STANDING COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE

COMITÉ PERMANENT DES AFFAIRES ÉTRANGÈRES ET DU COMMERCE INTERNATIONAL

EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, May 17, 2001

• 0906

[English]

The Chair (Mr. Bill Graham (Toronto Centre—Rosedale, Lib.)): Colleagues, I think we can start. We have a quorum for hearing witnesses.

Ms. Holm is here. We appreciate her coming. We might as well start.

Ms. Holm, thank you very much for coming. We appreciate your taking the time, as an individual, to join us with your expertise. We see you're an agrologist, which is a rather terrifying-sounding name. No doubt you will dispel both the mystery and the terror when you tell us what it's all about.

Thank you for coming.

Ms. Wendy Holm (Individual Presentation): Thank you.

The Chair: We'll start with you, if you don't mind. Then Ms. Elwell will come and join us later.

[Translation]

Ms. Francine Lalonde (Mercier, BQ): [Editor's Note: Inaudible]... because it was submitted to members of the subcommittee.

The Chair: Which one?

Ms. Francine Lalonde: The one on lumber.

The Chair: Mr. Harb will answer that question.

Ms. Francine Lalonde: Did Pierre Paquette agree?

The Chair: Mr. Harb, Ms. Lalonde wants to know whether Mr. Paquette had supported your resolution.

Mr. Mac Harb (Ottawa Centre, Lib.): Yes, Mr. Chairman.

The Chair: Was it passed?

Mr. Harb: It was passed unanimously at a previous meeting. The only change that was made related to the dates. We had previously opted for June 1 and 2, but this time around, we didn't set a date because we wanted to do that with the members of the committee.

The Chair: Therefore, everybody agrees on the principle. Now it's a matter of setting out the technical details. As soon as we have quorum, if Mr.... [Editor's Note: Inaudible]... also agrees, we can approve it and let Mr. Harb leave.

[English]

For the moment, we don't have a full quorum. I'd like to go back to Ms. Holm and let her submit her testimony. We can maybe do it after that.

Ms. Holm.

Ms. Wendy Holm: Thank you.

First of all, I would like to say I only had 48 hours notice, from the time I got the phone call requesting my appearance before this committee until I boarded the plane. It was very short notice. I would have prepared a written presentation. As it was, I sat in my hotel room last night and wrote a bunch of notes. It's a challenging subject to present in a coherent manner. I will do my best.

There were many colleagues, esteemed experts in this area from British Columbia and elsewhere in Canada, who I spoke to when doing some background on this presentation and who would have liked to appear before the committee. I think the committee would have benefited from their appearance and from hearing their input.

The subject matter of this committee strikes at the very heart of Canadian public policy. Bill C-6 is being presented as a solution to Canada's water trade dilemma. It's being presented as the third plank in the government's strategy to protect Canada's water. As such, I feel it fails very dramatically. If the committee is serious in its intent to look at this, which I'm certain it is, you need a fuller public process to consider the implications.

• 0910

I'd like to speak a moment to my qualifications. I am a professional agrologist. It's not all that scary. I'm a professional certified in agriculture. I am a resource economist. I completed my master of science degree from the University of British Columbia almost 30 years ago. I have been practising agrology in Canada for 30 years. I have been involved in discussions on the water trade debate since 1987. I am the editor and contributing author to the book Water and free trade, which first raised the question of water's inclusion in the trade agreements and the public policy implications.

For the entire time I have been speaking publicly on this issue, I have never been accused of being anti-FTA or anti-NAFTA. I think this is an important public policy issue that stands apart from the rest of the issues, the pros and cons of the trade agreements. I've never argued that this issue is what should kill the agreement. I think there are solutions. I think it is critical that all of the issues we raised in this book have come and are now sitting at our doorstep.

I was a recipient of the Queen's Commemorative Medal in 1993 for contribution to community. I was president of the British Columbia Institute of Agrologists. I'm past director of the Agricultural Institute of Canada. I am past chair of the board of trustees of Ethical Funds Inc. I was very pleased to have been named Agrologist of the Year in British Columbia two weeks ago, in part because of the work I have done on the water issue.

I'm speaking to you today on behalf of Canadians, 87% of whom are strongly opposed to water exports; farmers, of course, who are entirely dependent on water in addition to sunshine and soil for the production of food; and I suppose on behalf of my daughter and the eight generations who walk in front of me on this issue. I have no axe to grind. I have no politics with respect to this issue. I'm here as a professional. I've been associated with this discussion for a very long time.

In every aspect of this legislation, Bill C-6 is presented as “plugging the leak”, fixing the water trade dilemma that was created first by the FTA and subsequently by the NAFTA. It is presented as prohibiting the bulk removal of water from Canada.

Referencing the news release and the background, the amendments will prohibit the bulk removal of water from Canadian boundary waters, including the Great Lakes. This is the last step in a three-part strategy to prohibit bulk water removals from all Canadian water basins. It reaffirms Canada's commitment to act within its jurisdiction to prohibit bulk water removals. The main element is to prohibit bulk removal of boundary waters.

It is very clearly being presented as a solution that applies to water and the risk to Canada's water resources across the country. It does so, as this committee knows, with licensing and prohibitions in clauses 11, 12, and 13 of the bill.

When you read the sections and you quote small portions of it, it sounds very good. Upon closer reading and closer examination, however, there is very little in the bill to give any confidence in that direction.

Normally, with any legislation I've looked at—and perhaps this committee is more familiar with it than I am; I tended to look at water and resource legislation—the legislation states its purpose and then it goes on to contain regulatory sections that set out explicit allowances or exceptions. For example, the enabling legislation for NAFTA exempts raw logs and unprocessed fish from the Maritimes. Exceptions are, in my opinion, never seen as undoing the purpose of the bill itself. They're simply there to make specific allowances where the regulations are not intended to apply.

In Bill C-6 the exceptions are capable of undoing the entire purpose of the bill. The minister has given very generous powers to exempt basically all of the provisions of protection that are contained in the bill, and that authority is unfettered, to my reading.

• 0915

A further problem with Bill C-6 itself is that it doesn't, of course, apply to waters.... In the commentary they use the term “waters used as ballast, humanitarian, and for the production of food and beverages”. The International Boundary Waters Treaty talks about “navigation, domestic and sanitation, and power and irrigation”. When you see water for power and irrigation as part of an exemption and you look at the great concerns of the United States with regard to energy production and the production of irrigated agriculture and the exemption for water for the production of food and beverages and agriculture, that is of great concern.

Similarly, it is of concern that the definition of drainage basins can be left to the Minister of Foreign Affairs. I leave it to others to question why the Minister of Foreign Affairs and not also the Minister of the Environment. My background is not in environment; it's in economics and trade. But that is a point that I'm sure will be made to you by others.

The definition of the drainage basin is of great concern to me. You will recall that the voluntary provincial accord that the provinces were encouraged to sign almost two years ago used a similar drainage basin approach. They said that for the purposes of that accord, there are five drainage basins: the Atlantic, the Pacific, Hudson Bay, the Arctic, and the Gulf of Mexico. With drainage basins defined on that macro a level, we're basically talking about continental water-sharing schemes. The ability to define drainage basins without any qualification being solely in the hands of the Minister of Foreign Affairs is, I think, extraordinarily inappropriate.

I realize why the government has gone to drainage basins as opposed to borders, but the drainage basins erase borders, particularly—and I will speak from the perspective of British Columbia—where you have the north-south river systems. It applies primarily to the Great Lakes and does not really apply west of the Ontario-Manitoba border. It doesn't apply to rivers that cross the border, and of course it doesn't apply to coastal outflows. All of these are very serious concerns when it is being stated that this bill is going to prevent bulk water removal. If B.C. had written our water legislation this way, we would have tankers plying the coast in short order.

To the extent that this bill will work to discourage exports from the Great Lakes, it would put more pressure on the rest of Canada, in particular, from our standpoint, British Columbia, and of course Newfoundland. To the extent that the bill does reduce removals from the Great Lakes, it makes the rest of Canada's water more vulnerable to export pressures.

There are also concerns with regard to constitutional challenges to the bill. I'm not sure by what authority the Minister of Foreign Affairs takes over from the provinces the responsibility for the licensing of water. I of course understand that the federal government does have jurisdiction to sign and implement treaties in areas of federal responsibility, but it's not clear that this bill was needed to enforce the treaty already in place. It seems to raise constitutional issues with regard to federal-provincial jurisdiction over resources.

Gisborne Lake is a case in point, of course. Water is a resource under provincial jurisdiction under paragraph 92A of the Constitution. Absent NAFTA, provinces could safely consider what they were going to do with the issue of water exports. I've drawn many times on Dr. Tony Scott's three criteria. He is an international expert in water issues. He is an economist at the University of British Columbia. Way back in 1986-87 when this was first discussed, Tony Scott said that there are three conditions that would allow safe public policy contemplation of water exports. Those three conditions are, number one, that it would have to be limited to small-scale exports; for example, tankers. Number two, the term of the export contract would have to be a short term, maximum five years. This is of course to permit reassessment of the damage or the implications of those exports, what has been learned after the contract has been gotten into. If the export turns out to be problematic in terms of fishing, for example, or other sectors, the government can then step in. The third condition is to terminate or renew the contract at the option of the provincial government. So the three conditions are small scale, short term, and terminable or renewable at the province's option.

• 0920

Unfortunately, NAFTA strips away the ability of the province to contemplate water exports in a safe manner. Under the FTA and subsequently NAFTA, because water is not given an explicit exemption, such as raw logs and groundfish from the Maritimes, all of the conditions of NAFTA apply, including national treatment and investor provisions. The ability of the province to terminate that contract is certainly not there.

If we were to argue that there were overarching environmental reasons, we would have to share proportionately. We could not have any price discrimination between the two markets and we couldn't cut off normal channels of supply. The IJC, in its own report on this, recognized these concerns.

We can't safely undertake water export from coastal sources. We have no opportunity to give a sober second thought to these sorts of schemes. The rights are there in perpetuity. The federal government, in signing NAFTA and the FTA, has really tied the hands of the provinces in this area. Then we're saying, now save yourself. It's an impossibility to look at the implications of Gisborne Lake without addressing the problem of NAFTA.

The government has said that there was a three-part strategy: the IJC reference, the voluntary accord, and Bill C-6. These three planks are the federal government's answer to the dilemma created by the failure to exempt water from the FTA and NAFTA.

