International Trade Committee on Oct. 17th, 2006

[Nick Milanovic]

Let me take your last two questions together, Mr. Julian.

As Mr. Rowlinson said earlier regarding the issue of improving labour standards, the problem hasn't really been the drafting of the legislation that countries in Central America have. There are a number of very good provisions in Central America and Mexico, and in South America, for that matter. It's been a matter of enforcement.

When you provide a mechanism, such as we're suggesting today, that would allow a trade union or an affected party to bring a claim forward, saying that these rights, which you countries have taken together—for instance, forced labour—have been violated in a particular circumstance, if the violation is in fact found, you'll see an increase in the labour standards of those particular workers in that circumstance. This will also exert pressure on similar employers in the same industry to comply with the higher standard or face sanctions from an arbitration panel, which would include damages, for instance. That order of damages should offset the financial incentive to engage in a systemic violation of the very core rights we're talking about.

I would be surprised, indeed ashamed, if people on this committee and in the House of Commons could not agree amongst themselves that in negotiating agreements with the CA4, forced labour is something that we will not tolerate in our trade relationships with these countries and hopefully with any other country. Whether you believe in a free market approach to society or a regulated market, everybody can agree that the free hand of the market doesn't work when you force people into contractual relationships to work. We can agree from a moral standpoint that it is objectionable. So by including the rights of trade unions to enforce these things, independent of states that might be reluctant to do so, you exert an upward pressure on labour rights.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

The broader issue, of course, when it comes to the trade union movement, as we've seen in many countries in Central America and South America, is that in those times when they have not been living under democratic regimes, trade unionists have been subject to death threats and death squads.

Coming back to the issue of enforceable standards, how then, in a trade agreement, would we both enforce the standards and raise the standards that exist? In the case of a deterioration in the democratic structures of a particular country, how would we then react within the framework of the trade agreement to ensure that basic human rights were respected, that labour rights were respected, and that the right to free collective bargaining was respected?

[The Chair, Conservative, Leon Benoit]

Gentlemen, could we have a short answer, please? Your time is very short.

[Mark Rowlinson]

I'll give a very short answer.

Let me give you two concrete examples. I was involved in a complaint filed in Canada regarding the violent--that is, baseball bats and weapons--repression attack on a union organizing campaign in Mexico. Those kinds of situations, or situations that occur all the time--in Colombia, most notably--where trade unionists are murdered when they try to form a union, those sorts of basic, fundamental attacks on freedom of association are exactly the kinds of fundamental abuses that we think this kind of trade regime ought to be able to attack.

If Canada is going to take its human rights obligations seriously, we ought not to be trading with countries where workers who want to associate freely get murdered or beaten up. It's that simple. Those workers should be able to file complaints in Canada about that activity. And then the governments that are failing to protect these workers ought to be held to account for those failures.

[The Chair, Conservative, Leon Benoit]

Thank you very much, gentlemen. Our time is up for this first part of the meeting. Thank you both very much for coming.

We'll have Mr. Julian.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

I'd like to thank the witnesses for coming forward.

Mr. Chair, I do have two motions that I've put forward. What I'd like to request of you is that we have time set aside at our Thursday meeting to discuss those motions.

[The Chair, Conservative, Leon Benoit]

On Thursday, as you know, we have five groups coming in for a very important discussion on the future business of the committee on trade policy. It would be awkward fitting it in on Thursday, Mr. Julian.

As you know, we're going to have an informal session in the last hour of that meeting. It'll be an extended meeting. I'm not sure when we would deal with it on Thursday. It would be quite awkward. We can discuss that, I guess, privately. It's up to you, of course. The motions have been given. You've given the appropriate notice and you can bring them up whenever you want. But we could maybe discuss that privately.

This meeting will suspend now for a couple of minutes as we change witnesses.

Again, thank you very much, gentlemen.

[The Chair, Conservative, Leon Benoit]

We will reconvene the meeting. We'll start with the second part of our meeting, which, by the way, is an extended meeting. It will go until noon if necessary.

