International Trade Committee on Oct. 6th, 2010

[The Chair, Conservative, Lee Richardson]

Ladies and gentlemen, we're moving now to an order of reference from the House of Commons, that being Bill C-8, An Act to implement the Free Trade Agreement between Canada and the Hashemite Kingdom of Jordan, the Agreement on the Environment between Canada and the Hashemite Kingdom of Jordan and the Agreement on Labour Cooperation between Canada and the Hashemite Kingdom of Jordan.

We're going to begin the discussion of this bill with a briefing by the Department of Foreign Affairs and International Trade to give members some background. We will be pursuing this topic until it is dealt with in committee. I'll just advise the committee that on the return from the break week following this week, we will return on the Monday to hear our first witnesses on this subject.

I've asked for suggested witnesses from all. I've heard from the NDP and the government. So if you have witnesses you'd like to propose for this debate as time goes on, please get them in to the clerk. We certainly have enough to begin that consideration on the first Monday, but we'll be at it for awhile, so you're welcome to get those in over the next 10 days.

With that, let me please introduce our guest. We have a familiar face returning to the committee, the assistant deputy minister of trade policy and negotiations, Don Stephenson.

Don, thank you very much for coming back. I see you've brought a crew with you—for your self-defence, I'm sure. We only have about 40 minutes today once we get started, so I don't think it will be too rigorous this first go-round.

Joining Mr. Stephenson is Doug George, the director of bilateral market access and the chief negotiator of the Canada-Jordan free trade agreement. We also have returning to us a familiar face, the general counsel for the market access and trade remedies law division, Tom Zuijdwijk. Thank you for coming back. As well, we have John Holmes, the director general of the Middle East and Maghreb bureau.

From the Department of Agriculture and Agri-Food, we have Gilles Gauthier, who's been here before as well. He is the director general and chief agriculture negotiator of the negotiations and multilateral trade policy directorate. And from the Department of Human Resources and Social Development Canada, we have Debra Robinson, the director of international labour affairs.

Thank you all for coming. I'm going to ask Mr. Stephenson if he would give us a brief opening statement or overview for as long as he needs, and then we'll have a round of questioning.

Mr. Stephenson.

[Don Stephenson, Assistant Deputy Minister, Trade Policy and Negotiations, Department of Foreign Affairs and International Trade]

Thank you very much, Mr. Chairman, and thank you to the committee for giving us the opportunity to speak to you about the Canada-Jordan free trade agreement and the related agreements on the environment and labour cooperation.

In my presentation I'll briefly highlight Canada's general free trade agenda and note some of the benefits of the Canada-Jordan FTA, as well as discuss generally Canada's relationship with Jordan.

Consistent with government priorities set out in the Speech from the Throne, the government is pursuing a robust trade negotiations agenda under the global commerce strategy. This aggressive pursuit of additional trade opportunities is designed to ensure the broadest possible markets for Canadian businesses. To do this, we make strategic use of an entire suite of international policy tools. This includes not just regional and bilateral free trade agreements, but also foreign investment promotion and protection agreements, science and technology cooperation agreements, air services agreements, double taxation agreements, and regulatory cooperation initiatives.

These tools are used to secure competitive terms of access for Canadian businesses and investors by opening more doors for Canadians in international markets and helping to make Canada stronger in an increasingly competitive global economy. A key component of the government's strategy is a strong and ambitious regional and bilateral free trade agreement agenda, an essential contributor to Canada's future prosperity, productivity, and growth.

Building on the NAFTA and other free trade agreements, the government has recently implemented agreements with the European Free Trade Association and Peru, and received parliamentary approval of an agreement with Colombia, and signed agreements with Panama and Jordan. Last year we launched negotiations towards a comprehensive economic and trade agreement with our second-largest trading partner, the European Union. To date, we've held four successful rounds of negotiations, with a fifth to be held later this month.

Negotiations remain ongoing with partners such as the Caribbean Community or CARICOM, a number of Central American countries, the Dominican Republic, and Korea. We've also launched negotiations towards a bilateral free trade agreement with the Ukraine, and have held exploratory talks with Morocco and Turkey, and we're working to broaden our existing agreement with Costa Rica.

In September we published a joint study with India on the possible parameters of a comprehensive economic partnership agreement, and we are exploring opportunities with China, Japan, and with Brazil, together with its MERCOSUR partners, to deepen our trade and economic relations.

Mr. Chairman, we still face a measure of global economic uncertainty, and Canadian companies are at a competitive disadvantage because their foreign competitors have preferential market access under some form of free trade agreement.

Like other initiatives in our negotiations agenda, the Canada-Jordan Free Trade Agreement addresses those concerns by levelling the playing field with key competitors who already benefit from free trade agreements with Jordan, namely those from the United States and the European Union.

