House of Commons Hansard #99 of the 39th Parliament, 2nd Session. (The original version is on Parliament's site.) The word of the day was trade.

Topics

Business of the House
Government Orders

5 p.m.

Conservative

The Acting Speaker Andrew Scheer

(Motion agreed to)

Canada-EFTA Free Trade Agreement Implementation Act
Government Orders

5 p.m.

Conservative

The Acting Speaker Andrew Scheer

The hon. member for Ottawa South still has approximately two minutes left for his comments.

Canada-EFTA Free Trade Agreement Implementation Act
Government Orders

5:05 p.m.

Liberal

David McGuinty Ottawa South, ON

Mr. Speaker, let me wrap up in terms of why this is so important.

It is funny how the member for Charlottetown tied it together well in his closing remarks, pursuant to a question that was posed to him. Let me reframe and restate before concluding.

A lot of the multilateral approaches in which we are presently involved in terms of multilateral trading arrangements are stalled. Canada, in my view, needs to pursue and adopt bilateral trade agreements in order to remain globally competitive. We have benefited well. We are, as many describe, the most trade dependent nation on the face of the planet and, therefore, this is a good step forward.

As I said earlier, there is no evidence that the expansion of rules based trading regimes is in fact decelerating. On the contrary, it was China only several years ago that managed to break through and join the WTO after more than a decade of aggressive negotiations and positioning.

Here we have a win-win situation. We have the biggest concern addressed coherently in shipbuilding. Some concerns on supply management we have spoken to. We believe the bill addresses that imbalance as well. In fact, it took roughly 10 years to complete this negotiation because of the shipbuilding concerns that I believe have been adequately addressed. It is not a total carve out, as the member for Charlottetown indicated, but it is a good, solid agreement on which to move forward, to expand Canada's trading relationships and to create the wealth, the jobs and the investment that we need to move forward.

Canada-EFTA Free Trade Agreement Implementation Act
Government Orders

5:05 p.m.

Liberal

Omar Alghabra Mississauga—Erindale, ON

Mr. Speaker, as we always do, Canadians have a discussion about our trade dependence on the United States. As the United States is going through a recession these days, we are witnessing a significant impact on Canadian jobs and on the economy. There are always discussions on the need to diversify our trading partnerships, our exports and our imports so we are not that dependent on a single state.

I am not saying that we should not nurture, maintain and increase our trade relations with the United States, but could the hon. member comment on the value of Canada's diversification, of identifying trading partners, removing trade tariffs and the value that this expansion would have for Canadians and Canadian jobs?

Canada-EFTA Free Trade Agreement Implementation Act
Government Orders

5:05 p.m.

Liberal

David McGuinty Ottawa South, ON

Mr. Speaker, there is no doubt that the United States is going through some very difficult and troubling times. I personally predict that we will see culprits. We will see the blame laid squarely at the feet of different actors in American society who I think concocted a sub-prime mortgage scam that has affected many vulnerable Americans. I wish our American cousins all the best in the recovery that we would like to see in the United States and, of course, the spill over effects in helping to keep Canada's trading arrangements there robust and healthy.

However, there is no doubt that Canada needs to expand its reach. We are already trading all over the planet but the formalization of this trading arrangement with four nation states goes another certain distance to help us diversify. Diversification is good. Dependency on one particular market is not so good. We are seeing that there are risks now despite the fact that so many hard decisions were taken by the previous government to prepare the country to deliver 10 years of surpluses consecutively, to pay down so much debt and to lower taxation while addressing core social equity and justice questions.

Canada is well positioned and well prepared to weather the storm, although we are not sure what the fallout effects will be of the recent 30 months of decisions taken by the government.

However, more important, expanding our reach in terms of trade builds on our people. The single greatest asset we will have over time will be people: their brain capacity, their training and their skills levels. We have people from every corner of the planet now living right across this beautiful country. It is up to us now to play intelligent hockey and to build on those relationships all over the world and to strengthen our trading relationships.

