Evidence of meeting #44 for International Trade in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was trade.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

  • Steve Verheul  Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade
  • Ray Armbruster  Director and President, Manitoba Beef Producers
  • Cam Dahl  General Manager, Manitoba Beef Producers
  • Gordon Bacon  Chief Executive Officer, Pulse Canada

11 a.m.

Conservative

The Chair Rob Merrifield

We would like to call the meeting to order.

We want to thank our witness for being here. This is actually a continued study on a comprehensive economic trade agreement between the European Union and Canada.

We have with us our chief negotiator, Mr. Steve Verheul, and Ana Renart, deputy chief trade negotiator.

We appreciate you being here. We have a hour with you, and then we'll move into a second round of testimony on the Japanese partnership agreement.

Without any delay, we'll yield you the floor. Then we'll have questions and answers.

Steve, the floor is yours.

11 a.m.

Steve Verheul Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade

Thank you very much, Mr. Chairman.

Good morning, everyone. Thank you for inviting me to speak to you today about the status of the negotiation of a comprehensive economic and trade agreement, otherwise known as a CETA, with the European Union.

I plan to provide you with a brief overview of where the negotiations are at, outline some of the key outstanding issues we will need to solve in the coming weeks and months, and give you an idea of the upcoming next steps in the negotiations.

I will start with the status of the negotiations. Overall this remains the most complex, comprehensive international trade negotiation Canada has ever undertaken, and the same is true for the EU. Although the negotiations have now been under way for more than three years, we have never stalled, we have never lost momentum, and we have maintained a positive and constructive atmosphere throughout this period on both sides.

Since we completed our last formal round of the negotiations last fall, we have entered a much more intensive, focused phase of the discussions as we deal with increasingly difficult issues. We are now meeting at least once a month with our EU counterparts, and are having frequent video conferences and teleconferences in between those meetings.

With respect to the draft text of the agreement, most chapters are either completed or differences have been narrowed down to only key areas of divergence between our positions. We have exchanged offers on goods, government procurement, and services and investment. Those offers have been extensively negotiated.

At the moment, much of our focus is on three areas that are somewhat behind the rest of the issues. The first is rules of origin, which is essentially about determining the rules by which a product will be considered to be of Canadian or European Union origin, and thereby eligible to receive preferential treatment. The second is services and investment reservations, which is about determining which areas or sectors will be exempted from certain of the services and investment obligations of the agreement. The final area is the investment protection rules, where negotiations have started late because the EU only recently acquired the competence from member states to negotiate these provisions.

These areas are all highly detailed and complex, and inevitably take a considerable amount of time to sort out.

On rules of origin, Canada and the European Union come from quite different places. Our approach is to have quite liberal rules of origin, as many of the products we produce rely heavily on inputs from other countries, most notably the U.S. The EU, on the other hand, as a union of 27 countries, has developed more restrictive rules of origin, as a considerable amount of trade takes place within the EU market itself. Despite these differences, we have been making some good forward progress on rules of origin, including on agricultural products, fish, and industrial products. Both sides are making compromises to close the gaps between us, but there is no substitute to doing this product by product, and that takes time.

On the services and investment reservations, we had convinced the EU earlier in the negotiations to use the approach of taking commitments on a negative list basis, which essentially means that all areas are covered by the agreement, except where you take specific exceptions. We have also made good progress in this area, but this is the first time the EU has used a negative list approach. It has required extensive and lengthy discussions with member states to achieve a consensus on their positions.

On the investment protection text, as I mentioned, the EU only received its mandate on these issues several months ago, so this area needs to catch up.

So that's where we're at. At this point, both sides are maintaining comprehensive objectives for the negotiations, and both sides continue to be creative in looking for solutions. Despite the ongoing financial difficulties in the EU, we have seen no change in their commitment to complete these negotiations. Still, we clearly have some challenges ahead. As we move forward, the most difficult negotiations will be on goods, government procurement, intellectual property, and services and investment restrictions.

In the area of goods, first of all, not surprisingly we have challenges on agriculture, as there are sensitivities on both sides. Fish will also be a challenging area, as we have strong interests in the EU market, but they have some defensive interests. Finally, work remains on autos, both with respect to access to our market and for our access to the EU market.

Intellectual property will be another challenging area. While gaps have been narrowed on copyright, given the copyright bill in the House, we have made limited progress on EU demands on geographical indications for agricultural products, and have made no progress on the issue of patents for pharmaceuticals.

We have made an ambitious offer on government procurement in the negotiations, but this is the EU's most important offensive priority, and they can be expected to push for more.

Finally on services and investment, each side is looking for more from the other side, whether it's our interests in professional services, environmental services, research and development, or labour mobility; or the EU's interest in financial services, investment restrictions on energy, and others. We will need to reach accommodations on these issues as well.

