International Trade Committee on March 10th, 2008

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

Thank you very much for coming here today. I'll just start with a couple of quick housekeeping questions.

In your presentation, Mr. Plunkett, you said the government will be able to introduce implementing legislation once these 21 sitting days have elapsed. Is the department preparing implementing legislation for the EFTA agreement?

[David Plunkett]

Ton, you're closer to this than I am.

[Ton Zuijdwijk, General Counsel, Trade Law Bureau, Department of Foreign Affairs and International Trade]

Yes, we're currently working on implementing legislation. Of course, since there is legislation involved for which the Department of Finance and the Canadian Border Services Agency are responsible, we're preparing the legislation in cooperation with those departments.

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

And the projected date for that to be tabled in the House would be following the 21 sitting days?

[Ton Zuijdwijk]

That is my understanding.

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

Thank you.

Second, around mineral products, I understand about 60% of our current exports are nickel. We also ship gold, copper, and cobalt. What overall percentage of semi-processed or non-processed mineral products is exported to the EFTA countries?

[David Plunkett]

Unless one of my colleagues can find that quickly, I may have to get back to you on that exact number.

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

Okay. Thank you.

I'd like to move to shipbuilding. We're going to hear from witnesses on Wednesday, I believe, about the shipbuilding industry. I have three questions to start.

In terms of the consultations with the shipbuilding industry, did any of the representatives, either from the workers or from shipbuilding companies, tell the government not to go ahead with the EFTA agreement? That's my first question.

Second, I'd like you to explain annex E, paragraph 5, “For the tariff lines designated (*), vessels of dimensions exceeding the length of 294.13 m and a beam of 32.31 m shall be accorded duty-free access in Canada upon the date of entry into force of this Agreement”.

My third question on the shipbuilding industry is the issue around the Norwegian subsidies to domestic shipbuilding. Is there anything in the agreement that prohibits those subsidies?

Those are my three questions to start.

[David Plunkett]

With respect to the issue of consultations, certainly the ones I was involved in--but as I said, we did a range of them, and some of these will have gone back 10 years--I'm not sure anybody, even in this room, was involved in some of the early ones. But certainly the ones I was involved in, were there people who were telling us to go away and cease and desist? Yes. Other people were telling us to get rid of this 25% tariff as quickly as possible because it was proving to be a detriment to their business operation. And there were people in between saying they could live with it. They didn't mind our getting rid of it, but we should phase it out over a certain period of time.

So as I said, what we needed to do, working as a team including our colleagues from Industry Canada, was listen to the various voices involved with this and get a good sense of what they were thinking and try to find a way through this very tricky file. But if there's a unanimous voice going one way, frankly, that's easier to deal with than when the voices are coming from all sides, because then you have to sit down and try to see what makes the most sense from a policy perspective that might not be perfect to anybody but will give you a satisfactory way of working your way through a difficult file.

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

Now that we have the treaty before us, would you be prepared to provide the results of those consultations to the committee?

[David Plunkett]

I'll have to take that question under advisement and see, because some are oral discussions. Let us get back to you on that.

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

Okay.

Second question?

[David Plunkett]

My colleague Aaron can speak to the panamax issue, which is what you're referring to.

[Aaron Fowler, Deputy Director, Bilateral Market Access, Department of Foreign Affairs and International Trade]

As David has just made reference to, those specifications correspond to what are known as post-panamax classifications for ships. It's a measurement established by the Panama Canal Authority and it essentially sets the limit for the size of ship that can navigate the canal. No Canadian shipyards claim to be able to lay down a hull in excess of the post-panamax measurements. That's the reason this type of ship would go to zero duty immediately upon entry into force of the agreement, simply because it wouldn't be competing with any Canadian shipbuilder.

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

Well, that applies to existing capacity. But what it does is stop the ability of Canadian shipyards to expand to that capacity.

But thank you for explaining that.

The third is on the Norwegian subsidies for their domestic shipbuilding.

[David Plunkett]

As far as I can recall, there are no specific provisions related to prohibiting Norwegian subsidies in this area. That said, if you look at the back end of the treaty, where you get into all the institutional and dispute settlement provisions, obviously if we were to come across an activity, be it a subsidy, such as what you're suggesting, or anything, we have the capability of using the institutional provisions to raise this and pursue it. At that point, we would see what the reaction was and decide how to address it, as needed.

Keep in mind that the Norwegians have also told us, and I think have said in the WTO context, that they have stopped doing this and have no intention of re-engaging with them.

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

You understand my point. On dispute settlement, if there's nothing in the agreement that actually prohibits that support, then it is highly unlikely that we could use a dispute settlement mechanism to enforce something that's not in the treaty.

Thank you for that.

[David Plunkett]

I think it's important to also recognize that when you go into a treaty, you go into it with a series of understandings and a broad sense of what you expect. If the circumstances were to change dramatically, which would in effect negate a significant element of this, we would obviously have to take that into account in any future steps. But we're talking hypothetically here. We have the means to deal with this or any other issue not necessarily covered in the agreement that we think is problematic for the overall balance of the agreement.

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

I still reiterate my point. It would be difficult to use dispute settlement for something that's not covered in the agreement. That's the point I'm making.

I'd like to move on.

[David Plunkett]

Can I ask our lawyers?

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

Because I only have a few minutes left, I'd like to move on to the agricultural provision.

[The Chair, Conservative, Lee Richardson]

I'd like to hear the answer.

[Ton Zuijdwijk]

Let me add that article 17 of the agreement deals with subsidies and makes it clear that our WTO rights continue to apply. So if there were subsidies, Canada would be entitled, under the terms of the WTO, to impose countervailing measures and to use the remedies under the WTO.

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

Yes, I understand that. But we'll stress the point for the third time: there's nothing in the treaty that prohibits those domestic subsidies. That's the point I'm making, and that's for the record.

Thank you, Mr. Chair, for seeking that clarification.

I'd like to come now to the supply management programs. Your deck--and it is helpful, thank you for providing it--says that Canadian supply management programs are maintained. What exactly do you mean by that?

[Frédéric Seppey, Excutive Director, Strategic Trade Policy Division, Department of Agriculture and Agri-Food]

We mean that an essential element of the supply management system is the predictability of imports. That is achieved by having low duty apply on the volume coming in that is within the access commitment--which is the tariff quota we have in place--and having very high tariffs on the volume coming in that is beyond this tariff quota.

In these negotiations, the over-access tariffs are not affected. We maintain our over-access tariff on all the supply-managed products. Hence, we are maintaining the effectiveness of import control for supply-managed goods.