Mr. Mike Lake (Parliamentary Secretary to the Minister of Industry, CPC):
Mr. Speaker, I am pleased to rise to speak to the important amendments contained in Bill C-14 and to how its provisions help promote a vibrant economic union in Canada.
The bill seeks to implement improvements to the Agreement on Internal Trade, as agreed upon by the Government of Canada and all of the provinces and territories. These proposed amendments aim at strengthening the enforcement of this important agreement and ensuring governments are accountable in meeting their obligations toward this agreement.
One element I would like to highlight today is that the bill demonstrates the commitment of the Government of Canada to continuously strengthen our economic union by working in co-operation with provincial and territorial governments. However, it represents other significant developments as well and I would like to take advantage of this opportunity to cover some of them.
First, I would briefly remind the hon. members of what the Agreement on Internal Trade is all about and of the recent improvements to that agreement that go beyond how it is enforced. I think this will help to set out the reasons for the legislation that is before the House today. I will begin by taking a step back to touch on the importance of internal trade to our economy.
From the global perspective, the times continue to be challenging economically. Yet Canada has, through its sound economic and regulatory practices, weathered the storm better than almost any other nation. However, because the global challenges remain, it is more important than ever to ensure that our own house remains economically sound. The government has always taken the position that strengthening trade is not just something we seek to do internationally, but nationally as well. Internal trade strengthens competition which increases choice for businesses and consumers and drives productivity and innovation. To that end, we remain committed to encouraging, facilitating and playing a prominent role in implementing efficient internal trade practices within and across Canada.
The primary vehicle for strengthening the country's internal trade ties is the Agreement on Internal Trade. A bit of the history of the agreement is in order here since, in part, that history sets the stage for our discussions today.
The Agreement on Internal Trade is Canada's only national agreement governing the free movement of persons, goods, services and investments within Canada. On July 1, 1995, the Agreement on Internal Trade came into effect after being signed in 1994 by the Government of Canada and 12 provincial and territorial governments. Among other things, the agreement provides for general rules which prevent governments from erecting new trade barriers and which require the reduction of existing ones in areas covered under the agreement, as well as specific obligations in key economic sectors such as transportation, natural resources and communications, which cover a significant amount of economic activity in Canada. In addition, the agreement deals with cross-sectoral issues such as consumer protection and the streamlining and harmonization of regulations and standards.
To ensure each government lives up to its obligations under the Agreement on Internal Trade, governments and individuals can dispute the conduct of any government party to the agreement. In fact, the agreement contains specific provisions governing the administration and resolution of internal trade complaints. This process is key to ensuring the effectiveness of the Agreement on Internal Trade in committing governments to open and integrated internal markets and a stronger economic union.
One of the most important things to note about the Agreement on Internal Trade is that it is not a static agreement with rules that never change. Rather the agreement is in a constant state of evolution to meet the demands of our ever-changing economic landscape. For its part, the Government of Canada has remained committed to continuously working with the provinces and territories to improve the provisions of the agreement and expand its scope of coverage across the Canadian economy.
Indeed, the AIT has evolved to meet the changing needs of commerce and labour markets. In recent years, for example, the Government of Canada with the provinces and territories have incorporated an agriculture chapter that fosters freer trade of agricultural products. The chapter covering government procurement practices was also expanded to cover additional entities and the labour mobility chapter was also amended.
On the issue of labour mobility, I would like to take a moment to highlight the new AIT obligations to which the Government of Canada and the provinces and territories agreed to ensure better pools of available and skilled labour across the country.
As hon. members know, one of the biggest stumbling blocks to freer internal trade practices has been the matter of labour mobility. Over the decades, it has been a very difficult and contentious issue on which to come to agreement. That is why in January 2009 the Prime Minister and other first ministers were pleased to announce their agreement on amendments to the AIT that would enhance labour mobility in Canada.
In August 2009 a revised labour mobility chapter came into force. The new provisions ensure that a worker certified by regulatory authority in any one province or territory shall be recognized as qualified by all other provinces and territories. Certified workers are no longer required to undergo additional material training, testing or reassessment, resulting in seamless recognition across provinces and territories. The net result is improved employment opportunities and better access to a larger and richer pool of human resources for Canada's employers.