Overall, while that might sound like a long list, the reality is that even most of these issues are very well advanced, and the negotiations are being increasingly narrowed down to the final issues that will need to be resolved in order to conclude the negotiations.

Provinces and territories remain very closely engaged in these negotiations. We meet with them for at least a couple of days every month to review the outstanding issues and to discuss strategies for resolving differences in the remaining areas, and they continue to attend negotiating sessions covering areas under their jurisdiction. Their involvement continues to be highly constructive, and this has enabled our approach on all issues to be unified, coherent, and ambitious.

Finally, on next steps, we had our last meeting with the EU here in Ottawa two weeks ago, and our next meeting is scheduled to take place in Brussels beginning on July 16, 2012. We are planning to meet with the provinces and territories for three days the week before that to finalize our approaches to the various issues to be discussed at that meeting. Following the July session, we have meetings planned for September and October, and at that point we will need to assess how far we are from the finish line. Both sides continue to hold the objective of completing the negotiations in 2012.

Thank you for your attention. I would be pleased to respond to any questions you might have.

11:05 a.m.

Conservative

The Chair Rob Merrifield

We want to thank you very much.

Just before we get into the questions, I have one quick little question, just to add some information. Is this the most comprehensive free trade deal between any two countries in the world, if it gets over the line?

11:05 a.m.

Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade

Steve Verheul

As far as we know, yes—certainly of all the completed free trade deals that have been finished, and as far as we can tell, any in negotiation as well.

11:05 a.m.

Conservative

The Chair Rob Merrifield

That was my understanding. I was challenged on that last night so I thought I'd ask you this morning.

We'll move right to question and answer.

Mr. Davies, the floor is yours.

11:05 a.m.

NDP

Don Davies Vancouver Kingsway, BC

Thank you.

Thank you very much to both witnesses for being here.

Is there an investor-state provision on the table right now, Mr. Verheul?

11:05 a.m.

Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade

Steve Verheul

Yes, there is. We're starting late on that issue because the EU only recently acquired the competence to negotiate that for member states. We're only at the stage now of exploring what kind of text we can put together in that area.

11:05 a.m.

NDP

Don Davies Vancouver Kingsway, BC

Would Canada's position be similar to the chapter 11 section that's in NAFTA?

11:05 a.m.

Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade

Steve Verheul

It will be similar in some respects, but NAFTA was quite a long time ago at this point. We've learned some lessons, and the EU is also coming from a different place than we are when it comes to these issues. It will bear some resemblance to the chapter 11, but it will contain a number of important differences.

11:10 a.m.

NDP

Don Davies Vancouver Kingsway, BC

Not to put too blunt a characterization on such a provision, but chapter 11 has been described as a provision that allows corporations to sue governments for compensation if they believe they've stood in the way of profits.

Would that be a fair characterization of the provision that's in play here?

11:10 a.m.

Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade

Steve Verheul

I would say what we're trying to do in CETA—and we've had some fairly open-ended discussions about this so far—is that we do want to ensure we're providing a lot of scope for the right for governments to regulate. We don't want any kind of provision we negotiate to interfere with those rights.

There will certainly be a balance between what government is able to do and the opportunities that investors may have to pursue what they feel are wrongful situations.

11:10 a.m.

NDP

Don Davies Vancouver Kingsway, BC

Take a recent example. The Province of Newfoundland and Labrador had a chapter 11 experience when AbitibiBowater shut down their pulp and paper mill in Grand Falls-Windsor. The province responded by taking back the company's rights to water and wood in the province, and they sued the province filing NAFTA. The federal government stepped in and gave the company $130 million.

Is that the kind of experience we would be looking at if we get a similar kind of provision in this agreement?

11:10 a.m.

Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade

Steve Verheul

I'm not going to talk to any of the specifics of that case. It's difficult to evaluate this on the basis of one case like that. But I would say you will see that we will have a number of protections in our investor-state approach that will be a bit different from what has been negotiated in the past.

11:10 a.m.

NDP

Don Davies Vancouver Kingsway, BC

So would it be a fair characterization to say, hopefully, Canada is learning from the implementation of some of those provisions and might do a better job of protecting government's ability to make decisions in the public interest? Is that something that's on our mind when we go to the table?

11:10 a.m.

Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade

Steve Verheul

Yes, I think we're trying to negotiate the best outcome we can when it comes to things like investor-state dispute settlement. This is not anything unique to Canada, the U.S., and Mexico under NAFTA. It's contained in most countries' free trade agreements, or bilateral investment treaties, or foreign investment protection agreements. Those kinds of investor-state provisions are a part of most, if not all, of those, so—