International Trade Committee on June 10th, 2010

[Jason Langrish]

May I just add a quick final point?

We tried to do just regulatory issues during the TIEA, the trade and investment enhancement agreement. The reason it wasn't successful was not that we were negotiating the wrong things; it was just that the package wasn't broad enough to facilitate the trade-offs required. So we still have that core, that regulatory focus, but in order to conclude the agreement and facilitate trade-offs, everything has been thrown in. That's why we feel we'll be successful this time around.

[The Chair, Conservative, Lee Richardson]

Good. Thank you.

That concludes the first round of questioning. Our witnesses have been very patient. They've given us an hour already of their time. If they will give us their forbearance, I think I'd like to do one quick five-minute round for questions and answers. We'll do one round and probably be done within the half-hour if our witnesses are inclined to stay with us.

We will go, then, to Mr. Silva.

[Mario Silva, Liberal, Davenport, ON]

Thank you, Mr. Chair. I'll try to be very brief, because I have only five minutes and I wanted to hear from the excellent panel of witnesses we have before us.

I want to very quickly hear about the issue of the binding dispute resolution mechanism. I wanted to know your impressions of how effective this will be in dealing with some of these issues.

I also want to know if the Lisbon treaty that was signed.... I know about the implication that has in terms of the political system, but are there any additional mechanisms in place that make it more difficult in terms of the regulatory cooperation or signing a free trade agreement between the European Union and Canada? Also, I'm wondering if their very tough environmental standards will make access to procurement and sub-national procurement in those countries even more difficult.

I was hoping that maybe the former minister of trade could answer that question.

[Roy McLaren]

Okay. Let me do the second part of your question, and then Mr. Langrish might tackle the first part.

On procurement, we spoke earlier of the necessity in Canada to involve the provinces in any of our negotiations of a procurement agreement. But as I said earlier, the provinces have placed themselves to implement whatever is negotiated in the agreement. It is equally so that we're counting on the 27 member states of the European Union to implement every aspect of the procurement agreement. We've pressed the European Commission to commit to that, to ensure that all 27 member states under the Lisbon agreement participate fully in the implementation. We're confident that it will be delivered, and we're confident that here in Canada the provinces will commit themselves fully to the agreement.

Jason, do you want to add something?

[Jason Langrish]

Yes. I'll just go quickly through the three points.

Dispute resolution will likely either be what's called an investor-state provision--which is what is in the NAFTA agreement, meaning that companies have the legal right to directly challenge governments if they feel their rights have been contravened--or be state-to-state. We haven't shown a preference for that. We believe that the governments in both Canada and the European Union will act in good faith, regardless of which direction they take.

What's important, though, about dispute resolution is that you have legal recourse without having to go through the courts at the provincial level or at the state level in the European Union. Knowledge of this gives investors and traders confidence. That's probably the single most important thing. With a good free trade agreement, you won't have to use this, but just knowing that it's there will be reassuring.

There are two fundamental changes in the Lisbon treaty. The director general of trade of the European Commission now has to go and make a greater effort to explain to the European Parliament what's being negotiated. The European Parliament will be able to say yes or no to the agreement. They won't be able to amend it and send it back for renegotiation. One of the big things with the Lisbon treaty is that responsibility for investment now shifts to the European Commission and away from the member states, but the details of that are being worked out. I would encourage you to discuss that with the chief negotiator, Steve Verheul. He'll know that in more detail.

Environmental standards are very tricky. The fundamental way to deal with environmental standards is to ensure that they're based on scientific principles, and that's what we want enshrined in this deal, that scientific principles will prevail. Otherwise, you can create an arbitrary standard or certification to block products from coming into your market and favour local products. So we'd like to see that principle enshrined in the agreement.

[Mario Silva, Liberal, Davenport, ON]

Thank you.

Mr. Chair, I must say I'm very pleased. This is the first time I've asked direct questions and actually gotten direct answers.

[The Chair, Conservative, Lee Richardson]

It's been a good day.

Thank you, Mr. Silva.

Mr. Cannan.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair.

And thank you to our witnesses.

I appreciate, Mr. McLaren, the history lesson there at the beginning. I know Minister Emerson was very supportive of your foundation, and then Minister Day, and now Minister Van Loan, so hopefully we can hit the ball over the goal line.

How far away do you think we are from coming to some agreement--another year, at least?

[Roy McLaren]

I'm sorry, would you repeat that again, please?

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

This is about a two-year process, and we're about one year into it?

[Roy McLaren]

I would be hazarding a great deal to predict the exact completion of the agreement, but as I said at the beginning, we're on the eve of the fourth round, in Brussels in the month of July. I think when we have completed that fourth round, we'll be confident that we will probably be able to wind up within 12 months.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

As my colleague Mr. Allison—he's from the Niagara region, and I'm from the Okanagan Valley—said, wine has benefited greatly from the NAFTA agreement. As you mentioned, in 1989 the horticultural sector ripped out the grapes, and they thought that was end of the industry, and it's been nothing but positive.

