[Recorded by Electronic Apparatus]
Tuesday, March 4, 1997
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[English]
The Chairman: I will call the meeting to order.
In accordance with the order of reference adopted by the Standing Committee on Industry on Wednesday, October 2, 1996, the consideration of a conversion of military industries to civilian purposes, we today welcome officials from the Department of Foreign Affairs and International Trade: Ron Merrick, Lynda Watson, Charles Court, and Victor Bradley.
I'd like to warn the committee and the witnesses that there's the possibility of a vote later on this morning. So we're going to start right on time and get right at it.
I would ask those from the department to make their presentation, and then we'll have questions from the members.
Mr. Victor G. Bradley (Deputy Director, Science and Technology, Department of Foreign Affairs and International Trade): Good morning. My name is Victor Bradley. I am the deputy director for science and technology in the Department of Foreign Affairs and International Trade. I am also the department's representative on the interdepartmental advisory committee on Technology Partnerships Canada, which explains why I'm chairing this delegation.
With me today are Charles Court, deputy director in the North American and Euro-Atlantic security and defence relations division; Ron Merrick, deputy director in the market intelligence division; and Lynda Watson, director of the export controls division.
With your agreement, Mr. Chairman, I would like to first make a brief statement on some of the matters about which we understand you and members of the committee are interested. Then we'll answer - to the extent that we can - questions you or members may have.
I would like to first note that we have followed with interest the testimony given to this committee by representatives of the Department of National Defence, Industry Canada, and the private sector, including the Canadian Defence Preparedness Association. We share their view of the domestic situation with respect to defence conversion. Indeed, the Department of Foreign Affairs and International Trade has no direct role in defence conversion, as it primarily relates to domestic industrial policy, security policy, or both.
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We have been advised by the clerk of the committee of a number of subjects that might interest committee members. In particular, there are three that we will address briefly: the question of the impact of defence conversion on Canadian foreign policy interests; the matter of the department's involvement in the promotion of military exports; and the question of actions by the department with respect to the 1992 parliamentary report ``The Future of Canadian Military Goods Production and Export''.
On the question of defence conversion and Canadian foreign policy, the policy on defence conversion needs to reflect two aspects of Canadian foreign policy. On the one hand, Canada has made specific undertakings aimed at preventing the production of specific weapon systems. On the other hand, as a participant in a collective defence organization, Canada has certain obligations regarding the maintenance of defence preparedness, including contributing to the collective defence industrial base.
Regarding the arms control dimension mentioned above, a number of agreements restrict or prohibit the production of specific weapons of mass destruction. These are: the Nuclear Non-Proliferation Treaty of 1968; the Biological and Toxin Weapons Convention of 1972; and the Chemical Weapons Convention, which Canada ratified in 1995 and which is scheduled to enter into force on April 29 of this year.
In addition, Canada has taken global leadership in the campaign to ban anti-personnel mines, and it has unilaterally imposed moratoria on the operational use, production and export of these weapons.
As noted, Canada's important foreign policy role with respect to arms control and disarmament is complemented by a national security policy based on the principle of collective defence. Collective defence through NATO and NORAD effectively reduces the cost to Canada of meeting our security needs by allowing us to contribute to an alliance that is ready to come to our assistance should the need arise.
As a party to these two collective defence arrangements, we are expected to maintain certain levels of readiness of our armed forces and to make other contributions to the defence needs of North America and the NATO area.
Among the important contributions Canada makes is the facilitation of training in Canada by our allies and the maintenance of a defence industrial base. The size of that industrial base and the particular defence sectors in which we are active are not important to Canadian security policy as long as our allies are satisfied that we are playing an appropriate role.
In maintaining an effective role in international security affairs, the most important requirement is for Canada to have a modern, well-equipped armed force that can perform the full range of military tasks. The current international environment and our membership in NATO mean that it would be possible to use more imported equipment. Decisions regarding the sourcing of materiel are not the responsibility of this department, but we take the position that the maintenance of some defence production capacity is necessary in line with the considerations already outlined.
On the question of the department's role and involvement in the promotion of defence exports, the department has a basic mandate to assist Canadian companies to succeed in the international marketplace, specifically in the 28 sectors covered by Canada's international business strategy, the so-called CIBS.
