International Trade Committee on March 10th, 2008

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Overall, in your opinion, do you think this is a pretty good deal for Canadian business?

[David Plunkett]

Yes. I think it has commercial benefits; it also has intangible benefits. It shows that we are able to conclude a negotiation, and that helps us in future trade negotiations with other partners.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Is this a model for future FTAs?

[David Plunkett]

Well, it's a bit of a model, in the sense that it is a first-generation model. We will use first-generation models if, after consulting with Canadians, we think there's no need, for whatever reason, to go down the service or investment path. But if you look at the agreement we just concluded with Peru, it's far more extensive than this one because it gets into services and into investment.

This is a model up to a point, but it's not a cookie cutter. We will not necessarily use this model in all instances.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Thank you, Mr. Chairman.

I'm sure that must be almost my time.

[The Chair, Conservative, Lee Richardson]

Yes, that's pretty much it.

He almost made 15 minutes.

We just have time for a quick round. I'm going to ask to have one and a half to two minutes for questions and answers.

We're going to go to Mr. Malhi, Mr. Cannan, and then Mr. Julian.

[Gurbax Malhi, Liberal, Bramalea—Gore—Malton, ON]

I have just one question. In the current practice under the other Canadian free trade agreements, customs authorities only verify the origin of imports, yet this agreement will require Border Services to verify, upon request, the origin of Canadian exports, at a cost of $1.6 million a year.

[David Plunkett]

If you're agreeable, I have a colleague here from the border agency. I would ask her to speak to the border issue more specifically.

[The Chair, Conservative, Lee Richardson]

Could you please identify yourself for the record.

Thank you.

[Brenda Goulet, Manager, Origin and Valuation Division, Canada Border Services Agency]

My name is Brenda Goulet. I am a manager with the Canada Border Services Agency.

[The Chair, Conservative, Lee Richardson]

Thank you.

Welcome, and please continue.

[Gurbax Malhi, Liberal, Bramalea—Gore—Malton, ON]

The current practice in other Canadian free trade agreements is that customs authorities only verify the origin of imports, yet this agreement would require Border Services to verify, upon request, the origin of Canadian exports at the cost of $1.6 million a year.

[Brenda Goulet]

The trade agreement with EFTA is different from our other trade agreements in terms of how the verification scheme is created. The NAFTA model, if you like, has a verification that is based on Canada Customs verifying the exporter. Under EFTA we have agreed to a verification regime whereby we will look at our own exporter and we'll respond to requests from the EFTA countries to review exports from Canada. They will respond to requests from us to review their exporters.

The consequence of this is that we have to create some legislative amendments to give us the right to verify our exporters and we also have to do some training. We have to be able to respond to requests from EFTA countries to provide information about Canadian exports to them. As a result, we will need resources to do that. We expect to find the resources from within our own budget review, but the reality is that we have a new verification scheme that is unique and different from the one we have in other free trade agreements.

[The Chair, Conservative, Lee Richardson]

I think that's all, Mr. Malhi. Thank you.

Mr. Cannan.

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

Thank you, Mr. Chair.

To our hard-working panellists, thank you for your efforts to make Canada's first free trade agreement in almost seven years and on the first transatlantic agreement for Canada.

Specifically, I want to speak to the ties we're opening up to the European market. I've had the opportunity to go with Monsieur Cardin when we met with the European Union parliamentarians. A member from Germany was the chair of the International Trade Committee for the EU last June.

Maybe you could clarify for the committee the link that EFTA has with the EU. They have an agreement on the European Economic Area, I believe it's called. How would this play for Canadian businesses if we have a good relationship with the four EFTA countries in opening up opportunities to our second largest trading bloc in the EU?

[David Plunkett]

I will give you a superficial summary of my understanding of the link, but I'd like to send you a piece of paper that will give you a more formal link, because I'm now going on memory here.

As you know, the EU is now up to 27 member states that have various rights and obligations. There are a number of countries, such as the EFTAns, for which the EU is obviously their significant player. In fact, Norway has had two referenda, as I recall, to even join the EU along the way.

My understanding is that this economic arrangement is to try to facilitate the operation of trade and commerce, and possibly other areas, for the non-EU members. That can get you into regulatory issues to try to make sure you're onside with the EU's way of doing things, without necessarily having all of the rights and what not that you would as a full EU member. There are some subtle differences, because there is a difference in how Switzerland plays by this and how the other three do. That's why I'd rather give you something more specific on that.

There is a link between the EFTA countries and the EU, both formally and informally, over and above our own efforts to try to improve our economic partnership with the EU, which I'm sure we'll have a discussion on at one point.

This agreement, particularly the reference to the processing of agricultural product, where there is an explicit reference in this agreement to the EU, is basically our first agreement in six or seven years. It's also our first agreement with Europe, so it shows that we certainly have an interest in doing more with Europe. I think it sends a positive signal that Europe is still very important to us as a trading partner. Hopefully, individual companies and individual sectors will be able to take advantage of the opportunities in the EFTA to look at a more European approach.

Again, I think it very much comes down to a sector-by-sector situation. If you're willing, then we can send you some background material on this economic area to fill in some of the details.

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

I look forward to receiving that. It's a massive European market, and I'd love to open the door and diversify ourselves away from the U.S.

Quickly, speaking of the U.S., they don't have a free trade agreement with EFTA. Do you see some significant opportunities for Canadian businesses to get in there before the Americans do?

[David Plunkett]

Again, I think largely in the agricultural area, especially if you have products that are very price sensitive, where if all other things are even, if you have an x percent price advantage, it stands to reason that you may do well out of this--like in wheat. This is certainly one of the reasons we think it's important to be in there ahead of partners that don't have trade agreements at this time.

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

Thank you for your excellent work. There was an opportunity to meet with some of the members of Parliament, and it was a very enjoyable experience.

Thank you.

[The Chair, Conservative, Lee Richardson]

Great. Thanks, Mr. Cannan.

Okay, for one minute, Mr. Julian.

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

I'll make no comment except to thank you for coming.

I have four questions that hopefully you can answer now or in the coming couple of days.

First, what is the estimated value of tariff reduction on agricultural products from EFTA countries coming into Canada? It's estimated at $5 million for Canadian agricultural products going towards EFTA.

Second, what is the product promotion budget for Canada in the EFTA countries at the latest fiscal year completed--2006 or 2007? And if you have them, what would be the projected figures for coming years?

[David Plunkett]

Did you say “product promotion”?

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

Yes, product promotion.

Third, concerning the preamble, you mentioned environment and labour. How are those provisions enforceable?

And fourth, the dispute settlement appears to be very similar to that of the softwood lumber agreement, or softwood lumber sellout. Is it the same model as the softwood lumber agreement?

Thank you.

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

Mr. Chair, I just want to clarify one of Mr. Julian's questions. For the promotional assistance, are you looking at just strictly dollars or in-kind as well? When we had witnesses during the presentation, we had people talking about in-kind and actual financial dollars.

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

I'm just looking at the financial figures. It's much more difficult to evaluate the in-kind contributions.