As we see, internal trade is a key to our economy and the AIT has allowed the Government of Canada, with the provinces and territories, to get things done toward building a better and stronger Canada. Our collective efforts are ongoing.
Bill C-14 is the next step toward improving trade within Canada. The bill would improve the dispute resolution process and the enforcement mechanism of the agreement on internal trade.
Let me say why this is important in today's context. A commonly-recognized challenge within the agreement has been the effectiveness of its dispute resolution mechanism. The lack of strong enforcement tools has made the agreement less effective than it could be in ensuring freer and open internal markets. Without credible penalties, panel rulings could be ignored without consequence, and this issue has been raised by a number of private sector stakeholder groups, think tanks and even international organizations.
The Government of Canada understands and shares in the view that the agreements on internal trade need stronger enforcement. For this reason, all parties agreed in October 2009 to changes that would improve the dispute resolution process and strengthen the enforcement tools under the AIT. These changes apply to disputes between Canadian governments party to the AIT and not to disputes raised by or against a private citizen, business or association.
Key to the changes that were approved is the integration of monetary penalties that can be applied against a government for its continued failure to comply with the agreement. Simply put, an administrative monetary penalty is like a fine that is imposed on a government because it has not lived up to its end of the bargain in keeping our internal boundaries open for a more integrated economy with a multitude of choices for Canadians. With these fines now built into the process, they provide governments with an additional incentive to ensure they comply with the agreement and that they do their part in contributing to the sustainability of our economy.
How much are these penalties? The size of the monetary penalty varies by the population of the jurisdictions in question to take into consideration the budgetary constraints of some of the smaller governments. Maximum amounts range from $250,000 for the smaller provinces and territories like P.E.I. and up to $5 million can be applied against the Government of Canada and the larger provinces like Ontario and Quebec.
Furthermore, these amounts take into consideration the severity of the conduct in question. The new changes to the dispute resolution process permit a body called a compliance panel, that deals with disputes against governments for non-compliance with the agreement on internal trade, to determine an amount that corresponds to the negative impact of the measure in question. It also takes into consideration whether a government has made good faith efforts to remedy its situation so as to ensure that it is in compliance with the agreement.
Hon. members should also know that a government can lose its privilege to raise a dispute against another government if it fails to do its part in rectifying its non-compliant conduct. The application of these measures would encourage all parties to comply with their obligations and, over time, help to create a free and open market with better choices for businesses and consumers. In addition, the new process allows for appeals and for new qualification criteria for panel members.
In brief, those are some of the agreements on internal trade amendments agreed to by the federal government and provincial and territorial governments on the enforcement side. To back up our agreement, the 13 governments have either completed or are in the process of taking the necessary steps to implement these changes in their jurisdictions, including introducing new or amended legislation.
This is where we now come to Bill C-14, which is the Government of Canada's proposal to implement the new enforcement requirements under the agreement on internal trade. Bill C-14 is a very short bill, so there are not many specifics to account for, but it is what is in these provisions that makes for some powerful messaging.
Bill C-14 seeks to fulfill federal commitments made when it joined the provincial and territorial governments to provide for a stronger enforcement mechanism for government-to-government disputes under the agreement on internal trade. It is the legislation required for the Government of Canada to ensure that the new dispute resolution process under the agreement can be implemented for the federal government.
Under the new changes, governments have agreed to include monetary penalties. With Bill C-14, the Government of Canada will ensure that any monetary penalties awarded against it can be enforced in the same manner as an order of the Federal Court of Canada.
This is the important point. With the passage of this bill, it means that monetary penalties against the Government of Canada may be triggered for payment through the legal system and from the federal consolidated revenue fund if the government ever failed to make a payment.
I am not saying that should ever happen, but as this government is committed to act responsibly with respect to its commitments for a stronger economic union, it is also important to back that up with real accountability for that commitment. It is about being accountable for our actions as assessed by a qualified panel focused on Canada's internal markets.
This is not all that Bill C-14 does. It also provides for governor-in-council appointments of panel members to follow new qualification criteria to improve the decision-making process. It takes care of some other housekeeping amendments to the AIT implementation act and Crown Liability and Proceedings Act so that the supporting legislation is clear and up to date.
