Evidence of meeting #13 for International Trade in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was ceta.
A recording is available from Parliament.
11:50 a.m.
Conservative
The Chair Conservative Rob Merrifield
We don't have time for that.
Mr. Davies, we'll split the time. We'll give you three minutes and Mr. Holder three minutes. Then we'll bring the session to an end.
January 28th, 2014 / 11:50 a.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Thank you, Mr. Chairman.
Mr. Trew, I want to talk about investor-state provisions. Canada and the European Union nations are all modern democracies with well-functioning judicial systems. They respect the rule of law. Their judicial systems incorporate the concepts of transparency, security of tenure for judges, and appropriate appellate processes.
Critics of investor-state provisions point out the serious deficiencies in this regard, where trade disputes are not heard in domestic courts with all those protections, but rather are heard before international tribunals where the adjudicators don't have security of tenure. In fact, there are allegations of conflict of interest, because they slide in and out of adjudicating and then acting for the various corporations that may have complaints. Also, there is no appropriate appeal process, and transparency issues exist as well.
Is there any reason that Canada and the European Union shouldn't subject trade disputes to our domestic judiciaries?
11:50 a.m.
Trade Campaigner, Council of Canadians
No, I don't think there is any reason. I don't think there's a good reason to include investor-state arbitration in CETA. I'm not convinced, nor are many groups or lawyers who have looked at this text, which is available publicly now on certain websites, that it addresses the issues you've just mentioned, such as the good issues around the process itself and the fairness of the arbitral process. I don't think there is a good argument to include it, but there are a lot of good arguments to take it out of CETA.
11:50 a.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Do you have any concern, as some critics have raised, that the very investor-state provision may have the effect of restricting the jurisdictions', Canada and the EU, ability to make sovereign policy decisions without worrying about being sued by corporations on either side, and therefore having their policy-making room restricted because of the trade agreement? Do you share that concern?
11:50 a.m.
Trade Campaigner, Council of Canadians
I do. In fact, the federal government shares that concern as well. We saw that in the financial services negotiations as part of the CETA talks. They clearly didn't want to allow investor-state challenges to be directed at financial measures here in Canada. They expressly said that if that were the case there would be this kind of chill effect on our ability to put in place prudential measures to protect the financial system, for example to avert crisis.
If there's a chill effect in finance, I think it stands to reason that there's a chill effect in other areas: environmental policy, decisions related to mining concessions, oil and gas projects. In fact, we see globally that this is where the disputes are happening. Even here in Canada they're taking place against the fracking moratorium in Quebec. In Latin America the main focus is around very controversial public interest decisions related to mining, oil, gas, fracking, these kinds of things. We're just opening the floodgates, I think, with CETA to those kinds of challenges here in Canada.
11:50 a.m.
Conservative
11:50 a.m.
Conservative
Ed Holder Conservative London West, ON
Thank you, Chair, and thank you to our guests.
Mr. Trew, you made a comment, as it relates to CETA, that it's not as big a deal as we think.
Can I ask you, do you know the size of the European Union's gross domestic product?
11:50 a.m.
Trade Campaigner, Council of Canadians
It's the largest economy in the world—
11:50 a.m.
Conservative
Ed Holder Conservative London West, ON
Keep going. Do you have a dollar amount? You were right on it being the largest economy.
11:50 a.m.
Trade Campaigner, Council of Canadians
To be fair, we have access to that market. It's not a closed market. There are very few trade barriers to doing business with Europe. We do 10% of our trade with the European Union. That's the highest amount after the United States. There are almost no problems with respect to doing trade or business with the European Union.
11:50 a.m.
Conservative
Ed Holder Conservative London West, ON
Do you know how big our exports are to the United States right now, Canada's export value?
11:50 a.m.
Conservative
Ed Holder Conservative London West, ON
Well, combined between exports and imports, in 2012 it was over $600 billion. But in exports, no, it wasn't $200 billion; it was over $325 billion.
Do you know what it was in 1988, when we started the free trade deal, just our exports? It's not fair because you don't have these stats in front of you, I'm sure, so let me help you. It was just over $81 billion in Canadian exports. We've raised it 400%. I'm not even talking about imports in this chain-link economy that we have between the two. In fact, what we've done is we've had a 400% increase in exports alone from Canada to the United States. Yet I hear, from what you say, that you don't support NAFTA, and that you don't think Europe, which you rightly said was the world's largest economy, and the access that Canada has, as the only country in the G-8 that will have a link between the two most significant economies in the world.... We've proven with NAFTA, that you don't support.... We've increased our exports—and, again, ignoring imports for a moment—by 400% because we removed those barriers.
