suggested that there were large capital inflows that resulted from Mexico joining with the U.S. and Canada in NAFTA and those very fast and large capital inflows led to an artificial rise in the Mexican peso, which in the end created a problem. I wonder if you agree with that. Secondly, do you feel there's a concern in relation to Chile and how we handle that?
Mr. MacLaren: No, not at all. The inflow of capital into Mexico was substantial, and in effect Mexico based its economic development on it. It financed its spending from the inflow, rather than generating itself a major portion of its total government revenue to support its further economic development.
Chile is not in that situation at all. It has a nearly balanced budget and is not in any way dependent, as Mexico has been, on the inflow of foreign capital to finance its development.
[Translation]
Mr. Bergeron: Mr. Minister, this committee heard the minister of Foreign Affairs on Tuesday and asked him questions on the statement of the Auditor General about the fact that some officials of the Department of Foreign Affairs and International Trade might have taken advantage of the system by using some transportation allowances that they were not entitled to.
.1745
During this meeting, we learned that nearly $300,000 were refunded by the employees at fault, which is really nothing compared to the actual defrauded amounts. Could we have an idea of the number of employees, trade commissioners and international trade agencies possibly involved in that type of activities?
Besides, I must say I'm surprised, Mr. Minister, by some statements published today in the media. Apparently, the intent would be to bypass this problem to an extent, by exempting civil servants who travel at public expense from having to submit vouchers. Could you give us some more information on this topic?
I'd also like to ask you to explain why some of these defrauders were not brought before the courts for their actions.
[English]
Mr. MacLaren: Perhaps you know that Mr. Ouellet and I share...our trade service and our diplomatic service share the same administrative support services. I'm not as familiar as he would be with those details. But in answer to one of your questions, I understand no breakdown is available between trade commissioners and diplomats.
You might have a comment, Mr. Clarke, on some of the questions.
Mr. William L. Clarke (Assistant Deputy Minister, Corporate Services, Department of Foreign Affairs and International Trade): As the minister said in answer to the first question, roughly 250 employees were investigated for alleged irregularities under the travel directives. Full investigations were undertaken for every case and disciplinary action was taken in some 202 cases. We have no breakdown by discipline; that is, whether it was trade officers, administrative officers, political officers, CIDA officers, immigration officers, or other foreign service. We did not break it down that way. We could analyse that and provide it, but it would not be particularly indicative of one group being more guilty than the other.
About alleged fraud, of those cases, an initial determination was found that 14 of the employees should be looked at for possible fraudulent action; 14 of the 250 employees might have been involved in some fraudulent action. The department and the RCMP cooperated to provide the crown prosecutor of Ontario with all the information on each of the 14 cases.
The Ontario crown prosecutor then decided it would be very difficult to follow up on those cases to get enough evidence. For example, how would they get the travel agent in a particular country, say in Bangladesh, to come back here and testify before a Canadian court that he had been involved in changing or altering airline tickets. Therefore the crown prosecutor decided not to lay charges; there was not enough evidence to lay charges.
But all of the employees were disciplined. The discipline that was handed out to employees ranged from oral reprimands, written reprimands, suspension without pay, to discharge.
The Vice-Chairman (Mr. Volpe): Thank you, Mr. Clarke.
[Translation]
Mr. Bergeron: I want to repeat two elements of my question. First, we learned on Tuesday that some $300,000 were recovered and that, according to available information, the amounts involved exceed by several hundreds of thousands of dollars the amounts actually recovered.
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Is it anticipated that more money will be refunded or is it believed that all the money fraudulently obtained has been recovered?
On the other hand, we read today in the newspapers, in particular in the The Ottawa Citizen, that the policy or the problem could be bypassed if from now on, civil servants don't have to submit vouchers when they travel. What's the status there? Is there really a new policy, or is it rather that the reporter does not state some elements that the members of this committee might wish to see clarified?