The purpose of the meeting today, and the meeting on Thursday, is to give the committee background information so we can focus our longer-term study on Canadian competitiveness and trade. Today, we have witnesses from the Department of Foreign Affairs and International Trade. On Thursday, we will have individuals from business organizations—five so far have agreed to come, and there may be one more. We'll just see how that works out.

From the Department of Foreign Affairs and International Trade, we have Terry Collins-Williams, multilateral trade policy; David Plunkett, bilateral and regional trade policy; and Paul Robertson, North America free trade policy.

I understand you're making a presentation together. Is that right?

[Terry Collins-Williams, Director General, Multilateral Trade Policy, Department of Foreign Affairs and International Trade (International Trade)]

Yes, we will make a joint presentation of about 10 minutes. It might run a little longer, with your indulgence.

[The Chair, Conservative, Leon Benoit]

That's fine. We want to hear what you have to say, gentlemen. I'm sure your comments will help us to focus on our longer-term study.

[Terry Collins-Williams]

Mr. Chairman, we thank you for inviting us to this meeting.

We'll try to give you a brief overview of international trade policy, then answer your questions.

Let me begin by referring to two base documents that set out Canada's trade policy. The first is a speech Minister Emerson delivered on International Trade Day, June 8, 2006, entitled, “Shaping a Global Commerce Agenda for Canada”. By way of background, we have included with the speech “The State of Trade Report” and “Canada's International Market Access Priorities”.

Our second base document is the international trade component of our department's report on planning and priorities, tabled in the House on September 26, 2006.

I need not explain to this committee the importance of world trade to Canada's economic performance. You have all of the figures and data before you. You've had witnesses from our department and others go over that previously. So let me talk about the fundamentals of Canadian trade policy.

Any examination of Canadian trade policy must start with the pre-eminent importance of our trade relationship with the United States. My colleague Paul Robertson will pursue this later. Of course, we cannot ignore the need to expand trade opportunities to other countries and regions of the world. Shortly, David Plunkett will elaborate on initiatives for trade expansion that we now have under way.

I'd like to set out three essential elements for the formulation and execution of our trade policy.

First, we need to be aggressive in opening and maintaining market access opportunities for Canadian business. That is why we have, and will continue to press for, an ambitious outcome to the presently suspended WTO negotiations.

Second, we should be innovative and flexible in designing approaches, bearing in mind the rapidly changing dynamics acting on international trade. From the government's perspective, this would mean designing and negotiating instruments that address issues going beyond the traditional barriers of trade at the border. These instruments should provide the private sector with secure and transparent means to advance their interests in areas such as investment, science and technology, civil aviation, and others.

Third, we must always keep in mind that trade policy has to be rooted in solid domestic economic fundamentals, including sound fiscal and regulatory regimes and supportive infrastructure policies such as the recently announced Asia-Pacific gateway and corridor Initiative.

I'll now ask Paul Robertson to talk about the North American dimension of our trade policy.

[Paul Robertson, Director General, North America Trade Policy, Department of International Trade]

Thank you very much, Terry.

Perhaps I'll start by situating the pre-eminence of the Canada-U.S. trade relationship. We all know that Canada is one of the most trade-dependent countries in the industrial world and that the Canada-U.S. commercial relationship is the largest in the world and is the engine for Canada's economic growth and prosperity; $1.9 billion worth of goods, 37,000 trucks, and 300,000 people cross the border daily.

Canadian exports to the United States are equivalent to approximately 30% of our GDP. It should also be known that among American states, 38 states count Canada as their number one export market. Mexico is Canada's fifth biggest export market, while Canada is Mexico's second most important market. The vast majority of this trade flows without dispute.

However, the benefits of North American trade to Canadian prosperity must be considered on two levels.

The first is that global North American competitiveness is critical to Canadian success and prosperity. North American economies can work together collaboratively to great advantage to build North American supply chains that are extremely efficient. We already have cross-border clusters and we have cross-border supply chains, which create tremendous efficiency for our industries and allow us to take on some of the most competitive economies in the world from a North American platform.