Canada-EFTA Free Trade Agreement Implementation Act
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5:10 p.m.

NDP

Chris Charlton Hamilton Mountain, ON

Mr. Speaker, I listened carefully to the comments made by the member for Ottawa South. On the face of it, when we look at this trade agreement, the member nations of EFTA all have strong social democratic traditions. They are an excellent model for how one might go about building trade agreements. They have that ideal balance, almost, between trading and yet protecting the sovereignty of their own nations. To some extent, one would think they would be the ideal trading partner for a country like Canada.

Like the member for Ottawa South, I come from a landlocked riding. There is no shipbuilding industry on Hamilton Mountain--I know that will surprise some members--but what we do have in Hamilton is a really vibrant steel industry. Well, actually, it used to be a vibrant steel industry and now of course, like much of the manufacturing sector, we are seeing devastating job losses and declines in the manufacturing sector right across this country.

Yet we are selling out an industry in this trade agreement, namely the shipbuilding industry, which could make such a profoundly positive contribution not just to those communities across this country that are actively engaged in shipbuilding, but also in communities like mine that have steel making industries. The shipbuilding industry of course uses steel. There is all kinds of potential and, therefore, all kinds of reasons that we should carve out the shipbuilding industry from this trade agreement and then talk about the trade agreement again.

In light of the fact, and I think the committee hearings demonstrated this, that this trade agreement clearly sells out Canada's shipbuilding industry without any regard to either the workers or the community interests involved, could the member comment on why he would support an agreement that clearly sells out shipbuilding but also, as a result of that, continues to sell out industries like the steel industry in my riding of Hamilton Mountain?

Canada-EFTA Free Trade Agreement Implementation Act
Government Orders

5:10 p.m.

Liberal

David McGuinty Ottawa South, ON

Mr. Speaker, I would like to go back to the preface of the member's remarks. She heralded the notion that the countries with which we are entering into this almost complete negotiation are countries with strong social democratic traditions. Her language was “strong social democratic traditions”.

If in fact these are countries with strong social democratic traditions, I do not think they have expressed in any discussions, debates, negotiations or positions they have taken their view of what the member has categorized as a sellout. If they are countries of social democratic traditions, then I would expect they would negotiate in the best of faith and would put the interests of their trading partner alongside the interests of their own.

Surely the NDP is not suggesting that as a social democratic party that does not believe in the free market, only it can understand what is happening in terms of the Hamilton steel industry. The problem is that the NDP keeps pushing and pushing, not because it would like to see a carve-out. Once there is a carve-out, it sets a very interesting precedent. It is risky business and the question becomes, what is next to carve out?

I think what the NDP is really saying, and it should level with Canadians and tell them, is that it does not believe in the expansion of rules based trading systems; it does not believe in the international trading order; it does not believe in the international economic order; and it does not believe in private capital flows. It should say so and then give us an alternative vision of the world and the order that we ought to be pursuing.

Instead of trying to scare Canadian families and workers from the steel industry and beyond, I think it should--

Canada-EFTA Free Trade Agreement Implementation Act
Government Orders

5:15 p.m.

Conservative

The Acting Speaker Andrew Scheer

Questions and comments, the hon. member for Hull—Aylmer.

Canada-EFTA Free Trade Agreement Implementation Act
Government Orders

5:15 p.m.

Liberal

Marcel Proulx Hull—Aylmer, QC

Mr. Speaker, I congratulate the member for Ottawa South. It is refreshing to hear from an expert on the matter.

I would like him to elaborate on his concerns about how supply management could be affected by this agreement. We all know that the current Conservative government will not go to bat for supply management. I would like to hear an expert opinion on this subject.

Canada-EFTA Free Trade Agreement Implementation Act
Government Orders

5:15 p.m.

Liberal

David McGuinty Ottawa South, ON

Mr. Speaker, I will just say that the government has had a terrible record concerning supply management in the last 30 months.

