[Recorded by Electronic Apparatus]
Tuesday, November 28, 1995
.1104 
[English]
The Vice-Chairman (Mr. Mitchell): Order.
Welcome. The chairman is en route, so I will begin the meeting and welcome our witnesses from the Certified General Accountants' Association of Canada.
Gentlemen, maybe you could introduce yourselves.
Mr. Jean Précourt (Chairman and CEO, Certified General Accountants' Association of Canada): I'm the chairman of the board of CGA-Canada.
Mr. Mark Boudreau (Director, Government Relations, Certified General Accountants' Association of Canada): I'm the director of government relations.
Mr. George Lozano (Associate Director, Government Relations, Certified General Accountants' Association of Canada): I'm the associate director of government relations.
The Vice-Chairman (Mr. Mitchell): Maybe you could make your presentation. Then we'll open it up to the members for questions. Please go ahead.
Mr. Précourt: Thank you,
[Translation]
Mr. Chairman. First I would like to thank you and the members of the committee for affording the Certified General Accountants' Association of Canada the opportunity to provide its views on the Agreement on Internal Trade and on Bill C-88, the Agreement on Internal Trade Implementation Act.
CGA-Canada and its 12 affiliated provincial and territorial associations represent over 47,000 CGAs and CGA students across Canada and offshore.
.1105
In total, CGAs represent one-quarter of the accounting profession in Canada. CGAs are employed at the senior levels of financial management and accounting in industry, commerce, government and in private practice.
[English]
There are more than 20,000 public practitioners in the accounting profession in Canada, including CGAs, chartered accountants and certified management accountants. For these professionals, unfettered access to the Canadian accounting service market is essential to continued growth and improved service. Many CGAs, however, do not enjoy full public practice rights in certain parts of Canada, which prevents them from offering their full range of professional skills and expertise to the public.
Legislation in certain provinces effectively grants a monopoly to chartered accountants to conduct third-party audits and other attest functions. These restrictive provincial acts were established long ago and grant a privilege to one accounting designation, notwithstanding the fact that CGAs are equally qualified and have been recognized as such in most provinces.
Thus CGA-Canada welcomes the AIT because, among other things, it aims to eliminate such unfair barriers to trade and paves the way for a market-place in which competence and the ability to provide goods and services prevail. The winners will be the Canadian public, who will enjoy greater choice and lower costs. As such, CGA-Canada pledges its full support to the signatories to help ensure the AIT's successful implementation.
[Translation]
CGA-Canada welcomes and supports the passage of Bill C-88 because it will enable the implementation, at the federal level, of a historic trade agreement that provides a framework for liberalizing trade within our borders.
At a time when Canada is embracing globalization through the North American Free Trade Agreement and the newly created World Trade Organization, Bill C-88, in our view, provides the necessary foundation upon which the AIT can be implemented to effectively reduce and eliminate barriers to trade in goods and services that currently exist across Canada.
CGA-Canada believes that the federal government must continue to play a strong role in the AIT. The decisive efforts that led to the agreement must continue and momentum must be maintained to ensure that Canadians begin to reap the benefits of liberalized trade as soon as possible.
CGA-Canada is most pleased that the AIT secretariat has been established in Winnipeg under the direction of Mr. André Dimitrijevic. Now, the federal government must work closely withMr. Dimitrijevic and offer its full support to ensure that the Agreement is implemented in short order and that it is strengthened. CGA-Canada looks forward to working with both to this end.
However, CGA-Canada is concerned about certain aspects of the AIT that weaken the agreement substantially. The concept of `legitimate objectives' established in the AIT, while an important and necessary one, is worded in such a way that it is open to wide interpretation. The broad objectives that constitute legitimate objectives make it possible for the Parties to justify a wide range of regulations that impede the free movement of goods and services between provinces. It is our view that, unless the definition is tightened, harmful barriers to trade will be maintained through appeal to the concept. As such, we urge the federal government to launch a review process with the provinces, right away, aimed at tightening up certain provisions of the AIT and making improvements to ensure its successful implementation.
.1110
[English]
For accounting professionals, one of the most important parts of the AIT is chapter 7, which deals with labour mobility. At this time, there are many barriers that prevent professional accountants from offering their services nation-wide. Certified general accountants enjoy public rights in only eight provinces and territories.
Complete access to the Canadian auditing and accounting market by qualified professionals not only is fair but will benefit consumers by providing them with greater choice.
Chapter 7 of the AIT recognizes this in article 701. The chapter notes that, notwithstanding existing provincial regulations pertaining to licensing, certification, or registration, it is the responsibility of the parties to reconcile any differences in occupational standards and base any future relations on competence and no differences in training methods.
Annexes 708 and 712.2 provide the process for the recognition of occupational qualifications, occupational standards, and a list of work prioritized for action. Our chief concern here is that the AIT does not provide a timetable for the actions specified in annexes 708 and 712.2. Without a firm deadline and strong leadership from the government, these important implementation steps will be delayed at best and not carried out at worst.
CGA-Canada will urge the federal government to press for dates, certainly, from the forum of labour market ministers, to ensure that the important work of reconciling occupational differences, leading to the removal of unfair trade barriers, will begin as soon as possible. Moreover, the government should lead the way by stimulating and guiding the discussion between professional associations, with the objective of reconciling differences.
An important part of the Canadian market is government procurement. According to article 501, the AIT
- establishes a framework that will ensure equal access to procurement for all Canadian suppliers
in order to contribute to a reduction in purchasing costs and the development of a strong
economy in a context of transparency and efficiency.
We strongly recommend that the federal government encourage the parties to remove annex 502.1B in its entirety, as well as annex 502.2A, which contains an extensive list of entities that are not covered by chapter 5.
[Translation]
The dispute resolution procedures in the AIT, while balanced and mindful of the need to maintain cordiality among the concerned Parties, are cumbersome and slow. The dispute resolution process must be streamlined to ensure that trade barriers are removed as quickly as possible.
Decisions must be clear and unambiguous so that all parties concerned can take necessary action without delay. We urge the federal government to play a lead role in improving the dispute resolution process by making it a priority issue of the AIT review process.
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CGA-Canada strongly believes that the implementation of the Agreement on Internal Trade on July 1, 1995 must be viewed as a starting point only. The Agreement leaves much business unfinished.
CGA-Canada also supports the notion that the Agreement on Internal Trade is not carved in stone. The Agreement on Internal Trade must be viewed as a living document that will evolve over time. It is our view that there is plenty of scope to significantly improve the Agreement on Internal Trade. CGA-Canada believes that a concerted effort is required by governments and all stakeholders to continuously improve and strengthen the AIT.
CGA-Canada recognizes that it is no longer just a responsibility of governments to keep the domestic-trade liberalizing agenda moving forward. This responsibility must be shared by all Canadians. CGA-Canada will continue to utilize its resources to promote the Agreement on Internal Trade. With this in mind, CGA-Canada has proposed to the AIT Internal Secretariat at Industry Canada a Round Table on the International Trade Agreement. The event, hosted by CGA-Canada, will take place in spring 1996 and have as its objective to stimulate discussion from the public and private sectors on ways to improve and to promote the Agreement.
Apart from working with its public and private sector partners to make the AIT an effective trade liberalizing instrument, CGA-Canada will be collaborating with the AIT secretariat in Winnipeg to promote the Agreement and to disseminate information about its implementation, significance and its dispute resolution mechanisms to CGAs and other professionals nationwide. Senior officials of CGA-Canada and CGA volunteers will also be available to participate in AIT forums, committees or other venues where expert input pertaining to professional services and especially, auditing or accounting is required. Lastly, the AIT will be promoted in CGA-Canada Magazine, and other documents published by CGA-Canada and its provincial associations.