The second level of prosperity in North American trade is that Canada needs to maintain and enhance its capacity in North America. As you know, there's increasing competition in the United States' market from other countries, including China and India, for example.

There are many tools at our disposal to advance a broad, forward-looking agenda. NAFTA is the cornerstone of our trilateral trade and investment relationship. I should note that Minister Emerson in the spring met his NAFTA counterparts and led discussion, for the first time since the agreement was put in place, on how the NAFTA partners could begin to work together on strengthening North American competitiveness. NAFTA ministers noted that while integrated North American supply chains are already well advanced in a number of areas, it was clear that unnecessary barriers remain.

There are many barriers that Canadian governments and national governments among the NAFTA partners can do something to address. For example, there was agreement at the ministerial meeting to launch sectoral initiatives that would identify government-related barriers that were hindering a seamless flow of goods and services in specific sectors. There was also agreement, for example, on the desirability for the NAFTA partners to better align our bilateral trade initiatives within the NAFTA platform.

A second tool at our disposal that's being used, of course, is the security and prosperity partnership. This is a broad initiative launched by leaders in March 2005 that aims to build upon existing cooperation to further enhance the well-being of our citizens. In the prosperity agenda led by Industry Canada, for example, work is under way to further advance and promote regulatory cooperation, sectoral collaboration, and trade facilitation.

I would also flag a number of other elements briefly. The first is trade promotion strategies for U.S. and Mexican markets. These crystallize on-the-ground delivery to enhance opportunities for Canadian business by delivering a common strategy to promote trade, investment, technology commercialization, and research cooperation.

There are also many targeted bilateral initiatives among our three countries; for example, the Canada-U.S. Consultative Committee on Agriculture facilitates discussion and cooperation on bilateral agricultural issues, including market access and sanitary and phytosanitary issues.

Finally, one can't speak about the North American market these days without flagging as well the need to ensure that North American border crossings, ports, and airways support efficient commerce while improving protection from terrorism and crime. These are all elements of a forward-looking agenda to increase competitiveness in the North American environment.

Perhaps at this point, given the timeframes we're allocated, I would ask David to continue with his presentation.

[The Chair, Conservative, Leon Benoit]

Mr. Plunkett, go ahead.

[David Plunkett, Director General, Bilateral and Regional Trade Policy, Department of Foreign Affairs and International Trade (International Trade)]

Thank you, Mr. Chairman.

As my colleague has already noted, the department is committed to strengthening secure access to global markets through negotiation and implementation of commercial agreements, such as free trade agreements; foreign investment protection and promotion agreements, which are referred to a FIPAs; bilateral air negotiations; and other tools.

In this regard, the department has indicated that we would step up efforts to conclude free trade negotiations with South Korea, and we will pursue negotiations with other key markets in Asia and elsewhere.

We've also indicated that we will pursue foreign investment protection and promotion agreements with China, India, and Peru. We have completed air service agreements with these first two countries.

Canada needs to keep up with the rapid expansion of bilateral and regional trade agreements that we see many of our partners pursuing and concluding. Our competitors are seeking and obtaining preferential access to dynamic markets around the world, and they are putting Canadian firms at a competitive disadvantage.

It is important to realize that we have not concluded a single FTA in the past five years. Our relative performance in negotiating FTAs has a material impact on the competitiveness of our firms in foreign markets. Canadian firms are telling us they are losing business due to the free trade agreements of other countries. They are urging the government to level the playing field.

This is why there is a great emphasis being paid to the bilateral and regional agenda, in addition to Doha and the NAFTA activities, as referred to by my colleagues.

I want to emphasize that we are not negotiating just for the sake of negotiating. Business is telling us they are losing business. As Minister Emerson has said on a number of occasions, Canada has not been keeping pace on this front. He has called for Canada to be more aggressive and targeted about our trade arrangements and creating opportunities outside North America.

