International Trade Committee on March 25th, 2014

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

No, but it's a good example. So let's take that for an example.

What is the difference? Why do we need to negotiate with all these countries when some of them already have this regulatory enforcement whereas others don't? Why do we need to do this at the table? Does it provide anything? Is it beneficial? I guess that's what I'm wondering. Is there time lost there? There are tons of questions I can ask.

We're negotiating at the same time with Japan. We've already negotiated with Korea, and perhaps Korea will attach themselves. We already have agreements with the U.S., Mexico.

Is this the right approach? I'm not second-guessing, but I'm just wondering if it is the most efficient, best way to go about achieving what we want to achieve at the end—I guess that's free trade or fair trade—when there are some countries involved in the partnership that are not even at the first step of where we are. How does that work? Because I'm not part of negotiations. I'm just even wondering how you're even able to get there.

There are a lot of questions there.

[Kirsten Hillman]

Let me think about how to come back on that.

The cornerstone of Canada's trade policy for over a generation has been the global rule setting at the WTO. That is because, as a medium economy highly dependent on trade, what we are looking for is a level playing field in advanced countries like those in Europe, or the United States, and in high-growth developing countries where we would like to enhance our economic ties.

Unfortunately, things are not moving very well at the WTO. That has caused countries to go out and seek bilateral arrangements, and now, with the TPP and a few other regional agreements, regional initiatives, because as I was saying earlier, the WTO has become somewhat dated. It's not dealing with the realities of the current marketplace and what businesses need from their governments in trying to set a level playing field for them.

To answer your question as to why we're doing it with these countries, it's because these countries are doing it. They're doing it together. Right? There are many countries there that are extremely important to us and very important to our economy. In addition, it's a mechanism that is designed to grow in the region to include other countries that are very important to us.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

So which countries would be the most important in a TPP?

[Kirsten Hillman]

Which countries are the most important to us?

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Important to Canada, yes.

[Kirsten Hillman]

Beyond our NAFTA partners, Japan, and then the Asian markets that are there and that are coming in.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

So a huge country like Malaysia, is that important to us?

[Kirsten Hillman]

Yes.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

So their regulatory regime, I would imagine—I don't want to pick on them—is not as sophisticated as ours?

[Kirsten Hillman]

I too wouldn't want to pick on them.

What I would say is that there are countries around that table where our businesses have had challenges, absolutely.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Okay. What worries me is this. I think you were answering Mr. Morin's question about the single undertakings. So we can go about and do all this, and then at the end just pull out? Now, I'm not just saying Canada; anybody can pull out.

So we're starting from zero or minus zero when we talk about—and again, maybe I might be wrong—Malaysia, where the regulatory regime is not up to snuff with ours. Shouldn't that be the first area that you address before you continue? If not, just say, “Well, I'll go ahead and just negotiate with Japan and negotiate with the other countries,” and just get the deal done with Japan.

[Kirsten Hillman]

I think what happens in a complex multi-party negotiation like this is that each country comes to the table with what they're looking for and what they're sensitive to. There's going to be a package of gives and gets that is going to be acceptable for each party.

The reason we operate on the basis of a single undertaking is that we will not be able to assess until the very end of the day whether those gives and gets are acceptable to us. The same is true for every country around that table and there's no real way to have a country move forward on the things that matter to you unless you're willing to move forward on the things that matter to them. So we do it in a stepwise approach, bit by bit by bit, and at the end of the day we will all say this is the best deal we could create. Here it is, this is it. We take it back home and say this is what we have.

In truth, if you've devoted years to doing this and been very careful along the way, chances are hopefully everybody's going to say this is the deal, they're happy with this deal or else they usually just keep negotiating until they are. That's the sort of blood, sweat, and tears that has to go into getting there with a diverse profile of countries around the table. And I think the diverse profile of countries around the table is one of the key reasons that this is such an interesting initiative because it is setting rules, not only for countries that have already got rules like that, but for countries that don't or haven't taken steps in those directions, which sets an example to.... Absent of WTO we're all developing, and all developed countries and the whole global community is there. We've got a microcosm of that here, which I think makes it an extremely useful policy tool.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Cannan, you have seven minutes.

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

Thank you very much.

Ms. Hillman and your team, welcome to our trade committee.

I wanted to follow up on my colleague Mr. O'Toole's comments with regard to the fact that trade agreements are negotiated by professional trade policy negotiators such as you and not by parliamentarians or politicians.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

That's the problem.

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

I wanted you to clarify for the committee, if you could, if you feel there's an appropriate balance of transparency and confidentiality in these negotiations.

[Kirsten Hillman]

I'd be very happy to.

The way in which we approach, and have historically always approached, trade negotiations is to balance the requirement...and a trade negotiation is no different from any other negotiation that one might have in any other business context or labour context. There's a certain amount of confidentiality that's required in order to maintain our negotiating partner's trust. People have to take steps to be able to test the waters with certain ideas, get reactions, and see if those ideas are worthwhile in an environment where they feel comfortable that this will not become public, or they won't take those chances.

