Hon. Yuen Pau Woo: Would the Honourable Senator MacDonald take a question?

Senator MacDonald: Certainly.

Hon. Yuen Pau Woo: Senator Omidvar, would you take a question?

Senator Omidvar: Definitely. Thank you, senator.

Senator Woo: If I could then ask the question more specifically, which I think I did at the very end, what gives you the confidence that our American friends, who will be the principal users of this example you’ve set, will, in fact, use this tool with Canada as the cover, as setting the example? Because we’re not going to use this; this is not principally for Canada.

What gives you the confidence that they will not use it in a way that, in fact, violates international law and harms the prospects of countries simply because they have a political disagreement with those countries?

I hope that question is very clear this time.

Senator Omidvar: It is very clear. If the U.S. follows our example and anchors their legislation on state asset seizure in domestic law, as we are doing, then we will have set the right path.

Senator Woo: How would you imagine that the Americans will follow our example in setting a law when they are the pre‑eminent power in the world?

Senator Omidvar: The U.S. will be part of this task force that the Deputy Prime Minister has created. Legal scholars, academics and former officials will be on it. I’m not going to pre‑empt what the U.S. is going to do.

By the way, Senator Woo, I think this bill is not just aimed at the U.S. There are other nations that have frozen Russian state bank assets, including the U.K. and Japan. Europe is definitely not low-hanging fruit because of their position in the region and their dependency on Russia for all kinds of things. I don’t really believe it’s just the U.S. It is others as well.

As I said, a Canadian rolling stone can gather moss.

Senator Woo: Your speech is very timely given that we’ve just received the response from the foreign minister on the sanctions from the Magnitsky study, one of the findings of which you may recall is that the efficacy of our sanctions regime, particularly autonomous sanctions, including Magnitsky and some of the others you have described, have not been proven. We’re not clear that sanctions actually make a difference, based on the objectives that were set for sanctions — changing behaviour and so on.

I’m very supportive of the idea of war reparations along the lines of what happened after the Second World War. I’m not so sure about your proposal.

I’ll give you a preamble before I ask my question, but it sounds to me that while we talk about the importance of upholding international law, what you’re proposing essentially is executive power to override accepted international law, which strikes me as undermining a principled stand on the importance of upholding international law.

The reality of central bank assets is that most of them — about 70% — are held in U.S. dollars, maybe 20% to 30% in euros, the balance in Japanese yen and perhaps a few other small currencies, and a small amount in gold, which means that most of the foreign assets of any central bank will be held in the United States.

That gives me pause when you talk about how we should set the example. Not for us, because there really are very few central bank assets held in Canada. It gives me pause as to what kind of message and lesson, to use your term, we are passing to the United States, which has used its power to seize central bank assets in ways that are perhaps less edifying than you would present.

The Iraq example is not particularly encouraging when you think about how subsequent events in Iraq have unfolded and how the money could have been used for reconstruction. The example of Afghanistan is particularly discouraging, because the assets of the bank have been seized essentially to pay Americans off for the World Trade Center.

What leads you to think that this example, which really will be mostly for the Americans, will be used in a way that, in fact, respects international law and which promotes peace and comity in our world rather than more conflict?

Senator Omidvar: Thank you, Senator Woo. I’m trying to locate the question. Forgive me for trying to locate it.

Your first question is whether this is against international norms. I’m simply going to repeat what people far wiser than me have said. Again, Laurence Tribe, a well-known U.S. constitutional lawyer, said that Russia cannot hide behind international norms when it is breaking every one of them itself.

On the question that we are doing this so that the U.S. will follow, we all know that the U.S. system is “executive-order-happy,” if I may use that term. They tend to use it at many times.

Our proposal is different because even if it is executive action that generates the seizure of assets, it has to be grounded in the conditions of SEMA — the Special Economic Measures Act; those two conditions have to be met. There has to be a breach of international peace and security, and there have to be gross human rights violations.

The proposal that is being considered in the U.S. actually mirrors this proposal and anchors executive action — seizure of state assets — in domestic law. We’re a step ahead of them, if I may say, because that is precisely what we are doing. It is not cowboy, willy-nilly executive action. It is executive action based on certain conditions and criteria.