In conclusion, CGA-Canada is pleased and excited by the tremendous opportunities that will become available under the AIT. These will both stimulate the economy and provide better-quality goods and services at lower cost to all Canadians. Moreover, the reduction of trade barriers and the harmonization of standards in Canada will improve our productivity and increase our ability to compete at home and abroad. This will be especially beneficial in light of the opening up of international markets under the NAFTA and the GATS. We believe that the AIT can be improved and made more effective as a tool of national trade policy and the federal government should play a lead role in this respect.
The Certified General Accountants' Association of Canada stands ready to support the Government of Canada in its efforts to ensure that the AIT is implemented successfully and that it yields its full potential for the benefit of all Canadians. Thank you very much.
[English]
The Vice-Chairman (Mr. Mitchell): Thank you very much, Mr. Précourt.
We'll begin the questioning with Mr. Schmidt.
Mr. Schmidt (Okanagan Centre): Thank you, Mr. Chairman.
I want to thank you for bringing this presentation to our attention. Some of the points you have raised are exactly the kinds of points I'm concerned about, too. I would like to ask a very fundamental, foundational kind of question first, and then perhaps get to some details later.
You seem to be very much in support of the agreement on internal trade, and you raise the point that you want to cooperate and help in whatever way you can to make sure that the intent of the agreement can be reached. Do you believe the agreement is strong enough to even begin that kind of a process? Because there are so many things you've mentioned in here already, which almost suggest to me that they're hardly at even the beginning stages. Is there enough to work on so that you can indeed move beyond where we are today?
.1120
Mr. Précourt: I think Bill C-88 should be related to the resolution of any disagreement among different parties. It will take more than a year to resolve an issue, and I don't think this country can compete, if they take a year, or a year and half, every time to resolve an issue. In regard to professionals, and particularly in our case, the agreement should be more precise on professional services.
Mr. Schmidt: I think it applies not only to your organization but in a variety of other areas as well. But you're here to represent your particular interest. Already I see that the CGA group is making specific recommendations on amendments that should go into the bill. I really appreciate the kind of effort and intensity you have applied to the bill itself.
I'm wondering if we could ask you to give us an idea - now that we're getting very specific - on the kinds of timelines that should be in the bill. You mention in several instances here that the bill should be tightened up so that there are specific timelines by which these things can be finished. Do you have any suggestions as to what that timeline and what those deadlines ought to be?
Mr. Lozano: Perhaps I can answer that by saying the first step should be to look through the agreement and tighten up all those areas where there are no timelines specified, particularly when you get to dispute resolution, and it simply says ``the parties shall begin consultations for an extended period of time'', and other places also where there are specific timelines stated, but then there's a rejoinder that says you can extend it if you wish.
Mr. Schmidt: Yes, that's right; exactly - which makes it meaningless.
Mr. Lozano: That's right. As far as implementation is concerned, and particularly the labour mobility chapter, we're very interested in that, and we recognize that there is a deadline of next July 1996, at which time the parties are supposed to file plans indicating how they're going to implement the AIT. What concerns me is that there are no guidelines at this time as to what kinds of plans. How are we going to measure whether those plans are satisfactory? There is no real pressure on the parties to come up with something substantive by 1996. What we're afraid of is that by 1996 there will be documents set forward that will, once again, extend deadlines, and this can go on forever.
Mr. Schmidt: That's exactly the point. At what point does this thing reach a conclusion, at least? Maybe this little thing can be done at least, but the way it is now, it's so wide open that there's no closure anywhere along the line here.
I'd like to come back to a rather significant point you made, that there are these open-ended references to a time when this shall end, but there is no date. Should that be a year from now? Should that be two years from now? Surely you have some kind of an idea when you sit around your coffee tables of where it should be.
Mr. Lozano: I don't think we really want to have a blanket timeline for everything. Different things require -
Mr. Schmidt: Maybe a couple of examples would help.
Mr. Lozano: For example, the issue, again going back to chapter 7, of labour mobility, is that there is no real timeline for the beginning of the process of reconciliation of occupational standards. I would say the timeline for that should be now. Start right away.
Mr. Schmidt: Why do you think it wasn't in the bill to begin with? I want you to speculate a little bit.
Mr. Boudreau: This was a difficult agreement to reach. You must remember that the provinces and the federal government have been at this for twenty or thirty years, trying to negotiate a particular agreement.
Overall, you have to look at it just as you would the Canada-U.S. trade agreement or the GATT when it was in its founding infancy. That's why we say it's a living document, and we recognize that there has to be at least.... We would like to see the federal government begin to promote a second round of negotiations, because the federal government cannot impose these kinds of deadlines but rather needs to get agreement with the other parties in this particular agreement. So we have recognized, given these weaknesses....
.1125
But to get back to your original question, yes, there is a very real foundation here to begin the work that needs to proceed. But we do need the goodwill of both the provinces and the federal government to recognize the weaknesses and say, yes, let's have a second round of negotiations.
Mr. Schmidt: To change the direction of my questions a little.... It has to do with your association as an association of professionals. It's my experience from working with other professional groups that very often these barriers between provinces that really frustrate the mobility of these professionals from one province to another are as much related to the profession itself as they are to the provinces or the political powers that be. So I'm wondering what your association of professionals is doing to get your house in order so the political people can put into practice what you are ready to do.
Mr. Précourt: The real problem is now our group does have full rights outside Canada, particularly in the Caribbean. We're strongly involved in Hong Kong and China. We have our first CGA in China. But we cannot go into some of the provinces, such as Ontario. We don't have the full right. That's ridiculous.
U.S. CPAs can practice in Ontario. They are not Canadian. They can come. They have reciprocity. We will be reaching an agreement with Mexico, maybe within a year. But we cannot work within our own country. CPAs are coming into the area of Ontario, Quebec, because west of Ontario we have full rights everywhere. Strangers are competing against Canadians, because in our own country we cannot work and transfer from province to province.
Mr. Schmidt: I appreciate it. I know only too well what the problem is. My question is to try to find out why that is. Is it because the lobby against you within Ontario is so great you can't do it, or did somebody in some office somewhere just say they don't want CGAs in Ontario? There's no law in Canada or anywhere else in the world that doesn't have a reason for being there. So why is it there?
Mr. Précourt: Of course the lobby is very strong -
Mr. Schmidt: Lobby from whom?
Mr. Précourt: When you try to break a monopoly -
Mr. Schmidt: Whose monopoly?
Mr. Précourt: CAs'.
You see, in a free trade environment, if your group believes it's stronger than the other, you're not worried about the competition; but when you know the people are equal, you're worried about losing your monopoly. This is the case in Canada.
Now, with the free trade agreement addenda, I don't think this country can wait another two or three years to have free movement of professionals. And we're not alone in our case. It's not only the accounting profession.
Mr. Schmidt: No, I appreciate that. I am very well aware of the situation.
What I'm really getting at is this. Is there any hope the CGAs and the CAs would get together and say, look, we're here to compete with one another and we're equally competent, so what's the matter with you guys; why don't you let us practice?
Mr. Précourt: It hasn't worked as of now, I am saying.
Mr. Boudreau: We've tried that route many times, and it has failed. What we're dealing with is a provincial issue.
You have asked us what we are doing besides. The AIT is one component, but we are also engaged in talks with the provincial government in Ontario and other places to try to show it makes sense that we should have full mobility rights across the country.
Mr. Schmidt: So really your point is that the way things are now, the existing barriers protect monopolistic interests?
Mr. Précourt: Right.
Mr. Schmidt: Thank you.
.1130
The Chairman: I apologize for being late, but Ottawa airport was in some disarray this morning.
