International Trade Committee on June 19th, 2012

[Steve Verheul]

I think we would have preferred to have moved somewhat faster. I think the European Union frankly would have preferred that as well. Because of the extent and the complexity of this agreement, it just takes time to grind through a lot of it. We want to make sure we get it right, obviously. That requires a lot of ongoing consultations and a lot of ideas and creative thinking. I certainly think that if it's taking a little bit longer than we might have liked, it's because we're going to get a better outcome at the end of the day.

[Ed Holder, Conservative, London West, ON]

We all hope that as well.

You made reference to the negative list, and I will say to you that one of the comments we heard through parliamentarians across from us from Europe was about how that was something they had to come to terms with. My sense was that they had done that, though, and that—thanks to the support of negotiators from the EU—countries had supported that. I think that's a big step forward.

I try to share with my constituents on a weekly basis what goes on in various aspects of Parliament. I do this through a newsletter, and I send it out to some 20,000 people per week. The feedback I get when I discuss CETA is people asking why we would hitch our wagon to a place—a whole variety of countries—where there are a variety of financial challenges. Of course, Greece is the one that most recently dodged a bullet, and I hope that's ultimately a true thing.

What answer would you give to my constituents—and maybe I will just steal your answer if it's better than the one I am trying to think of—as to why Canada would want to do that? Are we putting Canada at risk somehow? I'd like to refresh that answer. I know we've talked generally in the past about benefits. It comes back really to what the European parliamentarians told us, which is, “Push this along, Canada, because there are going to be changes of government”. One of our colleagues earlier in his questions asked you that.

Can I ask you, please, how you would answer the constituents for me? Could you give me the great answer?

[Steve Verheul]

I myself have been asked that question a number of times too. Why are we negotiating with the EU when it's in such significant economic difficulties right now?

I think you have to take a bit of a step back and look at the bigger picture with respect to the European Union. It is made up of 27 countries. They remain among the richest countries in the world. It's the largest market in the world. There are 500 million people, and a GDP that is larger than any other market in the world. Sure, they are having some economic difficulties. We don't expect those are permanent. Even though they have some individual member states that are struggling somewhat, others remain very strong, including Germany and a number of others. For a union like the European Union coming out of that kind of situation, you can anticipate some significant opportunities developing. We want to take advantage of that wave when it happens. There's certainly no question in my mind that this is the right time to get it done.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We will now move to Mr. Sandhu.

[Jasbir Sandhu, NDP, Surrey North, BC]

Thank you for being here.

I just want to follow up on my colleague's question earlier on. There was a study commissioned by the European Union regarding its sustainability impact assessment on CETA. Basically this study urged both parties to avoid investor-state provisions relating to disputes settlement, because the study found no evidence that they encourage investment flow in and out of the country. Furthermore, the study also concluded that they do contain the risk that legitimate public policies will come under attack. There's evidence on this side, and we have also had to hand out $165 million of taxpayers' money, and now we're on the hook in the ExxonMobil Corporation case in Newfoundland for another $65 million.

How are taxpayers being protected when we're negotiating these investor-state provisions?

[Steve Verheul]

Whenever we start discussing these types of provisions, it's clear that we need to find the right kind of balance between the rights of government to regulate.... We don't want to interfere with that. We certainly don't want to affect anything related to public services or our ability to deliver and maintain public services. It's a matter of ensuring that we can keep that provision contained where it should be contained, which is with respect to investors who may have felt they had received some unfair treatment along the way.

In the chapter on investment protection, we're going to try to ensure that it's clearer than it has been before where that line is between the government's rights and an investor's rights to challenge some of the provisions. It's a matter of getting that balance right, because we do want to encourage investment. We want to assure investors that their investments will not be subject to unpredictability or to practices that might be highly questioned. At the same time, we want to ensure that, as a government and as Canada, we can do what we need to do to follow our policy.

[Jasbir Sandhu, NDP, Surrey North, BC]

Has the federal government done any sort of assessment on the impact on investment, both in and out of the country, if these provisions are part of it? Has the Canadian government done any studies on it?

[Steve Verheul]

It's difficult to do any kind of reliable study in that type of area, because you're basically having to ask people whether they feel more confident or less confident with having that kind of investment. Whether a company chooses to invest or not can be subject to a whole series of different questions and criteria. Investor-state protection is probably only one of those, and probably not the major one.

So we think that through the experience the European Union has had with investor-state dispute settlement and protection, and through the long experience we've had, we're well positioned to come up with an approach that we think will be more effective than what we've seen in the past.

[Jasbir Sandhu, NDP, Surrey North, BC]

We don't have any evidence as to whether the investment will flow or come into our country if these provisions are part of it, so why negotiate these provisions?

[Steve Verheul]

I think the reason to negotiate those provisions is to provide greater assurance to investors that if something goes wrong with their investment, there is an avenue they can pursue, particularly if there's been some measure taken that they see as contrary to obligations.