The IJC found that water exports do create dependency, that you can't turn them off. There are four recommendations, recommendations 10 to 13, and the conclusions that look at the pressures for removals and exports. There is, of course, recognition of the national treatment limitations of the agreements.

The voluntary accord failed appropriately, although there's no real note of that in the background documents. The legislation of the provinces can be changed by subsequent governments, and there is not unanimous consent amongst the provinces on the approach to take.

Of the three strategies the federal government has put forward to deal with this, Bill C-6 is the only piece of legislation we have. Because of the ability of the Minister of Foreign Affairs and the cabinet to basically specify exceptions for proposed subsections 11(1), 12(1), and 13(1), there is really no security in Bill C-6, even though it only applies to the Great Lakes. It doesn't offer any solutions for the rest of Canada.

I appreciate that the government is bending over backwards to legislate with regard to basins rather than borders. I can remember my mother saying what a tangled web we weave when first we practise to deceive. We've gotten ourselves into a situation, and now we're trying all sorts of ways to get out, but we're not taking the only route that will get us out. This deal has us so cowed we can't seem to think straight on a public policy level. We're coming up with all of these...I don't want to use the words “smoke and mirrors”, because I realize there's a lot of dedicated people who try very hard to deal with the situation we're presented with and try to come up with some way. But this way is just not sufficient. It doesn't do it.

• 0925

We talk about being afraid to say the word “exports”, and there's been so much misinformation. It is a complex issue. There is the statement that as long as we don't export the first drop, we're okay. That's simply wrong. The statement was that until water enters trade and becomes a good of international commerce, the trade agreement doesn't apply. That's not like saying until we export one chair, then all of our chairs are at risk. It means a chair is not subject to NAFTA unless that chair enters into international trade. If the chair is sold from Manitoba to B.C., obviously it doesn't apply. If it's sold into Washington State, it does. That's the same issue with water; it's on a case-by-case basis. It's not a question of once the first one happens, all of the rest are vulnerable.

That having been said, it does create vulnerability for a province. If Newfoundland were to export water from Gisborne Lake, then under chapter XI, the best provincial treatment, best in province, would be argued for other export opportunities.

The U.S. isn't afraid of using the “e” word. The eight Great Lakes governors were always able to veto diversions, and there has been an amendment to the Water Resources Development Act that explicitly allows them to veto exports. We have to use clear language on this issue, and we've gotten ourselves into a dilemma. Of course the flip side of that amendment is that if eight governors agree, for humanitarian reasons, or for irrigation reasons, or for power reasons, or whatever, they can explicitly agree to exports.

The problem is that water is a good under NAFTA under the investment provisions. Of course, water has entered into commerce. In the early 1990s there were several sales of bulk water out of the Columbia system that were not treaty water, that were beyond obligations in the treaty. Water is a good and that bridge has been crossed.

Another concern with respect to Bill C-6 and the national licensing it entails is that if there is an exception made under Bill C-6, that exception becomes the floor or baseline for all of Canada because provincial treatment then becomes national treatment. If you had a bunch of individual provincial standards and you raise that up to one national standard by putting in a licensing scheme, then it would certainly be argued, likely successfully, I would argue and as I am advised by people who are involved in constitutional trade law, that you could place other water at risk.

So while this legislation would perhaps provide some benefits to reducing removals from the Great Lakes if all of the problems we've talked about, I've talked about, were not raised, it offers no protection to the rest of Canada's water and it makes the problem worse for some of the provinces. The image that keeps coming to mind is I remember the child's fable about the emperor who was going to produce this beautiful suit of clothes. He went to his tailor and he was told this was the finest, most beautiful suit. He looked down and he was stark naked and nobody would say it.

The Chair: In our committee the emperor is the parliamentary secretary, so you can address your remarks to him. And believe me, you do not want to encourage this line of inquiry.

Ms. Wendy Holm: If this bill is being put forward as the way to save Canada's water resources, it is a very serious, very noble, and very worthwhile purpose, but it does not do it. It is like the emperor's new clothes: it just does not do what it says it's going to do.

• 0930

There is a lot of static.

[Technical difficulty—Editor]

The Chair: Go ahead, Ms. Holm.

Ms. Wendy Holm: I would close my remarks by urging this committee to take the leadership I think is required, that I know as a professional, as an agrologist, as a Canadian, as a mother, is required with respect to this dilemma we now find ourselves in.

There are four points to the strategy, four corners, four legs to the stool, of what must be done to resolve the dilemma we have been placed in because of the failure to exempt water from the NAFTA and the FTA.

In the material I provided to the committee, there is a briefing note, “4 Steps”. The first step is that Canada—and I realize there are problems with this—must place a federal moratorium on all water exports in vessels over 20 litres until we have a solution to this dilemma.

When Sun Belt's NAFTA chapter XI challenge is filed, and we are hearing all sorts of noises from California that they are moving forward with this, we have to put the United States on notice that we do not recognize the jurisdictional authority over water. We must seek an explicit exemption for water from all provisions of the NAFTA: goods, services, and investments.

I'm really glad. When we raised this issue back in 1987 every politician worth his or her salt stood up and said, no, water's not included; no, it's not included; no, it's not included; water's not included in the trade agreement. Pat Carney said it, John Crosbie said it, and everybody on record said it.

Because we never put it on the table, the exemption isn't a renegotiation; it's simply a clarification. If we say to the Americans, we need this exemption or we have to walk from the deal, I guarantee you the Americans would give us the exemption. America moves in her own interest. The trade agreement plus water, or the trade agreement, is way better, as far as the Americans are concerned, than no trade agreement at all.

We have to be prepared to go nose to nose with the Americans on this. We have to be prepared to play hardball on this. This is really the only way to solve it. It is the only way to solve this problem.

We are going around and around with all of these things trying to create a solution, and it's not working. The only way is to exempt it from the NAFTA. Then we need of course a federal water strategy to put in place the kind of regime with respect to the management of our water resources that looks at conservation and protection.

The Chair: Thank you very much, Ms. Holm.

I apologize to you for the short notice you got. The bill's been around for a long time, so we felt the community that was interested knew about it. We got short notice in terms of being able to get people out. But we appreciate very much your coming all this way. I want to assure you that you've raised some interesting things and we'll come back to your specific testimony.

We had the Council of Canadians here the other day. There are a lot of people drawing to our attention the level of the relationship between the free trade agreement and the way it inhibits things, the way you have. So we are getting that message. We appreciate you taking the time to come all this way to join us for that.

Before I go to Ms. Elwell, colleagues, we have one small housekeeping matter. We have an application from the trade committee for approval of a travel budget to go to Washington to discuss softwood lumber, which is yet something else we are discussing with our American colleagues. I understand from Mr. Harb that this was approved unanimously in his subcommittee—all parties were in favour. We'd like to be able to take it through our subcommittee this morning so that we can then take it to the House this afternoon.

An hon. member: So moved, Mr. Chairman.

The Chair: Do we have any trouble with that budget, colleagues? No. Thank you very much.

(Motion agreed to)

The Chair: I take it it's approved unanimously. I appreciate it.

Mr. Harb, you got your money and now you can go to Washington.

Mr. Mac Harb: Thank you very much, Mr. Chair.

The Chair: Tell them we want our water, too, while you're down there.

Mr. Mac Harb: Absolutely.

I would note, Mr. Chair, that in some of the caucuses there might be some members who are very interested in participating in the trip. We'd be more than happy to try to accommodate anyone interested in being part of the group, whether part of the committee or not. We would work with them. They can use their own means to travel there, but we will help them while they are there.

• 0935

The Chair: Can you use your—

Mr. Mac Harb: Travel points.

The Chair: You can't use the House travel points, but you could use the points you've accumulated by going say to Washington, as long as you go Air Canada or something like that.

Mr. Mac Harb: Yes. We would work with them on that.

The Chair: Thank you very much.

Mr. Mac Harb: Thank you.

The Chair: Okay.

Ms. Wendy Holm: Mr. Chairman, might I inject something very briefly?

The Chair: Yes, Ms. Holm.

Ms. Wendy Holm: With respect to softwood lumber, you might want to look at the minutes of this committee in 1987, when Ian Sinclair chaired it.

I appeared before this committee and argued that a market imperfection is not a definable government subsidy under the terms and conditions of the GATT as defined at the Tokyo Round. All of the bureaucrats were very excited by this. The testimony fully elaborates this issue, and it's a card we're not playing; so you might look at your own committee's records on this.

The Chair: Thank you. We appreciate that. Unfortunately, as you know, the problem is we have to persuade the Federal Trade Commission down in the States, and they only seem to drink their own bathwater, not ours.

Actually we're having a meeting of the Canada-U.S. parliamentary group this weekend. Believe me, on softwood lumber, the water issue—as you pointed out, we need the Americans' cooperation. We want to bring them in too. We have solid allies in the United States for dealing with water in an intelligent way and we have to make use of them as well.

Thank you very much for your recommendation.

Mr. Pat O'Brien (London—Fanshawe, Lib.): There are no softwood cards we are not playing, I can assure you of that.

The Chair: Exactly.

Ms. Elwell, we'll go to you, and then we'll open it for questions.

Ms. Christine Elwell (Senior Policy Analyst, Sierra Club of Canada): Thank you very much, Mr. Chair. My apologies for my unavoidable delay this morning and for interrupting Wendy Holm's testimony.

I'm with the Sierra Club of Canada, a national environmental group with five regional offices across Canada. We're involved in all water issues.

For the record, we'd be very interested in participating in discussions with respect to softwood lumber. Our view is the softwood lumber agreement should be extended and expanded. We're not in favour of free trade in softwood lumber. An exemption for the Maritimes is inappropriate. And finally, to say that export controls is a countervailable subsidy by the USTR is simply beyond belief. So if we have a chance to let you know our views with respect to this, we'd be very grateful.

We have been engaged in water issues at the provincial, national, binational, and North American levels. I've filed with your clerk a recent paper we've done for the North American Commission on Environmental Cooperation called NAFTA Effects on Water. It is now posted on their web page in the three official languages—not as yet but shortly—in French, Spanish, and English.

In this paper, we review a number of points from an environmental perspective. We review the current state of the unreliable scientific information that forms the basis of current water removals and use projects in all the jurisdictions within the Great Lakes. These decisions are based on old 1993 water levels and flows inventories that don't take into account scientific change, climate change, and NAFTA economic developments. The data that current use is based on is unreliable.