Mr. Mitchell.
Mr. Mitchell (Parry Sound - Muskoka): Thank you, Mr. Chairman.
Thank you again, gentlemen.
I have a question about one of the suggestions in your brief here about tightening up the definition of ``legitimate objectives''. You expressed significant concern that it is a loophole large enough to drive a truck through and that it could be used to circumvent the whole spirit of the bill.
In the agreement itself they do in fact define ``legitimate objectives'' as:
- public security and safety; public order; protection of human, animal or plant life or health;
protection of the environment; consumer protection; protection of the health, safety and
well-being of workers; or affirmative action programs for disadvantaged groups;
You've said, I believe, that you agree in principle that you need to have that type of clause. I'm interested in specifically how you would see it being tightened up.
Mr. Lozano: It has to have stronger language. Right now the notion of protection of the public in terms of safety and health and all that is open to wide interpretation, unless you have some kind of very specific listing, maybe in an annex, of what specific areas or situations would constitute legitimate objectives. Other than that, I don't see how this kind of open language is concordant with our commitments internationally, which say it's a flat, even playing field.
It's really admitting that it's not an even playing field within our own country. Somehow again it gets back to protectionism, setting up little regimes here and there to protect nascent industries.
The spirit of this agreement, like the spirit of NAFTA and the GATT, says the free market is what you want to give open reign to in the sense that people can compete if given the chance. They don't need special protections. These kinds of protections, disguised as legitimate objectives, simply skew the marketplace.
So I would narrow this down to very few cases.
Mr. Mitchell: It almost sounds as though you don't agree with the legitimate objectives clause.
Mr. Lozano: Well, we see that there may be cases where it should be in there and that in fact it gives the agreement some flexibility; otherwise there would be no room at all. But I really think this goes way too far. It's going to be used time and time again to get out of commitments.
Mr. Mitchell: Would it perhaps not be more appropriate to refine and make better the dispute resolution system as opposed to writing literally hundreds and hundreds of pages to try to pin down what you're suggesting you want to pin down? If we had what I think you would term an efficient dispute resolution system, where the dispute would be solved in sixty days, as an example, then that issue would not, I suspect, be of as much concern to you.
Mr. Boudreau: You're right, but you have to look at these both in the same sort of context. The fact that you have a weak dispute settlement mechanism tends to lead me to believe that governments will use the legitimate objectives clause to bring barriers and that you have no discipline power to bring a fine balance between the two.
If you had a binding dispute settlement mechanism, it would set precedence over time that the panels could go back to and define these things. As it is now, you have none of that. We now have a stronger dispute settlement in the GATT and in NAFTA than we do in this particular agreement, and that is going to have to be addressed.
.1135
Mr. Mitchell: Thank you, Mr. Chairman.
The Chairman: Ms Bethel.
Ms Bethel (Edmonton East): Gentlemen, I want to commend you on your initiative of the round-table on the ITA. I think that will be just great. Certainly in this country we need to promote the benefits to all Canadians of removing the trade barriers, and also develop a better understanding of exactly what it is and how it will be implemented. I really commend you on that.
I'm interested to know what the reaction from all sectors has been to your offer.
Mr. Boudreau: It's been very positive. We've been working with Mr. Manley's office and the new secretariat in Winnipeg and also with the business community out there. There is agreement between us that this thing needs to take place, that there needs to be a discussion to try to see where we take the agreement forward. If we were to have round two of negotiations, what would those negotiations look like? It's also to promote it.
One of the things the round-table will be doing in the morning is giving a better understanding of how this agreement helps small and medium-sized enterprises in particular.
Ms Bethel: Will it be a single round-table or will you do it on a provincial basis?
Mr. Boudreau: We're going to have a single round-table nationally with provincial representation and with the public and private sectors.
Ms Bethel: As I think it through, my sense is that one of the objectives is to create pressure for the provincial governments that are resisting. Would it not be wiser to have mini-round-tables prior to this within the provinces, so that you really could create some public understanding and pressure on those provincial governments?
Mr. Boudreau: We'll look at that. That could be a way of doing it. We've heard and we recognize that one of the key things is that the provinces have been very reluctant to move forward. Some of them have been dragging their feet on the agreement.
Ms Bethel: And the only way to change that, I would think, is if we put pressure on those provinces from the people within those provinces.
Mr. Boudreau: Yes, but a level of education has to take place.
Some of the professions have been very good at it. For instance, the Canadian Nurses Association has a working group on the AIT. We also talked to the Canadian Bar Association, and again, they were just starting to look at the agreement. The Canadian Medical Association -
Ms Bethel: It would have an incredible impact at the provincial level if those who have working groups provincially all met at the same round-table.
Mr. Précourt: We'll make the suggestion to our provincial affiliates. You have to realize I'm representing CGA-Canada, and we need partnership with our provincial affiliates or associations to do that on the provincial level. But you have a very good suggestion.
Ms Bethel: What role do you see this committee playing in these objectives? How can we as a standing committee move the agenda along?
Mr. Précourt: I believe you can speed up the implementation of the agreement. I'm hoping the public in general will be more aware. To a certain extent newspapers will take care of publicizing this agreement and will put it at the top of the agenda for the federal government to implement.
Ms Bethel: Thank you.
The Chairman: I have just two points.
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Since you finally said on the record that the real problem has been with the CAs, how do they react to the obvious contradiction that people from other countries who do what you do are allowed to come into their jurisdictions but you aren't? Did they try to stop it? How did the CAs react to the arrival of people from...?
Mr. Précourt: The CAs are doing what we are; they're working actively on reciprocity agreements with other countries in order to provide for other country members to come into Ontario and Quebec and to enjoy full rights.
The Chairman: But let me understand...they'll respect other CAs from other countries.
Mr. Précourt: Not necessarily CAs, because they have 120 different groups of accountants in this world. I'm part of the International Federation of Accountants also, and they're trying to reach reciprocity agreements with the major players: Europe, Australia, and England, in particular - they already have some agreements there.
The Chairman: Which would, roughly speaking, cover both groups. They'd be the equivalents of both groups in Canada, the CGAs and the CAs.
Mr. Précourt: Yes.
The Chairman: That does seem a bit of a contradiction.
Mr. Précourt: No, they don't have any problem seeing people from other countries work in Canada for a specific mandate, but they want to keep their monopoly. That's obvious.
For example, our members in New Brunswick enjoy full rights. Some will sign an agreement and practise in the U.S.A., but our members from Ontario and Quebec don't enjoy full rights; they cannot practise in New York or the U.S.A. They don't have the full rights in Quebec and Ontario.
We all have the same standard, common examination across the country. I'm a Quebec citizen, and if I wish to go to British Columbia I do have full rights. That's ridiculous. Maybe it's not the only situation that's ridiculous in this country when you're talking about free trade.
The Chairman: The other issue, to return to Ms Bethel's point about how we can each help each other on the file, is that clearly we have 11 players to move. You're talking to 1 of the 11 - an important one, but only 1 of the 11.
Did I hear you say that you would be asking your provincial chapters to get in touch with the provincial governments of each province, or that this action has already taken place?
Mr. Précourt: It's already taken place with our provincial affiliates.
The Chairman: Roughly speaking, how many of the provinces are sympathetic to the point of doing something to help you, and where are the points of resistance?
Mr. Précourt: I think most of the provinces are.... Of course, you can find more motivation in Ontario and Quebec. B.C. doesn't have the same kind of motivation. The professionals there, living in B.C., don't want to go back east. It's simply a question of where you want to work and where you want to practise in this country.
But if somebody from B.C. wants to move into Ontario, they have a problem. They cannot practise; they cannot do auditing. Of course, they are unhappy, but there is much more willingness in the eastern provinces than the west, and that's obvious.
