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[Traduction en français]
Mr. Smith: It's a double-barrelled question, and I think there are two birds sitting here, one for each shell, at the other end of the table.

I certainly would not want to describe my sous-sherpa colleague around this table as more conservative than we are. In fact, I don't really think there's a difference of view between the two departments.

The reality is, I think without question, that there is within governments generally a conservative--I mean to use the word in its pure sense--approach to those institutions, in no small part on the basis that ``If it ain't broke, don't fix it'', that it may need adjustment but basically the institutions have served us very well. They are adjusting, they are changing, and one wants to be careful that one doesn't throw them over entirely. So in that sense I find there is a caution.

On the other hand, there is also--and Ms Fréchette will, I am certain, comment on this--a sense that yes, it's worth while, after 50 years, looking at the institutions...how they are working, how their mandates have changed by the force of events over those years, and whether those changes have been adequate, whether the relationship is as the relationship ought to be, and issues such as the one we've discussed, military expenditures, which people were not as focused on 50 years ago, or maybe even 30 years ago, as they are now. So it seems to me that those are all issues people are entirely willing to look at.

It's true that there are people outside governments who are ready to take a more radical look at the Bretton Woods institutions, but I don't think, quite frankly, there's any difference between our two departments or really much difference amongst the members of the G-7 on these questions. The approach is one of caution, of not overturning institutions as such and really trying to make changes that are incremental and that build. I guess that's what I am saying.

I would pass to Ms Fréchette the question particularly with respect to giving these institutions a greater degree of authority over us.

Clearly, if one builds up the capacity of the institutions for surveillance, that will have an effect on all the members of the institution. I think that therefore, as we look at the changing role of the IMF, we have to look at where our own interests lie in this process. But, again, I think we would be far from the foot-draggers in this process.

Why don't you continue, Louise?

Ms Fréchette: To demonstrate that there is no difference between the two of us and that one cannot be described as more conservative than the other, I agree entirely with what my colleague Gordon Smith has said. I don't want to argue about whether or not we're conservative, because it's a subjective process and we'll always be conservative in the eyes of some and too radical in the eyes of the other.

What is important is that the department I represent is very firmly committed to this agenda responsibility we've been given to look at the Bretton Woods institutions and how they can be improved to be better equipped to deal with the challenges, and we're taking that responsibility very seriously and our two departments are working very closely together.

As for the question of whether we are prepared to submit to the rules as other countries, we are in fact subjecting ourselves to surveillance in the same way as all G-7 countries are, in the same way as other IMF members are. But in addition, we have a G-7 surveillance process, which is really serious and which because it is taking place among the G-7 countries is very frank and direct.

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So there is no doubt that when we are looking at strengthening the system, strengthening the surveillance, it is clear it has to apply to everybody equally.

[English translation]
Le président: Merci, madame Fréchette. Je n'ai pas employé le mot «conservateur» dans son sens politique, mais vous avez très bien exemplifié ce que Voltaire disait: «Ce chien est méchant; lorsqu'on l'attaque, il se défend.» Merci beaucoup de votre réponse.

[Traduction en français]
I think, Mr. Smith, you announced you had to leave shortly after 4:30 p.m. If you think this would be an appropriate time now...and then Madame Fréchette could give her statement and we could perhaps move directly to questions for her.

Thank you very much for coming, sir. I appreciate very much your frankness on the relationship between the departments, because it has been said.... I think it is good to get it on the public record that there is an identity of views there.

Mr. Smith: Thank you very much, Mr. Chairman. I apologize again for having to leave early, but I appreciate the opportunity to come this afternoon.

The Chairman: Thank you for coming.

[English translation]
Madame Fréchette, je m'excuse de vous avoir un peu bousculée, mais si vous le voulez, vous pouvez faire votre présentation et on va ensuite passer à d'autres questions.

Mme Fréchette: D'accord, monsieur le président. Ce sera très bref parce que M. Smith a déjà expliqué avec suffisamment de détails le processus général. Mais d'abord, je vais vous remercier pour vos mots de bienvenue. Cela m'a fait un grand plaisir de vous recevoir ainsi que certains de vos collègues à New York quand j'y étais comme représentante du Canada aux Nations Unies. À vrai dire, j'avais trouvé l'expérience tellement intéressante et tellement sympathique que j'ai été très heureuse d'accepter votre invitation de venir rencontrer à nouveau votre Comité aujourd'hui.