I hope I located your question.

Hon. Yuen Pau Woo: I’m happy to oblige, Senator Bellemare. Thank you for your speech.

To what extent would you make the deliberations of this proposed monetary policy committee public, particularly the minutes of their meetings and the detailed discussions that reveal the thinking of the members? As you know, in the Federal Reserve System there’s always a lot of speculation about the different governors of the Federal Reserve System and the positions they take. I’m not sure how beneficial that is and how much more transparent that makes the American system. What is your proposal for this approach that you’re suggesting?

Senator Bellemare: Thank you for the question, senator.

[Translation]

I’ll answer in French if I may.

I’m not sure the monetary policy committee should be televised, but it will produce a report, just like the one in New Zealand. I really like the New Zealand committee’s report, because it specifies who said what, which makes the outcome of the vote clearer.

In Western Canada, the C.D. Howe Institute created its own version of a monetary policy committee consisting of about 12 experts who discuss what they would do and then vote. Every member’s name is associated with their views. That beauty of that is that it results in a moderate, prudent monetary policy.

Senators may not be aware that, in the 1980s, when interest rates were very high, Canada had one of the most restrictive monetary policies in the world. Right now, given the current rate of inflation, Canada’s monetary policy is very restrictive. Leaving out the effects of mortgage rates and rent, we’re not far from our 2.6% target.

There was a time when the inflation rate target was between 1% and 3%, with some flexibility. Right now, the combination of a restrictive environment and rapid interest rate hikes means that many investments are not being made. We are not accelerating our transition to a green economy.

We can’t get that time back. We can’t get that lost prosperity back. We can’t make up for investments that weren’t made. That’s why the members of the Standing Senate Committee on Banking, Commerce and the Economy found that Canada’s per capita GDP wasn’t really up compared to other countries.

I know this is a difficult subject, but my bill has no financial implications because these experts will not be paid.

When I was appointed to the Economic Council of Canada, I was not paid. I did that work for six years. It took up a lot of my time, but I was very happy to be a member. In this case, I think there will be a lot of experts from different backgrounds and it won’t turn into a free-for-all — Earlier, I gave an interview on the radio and I was asked, “Don’t you think there will be bickering?” I said, “No, there will be votes and a result.”

Hon. Yuen Pau Woo: Thank you, Senator Wells, for your speech. You make some important points about the unique nature of agriculture in relation to the use of fossil fuels. The value of a carbon tax is greatest when it has few exemptions. My question with respect to the issue of agriculture being price takers is that prices go up and they go down, of course. Sometimes world prices go up to a point where there are windfall profits for farms, and sometimes they go down to the point where farms are at jeopardy of going bankrupt.

The traditional remedy for these kinds of problems in economics is price and income support. Why don’t we look to that kind of protection, if I can put it that way, rather than fiddling with a carbon tax and creating a carve out that might distort incentives away from our combined and collective goal of reducing carbon emissions?

Senator Wells: Thank you for that question, Senator Woo — it’s a good one. I don’t look at this as a carve out. This is an expansion to the exemptions that were provided in an earlier act. I think there was an oversight and, in fact, the chair of the House Agriculture Committee noted that, that this was an oversight. In fact, he supported this bill in the House.

This is also part of a program for farmers. I don’t think they want subsidies. Perhaps they will take them, but I think they just want a business that works for them and, where eligible, expenses at times when there are alternative fuels or alternative processes, they will use those. Right now, there are no alternative fuels or processes besides natural gas and propane, which are both, as you know, considered transition fuels.

They want to get better, but that’s why there’s a sunset clause on this. It would have to be considered to be renewed; it’s not ongoing. It automatically cancels after eight years.

Canadian farmers, growers and ranchers want to get better. They’re part of the solution in the environmental debate. I think this exemption simply expands where an oversight occurred in the earlier legislation.

Senator Woo: Thank you for the explanation. An expansion of an exemption is another word for a carve out, of course, but I appreciate that that’s what you’re looking for.