In Canada, we have already seen the dismantling of the call for tenders system for our aboriginal companies and communities, for example. There have been a number of situations where backroom deals took place, where the way in which the government carried out a call for tenders was compromised, and where the participating companies were complaining more and more about the tendering system.

It is up to us, as the official opposition, to pay close attention to what the government does with this free trade agreement.

Canada-EFTA Free Trade Agreement Implementation Act
Government Orders

5:15 p.m.

Liberal

John Maloney Welland, ON

Mr. Speaker, I am very happy to speak to Bill C-55.

I am a member of the Standing Committee on International Trade. The free trade agreement between Canada and the states of the European Free Trade Association, which are Norway, Iceland, Liechtenstein and Switzerland, was considered by our committee and I would like to make some comments on our findings.

First of all, I think we should look at the trade statistics between our countries which suggest that an agreement with the EFTA countries is of key importance to Canada.

We should note that the EFTA countries are the world's 14th largest merchandise traders and Canada's fifth largest merchandise export destination. They are key players. Two-way Canada-EFTA non-agricultural merchandise trade amounts to $5.6 billion. Canadian exports to EFTA totalled $5.1 billion in 2007 and include nickel, copper, pharmaceuticals, machinery, precious stones and metals, medical devices, aluminum, aerospace products, pulp and paper, organic chemicals, autos and parts, art and antiques. It covers a wide range of exports affecting many different areas of our country and affecting many different sectors of our economy.

Canadian imports from EFTA totalled $7.4 billion in 2007 and include mineral fuels, pharmaceuticals, organic chemicals, machinery, medical and optical instruments, and clocks and watches.

Canadian foreign direct investment in EFTA was $8.4 billion in 2006. EFTA foreign direct investment in Canada amounted to $15.6 billion in 2006.

This is certainly an agreement to be reckoned with.

I would like to go back to the considerations of our committee in our study of the agreement. I will give some of the history on this agreement.

In January 2008 Canada signed a free trade agreement with Switzerland, Norway, Iceland and Liechtenstein. The group is collectively called EFTA, the European Free Trade Association.

The Canada-EFTA agreement is the first agreement to be tabled in the House of Commons under the federal government's new policy of allowing members of Parliament the opportunity to review and debate international treaties by tabling those treaties in the House of Commons for 21 sitting days.

The House of Commons Standing Committee on International Trade took this opportunity to conduct its hearings on Canada-EFTA in order to contribute to these discussions.

It has been actually 10 years since a Canada-EFTA trade agreement was first proposed with formal negotiations beginning in 1998. Unfortunately they hit an impasse in 2000 on the issue of treatment of ships and industrial marine products. These issues are still of concern to some in this country.

Concerns were expressed then over the possibility that free trade with EFTA would require Canada to remove its 25% tariff on ships and expose the Canadian industry, which was already struggling with excess capacity to increase competition from subsidized Norwegian producers.

It should be noted, however, that in the time since those concerns were expressed, Norway reported that it has stopped subsidizing its shipbuilders. In fact, His Excellency Markús Örn Antonsson, who is the ambassador of Iceland to Canada, noted that several attempts were made to break this impasse but negotiations did not resume until 2006.

In June 2007 the two sides announced that negotiations were completed. In January 2008 the agreement was formally signed in Davos, Switzerland.

The Canada-EFTA free trade agreement is rather modest in scope. It is a first generation free trade agreement focusing on tariff elimination and trade in goods. Unlike NAFTA, for example, CEFTA does not include any substantial new commitments to investment services or intellectual property. These issues, as well as most safeguards, anti-dumping and countervailing duties will continue to be addressed by the World Trade Organization. However, as the committee heard, there are provisions within the agreement to allow for these issues to be revisited after three years, should the two sides wish to do so. As a consequence, it is not as controversial as some of the other free trade agreements we have dealt with.