And opening doors to trade and investment is the right approach to create opportunities for Canadians in global markets, markets like Jordan. Highlighted in both the Speech from the Throne, as well as Budget 2010, this free trade agreement will open doors for Canadians in the Jordanian market and help to make Canada stronger in an increasingly competitive global economy.

Over the years, Canada and Jordan have built a strong, mutually beneficial relationship. It is a relationship grounded in common aspirations—aspirations like peace, stability and prosperity for our citizens. Despite a small decline in our bilateral trade with Jordan in 2009, with the impact of the global economic slowdown, growth is the longer-term trend for our trade relationship. For example, Canada's 2009 merchandise exports, which totalled $66 million, were more than double the $31 million total in 2003. This free trade agreement provides an opportunity to further enhance this growing relationship.

Jordan's current average applied tariff is 11%, with peaks of up to 30% applied on some products of Canadian export interest. Upon implementation, this agreement will eliminate Jordanian tariffs on the vast majority of current Canadian exports to Jordan, with remaining tariffs phased out within three to five years, and only a small number of exclusions limited to the areas of tobacco, alcohol, and some poultry products.

This free trade agreement provides Canadian companies with benefits in a variety of sectors, including forest products, machinery, construction equipment, and agriculture and agrifood products such as pulse crops, frozen French fries, animal feed and various prepared foods. In addition to tariff elimination, the Canada-Jordan Free Trade Agreement contains a variety of other provisions, including rules governing market access for goods, rules of origin, customs procedures, enhanced commitments in the area of technical barriers to trade, trade facilitation and dispute settlement.

Our interests with Jordan as they relate to services are being adequately addressed in the World Trade Organization context. The Foreign Investment Promotion and Protection Agreement, signed at the same time as the Free Trade Agreement, covers Canada's investment-related interests.

The Canada-Jordan Free Trade Agreement contains principle-based chapters on the environment and labour cooperation. High-quality side agreements on the environment and labour cooperation, with strong binding obligations, were also negotiated in parallel to the Free Trade Agreement. Under the agreement, Canada and Jordan are committed to promoting corporate social responsibility.

As Canada's first ever free trade agreement with an Arab country, the Canada-Jordan Free Trade Agreement will not only help improve market access to Jordan's growing market. A free trade agreement with Jordan demonstrates the importance that Canada places on further developing relations with Jordan, while providing a platform for expanding commercial ties and raising Canada's profile in the broader Middle East.

This free trade agreement will also benefit Jordan, in sharing access to Canadian products at competitive rates, increasing access to the Canadian market, and providing rapid tariff reductions.

The agreement is also a concrete demonstration of Canada's commitment to enhancing regional peace and security by improving economic conditions, especially given Jordan's role as a moderate Arab state that promotes peace and security in the Middle East.

As a moderate Arab state with a constructive foreign policy on all major files, Jordan is a natural partner for Canada and an effective interlocutor between the Arab world and the west. Canada and Jordan are consistent supporters of the United Nations' efforts to promote peace and security. They were founding members of the Human Security Network, and since 2000 have collaborated on the establishment of the Regional Human Security Centre in Amman, Jordan.

Canada and Jordan have strong bilateral relations based on common interests and values and people-to-people links. Over the last decade, Jordan has consistently demonstrated a leadership role in the pursuit of peace in the Middle East. Jordan was also one of the first parties to the Ottawa convention banning anti-personnel mines.

Jordan has already notified Canada that it has completed all of its internal steps to allow the agreements to come into force. Should Parliament elect to pass this implementing legislation, officials would then work with their Jordanian counterparts to bring the free trade agreement and the two side agreements on the environment and labour cooperation into force on a mutually agreed-upon date and as soon as possible.

Thank you, Mr. Chairman. I look forward to responding to the members' questions.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Stephenson.

We'll now have questions. The questions could be directed to Mr. Stephenson, and from there you may redirect if you wish.

We're going to start the questioning with our Liberal colleagues.

Go ahead, Mr. Silva.

[Mario Silva, Liberal, Davenport, ON]

Thank you, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

We're going to try to get in seven minutes, but if you happen to be done in six, that will keep us on schedule.

[Mario Silva, Liberal, Davenport, ON]

I'll try to be fast.

Thank you very much for your excellent presentation. Some of the comments I was going to raise have already been addressed by you, but I think it's important to emphasize once again that what we're talking about here, in terms of this agreement, is a relatively small country and a small economy. The bilateral trade between the countries is relatively small. But I think there's a lot we can leverage here beyond just trade. I think that's what I heard from you as well.

