International Trade Committee on March 10th, 2009

[Deborah Lyons]

I believe I can confirm that there has been no reversal of the SPP process; at least I'm not aware of any. We do support working group meetings that take place. They're led by Public Safety, and Industry Canada, although we participate in the regulatory framework discussions, as Martin was mentioning. But our role is very much to facilitate those meetings, and so forth.

Our understanding is that there will be another meeting of the SPP, probably in the summer or fall of 2009, with Mexico as host....

Do you know if it's Mexico or the U.S.? It's Mexico; okay.

I was getting that mixed up with the NAFTA commission, which I think is going to be hosted by the U.S. this year.

On the promotion of our trade in the U.S. and the budget for that, we have two funds that we use. One is the departmental fund, which is used for all of our missions around the world. That's the client service fund. That fund is about $500,000 a year. Our missions use that in promoting Canadian business--

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

Around the world?

[Deborah Lyons]

Around the world, the fund is larger. In the U.S. it's around—

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

Half a million dollars.

[Deborah Lyons]

It's around half a million. But it gets a little better; I'm sure that sounds small.

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

It does.

[Deborah Lyons]

We have around $500,000 that we focus on basic business development. We have another $100,000 that is used to assist new Canadian exporters along the U.S. border. We call that the export U.S.A. program. And because of the huge focus on technology in our relationship with the U.S., we have an additional $400,000 that is focused on technology development, technology partnership. It is a total, from the client service fund, of about $800,000 or $900,000 focused on the U.S. missions only.

In addition, because the U.S. is so critical to Canada's prosperity, so critical to our companies—that's where the majority of our companies do business, obviously—we have a very strong partnership with other government departments. Other government departments play very large in the U.S., and particularly our regional development agencies, which work very closely with Canadian clients across the country, as well as National Research Council, which is very concerned about technology development, technology partnering; and, of course, Agriculture and Agri-Food Canada.

Several years ago we formed a partnership with these other government departments. That is now referred to as the North America platform program. You may have heard of it as the enhanced representation initiative, where all these departments came together with DFAIT to enhance our representation in the U.S.

From that fund we have about $1.5 million, with which we focus on both business development and what we call commercial advocacy, some of the things we've just been talking about with regard to promoting Canada's position on things like COOL, on APHIS—

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

I'm sorry to cut you short, but I have other questions.

So the total would be $3.4 million?

[Deborah Lyons]

The total would be $3.4 million.

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

Okay. That contrasts with Australia, which puts about $0.5 billion into product promotion. The European Community, just in its wine exports alone, puts in $125 million.

So if, in the largest trading relationship in the world, we're only investing $3.4 million--

[Deborah Lyons]

For business development.

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

No, I'm talking about direct product promotion.

[Deborah Lyons]

Then you're quite right; it is for product promotion.

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

I appreciate that, because I've asked other departmental officials to come forward to give us figures. It has been very difficult to get them. It is helpful to have this, because it shows that more investment is needed, definitely.

[Deborah Lyons]

I'm aware that you've asked for Europe numbers, and we have them for you.

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

Great. Thank you.

Now I'd like to move on to two other questions, and then I'll turn the floor over to you.

First, we've had a major shift in trade policy with the U.S. Essentially, I don't think I can underscore enough that Obama campaigned on a fair trade agenda. That was in clear contrast to McCain, who was campaigning on Bush-style free trade. I'm wondering how the department is adjusting to what is very clearly a fair trade agenda before the U.S. Congress—a lot of fair traders were elected to the U.S. Congress as well— and to the administration pushing for stronger social, environmental, and labour standards, pushing for Chapter 11 provisions that Mr. Cardin referenced as well. How is the department adjusting to that new reality, which is no longer the old-style free trade but rather a much more balanced fair trade approach?

My last question is around softwood lumber. I'll have to disagree with the comments Mr. Stephenson made in his opening remarks. Outside of the Ottawa bubble, the softwood lumber agreement, the softwood sellout, is very controversial. In fact, in B.C. it's quite likely that the B.C. government's support for the softwood lumber sellout will contribute to their being defeated on May 12.