The Chairman: Mr. Bélanger.
[Translation]
Mr. Bélanger (Ottawa - Vanier): Mr. Précourt, I only have two questions to ask you.
First, you propose to amend the wording of clauses 8, 10, 12 and 13 of the bill by substituting the words "The Governor in Council shall" for the words "The Governor in Council may".
I very briefly checked what was involved in each case and I admit that I share your feeling. However, I have trouble understanding the meaning of this amendment as suggested. For example, clause 8 of the bill states:
8. Le gouverneur en conseil peut, par décret, désigner tout membre du Conseil privé...
If you say: "doit désigner, par décret, tout membre du Conseil privé", that doesn't work. That doesn't read right and no longer has the meaning you want to give it. Do you follow me? Do you agree?
Mr. Précourt: I'm going to ask Georges to answer that question.
Mr. Bélanger: You may answer in English if you wish.
.1145
Mr. Lozano: Perhaps in the translation...
Mr. Bélanger: It's the same thing in English.
Mr. Lozano: In English, we simply want to say that "may" gives the Governor in Council, the government or the Minister the option of being represented on those committees. We think a more forceful word is needed.
[English]
Mr. Bélanger: Clause 8 says:
- The Governor in Council may, by order, designate any member of the Queen's Privy Council
Mr. Lozano: ``May'' gives you the option of not doing it.
Mr. Bélanger: Reread it as: ``The Governor in Council shall, by order, designate any member of the Queen's Privy Council''. What difference does it make?
Mr. Lozano: Because it indicates it's going to be done as opposed to may be done. We're trying to strengthen that.
Mr. Bélanger: Yes, except that here there's no dispute that the Governor in Council will appoint; it's that it may appoint any minister. That's what that says - not that it may appoint or not appoint, because it may appoint any minister.
Maybe you're playing on words there, but I found the same in clauses 10, 12 and 13, that it's not necessary to.... What you're suggesting doesn't necessarily get you what you get. So I want to flag those, because if we're asked to amend the bill -
The Chairman: What we might want to do - and I might ask our clerk to help us here - is check back with the department to make sure about whether or not we have an ambiguity. Because if it turns out that the interpretation is completely.... The way Mr. Bélanger reads it, the permissiveness simply extends to a range of ministers, not to people beyond that range.
Mr. Bélanger: It's the same with clause 12, Mr. Chairman. It says:
- The Governor in Council may appoint any person
- Should we say that the Governor in Council ``shall'' appoint any person? To be honest, I'd
rather not say that.
Mr. Bélanger: The other one I wanted to get back to is on mobility. I want to make sure I understand this, and I quote your document:
- Certified General Accountants enjoy public practice rights in only eight provinces and
territories.
[Translation]
Mr. Précourt: Quebec, Ontario, Newfoundland, Nova Scotia and Prince Edward Island are the provinces that don't have it.
Mr. Bélanger: What does that mean?
Mr. Précourt: It means that people can't audit the financial statements and say that those financial statements faithfully represent the business's financial situation.
Mr. Bélanger: Only chartered accountants can do that?
Mr. Précourt: That is correct.
Mr. Bélanger: But what does that have to do with what you are presenting?
Mr. Précourt: We could practise our profession in those provinces. In other provinces, in Canada, we have these rights.
Mr. Bélanger: Like someone who is...
Mr. Précourt: For example, our members can prepare returns of this kind in New Brunswick, but cannot in Prince Edward Island. That's what we mean. When the bridge is completed between Prince Edward Island and New Brunswick, we won't even be able to cross that bridge to go conduct an audit on the Island.
The situation is even more bizarre in Quebec. CGAs can conduct audits for the municipalities, cooperatives and school boards, but they can't do them for an incorporated convenience store.
Mr. Bélanger: Those are things governed by the laws of the province?
Mr. Précourt: Exactly.
Mr. Bélanger: Do the provincial statutes limit what a CGA can do in Quebec, Ontario, Newfoundland, New Brunswick or Prince Edward Island or in the Territories?
Mr. Précourt: No. In the Territories, we are fully entitled to practise.
Mr. Bélanger: So you should perhaps remove the territories from your remarks. You can practise in the Territories.
Mr. Précourt: Yes, that is correct.
Mr. Bélanger: If I understand correctly, in Quebec, a CGA may audit the books of school boards.
Mr. Précourt: Yes.
Mr. Bélanger: Can a CGA from British Columbia audit the books of school boards in Quebec?
Mr. Précourt: Yes, he can if he comes to Quebec. At that point, he'll be subject to the statutes of Quebec.
Mr. Bélanger: So there is mobility. Where there are restrictions, do they apply to everyone?
Mr. Précourt: Yes, to everyone residing in that province.
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Mr. Bélanger: You are therefore asking that the federal government impose a particular form of regulation of CGAs on the provinces.
Mr. Précourt: Professionals in general, yes.
Mr. Bélanger: Do you know whether the federal government is entitled to do that?
Mr. Précourt: The federal government can't legislate, but it can influence the provinces so that they permit free trade among professionals.
Mr. Bélanger: There are two concepts here. You just told me that there is free trade among professionals despite the restrictions set by the provinces.
Mr. Précourt: Yes.
Mr. Bélanger: So a restriction in Ontario doesn't apply only to CGAs from Ontario, but to everyone.
Mr. Précourt: That's correct.
Mr. Bélanger: And conversely, the lack of restrictions in Manitoba, for example, applies to everyone. There are no restrictions.
Mr. Précourt: Yes. However, I wouldn't call them restrictions, but rather an unfair situation for all professionals.
Mr. Bélanger: So the Agreement is consistent with free trade.
Mr. Précourt: Yes.
[English]
Mr. Boudreau: We're not asking the federal government to impose anything on the provinces. The federal government is only one party to this particular agreement. We recognize that some of these comments do not have to be addressed at the federal level, but rather at the provincial level. That's why the agreement....
Mr. Bélanger: I'm just asking for information here, but it is my understanding that the federal government does not set the rules governing the profession at all.
Mr. Boudreau: No.
Mr. Bélanger: That is the responsibility of the provinces.
Mr. Boudreau: It would have to be addressed at the provincial level, but what the federal government can do is ask the provinces to at least look at these kinds of things if it wants true labour mobility across the country.
Mr. Bélanger: And that's what this agreement does.
Mr. Boudreau: That's what it does.
Mr. Bélanger: Thank you.
The Chairman: I need to ask a follow-up question.
I think I understood Mr. Précourt to be saying that in the province of Quebec, a CGA coming from British Columbia would be subject to the same restrictions as a CGA there. He could do commissions scolaires, but not dépanneurs or whatever. What about somebody coming from outside the country, where there has been a kind of a blanket free trade arrangement? Does that person coming from outside the country - someone from the United States, Mexico or wherever else, who is the closest thing you could identify as being more like a CGA than a CA - and going to Quebec have the right to do things beyond that which CGAs even in Quebec can do? Do you see what I'm getting at?
Mr. Précourt: In that case, if the CPAs want to practice in Ontario and Quebec, they won't run after the CGAs to have the reciprocity. They will run after the CAs, because they enjoy the privilege of full rights. They won't come to us. Western Canada is a different story.
If I was a CPA working in New York, and I wanted to move to Toronto, I would go to the CAs because they have an agreement. I would have to pass a law examination and a taxation examination, or maybe go to a seminar and have no examination at all. That CPA is a non-Canadian who will enjoy full rights in Canada, while the CGA cannot move. A U.S. guy can move into Ontario, but not the Canadian.