Aerospace and defence are treated as one sector, although certain distinctions are made between the two elements in this particular CIBS strategy. This is necessary because of the high percentage of the aerospace subsector that is involved in purely commercial products and services.
The department's initiatives for international market assistance are delivered in the context of the Team Canada strategy, which builds partnerships with other government departments and agencies, provincial governments, industry associations and the private sector through the vehicle of the national sector team for aerospace and defence. Together with our partners on the national sector team, we have developed a strategic plan for trade development in this sector, which, as I've noted, is outlined in Canada's international business strategy.
The strategy for aerospace and defence includes measures to collect and distribute market information and intelligence to assist Canadian exporters in identifying foreign market opportunities. The department's involvement in the promotion of defence exports can be categorized as responsive, and in most cases it stems from sourcing requests and notifications, mainly from our posts abroad.
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As part of our contribution to the government's international business development strategy, its jobs and growth program and related economic development initiatives, our trade commissioners at home and abroad assist Canadian industries to export their products and services (a) by providing market intelligence and information, so-called MI/I, particularly in the form of market studies for specific products and services in specific geographic areas; (b) by providing notification of sales opportunities obtained from various sources; (c) in the context of Team Canada, working closely with other government departments and relevant industry associations through the vehicle of the national sector teams to coordinate international marketing strategies; and (d) informing the business community of the availability of various cost-recoverable government export assistance programs, including the program for export market development - PEMD - and Technology Partnerships Canada, TPC.
I will turn now to the question of export controls. Since the early 1950s, Canada and its allies have regulated the export of military and strategically important, often dual-use, technologies. Today Canada has one of the most restrictive export control systems in the world. We know of no close ally or like-minded country that has a more restrictive policy, or that more carefully or strictly scrutinizes each potential export case for possible adverse security or human rights impacts.
Canada can be justifiably proud that our controls have allowed producers of defence goods, especially of components and subsystems, to export extensively while preventing any potentially harmful exports from getting through.
To suggestions that Canadian military goods find their way to unacceptable destinations, we strongly disagree. The explanation is in the in-depth evaluations that are undertaken before decisions are made.
Let me take a moment to walk you through a diagram, which I believe has been circulated to members, illustrating how the assessment and decision-making process actually operates. My colleague Lynda Watson, director of export controls, would be happy to answer any questions on the evaluation process or the diagram.
As you can see in the diagram, after applications are submitted a detailed consultation process is initiated. The purpose of these consultations is to bring factual information and specialized analysis to bear on the decision of whether or not to issue an export permit.
The Department of National Defence is asked to assess the potential of an item for strengthening or destabilizing the military and security situation in and around the recipient country. They determine if the item is technologically at or above the present system capability of the recipient, and whether this would increase the recipient's ability to threaten its neighbours or its own people. DND also looks at relevant intelligence information and brings CSIS and Customs, if necessary, to review the activities and behaviour of the end-user company or government department.
Industry Canada looks at Canadian industrial development factors, including whether or not the exporting company is participating in any government programs and what its business circumstances are.
Within DFAIT, four groups routinely assess each application where policy concerns may exist. The T branch, as we call it, looks at trade questions, for instance whether the transaction for military goods is closely associated with other civilian contracts or whether the export may be spare parts for something sold in previous years.
The human rights division consults information files on the recipient country, which include annual human rights analyses conducted on each country by our embassies, and reports submitted by Canadian and international organizations. An assessment is first made of the overall human rights conditions and whether there are concrete signs of improvement that should be encouraged or deterioration that should be discouraged, and second, whether the item in question might in any way be used against or worsen the treatment of citizens.
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The international security and arms control division looks at the regional stability and security relationships between the intended recipient country and its neighbours, as well as questions to do with strategic alliances in the area. Peacekeeping obligations of the recipient state would also be considered.
Finally, the ``geographic'' is consulted. They judge what positive or negative messages might be sent by either the approval or the denial of a permit. The geographic division also brings to bear any pertinent information from our posts on relevant economic, security, human rights, or other bilateral issues.
Our recommendation is formulated for consideration by the Minister of Foreign Affairs, Mr. Axworthy, who may request a meeting with officials to review the facts and recommendations.
Members of the committee may recall that last June 18, Minister Axworthy tabled the annual report on military exports in 1995. At that time he announced three areas where he would be exercising closer scrutiny or reviewing extra information.