Like any negotiation—I'm not telling any of you anything you don't already know—in that context there has to be a certain amount of negotiating confidentiality or it just won't work. Nobody can negotiate in the public eye.

That being said, this is a government initiative for the benefit of Canadians, for the benefit of our businesses, our citizens, our workforce. Therefore, the positions that we as public servants are asked to take at the table are informed 100% by the consultations we have within the government and in Canadian society at large.

We have a very robust consultation mechanism or series of tools in this negotiation, similar to everything we've had in other negotiations as well. We have our Canada Gazette process that we launched before the negotiations were initiated in December 2011. We received 79 submissions from companies, associations, civil society, provinces, individuals, and a variety of sources. We have a consultation mechanism whereby we have regular information briefings to hundreds of Canadian businesses in civil society, stakeholders, on a regular basis as the negotiations progress. We do this through webinars. We have an online tool and mailbox. We receive written submissions, we answer back, and we also meet with specific groups, either in the business community or others, who ask us to meet and discuss what's going on in their specific areas of interest.

Within the confines of the trust we have with our negotiating partners, we reach out in a multitude of ways to inform our negotiating positions. That is the mechanism we use to make sure that the information is getting out to those who are most interested in it in relation to the TPP.

The other thing that I think is really interesting about this negotiation, and that I've never seen before in my career in this area, is that the TPP itself, during all of the formal negotiating rounds, had what was called a “stakeholder day”. Negotiations were suspended for a day and stakeholders from any TPP country were invited to come and make presentations to not only negotiators from their own country but to negotiators from all TPP countries. Then we had a question and answer period.

I've never seen anything quite like it before. Many Canadian stakeholders participated in that. It also gave us an opportunity to provide them with a forum to talk to negotiators from every other TPP country should they so desire. I think really the openness of this negotiation is unlike anything I've ever seen before.

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

Thank you very much for clarifying, I think for all members of the committee and all Canadians, the fact that, as you alluded to and the Prime Minister has indicated, and the trade minister on many occasions, we've only signed the agreements in the best interests of all Canadians. We saw that in Korea. I had the honour of being there a couple of weeks ago for the announcement of the completion of the negotiations on the gateway into Asia.

The next one touted for bilateral by many of the stakeholders is Japan. You mentioned that, or Mr. Pacetti, when he was asking about the next one besides NAFTA. Maybe you can update the committee on that. I think it's the fifth round of negotiations with Japan.

How do you see those negotiations going in parallel with the TPP talks?

[Kirsten Hillman]

We actually have a negotiating team in Tokyo right now for our fifth round of negotiations with Japan. Those are proceeding well. I wouldn't say they're at an early stage, because maybe that's not quite right, but they're at an earlier stage. Japan has also committed to pursuing both the TPP and the Japan FTA in parallel, and that's precisely what we're doing.

Obviously many of the interests we're pursuing with them bilaterally are also on the table in the TPP. In a way, that provides a bit of efficiencies for us as well, because we can have these conversations in relation to both instruments at the same time.

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

That is very helpful. Several of us on the committee were in Japan so we know the importance of that agreement opening up the Asia market and the bilateral opportunities. I know Japan is very welcoming because we don't threaten them; we don't produce rice, per se, like one of the other TPP partners.

I have one last quick question on the timeline. What do you see as far as President Obama trying to get the trade promotion authority? He hasn't really succeeded. What's your best guess as far as the timeline with the TPP?

[Kirsten Hillman]

That's always a tricky question for someone like me.

What I can say is that there is a very strong and sustained commitment to concluding the agreement as rapidly as we can. That being said, many challenging issues remain. There are domestic political processes in train in the United States coming up. Chile has just gone through a change in government. These kinds of things always have an impact on the pace of a negotiation and that's just the way it is. I don't think we can truly predict. I think there is a will to not have it languish. I think we see in trade negotiations that if we let them slow down too much people lose the incentive to make the choices that are needed to bring it to a conclusion.

I know that's not a very precise answer for you but I think that's really the only possible answer at this point.

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

It's a sincere and honest answer. I appreciate it.

Thank you very much.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Madam Liu, the floor is yours.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Thank you, Mr. Chair.

Thank you, Ms. Hillman and Ms. Theodore, for appearing before our committee today.

Just briefly, before I begin my questions I'd like to push back on what the Conservatives have been saying as one of the most transparent negotiation processes. We've had witnesses coming to the committee unable to make projections about job creation numbers in their own sectors. I know Mr. O'Toole is concerned about the Council of Canadians causing mischief. I think it's in the best interest of all Canadians that there's a level of greater transparency in the negotiations.

I'd like to continue by asking about the number of FTAs that Canada already has with most of the significant countries in the TPP. Since we already have trade agreements with many of these countries, what new market access does Canada stand to gain from the TPP?

[Kirsten Hillman]

As I said, it's both market access and rule settings.

With the countries with which we don't have FTAs, Malaysia, Vietnam, Australia, New Zealand, and Japan, some of those countries have significant market access barriers in place. There are tariffs in the tens, to twenties, to thirty, percentages in some of the areas of interest to us: agriculture, forestry, fish, seafood, and chemicals.