International Trade Committee on June 15th, 2010

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Thank you very much.

[The Chair, Conservative, Lee Richardson]

Thank you, Monsieur Laforest.

Mr. Julian.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

I thank our witnesses very much.

This is our first briefing on the CETA agreement. We had one meeting last Thursday, so it's very good of all of you to be available to provide some more information on how the negotiations are going.

I want to quote one of our witnesses from the meeting last Thursday. Roy McLaren said, in response to a question from Mr. Laforest on supply management:

Everything is on the table. We entered this negotiation, on both sides, Europe and Canada, by putting everything on the table, including agriculture.

My first question is for Mr. Gauthier. Is Mr. McLaren right? Is supply management on the table?

[Gilles Gauthier, Director General and Chief Agriculture Negotiator, Negotiations and Multilateral Trade Policy Directorate, Department of Agriculture and Agri-Food]

Thank you for your question.

At the time the negotiations were launched, there was an agreement that there was to be a no-exclusion a priori... That essentially left it open to each side to make proposals on anything of interest to them. So that's the operating modality we agreed on at the launch of the negotiation.

That being said, the European Union is perfectly aware of the government's position on supply management. We have made that view known during the negotiations, and we'll continue to do so.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

But at this point, supply management is on the table.

[Gilles Gauthier]

As I said, it's up to the European Union to make proposals that may relate to products under supply management. Our response remains the same, which is that the government strongly supports supply management. We have defended supply management in all our trade negotiations, and we'll do so in this one as well.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you for that.

I'd like to go on to Mr. Verheul.

I want to get a sense of the negotiations around government procurement between the provinces and the federal government. You mentioned earlier that there is a high level of ambition on the government procurement component of the agreements. Later on, if I understood correctly—and correct me if I'm wrong—you said there is work required to get all the provinces on board.

I'm wondering about the process. Is it that the provinces have come to the federal government and tabled offers on procurement, or is it more that the federal government has gone to the provinces saying this is the negotiating framework and are you on board with it?

Does it start with the federal government, or have the provinces started by tabling their offers on procurement?

[Steve Verheul]

It's actually a bit of a two-way dialogue, using both of those kinds of approaches. The provinces have come to us with an indication of what they would be prepared to put on the table; we've gone to them with a notional target of what we think would be needed for an effective negotiation. We're in the process now of identifying any gaps that might exist between the two and trying to move us toward a coherent package we could put in front of the Europeans at the right time.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Is it fair to say that all the provinces and territories have tabled now?

[Steve Verheul]

Yes, it is.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Okay. Thank you for that.

The third issue I want to touch on is regulatory standards.

Mr. Verheul, you mentioned the gaps between standards in the European Union and Canada. Of course in the European Union we have rules, such as REACH and food and product safety, which I think to most observers would be higher than Canadian standards.

Have there been negotiation instructions around raising Canadian standards, or is the objective at this point to maintain our standards at a lower level in those sectors and to try to get the type of exemption that some countries negotiating with the European Union have been unable, as you know, to get in the past?

[Steve Verheul]

Well, we're not looking to have a one-size-fits-all approach to this. In some cases we do expect we will harmonize our regulations with the European Union. In other cases they may harmonize theirs to ours, but those will probably be fairly limited cases. The more common outcome will be looking towards recognition of the process and each other's internal assessments and accepting those. A mutual acceptance that the regulations will achieve the same kind of level of protection is likely a big part of where we will go.

That's in dealing with existing regulatory differences that we're trying to confront now. What we have a greater hope for is the whole issue of regulatory cooperation, where we're going to have a window into each other's regulatory systems that will allow us to either start off from the same direction initially or, at a minimum, be able to flag any concerns before the regulations are actually drafted and become law.

As a closing comment, the whole area of how we deal with regulatory standards has been agreed by my counterpart and me as an area that needs some brainstorming, a much more in-depth examination of what we can do to come up with a system that really works between our two regulatory approaches. We are putting a lot of effort into that.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

At this point we're aware that in most cases the European Union has tried to ensure that regulatory standards were higher in the countries with which they signed agreements.

I certainly understand the regulatory cooperation, but do you see this as a possibility, that the European Union would back off from that practice?

[Steve Verheul]

I don't think they would be doing that across the board, by any means, but I think we will be looking for accommodation in various areas, as will they. Europeans don't universally tend to have higher standards.

When it comes to things like auto standards, for example, their standards for the protection of children within autos are lower than ours. We're not about to lower ours to accommodate the EU standards. So it's a matter of going through each of the many hundreds of standards and trying to find an accommodation that allows for trade to occur without jeopardizing the intent of the regulations to begin with.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Just around the issue of the involvement of the labour movement in civil society organizations, there's been some talk about having a model somewhat structured around MERCOSUR, where there is some direct involvement of the labour movement in civil society groups. Has that been discussed at this point?