First, threat of hostilities criteria would formally consider all internal and regional as well as external conflicts and security questions.
Second, human rights criteria would be interpreted more strictly. This has resulted in reviewing democratization and civil and press freedoms.
And third, the policies and laws of the governments of recipient countries to control the supply and ownership of firearms as well as their degree of success in doing so would be reviewed.
Improvements of this type are made regularly and continually whenever deficiencies or weaknesses in the system come to light. The Canadian assessment procedure results in a very high degree of confidence that exports will not be harmful.
Canada reports to the public and Parliament, to a degree unmatched by other countries, exports of military items. This includes over 18 categories of equipment, right down to replacement parts. Other countries report only three.
Some people might wish that exact items were named or that buyers or sellers were identified. We in the department continue to examine these suggestions but must be wary that release of such detailed information will not threaten the commercial competitiveness of Canadian companies.
As a final point I would like to note that Canada has a well-respected system of export controls that is both stable and relatively predictable. Our allies know and understand it and our own industry accepts it. We believe this speaks well for our system.
Thank you very much, Mr. Chairman.
The Chairman: Thank you, sir.
Mr. Ménard, will you start with questioning?
[Translation]
Mr. Ménard (Hochelaga - Maisonneuve): I believe there will be a vote at 10 a.m. on a time allocation motion for Bill C-71.
[English]
The Chairman: When the bells ring we will find out whether it's 15 or 30 minutes. I think it's going to be a 30-minute bell, so we need to get right at questioning, and then about 10 minutes before the time for the vote we'll have to take a break.
[Translation]
Mr. Ménard: Fine. I would like to thank the officials from the Department of Foreign Affairs and International Trade for coming here this morning.
At the beginning of your presentation, you referred to three treaties Canada had signed which dealt with limiting conventional and nuclear weapons. It might be interesting to have a one hour briefing session, not in committee because we have a lot of work to do and witnesses to hear before the end of April, but with the special branch of your department.
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Perhaps you could explain to us what the implications are for Canada of the non-proliferation treaty and the two other treaties you referred to, and perhaps you could tell us what the situation is with the arsenal. I know the Department of Foreign Affairs and International Trade has been following the matter very closely.
You told us and we finally understood that exporting weapons is a fairly regulated process. You seem extremely confident and optimistic about the results and what it means in terms of exports for foreign countries.
However, as you know, there is a network of pacifists from one end of the country to the other, and even a coalition claiming that Canada exports weapons to other countries, including Latin America. I would like you to provide us with further details and deal specifically with the human rights criterion. You named three or four criteria that are taken into account, including potential domestic use of weapons and possible regional destabilization. I'd like you to tell us what this policy means to you and how it relates to the entire issue of human rights.
[English]
Mr. Bradley: On the first point, I think I can safely say that we can arrange a specific briefing for interested members on the three treaties on weapons and mass destruction that were mentioned at the beginning.
On the second point - and I guess the second and third points really flow together - I would like to ask Lynda Watson to address the specifics.
Ms Lynda Watson (Director, Export Controls Division, Department of Foreign Affairs and International Trade): Thank you very much. It's a pleasure to meet you this morning and to be given an opportunity to answer the members' questions.
We are quite confident about and proud of the care and detail of the export control system. Yes, we certainly are aware that there are now, and in all probability always will be, criticisms and disagreements about how it is done. We recognize that there are Canadians who are generally opposed to all military exports. There are some who are even opposed to the existence of a military industrial establishment, but the mandate of my division and our department is to allow the export of goods generally while preventing those that may actually cause some harm or irritate situations that may not be good in recipient countries.
You specifically mentioned Latin America. I will take that as an example rather than a request to speak specifically on Latin America.
Yes, we have many embassies and posts in Latin America, which provide us with information on the human rights and security situation in that area.
Certainly there has been a dramatic change in Latin America over the last ten years, and some Canadian exports of military goods are beginning to go into that area. When I say there are exports of military goods, I want the members to understand that we are not saying there are exports of weapons systems. There are no exports of weapons systems to Latin America; in fact, virtually no weapons systems are made in Canada and virtually none of these are exported.
