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<title>MR. MARCHI - TO THE STANDING SENATE COMMITTEE ON TRANSPORT AND COMMUNICATIONS ON BILL C-55, OTTAWA, ONTARIO</title>
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<p><font face="Arial Bold" size="+1"></font><font face="Arial Bold" size="+1">99/37 <u>CHECK AGAINST DELIVERY</u></font></p>
<p align="CENTER"><font face="Arial Bold" size="+1">NOTES FOR AN ADDRESS BY </font></p>
<p align="CENTER"><font face="Arial Bold" size="+1">THE HONOURABLE SERGIO MARCHI </font></p>
<p align="CENTER"><font face="Arial Bold" size="+1">MINISTER FOR INTERNATIONAL TRADE </font></p>
<p align="CENTER"><font face="Arial Bold" size="+1">TO THE STANDING SENATE COMMITTEE ON </font></p>
<p align="CENTER"><font face="Arial Bold" size="+1">TRANSPORT AND COMMUNICATIONS</font></p>
<p align="CENTER"><font face="Arial Bold" size="+1">ON BILL C-55</font></p>
<p><font face="Arial Bold" size="+1">OTTAWA, Ontario</font></p>
<p><font face="Arial Bold" size="+1">May 25, 1999</font></p>
<p><font size="+1"><strong><em>(3:30 p.m. EDT)</em></strong></font><font size="+1"><em></em></font></p>
<p>Let me first of all say how much I appreciate this opportunity to come before you today to discuss the international trade side of the
Bill C-55 coin. I have followed your deliberations on Bill C-55 with interest. I have also read with care the comments made to this
Committee by my colleague the Minister of Canadian Heritage. </p>
<p>Let me say at the outset that I share her view that there is nothing inconsistent or incompatible about a vigorous and open trade
policy and an equally strong defence of one's own culture.</p>
<p>So let there be no doubt: this government stands behind Bill C-55, and we are determined to see it passed into law.</p>
<p>Let me just quickly review how we came to be where we are now. </p>
<p>Honourable Senators will know that in 1997 the World Trade Organization [WTO] found certain of Canada's policies with respect
to our publishing industry to be inconsistent with our obligations under international trade rules. We responded in full to that ruling
by removing the four specific measures that were found to be inconsistent. The United States recognized the steps we took to
comply with the WTO ruling.</p>
<p>In October of last year, the Minister of Canadian Heritage proposed Bill C-55, which, as you know, ensures that only Canadian
periodical publishers will be able to sell advertising services to Canadian advertisers directed primarily at the Canadian market. We
believe that Bill C-55 complies with the WTO, as it is a measure aimed at restricting access to certain services, not goods. Under
the WTO regime, we have no obligation to provide national treatment for advertising services.</p>
<p>The United States, however, does not share our view that the new legislation, Bill </p>
<p>C-55, is consistent with our international obligations. And so we began a series of discussions aimed at resolving our differences.</p>
<p>Since January, a series of meetings have been held between Canadian and U.S. officials, and I have been in touch with Trade
Representative Barshefsky on an ongoing basis.</p>
<p>While you will appreciate that I cannot go into the details of those discussions this afternoon, I will say that we have made
substantial progress and I expect that we will come to a meeting of the minds very soon. I should also say, Madam Chair, that both
sides have approached this issue in good faith, for neither side desires a trade war. We are, after all, each other's best customers.