The Chairman: So what's actually happening, if I understand it, is that while the CPA-type person in the United States, who's called a -
Mr. Précourt: They have only one group in the United States. They are mainly CPAs. There are 300,000.
The Chairman: So in order to take on the protective colouring of a CA, they have to pass a couple of tests that you, by the way, could not pass; you couldn't do the same little tests in Ontario or Quebec and suddenly be treated as a CA because they wouldn't put up with that, but they would allow the former to happen because they couldn't stop it in the United States. A CPA with a couple of courses can come in to do CA-type things in Canada.
Mr. Précourt: And it's not only that in Ontario and Quebec. At McGill, they do have a program for CAs who wish to move to the Unites States. I don't know how many courses there are. There maybe five different courses, mainly in tax and law. With these courses they can move into the United States, but the CGAs in Quebec and Ontario would run into problems trying to move into the United States and enjoying full rights, because they don't have the full rights in their own province.
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If they are from B.C., that's a different story. In fact, what our members should do is move to New Brunswick, move to B.C., take the courses, and move to the United States. It's ridiculous like that, but that will work.
Mr. Bélanger: Of these provinces, which is likely to change?
Mr. Précourt: Newfoundland. You may be aware that we went up to the Supreme Court of Canada on a P.E.I. case. We were received by the Supreme Court of Canada. Now it's Newfoundland. I think Mr. Clyde Wells is working to have fairer situations for CGAs and CMAs in Newfoundland. For many years, Quebec and Ontario did a lot of lobbying to their governments. Most of the politicians agree with that, but it's a question of lobbying.
Mr. Boudreau: What shouldn't be lost here is that ours is just an example. If you move into the other professions, you get into this ridiculous kind of treatment. You even get it if you move down into the trade sector and look at an electrician from Ontario or Quebec, a bricklayer, or whatever. This is why if we're truly going to address this issue, the labour mobility chapter is so crucial to this particular agreement, in the sense that no matter where you are as a Canadian you are able to move from province to province to practice and make a living.
There's also the fact that as we move along with other countries and talk about labour mobility from one country to the next, we get into the GATS and other areas. So what we've presented here today is just one example, but I'm sure if you hear from other groups, you will see why this particular chapter is quite crucial to the agreement.
The Chairman: It gives you more clout, presumably.
I think we'll have Mr. Schmidt at this point.
Mr. Schmidt: I think there were two points you made. One was that the federal government is only one party to this business. Also, I think I heard you say that you didn't want the government to impose some kind of a framework. Yet I think I heard you say also that it was impossible for you to get the CAs to work with you to come to some kind of an agreement with what should happen here. You're just one example, as we've just heard.
It seems to me that this situation is so complex and so difficult. Is it possible; with all your beautiful and ideal situations with these round tables, do you think there's any hope of getting a resolution here, or is it going to come to the point where the government's going to have to say we are going to have labour mobility?
Mr. Précourt: I think the government will have to be a leader on that and say that in this country we'll need labour mobility. It's the federal government that will make the statement that will influence the provinces, but as of now I don't think the other group is mature enough to resolve the issue.
In Europe they resolved the issue in the European Community. In 12 countries they have22 different accounting groups, and they made an agreement to move from Belgium to France, etc. They are not a large country like Canada, but they reached an agreement. At this stage they are not mature enough to resolve the issue.
Mr. Schmidt: Who's ``they''?
Mr. Précourt: CAs.
Mr. Boudreau: I think where the real pressure will also come from is external forces. As we go down the routes of developing the NAFTA and the GATS further, we'll put additional pressure for Canada to get its act together. I think that's where the real pressure will come.
We're really lagging behind in this particular area. It's hard for the federal government to go to these talks in Geneva on trade and services and begin to talk about mutual recognition with other countries when we can't even get our own backyard in order.
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The Chairman: The impression I get from what you're saying is that all these pressures, both external and internal, are actually working in a good direction. What we're talking about is the timing and the degree and all the rest of it. In a sense there's no turning back, and it's going in a good direction. We have to do our bit to expedite the process, but you have to do your bit to bring the provinces on side.
I think that concludes this part of our testimony. We thank you all for coming.
[Translation]
Thank you very much. That was very interesting, even for those who arrived late.
[English]
Good luck to you. Keep up the work on our provincial counterparts.
We now have our next witness, Mr. Schwanen, from the C.D. Howe Institute. We have a very short document, a news release, a C.D. Howe communiqué dated September 14, which is a summary of the position of Mr. Schwanen, certainly....
I never know whether.... Do people who do research for the institute speak ex cathedra or on behalf of the institute?
Mr. Daniel Schwanen (Senior Policy Analyst, C.D. Howe Institute): If we actually work there we speak on behalf of the institute. But sometimes we commission outside research, so there's confusion.
The Chairman: Well, welcome, Mr. Schwanen.
Mr. Schwanen: Thank you very much. I'm sorry for the brevity of the material you have in front of you.
The Chairman: It's welcome. Would there were more people like you. We'd like it in haiku, actually; but it never comes.
Mr. Schwanen: I'll keep that in mind for future reference.
Mr. Chairman, members of the committee, thank you for your invitation. As you are well aware, the issue of obstacles to the flow of goods, services, persons, and capital has been a recurring feature of economic policy debate in this country. Since the late 1970s the key challenge has been to ensure that the growing role provincial governments play in our economy, especially with various regulated activities and public-sector procurement, will not unduly hinder access to markets across Canada for Canadian goods and services and for Canadian labour and capital. Last year's agreement on internal trade represents the most comprehensive attempt yet to deal with this challenge.
[Translation]
It is important to remember that access to the domestic Canadian market is currently far greater than that which Canadians have when they do business in other countries, even with the signing of key trade agreements such as NAFTA and the World Trade Organization.
Even here, however, virtually all the other industrialized countries offer their citizens better access to their domestic market than that to which Canadians are entitled at home. It is striking to note the large number of cases in which the European Union, consisting of 15 sovereign countries, offers its businesses and citizens better access to its domestic market than that available to Canadians at home.
One of the best ways in which Canada can generate globally competitive industries in both the goods and services sectors is to ensure that access to the domestic market for Canadian firms is needlessly impeded as little as possible.
Furthermore, a Canadian market that can be wholly served from any domestic locality makes our economy more attractive to foreign investors and makes Canada stronger in its trading negotiations with other countries. Although estimated price reductions for consumers and cost reductions for public buyers resulting from a reduction or elimination of domestic trade barriers differ appreciably, significant economies are generally predicted in both cases.
[English]
To some the phrase ``removal of trade barriers'' conjures up an image of enforced uniformity of various standards and policies, perhaps at a lower level than those that citizens in any given province would choose, for the sake of ensuring maximum freedom of commerce among the provinces.
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This is not the interpretation we at the institute put on a more open internal market and it is not the interpretation that has been followed in the Agreement on Internal Trade.
Certainly if differences in provincial policies, or even in federal policies, with respect to a particular province or region made trade more difficult but were the legitimate result of citizens' varying preferences or of issues specific to a province, removing such barriers simply for the sake of easier trade could actually result in welfare losses rather than gains.
The real test of a strong internal market is not, therefore, whether it removes or even reduces differences per se; it is whether a policy or practice, whether provincial or federal, that holds sway in one part of the country is discriminatory or creates unnecessary costs for other Canadians in relation to the local objective it seeks to achieve.
A few weeks ago, our institute published a book containing a number of articles by top scholars in the area of internal trade assessing last year's agreement on internal trade. I have one copy of this book with me. I would be very happy to send a copy of the book to individual members of the committee if they have not yet received a copy directly.
Considering that the authors in this volume sometimes diverge widely regarding their views on, for example, the benefits of government intervention in the economy in general, there was a surprising degree of coherence on the meaning and the benefits of the agreement on internal trade among the authors and across the various articles in the book.