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Weapons are not the kinds of goods we would export to countries where we had policy concerns, but all military goods are not weapons systems. Everything purchased by defence departments in other countries is also not a weapons system or even military goods.
We publish annually a report on a very specific category of goods that may be awkward and difficult, but the definitions for military goods have been determined for us by a multilateral agreement. We have adopted the definitions the agreement uses. Goods that are especially designed or modified for military use are military. They do not have to be weapons. Most of them are perfectly innocent goods such as radars and radios.
[Translation]
Mr. Ménard: Give us an example of the products you are referring to. You say that traditionally, no arms have ever been exported outside Canada, either to Latin America or elsewhere. That is a good starting point. You have a restricting definition of military equipment, since it is dictated by a multilateral agreement. Give us an example of what we export so that it is clear for committee members.
[English]
Ms Watson: I'm sorry, but I do not have the statistics in front of me. I know that to some countries in Latin America we are exporting repair and overhaul parts or components that will go into aircraft, mainly into cargo aircraft such as the Buffalo and the Hercules. I know that we are supplying a variety of protective clothing - bulletproof vests, flak jackets, bomb disposal suits, and things like that. I know we are involved in some radar and sensor systems.
[Translation]
Mr. Ménard: [Inaudible]... a pacifist technology.
[English]
Ms Watson: These are the kinds of items that are exported to Latin America. I'm sure a number of firearms are also exported, but every time a firearm is exported it is not necessarily a threat to security or human rights. Circumstances in which firearms may be exported would involve a diplomat returning to his own country and taking his own firearm with him or a Canadian travelling to a country to hunt or go on a safari. These are perfectly understandable reasons for granting an export permit.
Those circumstances would be the types of circumstances in Latin America, where even firearms may be considered acceptable for export. However, the number of firearms exported to Latin America is very small, and there are no offensive systems that I'm aware of.
Mr. Bradley: Mr. Chairman, I have one point for the member's first question. I've been advised that a staff member of one of our defence relations divisions, Jill Sinclair, will be briefing the Standing Committee on Foreign Affairs and International Trade today on nuclear disarmament policy. I thought I should bring that to the member's attention.
[Translation]
Mr. Ménard: You told us that one of the factors that is taken into account is the entire issue of human rights. What does that mean exactly, in terms of getting a licence? Earlier on, you referred to Team Canada. What guarantees are there? What can you tell us about the link that must exist between Canada's trade policy and human rights?
Over the past three of four years, it seems that strictly economic mercantile interests have prevailed over human rights considerations. I know you cannot be held responsible for matters raised by different heads of state or by politicians, but do you study those cases? Do you make recommendations? How do you intervene and what action plans do you have to make sure human rights issues are tied in with our trade policy?
[English]
Ms Watson: We certainly take into consideration all the human rights factors that are recognized by organizations such as Amnesty International. We look at reports produced by Amnesty International and a variety of other bilateral and broad human rights organizations, including many Canadian NGOs.
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We do, however, tend to focus the most attention on those kinds of human rights considerations that threaten life and limb and freedom of movement. We recognize that there is no country in the world, including our own, where somebody does not have some accusation that some form of human rights limitations have been placed on the population. So clearly when we are talking about military goods, we are most interested in those human rights elements that may affect that.
You mentioned Team Canada and linkages to human rights. I want to assure the members that there is very close consultation between those parts of government that recruit participants for Team Canada events and specialists, such as the export controllers, to make sure that the participants in these missions are compatible with our policy considerations in these countries.
If countries in which human rights or other kinds of policy concerns exist are being visited, there is consultation on who the companies doing the visiting are and whether we may be giving some conflicting message by bringing some company that had a military product to market to a country in which we would not be prepared to issue a permit. We would want to make sure in advance that the company was informed we would not be willing to issue export permits in these cases.
The Chairman: Thank you very much.
Mr. Murray.
Mr. Murray (Lanark - Carleton): Thank you, Mr. Chairman.
I'd like to go back to this idea of collective defence, which was mentioned earlier, and the fact that Canada has an obligation to maintain a defence industrial base.
We don't appear to be in the business of producing weapons systems. I'd like to understand who decides what our defence industrial base should be in order to meet the obligations we have. If we, for example, back out of the production of certain types of military products, does that raise problems with our international partners in NATO and other organizations? Is it a case of Canada doing what it can do because it has a certain number of companies producing certain products, or is it a case of our partners suggesting to us that we should be involved in the production of certain products? What is the situation there?