The CEFTA is comprised of four linked agreements: a main trade agreement and three bilateral agreements on agriculture between Canada and Norway, Iceland and Switzerland, respectively. Liechtenstein is covered in the Canada-Switzerland agreement. Under the terms of the main agreement, tariffs on all non-agriculture products will be eliminated immediately upon entry into force of the agreement. The only exception is Canadian ship tariffs. Tariff reductions in agriculture are country-specific, as will be discussed later.

With respect to ships, boats and floating structures, the committee heard that the Canada European free trade agreement provides the Canadian shipbuilding industry with one-way protection by which Canadian shipbuilders gain immediate and full access to the EFTA market, while certain protections are maintained in Canada. It is not an unusual type of provision.

For Canada's most sensitive shipbuilding products, there will be a 15 year phase-out of Canada's existing 25% tariff. For less sensitive products, the total phase-out period is 10 years. In all cases, however, there will be no reduction in the import tariff for the first three years of the agreement.

The sole exception is for post-Panamax sized cargo ships, so named because they are too large to navigate the Panama Canal. According to officials from the Department of Foreign Affairs and International Trade, no Canadian shipyard claims to be able to lay down a hull of this size. The Canadian tariff on ships of this size will fall to zero immediately upon entry into force of the agreement, which makes common sense.

Moreover, the CEFTA also includes a safeguard mechanism which offers additional protection to the Canadian shipbuilding industry. If imports from EFTA are found to be causing injury to Canadian shipbuilders within the 10 to 15 year phase-out period, then the tariff rate can revert to the pre-free trade rate of 25% for up to three years. The committee also heard that the CEFTA does not oblige Canada to modify its buy Canada procurement policy for ships.

Addressing the issue of agriculture and agri-food products, which is another area of concern, certainly the content of the three bilateral agreements on trade and agriculture differ from one another, reflecting the unique sensitivities and priorities of Canada and the individual EFTA countries. Under all three agreements, most agriculture and agri-food products will be traded tariff-free. However, each country gained and/or limited concessions on certain key agricultural and agri-food industries.

For example, the committee heard that Canada did not make any over-quota tariff concessions on supply-managed agricultural products, but did grant to Switzerland tariff-free in-quota access to the Canadian cheese market. Canada also gained improved, but not tariff-free, market access to certain sensitive sectors in EFTA countries. These include frozen french fries in Iceland, frozen blueberries and durum wheat in Norway, and durum wheat and horse meat in Switzerland.

The committee heard that the expected economic gains from tariff reductions under this trade agreement will be modest. Tariffs on many non-agriculture products are at perhaps what I would say are nuisance levels, 2% or less, and many other products are already traded tariff-free.

Nevertheless, several witnesses anticipated an increase in trade to result from this agreement. Certain Canadian industries are expected to benefit from improved market access, particularly in agriculture where most of the major tariff reductions are found. Some industrial sectors are expected to benefit as well. These include wood and metal products in Iceland, apparel products in Norway, and cosmetics in Switzerland.

Witnesses also observed that the benefits of the CEFTA may not be limited to lower tariffs. Other potential gains include opportunities for trade diversification, enhanced industrial cooperation, and through increased interaction with the European business active in the EFTA countries, closer economic ties with the European Union.

The agreement will also put Canada on an equal footing with EFTA's other free trade partners, and will give Canada an advantage over countries like the United States, which do not have a trade agreement with EFTA.

The committee also heard that trade agreements have an important symbolic impact.

The vice-president of government relations for Bombardier, George Haynal, when he appeared before the committee, stated that trade deals create a level of confidence among investors, even if, as in the case of CEFTA, investment is not included in the agreement.

Per Øystein Vatne, first secretary to the Embassy of the Kingdom of Norway, when he appeared before us, observed that the very presence of a free trade agreement creates interest in the business community; the appetite for trade missions to Canada from EFTA countries has increased markedly since the CEFTA was announced.

In fact, many of their parliamentarians appeared here in Ottawa before our committee as the negotiations were going on.