I will be one to say that it isn't always the gentlest and smoothest relationship with the United States, but we've done that, and that has meant jobs for Canada. When we link it to Europe, and that opportunity for the world's largest economy.... By the way, $17 trillion is the number, just to give you a sense of the size of that economy.
Without you having those numbers in front of you, what I've heard you say, and what I've heard Mr. McBane say, is that the job creators, the ones who are, frankly, going to be the ones that keep you and Mr. McBane, and all of us as Canadians employed and create new opportunities...those are the agreements that you don't support. My colleague was trying to get a sense from both of you.
11:50 a.m.
Conservative
Ed Holder Conservative London West, ON
That one trade agreement that you supported, you said, “We don't oppose every aspect” of this agreement. Can you tell me, then, what you do support within the agreement, please?
11:55 a.m.
Trade Campaigner, Council of Canadians
The Atlantic fisheries, for example, stand potentially to gain from lower tariffs in that area. Now that's an area where tariffs are actually quite high, but if you look at most of the other areas of the Canadian economy, you know Canada-EU trade, the tariffs are quite low. I think going back to the NAFTA experience, it's non-reproducible with Europe. We have a very integrated North American economy here. It's difficult to say to what extent NAFTA or the free trade deal did actually lead to—and I'm being serious here—that four times growth. Even when we signed that deal with the United States, tariffs were already quite low.
In terms of trying to reproduce that with Europe, I mean even the federal government's own study doesn't say that's going to happen. They're looking at a larger trade deficit of about $8 billion after we sign CETA.
11:55 a.m.
Conservative
The Chair Conservative Rob Merrifield
Thank you very much to both of our witnesses. This takes us to the end of this session. We will now suspend for a couple of minutes as we set up the table for the next set of witnesses.
Thank you again. We appreciate your comments.
Noon
Conservative
The Chair Conservative Rob Merrifield
I'd like to call the meeting back to order.
We have our witnesses in their chairs ready to go. We want to thank them for being here.
From the Canadian Agri-Food Trade Alliance, we have Mr. Martin Rice. You've been here before. We appreciate your coming back.
From the Information Technology Association of Canada, we have Lynda Leonard, senior vice-president. Thank you for being here.
We'll start with you, Mr. Rice. The floor is yours.
Noon
Martin Rice Director, Canadian Agri-Food Trade Alliance
Thank you very much. Bonjour. Good morning.
My name is Martin Rice. I'm a director of the Canadian Agri-Food Trade Alliance. I represent the Canadian Pork Council, and I am pleased to be here on CAFTA's behalf to speak to committee members on the Canada-European Union comprehensive economic and trade agreement, or CETA.
CAFTA, as perhaps all of you are aware, is a coalition of national and regional producer groups and industry associations in support of open and transparent conditions for international trade of agrifood products. Taken collectively, our members account for roughly 80% of Canada's annual agrifood exports.
CAFTA was able to immediately and unequivocally voice its support of the agreement in principle on CETA when Prime Minister Harper and European Commission President Barroso announced it on October 18 last year.
CETA secures real and substantial access to one of the world's few multi-billion dollar agrifood export markets and importantly, it does so ahead of our major competitors. We concur with the observation made by many international trade experts that the Canada-EU trade deal, when implemented, will be Canada's most significant trade agreement since NAFTA. CETA covers a significant range of issues, including tariffs, non-tariff barriers, services and investment, financial services, government procurement, and much more.
Very significantly and for the first time in the history of Canada's trade deals, CETA covers issues that fall within the jurisdiction of provincial governments, leading to Canada's 13 provinces and territories having played a significant and important role during the negotiation process. We compliment them on their contributions in this precedent-setting international negotiation.
The European Union, with Croatia's accession in 2013, now includes 28 individual countries, whose combined population exceeds 500 million.
Today, Canada ships just $2.4 billion in agriculture and food products to the EU, only about 5% of our total. CETA offers tremendous potential for our members. Canada's exports really should be much higher. l would like to share with you a sample of CAFTA members' projections of the additional opportunities that are seen to be provided by CETA. The Canola Council of Canada estimates the deal will provide that sector's exporters the opportunity to increase sales by up to $90 million.
The Canadian Cattlemen's Association points to new duty-free access for almost 65,000 tonnes of beef at a value they estimate to be nearly $600 million.
Opportunities from CETA for the grain sector are seen to be both direct and indirect. The Western Grain Elevator Association has identified duty-free wheat sales on top of the grain utilized in feed for livestock to meet the increased EU demand for Canadian meat.
