Finance Committee on April 27th, 2023

[Anne David]

Yes. Leading up to budget 2022, as the government announced its intention to stand up the Canada growth fund, the government considered a number of ways to stand up the growth fund and a number of mechanisms, and considered other existing organizations and whether it would fit in their mandate and the capacity to administer. Given PSP's expertise and the fact that it's a large investment fund that currently manages over $225 billion, PSP was selected as the investment manager for CGF.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Does PSP manage any venture capital funds? Do they have any experience managing venture capital?

[Anne David]

Yes. PSP has a large and diversified portfolio that includes venture investments.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Okay.

Was the decision to use PSPIB at the departmental level, or was it at the political level?

[Anne David]

Ultimately, the decision will be made by Parliament, because the legislation has not passed yet.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

What I mean is this: Was it a decision from the minister's office or was it a decision of departmental officials to use PSPIB?

[Anne David]

Thanks again for your question.

Decisions in respect of the budget are made by the Minister of Finance and the Prime Minister, and ultimately they are made by Parliament.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

You say, in your briefing notes, that the PSPIB has already seconded a team to help stand up the Canada growth fund. What I'm concerned about is that the provisions required to change the enabling provisions for the Public Sector Pension Investment Board Act have not been passed. They are under consideration in this legislation. They haven't gone through Parliament or the Senate, and they have not received royal assent.

How is it permissible then for the PSPIB to provide the current services to help stand up the Canada growth fund to make investments before the end of June, which is your stated goal?

[Anne David]

The PSP has not yet seconded employees to the CGF. It is currently negotiating an arrangement with the CGF to second team members to the CGF, so those—

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

I'm sorry to interrupt because my time is limited. Your notes, which I read very carefully, said that a team has already been seconded. Is that not correct?

[Anne David]

A team will be seconded. They are currently working out the arrangements.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Why do the notes say that they have been?

[The Chair, Liberal, Peter Fonseca]

That's the—

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

Could I ask for a response to that in writing?

[The Chair, Liberal, Peter Fonseca]

Sure.

[Marty Morantz, Conservative, Charleswood—St. James—Assiniboia—Headingley, MB]

I'm confused. If the notes were inaccurate, perhaps you could clarify that.

[Anne David]

I'd be happy to respond in writing.

[The Chair, Liberal, Peter Fonseca]

Could we get that in writing, please?

Thank you, MP Morantz.

As we go to our next questioner, MP Baker, could members and witnesses keep your earpieces far enough away from the microphone, please? It is affecting the sound for the interpreters, and we want to make sure they can do their work in a healthy and safe way.

We'll move on to MP Baker, please, for five minutes.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Thank you, Mr. Chair.

Thank you, to all the witnesses who are here today, for your service and for all your work in preparing the BIA. I know it is a tremendous amount of work. Thank you also for your service to Canada on an ongoing basis. I express my gratitude to you for all of that work.

My first question is about part 4, division 5 of the bill, which would see the indefinite withdrawal of Russia and Belarus's most favoured nation status, which would result in a general tariff of 35% being applied to virtually all imports from those two countries.

In response to Russia's genocidal invasion of Ukraine, Canada was the first country to withdraw their most favoured nation status. Can you explain the rationale of making this withdrawal indefinite, and tell us when the current revocation of that status is set to expire?

[Yannick Mondy, Director, Trade and Tariff Policy, International Trade Policy Division, Department of Finance]

Good morning.

My name is Yannick Mondy. I'm the director for tariff and trade policy of the Department of Finance. I'll be taking this question. Thank you for it.

I will answer with respect to the end part of the question as to when the current OIC is set to expire. It is set under the Customs Tariff and would normally expire 180 days after its coming into effect, which is October 8. Based on the current parliamentary schedule, that date would not be a sitting day. It needs to be on a sitting day, otherwise it gets extended by another 15 sitting days. Right now, based on the current parliamentary committee schedule, that puts us at the beginning of May. I believe it is May 5 or May 8. I can provide that in writing if necessary.

That is why this was drafted for division 5 to have a retroactive effect to the end of this particular date.

I don't know if I fully answered the member's question.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Yes, I appreciate that. It's helpful.

The other part of the question was this: What is the rationale in making this withdrawal indefinite?

[Yannick Mondy]

It's just to reflect the enduring nature of the conflict and also to ensure that, given that the tariff and those parts of the tariff would be...it's by deference to the legislative branch to be able to ensure that Parliament approves a permanent withdrawal of the MFN, most favoured nation, tariff treatment for those countries. This can be reconsidered for re-establishment at a future date, but this is lined up with the enduring nature of the conflict.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

Okay.

It imposes a general tariff of 35% on imports from those two countries. Is that correct?

[Yannick Mondy]

Yes. This is to virtually all goods. Not all imports are subject to 35%. By legislation, there are a few exemptions under the general tariff, which is the default tariff that applies when you withdraw the most favoured nation tariff treatment.

So there are some exceptions. For example, goods that already have an MFN rate that is well above 35% would retain those higher rates. Examples would be goods that are subject to Canada's supply-managed system, for example. As well, other exclusions retain an MFN rate. Periodicals would be one example, and certain works of art.

[Yvan Baker, Liberal, Etobicoke Centre, ON]

But effectively this is designed, at least in part, to make sure that we're imposing greater costs on Russia and Belarus, economic costs, for their role in further invading Ukraine.