Again, just to be clear, trade arrangements are more than just free trade agreements. Rather, they include investment protection agreements, air agreements, tax treaties, and other means to help Canadian business and get them involved in global supply chains, such as regulatory cooperation, and science and technology. The list is fairly broad.

Committee members know perfectly well how important trade is for the Canadian economy. For example, nearly one in five jobs in Canada depends on trade.

I believe that when my colleagues came before the committee in early May, they outlined some of the countries we have been working with in the past and today as part of an aggressive effort to secure access to global markets and conclude trade arrangements. In the interests of time, I will spare you a complete listing of these activities again.

Instead, by way of illustration, let me say that in the six weeks that I have spent taking up my position, since after Labour Day, we have been pursuing free trade agreements with Korea; the EFTA countries; the Central Americas, the so-called CA4; and Singapore. Exploratory talks have started with countries in the western hemisphere, such as the Andean community.

Generally speaking, my team is being stretched to the limit just to keep up with the breadth of our activities and the current pace we are keeping. Each negotiation presents its own challenges. The various talks are unfolding at their individual pace, some being more advanced than others. These exercises are grounded in the realities of our domestic sensitivities as well as those of our negotiating partners.

As you can tell from this illustrative list, our activities are wide ranging. These activities around the globe reflect the interest that our stakeholders have expressed for these various markets and regions of the world. We believe this will be an important contribution to strengthening Canada's competitiveness in international commerce. While our commercial agenda is pursued for economic reasons, it also has positive ramifications for Canada's international relations overall, be it development or foreign policy.

We are working to create opportunities outside North America, to take advantage of shifting and growing economic power in these parts of the world. Completing these initiatives will enhance our credibility as a negotiating partner and maximize commercial benefits for Canadians.

The negotiating agenda is delivered by a highly skilled interdepartmental team that draws on the strategic insights generated by the Government of Canada's extensive domestic and international network.

Our posts abroad advance these ongoing initiatives and help us to identify opportunities for Canada. Our posts also promote and represent Canada's international economic and commercial interests abroad, again in consultation with stakeholders.

Mr. Chairman, in closing, I would like to emphasize how important it is for Canadians to continue an ambitious bilateral trade program, which is an important program for the competitiveness of the Canadian economy.

[The Chair, Conservative, Leon Benoit]

My thanks to all of you.

Mr. Plunkett, we will hear from at least five of the key organizations representing these businesses that are calling for these negotiations to move forward. We look forward to hearing from them on what they see as the priorities in terms of Canadian trade policy.

Just before we get to questioning, I do want to say that Mr. Julian has given me notice that he would like to debate the motions at the end of the meeting today. He has recognized that it would be quite difficult to do so on Thursday, I believe. Just so you all are aware of it, I'll actually leave twenty minutes aside for that. We will start that at 11:40.

We'll now start with the questioning from the official opposition Liberals, and Monsieur LeBlanc.

[Dominic LeBlanc, Liberal, Beauséjour, NB]

Thank you, Mr. Chairman.

Thank you for your presentations, gentlemen.

You've provided a brief overview of a number of very important issues for the Canadian economy which I very much appreciated. This is an opportunity for us to focus on other issues. It seems to me that, for a number of months now, we've tended to focus on only one important issue in the United States. Now we're trying to look at other equally important issues for the economy.

Mr. Collins-Williams admitted that we had not signed a bilateral agreement in five years. I believe that the United States has passed us by a broad margin. In light of a discussion I had with someone a few months ago, it's my impression that the United States has signed bilateral agreements with a number of countries in recent years.

Am I correct?

[David Plunkett]

Yes, you are. My colleagues keep telling me that in this time period of which we are speaking, the United States has signed agreements with 15 countries.

[Dominic LeBlanc, Liberal, Beauséjour, NB]

Is that including some very major markets, including some big Asian nations? It's unfair to ask you for a precise list of the 15, but do you know off the top of your head what countries?