Secondly, we review current climate change impacts to the Great Lakes showing a 2.5-foot drop in lake levels by 2030, a mere 30 years away. The urgency of conserving this exhaustible resource is certainly upon us.

We also review the trade aspects of NAFTA, GATT, WTO, and investor-state mechanisms. I won't go into it because I take it you had quite a bit on this yesterday, and Wendy's touched on it today as well. But our general conclusion in the paper was that the current exceptions in the regimes on prohibitions of water removals and use, and triggers for notice of withdrawals, all hang on a legal fiction.

This legal fiction pertains to the exemptions for water incorporated into products such as agriculture, used in services such as hazardous waste treatment, and used in bottling. All of these exemptions are in fact huge loopholes where water is being used and removed from the basin. And I'm afraid there's nothing in Bill C-6 to defog this legal fiction that somehow water incorporated into products and agriculture and industry is somehow not a removal, even though it leaves the basin.

• 0940

The number one gap we found in current regulation of water in the Great Lakes area has unfortunately not been closed in Bill C-6.

I also file with you today a paper—

The Chair: Sorry, to interrupt you, but this was a point I think Ms. Holm made. Perhaps we could help clear it up right now...well, obviously, others will ask questions.

We were told by our experts that in fact when water is used for power generation or agriculture, it doesn't leave the basin, because it's incorporated in the the basin's overall ecological system. In power generation it obviously goes back into the river—that's not so complicated. In agriculture, some will be evaporated and so on, but I understood the whole point to be that it wasn't leaving the basin.

Now Ms. Holm—for the first time out of all the witnesses—told us this morning that the minister's permit would allow the export of water for the purpose of either agriculture or power generation. We've not heard this from any other witness. We've heard from our government witnesses that the permits given by the minister deal with issues like uses in Canada, such as water for the city of Toronto, running it through, or the use...in Canada.

In the history of Canada there's never been a permit for the export of water out of the basin on the basis of a minister's permit, unless the Chicago drainage canal would be covered—I don't know.

You and Ms. Holm have introduced a totally new concept here. Looking around the room, everyone seems to agree. We'd like you to—

Ms. Christine Elwell: The International Joint Commission's final report goes through this quite clearly. Water incorporated into products such as agriculture—and it's not only evaporation.... Water goes into your tomato and might go to Europe. It leaves the basin. Now you might say one tomato, so what? But the numbers are staggering. Or water used in slurries—as, for example, the situation in Kingston with the taking of the Tay River—while it's combined with maybe 5% of this chalky substance for paper, 95% of it is water, and it's going out in huge tankerfuls.

So there's this legal fiction that the IJC, Bill C-6, provincial legislation all have that says—

The Chair: Yes, okay, I hear—

Ms. Christine Elwell: It's a real issue here that we're not dealing with.

The Chair: Okay, now I understand that point.

I have to tell you I have a little problem with it, because we drink a lot of water ourselves. I think we're 98% water. So when we go across the border, we're exporting the water, if lots of us go. I don't think we should let the committee go, because they're going to take too much of our water with them. I have some problems with that.

As long as I understand it's incorporated in the product.... Ms. Holm's point was more that this might allow for the export of actual bulk water. The United States might say we need a lot of water for a generation project, something like the Columbia River basin negotiations, or a similar thing.

Ms. Wendy Holm: May I make a brief comment, since you asked the two of us on this one?

The Chair: I'm now interrupting our question period items. I was only trying to get it clear in my mind.

Ms. Christine Elwell: Two quick follow-ups from that, Mr. Chair.

First with, respect to electricity, while you might be returning the water, it's not in the same state. Often the temperature is escalated and it upsets and disrupts the ecological function.

Second, when you look at Bill C-6, no licence is required for normal municipal use, or for agriculture, or for industry. So it's not that the minister can issue licences that would incorporate water leaving the basin; no licence is required at all. It's even worse. I can show you.

The Chair: No, that's helpful. We're just trying to understand. I'm certainly not being critical.

Ms. Christine Elwell: Our main discovery for the CEC was this huge gap that allowed all sorts of water to be taken out of the basin and not accounted for. So we were very pleased to find out the Great Lakes Commission, as well as the IJC, was actively engaged in a scientific project to do a water-levels inventory to really get a handle on how much water is there, how much is leaving, good science. Based on good science you could develop appropriate policy.

All I'm flagging is that today, the way it is now, we're not using reliable data. We're not accounting for real removals in products and Bill C-6 doesn't close this gap.

• 0945

In addition to this paper, I also leave you with our five environmental reasons to oppose the FTAA, which we launched in Quebec City, and which also contains a section on water.

In the short time I have with you today, I'd like to emphasize the environmental aspects of the bill in three main ways. The first way is to agree with the tone.

Being framed as an environmental measure, the prohibition on removals is being framed as environmental protection, and we strongly support this approach. While reasonable people can disagree whether a ban on water removals in the natural state triggers trade and investment obligations, the best way to manage this risk, according to our thinking, is to clearly and firmly describe the measures as conservation measures of an exhaustible natural resource.

In our NAFTA Effects on Water paper, we outline the grounds to doubt the renewability of water, based on climate change modelling and based on the fact of water pollution from intensive livestock operations, hazardous waste, all sorts of things. In effect, water pollution is like a removal: you no longer have the same use of it as you did before.

The best counter to trade obligations is in fact that this is an environmental measure. If we're wrong that this won't trigger some trade obligations, and if they do, our best hope is to rely on the exemptions you find in trade agreements—for example, article XX under GATT incorporated into NAFTA, or the provisions of NAFTA. And to be able to get coverage under those provisions, you need to show that you're not only putting conservation on the table for others, but you're also putting it on the table for yourself. So incorporating some conservation measures within Bill C-6 would bolster the tone of it being environmental protection legislation.

With respect to NAFTA, we know we don't have the luxury of these general exceptions. The general exceptions of GATT are not incorporated into NAFTA's chapters on services or investor rights. The solution we provided to the CEC was that we need a binational executive agreement that would list water protection under 104 of NAFTA as a multilateral environmental agreement. Under that agreement, you can have bilaterals, and there are six of them. Three of them between Canada and the United States list a water protection executive agreement under 104, which would give you coverage from the obligations under services and investment. In that sense, you would have the luxury to clearly be able to discriminate between in and out of base in uses and proponents.

There are a number of ways I would suggest you might modify Bill C-6 to better capture the environmental content of this initiative. There are a number of modifications we would need to make.

Number one would be instead of or in addition to the Minister of Foreign Affairs being in charge of licensing and approving exemptions for prohibitions on water removals, the Minister of Environment ought to play a lead or at least cooperative role in this regard. When you look at the Quebec legislation, this is what they've done: it's the Minister of Environment who approves any exceptions, not the business side of the House.

Another modification we would make, as Wendy indicated, is we would narrow the scope of water base to include individual watersheds within the lake or within the river.

We would insist upon some conservation measures in the bill itself to trigger that this is indeed an environmental protection initiative, which would bolster your chances should there be a trade challenge.

We would also ask that all regulations and licensing that exempts the prohibition on water removals be subject to the Canadian Environmental Assessment Act.

We would also suggest the removal of the presumption that agricultural, industrial, and municipal uses have de minimis impact and are therefore not covered by licensing. There's no credible reason to believe that there are no environmental impacts related to those uses, whether cumulative or individual.

We would remove the presumption that exceptions are reasonable with respect to ballast water, bottling, or water incorporated into products.

• 0950

On ballast water, may I make a plea that if not in this bill, there needs to be federal legislation on ballast water. Indeed, the call is to have a binational agreement. If you can find some opportunity to do some work around that, that would be very much appreciated. The invasive species issue around ballast water and ships is critical, and the moment is now to try to engage in a binational discussion. A patchwork of provincial regulation or non-regulation is just not workable.

Another major recommendation we would make is with respect to the scope of the bill. It must include provincial obligations. The federal-provincial accord leaves too much room to the provinces to increase an unsustainable use and removal of water. Recent Supreme Court of Canada decisions have reaffirmed the federal role in environmental protection. This resource, water, is clearly an important resource, where there's a federal need.

Each provincial jurisdiction allows these same huge loopholes I've indicated, with cumulative impacts based on administrative regimes that lack the capacity and often the will to protect the water. In our paper we give you the example of Ontario taking water from the Tay River. We expose the lack of capacity with the Ontario government to actually be able to manage the environmental impacts around that.

So leaving it up to the provinces will not get the environmental protection we need. Without environmental protection of the water enshrined in federal legislation, we open up our vulnerability to trade challenges.

I guess I have one last comment before we get to the questions. Again, we look for the results of the Great Lakes Commission and the IJC's scientific reporting on inventories of water levels and flows. It's that basic science you need to be able to put together a comprehensive and workable document and legislative framework. So I guess my final comment would be to please keep in mind to review this. We expect results within maybe two or three years. Keep an open mind that you may need to re-examine this. It's likely you'll have to toughen it up.

Those are my comments, and I'm here to answer any questions you have. Thank you very much.

The Chair: Thank you very much, Ms. Elwell. We appreciate that.

I hope your colleague is well.

Ms. Christine Elwell: I'm looking for her. Is she still alive?

The Chair: If you can see her from the window, give her encouragement from us.

Mr. Casson, sir.

Mr. Rick Casson (Lethbridge, Canadian Alliance): Thank you.

Thank you both for being here.

Ms. Holm, there's an agrologist in southern Alberta, Roger Holm. Is he a relative of yours? It's spelled the same and everything.

Ms. Wendy Holm: No—not that I'm aware of.

Mr. Rick Casson: Interesting.

You made some very interesting comments. I'll ask you to clarify some, and maybe just go over....

You've indicated that the voluntary accord that was sought, I guess with the provinces—is that what you meant—has failed.

Ms. Wendy Holm: Yes.

Mr. Rick Casson: I'd like you to maybe explain that a little bit further.

You also said that NAFTA bound the hands of the provinces to do anything.

Ms. Wendy Holm: Yes.

Mr. Rick Casson: Maybe a little more on that.

What one province does as far as water exports would not affect another province, or would—

Ms. Wendy Holm: No, it would not.

Mr. Rick Casson: I needed some clarification.

On this whole business of licensing, we've talked quite a bit at the committee about that. You indicate a real concern that a licence could be issued. We're talking about food production, power production. So your concern is that licensing would allow exports of boundary water.