[English]
Mr. Clarke: In answer to the first question, all of the funds that were found owing by the employees were recuperated. We're talking about irregularities that occurred in the period 1986 to 1990, and we had a four-year investigation afterwards where each of the cases was investigated. The funds were recuperated. The only thing we have not done is calculate what the dollar value would be of all of the suspensions. If you added up the 200-plus suspensions in terms of 10 days, 20 days, or 30 days, it would be many, many hundreds of thousands of dollars.
In terms of what The Ottawa Citizen was talking about, which is FSD-50, which is one of the directives provided to foreign service employees serving abroad, FSD-50 is one of 70 directives covering some 450 pages of an agreement covering for the Treasury Board and negotiated on behalf of all employees of the Crown serving abroad. The negotiations of these directives are done every three years, and the next round of negotiations to review them will take place this fall.
Currently, under FSD-50, which is the travel entitlement, which is a benefit given to people serving abroad, it is given to those employees who are serving abroad on the basis that if they are in a hardship post, such as Teheran or Algiers, they are allowed one trip out of Algiers or Teheran per year and they are entitled either to take a full fare entitlement and account for that completely by flying with the ticket to whatever destination they have and back or to get 80% of the ticket. They can travel where they so wish and they have to file at the end of the date of returning their air ticket and their hotel to prove that they have travelled and taken a vacation. In a country where living conditions are similar to those in Canada, such as Paris or Tokyo, they are entitled to one air ticket in a four-year assignment.
Mr. Regan: I have two quick questions.
One is on tariffs on supply-managed products. The U.S. is saying that NAFTA has precedence, in their view, over the GATT in terms of this issue, and they have requested consultations. I would like to know what the current state of that negotiation is.
The second thing is that the U.S. has imposed restrictions on Canadian sugar and products containing sugar. Why have we used the NAFTA dispute settlement procedures rather than the WTO?
Mr. MacLaren: On the question of supply-managed products that arises out of the tariffication of the old border measures that we took to protect our poultry and dairy industries, the United States has challenged our tariffication under the Uruguay Round and has argued that it's incompatible with our commitments under NAFTA. On that question the United States has sought consultations with us, as is provided for under the NAFTA. We've engaged in those consultations and set forth our views and the Americans have set forth theirs. It's for them to decide whether they wish to proceed to the next step on the route to an eventual NAFTA panel, the type of panel we saw in the softwood lumber industry in the past.
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They have not yet indicated to us that they intend to pursue that route. If they wish to pursue their challenge, it would be ultimately in the form of a NAFTA panel that would in effect judge between our position that WTO, as you put it, takes precedence over NAFTA, or that NAFTA takes precedence over WTO.
The Vice-Chairman (Mr. Volpe): Thank you, Mr. Minister.
I have a brief question from Mr. Mills, as well.
Mr. Mills: I just wondered about your thoughts on privatizing EDC, with the exception of the Canada account. It's a brief question.
Mr. MacLaren: That's a very brief question. Do you mean what I think of the idea?
Mr. Mills: Why not?
Mr. MacLaren: Let me just say that among the many merits of the Export Development Corporation is its ability to marshal the resources of Canada behind export support and in many instances to offer support at rates that a private sector financial institution, with its consciousness of its shareholders' risk capacity, would be reluctant to undertake. I don't think we'd want to lightly give up that service, that advantage that the Export Development Corporation provides.
As you know, Mr. Mills, all exporting countries - all developed countries, at least - have one form of government export financing support or another: the Eximbank in the United States, the British, the French, the Germans. I can't believe Canada could effectively compete globally if we did not also have that government dimension.
At the same time, however, I want to say that we've been working hard to encourage our private sector financial institutions to take a renewed interest in export financing. There was a period when they did so, a decade or more ago, and then they seemed to concentrate more on domestic opportunities. But we hope that EDC and the private sector, more private financial institutions, will engage in more joint ventures, in more mutual support for export opportunities.
Do you want to add a word about that?
Mr. Pruneau: Not very much, Mr. Minister, because I do think you've covered the main issue.