Mr. Bradley: I'm going to ask Mr. Court to give the bulk of the answer, but I would like to note, as we said in our opening statement, that the primary decisions with respect to the Canadian defence industrial base are domestic. The Department of National Defence and Industry Canada are the leads on this primarily defence matter.
I'd like to ask Mr. Court to elaborate slightly on the approach we take in fulfilling our obligations.
Mr. Charles T. Court (Deputy Director, North American and Euro-Atlantic Security and Defence Relations Division, Department of Foreign Affairs and International Trade): Very briefly, as Victor said, the decision on what sort of industrial base we maintain is a Canadian decision. Allies are probably not going to say that we should participate in such and such an activity because it contributes to the overall defence of the alliance. However, it has to be recognized that the less we participate in the overall defence effort, the less weight we have as a member of the alliance.
That's not to say there won't be times when there will be suggestions for activities in which Canada can play a part. If you look at some of the activities in the context of NATO, for example, one of the first NATO owned and controlled systems to be acquired was the AWACS. Canada contributes a significant proportion of the crews and the working funding for the AWACS program. Canadian businesses can therefore expect to participate in the equipment of these aircraft.
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Were we not in a position to provide some of the components - and here we're talking about electronics, communications, radars and this sort of thing rather than weapon systems, because the AWACS is not a weapon as such - we would either have to avoid participation, which would harm our ability to contribute to the overall defence, or start from scratch.
One of the important points about membership in the alliance is that it does permit us to maintain a level of sophistication in our defences that we could not afford outside an alliance. This perhaps opens a possibility for Canadian firms to become economically active or maintain their economic activity that would not otherwise be available.
In the future there will be other such systems as AWACS in which Canadian firms might want to participate, and could not if we didn't have the appropriate sort of base.
Mr. Murray: I think it would be fair to say as well that Canadian companies compete with companies in allied countries to provide a lot of this material. So in terms of maintaining that industrial base for defence purposes, it's really a case of Canadian companies keeping up to date and being competitive.
I would expect that within NATO a lot of these contracts are competitive. It's a case of Canada taking part because Canada has won the contract, not because it has been designated to provide a certain part of the overall defence-related industrial base but rather because it has the best products. It's done on a competitive basis, is that not true?
Mr. Bradley: Military organizations around the world are increasingly moving to what is called off-the-shelf acquisition, looking at the dual-use issue from the other way around, starting with the civilian. In all civilian areas of technology - and we are talking about a technology-based effort here - there is no question that both technology and cost-competitiveness issues will be a factor in procurement and the success of Canadian companies on both the military and civilian side of their exports. So I think the points you're making are perfectly accurate.
Would you like to elaborate a little, Ron?
Mr. Ron H. Merrick (Deputy Director, Market Intelligence Division (Aerospace and Defence), Department of Foreign Affairs and International Trade): I'd like to go back to NATO AWACS again and the fact that Boeing is the lead for the AWACS refitting in the United States right now.
As a result of Canada's participation in the NATO program, Canadian companies are given preferential treatment by Boeing. That has to do with the sale of everything that Boeing could acquire, from flight suits to any kind of paraphernalia. They have almost 100,000 employees, as you may be aware, in Seattle itself, and Canadian companies that provide anything to that kind of a base are eligible to participate simply because of our involvement in the NATO program.
For the last several years Boeing has represented about $1 billion of exports for Canadian companies all across the spectrum. To some extent the NATO program and our involvement in it have been a door-opener and a lead, especially for Canadian SMEs, small or medium-sized companies, to make inroads in the United States into that industry.
Mr. Murray: Looking at the export controls area, more and more for large military procurement needs, companies from different countries work together to produce aircraft or ships or whatever. How does it work in a Canadian export control system when there is technology blended from all kinds of different companies and countries working together, and then there's a desire to have a greater return on the investment made in those products by selling them to other powers? Is that a tricky situation for the Canadian export control group?
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Ms Watson: It is not a particularly tricky situation, because the general policies have been in place for the 40 years we have had a modern export control system. Furthermore, the policies are the same policies that are used by other countries, with rare exceptions.