Ms. Wendy Holm: Yes.

Mr. Rick Casson: Okay. Then maybe just something on that.

Mr. Chairman, I don't know how much time she'll have for all of this, but....

On the definition of “natural state”, water in its natural state, what is that? Of course we heard the other day that the five drainage basins are indicated, but that there is a border between the countries, and it divides the basins. I think you indicated that it does not. You felt that the entire basin would be part of the system. Anyway, I'll leave it up to you to....

Ms. Wendy Holm: Okay. Let me try to go through that quickly.

The voluntary accord I was speaking about was the one when the provincial environment ministers were closeted in Alberta two years ago, I believe, the fall of 1999. The federal environment minister presented to them an accord, which he was trying to get their consent on. That accord failed. They did not sign it. It was a good thing they didn't sign it, in my opinion, because it was the drainage basin approach. First of all, it was voluntary, so there was no continuity or certainty. And secondly, it relied on macro drainage basins, five drainage basins, so British Columbia and California are in the same drainage basin under that definition. So it actually permitted north-south transfers of water; it enabled north-south transfers of water.

• 0955

The background material for this refers to this accord and says the provinces are still moving toward that. I don't believe there is unanimity on that approach. And it is voluntary. And no matter what the provinces say, it doesn't change the federal treaty obligations.

On binding the hands, again, absent NAFTA or the FTA, Gisborne Lake.... If the people of Newfoundland decided that they wanted to contemplate water exports through supertankers, and they did it in a wise and judicious manner, which I think would be following Tony Scott's three recommendations—small scale, short term, terminable or renewable at the province's option—after you keep looking at this and asking, does this make sense, okay we'll try it, does it still make sense, then those three options would make it safe to try.

Our province has taken a different approach and said no, but that's a provincial matter.

The feds have bound the hands of the province, in that the province can't go back with a sober second look at this; they can't terminate or renew at the province's option because of the rights conferred in the trade agreement, as long as there is a willing buyer and a willing seller. And particularly with water, because of the dependencies that are created, the government can't come in and disrupt that.

I could go on for a long time on that one, but it basically binds the hands of the province to undertake this safely. It says you can go but you can't stop. It's like putting somebody in a car with an accelerator and no brakes.

With respect to food production, you have to remember what the Americans' priorities are. Fair enough, water for irrigation is a hugely important priority for the Americans. Similarly, power. If you look at the Columbia Treaty, the Columbia Treaty is about providing irrigation water to the million acres in the Columbia basin.

The actual wording of the government's own background papers on this talk about imposing a prohibition on removal of boundary waters out of their water basins. It says that exceptions will be considered for ballast water, short-term humanitarian purposes, and water used in the production of food or beverages—e.g., irrigation. That's an exception to the prohibition on removals out of water basins. So the issue is not only irrigation within a basin; it is with respect to outside the basins.

If you look at the International Boundary Waters Treaty, article VIII:

The International Joint Commission shall have jurisdiction over and shall pass upon all cases involving the use or obstruction or diversion of the waters....

This was about managing these waters. It gives the order of precedence: domestic and sanitary, navigation, power, and irrigation.

When we use the words “used in the production of the food”, it sounds so nice, but we're really talking about irrigation, and some very large-scale irrigation. If you look at the factory farms in the United States, you're talking about very large irrigation needs. I'll give you an example. I'll go to Alberta and we'll forget about Bill C-6 for a moment.

One of the things we've always argued is the problem is the Americans can turn on the tap. Let's say we undertake an irrigation project in one of the western provinces to provide irrigation water to Canadian farmers. Because of climate change, because of many reasons, the province may decide we're going to bring this land into irrigated agriculture.

The American farmers across the border would be entirely within their rights to say “We have done these studies and have decided you have enough water, really, for both of us if you build this dam higher, if you do this, if you do that. We will provide the money to increase the size of the project and bring it down here. Our farmers would like to share in this resource too. You can't undertake this simply for the benefit of Canadian farmers. We would like to share in the benefit of this. So we want to see this be a larger project. If you're going to give irrigation water to Canadians, you can't just give it to Canadians if Americans want it as well.”

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The production of food is very political, and irrigation and agriculture certainly have a long-time interest in water from Canada. The wording of the International Boundary Waters Treaty I just read to you and the wording of the government's own background paper recognize that irrigation would be a possible exception for the prohibition of removals from drainage basins.

You talked about natural state. A river in its natural state is one that is not.... With the Columbia River prior to the Columbia Treaty—let's forget about the other little dams in it—a certain amount of water was delivered into Washington State from British Columbia in its natural state. Unfortunately, the river had huge freshets in the spring and then dropped down to nothing in August. So there was no irrigation—it was heat, wheat, and rattlesnakes. The Columbia Treaty asked Canada to impound that water and deliver it when and as the Americans needed it. That took the water from its natural state to a good. When you deliver that water on time, it becomes a good, because there is a benefit from the delivery on time, as opposed to over time, and the difference between natural state and a good clearly has to do with capture in that situation.

Drainage basins erase borders. The issue is Canadian sovereignty over water resources. When you argue a drainage basin in a country like Canada, the drainage basins cross the borders. If you say all of this can be within the same drainage basin, you have, in effect, erased the border on a policy level in respect of the management of that resource—not to say that the integrity of drainage basins is not important. We share a drainage basin with California. If you're going to say that movements of that water within drainage basins is fine, then you facilitate the continental sharing of water resources. Water has been on the top of the U.S. Army Corps of Engineers' wish list since the early 1950s.

We have found ourselves in this dilemma where we are spinning our wheels, getting into how many angels dance on the head of a pin with this kind of thing. We need an exemption from NAFTA. That's really the only thing that's going to fix this. Then the province can decide to look at water export proposals like Gisborne Lake safely. They can also call them back if they don't work. They can charge a price for it under NAFTA and FTA. If the Americans have a right to buy it, how much leverage does the seller of that have?

The Chair: Thank you.

Ms. Wendy Holm: I think that was all the questions.

The Chair: Madam Lalonde.

Ms. Christine Elwell: Could I just make a quick comment on that?

The Chair: I'm sorry, this has gone way over the time. We have a rule here, and everybody wants a chance to ask questions. If we allow one question to lead to a 20-minute answer, then the others can't get in.

Ms. Christine Elwell: What about one sentence for fact?

The Chair: One sentence.

Ms. Christine Elwell: The National Post says the accord has been rejected by Quebec, British Columbia, Alberta, Saskatchewan, and Manitoba.

The Chair: Thank you. That's the voluntary accord Ms. Holm was talking about.

Ms. Christine Elwell: The federal-provincial accord.

The Chair: Is that the same thing as the Canada Accord?

Ms. Christine Elwell: Yes.

The Chair: Anyway, we'll get an answer to that.

Madame Lalonde.

[Translation]

Ms. Francine Lalonde: Thank you very much for having travelled so far to be here today. You only had a short time to prepare for this meeting. I would therefore like to thank you for your two presentations, that I intend to reread several times. They complement each other.

I would like to come back to the issue of basins. This is a technical question but one which could become a political one. What do we have to do to ensure that the definition of basins does not take into account areas south of the border?

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[English]

Ms. Wendy Holm: You can't prevent it the way in which it's being approached currently. The only way you can prevent it is to accept the fact of the trade implications of water and deal with it from a sovereign basis on the trade level. You can't do it with a drainage basin approach. It is impossible, unfortunately.

[Translation]

Ms. Francine Lalonde: If I understand correctly, basins necessarily include those areas which may be south of the border.

[English]

Ms. Wendy Holm: In fact, the provincial accord cited five major drainage basins: the Gulf of Mexico, the Atlantic, the Pacific, Hudson Bay, the Arctic. That enables continental water sharing along those drainage basins.

[Translation]

Ms. Francine Lalonde: You're talking about the Joint International Commission. I have read the recommendations and I was struck by the fact that they were tabled by the provinces and the American States. Four of the six recommendations, including those dealing with exports and water conservation, were put forward by the provinces and individual American States, whereas those dealing with data collection for water measurement as well as those dealing with research and development were tabled by individual American States. The remaining recommendations, including those dealing with the actual issue of bulk water exports, for example, came from the provinces. The reason which has been put forward to explain this is that everything will be dealt with in a coordinated and timely fashion. There was a third adjective there but I've forgotten what it was.

When you read the recommendations, you will see that measures for conservation and also measures designed to ensure water quality have been built in. In terms of the definition of provincial jurisdiction—Im not talking about individual American States' jurisdictions here—water, as a resource, belongs to the provinces. If I am not mistaken, any attempts to link conservation and water treatment to exports, must be referred to the provinces. Under Bill C-6, the federal government is amending the implementation of the treaty and not the treaty itself. Therefore, the government is required to act within the confines of this treaty. This is why I believe that Bill C-6 puts us in a vulnerable position. I said that, before you did. Thats why I was smiling. The Joint International Committee and the treaty can be used as a foundation on which to build preservation and conservation measures. It's for this reason that I am amazed to hear recommendations calling for obligations to be imposed on the provinces.

I will wrap up here. I would like to hear your comments and any information that you could provide us on this. I believe that asking the federal government to take steps to provide better protection is not a good idea because past experience has shown us that this doesn't in fact work.

I wanted to give you three examples here. The government failed to provide better protection on the issues of fisheries, the unemployed and international negotiations. Consequently, I would have more confidence in the approach set out by the Joint International Commission, whereby the federal government would have only very restricted input. The Joint International Commissions approach would give the minister, as you have pointed out and as I did in what I have said, very major discretionary powers.

[English]

Ms. Wendy Holm: I think it's clear that water is a provincial jurisdiction. This is why a federal water strategy, which died on the order paper almost 12 years ago now, looked at trying to balance the federal-provincial jurisdictional issues and consider the rights of the province to enact water policy within a safe policy framework. The problem is that NAFTA makes a safe policy framework impossible for the provinces to undertake, and so you have to do the two things.

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British Columbia is a case in point. We banned water exports. We paid out the person who held the licence in British Columbia, and the chapter XI, we are told, is going to be coming forward, and as far as I can see, they are legitimately coming forward. It challenges the right of the province to act in a way that is inconsistent with the federal treaty. Of course, we can say no, as long as we compensate and compensate and compensate and compensate and compensate. We're putting the water at risk or the taxpayer at risk, and that's an impossible dilemma.

