International Trade Committee on June 1st, 2023

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

I was shocked to find out that some sanitary and phytosanitary conditions are not subject to the dispute resolution mechanism within the CPTPP. It's shocking for an agriculture-exporting country that this wasn't done.

I'll go to Mr. Allam.

[Omar Allam]

Yes, on that point, to highlight, I am not a trade policy negotiator, but in my experience, I would say there are a few areas.

One is that, if you were to look at a comprehensive trade and economic partnership arrangement, I think it really depends on the type of partnership and the government's model in the mechanism. One step outside, I think that, yes, politically, you do need to have a dispute resolution mechanism in place; however, you can leverage other types of partnership models to have discussions to avoid these types of irritants at a very technical and scientific level. You're bringing evidence-based science and technical conversations to the mix, but you're also relying on a multilateral system to ensure that you're...you know....

What I've seen in my experience is that you have a lot of notifications to the WTO and then there are preventative measures on the margins to avoid SPS and TBT types of issues. I believe that these types of conversations and, let's say, resolutions, or at least a pathway to resolutions, can be applied through different types of economic partnership arrangements beyond having FTAs, as Mr. Dade mentioned, as a safety valve, so they should be applied.

[Émilie Bergeron]

Yes, we would agree. Dispute resolution mechanisms need to be in place in all FTAs and all provisions—SPS or TBT—need to fall under these dispute mechanisms.

We also think it's important to have provisions on issues that we know could potentially become non-tariff barriers—for example, MRLs in the case that we just discussed. We have a good example of that in the CUSMA and in the CPTPP, where the Government of Canada was the one pushing for negotiating new provisions, new texts and new obligations for countries for these issues that could potentially be barriers to trade. It will be I think very important that these new provisions and these new and stronger texts be included and be part of the dispute settlement mechanism.

[Kyle Seeback, Conservative, Dufferin—Caledon, ON]

I think I have about 40 seconds left.

Go ahead.

[Sharon Zhengyang Sun, Trade Policy Economist, Trade and Investment Centre, Canada West Foundation]

I just wanted to add to what Carlo said. One of the lessons we learned from the Australia and China FTA is, of course, that it's not one of the most comprehensive agreements we have seen, but the Australians have been telling us that having some role is better than having no role. It has been effective, but of course it doesn't address everything.

What we see instead, because it doesn't address everything, is association-to-association MOUs. It is engagement at every level, not just between federal and provincial but also between associations, like the Australian meat association collaborative mechanism with the Chinese meat association.

What we see is that, when you have this kind of decentralization integration, and when there is a political dispute at the political level and there is a political ban at the federal level, it becomes a little bit more difficult to impact some of these industries that are so integrated with the Chinese market. Of course, the government has to take that in mind when they are doing this kind of negotiation, so we find that to be quite effective.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will move on to Mr. Virani for six minutes, please.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Thank you, Madam Chair.

Can I build on that, Ms. Zhengyang Sun, with what you just mentioned? The Indo-Pacific strategy has—it was mentioned in some of the opening statements—the notion of an office in situ, on location, in the Asian hemisphere where some of these irritants, hopefully, could be resolved.

Building on the point you just made, tell me about how you take this association-to-association relationship, and how you make it real and make it come alive in terms of utilizing that office on location, if it's in Singapore or if it's in Japan, etc.

Are you advocating for having various entities in various Canadian food-providing industries on site with personnel at that office? How would you see it rolling out?

[Sharon Zhengyang Sun]

The location in Asia will be critical, especially in terms of travelling to all of these, because under the Indo-Pacific strategy, we are covering 40 markets. Of course, we're not going to be trading with all the 40 markets listed—we're never going to trade with North Korea—but it will be very important to be in Asia so that you can access....

One of the things that Canada West is advocating for is having a location in the Prairies. I can let Carlo elaborate on that. I think that will be very important, because then we can invite our trade partners to come here to examine our facilities and to make the connection with the local associations to make that happen.

[Arif Virani, Liberal, Parkdale—High Park, ON]

It's a bit two-way.

[Sharon Zhengyang Sun]

Yes. It's two-way.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Mr. Dade, you mentioned this at the outset, because you talked about, prior to 2003, Chinese entities being in Canada to learn about what we're doing with fertilizer, and then that helped inform their drafting of their regulations.

[Carlo Dade]

That's correct. That's the long game in terms of resolving it: building the real capacity to fundamentally and to structurally impact.

The export associations, producer associations.... The idea for the office came from Pulse Canada and Manitoba pork. They are already integrated into this in terms of the creation. They are participating in discussions with Agriculture and Agri-Food on how to build out the office. Their role, I think, will come from the ongoing development of the office and from their work with Agriculture and Agri-Food, with the Prairies and with the provincial governments in terms of how they, too, who have presence on the ground, will be integrated.