We have legal jurisdiction over those goods that are exported from our country. Nobody can make us export anything if we don't want to. Once it has left our country, it is outside the legal reach of our system. We have one chance to say no and that is before the good leaves Canada.
If we are exporting the good to some small African country, for instance, we may not say yes in the beginning. This may be simply because we are worried about whether they have an export control system at all, if a Canadian motor or generator might be incorporated in a vehicle that is made in that country. If we don't have very much faith in the systems they have, the intelligence they gather, the care they exercise or the values they have - we might feel that those values are quite different from Canada's - we would decide in the beginning, before it left our territory, that we would not export it.
This is not the case, though, for most of our NATO partners, most of the western industrial countries we find ourselves in. Certainly the United States, Germany, Belgium, the U.K., Italy and countries of that nature are close allies. While there are differences between their export control systems and ours, we would say yes in one situation and they might say no, or vice versa. Generally speaking, they share the same kinds of values we do.
This is a two-way benefit, because of course Canada does make many systems here and we do not manufacture all of the components. We would not expect to be accountable to these countries for where their components may be resold. As a non-export-control and non-military example, we would not particularly appreciate the United States telling us that any good with a Canadian component in it could not be exported to Cuba.
It is the same legal principle, the same policy principle, and it's widely practised throughout the world.
The Chairman: Thank you very much. Mr. Ménard.
[Translation]
Mr. Ménard: Still on the issue of trade policy, if I'm not mistaken, your department currently does not have a real program to help businesses that want to diversify and try to convert from a military industry to a civilian one. That doesn't exist right now. You have a number of trade programs. You said there were priorities and you identified 27 areas of involvement, or clusters, so to speak. Businesses operating in the defence sector and who want to diversify somewhat are unable to get any assistance from your department. Is that correct?
[English]
Mr. Bradley: Mr. Chairman, the member is accurate technically, but I would like to remind the committee that the government's program to support defence conversion is Technology Partnerships Canada. A wide range of government departments participate in the interdepartmental advisory committee. While TPC is operated by Industry Canada, it is nevertheless a federal program for helping companies develop technology in the aerospace, advanced technologies and environmental sectors. But it includes a defence conversion component, which our department and our minister were very strong in ensuring, and that is the government program for doing it.
At the end of the day, defence conversion is a domestic issue. It is not in and of itself an international or trade issue.
[Translation]
Mr. Ménard: Yes. That is why I asked my question so carefully, knowing that I am addressing officials from the Department of Foreign Affairs and International Trade and not from the Department of National Defence or the Department of Industry. But I wanted to be sure.
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Moreover, since you referred to Technology Partnerships Canada, I will mention that we heard from officials from that Department who confirmed that in fact, a mere three businesses from the Defence sector applied. That confirms what I always thought, that while Technology Sponsorships Canada is worthwhile in some sectors, it is obviously not the tool that we need to undertake the diversification or conversion process that I am looking forward to. At any rate, it is not your place to comment on a thorny issue like that.
I would like us to turn our attention to the process for granting permits and ensure that we have a good understanding of it, because it seems to be an important aspect for the committee to understand. A permit is required to export or import military material; that is a starting point. How long does this process take? When a person, an exporter or a manufacturer submits an application, what is your department's turnaround time? How would you evaluate it in terms of delay?
[English]
Ms Watson: Generally speaking, an export permit can be turned around quite quickly to a country which is well known to us and where we have extensive and long-term trading relations in components and electronics and that sort of thing, such as one of the NATO partner countries. I would say less than two weeks would be the usual turnaround time.
However, we take much more care when we are dealing with countries where we have less experience, where we have fewer applications each year, or where there may have been or are at the present time certain imperfections in our policy assessment. I am not suggesting genocide. I am suggesting maybe delays in elections or accusations that police may lock people up or something like that. The consultation process Mr. Bradley has outlined for you usually takes two weeks by itself.
In a situation where we have a country that we have less experience with, the usual period of time would be four to six weeks. Hopefully it's closer to four because we have in the past made commitments that we would try to keep this period of time down, but there are exceptional cases where the period of time goes well beyond four weeks.
[Translation]
Mr. Ménard: Out of 100, how many permits would you say are granted and how many are refused? I would just like a rough estimate.