At the end of the day, Bill C-14 is a demonstration of the federal commitment to improving the agreement on internal trade and to continue strengthening the economic union. As provinces and territories are also taking similar steps in their jurisdictions to implement the new changes to the dispute resolution process, the bill is also a symbol and a reminder of our collaborative efforts in working with the provinces and territories to make the agreement more enforceable.
I believe in these efforts. Together, as each government ensures the changes are effective across the country, Canadians will have a stronger national agreement that will collectively address some of the concerns and recommendations raised by stakeholder groups and hold its governments more accountable.
The clock is ticking. As Bill C-14 covers implementation of the changes for only the Government of Canada, provincial and territorial ministers of the committee on internal trade, with the agreement of their premiers, have completed or are in the process of passing similar legislation, or taking other steps necessary to ensure that accountability for compliance with the agreement on internal trade is widespread across the country.
I have spoken of the importance of internal trade for the economy, the role of the national agreement on internal trade, recent improvements to that agreement, and about the specifics of Bill C-14. Before I conclude, I will reiterate a few points on the importance of internal trade for the economy.
Internal trade for our multi-jurisdictional federation is a critical issue. This is a priority for the Government of Canada, which remains committed to working with the provinces and territories for a stronger economic union.
I mentioned already that Canada's governments have ensured greater labour mobility, introduced an agriculture chapter to the agreement on internal trade, and improved the coverage of government procurement rules. Something I did not mention is the success that we have made in removing barriers to interprovincial trucking. These efforts are all consistent with the ingredients necessary to build a stronger economic union that takes into consideration the need to work with provinces and territories to remove barriers that restrict businesses from growing, competing and producing. They are all critical elements for Canada to sustain its economic standing during these tough economic times.
I say to my hon. colleagues that at first glance Bill C-14 may seem to be a short and fairly technical bill pertaining to the administration of monetary penalties under the dispute resolution chapter of the agreement on internal trade and that, in the scheme of things, the changes may seem relatively minor. From a technical point of view that may be so, but from a principled point of view, they have real importance.
As we in the federal jurisdiction pass Bill C-14, we join our colleagues from other governments. Together, we show that the Government of Canada, with the provinces and territories, is committed to making national progress in removing economic barriers to more competitive markets with greater choices for Canadians. In that broader sense, we all triumph from the co-operation of governments working together for the greater good of Canada and the economic union that we are all proud of and part of.
The effective administration and evolution of the agreement on internal trade will continue to depend on co-operation. As the Government of Canada, we need to uphold our part of the relationship and pass Bill C-14. I now urge all members of the House to pass this important piece of economic legislation, so that we can do exactly that.
Mr. Guy Caron (Rimouski-Neigette—Témiscouata—Les Basques, NDP):
Mr. Speaker, I am very pleased to address Bill C-14, An Act to amend the Agreement on Internal Trade Implementation Act and the Crown Liability and Proceedings Act, which proposes amendments.
I am pleased because, regardless of what members opposite may say, the NDP supports the removal of domestic trade barriers, the expansion of internal trade and also labour opportunities and mobility. More specifically, we support the parts of this bill that will facilitate the movement of Canadians from province to province to get work. So, we think that some aspects of this bill are worthwhile.
As the hon. member knows, the Agreement on Internal Trade is an agreement between the provinces and the federal government that was signed in 1994 and came into effect in 1995. Since then, it has been amended several times. We are currently addressing the content of the 10th amendment. An 11th amendment has since been proposed and negotiated. We must recognize—and this is the point that I tried to raise in my question to the hon. member—the importance of striking a balance in a free trade agreement like this one, because this is really what it is.
It is a free trade agreement that is more similar to the one negotiated under NAFTA than to those that were ratified at the World Trade Organization. It is also obvious that an agreement like the Agreement on Internal Trade results in a loss of sovereignty for the provinces. That is the foundation of the accord. The provinces have signed it, and they have accepted it. However, the fundamental issue has to do with balancing that loss of sovereignty. I will elaborate on this later on.