There's a heck of a lot of herding of cats that has to be done as we get this office up and off the ground.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Can I shift to Ms. Bergeron and Mr. Kolz?

I think in your opening comments you talked about the MRLs. I want to give you guys a bit of a step back sort of question. We hear a lot about non-tariff trade barriers. We heard a lot about SPS and federal sanitary standards, but tell me about the differentiation, if you see any, with respect to our trade partners in Europe—because you cited Europe in this context—versus our trade partners in Asia that are also under development.

You commented to Mr. Seeback's question about the need for a dispute resolution mechanism to be entrenched in agreements. I'm sure you're well aware that we're working on an agreement with India, we're working on an agreement with Indonesia, and we're working on an agreement with ASEAN.

Do the types of NTBs that we see, including inside of SPS, differ qualitatively in Asia versus what we see in Europe? If so, how do you adjust the mechanisms that are needed, if at all, or are the mechanisms that you would apply to the Netherlands the same as what you would apply in Indonesia?

It's a big question, but take a stab.

[Émilie Bergeron]

I would say that the NTBs that exist in Europe, especially on MRLs, could exist elsewhere. I would say the European Union is the prominent country. They usually start, and after that what they do there could be adopted by other countries, where they could use MRLs or approval of biotechs as a way of keeping trade outside of their borders. This is why CropLife Canada is promoting a strong text on biotechnology, as is the case with CPTPP and CUSMA, and even working to expand that text by being more creative to try to address the issues that are not here today but could happen in the future with new technology and innovation coming in. New text could also be developed to address issues like the MRL one.

When we're talking about countries like Indonesia or India, I'm not saying we have issues right now, but we've seen in the past these countries adopting measures that were not based on science. We believe it's the role and the obligation of Canada to defend in those agreements by reinforcing text and to make sure that every single measure they adopt is based on science and does not become an unjustified barrier to trade.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Mr. Dade, I think it was you who mentioned that you had two or three points. One point toward the end was exploring a WTO challenge. I confess to you that we just came back from a trip to Washington, and one of the issues we were dealing with was the American non-participation in the WTO appellate mechanism.

Given that lay of the land, do you want to elaborate on this WTO challenge or speculation about how we deal with that? Obviously, there's the Ottawa Group and there's a review of the WTO, but it seems like we're at a bit of a stalemate with respect to that appellate mechanism.

[Carlo Dade]

That's correct. There are two issues.

The WTO process continues to work. You've had cases brought to the WTO where the parties have agreed with the initial decision and haven't advanced it to the appeals stage. I think it was Turkey and.... I can't remember who. There have been cases where it has continued to work simply because countries have chosen just to take the initial ruling.

The larger issue is that, as with MRLs, there are fundamental differences here. The Europeans have a different approach as to how to regulate food. It is not science to prove that there should be no harm, but you actually have to prove no harm, so they take a different approach. With the WTO, the Americans take a different approach to the WTO than do we, the Europeans and the Japanese. The Americans believe that they agreed to only what was signed in the agreement and nothing else. We believe in a living WTO, where you can have interpretation of rules and can continue to grow. That's a fundamental disagreement that we're just not going to be able to square.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Savard-Tremblay, you have six minutes.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you.

I just want to get some clarifications before I can put my questions to Mr. Ghadawala.

Given the importance of the aerospace cluster in Quebec, I probably have some questions for you, Mr. Ghadawala. I wanted to make sure I knew what your niche market was. From what I know, you design and manufacture aircraft engine components. You are also a Boeing subcontractor.

Is that correct?

[Rushi Ghadawala]

Thank you so much for your question.

All I can say is that Magellan is a global corporation that is focusing on not just one particular segment of the business. It's also working on various other segments, such as aeroengines and aerostructure in space business and defence markets, and on engine and component repair and overhaul services to our various customers.

To answer your question, we are not limited to only one particular service or one particular segment of our space industry.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

You are also based here; that is why you are commenting on the issue of non-tariff barriers. Do you feel qualified to answer if I ask you questions about the aerospace industry in Quebec and Canada?

[Rushi Ghadawala]

I'm sorry. I couldn't understand your question. Could you please explain it a bit more?

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Look, I will ask you the questions and we'll see.

We know, for example, that Quebec trades a lot with the United Kingdom when it comes to the aerospace sector. Negotiations are currently underway with the United Kingdom, and they must be fairly advanced.

Do you have any comments or suggestions on that? Can you tell us if there are things we could keep a close eye on regarding this issue?

[Rushi Ghadawala]

That's an excellent observation, sir. I would be happy to provide a more detailed written answer to the committee at a later stage, if it is acceptable.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Of course. So you will send us a written document on that.

[Rushi Ghadawala]

Yes, sir. We can provide you with a written answer in more detail specifically pointing to your question.