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Presentation to the Committee on Foreign Affairs and International Trade

Public Interest Advocacy Centre (PIAC)
Presentation to the Standing Committee on Foreign Affairs and International Trade

1. PIAC would like to thank the committee for inviting us to present comments and recommendations which will help shape Canadian policies and priority objectives for the prospective World Trade Organization (WTO) negotiations.

2. PIAC is a national not-for-profit organization that advocates on behalf of the interests of traditionally under-represented citizens, including low income, senior and rural Canadians. However, many of the issues of which we are involved are relevant to other Canadians. PIAC’s core regulatory and policy activities involve telecommunications and broadcasting, energy utilities, banking, as well as matters relating to privacy and electronic commerce. PIAC’s member organizations represent over 1.5 million Canadians.

3. Many of our comments today will be related to issues involving telecommunications. However, the issues and principles which we will be addressing, have the same relevancy for other sectors of Canada’s economy and social activities. Our comments are presented in two sections. The first section deals with comments and principles we believe are important for Canada’s general approach to international trade. The second part offers some specific recommendations.

Lessons Learned

4. International trade is extremely important for Canada and we have seen a rapid expansion in this in both the traditional goods sector and more recently services. While the benefits of trade have been given much attention, the implications and costs of liberalization as it is extended to more types of services and socio-economic activities needs to be more closely evaluated.

5. Over the past few years, and even the past few weeks, there have been numerous examples that our national and international affairs are not unfolding according to some of the assumptions made by international trade and economic theory. For example, we have seen threats to the stability of our system emerge from the Asian flu and calls for improved controls of the international financial system; a cause being championed by Canada’s finance minister. Contrary to assumptions about the implications of our trade commitments, we have seen the challenge to Canada’s authority on environmental issues with the MMT gasoline additive ban, and the need for the creation of Bill C-55 in attempt to preserve the presumed autonomy of an aspect of our cultural industries. And in the past few weeks, contrary to assumptions about what Canada was actually agreeing to, we find that elements of an important industrial initiative, Canada’s Technology Partnerships Program, contravenes WTO rules. And of course, last year there was the MAI, of which I am sure you are familiar.

6. The point is that there are important lessons we can learn from recent and more historical experiences.

7. One of these lessons was described in the invitation to appear this committee sent to us and others. That is that the global trade regime has implications far beyond inter-corporate dealings. These extend to Canadian’s everyday activities whether those be economic, social, environment, cultural, educational, health and safety, among others. As well, the increasing complexity of trade, and its intended and unintended consequences are likely to exceed the estimates of government, industry and public groups. These could have tremendous positive, but also negative impacts on our domestic economic, social and cultural relations and activities.

8. As part of this, a second lesson is the need for much more detailed consideration, research and analysis on the rules and conditions of trade of which Canada is contemplating agreement on. This should involve several activities. One is greater consultation with industry, consumer and public interest groups, different levels of governments, academics and others, about these issues. The work of this committee is a very useful step in this direction and we would like to complement you on these efforts. A better understanding by our trade negotiators of the real everyday activities and needs of our citizens and businesses, and how these are likely to evolve in future, will greatly inform understanding about the implications of how rules should be written, what may be agreed to or what Canada may choose not to agree to at the WTO.

9. We feel that there should also be much more consultation between those in International Trade and Foreign Affairs and those in other government departments at both the federal and provincial levels which have direct responsibility and expertise in matters relating to socio-economic issues and services, programs and initiatives. An improved understanding of current programs and initiatives and how these relate to Canadians’ needs, will help to avoid problems such as those mentioned earlier.

10. Another important lesson is that Canada is a mid-size trading country. Our successful development as a country has featured a mixed public/private role in the development and ongoing operation of our economic activities, and a substantive government role in our social and cultural initiatives. At the same time, we have balanced this with a fairly open international trading relationship with other countries. As we move forward, we need to position the WTO as a fair trade mechanism that serves the needs of countries, but at the same time does not undermine or negate the authority of our national government, or other governments or agencies to fulfil their mandates, obligations and responsibilities to Canadians.

11. This means that the Canadian government must continue to have access to the policy and regulatory mechanisms necessary to maintain our economic and social relations and practices, and to have the flexibility to adapt or change these in future, in response to the changing needs of our society.

12. Some of the principles that we believe should inform Canada’s approach at the WTO negotiations in relation to these matters are:

  • the recognition that instruments such as subsidies, exemptions and reservations, and performance requirements will continue to be important tools to achieve governance objectives in Canada.
  • the possible abandonment of any of these should only be done sparingly, on a case-by-case basis or for a specific activity as opposed to blanket application, and only after substantial research and consultation on the possible implications of such a commitment.
  • given the essential nature and quality of life importance of a number of services to Canadians, Canada should exempt or maintain considerable flexibility in some sectors or activities in any WTO agreement. These would include: health and safety, environment, culture, and the universality of public services, including basic communications. As a matter of policy, Canada should also be able to evolve the definitions, meanings and scope of application of these as our needs and practices change.