We should also expect that agreement to harmonize standards between the provinces which, in many cases, may be a good thing. However, a lack of balance in this regard could trigger relatively serious problems for certain sectors. Indeed, it could create obstacles to a province's ability to legislate on the environment, workplace safety and other issues that may not constitute a trade barrier as such, but may have to do with specific concerns in the province involved.
There have been cases under the Agreement on Internal Trade. There was one that pitted Ontario against Alberta and British Columbia concerning substitutes and dairy blends. In fact, Ontario banned the sale and manufacture of various products that resemble or imitate products made out of milk or milk ingredients. The 2004 panel formed to talk about this issue found that Ontario's Edible Oil Products Act contained measures that were not compliant with the Agreement on Internal Trade. The 2004 panel found that the measures were discriminatory, that Ontario’s dairy products constituted a like product and that Ontario gave them better treatment.
The panel also found that the measures interfered with the right of entry and exit, as the Edible Oil Products Act restricted or prevented the movement of goods and related services between provinces and created an obstacle to trade. After the report of the panel formed under the Agreement on Internal Trade was issued, Ontario had until February 1, 2011, to comply.
I want to know whether Ontario was denied its ability, not to protect its dairy sector, but to establish a distinction between the consumption of dairy products and edible oil products, which are different but try to imitate dairy products or milk itself.
Ontario still claims that protecting its dairy sector, not from a commercial point of view but from the consumer's point of view, is a legitimate objective. This also raises another question about supply management. We know that supply management in Canada affects the Maritimes, but it mostly affects three provinces: Ontario, British Columbia and, naturally, Quebec. Quebec and Ontario alone account for 50% of dairy production in Canada.
These two provinces are strongly committed to fully protecting the supply management system. What does the Agreement on Internal Trade say?
The chapter on agriculture allows parties to adopt or maintain measures concerning supply management systems that are regulated by the federal and provincial governments as well as measures concerning marketing boards governed by the provincial governments, which are not technical specifications.
According to the agreement, a technical specification is a technical rule or standard, a sanitary or phytosanitary measure or a compliance evaluation procedure. Based on that definition, is supply management protected? We are not entirely sure.
A technical specification is a technical rule, a document or a legal instrument that sets out characteristics of goods or their related processes and production methods, including applicable administrative provisions, and compliance with it is mandatory under the law. It may also deal exclusively with terminology, symbols, packaging, marking or labelling requirements as they apply to a good, process, or production or operating method.
What is the point of supply management then? Can we protect the milk market? Perhaps, but we cannot regulate its manufacturing process, labelling, production method or characteristics in order to keep people from skirting the system by using analogs.
I am raising the issue of supply management because an agreement such as the Agreement on Internal Trade will surely have ramifications in terms of the free trade agreements we negotiate overseas. All of the rules that we want to apply to internal trade here are closely followed by our international trading partners. They can see the potential for loopholes and could ask for elements that were protected or were not on the negotiating table with the Government of Canada in the past.
As with any free trade agreement, it is crucial that there is a clear framework regarding the responsibilities of the parties. It is even more important to have the flexibility to protect sectors that are central to the economy of the parties, such as supply management. And this issue also brings up the question of programs that promote eating local. This is not a public health issue or a consumer protection issue. According to the Agreement on Internal Trade, it might therefore not be a legitimate objective.
Will these policies be challenged under the Agreement on Internal Trade because they give local products a higher profile? We are in favour of introducing exceptions so that the groups created under the Agreement on Internal Trade to judge cases can consider some of these exceptions. Once again, these exceptions are not there to impede commerce or to cause problems in terms of interprovincial trade. We are more in favour of a real response to the specific needs of several provinces.
Many of the concerns raised by the government and these groups warrant our attention and, accordingly, the NDP would like to call expert witnesses in committee in order to get some clarifications on the potential impact of such a bill.
As I pointed out, it is important to understand that the Agreement on Internal Trade is similar to NAFTA in terms of its structure. One of the things about NAFTA that worries us—and it still worries us because NAFTA is still in effect—is chapters 11 and 19, particularly the provisions on investor states. Those provisions allow investors to sue foreign states directly. Thus, an American investor can sue the Canadian government or the Mexican government for anything it considers a constraint on its ability to do business in a country or its ability to make a profit in that country. Of course, some exceptions exist in NAFTA, but they seem pretty weak.