We have to bite the bullet and say, look, the problem is water's inclusion in NAFTA. We're doing all these things to try to not say the word “water”, not say the word “export”. It's silliness. We simply have to get water out of the NAFTA. We have to get an exemption.

[Translation]

Ms. Francine Lalonde: Would you and Ms. Elwell elaborate further on that? It is the first time that I hear the request worded in that way. I find it hard to swallow. What rationale can be used to ask for something like that, other than a relationship of domination?

[English]

Ms. Wendy Holm: We have a six-month out-clause. Out-clauses are in agreements to ensure that the agreement stays fair. Particularly when you have one party that has more power than the other, out-clauses are a very important way of ensuring that the agreement remains fair. We have an out-clause in the NAFTA and in the FTA. As I said, everybody stood up and said water is not included. They told the Canadian public water is not included in the trade agreement, and that is on record. It was very publicly stated by our subsequent trade minister.

Surely, Chrétien can go back to the United States and say we have a dilemma here. Our politicians didn't lie to the Canadian public. We clearly did not intend to have water included, and if by some jiggery-pokery it's in there, we've got to fix this. This is not a renegotiation, this is a clarification. We are on record as not wanting to include water. We've got to fix it, or we have one other option. Then we have to turn our back on the Americans and let them rage for a while, but in the end they would do it. What an empowering thing for Canada to do, to get this one right. It creates the opportunity then to go forward in other strong areas. It is leadership we need at the federal government level.

Ms. Christine Elwell: May I make a comment too? The basis in NAFTA for exceptions is weak. We have the 1993 statement of the three amigos saying water is not on the table, yet the same day the USTR issued a press release saying nothing in that statement changed a word of NAFTA. So there is a debate on how effective the statement is by the three governments, when they signed NAFTA, that water is not on the table.

I think one option is, as I've suggested, a bilateral executive agreement, using 104 of NAFTA. Call this an environmental agreement, throw it under 104, and test to see whether an exemption would work. The intent is to exempt not only trade obligations and goods, but also services and investment.

The other provision of NAFTA you could rely upon perhaps is 1131 in the investment chapter—and I know Chairman Graham knows this provision. This allows the free trade commission to clarify NAFTA law for the purposes of investor-state disputes, and in that clarification you could say water is not within the scope of investor-state disputes. It's clearly in the NAFTA agreement. It has never been tested yet. So there are a couple of options.

May I just comment on your concern that maybe the IJC recommendations are the best, and you wonder why they're directed at the provinces so much? I just reviewed my—

[Translation]

Ms. Francine Lalonde: I understand why, but I would like to know what you think about it.

[English]

The Chair: You're well over the ten minutes, so please complete this one, because we've got to move to the next one.

• 1015

Ms. Christine Elwell: Very quickly, the IJC recommendation is really not good enough either. It basically says that as long as there's no more than 5% taken from the Great Lakes, it's assumed to be a non-impact.... This is based on data that's old and reliable. Five percent of an ever-diminishing resource does not for a sustainable system make, so I wouldn't rely on the IJC recommendations either. I think you need to have a new binational accord that seriously looks at this and tries to carve it out from trade obligations as best as you can.

The Chair: Thank you.

Mr. Keyes, and then I'll go to Mr. Comartin.

Mr. Stan Keyes (Hamilton West, Lib.): Ms. Holm, for clarity for myself, is it water in its natural state that you want excluded from NAFTA?

Ms. Wendy Holm: I want water exempted as a good from the goods, services, and investment provisions of NAFTA. I want 2201.9 exempted.

Mr. Stan Keyes: I want to make it clear, because I think it's important, that back in 1993 it was made quite clear in a joint statement that water in its natural state is exempt from NAFTA—

Ms. Wendy Holm: Of course.

Mr. Stan Keyes: —and only when it becomes a product is it then subject to these....

I want to make that clear for anyone who's listening in on our committee today.

Ms. Wendy Holm: Just to clarify, the way the exemption would be done is to put 2201.9 on the exemption list.

Mr. Stan Keyes: There is an exemption. That's my point.

Ms. Wendy Holm: No, there is not an exemption.

Mr. Stan Keyes: For natural water.

Ms. Wendy Holm: No, there is not. I'm sorry, I don't mean to disagree with you, but there is absolutely no wording in the trade agreement that—

Mr. Stan Keyes: All right, we'll agree to disagree on that point.

The Chair: It sounds to me like you're disagreeing.

Mr. Stan Keyes: We'll agree to disagree.

Ms. Wendy Holm: Well, it's fact.

Mr. Stan Keyes: For greater clarity, Ms. Holm, you said 87% of Canadians are opposed to the export of water.

Ms. Wendy Holm: Yes.

Mr. Stan Keyes: What is your source for that proclamation?

Ms. Wendy Holm: I sat on a committee called Water Watch Canada in the 1980s, which actually included the now Governor General and others. We took a poll of the Canadian public—I can't remember now whose poll it was—and on the basis of that poll, 87% of Canadians opposed water exports and would think very unfavourably of any government that allowed them or contemplated them.

Mr. Stan Keyes: Okay, so we're talking about a poll that is ten years old.

Ms. Wendy Holm: Actually, it's probably 13 years old, but I would suggest that it is more of concern now.

Mr. Stan Keyes: It depends on how the question is put, and so on. But that aside, Ms. Holm, which of the regulations would, in your words, have the potential of undermining the bill, and how many of these regulations are there?

Ms. Wendy Holm: When you say “regulations”, you're speaking about...?

Mr. Stan Keyes: You said that the regulations have the potential of undermining Bill C-6.

Ms. Wendy Holm: Right.

Mr. Stan Keyes: I'm asking, which ones are they, and how many of them are there?

Ms. Wendy Holm: I'm going to answer that question, but I would just like to go back, because it's really not a disagreement.

NAFTA comes into effect jurisdictionally when there is a buyer and seller. Nobody buys and sells free-flowing rivers. Free-flowing rivers are not exempted in the NAFTA; it's just that NAFTA has no jurisdiction over them.

The word “water” is not mentioned in there. It's simply that there's no jurisdiction when there's not a buyer and seller in an act of commerce. It is when those occur that NAFTA applies.

With the regulations, there are two sections. One is under proposed paragraph 21(1)(d):

21.(1) The Governor in Council may, on the recommendation of the Minister, make regulations

(d) specifying exceptions to the application of subsections 11(1), 12(1) and 13(1);

Above that I also mention proposed paragraph 21(1)(c), describing the water basins or how those water basins are defined.

Proposed sections 11, 12 and 13 all state explicitly as well that they do not apply to the exceptions specified in the regulations. But those exceptions are not specified; it's just the power to create an exception that's specified in the regulations. So it's pretty wide open.

Mr. Stan Keyes: So you feel that we could actually sit down and define each possible occurrence that the cabinet might need to look at in order to provide an exemption if necessary or not necessary?

• 1020

Ms. Wendy Holm: I think exceptions allow the minister to completely undo the purposes of the bill. That is my opinion.

Ms. Christine Elwell: Correct.

Mr. Stan Keyes: But you're assuming that a minister would want to undo the purposes of the bill.

Ms. Wendy Holm: Well, I think, with all due respect—

Mr. Stan Keyes: The minister wouldn't be a minister long and wouldn't be part of a government very long if they started undoing everything they wanted.

Ms. Wendy Holm: That provides no real policy certainty.

Mr. Stan Keyes: There has to be some latitude here. We can't be listing every possible occurrence that might take place. It's an impossibility. There has to be trust in your government and cabinet.

Ms. Wendy Holm: It is very unusual for legislation to envisage undoing that legislation completely. The exceptions are usually thought of as specific—

Mr. Stan Keyes: Ms. Holm, I just can't agree with your idea that this kind of occurrence would happen.

In your Newfoundland example, you stated that Newfoundland could start to export its water, and then there should be opportunity to revisit the particular deal, or whatever, with wherever this water would be exported to, as long as it wasn't a smaller amount, and so on, and be able to revisit it again and again in order to evaluate the impact, and so on. But what you're talking about there is provincial jurisdiction.

You went on to say that it sounds as though the federal government then can't step in, in order to do something about that situation.

Ms. Wendy Holm: No. What I was saying is that the federal government has tied the hands of the province in that it cannot undertake the actions in the interests of the province to stop those water exports once they start. Once they start—and the IJC certainly even recognizes this in its own—

Mr. Stan Keyes: But we can't do that now.

Ms. Wendy Holm: I could go into much more detail, if you want.

Mr. Stan Keyes: The federal government can't step in now.

Ms. Wendy Holm: It's not the federal government stepping in. Absent FTA and NAFTA, the province had all sorts of policy options to deal with contemplating small-scale export, entering into it, and, if it didn't work, stopping it.

The federal government, by signing NAFTA and the FTA and not including a specific exemption for water, has removed the ability of the province to step in and, with due sober second thought, turn that tap off if it no longer makes sense. Under NAFTA and FTA, the rights to keep that tap on are between the buyer and the seller. What that does is put public policy at extreme risk. A province cannot contemplate an export, because exports are potentially forever.

Mr. Stan Keyes: Well, Ms. Holm, I appreciate you coming and I appreciate your presentation, but I think many of your arguments are based on leaps of logic.

Ms. Wendy Holm: I know this deal very, very well.

Mr. Stan Keyes: But unfortunately, in my humble opinion, many of your arguments are based on leaps of logic. I think we're going to agree to disagree on a lot of what you said.

Ms. Wendy Holm: Had I had more time, I could certainly refer you to many papers that go chapter and verse, and article and clause and subclause, into all of the reasons why what I'm saying now in summary is in fact true.

Mr. Stan Keyes: Okay.

In conclusion, Mr. Chairman, just as a statement, this bill has been around even since the last Parliament. Very little, if anything, has changed in that bill.

Ms. Wendy Holm: Exactly.

Mr. Stan Keyes: So given more time, something Ms. Holm has stressed....

But I want to make two things clear. One is that this bill has been around since the last Parliament, under a whole different number and letter, and so on, and so I don't want that to reflect badly on the chairman or this committee, because in fairness, Ms. Holm, your name was put forward by the New Democratic Party—

Ms. Wendy Holm: Actually it wasn't. It was by the Canadian Alliance. Thank you.

Mr. Stan Keyes: Okay, by the Canadian Alliance, over a week ago—

The Chair: And the NDP.

Mr. Stan Keyes: And the NDP, actually.