Your argument that increasing or preserving the margins of farmers so they can spend surpluses on innovative and less carbon-intensive technologies has a logic to it, but the point is that you need some kind of incentive for them to do that. There’s no guarantee that farmers will use the surpluses, fungible as they are, for that particular task.

Again, there are other tools by which we can incentivize farmers to use geothermal and solar and whatever else might appear, and this is through the means of direct incentives for those technologies.

Why are we not considering these other pathways that, on the one hand, are consistent with the universality of a carbon tax, recognizes the fluctuations, incomes and prices that farmers inevitably face, but also focus on incentives for specific carbon‑reducing technologies that may be available in the years ahead?

Senator Wells: Thank you for the question, Senator Woo. I’m sure those incentives are already there for migrating to alternative sources of fuel that have carbon neutrality, like geothermal, solar and wind, but we’re not there yet. We may be there in some small-scale operations, but we’re not there on an industrial scale.

Canada, among most countries, is a world leader in industrial farming. These are industrial-scale operations that don’t yet enjoy the benefit of geothermal and all the other things that may occur in the future through innovation, investments or other technologies, but this is what we have. The carbon tax is relatively new, and the industry has not caught up to it.

One day, it would be great if these industrial processes were carbon neutral. In regard to on-farm, I still push back on your claim that this is a carve-out because the system already exists where there are exemptions. This is just adding to those exemptions. We will agree to disagree.

This is further assistance for the ranchers, growers and farmers to reach where they need to be.

Hon. Yuen Pau Woo: Thank you, Senator Boniface. You just said that the standard used is higher than that used in the United States. That raises the question of the pre-clearance agreements that we have with the Americans and the changes to pre‑clearance that will be affected by this bill. Is there a need to negotiate with the Americans for this to happen?

Senator Woo: I take it from your non-answer that you consider all legally constituted entities in China to be subject to the direct or indirect control of the Chinese state. In that case, I ask you why would we not register a cultural organization in China that wants to promote cultural ties with Canada and, through its agent here in Toronto or Montreal, wants to speak with me, for example, about having a concert in Calgary or some other city? Why would somebody representing that institution in China, in a “tyrannical” state, subject to the direct or indirect control of the Chinese Communist Party, not be registered and perhaps punished if he or she were to speak to not just me but to any of us in here, including, of course, our colleagues who support the arts? We heard earlier today about the motion to give more attention to the importance of the arts in this country. Why would someone representing that cultural institution not be covered under the registry?

Senator Woo: If I could follow up again, your non-answer would seem to suggest that the cultural organization would, in fact, be covered under the registry, even though you said it would not be in your speech. Presumably, other organizations, such as alumni associations, sporting groups, municipalities, again under the direct or indirect control of the state, would have to be registered if an individual representing that entity were to speak to a parliamentarian or indeed with a senior official.

In that situation, where essentially every legally constituted entity in the People’s Republic of China would have to be registered under this act, would you not agree that the assertion of the two authors in the op-ed about the circulated “disinformation” in text messages and WeChat posts saying that many entities and individuals associated with China would be targeted under Mr. Kenny Chiu’s failed bill was in fact accurate?

Hon. Yuen Pau Woo: Thank you, Senator Housakos, for drawing attention to my op-ed. I encourage all of you to read it for yourselves rather than rely on the caricature that he has offered.

Senator Housakos, you have been quite clear in saying that China is an authoritarian state, which I entirely agree with. You also described it as “tyrannical.” I’m not sure I would go that far, but it’s certainly a Leninist state.

I think you said that all entities in China are subject to the direct or indirect control of the Chinese state.

Let me put my question in the reverse. Can you name some legally constituted entities in the People’s Republic of China that would not fall under the definition of directly or indirectly controlled or influenced by the Chinese state and therefore would not be subject to registration under this bill?

Senator Woo: Let me put it even more directly, then. Would you consider that any Canadian, whether a recent immigrant from China or anyone else, representing any Chinese organization, institution or entity in China — a school, a municipality, a badminton club, a mah-jong association, all legally sanctioned in China, presumably under the direct or indirect control of the state — who wants to speak to a parliamentarian or senior official — would that person be covered under your bill? Under Mr. Chiu’s bill, he would. Would that person be covered under your bill and would he or she be required to register?