This brings me to the measures that were the subject of the question I asked the Parliamentary Secretary to the Minister of Industry. We are talking about companies that launch lawsuits against certain governments for reasons that are not necessarily trade-related, but that aim to prevent a given country from enacting completely legitimate, pertinent legislation, in this case, on the environment.
I will give two examples. Dow AgroSciences sued Canada for $2 million because Quebec prohibited the use of pesticides manufactured by that company. We all agree that pesticides are a basic environmental issue that has been around for at least 40 years. A number of products sold by various companies are recognized as being harmful not only to the environment, but also to the health of people who live close to areas where these pesticides are used.
Dow AgroSciences has tried, and continues to try, to sue Canada for $2 million because of the ban. This is not the only such suit. The Crompton company has also sued Canada for $83 million because some municipalities have banned the use of the pesticide lindane. These two examples clearly show the weakness or the lack of balance in investor-state provisions when it comes to the state's ability to protect public health.
The Agreement on Internal Trade contains provisions that allow a person or a business to sue another province for decisions, regulations or laws that it deems to be contrary to its interests and to its ability to do business in that province. These aspects are dealt with in the agreement in effect negotiated between the provinces and the federal government. We will continue to talk about these aspects and any provisions of international or domestic agreements that do not uphold environmental rights or workers' occupational health and safety rights. We want the provinces to always have the opportunity to regulate their environment and to protect the health of their people.
We are in favour of the Agreement on Internal Trade to a certain extent, as long as it addresses all the points that I just raised. We want the bills related to the Agreement on Internal Trade or to international agreements to avoid encouraging policies that force deregulation or privatization on the provinces and territories. We want these bills to avoid pushing the federal or provincial government to have power of attorney over certain interests of an industry or major investor.
We also want to prevent the bills from seriously reducing a government's ability to buy products from local suppliers. That is an element that is very important, particularly when it comes to the strategy for economic recovery. We want to avoid limiting the provinces' and territories' ability to help their provincial companies and industries as part of an employment or economic recovery strategy, or preventing them from doing so.
In any free trade agreement, there must always be a balance between the various interests. Bill C-14 includes provisions that are encouraging in some respects. I mentioned the legal action taken against Canada under the North American Free Trade Agreement. At least, this bill limits the potential impacts of such legal action. We are talking about economic impacts of approximately $5 million for a fairly large province like Ontario, Quebec or British Columbia. On a per capita basis, the maximum fine would be less depending on the size and population of the province to prevent what is often frivolous legal action from being brought against the provinces and to produce what I call the litigation chill effect and avoid things like the $83 million dollar case that I just mentioned. There are even cases that involve several billion dollars. Yet, I feel encouraged that a limit such as this one was imposed.
Another one of our concerns about this bill pertains to the composition of the panels, to those who are presented by the parties to hear a specific case.
Of the five members who can be presented by the two parties involved, only one must be an expert on Canadian commercial law. The other four individuals may have other expertise not necessarily related to the case at issue. We think that is a problem, and it should be corrected.
The other problem is that only one of these five individuals must be bilingual and be able to work in French and in English. Why only one? This means that if there is one bilingual individual in a group and the other four members do not speak French, the discussions will take place in English. If we were dealing with different commercial laws, we could have required, for example, that a good proportion of members be bilingual and able to carry discussions in French and in English. However, I do not see the justification for having only one bilingual person on either side, just like we fail to see why only one individual should be an expert on Canadian commercial law.
Therefore, the NDP will definitely support this bill at second reading, so that we can discuss it in committee and correct some flaws, such as a certain lack of balance. We notice a lack of definitions or limitations that could apply to some people, businesses or provinces to prevent the possible use of the investor-state provisions. These provisions can sometime have a chill effect and result in a province being reluctant to make undertakings, to agree or to legislate, even for the good of its citizens, on environmental issues or on their own stimulus measures. I am thinking of municipalities among others.
That is why we want to take a closer look at this bill. We will have a chance to do so in committee. I really appreciate this opportunity to present our views on this legislation.
I will be pleased to answer any questions.