Part of my message today will be to convey the main conclusions from these authors. As well, I would like to draw your attention to the need to continue the work begun under the agreement, and to the need to strengthen the role of some key mechanisms put in place by the agreement if we are to fully realize its benefits.
In its general principles, the Agreement on Internal Trade provides a good balance between the full rights of the parties, the various governments, to take measures to achieve legitimate objectives in their respective spheres of competence, while ensuring that these measures do not discriminate or constitute unnecessary obstacles to trade vis-à-vis other Canadians.
Some clearly discriminatory measures, for example, with respect to government procurement or alcoholic beverages, have been removed or will, it seems, be removed within a set period of time.
In other areas, the parties pledge themselves to a greater harmonization of standards, for example, with respect to labour qualifications, and to mutual recognition of standards in other fields, for example, training standards.
The agreement also contains interesting institutional innovations, such as a dispute settlement mechanism, to which firms and individuals have some access, contrary to dispute settlement mechanisms in international agreements, although it is a convoluted access.
The agreement also contains disciplines on the use or on government's ability to use regional development as an excuse for denying access to one's market to other Canadians. It also contains a code of conduct on incentives aimed at limiting the use by one government of subsidies that are clearly harmful to another region.
Although some headway was therefore made in removing existing barriers in a number of sectors, in virtually all cases favourable judgments about the liberalizing effects of the agreement must be heavily qualified. This is not because the principles on which the agreement is based or its structure are unsound, but rather because much, perhaps too much, is left for future negotiations.
[Translation]
While the federal and provincial governments are committed in very specific terms to negotiate the removal of many of these barriers, there is scepticism among the contributors that these promises will be fulfilled at least within the time frames and along the lines promised in the Agreement particularly given the requirement for unanimous decisions.
Deadlines have already come and gone with respect to, for example, bringing municipalities, schools, and hospitals under the Agreement's procurement provisions, or liberalizing trade and energy.
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[English]
The agreement on internal trade is therefore incomplete in this respect, but again its framework is sound. In other words, within the agreement there is considerable scope for achieving a better economic union.
Its main flaw - and maybe I'm repeating myself here - is that it leaves too much for a later date, but, unlike previous attempts in this area, I think there's nothing in the agreement that impedes further progress. This allows our institute to support this agreement.
This being said, it seems to me that certain changes could be made within the scope of the agreement that would improve its chances of success. Giving individual Canadians and firms greater access to the dispute-settlement mechanism through streamlined procedures - right now they're fairly convoluted - would seem to me to be a good way to ensure that dispute-settlement panel decisions will be very difficult for governments to ignore, despite the lack of avenues for enforcing these panel decisions in court.
It seems particularly important to maintain pressure on governments to honour the commitments they have made, especially with respect to further liberalizing public sector procurement, negotiating terms for an agreement on energy, and harmonizing or mutually recognizing standards and standards-related measures.
As currently envisaged, these outstanding goals are to be pursued by sectoral committees made up of provincial or federal representatives, each working independently of the others. However, such committees might not represent the best way to ensure progress under the terms of the agreement. They would actually, I think, fall short, because they would be made up of the very people charged with administering the barriers in their respective sectors for their respective governments in the first place.
For effective results here, a strengthened role for the internal trade secretariat must be considered.
Taking their cue from the process used to complete the single European market between 1986 and 1992, the parties to the Canadian agreement should empower the internal trade secretariat, which currently seems confined to a facilitator role, to call on government, industry, and independent expertise to put together, for approval by governments through the committee on internal trade, a comprehensive package of the technical measures necessary to achieve the objectives of harmonization and mutual recognition of standards actually laid out - the very same objectives laid out in the agreement, but on which we haven't agreed yet.
Over time, the secretariat might also evolve into a policy development body exploring the possibilities for bringing under the umbrella of the agreement areas that have been left out, such as the financial services industry, and even assessing the feasibility of other forms of intergovernmental corporation; for example, on fiscal issues that would enhance the economic union.
I'm not sure that this committee can recommend such changes within the scope of this bill; nevertheless, I urge the committee to do what it can to ensure the success of future negotiations resulting from the agreement and of the institutions set up under it.
Thank you very much.
The Chairman: Mr. Schmidt, have you some questions?
Mr. Schmidt: Yes, I have lots of questions.
First, I want to thank you for that very concise and rather comprehensive review of some of the concerns you've uncovered in the proposed legislation and the agreement that the legislation actually brings into being.
I would like to ask a question about further development of this, if you like, neutral committee that was supposed to come together actually to resolve it, because the point was well made that sectoral committees are actually the same people who are enforcing it. So they would be working against themselves, and probably they're not going to do that.
What is this mechanism, this other committee or this other group? How would it be composed? How would it operate? What would its guidelines be, and so on? Could you elaborate on that a bit more? I'm very intrigued by this suggestion.
Mr. Schwanen: We already have a secretariat in place, but the role that has been assigned to it is very skimpy. There's scope within the agreement to give it far more. The scope we could give to this committee is not limited.
What I have in mind is really something akin - although I must be careful, since we're not talking about creating another order of government, or a bureaucracy for that matter - to the European Commission, which is neither a tool of the individual European governments nor a centralizing agency that imposes decisions from above. It is, rather, an independent tool, made up of members and experts of the various countries. But they do not represent their various governments. They are there to find solutions to the problems of strengthening the economic union, in the case of Europe.
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They go at it item by item: competition policy, telecommunications policy, and so on. They then submit it to the member governments. They don't have decision power, but they're more independent in their assessment and in the measures that are necessary. Then they submit to the individual European governments, through the European council, for voting, a package of measures in the various areas.
For people already working, as I say, to administer barriers in various departments, and for their various governments, it's too easy for them to come together, when told to try to apply broad liberalizing principles to their general areas, to come up with reasons for why it doesn't work.
Mr. Schmidt: That's very helpful.
These proposals then being presented...the member groups...they don't represent their specific governments, but if it's a sector - and there would be sectors within their countries, or within the provinces, in the case of Canada.... Would these be experts in those areas, the ones who would come forward, so on the secretariat that would come to grips with labour mobility - we'll use that as an example - these would then be representatives from the unions and from the various sectors of the electrical trades, for example; the various professions? Would these people be there, or would it be a group that knows very well what these people are and what the problems have been that have created immobility, if you will?
Mr. Schwanen: No, they would be consulted just as in Europe.
From having studied the issues back in the late 1980s...it's very rare that you would propose for approval by government, for example, a standard in one area that didn't meet...where the main actor, for example, in the case of telecommunications standards the telecommunications industry, actually said, yes, sure, given that the principle is that we have to have one standard, this is what we can agree on among ourselves, and then that's approved by government.
Mr. Schmidt: I wasn't so much concerned about standards. Especially in telecommunications, the standards are probably going to be developed in the private industry, because it's moving so fast you can't move fast enough to keep up with that. So I don't think that's my concern. My concern is that a person who is qualified to work in telecommunications should be able to do so in Prince Edward Island and in British Columbia and in Ontario, and so on. That's the concern, and that a professional who can audit a set of books of a corporation should certainly be capable of auditing a set of books for a school board, for instance. Yet we have barriers in between. Those are the kinds of things we're talking about here.
These proposals that would be made: they would be given to the federal government and the respective provincial governments. Is that correct?
Mr. Schwanen: Right now, as it stands.
Mr. Schmidt: Then the respective governments would pass on those before they -
Mr. Schwanen: Oh, I see what you mean. This is an area, labour mobility.... Actually, this is a model I realize I should have thought of in much greater detail.