One of the areas of the horticultural industry that has been suffering is apples. I don't know if CAFTA might have any comments. We want rules-based and fair, open, and transparent trade. One of the aspects of the non-tariff barriers is GMOs. Have those been discussed at all within your first three rounds of discussions?

[Kathleen Sullivan]

They have been, actually. We have been very adamant with our trade negotiators, as well as with Agriculture Canada, that GMOs have to be a critical part of these negotiations. We essentially have market access, for canola for example, into Europe, but it's all for naught essentially because of the non-tariff barriers that exist. So that's a critical part.

Canada has signalled to the European Commission that this is going to be a critical component of any deal if we're interested in signing something. They seem to have responded favourably to that. They're at least, as I understand it, prepared to sit down and talk with us. That doesn't seem like a lot, but given where we're starting from with the commission on this issue, in fact it is a pretty important step forward.

We are hopeful that at the July negotiations in Brussels, which are taking place in just a month, there will actually be some focused discussion on those issues specifically. We plan to be there so we can also meet with the commission and continue to press Canada's perspectives on this.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

In your opening comments, you mentioned non-tariff barriers. You didn't identify any specific ones. What are you hoping will be addressed specifically?

[Kathleen Sullivan]

The biggest one on the grain and oilseeds side would be GMOs. On the meat side, there are certainly issues with European bans on growth promotants, for example. That would be a pretty significant one. There are some pretty important issues regarding European and Canadian differences in standards within processing plants. We would certainly maintain that we have the same standards they do, but they insist on coming and inspecting plant by plant, as opposed to having just a recognition agreement. Our plants are inspected by CFIA, so there should be some sort of mutual recognition.

There are also issues in some areas—grain, processed food, and pork—where the structure of the tariff lines is very complex, and it can actually be quite difficult to get the product in just because you can't meet their specific requirements. It's really more of an administrative issue, but it can be quite a burden as well.

Those are just a few of the things we would certainly have on our list to deal with.

[Richard Phillips]

I could just give the example of oats. You'd think we could export oats, but there are also oat groats, oatmeal, rolled oats, flaked grains, hulled oats, and pearled oats. You can get picked apart on the value-added pieces if you're not careful. There's a lot to each individual crop.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

That's very informative and insightful. Value-added is a very important aspect.

Maybe just enlighten the committee as far as the process goes and as to how many people are involved in this negotiation.

[Kathleen Sullivan]

It's quite large. Of course we aren't in the rooms at the negotiations, but we understand there are about 21 different negotiating tables, all overseen by the chief negotiators. And I think the component we haven't talked about is the involvement of the provinces, and about half of those—

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

That was my next question.

[Kathleen Sullivan]

--negotiating tables actually deal with topics that fall under provincial jurisdiction or shared provincial and federal jurisdiction. We've certainly heard stories that the sole European negotiator is sitting across the table from quite a number of competent Canadian negotiators from across the country. I think the Department of Foreign Affairs has done a remarkable job in coordinating this whole process. The provinces have certainly done yeomen's work in offering up the resources that are necessary to carry this out, because it is more than a full-time job for everybody involved.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you very much. I wish you continued success.

[The Chair, Conservative, Lee Richardson]

Thank you.

We're going to let Mr. Guimond wrap this up. Monsieur Guimond.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

Thank you very much, Mr. Chair.

I just wanted to say that it feels good to talk about a free trade agreement that does not threaten human and workers' rights. It's a relief to be able to discuss with a partner as equals.

Good afternoon witnesses, and welcome. This is a good discussion. My first questions are for Ms. Sullivan and Mr. Phillips.

We know that the European Union makes heavy use of geographic indicators. For instance, these indicators are used for a lot for European cheeses, especially in France.

Do you feel that the European way of controlling and labelling products could represent a major barrier for our producers and for Quebec and Canadian agriculture?

[Kathleen Sullivan]

I don't know if it will be a barrier for our cheese producers. I would in fact suggest that certainly here in Ontario and Quebec we have phenomenal artisanal cheese markets. I think there may in fact be, as Mr. McLaren pointed out, some interesting export opportunities for those sectors. Having said that, there is no doubt that geographic indicators are on the list of difficult topics that we're going to have to negotiate our way through.

As I understand it, Europe has never signed a free trade agreement that didn't recognize their geographic indicators, either their system or their list of geographic indicators. That is undoubtedly going to be one of the trickier and more complex issues that we're going to have to take on in the context of the negotiations.

There's no doubt there are a large number of food geograhical indicators on the cheese side and also on the meat side. So we're going to have to, at some point in the not-too-distant future, get into a fairly detailed analysis of what the impact could be, and then what we're going to do from more of a system standpoint in terms of how we're going to meld their system and ours, because, as you probably know, it's as much a cultural system for them as it is a regulatory system. So we're going to have to figure out a way to get our head around it.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

I have the same question for you. What's your opinion on this issue?