I'm always tempted to say that with somebody else's money and my good looks, I think we could do a great deal in buying EDC, but the problem is the capacity to take risks, as you pointed out. That would become the problem.
If you look at all the countries where they do have a privatized part of their export support scheme, you will find these countries are losing a lot of money. They have to subsidize those types of endeavours with their treasury. I keep saying yes, you've privatized the cashflow, but you've kept the risk. I think it's probably the worst situation for a country to be in.
The Vice-Chairman (Mr. Volpe): Thank you, Mr. Pruneau.
Mr. Wells.
Mr. Wells (South Shore): Minister, my primary committee responsibility is fisheries and oceans, so it may be no surprise that my question will have to do with turbot. What is your opinion on the implications of the recent dispute over the turbot? What do you think the long-term implications will be for trade relations between Canada and the European Union?
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Mr. MacLaren: The turbot question was essentially a conservation question. It has now been resolved. There is now an agreement that brings that dispute to an end and indeed provides for a far more effective management of the resource, the conservation of the resource, than was in place before.
I think it would be idle to pretend, particularly in the case of Spain, there wouldn't be some trade repercussions. I can't offer you any specific evidence, but I wouldn't be surprised if for a period - short or longer, I don't know - there would be some disinclination on the part of Spain to continue at quite the levels of trade we enjoyed in the past.
I don't think that's a long-term problem, and as for Europe as a whole, I don't think so. We've seen no evidence that it has had an adverse impact on our trade relations with Europe. On the contrary, I hope we can develop in the time ahead closer trade linkages, including an eventual free trade agreement, which we've touched on earlier. That discussion is a lively one, and it's continuing. It has not been in any way affected by the fisheries problem.
The Vice-Chairman (Mr. Volpe): I'm tempted to invite you to that pasta dinner I'm going to have in about an hour in Toronto.
Mr. Wells: He also answered my second question at the end.
The Vice-Chairman (Mr. Volpe): Very good, thank you.
Mr. Mills: My only comment is that you don't try to get a visa from the consulate of Spain right now. They're sure being miserable.
The Vice-Chairman (Mr. Volpe): Thank you for the observation, Mr. Mills.
Mr. Harb: I think I'm the last one on the list, Mr. Vice-Chairman.
The Vice-Chairman (Mr. Volpe): You may well be.
Mr. Harb: I want to say, seeing the main estimates being the order of the day and the minister not receiving any questions on it, it's a clear indication that -
The Vice-Chairman (Mr. Volpe): You want to correct that matter?
Mr. Harb: - the committee endorses what was in the estimate.
But also, Mr. Chair, I wouldn't want to let it go without saying I had the pleasure of working with our staff at Foreign Affairs and International Trade Canada and also with the minister, and I had a chance to visit many of the embassies abroad. I can tell you that these people out there put in the hours day in and day out. They don't know what 9 to 5 is. Many of them work flat out trying to serve this country.
I think it would be very important for us to send a signal to them that, yes, there are the odd bad apples in every tree, but it should be by no means a reflection on the public service, who are serving this country in a great way, especially those who are serving us abroad. They're almost no different from the peacekeepers in Bosnia or elsewhere, and they're doing a magnificent job.
I wanted to pass this along, I hope on behalf of the committee, to the deputy minister and to the minister in their communication with our people abroad to let them know how much we appreciate their work.
The Vice-Chairman (Mr. Volpe): Thank you, Mr. Harb.
Mr. Mills: I would even second that, because the ones I've visited - hey, they're doing a great job.
Mr. MacLaren: Thank you very much. What an admirable parliamentary secretary and an admirable member of the opposition.
The Vice-Chairman (Mr. Volpe): You can't go wrong with that.
Mr. Minister, I want to thank you, and Mr. Kilpatrick, Mr. Clarke, Mr. Stephens, and Monsieur Pruneau, for your time before this committee. As always, it has been instructive. We hope we can continue the kind of open dialogue the department has opened up with this committee. Thank you very much.
The meeting is adjourned to the call of the chair.