Je voudrais clarifier la question des fonctions que j'occupe par rapport au G-7. J'ai en effet une double fonction, d'une part, celle de représentante du ministre des Finances à un groupe de sous-ministres qui se réunit tout au long de l'année. On se réunit de 10 à 12 fois par année pour échanger, pour coordonner nos positions, pour tenter de régler ensemble les problèmes, pour préparer les réunions des ministres des Finances. Pendant la période de préparation des sommets économiques, qui, habituellement, commence au mois de janvier et se termine avec le sommet lui-même, la plupart d'entre nous, qui sommes les G-7 deputies, assumons également les fonctions de sous-sherpas du groupe de préparation des sommets.

Justement à cause de l'existence de ce groupe de représentants des ministres des Finances qui se réunit plus souvent que les groupes de sherpas, nous avons déjà commencé, dans notre groupe de sous-ministres, le travail préparatoire sur la question de la réforme des institutions.

Il faut se rappeler que les chefs d'état réunis à Naples nous ont donné le mandat de voir si nous pouvions adapter les institutions actuelles et en créer de nouvelles, si nécessaire, pour garantir la prospérité et la sécurité de nos peuples.

Au cours des quelques rencontres que nous avons déjà eues à ce sujet, nous avons commencé par le commencement, c'est-à-dire par un examen du contexte international, comment il a changé depuis les 50 années qui se sont écoulées depuis la création de la Banque mondiale et du Fonds monétaire international. Puis on s'est interrogés sur les défis que ces institutions devront probablement relever au cours des décennies qui viennent.

Notre point de départ là-dessus, c'est qu'on reconnaŒt que les institutions de Bretton Woods ont, en fait, énormément évolué depuis leur création. Elles ont fait preuve d'une capacité d'adaptation assez remarquable. Pensons que le Fonds monétaire international et la Banque mondiale, par exemple, ont créé toutes sortes de nouveaux mécanismes pour répondre au choc pétrolier, ensuite à la crise de la dette des années 1980, à tout le défi des pays en transition en Europe de l'Est et à l'éclatement de l'Union soviétique.

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Ce sont des institutions qui ont fait la preuve qu'elles sont capables d'évoluer, de se transformer au fur et à mesure que de nouveaux défis leur sont présentés.

Mais il a semblé important aux chefs d'état de prendre du recul et de voir si ces institutions sont en mesure de relever les défis qu'on peut prévoir au cours des prochaines années. À vrai dire, les ministres des Finances, comme vous le savez, se sont réunis à Toronto le 3 février, je pense, et ils ont déjà commencé une discussion préliminaire entre eux, en particulier sur la question de savoir si le système international, tel qu'il existe, est en mesure de gérer les crises financières, discussion qui a été, bien s–r, inspirée en grande partie par l'expérience tout à fait immédiate de la crise mexicaine qui a pris une ampleur assez dramatique à la fin de décembre et au début de janvier. Les ministres ont déjà eu un premier échange là-dessus.

Le Canada,

[Traduction en français]
as host of the last ministerial meeting, held in Toronto, proposed that we should focus on four key questions in preparing for this examination of the Bretton Woods institutions. The first one is precisely that: the ability of the international financial system to manage shock. We believe this will require a close examination of current surveillance practices as well as financial support mechanisms. This exercise will focus principally on the role of the International Monetary Fund.

Secondly, we propose that we focus our attention on the use of our resources by these institutions. We ask the questions, are we spending our money in the right place? Should we be shifting more of our resources, our aid money, to the countries that need them most and can use them best?

The third area of focus for preparing this item for Halifax is we propose that we look at the future policy directions of these institutions. Are these institutions attaching sufficient priority to challenges such as poverty reduction, environmental protection, private sector development, multilateral debt?

Finally, the fourth broad area we'd like to discuss with our colleagues in the G-7 is the whole area of management and governance issues. What's the scope for reducing overlap and duplication among these institutions? Is there significant scope to reduce administrative costs and turn these institutions into smarter and leaner organizations?

These four broad sets of questions were accepted by the finance ministers' meeting in Toronto, and these form the basis of the work we will be carrying out between now and Halifax in order to submit to, in the first instance, our finance ministers, who can then advise the leaders on a set of concrete proposals. What we're looking for is some specific conclusions that could be reached at Halifax.

Bear in mind, as my colleague Gordon Smith has said, that the G-7 itself cannot and should not pretend to decide on the future direction of these institutions. In fact, not only do we not control them, but we do not have a majority vote in these organizations. Even if we did, I think it would go against the very principles of these organizations and the way they have been functioning, where decisions are taken by consensus and we are trying to build a partnership with all the member states.

Therefore what could emerge from Halifax is a renewed commitment to these institutions. This is something that comes naturally to Canada, because we have always attached high priority to a strong and well-functioning set of multilateral institutions. Halifax could reinforce the commitment of all G-7 countries to these institutions, provide impetus for change in these institutions, and give some broad direction to this change...but being careful not to appear to be dictating what these changes should be.