Given how large the anti-circumvention clause is, given the fact that essentially it means every time we go forward on any type of arbitration, we've lost, I'm wondering what the upcoming cases are—we've just had a $68-million fine toward Ontario and Quebec—and what the risks are if we lose in that arbitration. What are the costs to Canada likely to be? I'm talking about Ontario and Quebec. I'm also talking about B.C. and Alberta.

Thank you, Mr. Chair.

[Don Stephenson]

Let me try them in reverse order.

With respect to the softwood lumber agreement, when I took this job on the first of September--I tried to get through a whole career without dealing with softwood lumber, but I didn't quite make it--the first thing I needed to do was go meet the lumber industry. So I went to British Columbia and then to Quebec to meet with the principal producers on the one hand, but also their industry associations. I have since met with all of the provinces and all of the provincial associations representing the industry.

They told me unanimously that my first priority should be to protect and preserve the agreement. The reason they told me that was because in the current economic climate, the agreement gives them a little bit of stability and predictability in the marketplace.

I can only report to you what I heard from those representatives of the industry.

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

Yes. Well, we'll have to disagree on that.

[Don Stephenson]

You can't disagree on what I heard.

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

No, no, I have to disagree--because certainly I meet with producers, and I've seen the plants that are shut down in B.C.

But my specific question was on the upcoming cases. If they go against Canada, and likely they will, what are the costs going to be?

[Don Stephenson]

The only other arbitration under way is with respect to Ontario and Quebec provincial support programs for the industry. The claims made on both sides are so wildly different. On the one side, Quebec and Ontario have submitted that the value of these programs can be measured in single-digit millions of dollars, whereas on the American side, they have a range of the effects between $400 million and $1 billion. So it's very difficult to say, with any confidence whatsoever, what a panel might determine in that circumstance.

The other question was with respect to the anti-concentration clause, I think you said...?

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

No, it was more a comment--that it's because of the way the anti-circumvention clause is worded that we keep losing, and that this was why it was a bad idea to sign the agreement. But it was more of a comment, it wasn't a question.

The other question was regarding the fair trade approach of Mr. Obama.

[Don Stephenson]

When the Prime Minister met with the President, he indicated that Canada is open to a discussion of how to strengthen the provisions in respect of environment and labour. The President, on his side, first of all didn't raise this in his discussion with the Prime Minister; it was raised only in the questions and answers, after the meeting.

The President has indicated that his interest is in strengthening those provisions, and the Prime Minister indicated his willingness to engage that discussion, but not in a manner that would put the entire agreement at risk. To date, we have no proposal from the American side about what it is beyond the general comment that they'd like to strengthen the agreement perhaps by bringing environment and labour into the body of the NAFTA. I interpret from this that what they're looking for is stronger dispute settlement provisions in respect of the obligations that are taken in environment and labour.

I would have to say that if we do engage in such discussions, those discussions would, on the Canadian side, be led by the departments responsible for environment and labour, not so much the Department of Foreign Affairs and International Trade, so there's not much to report yet in respect of that discussion.

[The Chair, Conservative, Lee Richardson]

Thank you.

Thank you, Mr. Julian.

That concludes the amount of time we have for Mr. Julian's questions and also for Mr. Stephenson's appearance before the committee--unless you wanted to comment on the B.C. election.

Thank you for your appearance here. It is 10 o'clock, or just after. Your colleagues, I understand, are going to remain for the next round.

Again, thank you, Mr. Stephenson, for joining us.

[Don Stephenson]

I want to give my apologies to the committee. I am off to meet the provinces. It's our regular quarterly meeting with respect to all trade policy matters, and today's discussion will be to pursue, in particular, last week's decision with the European Union and how to move forward in a trade discussion with them. That's the principal issue for today. Yesterday the principal issue was responding to the softwood lumber arbitration case.

That's just to make the point that, with apologies, I leave you in order to work--and to work, as always, effectively with the provinces.

Thank you very much.