[Steve Verheul]

We haven't had any discussions about an actual model going forward, but we have been consulting closely with civil society. I've been having a discussion with a broad group of civil society representatives after every negotiating round, and they've certainly made their views clear on the various issues.

We've been doing the same with the business community. We need the input from all Canadians who have an interest to get this to the right kind of place where it's going to be broadly acceptable and seen as providing real benefits to Canadians.

[The Chair, Conservative, Lee Richardson]

Thank you.

We're going to start over on this side with Mr. Allison.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Thank you, Mr. Chair, and also thank you to our guests.

Mr. Gauthier, you talked about supply management. I come from an area that has a lot of supply management, and I know you've said we will defend that.

My questions are twofold. I appreciate the fact that we have sensitive areas in agriculture that we want to protect, and you've indicated we'll do that. I imagine the Europeans also have a number of sensitive areas with regard to agriculture.

Do you think defending our supply management makes it difficult, or they have something they want to protect so they understand that?

[Gilles Gauthier]

It's common that both parties will have some sensitivities. But you need to look at it not necessarily as trading off one to the other. This is a complex negotiation and it involves a lot of different issues. In agriculture alone, you're talking about a breadth of issues that is quite diversified.

You're not looking at it only from the same product on both sides and so on. You're trying to address each other's best export interests and sensitivities, and that's the process of a negotiation, trying to advance your interests across the board, whether there are more on the offensive side or more on the defensive side. I think in terms of these negotiations, Canada certainly has objectives in terms of enhancing our export interests in a number of areas: beef, pork, grains, processed products, so it's quite a breadth of different offensive interests.

The EU will also want to advance their interests across a range of products. It remains to be seen whether among their top interests there will be some interest pertaining to supply managed products. For now I think our position in the negotiations has been very clear, that on these products the government has stood firm in defending supply management. Therefore, maybe there are other areas where we can better accommodate their export interests and at the same time advance our own.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

I have one last question and then I'm going to pass it over to Mr. Keddy.

Based on your experience with negotiations, do they have some supply managed areas like milk or some of these areas that they...?

[Gilles Gauthier]

Agriculture, generally speaking, is a sensitive area for Europe. Traditionally they have always taken a fairly defensive position, whether it is in this negotiation with Canada or in other negotiations at the WTO or with other trading partners.

I think we need to be creative in trying to find solutions where we think Canadian exporters can serve their market in an effective way, competing on an equal footing with other countries, and supplying a fairly broad-based market. After all, the EU is a very large market. They're a net importer of foodstuffs in many product lines. So why can't Canada be competitive in these particular segments of the agriculture sector and therefore advance our export interests?

I think that's the objective we're trying to pursue in these negotiations.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Thank you very much.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you, Mr. Chairman.

Welcome to our witnesses.

Specifically to Mr. Allison's question, in our discussions with some of the EU negotiators the other day, they stated that they do have quota on milk in a number of European countries, so I would expect that should be to our advantage. I don't know where we go with that, but it certainly should help us.

I've got a specific question on lumber exports. I'm sure you guys are very familiar with the problem of lumber exports coming from eastern Canada specifically being cut out of Europe or shut down from Europe for at least 15 years over the pine borer nematode. Products from Canada with bark or needles on them, forest products, are not allowed to be shipped to Europe. You know, we've got 500 years of history of shipping product to Europe, so this should be one specific area that we should be able to deal with, get away from the phytosanitary certificate and go strictly with inspection. We were always able to ship green lumber to the European Union as long as it didn't have bark or needles on it. That was a multi-billion-dollar industry in eastern Canada. We should be able to again, as long as we clarify the rules when we work this agreement out.

Have you folks looked at that, or perhaps, Mr. Verheul, have you looked at that?

[Steve Verheul]

Yes, we have. We're certainly aware of the level of interest in that particular issue from the east. Some of our highest priorities in the goods area generally include wood and wood products. We've certainly made that clear to the European Union.

The other thing we made clear is that when we're talking market access with the European Union, we're not going to talk simply about tariffs. We're going to take a much more global approach to the whole issue of market access. Our perspective is going to be asking what it takes to get our product into the EU market—not what it takes to lower the tariff, but what it takes to get the product into the EU market. That means we have identified specific sanitary and phytosanitary issues, including the kind you mentioned, as well as other technical barriers to trade that they have, which currently tend to block our exports. So by looking at market access in that more global kind of picture and orienting it towards what it takes to get into the market, I think we'll have a much better chance of getting real and lasting access.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

If I have time, Mr. Chairman, on—