Labour mobility is an area where this model could work very well, because the governments have already unanimously agreed on a very detailed path or formula. They've said in areas, for example, where our standards are almost compatible, we're going to try to move towards mutual recognition, etc. They've already agreed to the principle of removing, as much as possible, impediments to labour mobility, at least those that result from different training and professional standards and whatnot.
I think you can now give the work to the secretariat, based on these prior commitments, to tell us precisely how this is going to implemented. Then they could go and consult with a much wider range of consultation than simply having provincial and federal government officials getting together and deciding what they're actually going liberalize or not.
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Mr. Schmidt: That was probably developed further than any of the others.
Would that similar model then be used in other sectors as well? Is that your concept? I'm trying to understand your concept.
Mr. Schwanen: I think you could say that commitments have been made in this agreement, except they're not enforced yet.
Mr. Schmidt: Given the way they're set up, I don't think they're enforceable, either.
Mr. Schwanen: Well, enforceability is perhaps another issue.
Mr. Schmidt: It is.
Mr. Schwanen: Let's have an independent body, like the secretariat, that could look at these issues and propose actual concrete measures. This would hold the government to its commitment, because it's easy to say, ``We agreed to do this, but in the end we found out that we couldn't''.
Mr. Schmidt: Exactly.
Mr. Schwanen: Now that you have an agreement on paper - it's by consensus, it's unanimous - you need to move towards a more independent body that can consult very widely with government, but also with other actors, and say, ``Given these commitments, this is the actual technical way in which you can implement it''.
I come again to the European Union's directives, which basically are very technical measures. They don't decide on the principle of the thing. They're being given the principle of the thing by governments, and the governments tell them to work on it.
This agreement establishes very good principles, but now we should tell somebody a bit more independent than government, directly, or the specific department, to work on the specifics and come back to us with directives that we can actually implement.
Mr. Schmidt: For the record, I want to make sure that I understood you. The agreement, as you see it, has a sufficiently strong foundation, and the principles are strong enough and clear enough, that indeed the trade barriers that currently exist among the provinces can be eliminated?
Mr. Schwanen: Yes, if you do whatever is promised in the agreement.
Mr. Schmidt: Why do you put a qualifier on it? Either it does or it doesn't.
Mr. Schwanen: The principles are great. The structure is there. There's a future work program and deadlines and whatnot. As I mentioned, some deadlines have already passed, so this makes it really skeptical.
Mr. Schmidt: Exactly.
Mr. Schwanen: Nevertheless, it's not all there, but it's pretty much all in the agreement. It's a great agreement, if you read the first four chapters. I'm sure you've heard it before.
Even in the detailed chapter.... The labour chapter is one example where I think the problem is very transparent. They've laid it down on paper. They should be commended for that. They've even laid down an approach for under what conditions we are going to agree to mutual recognition and whatnot. Then there are deadlines and the implementation is being given to the labour committee and whatnot.
Again, that's where you need to give the actual implementation work or the work on what actual technical measures can be implemented to implement this agreement. You can give that to a more independent, actually a more open, body, as far as I'm concerned, in terms of consultation and keep the ball rolling in that way.
The Chairman: I guess this really has to do with the process of change, how fast we can move forward. When our previous witnesses were speaking - I'm glad to see they are still here - we were talking about putting pressure on the individual provincial governments through the chapters of organizations such as the CGA, as one mechanism.
I suppose another mechanism - and it's actually provided for in at least one part of the dispute settlement - is publicity. I'd put this, as a cheeky sort of suggestion, forward to an independent organization like the C.D. Howe Institute. You could run an annual contest, like the worst dressed or whatever it is, which would be the most protectionist province prize.
You're an independent person, so you're allowed to say what you like. If there were to be a most protectionist prize among existing provincial governments, who would be the big winner? Are there clear front runners for this dubious honour?
It's a loaded question.
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Mr. Schwanen: I have to answer that, right?
The Chairman: You're an independent person, unlike us.
Mr. Schwanen: I'm very much tempted to say that it depends on the kind of barrier.
The Chairman: What if you took it and globalized it?
Mr. Schwanen: I'd say you'd have to look to central Canada and the Maritimes as basically being the main culprits. You saw what happened in Ontario, for example.
I see that my MP, Mr. Mills, is not here today.
The Chairman: He's undoubtedly speaking in the House.
Mr. Schwanen: Yes.
In Ontario, past provincial governments directed municipalities to buy their buses from a particular company, otherwise they were going to lose their subsidies. It's inconceivable to me that this would not hurt other potential bidders in other provinces.
I was just on the plane today with someone from a company that shall remain unnamed. They work for a very large manufacturing concern. They said that whenever they bid on a Quebec government contract under current rules and the particular product is not produced in Quebec, for example, they are basically being told they are at a disadvantage. They then point out, however, that in other product chains they employ x thousand people in Quebec, and could they please not have to manufacture every line of product in Quebec but still be able to import lines of products from other provinces with respect to government procurement?
This is not just in Quebec. Because it's your people who elect you, after all, there is a natural tendency in a lot of provinces to look at whether or not the person or the company to whom you're awarding the contract provides employment next door. You forget when you do this that you are therefore denying your own manufacturing firms or service firms other opportunities in other provinces, because other provinces do the same thing.
I realize it's a very convoluted way of answering what was a very clear question, but I really don't think there is one clear culprit in this case.
The Chairman: But your answer would suggest that the larger jurisdictions have the capacity for autarchy, if I can put it that way, in producing their own goods. It is on them, then, that you can bring pressure to bear by saying ``If we make it here, it should be bought here'', and this is more likely going to occur in the larger provinces.
Does the agreement as we see it deal with those awkward issues of buses, computers and all the rest of those things we hear about? Are you optimistic that even those toughies can be dealt with by the right kind of mechanism, or are they even such blatant examples?
Mr. Schwanen: It should. The agreement on procurement is actually one of the strongest parts of this agreement. In terms of awarding contracts, it imposes on a very large number of government departments all kinds of transparency requirements and fairness requirements that were not there before. There is mention in the agreement of extending this to, for example, municipalities and hospitals and, especially, utilities and whatnot. It hasn't been done yet, although there's a commitment to do it.
There is a specific dispute settlement mechanism for that part of the agreement. It's basically the same model as the one actually used in the WTO, or prior to that, in the FTA and the NAFTA. It seems to be working very well, but for that reason I think governments have of course excluded a number of sectors. In those sectors to which the agreement applies, however, I don't think there is any reason to assume it's not going to work very well.
With respect to the issue of subsidies, that's a tricky one. We know it's not just the large provinces that try to attract businesses through various subsidies, but again I think there's a code of conduct on incentives there as part of the agreement. Many analysts have said, look, apart from the fact there's no enforcement mechanism, if you impose certain policies on your municipalities - for example, in the case of Ontario, they must buy Ontario-made buses, otherwise their subsidies will be cut off - this clearly goes against the grain of this agreement. I think it is part of the reason why the current Ontario government is re-evaluating this position right now.
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You always come back to the issue of the enforcement mechanism, whether it's strong enough, and whether publicizing the problems via the panel reports and so on is going to force the parties - not just the provinces, but sometimes the federal government - to review their policies. But, as written, I think the agreement does get rid of a lot of these problems.
The Chairman: I was very interested, as was Mr. Schmidt, when you seemed to suggest that within the existing agreement, if the secretariat performed its function properly - presumably it would be given the resources to do so, and I assume that would also imply its research would be bulletproof and so incontrovertible; that it had done its homework and the scandalous or doubtful practice would really be subjected to the glare of analysis - it could drive the administrative process and simply call people's bluff, in a way. If that mechanism regularly put up proposals to the council or the various governments and said, ``Acting on your will, we have now actualized this with an actual agreement'', that in itself might create a very powerful dynamic on the European model.