Canada should not agree to Standstill or Roll-back provisions on legislation or programs except under exceptional circumstances. We cannot predict the future, and we will likely need the flexibility in governance to meet our changing economic, social and cultural needs.

Performance requirements have been an essential policy tool in realizing economic and social objectives. These should not be downgraded or removed through any WTO agreement. For example, performance requirements have been used in broadcasting to meet economic, cultural and social objectives through such things as production funds, and content and programming requirements. In telecommunications, requirements in the form of contributions are used to ensure the universality and affordability of service. As the Internet continues to evolve, some aspects of this new service may come to be considered essential. The ability to require contributions by companies to facilitate universality or other goals, may be required. Performance requirements also include consumer protection laws, privacy laws, standards, among other rules frameworks.

Similarly, the importance of the use of subsidies to facilitate economic and socio-cultural development and activities in Canada needs to be maintained. The reality of trade is that some subsidies will have to disappear. However, again this should be done on an exceptional basis and after proper research and assessment on each issue has been undertaken. The recent WTO decision on the Technologies Partnership Program suggests the importance of this issue for Canada. Unlike the Americans, we don’t hide everything under national security. Both performance requirements and subsidies have been essential policy tools in Canada and will have continued relevance for our national development. For example, the federal government’s Connected Agenda features a number of programs which contribute to economic, social and cultural policy objectives – the Community Access Program, SchoolNet, Smart Communities, among others. At the moment these are funded through programs or subsidies. It may very well be in the future that some or all funding for these may include industry contributions through regulation. If we don’t take care in how we approach the question of subsidies, performance requirements and related provisions in a WTO agreement, we may hamper or end our ability to undertake such initiatives in many sectors, not just communications. We need to ensure that options remain open to us in future.

Specific Actions

13. There are a number of specific issues we would like to raise. First, we do not feel that it is appropriate at this time to change the levels of foreign ownership permitted in the communications sector. There are several reasons for this: it would be premature to undertake this while we are still introducing competition and restructuring the sector; we have yet to resolve existing and pending social and cultural obligations as required by the communications Acts; current investment levels have demonstrated that Canadians already benefit from new and innovative technologies developed elsewhere; and the sector has realized significant foreign investment and participation. There is no compelling evidence to suggest that an increase in foreign ownership levels would accrue further benefits to any party other than the shareholders of such foreign concerns.

14. Moreover, there is a real question about whether majority foreign ownership in this sector would realize the same benefits, such as R&D, employment and social contributions as exists under the current regime.

Consumer Protection

15. There are several matters which relate to consumer interests and protection which we believe should be closely coordinated with any WTO initiatives. The WTO has been mainly focused on creating rules and privileges that benefit industry. To create a fair and effective market, it is important the some balance is brought about through the maintenance and extension of rules which benefit and protect consumers in dealing with companies in Canada and those operating from other jurisdictions.

16. Canada, like many of our major trading partners, is in the midst of developing rules and regulations as these apply to privacy and security of information. As well, consumer protection legislation is being revisited in the context of international trade and online transactions. These rules or performance requirements need to be well established and included as part of any trade agreement. Canada is working in conjunction with our major trading partners in the development of some of these rules. Similar initiatives are being undertaken by other governments. For example, the European Commission is pushing for an international charter for global communication policy to address the technical, legal and commercial aspects of e-commerce.

17. In respect of such activities, there should be greater coordination between the WTO and other institutions and initiatives. As a general observation, to realize some symmetry in policy, we believe that the WTO should be working in closer collaboration with other international organizations that are involved in rules making, such as the OECD and International Telecommunications Union.

18. An important part of such processes is the need to increase the participation of consumer organizations. Such organizations in each country have developed significant levels of expertise in different sectors, such as communications, the environment, health, and so forth. We believe that the Canadian government should not only undertake a greater degree of consultation with such groups on trade issues, but also provide support to allow Canadian groups to consult and work more closely with their counterparts in other countries. Such collaboration will be to the benefit of consumers, as well as governments and industry, through the creation of a fairer market place.

19. Another important issue for consumers is that of standards. Standards and regulation provide important protections for consumers. Canadians standards must be maintained and not downgraded as part of our international agreements. Until there is a harmonization of standards of acceptable level, a system of assessing the equivalency of standards should be included in any trade agreements. A similar equivalency test should also be applied to privacy, data protection and consumer protection measures.

20. As a final point, we believe as part of any WTO negotiation process, the Canadian government should publish and seek public comment on specific proposals being made by Canada and other countries. Trade negotiation is a dynamic process, and such an initiative would provide interests in Canada with occasion to comment on opportunities and oversights as they may emerge in negotiations.

21. We thank you again for this opportunity to participate in these hearings and would be pleased to answer any questions.

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