[English]
Ms Watson: There are very few formal refusals. We have had extensive discussions with allies on this. It is not because we would not refuse. It is because in the cases where refusals would be very likely, companies know already. Because our criteria are well publicized, they know already that the risk of a refusal is very high.
If they are not sure, they will call us up and they will discuss with us what recent experience has been. Have there been other refusals? Would we expect, would we anticipate, that concerns might emerge through the consultation process? This very often results in companies deciding against an application at all. There are more situations where a permit is actually submitted and withdrawn before any result can be found than there are refusals.
I think last year we had something in the order of 100 refusals and 1400 approvals. These are approximate numbers.
The Chairman: Ms Brown.
Ms Brown (Oakville - Milton): Thank you, Mr. Chairman.
I apologize for being late. My plane was 20 minutes late so I was 20 minutes late. I'm sorry about that and I'm sorry I missed your presentation.
The discussion has led to some questions. I want to go back to the phrase ``need to maintain a defence industrial base''. I'm wondering in which piece of legislation or which policy document I would find such a statement. Or is it more of an historic understanding?
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Mr. Bradley: Subject to correction by my colleagues, I suspect you wouldn't find it in a policy document or a piece of legislation. I believe you would find it in the historic practices of the Canadian Department of National Defence, in terms of both its domestic interest as our security force and its relationship to the two alliances in particular that were mentioned, NATO and NORAD. I believe there is an expectation by our allies that we will maintain an unspecified level of capability to show that we are truly involved in our own defence.
Ms Brown: Do you think it's time for the government to have a debate on whether we should, as opposed to this system of understandings based on the historic practice under which everybody seems to functioning? If in fact somebody said we don't need a defence industrial base, a lot of policies in many departments would have to change. What you're telling me is that of late, maybe in the last 25 years, there has not been such a debate. You couldn't tell me in which piece of legislation or even in which white paper such a statement was made, so is it time to have that debate?
Mr. Bradley: Mr. Chairman, I don't think it's appropriate for officials to comment on whether politicians and our masters should have a debate or not. So with respect I will decline to answer that directly.
Ms Brown: Excuse me, Mr. Chairman, it is easier for officials to operate when policy statements are clear. They can operate clearly and fulfil their functions when goals, objectives, and basic policy statements are on paper and are clear. I know how officials cling, when a minister speaks.... If the minister were here today, Mr. Chairman, all those chairs would be filled. Every senior civil servant would want to hear every word that came from his mouth, because that might be the only policy statement they will hear for the next three months. Therefore, guiding their own actions and implementing whatever they're supposed to do are much easier when things are clear.
You're telling me this statement does not exist anywhere, so maybe I have to draw my own conclusion about that.
I would like to go back to this. A permit turnaround for NATO partners is fairly quick, because they're the kinds of countries we share values with. I would like to take issue with that.
I think it's true that we probably share a similar respect for the rule of law. I think that respect is implemented in varying degrees in some of our NATO countries, but I wouldn't draw the conclusion that we share the same set of values. Maybe on this day we claim to, but values are developed over time. Considering the aggressive militaristic history of some of our NATO partners, I wouldn't conclude that I share the same values at all. Then I wonder whether we should be having this quick turnaround of these things.
I also understand that the expansion of NATO is going to cost about $200 billion, and I wonder if the supposedly shared values between Canadians, Italians, Belgians, Brits, and Germans would be so shared that they would want to carry the cost of the $200 billion NATO expansion. I think there is a question here, if in fact our officials are operating under the assumption that we agree we have shared values with our NATO partners. I'm not sure that's true.
Mr. Ménard: That's a good question. I want to applaud.
Ms Watson: I hope I didn't indicate that we were talking about the full spectrum of societal values, cultural values. I would not presume to make such a comment. I am talking about the nature of the export controls in place in these other countries, the types of evaluations and assessments they make, the forms of intelligence they gather and apply, the list of criteria they use, and their performance over a period of time in terms of which countries they export to and do not export to.
Although I did say there were differences and they were not identical to our system, they are in the general area, they are quite similar, sufficiently so that over several decades we have developed a pretty high degree of confidence that we're not going to go too far wrong by trusting their export control systems to decide where our embedded components may end up.
