What Does Sovereignty-Association Mean?

Introduction:

When I dropped my wife Jan at the train this morning she gave me three words of advice... "Harold ... be civil."

You see my wife understands me and knows that in spite of having limited exposure through travel and in spite of being unilingual, I am Canadian. Le Canada, c'est mon paye. I suspect I don't stand alone when I say I see the political philosophy of our guest today as somewhat of a threat to my country.

However I will be civil.

It is the mandate of both The Empire Club of Canada and The Canadian Club of Toronto to provide a platform for discussions of national interest. And certainly M. Parizeau's political platform, whether we like it or not, is part of the Canadian fabric, so we had better hear it.

M. Parizeau has spoken to The Empire Club on two previous occasions, in 1977 and 1984, I believe as Leader of the Parti Quebecois and Leader of the Opposition in the Quebec National Assembly. He is already known to our audience.

In the aftermath of the failure of the Meech Lake Accord, our nation has been thrown into turmoil. Within Quebec, Premier Bourassa has established the Belanger-Campeau Committee to hear views on Quebec's constitutional future. The results of its findings are to be presented by March 1991. Prime Minister Mulroney has similarly established a Committee under the Chairmanship of Keith Spicer to gain a similar national picture by July of '91.

What do Canadians want? That is the question. One thing is certain, status quo is not an option. Gary Lautens of the Toronto Star last week wrote: "What are we missing?" Tell us, Jacques Parizeau. You have a fine education. You wear expensive suits. You've held high office. You know wine and good food. You travelled. You have a solid roof over your head. So tell us where has Canada let you down? How have you suffered as a Quebecer in this nation? What are we missing?"

Well M. Parizeau, there are many Canadians who are concerned and want to understand and want to find creative answers to our current problems. Your address today hopefully will give us some insight and maybe even some answers.

We welcome you today to address us on the topic "What does sovereignty-association mean?"

Jacques Parizeau:

After the referendum of 1980 in Quebec, common wisdom was to the effect that sovereignty as a political goal had receded and that for a long time to come, say a generation, the issue would fade away. It explains why, during the 1981 negotiations to patriate and amend the Canadian constitution, the awful risk was taken to go over the head of Quebec, and set up a constitutional text that withdrew from the Quebec National Assembly powers that had traditionally belonged to it. In hindsight, one realizes now that this was a turning point.

Undoubtedly the Liberal government elected at the end of 1985, is a federalist government. It must somehow bring Quebec back to the constitutional fold. It must try to close the chapter that has brought so much turmoil among Quebecers. The Quebec government gambled. It assumed that if it asked from Canada minimal conditions, Canada would respond readily and accept. Political authorities in Canada responded in fact with alacrity. The Meech Lake Accord was signed.

It had to be ratified. Finally, it was not. Public opposition to the deal grew. Two premiers became the standard bearers of a number of Canadians in all provinces. The Premier of Quebec had gambled, the Prime Minister rolled the dice, all to no avail. It is fashionable nowadays to say that it was not on constitutional issues that the Meech Lake Accord floundered, but because of the rigours of the amending process. In other words, Quebec was not rejected by Canada, it was some silly provisions of the 1982 constitution regarding the amending process that caused the snafu.

Maybe we should simply recognize that the Meech Lake Accord was the real last chance for a compromise between two broad political visions of Canada that gradually veered towards a collision course.

The 1982 constitution and particularly its Charter of Rights clarified the concept of fundamental equality of all Canadian citizens. And if all Canadian citizens were equal, the constitutional expressions of their differences had to be somewhere, somehow also equal. Thus that provincial governments should have similar powers and responsibilities is a logical outcome. And the triple E Senate proposal expressed the same preoccupation.

Nothing can be as foreign to Quebecers as such principles. For years, irrespective of the governments in power, Quebecers felt and acted differently. For cultural and linguistic reasons, there is not the slightest chance that they accept all that a Canadian Charter of Rights implies. It is not that for them rights and obligations are any less important than in Canada But there must be a place for differences. The distinct society clause was a way to go about that, quite insufficient as far as I am concerned. But it was the pith and substance of the Quebec government gamble.

In the same way, there was not the slightest probability that Quebec would renounce specific powers as a province or accept the triple E Senate. Quebec is not a province like the others, as all children learn before playing Atari or Nintendo.