Your name was put forward to the committee over a week ago, and consideration is usually given by those who put names forward to contact the person and say, look, you might get a call from the clerk in a week to appear before the committee, so you might want to get yourself ready. So I don't want that to reflect badly on the committee or the chairman.

Ms. Wendy Holm: I certainly feel that I've prepared for this committee.

Mr. Stan Keyes: Oh, all right.

• 1025

Ms. Wendy Holm: I'm glad to be here. The point is it's for a very short time. I could go on for quite a while, chapter and verse, as to the problems. There are many people who would like to have the opportunity to appear before you.

Mr. Stan Keyes: I'm saying I don't want it to reflect on the committee that you're here in a rush. It's a lack of consideration by the parties who put your name forward. They should have given you the notice over a week ago, that's all.

Thank you, Mr. Chair.

The Chair: Thank you, Mr. Keyes.

Mr. Comartin.

Ms. Wendy Holm: Over a week ago is still not a great deal of notice, really.

Mr. Stan Keyes: It's better than the 48 hours you mentioned.

Ms. Wendy Holm: I wasn't confirmed. I didn't speak to the clerk of the committee until Monday. I was called on Friday.

Mr. Stan Keyes: I'm not going to go into the nuances, Ms. Holm. You could have been called over a week ago and told you might be called before the committee.

Ms. Wendy Holm: I'm saying it is my pleasure as a Canadian to take the time out of my schedule to come here unpaid. It is a very short notice.

Mr. Joe Comartin (Windsor—St. Clair, NDP): I assume the last exchange wasn't part of my time. It was attributed to Mr. Keyes rather than to me?

The Chair: There's an exemption in the bill for the amount of time.

Mr. Stan Keyes: I was here on time, though, Joe.

Mr. Joe Comartin: I was here when she started as well, Mr. Keyes. I think I paid more attention to her than obviously that side of the table did.

Mr. Stan Keyes: On division.

Mr. Joe Comartin: Granted.

Ms. Holm and Ms. Elwell, if I understand both of you, you feel we're going to lose the Sun Belt case?

Ms. Wendy Holm: If Sun Belt were brought to a chapter XI, I would certainly feel we would lose it, yes, absolutely.

Ms. Christine Elwell: Probably what's even worse is we won't know the position government took behind those closed doors.

Mr. Joe Comartin: I think you both in different ways are saying we have to get an agreement with the Americans on exempting water, a blanket exemption. Am I correct?

Ms. Holm, did you agree that section 104 under NAFTA was the appropriate way to go?

Ms. Christine Elwell: It's one way.

Ms. Wendy Holm: Yes. Any architect of the bill would be able to tell you in fairly short order that you have to take it out of goods, services, and investments.

Mr. Joe Comartin: Ms. Elwell, you mentioned a bilateral agreement. What about Mexico? Don't they have to be at the table as well?

Ms. Christine Elwell: It's not necessary. Under section 104, you can have a bilateral executive agreement. You don't even need to amend NAFTA. It doesn't have to go through Congress. It's an exchange of letters and could be bilateral.

Mr. Joe Comartin: Assuming the Canadian and American governments did so, what's to prevent a private investor from bringing a claim?

Ms. Christine Elwell: Section 104 exempts all other inconsistent NAFTA obligations. It would include chapter XI on investor rights.

Mr. Joe Comartin: Can we do it retroactively?

Ms. Wendy Holm: Sure. Oh, can we do it retroactively?

Mr. Joe Comartin: Yes.

Ms. Christine Elwell: I don't know, I'm sorry.

Ms. Wendy Holm: I think we would have to distance ourselves from chapter XI by saying the problem we're dealing with is getting this out. We never intended to put water on the table and we won't be part of a chapter XI. These things come down to politics as well as hard ball.

The Chair: Surely the witnesses would agree we could do anything in terms of interpretation in the writing of the treaty retroactively, if in fact the parties to the treaty agree. You would need the three governments to sign on.

Mr. Joe Comartin: I'm not sure, Mr. Chair, given some of these strange rulings we've had under chapter XI in the sense of the expansion of the treaty, whether we wouldn't get a commission or a panel saying you can't do this retroactively. I was looking at whether there were any known exceptions.

Ms. Wendy Holm: By retroactively, I was thinking you would want to get us out from under the dilemma with Sun Belt. Is that what you mean?

Mr. Joe Comartin: Yes.

Ms. Wendy Holm: I think it would have to be dealt with and negotiated. I think we should first say, if it comes to that, we don't accept water is a good. We have to get this clarified. We're not going to be part of a chapter XI, nor be bound by any chapter XI decisions. We clearly did not include water in the deal, and if it is included, it has to be so.

The Chair: I don't want to use your time, but it seems to me the problem would be under chapter XI. The problem is the definition of expropriation is too broad, or broader than most of us in international law felt at the time it should be, and which we are now discovering. That's the issue we're all looking at.

I would think the problem, even if all three governments rewrote the treaty, with any cases that have been started up to that time, and Sun Belt would be one, is the United States would probably run into a problem where the constitutionality of its revising retroactively would be taken to its courts.

This is something that would be wildly complicated, I quite agree with you.

Ms. Wendy Holm: It's better to deal with a small complication where we can draw the lines around it.

The Chair: Yes, I agree. I'm not trying to get into that. We're just all trying to understand this thing.

• 1030

Ms. Christine Elwell: Presumably it's 113.1 that allows the three governments to clarify language. That rule is there until the decision comes out, and we don't have a decision yet. So technically there's probably still time.

Mr. Joe Comartin: Good point.

To follow that up, if the Americans say, no, we're not going to agree, the six-month provision allows us to back out, requires us to back out of the whole treaty.

Ms. Wendy Holm: Yes, but I don't think we'll ever have to do that. I really don't. The Americans get an awful lot of assets under the trade agreement, and I think they'd figure, if we give it up here, we'll get it another way. But that's okay. I don't think it would mean sacrificing the trade agreement at all.

Mr. Joe Comartin: Mr. Chairman, I missed the last committee meeting. Did the Tay River situation come up?

The Chair: Yes. The Council for Canadians witness, Mr. Dunn, mentioned that in his view—without putting words in his mouth—the Tay River was allowed by the Province of Ontario under certain environmental conditions, which in his view were not satisfactory, and that might establish a standard for the Canada-wide accord, which would then apply and would be difficult to deal with if a chapter XI case or something came up. That's the way I understood his evidence.

Mr. Joe Comartin: Did we get information that there's another hearing going on and chapter XI is going to be taken into account?

The Chair: No, we didn't. There was a lawyer here from the company involved, who said they did go through extensive environmental reviews, but I didn't feel that we should get into that at this committee hearing. We're trying to deal with this bill in its narrow scope. This is only one part of a tripartite strategy. One of the problems with all the testimony we're getting is that we're jumbling up everything at once, and I'm trying, for the purposes of the bill, at least to keep it segmented, so we can focus on the other issues at another time. I'm not saying they're not relevant, but this is a bill of limited scope.

Mr. Joe Comartin: I have to take exception to that, because as I understand the situation—and I haven't seen the ruling—there was a ruling about two weeks ago from that tribunal in Ontario determining that in fact they were going to look at NAFTA in the subsequent hearing. The hearing they're considering now is for a huge volume increase in the water.

The Chair: Which is that tribunal?

Mr. Joe Comartin: I don't know the name of it.

Ms. Christine Elwell: It's the Environmental Assessment Appeal Board. It's not a NAFTA chapter XI case. It's within the Ontario jurisdiction.

By the way, it is relevant to your bill here, because it's an example of these huge exceptions where water is contained in products. In this case it's a slurry. So you have huge amounts of water leaving the basin because of an exception that's in this bill too.

The Chair: That's interesting. We had not understood it as being relevant, because it was the use of water within the province. Now you're saying the same principles from that could be applied to water—

Ms. Christine Elwell: The water from that slurry is going south—that's not out of the basin.

The Chair: But wait a minute. I'll have to get an answer from the experts, but it's not boundary water, because it's a north-south flowing river. So it isn't covered by this bill anyway. That's one of the great problems we're having with this bill. It is very narrow in its scope, and without a map in front of you showing exactly what it covers and what it doesn't, it's quite difficult to get your mind around what it's trying to do. That's why I think we all have to keep in our minds that it's only one part of a three-part strategy, as Ms. Holm said, and we're trying to examine whether this strategy in itself is satisfactory, and then we'll focus on the others.

Mr. Joe Comartin: But where it's relevant, Mr. Chair, is that you could have exactly the same type of operation set up on the St. Lawrence, on one of the Great Lakes, the same type of request then being made to the Minister of Foreign Affairs for a licence. So the ruling that may come out of that tribunal would certainly be quite interesting, I think.

The Chair: I agree, and I understand what your point and Ms. Elwell's point is on that.

Ms. Christine Elwell: If I may, I have one other point of clarification. The Ontario government relied on Parks Canada waterflows as part of the channel, from the St. Lawrence basin water, from the Rideau Canal, Parks Canada. So it's Parks Canada data that provide the scientific basis for the Ontario government's saying yes.

The Chair: Well, thank you. That's interesting.

Did you have any other questions?

Mr. Joe Comartin: No, thank you.

The Chair: Thank you.

• 1035

Mr. O'Brien, then Madam Marleau.

Mr. Pat O'Brien: Mr. Chairman, I'd like to thank the witnesses. I'm not sure I share your views—or certainly to some extent I know I don't. But I want to probe a couple of things just briefly, because I want to share my time with my colleagues, if they have questions.

Ms. Elwell made a point about exporting water. Are you really suggesting that the Government of Canada prohibit the export of legal products that contain water? That seems to be the logical extension of what I think you said.

Ms. Christine Elwell: No, but I don't think it should be unregulated.

Mr. Pat O'Brien: So you're not suggesting we ban the export of legal commercial products.

Ms. Christine Elwell: I suggest it's inappropriate to not have any regulations about water taking, if it's for a product, agriculture or hazardous waste treatment. To say that water that's taken and used in these circumstances is nobody's business, and not a matter of a sustainable inquiry, is inappropriate.

Mr. Pat O'Brien: Okay. I got my answer and it's no. Thanks, Mr. Chairman.

Ms. Holm, you wove a couple of anecdotal things in there, and I'd like to pick up on one of them.

You talked about a tangled web. What is the point of that comment? Are you suggesting this bill is designed to deceive somebody? If so, whom and how?