[David Plunkett]

In addition to the NAFTA in 1994 obviously, they have signed with Australia in 2005, Chile in 2004, the Central American Dominican Republic in 2005, and Singapore in 2004. They signed one with Oman in 2006, yet it's not yet enforced. They signed with Morocco in 2004. So there is a good cross-section across the world.

[Dominic LeBlanc, Liberal, Beauséjour, NB]

Mr. Plunkett, you referred to different priority areas where you and your colleagues are focusing to advance discussions in terms of various bilateral agreements. We're led to believe that Korea is obviously one on which we're closer than others, or more work has been done in terms of the Korea agreement. Could you update us on where we are, in your view, in terms of a timeframe for an agreement with Korea?

As the chair said, we're going to have a chance to see some business groups later this week. From your information, which groups are pushing you specifically with respect to an agreement with Korea? In other words, which ones are encouraging the government to move quickly, and what sectors in the economy have expressed hesitation? I ask that because for every group advocating an agreement, we'll find some group that worries about domestic fallout.

[David Plunkett]

With respect to the Korea negotiations, my understanding is that the negotiations have been very productive to date. Now, I'm going to be a bit standoffish here because it's actually my boss who's our chief negotiator, but I have brought with me a colleague who's been more closely aligned with this, so if we need to drill down any deeper I'll ask him to speak here.

We held a seventh round of negotiations just a few days ago in Ottawa, and the eighth round will take place the week of November 20 in Seoul. The areas we've been working on are to advance market access liberalization for trading goods, which gets you into agricultural, industrial...fish and seafood products, and these are obviously areas that would have expressed some interest. In the pre-launch period of any negotiation, we canvass business, or business actually comes to us as well, to let us know that they would be interested, and so it's these sorts of industries, as well as natural resources, chemicals, and environmental goods.

There is quite a wide range of interests here that have expressed some real interest in the Korean market, in part because they have some high tariffs in areas of export interest to us. I think the average overall tariff is 12.8% and the average agricultural tariff is 52%. So there is some real interest in trying to get these tariffs down, because people see some market opportunities here.

Obviously the media have been full of concerns recently that have been expressed by the auto industry. Some concerns have also been expressed in the past from the shipbuilding industry. Like every negotiation with every country, we do take these concerns into account. We consult closely with industries to make sure we understand their concerns, and as we proceed, we will take these concerns into account.

[Dominic LeBlanc, Liberal, Beauséjour, NB]

Thank you for that update with respect to Korea.

What other agreements are you close to? What other bilateral agreements are you pursuing and how far advanced are they, just in a very general way?

[David Plunkett]

It's very difficult to be very specific about a date for completion, because obviously this is a dance that requires two partners, and even though we may see something as an insignificant issue that shouldn't take much time, the other side may well feel....

In the six weeks I have been in this job, I have been to Geneva to try to bring some progress to the EFTA negotiations. Now, EFTA is Switzerland, Norway, Liechtenstein, and Iceland. I was in Singapore last week, trying to bring some life into those negotiations. The EFTA negotiations have been stalled since 2000, and the Singapore negotiations have been stalled since 2003, so we are trying to see whether we can find a way to work our way through some of the issues that have caused the impasses in the past.

[Dominic LeBlanc, Liberal, Beauséjour, NB]

What are the issues with respect to EFTA that have caused us the blocks?

[David Plunkett]

Well, there's a range of issues. Ships are an issue that has been out there. From an export perspective, we are looking for more interest in areas of interest for our exporters, be it agriculture...and so we are playing around. These agreements all include a number of broad issues, some of them basically institutional questions where, frankly, it's the lawyers who worry more about these things than the average businessman, but it's part and parcel of a large package that has to be put together.

I'm an optimist by nature, so I would hope that we could conclude these agreements in the near future. But as I said, it's a negotiating process, and this has to be concluded to the mutual benefit of both sides. So we both have to, at the end of the day, see enough on the table that is beneficial to both sides to conclude.