Be that as it may, we are now faced with a substantial increase in the support given by Quebecers to the notion of sovereignty. Never in the past has anything like this kind of support been witnessed. It is fanned, undoubtedly, by the lifting of the traditional economic objections. That business circles start to state clearly that sovereignty is feasible, that it might have some advantages, has a noticeable impact on people who might have had a sovereignist gut reaction but were downright afraid of the economic consequences.

In that light, two briefs presented to the Constitutional Commission are noteworthy. The one presented by the Chamber of Commerce of Quebec is remarkable. Without taking a position on the constitutional question, it describes what would be the preferred economic environment for Quebec business. That environment is such that, should it be realized and extended to all provinces, the federal government would lose about two thirds of its various spending programs (excluding the interest payments on the debt).

The second brief is that of the Mouvement Desjardins. It is now the largest financial group in Quebec. It has 4.5 million members regrouped in cooperative structures and close to $45 billion in assets. Nothing is as typical of the real Quebec of today. Its call for the sovereignty of Quebec was a sort of political earthquake.

The Constitutional Commission is in itself a formidable precedent. For the first time Quebecers are called upon to determine their future by themselves. Both political parties agreed on this fundamental meaning of the exercise.

Of course federalists are not yet an endangered species in Quebec, but they operate at a considerable disadvantage in the present debate. They know that any change in the Canadian federal system would have to be substantial to have any chance of being accepted by a fair number of Quebecers. Can this approach have a sporting chance of acceptance by Canada since, only six months ago, the very minimal requests of Quebec were thrown out? For them something very imaginative has to be found to get out of that trap. More imaginative at any rate than the Prime Minister's suggestion of a joint committee of the House and the Senate to propose changes in the amendment progress.

The Premier of Quebec came up with one such imaginative formula, in the form of drastic transformation of the Canadian political structure, something to shake all Quebec federalists out of their torpor. Falsely inspired by the European model, or more to the point, by what the most rabid of Europeans dream about for the 21st century, a supranational Parliament and a supranational government would handle not only the significant economic policies, but national defense and external affairs, as well as the public debt charges. These supranational institutions would rule over Quebec on the one hand, and the rest of Canada on the other.

This, of course, raises a problem. If the "rest" of Canada presents itself as only composed of nine provinces, what is proposed is simply a reshuffling of sections 91 and 92 of the old BNA Act embodied in the Canadian constitution. The supranational institutions are in fact the present federal parliament and government. We are back to square one.

Thus, the "rest" of Canada must also have its government, just as Quebec has one. English Canada would therefore adopt a three-tier system of government. The nine provincial governments would set up their own federal government, above which the supranational parliament and government would rule on the one hand, and above the Quebec government on the other. Canada as a whole would accept these sweeping changes just to keep Quebec happy.

Of course the contraption will never fly. It is a mystification, an abusive reading of the European situation. No wonder it has hardly been mentioned in the discussions of the Constitutional Commission.

So we are back to sovereignty and to sovereignty association. We have now reached a point where even those who in no way share these objectives must start figuring the probabilities. Never in the past has it been so important to be precise about what is meant by those terms. Emotions are an essential part of life but a few clear ideas do help occasionally to focus on the issues.

For a country being sovereign implies that:

A) All taxes paid by its citizens are raised by its parliament.
B) All laws applicable to its citizens within its boundaries are adopted by its parliament.
C) All treaties that bind this country to other countries are ratified by its parliament.

That is the very basis of the sovereignty of a nation. Indeed all kinds of ways exist to delegate elements of sovereignty to international institutions and nowadays this delegation is spreading rapidly. The second half of the twentieth century will probably go down in history as having made this major discovery that countries, even small countries, can exist and flourish in markets which are very much larger than their political boundaries. The global village is not the cause of that discovery. It is its result.

We also know that for individual countries to prosper in very wide markets, liberalization is a continuous inducement to increase productivity and to upgrade quality, therefore competitiveness. This, Quebecers understood certainly more intensely than Canadians during the great debate over the Free Trade Agreement with the United States. It came as a surprise, and sometimes as a shock in English Canada, that in Quebec, the agreement ceased to be a partisan issue, and that both political parties put as much pressure as they could to support the federal government in its negotiations.

In economic terms, the future of Quebec will be determined on the North American continent and abroad. Half of everything that Quebec produces is exported. Inward-looking policies and protectionism would be absurd answers to the questions of the future. It is in that light that one has to examine the whole concept of economic association with Canada. Let us first start with what some people still feel are formidable obstacles to any mode of economic association between what would be two countries.