We have that kind of dispute settlement in various other areas as well. It's a little bit different when it comes to investor state, but the main motivation behind it is that we can assure investors of a reliable environment within Canada. Similarly, we can be assured that we have a reliable investment environment within the European Union.

[Jasbir Sandhu, NDP, Surrey North, BC]

Just to change the topic here, we've had Bill C-31 being passed through the House of Commons. We've also had concerns from European Union countries, a number of them, in regard to the visa issue.

With regard to Bill C-31 being passed, was it direct pressure from the European Union to have this bill passed?

[Steve Verheul]

No, I wouldn't say so. That was done for domestic reasons. Certainly it allowed us some more scope to negotiate within the CETA on the basis of some of those proposed changes, but no, I wouldn't say it was driven by the CETA or by other outside countries that may have been asking for similar things.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Cannan.

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

Thank you, Mr. Chair.

Thanks again to you and your team, Steve, for the great work you've been doing to date. I know it's many hours and hard work, which is for, as I've said, the bigger picture for not only today but future generations.

I'd just like to clarify the numbers we'd talked about when this was announced a couple of years ago, in terms of the economic impact.

Are you still looking at $12 billion and at approximately 80,000 jobs being created?

[Steve Verheul]

Certainly that was the outcome of the study that was done prior to the launch of negotiations. I think, based on the extent that we've entered into areas that are perhaps more comprehensive than we'd anticipated at the beginning, and given the fact that the study was assuming that there would be an outcome at the WTO negotiations that would have diminished the impact of those numbers, my own personal view is that those estimates are probably low.

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

Thanks.

Just to clarify, Mr. Davies talked about water. Water is not on the table.

[Steve Verheul]

No. We've been very clear that...and we will have provisions in the agreement that will specify that there will be no rights to water in its natural state. There will be no requirement to privatize water or any of that type of thing.

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

With regard to our trade situation with the EU right now, what's our trade balance?

[Steve Verheul]

Our trade balance is slightly in favour of the European Union. Given the size of the markets, we tend to do fairly well, given that their economy is some 15 times greater than ours.

When it comes to current trade levels, in 2011 we exported about $40 billion worth of exports in trade, and imported about $52 billion. So it's not that far off of a balance considering the different size in the market.

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

You're cautiously optimistic that this agreement will push us towards a more balanced or positive direction?

[Steve Verheul]

Well, we'll certainly be exporting a significant amount more. Whether that will put us in a different position or not remains to be seen, but I think if we're importing more products of good quality from the European Union that we're getting at a good price, then I think that helps our economy too.

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

As you said, a good balance....

There was one concern when we were over there a couple years ago meeting with the parliamentarians. Maybe you can clarify the ratification process. So you're meeting in September or October and you come to an agreement then. How does that unfold with the parliamentarians and the ratification process? Can you enlighten us on that, please?

[Steve Verheul]

Sure. It's a fairly simple process in Canada. It's much more complicated in the European Union.

After we complete the negotiations and both negotiators have signed off as saying the negotiations have now ended, the first thing that happens is that it will have to be put through a process of legal scrubbing to ensure that the language we've negotiated is legally consistent throughout the agreement. Then there will be a period of having to translate the agreement into 22 languages within the European Union, which will take a considerable amount of time as well.

Then, once we do have that final agreement, it will go through the process of getting agreement within the Council of the European Union. It will also have to get agreement within the European Parliament and then, to the extent that this is a mixed agreement, as they put it, which includes areas under competence of both the European Union and the member states, it would eventually have to go to individual member state ratification.

Just to clarify that, traditionally the European Union will provisionally apply the results of the agreement while member states are going through the process of ratification, because most of the elements in the trade agreement will be under European Union competence, whether it's tariffs or whether it's most of the services and investment provisions. So 99% of the agreement could be put into place far earlier.

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

There's still a lot of opportunity for discussions and collaboration, I know. I compliment Hon. Ed Fast and Parliamentary Secretary Keddy for involving municipalities. I was nine years in local government, and this is the first time that local governments and the provinces have been consulted to this extent. I applaud that leadership initiative and inclusiveness.

Just to clarify, then, there will still be plenty of time once the negotiations are finalized to get the message out and communicate and dialogue with Canadians about the process before it's ratified by parties.

[Steve Verheul]

Yes, absolutely, and I've been spending quite a bit of time myself with municipalities as well, with the Federation of Canadian Municipalities. I keep them regularly informed on the outcome of our discussions. I've been to a number of meetings with Minister Fast to meet municipal representatives.

I think your scenario is exactly right. Once the agreement is concluded, we will have a considerable amount of time to prepare Canadians for the changes that will come with that agreement, both with respect to areas like those you've mentioned with the municipalities in educating them on any particular changes they might have to make when it comes to the impact of the agreement, as well as, just as importantly, ensuring that Canadian exporters are ready to start taking advantage of the provisions in the agreement that will give them far greater access to the European Union than most other countries.