Ms. Wendy Holm: I think we have a problem that we've all known about for 14 years.

Mr. Pat O'Brien: Is this bill designed to deceive somebody? If so, whom and how?

Ms. Wendy Holm: In the verbiage around this bill, the amendments will prohibit the bulk removal of water from Canadian boundary waters. The average Canadian, understanding that, feels that is the answer. They feel—if I can finish—

Mr. Pat O'Brien: But you're not answering my question, with all due respect, Mr. Chairman.

Ms. Wendy Holm: The federal government has to assure Canadians that our water is not at risk. The legislation that was called for was an export ban, a moratorium on exports, and then appropriate steps to resolve the problem. The government is taking steps, but it's not resolving anything. The IJC reference does not resolve anything. The provincial accord does not resolve anything, and this bill does not resolve anything with respect to protecting Canada's water.

Mr. Pat O'Brien: I appreciate that. I don't like to interrupt you, but I do control the time I'm allowed to ask questions, as we do on both sides. You're not answering my question, with all due respect.

I mean, was it just rhetorical flight—and it's a serious question—or are you seriously suggesting Bill C-6 is designed to deceive someone?

Ms. Wendy Holm: Yes.

Mr. Pat O'Brien: Okay, whom?

Ms. Wendy Holm: I think it's designed to deceive the Canadian public that there is a protection on Canada's water. I think the Prime Minister and the Canadian government realize the dilemma they're in, and they simply won't bite the bullet and do what needs to be done to save Canada's water.

Mr. Pat O'Brien: Okay. How is it designed to deceive the Canadian public? I knew I would get you to answer the question eventually.

Mr. Wendy Holm: Mr. O'Brien, I'm not a hostile witness here. I answer all questions, and I don't need to be badgered about it.

Mr. Pat O'Brien: You took a long time to answer that first one, but could you answer the second one? My question is simple. I don't want to be a hostile questioner, but I'm not getting a direct answer.

We finally got the direct answer that you feel it's designed to deceive the Canadian public. I find that incredible, but you're entitled to your view. Now my direct question, in an unhostile way, is how?

Ms. Wendy Holm: First of all, I would like to say that I think this three-plank strategy is the result of a government that's not prepared to stand up to the Americans and say we want an exemption for water. The three-plank strategy is being dressed up and spun out to look as though it's going to solve the problem.

I'm sure the drafters of this bill and many people in Environment Canada and others, who have been grappling with this dilemma since 1988, are not deceptive individuals. But the sum effect of this, because the Prime Minister is not prepared to bite the bullet and do what needs to be done, is that we are creating this smoke-and-mirrors situation. Look at the wording. Everything that's been sent out on this says this will solve the problem, and it won't solve the problem.

Mr. Pat O'Brien: Okay. So I take your answer to be that through deceiving-type wording or deliberately ambiguous wording, the bill is deliberately attempting to deceive the Canadian public.

• 1040

Ms. Wendy Holm: The bill is a sieve. The bill does not do what it purports to do. Because of its exceptions, its limited scope, and its application to the Great Lakes, it does not solve Canada's problem, with respect to water exports, absolutely.

Mr. Pat O'Brien: I guess that's as close to an answer to my second question as I'm going to get. I have to say, as a short statement, it's incredible to me that a witness would come before this committee and say that the express purpose of a government bill was to deceive the Canadian public.

Let's disagree on the wording or on the.... But quite frankly, I have to be candid and tell you I think that calls into question the usefulness of your testimony, at least for me. But you're entitled to your opinion.

Thanks, Mr. Chairman.

The Chair: Thank you. We'll take that as a statement, rather than a question.

Mr. Pat O'Brien: It was intended as a statement.

Ms. Christine Elwell: There must be a full moon today or something. Is the moon in Aries, or what's going on here today?

The Chair: Mr. Casson is next, then Madam Marleau, and then Mr. Paradis will wrap it up for us.

Mr. Rick Casson: Thanks, Mr. Chairman. Hopefully we're all entitled to have our opinions and express them freely.

I'd like to get back to a statement you made, Ms. Holm, about irrigation. I think this could probably apply to more things if we in Canada defined different uses for the water we have—if we want to expand irrigation acres, use water that's flowing down the rivers for power generation, food production, or whatever you want. You kind of intimated that if we did that, our trading partners would have every right to ask for the same benefit.

The scope of the bill, again, is a problem here, because we are dealing with boundary waters. If we had a boundary water and we had an agreement with the Americans to take more out for irrigation, then the agreement would already be in place to do that. So how would that statement apply to the situation that if we expanded our irrigated acres in Canada, our trading partners—being the Americans—would have the right to demand more acreage as well?

Ms. Wendy Holm: I think it applies as well in the Great Lakes instance as it does in the Canadian context, and I agree. That's why I sat for many hours trying to put together the connections between these. It is because this bill purports to solve the problem for Canada that we have to look at the rest of the areas that are left vulnerable.

That having been said, the IJC International Boundary Waters Treaty Act envisages the productive uses of water, such as power, agriculture, domestic uses, sanitary uses, and navigation. The Canadian explanation of the bill specifically envisages exceptions for allowing out-of-basin withdrawals for agriculture.

All I can say is that in the situation of climate change, I'm sure, with the Great Lakes, the eight governors are very well organized around that. Part of what underpins some sense of optimism for the Great Lakes is the American involvement in the future of the Great Lakes, and all of the other agreements that are in place there. But by the same token, the bill specifically allows for the exceptions for agriculture. So it is of concern to me, even in the Great Lakes example, but it is of greater concern in the larger Canadian context.

Mr. Rick Casson: Thank you.

The Chair: Thanks, Mr. Casson.

Madam Marleau.

Ms. Diane Marleau (Sudbury, Lib.): I want to say that, speaking for myself, and I'm sure for a lot of Canadians, we share your concerns. There's a lot of concern about the future of water here in Canada. While I don't believe that this bill has been put together to deliberately fool anybody, the reality is it has a very small scope. Even as a member of the committee, I was disappointed with the scope of the bill. It does so little, frankly, to change what's already in place.

So I would ask, is there some wording directly in this bill that you think should be changed? There are only a few clauses, and we will be doing clause-by-clause. You're right, the bill only addresses these transboundary waters that are already being addressed in other ways. I'm not even sure if it changes what's in place very much. Some say it does.

• 1045

But there's another issue that I think needs to be looked at, and there's one question I'd ask you in terms of that. There has been a proposal for a committee to study water. Now we're waiting for the agreement of other parties and it has nothing to do with this committee. I really believe that many of your concerns have to be addressed, and I'm very hopeful that perhaps in the fall we can have that kind of a committee in the House of Commons to really look at all of the issues you've brought up, because it's a concern to all of us. I don't think we on the government side or anyone in the opposition takes it lightly. So while we may take offence to your saying this bill deliberately misleads, I don't think there's anything at all there that's been made specifically to mislead. But it is a very weak bill, you're right.

Perhaps if we're guilty of anything it's of wanting to work too much and too closely with the provinces. But I think we need to do this, to show this willingness, at least in the first instance. As we study the issues, then perhaps we have to look at the federal government putting in an overarching level of governance for water that has a lot more power than what this bill would ever have.

I share many of your concerns, and the minister shares them, the Prime Minister shares them—this is not something that those of us on this side are not aware of and don't care about. The sooner we look at an overarching way of managing all of our water resources the better.

Ms. Wendy Holm: I don't like having been baited to come up with the statement, but I will stand by it. Although it was not in my presentation to this committee, when you have verbiage around the bill and the way a bill is presented that says this is what's going to ensure that Canada's water is protected, it's misleading. That is misleading, and I think I made it clear this is a dilemma that Canada has gotten itself into because it does not want to take the perhaps more obvious and harder course that I think this government would be cheered for taking, which is to solve the problem with water's inclusion in the NAFTA and the FTA.

With respect to what you can do to tinker about the edges with this bill, it's very difficult. You have wide open exception doors there.

Ms. Diane Marleau: They're there already.

Ms. Wendy Holm: Yes. The creation of a national licensing scheme raises the spectre of.... The MAI is what said whatever happens in one province applies to all. The MAI of course didn't pass. The NAFTA says it's provincial. If you have exports in a province, then there are rights under chapter XI that are restricted to that province, not across Canada. But what this bill does in its licensing regime is it opens the door for an argument that if it happens in one place, it can then be extended. That is of great concern to me. It places additional pressure on British Columbia and other provinces that have water to export. So I don't know what you can do, I'm sorry.

Ms. Diane Marleau: But the challenges exist whether we pass this bill or not.

Ms. Wendy Holm: Absolutely.

Ms. Diane Marleau: So this bill doesn't address it, and it isn't designed to address it either.

Ms. Wendy Holm: But it does say in all of the wording, and this to me is a very important point—

Ms. Diane Marleau: I think it's been a good thing, even if I personally don't believe it does very much. I think it has at least allowed us to listen to people like you; it has allowed you a platform to bring your concerns forward, even though they are not particularly included in the scope of this bill. I think the more we have a chance to discuss these issues in the open the better. And I hope we can continue to work together because I do believe that water is going to be one of our best natural resources in this century, and we'd better, as a country, come together and deal with it.

• 1050

Ms. Christine Elwell: Thank you for those words.

May I also add that the specific recommendations we made looked at providing a role for the Minister of Environment and making the exception subject to the Canadian environmental impact assessment. You could have clauses in here on licensing that say ordinary use is for domestic purposes; or for the exceptions contained in the regulations, you could say provided they're for sustainable use. You could add some language that would bolster the environmental nature of this bill, which would be very helpful should you have a trade problem.

Ms. Diane Marleau: Maybe we'll look at that. We're going to be doing clause-by-clause, and at that point we might look at some of your suggestions.

Ms. Christine Elwell: Invite us back.

Ms. Diane Marleau: That's two weeks from now.

The Chair: Without encouraging Ms. Elwell, who is an extraordinarily energetic lawyer, I might suggest that if you have a specific recommendation for an amendment, you might want to actually get it prepared in a way you could give it to one of the members, with the proposal as an amendment. Otherwise, to suggest it to us and then have us come into the room with it in our heads, not in concrete form—it won't happen. So if there's a specific amendment, you might want to speak to one of the members to see if they would be willing to sponsor it and do it.

Ms. Christine Elwell: Maybe Pat.