Some witnesses, however, expressed reservations about the deal. There is no question about that. Representatives from Canada's shipbuilding industry, in particular, were concerned about the potential impact of CEFTA on their sector.

Mr. Andrew McArthur, of the Shipbuilding Association of Canada, noted that Norway's world-class shipbuilding industry is not subsidized today, but owes its present competitiveness to generous government support in years past.

For this reason, Canadian shipbuilders wanted their industry to be explicitly excluded from the CEFTA, as it is from the NAFTA. They eventually agreed to accept a long term phase-out of tariffs, but their support was contingent upon a new Canadian shipbuilding policy that included a buy Canada policy for government procurement, and the combination of two existing support mechanisms that are currently mutually exclusive: the structured financing facility, SFF as it is known, and provisions for accelerated capital cost allowances, ACCA.

The CEFTA includes a long term phase-out of tariffs and preserves a buy Canada procurement policy, but no action has been taken on the SFF or capital cost allowances as of yet. As per their submissions to the government, representatives of Canadian shipbuilders and marine workers were adamant that without combined access to the SFF and ACCA, the impact of the agreement would be devastating to the industry and would lead to job losses. In their view, this additional government support was critical if the Canadian industry was to survive increased competition from Norwegian producers.

It was noted, however, that the tariff phase-out schedule, and safeguard provisions, for marine industrial goods was particularly generous. According to the counsel for the International Trade Group, Cyndee Todgham Cherniak, a lawyer who specifically deals with international trade, the 15 year phase-out on sensitive ship products is the second longest phase-out she has ever encountered in her study of 100 free trade agreements. However, Ms. Cherniak also cautioned the committee that this abnormally long phase-out period could meet some resistance at the WTO from other major shipbuilding countries, like China and South Korea.

In addition to shipbuilding, some concern was expressed about the impact of CEFTA on supply management in agriculture. Terry Pugh, executive secretary of the National Farmers Union, suggested that the in-quota tariff cut for supply managed products might weaken the foundation of the supply management program.

Finally, several witnesses noted that no economic impact studies had been conducted to estimate the effect of the CEFTA on the Canadian economy. It was suggested that without such studies, it was difficult to judge whether or not the deal would be good for Canada.

Certainly, we are an open committee and we collaborate very well. I would like to draw to members' attention the considerations of the Bloc Québécois, who were certainly very concerned about supply management and preserving it.

Since the elimination of the 7% tariff provided for in the agricultural agreement with Switzerland will affect only the market segment that is already covered by imports, the impact on our producers would be minimal.

However, this will make it all the more important to vigorously defend supply management at the WTO. A quota increase, coupled with the elimination of the within-quota tariff would expose our dairy farmers to increased competition from countries that, unlike Canada, subsidize their dairy production. Certainly, this is a point that the current government must take into consideration.

The Bloc were also concerned about shipbuilding. It felt that the adjustment period provided in the agreement is quite long, as it is, but it will be helpful only if accompanied by adjustment and upgrading programs for our shipyards. Otherwise, it will slow their decline, but nothing more.

Of course, that hits the concerns of possible subsidization and Norway understood this very well. It began a vigorous industrial policy and built up a health industry--

Canada-EFTA Free Trade Agreement Implementation Act
Government Orders

5:30 p.m.

Conservative

The Acting Speaker Andrew Scheer

The hon. member for Acadie—Bathurst on a point of order.

Canada-EFTA Free Trade Agreement Implementation Act
Government Orders

5:30 p.m.

NDP

Yvon Godin Acadie—Bathurst, NB

Mr. Speaker, I think you will find that we do not have quorum in the House.

Canada-EFTA Free Trade Agreement Implementation Act
Government Orders

5:30 p.m.

Conservative

The Acting Speaker Andrew Scheer

I seem to see full quorum.

And the count having been taken:

The hon. member for Welland has approximately five minutes to conclude his remarks.