That's all doable within the existing agreement. How much greater an allocation of resources than was foreseen would it take to do the job right? Do you have any sense of the order of magnitude?
Mr. Schwanen: I think it's doable. I'm not a lawyer, but I read the agreement as carefully as I could, given that constraint. My interpretation of what's written for the secretariat in the agreement is you set it up and the secretariat has a very limited duty right now, but the committee on internal trade is actually empowered to give the secretariat additional roles and resources. I think that's written specifically, and nothing in the agreement would preclude that.
In terms of what resources are necessary, I'm keen to avoid unnecessary expenditures on this score, but I think it's very important to have fairly solid research staff in a commission such as this one, who could look at the various issues one by one. I think these people could be on loan from respective governments. The dynamic is different, but they wouldn't necessarily be from the areas in which the barriers exist. They're not necessarily people who would go there to defend their government's position - I think that's the idea. There's enough talent in the respective governments to put a team like this together.
The Chairman: As I understand the cost-sharing arrangement for the secretariat, I think it's 50% federal and the other 50% is carried on a representation by population basis. One way of easing the cost would be to contribute person power rather than actual cash. You have to cover them off in terms of their meeting costs and so on, but that might be a cheaper way of doing it.
Mr. Schwanen: Yes. I must say I haven't thought about that specific issue, but that's certainly what I have in mind in terms of the composition of the research people, for example.
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The Chairman: My last loaded question goes like this. Is there any evidence that provincial governments that have had a more conservative nature - I'm thinking of Alberta and Ontario - tend to be open to reducing trade barriers? Is one in the position to say yet - and I guess it's more a question of Ontario - whether the ideology of their particular brand of conservatism extends in that direction in a visible fashion that you've perceived?
Mr. Schwanen: They've signed the agreement. Enough people everywhere pay lip service to the need for mobility of labour and capital and say how good this is for Canada - I've just done so myself - and how it does really help us in our international negotiations.
The groups presenting today told us that when you go to a foreign country and ask for access to its market, but refuse to give it access to our whole market in return, it costs us.
If you look at the recent agreement on government procurement in the WTO, it's a very significant agreement. Switzerland and many other countries specifically exclude Canada. They give access to Mexico, the U.S., and France but they specifically exclude Canada - and only Canada and Canadian firms - from bidding on contracts such as utilities, the Swiss cantons or these kinds of things, because we do the same thing to them.
They won't allow any of our companies to bid - of course, you can always bid - within the same favourable rules as people from other countries because we don't give them access to our market. I think the fact we don't have a unified market here, in that sense, really hurts us abroad.
The Chairman: Within provincial governments, associations, groups we've heard about from the previous witnesses, or the level of individual firms, are you detecting, beyond the level of rhetoric, a real sea change taking place? Are people beginning to make the connection and is the penny dropping? Are they really saying, ``Gosh, in this globalized world I'm really hurting myself and my firms by having these rules that may benefit me in the short run, but will clearly damage me in the long run''? Are you hopeful?
Mr. Schwanen: Yes, but I'm just wondering whether we have any choice. Whether we realize that is another matter. I know what you're saying. For example, there are many areas where the federal government could intervene and use the trade and commerce powers and say, look, this is ridiculous; we can't compete, so let's impose the other measure. I don't think anybody wants to see that.
I think the provinces, within their areas of jurisdiction, should follow the European model and say, look, we're stronger if we can agree on creating a single market for a number of these items; let's do it among ourselves with the help and approval of the federal government, on the basis of this agreement we all signed.
Maybe I'm out of touch, but that's sufficient reason for me. There's always a threat that the federal government will have to intervene in some areas at some later date, if we don't get this agreement through, to simply keep goods, services and people flowing across this country. Otherwise, we'll all be poor.
I think there's an advantage for the provinces, in particular, to actually endorse this agreement and this initiative in very concrete terms.
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The Chairman: Mr. Schmidt.
Mr. Schmidt: Mr. Chairman, I think the point's extremely well made.
I really appreciate the candour with which you've approached the questions, Mr. Schwanen, but now I want to ask another question that may require even more candour. It has to do with the implications of the unity problem that now exists in Canada as a result of October 30 for the agreement on internal trade. Given that dimension, how do these people now meet at the table to remove the trade barriers?
Mr. Schwanen: The June 12 agreement between the three sovereignist leaders in Quebec clearly stated that one of the things they want to negotiate with Canada, as part of the new partenariat, is not only the maintaining of the existing level of economic integrity of the Canadian market, but the actual enhancement and improvement of it.
This is perhaps the one issue where I really don't see any incompatibility. I think you could still pursue various options as to who or what you're going to be in political terms, and still, as the Europeans have done, pursue with your neighbours - actually, that would be a gesture of good faith - policies that create a stronger common market.
There was an article in Le Devoir on September 11, 1995, by Professor Loungnarath at the University of Montreal. I talk to him fairly regularly. He's part of a group of 250 young professionals, academics, etc., who are favourable to Quebec sovereignty. In this article he says:
[Translation]
- than in the Quebec-Canada economic union,
- after sovereignty -
[Translation]
- the Agreement on Internal Trade could serve as a basis.
Therefore, again, I don't think this is really something you should avoid pursuing or supporting because there's an option of political independence. I think we would all benefit by this stronger internal market.
Mr. Schmidt: Mr. Chairman, I think there's no question that this is true. The question is really a follow-up to what the chairman asked: can it happen? What's the milieu that will bring together this goodwill? I quite agree that this could be the beginning of a goodwill gesture. I quite agree with that.
The point is that all parties, in order to reach a settlement of some kind, have to want to resolve whatever the problem is. If they're not committed to a resolution or to the desire to find a resolution, they won't. That's really my concern.
This group of 250 people want this to happen, but are they the people who are going to make the decision as to who goes to the secretariat? Who sits down in this group and actually comes to grips with some of the barriers that currently exist?
Mr. Schwanen: Of course this is where everybody's sort of scratching their heads and saying: ``Well, again...''. I think it was an important step to sign this agreement. Let's not forget that an agreement has been signed. Under their various signatures, the governments are committed to certain steps.
I'm sorry if I'm falling a bit short here, but I think the idea is not to let the issue fall from the public eye. A committee such as this one should ensure that progress.... If the secretariat doesn't do this - and I think it's the role of the secretariat to do it - I think it's the role of this committee to report and monitor the progress, or the lack thereof, under the agreement. We, as an institute, certainly intend to do that, but we don't always have the resources.
Mr. Schmidt: I quite agree. I think that's very desirable.
The question, though, is not whether their commitments have been made. The question is, will the commitments be lived up to? That's the question.
As you indicated, I think, a series of deadlines has already been missed. They made a commitment. The commitment was to have this done at this time. Well, it hasn't been done. So if those little commitments couldn't be met, what are they going to do with this big commitment that far exceeds the significance of these little timelines that have already been bypassed?
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Mr. Schwanen: I may be falling short here, but the only answer I have been able to find to that is, again, to make the dispute settlement mechanism more available -
Mr. Schmidt: I agree.
Mr. Schwanen: - to individuals and to enterprises, and to strengthen the role of the secretariat; make it more independent, more visible, and especially, make it a body with a bit more of a research function.
Mr. Schmidt: Thank you, Mr. Chairman.
The Chairman: Thank you very much. I think on that - dare I speak for the committee - we entirely agree with you, and we find your testimony extremely helpful, rather encouraging, actually, about the work that's been achieved to date. Obviously we have our role, to keep pushing ahead. I thank you for guiding us through this process.
I thank all the witnesses.
We are adjourned.