Mr. Pat O'Brien: I tried to get from our witnesses how the bill tends to deliberately deceive. I don't want to be part of that. I didn't get an answer today. Maybe I'll get one in writing.

The Chair: Right, thank you.

Mr. Pat O'Brien: I'll look forward to it.

[Translation]

The Chair: The parliamentary secretary, with his clothes on, I note.

Mr. Denis Paradis (Brome—Missisquoi, Lib.): Thank you, Mr. Chairman.

First of all, I would like to welcome the witnesses, and particularly Wendy Holm, who, as is the case with many other witnesses who appear before this committee—and it is important that I point this out—travelled right across the country. Whether or not one agrees with the presentations that are given by witnesses, we must remember that these people give of their time to come and explain their point of view. I commend all of the witnesses who travel from near and far to appear before the House of Commons committees, Mr. Chairman.

And now, to the business at hand. I, personally, feel that the bill is important. It does not answer all of the questions, and that is not what it is supposed to do. There is a lot of talk in the media about water quality, whether it be in Walkerton or North Battleford. There is also a lot of discussion on the issue of protecting our water.

Last summer, a group of members travelled to the Okanagan Valley, in British Columbia. We hosted the mayors representing all of the cities in the region, who told us they felt it was important that the various levels of the government protect our water, which is a natural and environmental resource. We told them we would try to make some progress with Bill C-6, but what we must not forget is that the government of Alberta can bring about concrete results that would also allow the people of British Columbia to preserve their water. This is a constant concern, something that is of interest to all Canadians, from coast to coast.

As to Bill C-6, I would like to raise a few points that require clarification. Firstly, the principle of Bill C-6, which, through its scope, is, of course, not intended to take the place of the provinces, but rather to take the place that the Constitution and the treaties have granted us within the Canadian framework. It is assumed that, at a given time, this would represent a prohibition, a restriction on the massive removal of water from our Canadian lakes and basins. But, once again, we must not forget that we will need a federal-provincial agreement, we will require the support of the provinces so that each one can undertake this within its own jurisdiction.

I would like, as an aside, to mention that the licensing system that has been provided for has absolutely nothing to do with the bulk removal of water. These are not licences to remove a small amount or a larger amount. That has nothing to do with it. The permits provided for in clauses 11 and 12 are a way to legalize what has been taking place since the treaty was signed.

Since the treaty came into force, Canadians and Americans have agreed that if there is a dam on one side or the other, then each country must give its consent through the International Joint Commission.

• 1055

We might think that the use of licences means something else, but that is not the case at all. It is simply in order to provide for cases where there might be dams or other types of obstructions. Previously, there was an exchange of correspondence; authorization or agreement was granted in a letter. From now on, licences will be used instead of letters. It has nothing to do with the removal of water.

In support of what I have just said I would quote the beginning of clause 13, which deals with prohibition, and where it says Malgré l'article 11, ÀDespite section 11ä. Therefore, clauses 11 and 12 have nothing to do with what is called bulk removal. That is my first point, Mr. Chairman.

The second point, that I dealt with briefly, earlier, involves the essential nature of co-operation with the provinces. Everyone says: if we want it to work, then everyone must be onside. That is important. We say that it covers the Great Lakes, but remember that the Great Lakes represent between 20% and 22% of the world's fresh water. It is really quite something, Mr. Speaker, to say that we hold 20% to 22% of all of the fresh water in the world. I would like to ask our witnesses to comment on that later, Mr. Speaker.

The third and final point is the following. Of course, this bill involves water in its natural state, that is to say, the water that is in the basins, not the water that is outside of these lakes or rivers, which is not a commodity. That is why we need the support of the provinces. It is because this is an environmental resource.

Everyone has to be involved; this bill requires co-operation. Let us take Newfoundland, for example. The province could, at some point, authorize the bulk removal of water from a lake or other body. It would be more advantageous for the province to work along with us in trying to prevent the bulk removal of water. We will try to convince the province to do so. But, some day, it could still decide to allow some water to be removed.

We must understand that when water is removed from its natural basin it can become a commodity. But, when it is in a river or lake, it remains an environmental resource that a province might want to protect by prohibiting its removal, in the same way that it can put an end to logging once it feels that enough trees have been cut down. Only the provinces can manage their own natural resources.

No one can force a province to cut down a certain number of trees unless a contract has been signed. That relates to contractual obligations, which is another story. If a contract binds both parties for a five- or ten-year period, that is another matter. When it comes to natural resource management, the provinces are in charge.

Mr. Chairman, this bill includes everything, it seeks to ensure that everyone will operate in the same way, and it is important for all Canadians.

Maybe this should have been a question rather than a comment, Mr. Chairman.

[English]

The Chair: We have about two minutes left, and I wouldn't mind making a statement myself.

Ms. Wendy Holm: This is an example. Mr. Paradis, you said that it prevents removal of water from Canadian drainage basins. It's boundary waters, which is an extremely small subset of Canadian drainage basins. The entire western half of this country is not touched by this bill. It's very easy to say it prevents water removal from basins, but it doesn't. Boundary waters are a very small subset of that.

When you talk about proposed section 13, proposed sections 11, 12, and 13 all say their particular subsection (1) does not apply in respect of exemptions specified in the regulations. So you can have exemptions for the licensing under proposed sections 11, 12, and 13—all envisage exceptions. Proposed subsection 13(4) says:

Subsection (1) does not apply in respect of the exceptions specified in the regulations.

So all of these are there until they are accepted.

This is not the business of this committee, but if Gisborne Lake goes ahead, it is almost impossible for the province to come in and say no, if both the buyer and the seller have an interest in continuing that. It is a longer discussion than we have time for here. I am more than happy to send you chapter and verse as to why that is.

Poor Newfoundland, poor British Columbia, in their ability to act in the interest of their residents, their hands have been tied by the federal government's entering into NAFTA and FTA without an exemption for water, and that's the problem. Even the IJC recognized that.

The Chair: Okay.

• 1100

[Translation]

Mr. Denis Paradis: Mr. Chairman, if I may, I would simply like to say that we have the regulations here before us. I simply wanted to mention that to the committee members. The government doesn't always take the trouble to introduce the regulations along with the bill. But we do have the regulations available to committee members at this time and I simply wanted to point that out.

Mr. Chair: Yes, absolutely. We have the regulations.

[English]

I'm going to close the hearing now, because we have to go. But I just want to leave two points with the witnesses.

I subscribe to what Madame Marleau said. Everybody is concerned about the problem. I wouldn't go as far as she does in saying that the bill doesn't do much. I think the bill establishes an important principle, but I'd say it's very limited in its scope. Obviously, we appreciate the fact that it deals with boundary waters. It doesn't deal with the west coast, it doesn't deal with the internal waters of the province, and things like that. As Ms. Holm said, I think accurately, it's part of a three-pronged strategy. We want to make sure that at least this part of the strategy is accurate and good, and we'll worry about the other parts later. We have to focus on all of them.

I would say there are two points you've left with me that trouble me. Both of you and other witnesses have brought up the relationship of NAFTA, chapter XI largely, but also other aspects. Our own parliamentary library researchers drew to our attention in their report to us the statement of the Governments of Canada, Mexico, and the United States that we've referred to. Ms. Elwell, you seemed to give that the back of your hand by saying, oh, well, even the USTR said.... An international lawyer might say, well, that may be good, because it firms up what's already in the treaty. So you could read that both ways. But I will be asking our legal experts to tell us, in terms of the Vienna convention and the law of treaties, what the weight of this statement is and to what extent we can rely on it as an interpretative vehicle in assuring us that NAFTA does not apply to water in its natural state. There may be other problems, but at least we can address that one.

The other thing I'll be asking our legal advisers to do when they bring the bill forward is address, I think, Ms. Holm's point—it's the first time I've heard it here. There's no requirement for a licence for water to be used for power or irrigation purposes, and my understanding was that was just internal. You seem to suggest—and I'm just going to some of these more exotic schemes, like the Grand Canal that would go to Arizona to deal with their aquifer problems—because it's an irrigation problem, it wouldn't be covered. If that's what you're suggesting, I'd really like to get some advice on that, because that seems to be a big issue.

Is that what you were suggesting to us, that if the United States came to us and said they wanted to drain one of the Great Lakes or use some of the water in one of the Great Lakes for the purpose of irrigation, or for power, and it's going to require bulk exports of water to do it, that wouldn't be covered by the bill, or by the International Joint Commission, or by the treaty, and things like that? If that's what you're saying, I think that's a serious concern. But maybe I'm misinterpreting what you're telling us.

Ms. Wendy Holm: We might disagree and you might have another opinion on this, but my point was not that it's a problem that they're not licensed—although I take your point on it. My concern was that they are acknowledged uses of the water—power, irrigation, domestic and sanitary, ships—

Ms. Christine Elwell: Ballast.

Ms. Wendy Holm: —ballast, transportation. These are the priorities the United States and Canada put on the uses of water, and these three uses are envisaged as exceptions for removal of water from the drainage basin. I don't think the licensing scheme does that much one way or the other. So it wasn't so much that they weren't licensed, it was that they are—

The Chair: We'll ask for comment and clarification on that important issue. You may or may not accept that, whatever the government says, but at least it will give us all a platform for better understanding and for future discussion of these issues. As Ms. Marleau says, this is not an issue that is going to go away.

Ms. Wendy Holm: I did not disagree that waters in their natural state are not covered. That's a tautology, we know that. So that wasn't a point of disagreement on my part.

The Chair: I see. The argument is more, what is water in its natural state?

Ms. Wendy Holm: No. The fact is that water never becomes a good when it's in its natural state. We do things to it and then it becomes a good, then all the terms of the agreement apply, such as making it available, damming it, holding it back, delivering it on time. These are what make it a good.

The Chair: I understood that. I think I see the officials back there, so we'll be asking for clarification about that.

Thank you very much.

Ms. Christine Elwell: Mr. Chair, when might we expect to see these regulations that would go with the bill?

• 1105

The Chair: I think they're a matter of public record before the committee. So you've got total access to them—

Ms. Christine Elwell: Maybe the clerk could provide them.

The Chair: —and we'll be happy to provide them to you.

Ms. Christine Elwell: Lovely. Merci.

The Chair: It's very dangerous to give competent lawyers more and more documents. It just produces more work.

We're adjourned, colleagues, until Tuesday the 29th.

Don't forget that on Monday the 28th we have the Russian delegation.