The first argument usually runs along the line that Quebec's contribution to the financing of the federal government is so much below what the federal government contributes to Quebec, that Quebec would need, in order to maintain its standard of living, large federal subsidies after it has become a sovereign nation. No red-blooded Canadian will ever accept that.

And indeed he should not. There is no need for such transfers anyway. There are presently two estimates of what Ottawa pays to Quebec, and what it gets from it. One estimate shows that Quebec, after gaining much at the turn of the last decade, has been losing in the last few years and losses, although not very large, are growing. Another estimate shows that Quebec still gains although not much, but that the gains are dropping like a stone. The only difference has to do with the methods of accounting for federal interest payments in each of the provinces.

The second argument has to do with the federal debt and can be summarized this way. if these people think that they can run away from Canada without shouldering their part of a debt that was incurred in the name of all Canadians, they are in for a surprise. This kind of reaction is widespread these days and is also, for me, quite a surprise. For twenty years, the Parti Quebecois has been saying that when sovereignty becomes effective, Quebec will be responsible for its share of the Canadian public debt and entitled to the same share of assets. What share? There are really two criteria to use: population and gross domestic product. We will, I suppose, haggle for a few weeks before we come to something like a quarter.

There will be some adjustments made; for instance all debt pertaining to the Canada Pension Plan does not have to be shared by Quebec since it was never part of the Plan. There will be problems of evaluation, for instance with respect to federal fixed assets that are carried on the books at one dollar. In other words, operations can be numerous and complex, but the concept is pretty straightforward. Some people, however, cannot keep it simple. Recently an analyst for one of Quebec's largest investment dealers, came out with what he thought would be an unforeseen complication. How long would it take for the markets to absorb the tens of billions of dollars of Quebec securities to replace Quebec's share of the federal government's outstanding debt? But why should anything like that occur? The fact that Quebec shoulders a quarter of the federal debt does not mean that a quarter of all federal debt vehicles be replaced by Quebec vehicles. Why on earth for?

This leads up to the concept of economic association proper, and the question can be stated in the following way. what should be maintained of the Canadian economic space, as it is now articulated? There is no doubt, when listening to the briefs presented to the Constitutional Commission, that nobody sees merit in disrupting the Canadian economic space. But what about the rest of Canada? How will they react? At that point, one has to go into specifics.

The first question that comes up has to do with the free flow of goods, services, money and people. One would assume that given the rules set up in the U.S.--Canada Free Agreement, nobody in his right mind would imagine that free trade of goods and services would be achieved in a North-South direction but not in an East West one. As far as money is concerned, one would have a hard time imagining that it would flow freely between Montreal and New York and Toronto and New York and not between Montreal and Toronto.

It is with people that one can really raise a problem. It usually starts on the issue of those who live on one side of the Ottawa River and work on the other. Not with respect to the civil service. Quebecers who work for the federal civil service will be absorbed in the Quebec civil service. It has to do really with the private sector. What happens, for instance, to those people who live in Hull and work for private business in Ottawa? The problem is much wider than this border situation and it has to do with the fact that Montreal and Toronto live like each other's economic suburb. Numerous companies of a certain size have a head office in one city and their largest branch in the other. It is in the interest of both that the labour force and particularly the first rungs of management be kept fairly mobile. And Canada has too much experience with tax treaties for fiscal problems to be an issue.

Should Canada and Quebec keep the customs union that has existed for so long? In other words, if there should be two countries, should they keep the same customs duties with respect to third countries. One can already hear the loud protest of some. Why should Canadians accept the tariffs that protect some of the older industries of Quebec or the maintenance of quotas on some agricultural imports? That indeed is only part of the story, and leaves aside the fact that Ontario, in many instances, has the same interest, or that many Western agricultural producers have a vital need to preserve their markets in the East.

Be that as it may, an answer will have to emerge rather rapidly. If the customs union is maintained and in the affirmative, what kind of role will be recognized to Quebec on the definition of elements of a common commercial policy, with respect to GATT particularly?

The question of the maintenance of a common currency and a common monetary policy is an important one. Technically, the introduction of a distinct Quebec currency does not raise major problems, particularly in so far as Quebec affirms its intention to respect all previous financial commitments, which obviously would be the case. But even if Quebec had its own currency, the question of a common monetary policy would still have to be raised.