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Ms Brown: You're saying their level of sophistication is probably close to ours. They have as many forms and they have as many rules. But my contention is that if the values aren't closer, they could have forms that are there for different purposes.
I have one more question. We had before us a couple of weeks ago the Defence Preparedness Association, which represents many industries that are looking for markets for their defence products. I want to go back just for a second to Mr. Ménard's comment earlier, which was the idea that many Canadians feel that commerce and money and international trade are way more important than some of our other values, such as human rights.
Taking that analogy into another area - that is, that commerce is more important than not so much human rights, but other uses for our resources, say, civilian uses - have you noticed a change in culture among those people who apply to you for permits to export or those people who come to you for guidance about international business, say, in the last five years? I got the sense the people representing these industries would sell anything to anybody if you said okay. It seemed to be purely commerce and market driven. There didn't seem to be an understanding that we as a country have a responsibility in the international community, that we have certain standards, that we don't have a militaristic history.
Is there any way we can get at that and get to those business people to educate them about a new way of looking at their business?
Mr. Bradley: Mr. Chair, I would like to recall what the member missed in our opening statement, which is that we believe the Canadian export control system is well accepted and well respected by Canadian industry. We have an export control system they support. That is our belief.
Would you like to add to that?
Ms Watson: I would like to add to it. Indeed, my colleagues here who are responsible for working closely with the companies on their marketing may have comments as well.
We certainly are in contact with companies that have made us aware of their specific plans in the defence conversion area. We have not made a survey of this. We do not have any comprehensive knowledge of this, but we from time to time have been told by companies about the successes they have had in identifying new commercial or civilian markets for traditional military products. I will give one simple example.
Companies that are involved in developing munitions, bullets, shells, and things like that have an extraordinarily difficult time finding any civilian application, but one of the companies in this sector has identified a prospect in the civil sector in air bags in cars. The propellant used inside is the same. We strongly encourage and go out of our way to encourage that kind of initiative and facilitate those kinds of exports when they occur.
I certainly believe very strongly that Canadian companies do see they have a shared role in Canada's values with respect to global peace and security and the maintenance of human rights.
I did mention there were very few situations of denials of permits. I also mentioned it was because these companies not only recognized the policies of the Canadian government but also shared and agreed with the policies of the Canadian government with regard to not selling military goods, even very tame and ordinary military goods such as spare parts, to certain kinds of governments.
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We have had no applications of any kind for any exports anywhere into the great lakes area of Africa. That's not because there are no markets; there certainly are all sorts of little armies there that would buy anything they could get their hands on, but Canadian companies would not touch them with a ten-foot pole. This is the sort of responsibility or participation that our minister very much encourages, and I'm sure you've heard him speak on the subject.
The Chairman: Thank you very much. Thank you, Mrs. Brown.
As the chairman I sometimes do not get to ask a question, but I'm going to now, for clarification.
When you were describing the export permit graph, you talked about the various steps, including the export controls division and the issuance or refusal of an export permit. Could you explain the top portion in a few words? If the export control division issues or refuses a permit, is there an appeal process? What is the process at the top?
Ms Watson: There are two channels by which an export permit may be issued or refused. In fact, this is a slightly old chart. Any contemplated refusal automatically implies there is some policy concern, and the minister wants to see all of it. We would therefore never see the refused category in the lower-hand box.
It does say that if there are a small number of NATO and like-minded countries, there are no policy concerns, and there is nothing extraordinary or exceptional about the proposed sale, these permit applications do not have to go to the minister's office for final sign-off. You appreciate that the 300 or 400 specific transactions for which we must obtain the minister's concurrence impose a very heavy burden on the minister, so in those cases where the sales are minor, the goods are non-offensive and non-lethal, and there are close allies, the minister has delegated the determinations to the officials.
You ask about an appeals process. When our act was created, it was not common for specific, formal appeals to be written into the legislation or regulations, but we have many instances of appeals every year. Some are more formal than others and some go back up to the minister, but there are numerous situations of re-evaluations and re-assessments. We are always open to that.
The Chairman: Thank you very much. It's been a pleasure for us to hear from you and to exchange questions. I appreciate that we've interrupted some of your time today, and thank you very much in helping us continue with our work. Thank you.
Mr. Bradley: Thank you very much, Mr. Chairman.
[Proceedings continue in camera]