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BY

THE HONOURABLE PIERRE PETTIGREW,

MINISTER FOR INTERNATIONAL TRADE,

TO

THE CANADIAN BAR ASSOCIATION

OTTAWA, Ontario

May 19, 2000

Let me begin by expressing my appreciation for your generous invitation to join you today. In looking over your program, I noticed that I was in very distinguished company -- the presence of Ambassador Gordon Giffin and Madame Justice Louise Arbour is a tribute to the esteem in which the Canadian Bar Association is held, and I am delighted to be here amongst such august company.

Today I would like to share with you some thoughts about the importance of a rule-based trading system and globalization and about why these are issues that should engage not only trade ministers, or even trade negotiators, but also -- and perhaps especially -- you, as lawyers.

I hope today to build on the comments of one of my assistant deputy ministers -- the very capable Jonathan Fried -- who spoke to you yesterday about the increasing "regulatory" agenda for trade and the challenge of coherence.

Time of Unprecedented Change

We live in a time of unprecedented change in your area of expertise: international law. It is a time when the traditional state is being challenged by a multicentric world, one in which goods, services, ideas and individuals move more freely and independently than ever.

And while I am not one of those predicting the imminent demise of the nation-state, I think it is clear that those neat, watertight compartments of earlier times are springing leaks and that transnational networks -- not least in how we order our trade and economic activity -- are leading to an integration that would have seemed impossible just a few short years ago.

In such a world, consensus among individuals, not unilateralism by states, is the operative basis for relationships. We see now a great expansion in the need for international law, or a better "global law," for rules that will govern relationships between individuals who happen to be in different countries, rather than just between the countries themselves.

It is appropriate that I discuss these issues in a room full of lawyers. For without you, without your knowledge and integrity, our legal system -- and our country -- would be less than they are.

This is not flattery; it is fact. Throughout our history, the rule of law has been our strength, the foundation upon which we have built our great country. And you have been both its architects and its custodians.

Historically, it has certainly been the state's ability to provide economic rights to individuals and corporations, in a territory comprising communities of an intermediate size between cities, which segmented economic flows, and empires, which stifled them, that allowed the development of modern economies and of industrial capitalism to which we owe so much development.

Today, we are challenged to build even greater structures upon that same foundation -- to see the rule of law writ large across the page of international trade.

For, just as the rule of law has provided the means to formalize and regulate matters -- and to determine consequences -- in our domestic relations, so too must it govern the expanding area of trade among nations.

Canada Needs a Rule-Based System

For a country such as Canada, the need for a rule-based trading system is clear. We are one of the world's most active and successful trading nations, a country whose domestic prosperity is generated to a very large degree by international commerce.

Ten years ago, 25 percent of Canada's gross domestic product [GDP] was generated by exports, a figure that put us amongst the top countries in terms of our success in international markets. But since that time, Canadian exporters have built on their success. Now, more than 43 percent of Canada's GDP is generated by our exports!

In comparison, the United States exports only about 11 percent of its GDP and Japan, 15 percent. So, to put it another way, we export four times more than the United States and three times more than Japan, proportionately speaking.

Today, one out of every three jobs in Canada depends on exports, and the 427 000 net new jobs that Canadians created last year -- the highest since 1979 -- can be attributed directly to our success in global markets.

So the evidence is clear: our exposure to international competition has energized our economy, spurred innovation and created hundreds of thousands of jobs for Canadians.

But, as you know better than most people, we have not achieved this degree of economic integration with the world in a vacuum -- we have done so within the security of a rule-based system. This was essential, for while we may be a major trading nation, we are not an economic or military superpower.

We needed -- and we still need -- to have a system of international trade governed by the rule of law, not the law of the jungle; a system where disputes are settled based not on the size of your economy or strength of your military but according to a predictable set of agreed multilateral rules that determine the rights and obligations of the parties. A system that levels the playing field.

Canada Is a Strong Supporter of the World Trade Organization

That is why we have been such strong supporters of the World Trade Organization [WTO] and its predecessor, the General Agreement on Tariffs and Trade [GATT]. The WTO has proven to be an exemplar of the rule-based system. It has been very effective in providing a predictable framework for international trade and has made a major contribution to establishing a stable economic order.

In other words, it has demonstrated itself to be one of the most advanced applications of the rule of law at the international level. It has also proven itself adept at forging and maintaining peace in a trading system built on consensus and mutual obligation, rather than unilateralism. It is, in short, the right kind of body, with the right kind of approach, for the multicentric world that is evolving.

I believe that a key improvement of the WTO over the GATT is the Dispute Settlement Understanding [DSU]. We now have a Dispute Settlement Body to administer the DSU, its rules and procedures. And this body is vested with the authority to establish panels, adopt panel and Appellate Body reports and maintain surveillance of implementation of its rulings by WTO members.

In short, we have a dispute resolution system where the rules are clearer and the procedures fairer.