The Canadian Meat Council, which represents meat processors, has pointed out that the value of EU agricultural imports has increased by some 145% in just over a decade, from 2000 to 2012. It sees important export growth opportunities for bison, veal, and prepared meats in addition to pork and beef.
The sugar industry, through the Canadian Sugar Institute, expects CETA will secure an additional $100 million in exports of sugar-containing products to the European Union.
My own organization, the Canadian Pork Council, representing Canada's hog producers, has projected, based on existing market intelligence and the anticipated market opportunities for specific cuts of pork, that this deal could, in a few short years, lead to annual sales from Canada to the EU of $400 million.
Taken together, we believe the Canada-European Union comprehensive economic and trade agreement, when fully implemented, could result in $1.5 billion in new Canadian agrifood exports to the EU.
On the day of implementation of CETA, tariffs on almost 94% of Canada's agrifood exports to the EU will be eliminated effective immediately. Over the course of the implementation period, virtually all tariffs, other than for beef and pork, will also be eliminated.
Also contributing to the value of CETA for the Canadian agrifood industry is the fact that the negotiations have gone beyond tariffs, taking on a wide range of non-tariff issues critical to Canada's agriculture and food exporters.
CETA has included discussion in areas such as technical barriers to trade, sanitary and phytosanitary issues, regulatory cooperation, and export subsidies. These issues can often be the most significant barriers facing our exports, as important even, in some cases, as the tariffs themselves in the case of the European Union.
CETA has established mechanisms that will promote cooperation and discussion on regulatory issues and non-tariff barriers that impede trade. Through CETA, Canada and the EU have also committed to work together to advance a number of non-tariff issues, including approval of meat processing facilities and timely approval of biotech traits. These and other issues still need to be more fully resolved before CETA is implemented, but we are confident that the Canadian government is committed to doing that.
It is my own view that Canadian agriculture and food exporters have individually and collectively through CAFTA invested significantly more time and effort on assisting Canada in achieving a favourable outcome from CETA negotiations than for any other set of trade negotiations. We firmly believe CETA provides the net national benefit to Canada that merits this agreement being finalized and implemented. We look forward to continued support of the federal and provincial governments in achieving these outcomes.
Thank you very much.
12:05 p.m.
Conservative
The Chair Conservative Rob Merrifield
Thank you very much.
We'll now move to our second presenter. Ms. Leonard, the floor is yours.
12:05 p.m.
Lynda Leonard Senior Vice-President, Information Technology Association of Canada
Thank you very much for inviting ITAC to meet with you today to talk about the comprehensive economic trade agreement.
I am here this afternoon as a poor substitute for my boss, Karna Gupta. Karna is in Dubai today, leading a trade mission at the Arab health conference. He's with seven of our members who are active in electronic health delivery.
This is our second mission to emerging markets in as many months, which I hope gives you a sense of the importance of global markets to the technology companies that we represent.
To my knowledge, this is the first appearance ITAC has had before you. Thank you again for the opportunity. Let me begin, therefore, with a quick thumbnail of the information and communications industry within Canada.
There are over 30,000 ICT companies across the country. In total, they generate about $155 billion in annual revenue and contribute about 5% to the Canadian GDP. They employ 521,000 Canadians directly. When you calculate the number of techies employed by other sectors, our workforce swells to about 800,000 people.
Our employees are very well educated: 45% of ICT employees have university degrees, compared with the national average of 26%. They're also well compensated, earning an average salary 52% higher than the Canadian average.
The sector leads the economy in investments in research and development, accounting for nearly a third of business investment in R and D in Canada.
While some of ITAC's members are over 100 years old, and the organization itself has existed for 60 years, we're still a relatively young industry. Our sector experienced its most rapid stage of growth from the period of roughly 1976 to 2001. I believe it's fair to say that our industry very much grew up in a period of freer trade, and we're clear beneficiaries of historic trade agreements.
Our growth and our success are closely tied to our ability to export. Well over half of what we produce is exported. The simple reality is that the Canadian market is simply too small to ever be sufficient to support the growth and leadership of Canadian producers of computers, software, wireless devices, applications, and microelectronics.
ICT companies know from the moment they emerge from their incubators that they must find customers in global markets or they will fail. A key mandate of our association is to do whatever we can to assist in the development of effective international business development strategies as early as possible in the evolution of these companies, and to assist them in any way we can. We rely very heavily on the resources of the Department of Foreign Affairs, Trade and Development and its trade commissioner services, as well as Export Development Canada, to help us fulfill this mandate.