It is understandable that Quebecers by and large would find it more comforting to keep the Canadian dollar as their currency and, in spite of the criticism often levied at the monetary policy pursued by the Bank of Canada, would thus prefer to maintain a common monetary policy, if they could have some say on the way it is run. The same can be said for Canadians, who may often have qualms about the way monetary policy is conducted, but will have few doubts about the instability that the appearance of a Quebec currency and an independent Quebec monetary policy would bring to the Canadian dollar. This is particularly true if one takes into account the large debt in Canadian dollars that Canada would then have to recognize in the hands of Quebecers arising from the distribution of the present money supply and outstanding securities.

The real problem arises with respect to the control over the common central bank. While the unity of direction is essential, there could be a set of benchmarks for mandatory consultations and negotiations, particularly when spreads between Canada-Quebec and U.S. short term rates go beyond agreed limits. Money talks. After Ireland left the United Kingdom in 1921, for twenty years afterwards the pound sterling remained first the currency of Ireland and then the basis of the new nominal currency. God knows if passions ran high at the time.

Economic association will have to be pursued further. Quebec becoming a sovereign country, transportation and communication will be high on the list of Canadian priorities for discussions. Are present arrangements respecting water, road and rail transportation to be maintained? Canada will insist on that and quite rightly so. The same applies to access to the communication links. To do anything else would be silly.

One could go on discussing the maintenance of other economic links. In that sense economic association can be restricted to basics or opened quite wide. It all depends on what is considered to be mutually beneficial. If one side feels that it has no direct interest in a proposal, and that no trade-off is possible, the proposal will be dropped inevitably.

What should be remembered, however, from a Quebec sovereignist point of view are two basic elements.

a) We are not trying to reform federalism. We want to have a real country. All we wish to determine is, among present economic arrangements, which ones are deemed to be sensible to maintain.

b) We are convinced that Quebec must enhance an open economy closely associated with that of its main trading partners, Canada being evidently the first country with which to discuss these things.

From time to time when expressing these two principles, the question is raised as to how secure a sovereign Quebec would be respect to the Canada-U.S. Free Trade Agreement. Would there not be pressures to exclude Quebec from that agreement and thus undermine a most vital part of economic association?

This brings us to the last question I want to raise. That of existing treaties with the United States that were signed by Canada in the name of Quebecers amongst all Canadians. There are two ways to go about this. The first one implies that one by one these treaties are reopened as Quebec becomes a sovereign nation and one by one are renegotiated or cancelled. The second way consists in their reconduction as they are now, an adjustment being simply made for the presence of Quebec when called for. It does not freeze all such treaties for all eternity. When they come up for renegotiation, Quebec will simply be party to the negotiations.

The first way would bring about quite a mess for sometime. If somebody wants to exclude Quebec from the Free Trade Agreement, why would not somebody else want to exclude Quebec from NORAD or from the St. Lawrence Seaway Agreement for that matter. The sensible thing to do is to recognize present commitments by all parties concerned. Some Canadians might find it difficult to accept this approach. I have not met an American who does not recognize its merit. From what I have tried to sketch in this presentation, the following conclusions should, I think, be drawn.

• Firstly, there is now a strong probability that Quebec becomes a sovereign nation.

• Secondly, when this occurs, Quebec will want to live within the liberalized rules of large market spaces, and test its own capacity to prosper, to develop and to grow.

• Thirdly, economic association indeed with Canada, but also beyond Canada, is a logical outcome of where Quebec wants to go.

• Fourthly, Quebec has no historical or political account to settle with Canada. Not now at any rate, not any more. There is enough strength in Quebec today to let what is bygone be bygone. The future is exciting enough not to get bogged down in past irritants and conflicts.

A number of Quebecers have often looked at Canada as a threat or a yoke. Canada has often seen Quebec as a dreadful pain in the neck that prevented Canadians to be the Canadians they wanted to be.

Rene Levesque used to compare the Two Solitudes to two scorpions in a bottle. Let's get the scorpions out of the bottle. They might even learn to live side by side in harmony.

The appreciation of the meeting was expressed by Al G. Jameson, President of The Canadian Club of Toronto.

Mr. Parizeau, interest is high in your vision for Canada and Quebec. There is concern over the future of our country. We know we must find a way to move ahead. Obviously, there are alternatives from which all Canadians must choose. You are a highly respected and articulate spokesman for one of those alternatives and we sincerely thank you for bringing your vision to us personally.