There is also now a permanent Appellate Body -- another major improvement over the old GATT system. And this new dispute settlement system does not champion litigation over negotiation. Indeed, dispute avoidance remains the fundamental objective of the process, and parties are encouraged to see negotiation as their first choice -- not their last chance. (Even in our current dispute with Brazil, we still prefer, and we are working toward, a negotiated settlement.)

There is a parallel here with the evolution of domestic law and the search for effective litigation avoidance mechanisms, mediation and other alternative modes of dispute resolution that are increasingly a part of the legal landscape.

Of course, at the international level, there is also another disincentive to litigation and that is that even if a party "wins" its case and seeks compliance through retaliation against another country, chances are that the citizens of the "winning" country will be adversely affected -- either by having their choice of products restricted or by being deprived of less expensive goods or services from the country they retaliate against.

So negotiation still matters, and dispute avoidance remains much preferable to dispute adjudication.

All of these features of the dispute settlement system contribute to a strengthening of the rule-based multilateral trading system. This, in turn, provides a stable framework and certainty for business. It ensures that traders and investors will have non-discriminatory access to foreign markets. It also helps to constrain the unilateral exercise of economic power.

Of course, the WTO is very much a body that is evolving, and in the days ahead it will face several significant challenges. I think we need to do a number of things if we want to ensure the long-term stability of the WTO.

Future of the WTO

We need to make the WTO more accountable and more transparent. We need to improve its ability to respond to the needs of developing countries. We need to do a better job of clearly delineating the rights and responsibilities of its member states. And we need to make the WTO work more coherently with other international bodies such as the World Bank, the International Monetary Fund, the United Nations and the International Labour Organization.

This means these various institutions must work in a co-ordinated manner, with each acting in its own area of responsibility and expertise. Quite frankly, part of the problem at the moment is that we have allowed non-trade issues to be pushed onto the WTO.

The protestors in Seattle, for example, brought a long list of grievances -- a number of them quite legitimate -- ranging from environmental concerns to labour standards and practices. Indeed, their concerns covered nearly every aspect of globalization. But because "globalization" is such a large and amorphous concept, located in no particular state and seemingly accountable to no one, the protestors chose, understandably, to direct their concerns at something that was concrete: the WTO -- a tribute to its efficiency.

But let's remember: the WTO is a body designed to deal with trade issues. Not labour issues. Not environmental issues. Not human rights issues. Trade issues.

Now this doesn't for a moment undermine the legitimacy of the concerns of labour, environmental or human rights activists; it just means that in many cases they're looking for solutions in the wrong place.

So we have to work in a more co-ordinated fashion, strengthening each international body to do its work better and to co-ordinate all their efforts in a coherent manner.

And those of us who believe in trade, who see its potential to increase living standards and to open new doors of opportunities to individuals and nations, need to do a better job of explaining its benefits and acknowledging its weaknesses.

The fact is that the changes taking place at the international level affect all of us, as citizens of the world. That is why I think that those of you who understand these issues, who in many cases are helping to shape them, have an important role to play in communicating the need for a rule-based system of trade.

I can also see another reason why your engagement on these issues is so important. The nature of international trade -- and the rules governing it -- has changed profoundly in recent years. It used to be that trade negotiations were about borders, about imposing disciplines on the goods and services that crossed them. This meant a focus on customs, tariffs and duties.

And, over eight rounds of multilateral negotiations, we have done an excellent job of reducing or removing most of these impediments to cross-border trade.

Now, however, the concerns have moved inland -- to deal with issues like standards, licensing and approval procedures, product and professional certifications and, more broadly, with the regulatory framework.

And as the focus moves from borders to the conduct of commerce within those borders, there is a greater and greater impact on domestic law. In fact, more and more, national regulation of trade and investment is based on norms or standards negotiated internationally.

Canada's enabling legislation for the WTO Implementation Act, for example, amended 29 different federal statutes so that they would conform to international treaty requirements.

So the line between national and international rules on trade is becoming increasingly artificial. And I would suggest that this reality imposes on you, as professionals, a responsibility to stay current with these international legal developments.

Indeed, the practice of law is at the epicentre of the developing rules of international trade law. In this new world trade order, enforcement of international trade rules will increasingly take place at the domestic level, and your advice to your clients must take into account those rules. It must recognize the explicit relationship between our domestic laws and international law. And it must bring to issues of domestic concern, an international perspective.

Even those of you whose practice is primarily domestic will increasingly face issues of foreign law and conflicts of law.

Now, the issues I have outlined so far are ones with which you are all familiar. But there are other issues and other forces -- less obvious but equally important -- that must also be addressed if we are to make freer trade work not simply for our economy, but also for our people.

In recent years we have seen a rise in concern for our rights, not just as citizens of a state, but as citizens of the world. We hear more and more about crimes against humanity, about cultural homogenization, about environmental concerns and about global challenges such as AIDS and the exploitation of children.

Nowhere are these developments more evident than in the area of international trade. As the recent protests in Seattle and Washington suggest, concerns over globalization centre on its impact on people, wherever they may live.