In 2011 we exported $20.7 billion in goods and services. The nature of ICT exporting is changing. The United States and our close connections with the U.S. ICT industry have been very important to us. The legacy of freer North American trade has positioned us to be viewed, or to think of ourselves, without hubris, as Silicon Valley north.
The freer flow of talent across the 49th parallel has also had a profound impact on our industry. Silicon Valley experience is prized in the Canadian industry. Many, many ambitious ICT entrepreneurs have tested themselves in the valley, or the alley, or the other centres of ICT excellence. Frequently they return home to build stronger enterprises of their own here in Canada.
Access to U.S.-based global giants is also prized. Partnerships with these companies can set a course for global success for Canadian firms in their supply chains. Of course the U.S. business and consumer markets, exponentially larger than Canada's, also have a magnetic power on Canadian ICT. For all these reasons, the United States is and will continue to be vitally important to our industry, and receives about 64% of our exports.
But other markets are growing in importance as well. The size of Canada's ICT exports to the United States actually declined in 2011, while exports to the European Union increased by 8% to constitute 12% of ICT exports, totalling approximately $1.4 billion. We've seen significant growth in Asia Pacific trade as well.
The nature of what we're exporting is also changing. The computer and software space is currently accountable for about 86% of our industry, and is its fastest growing segment.
Canadian companies are proving themselves to be world class in solving enterprise transformation challenges for organizations throughout the world. We're seeing the services component command an increasing larger share of ICT exports, accounting in 2011 for just under half of our exports.
This requires new thinking about the nature of 21st century knowledge exports and challenges us in our use of terms like shipments and ports of entry. It challenges us to think about the increasingly digital nature of what we produce and the invisible and instantaneous way that it is delivered to global markets. One of the things we like about the comprehensive economic and trade agreement is the admirable way it's met many of these challenges. I'm pleased to say that we can observe the same forward thinking in other trade agreements currently under discussion.
When CETA was announced last fall, we welcomed it as good news for technology, giving our companies unprecedented access to a sophisticated market of 28 countries. We hope we were sufficiently enthusiastic in our response. Here are some of the specific elements of CETA that we welcome.
CETA expresses an understanding of the importance of the global trade in services. As the CETA overview so clearly expresses, “Trade isn’t just about importing and exporting goods. Ideas and expertise are also traded in the form of services and investment flows from one country to another to create jobs and growth in both the originating and destination countries.”
The agreement understands and makes provisions for a trade context where a major Canadian export is brainpower. CETA also understands that knowledge exports require the freer flow of people. Thanks to digital technology, brainpower can be exported in a variety of ways but sometimes exporting brainpower requires the physical relocation of the human being attached to the brain.
Because the importance of exporting is such a fundamental tenet of our industry and because we've become adept at succeeding in global markets, we've learned pretty quickly that no country has a monopoly on creativity or innovation, so Canadian ICT companies have developed a sharp appreciation for the highly qualified talent found throughout the world. We believe it's important to safeguard and protect Canadian jobs and protect Canadian employees from abuse, but because our primary product is knowledge, we view the pursuit of freer access to global labour markets as part of the same impulse that drives us to seek new opportunities in global goods and service markets. This isn't necessarily a widely held belief, so it is encouraging to see this idea captured in some of the thinking behind CETA.
CETA explicitly includes knowledge-based sectors, once again expressing recognition that there are no natural monopolies on knowledge. CETA seeks to create stronger ties for discussion and cooperation in science-based sectors, including ours. It also underscores the importance of clearly understood and shared mechanisms for the protection of intellectual property. With a focus on the ways that regulation can impede or foster innovation, it provides for an environment of regulatory cooperation.
CETA understands the role that government procurement plays in economic growth. The provisions of the agreement aim to expand and secure opportunities for Canadian companies to supply their goods and services to governments in Europe. European companies will have similar access to Canadian procurement, which should lead to robust competition for government business and better outcomes for taxpayers.
Finally, CETA is forward looking and encourages Canadians to be forward looking. With its focus on knowledge sectors, its understanding of electronic commerce, and its fundamental recognition that the world of modern business is so dynamic that even trade agreements must be adaptable to new realities, CETA is a very modern trade agreement.
We look forward to its formalization. When this occurs, Canada will have freer access to markets in half of the world and for global traders like Canada's technology sector, this is good news indeed.
12:15 p.m.
Conservative
The Chair Conservative Rob Merrifield
Thank you very much for your testimony.
We'll now move to questions and answers. We'll start with Monsieur Morin. The floor is yours.