More than $1.5 billion in trade crosses our border every day. It is the world's biggest and best trading partnership. That's why we
have sought to resolve these issues through dialogue. That's how neighbours, friends and trading partners do things.</p>
<p>We should also remember that in the past Canada and the United States have settled many disputes in our commercial relationship
through dialogue; indeed, that has been the rule, not the exception. </p>
<p>Most recently, for example, we were able to work out our differences over actions taken by some Midwestern states in the area of
agriculture.</p>
<p>So we saw our present discussions with the United States as an opportunity to advance our cultural objectives, while avoiding
confrontation.</p>
<p>I might just add, Madam Chair, that this desire to resolve disputes through discussion is not only a matter of preference, between
friends, it is also a practical approach, between partners. For the consequences of a trade war would be immediate, its resolution
protracted and its consequences harmful.</p>
<p>If the United States did take trade action against those industries that are reported targets (steel, apparel, plastics and lumber), there
would be a chilling effect on new export contracts and investments in those key sectors.</p>
<p>While we would have the right to challenge the United States under the NAFTA dispute settlement procedures, until a decision was
rendered by a panel Canadian exporters would suffer, any expansion plans would be put on hold and Canadian jobs could be
imperilled.</p>
<p>For all of these reasons, the Government of Canada has preferred a negotiated solution -- neither a solution at any price, nor one
that plays one sector off against another, but a mutually satisfactory and balanced agreement.</p>
<p>And I remain confident that such a way will be found in the near future.</p>
<p>However, should an agreement not be reached, it has been Canada's consistent position that the matter be referred to the WTO for
an independent review. After all, that is one of the reasons we <em>have</em> multilateral institutions like the WTO.</p>
<p>And as an institution, its rules need to be respected and its dispute settlement mechanism needs to be the ultimate court of appeal
for any two differing parties.</p>
<p>Moreover, more generally, this dispute has highlighted the need for clear rules on culture and trade at the multilateral level. I have
maintained for some time now that the WTO needs to address this gap, which I believe is of increasing interest to a growing number
of member nations.</p>
<p>As we approach the launching of a new round at the WTO, we should give more thoughtful consideration to how we can develop a
more certain and secure framework for promoting and protecting cultural industries within the global trading system.</p>
<p>But returning to the present dispute, let me be clear: we will not make a deal with the United States at any price. There are lines this
government is not prepared to cross, concessions we are not prepared to make, principles we are not prepared to abandon.</p>
<p>Culture is too important, too fundamental to our character as a nation. And Madam Chair, the fact is that culture <em>need</em> not be
sacrificed to commercial considerations. The two can constructively co-exist.</p>
<p>Now I know that some would argue that the assertion of cultural integrity is inconsistent with our strong advocacy of open trade
policies; that to support freer trade is to allow unrestricted access to our market.</p>
<p> </p>
<p>While I understand these arguments, I do not share them. And in the remainder of my time with you this afternoon, I would like to
explain why I believe freer trade and the assertion of our culture are indeed compatible.</p>
<p>First of all, the argument that free trade means no restrictions is patently false. Every trade agreement contains exceptions. Every
country has particular interests it seeks to defend. </p>
<p>So while economic theory may suggest an "all or nothing" approach, the world in which we live operates somewhat differently.</p>
<p>A corollary of the "all or nothing" argument is that globalization is really about sameness: that we must abandon our differences if we
are to trade with one another. Or that because we trade with one another, we become more alike.</p>
<p>But, Madam Chair, my view of globalization is not one in which everyone wears Nike shoes, drinks Pepsi and shops at the Gap.</p>
<p>Trade liberalization does not mean sameness. It means that countries can promote their uniqueness. It means putting forth our
differences and letting the market decide on their merit.</p>
<p>It means that a country does not surrender its sovereignty over that which is most basic to it -- its culture -- simply by virtue of its
having entered into a free trade agreement.</p>
<p>I have said many times, and in many parts of the world, that a country should not have to sell its soul in order to sell its goods.</p>
<p>These, then, are the principles that have guided our conduct on the issue of split-run magazines. And these are the principles that
Canadians can expect us to honour in whatever arrangement is finally reached.</p>
<p>As I close, Madam Chair, let me say that as Minister for International Trade, I fully understand and support the benefits that freer
trade is bringing to this country. Canadians recognize that the success of our nation's economy is inextricably linked to our ability to
venture beyond our borders in search of economic opportunities.</p>
<p>But in the context of the Bill C-55 discussions, we should also recall that it was an American poet, Robert Frost, who observed that
"good fences make good neighbours." Not fences to keep our neighbours out, but fences to preserve that which is within.</p>
<p>Thank you.</p>
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