And so the question being asked is this: should everything be left to the free play of the market and the survival of the strongest or most competitive? Or should we take to the international stage the same principles that have served us so well on the national level? And, in particular, the principle of the rule of law?

A New Ethic Is Required

I believe that the answer is obvious. But it will require a new ethic, one that I would describe as reflecting an evolution from a basis in "law" to a basis in "justice," with the latter implying a more human and caring approach than the strict application of rules. To put it another way, we need to infuse justice with equity. We need to take the blindfold off the symbol of justice to take more account of the human element. In short, we need an ethic of "care." Let me explain.

Traditionally, relations between states have been based on corrective or retributive justice -- the redress of wrongs and the punishment of crimes. But in the postmodern world, we will need to move beyond that, to a more redistributive notion of justice.

It is a form of justice that asks us to look beyond the immediate satisfactions of punishment to the longer-term benefits of altruism. A striking example of this was the Truth and Reconciliation Commission in South Africa, which saw the need to heal and move forward as more important than the need to condemn and look back.

I believe this is the way of the future! And if I am right, this will require all of us to think creatively -- outside the box, as the saying goes -- about how to structure our systems to respond to this need.

Of course, as we move forward, it will be essential that the legal rules developed and refined by lawyers over many centuries remain an integral part of the international trading system. And it is equally essential that those of you who have been trained in the law bring your skills and understanding to facilitating that integration and to defending those principles.

Challenge to the Legal Community: Three Questions

But I came here to issue a challenge that I hope you will take up. This country needs you -- and I need you -- to put your skills and knowledge to the test.

Help me -- help us -- to develop the new approaches and new mechanisms that we need in this era of globalization. We saw in Seattle, and again in Washington several weeks back, the collision of two worlds -- what I usually call a collision between the international order and the global disorder.

I can think of three questions you could turn your minds to. The first is how to rethink the current WTO system when it comes to compliance and recourse to retaliatory measures. Recourse to retaliation -- the removal of trade concessions -- is a last resort to encourage a WTO member to conform with its obligations under the rules. I would hope, too, that it remains an infrequent resort.

As I said earlier, retaliation rarely is without some real cost to the domestic industry as well as the consumers in the very country that won its case. In some circumstances, the economic realities of the countries involved will make it a toothless threat. Plainly, retaliation is a blunt instrument with which to encourage compliance.

If any of you come up with some ideas as to what tools or what system might work better than what we've got now, I would love to hear them!

Second Question: Interrelationship Between Institutions

The second question I will put to you is much broader in its scope. It is to ask you to give some thought as to how the various international institutions that I spoke about earlier should interrelate. We need greater coherence. Not only does the left hand need to know what the right hand is doing, it sometimes needs to operate in a supportive and complementary manner.

I have said that too many non-trade issues and problems are being laid at the WTO's door. The reason this is happening is that the WTO is the only effective international institution. However, it won't be for too much longer if we expect it to solve environmental or human rights issues.

So I am asking you, what can and what should be done to enhance the effectiveness of other international bodies whose mandate is more appropriate to dealing with these important and legitimate issues? And beyond that, what, if any, formal legal interrelationship should there be between all these bodies?

If a country ignores its international obligations in one area -- for example, the environment -- should there be repercussions in terms of its status and treatment in other areas? Many of those in the streets want to see a link and expect governments to make a link.

But is this reasonable? And, if so, is this feasible? What we are talking about here is the need for "collective institutional integrity" and it goes to the heart of the whole system.

My interest in this goes beyond just saving the WTO, though that is the primary objective. I also want to see a satisfactory response to those people who see globalization and liberalized trade as contributing to so many evils in the world. Without such a response, we can expect to see more Seattles.

Third Question: Coping with the Tragedy of the Global Commons

My third question to you is more fundamental and relates to what will amount to a change of civilization: that is, the inevitable emergence of the global commons. Today's decisions involve a spatial and temporal horizon of unprecedented scope. They involve not only relationships among states, societies and individuals, but also the relationship of human beings with the rest of the world and with future generations. There is such a thing as a tragedy of the global commons; it occurs when the common good is sacrificed because no actor will engage unilaterally in policies of prevention when only concerted world action has any chance of success.

If only for this reason, the responsible behaviour that is required in our current situation necessitates an ethical renewal. The scope of the challenge is thus immediately apparent. What can the legal community do to assist us with this paradox?

Conclusion: I Look Forward to Your Contribution

So those are my challenges to you! I hope you will put your intellectual muscle to work on these fundamental issues and feed me some creative ideas.

More generally, I would ask all of you to participate, not simply as counsel, but as Canadians -- as citizens blessed with education and training that can contribute to the important debates that lie ahead. As the rules governing trade increasingly occupy traditional areas of domestic concern, the effect on all of us, as citizens, will be tremendous. And if your interests are to be represented and your views considered, then your voices must be heard.

I look forward to the contribution you will make.

Thank you.