Jordan is a key, important partner in the region. It is a stable country that has played a very constructive role in the peace process in the Middle East. This is probably one of the first trade agreements we've negotiated with an Arab country and a Muslim country. So I think this particular deal has symbolic importance, and I think it's the reason there will probably be a lot of support from the House. They see beyond economics to the symbolic importance of this agreement, and they see the good will that can be leveraged by Canada towards other partners in that region. It is a way, possibly, into other countries that are larger players in the Arab world. I think it's a good start. It's one we probably can get done in a better timeframe than we can with other countries, I would imagine, that are much more complicated.

Could you emphasize again the symbolic reasons why this will be so key for other deals we want to approach in the future with other partners in the region?

[Don Stephenson]

I'll let my colleague John Holmes speak to the broader significance of the agreement.

From the trade policy perspective, I agree that it's a very small market. But it was a deal that was available to us, and it put our exporters back on a level playing field with their major competitors. So it was not an opportunity to miss on the trade side, either.

Let me pass it to John.

[John Holmes, Director General, Middle East and Maghreb, Department of Foreign Affairs and International Trade]

Thank you for your question, Mr. Silva.

I won't add much to what you said in your introduction. Jordan is a partner for us not only on the trade and economic side but also on the political side. King Abdullah, as I'm sure you noticed, when they launched the Middle East peace process negotiations at the White House was standing next to President Obama. His government has given strong support to the resumption of talks and is working behind the scenes with others to try to make sure that the negotiations stay on track.

With respect to that very important issue, it's playing a very positive role. It's also playing a very positive role through the broader region. I would note that this year as chair of the G-8, Canada will be co-chairing the broader Middle East and North Africa initiative, which is an initiative from a few years back. In that, we promote dialogue with civil society. We promote good governance. We promote greater cooperation with the private sector and a range of other issues. Of the many countries in the region, I would say Jordan is one of the ones that have been most constructive, most helpful, as we try to advance that particular agenda.

Those are just a couple of examples where our close relations are very productive to Canadian values and Canadian interests.

[Mario Silva, Liberal, Davenport, ON]

I don't know if I have any time left, but I wanted to know what you see as some of the growth areas in Jordan. What is happening on the ground in terms of what industries, what sectors are going to be the growth areas in the next little while?

[Don Stephenson]

Sir, please let our chief negotiator respond.

Doug.

[Douglas George, Director, Bilateral Market Access, Chief Negotiator, Canada-Jordan Free Trade Agreement, Department of Foreign Affairs and International Trade]

It's hard to say offhand what the key growth areas will be, but we're doing very well in terms of forest products, textiles, pharmaceuticals, agricultural products. I think one of the key things to note is that in many areas we're facing a 10% to 30% Jordanian tariff whereas our key competitors, the U.S. and the EU, are largely or are completely tariff-free in the same areas. We're hoping to gain back some of the market share we've lost.

The U.S., since they signed their agreement in 2001, have more than tripled trade. The EU signed it in 2002, and theirs has more than doubled. So overall we think there are some benefits to be seen by Canadians.

[Mario Silva, Liberal, Davenport, ON]

Thank you.

[The Chair, Conservative, Lee Richardson]

Thank you.

I think we have two minutes for Mr. Dhaliwal.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

Thank you, Mr. Chair, and thank you, panel members.

I have a question for the assistant deputy minister. You mentioned that you have talks with India and China. Certainly, we are fully supportive of this agreement with Jordan because we have strategic political ties with that country. What I have noticed over the past few years is that most trade agreements are signed between America and Canada, even though we all see that Canada's economic future lies in Asia.

What would it take to complete one of the agreements that we initiated with Singapore about 11 years ago?

[Don Stephenson]

Sir, that is a question in several parts.

First of all, we are working very hard on the major emerging markets and the markets in which there is explosive growth—particularly Asia—and we're doing that just like everybody else on the planet. We are, we hope, making progress in all markets, and in particular with the study that was done jointly with India that recommends that we move forward with a free trade agreement negotiation with India. We hope that will bring us success with regard to that market.

We also have a new process, that was launched by the Prime Minister, with China, a working group established under a joint economic and trade committee that is intended to look for opportunities for expanding that relationship as well. As is stated in the global commerce strategy, those major markets--large, rapidly expanding markets--are the first priority. In the meantime, you try to make progress where you can, and the agreement before you is a case in point.

With regard to the impasse we have been at for some time with Singapore, the position being taken by Singapore on a variety of offensive interests—you know, Canada's principal commercial interests in those negotiations—has essentially put us in a place where moving forward in the absence of movement on the Singaporean side would not leave us with an agreement of sufficient value to make the concessions they're looking for on our side.

We're hopeful that may change at one point, that we'll find a way to move forward. In the meantime, if it's not the right deal, you don't do it.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Stephenson.

Thank you, Mr. Dhaliwal.

Monsieur Laforest.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Thank you, Mr. Chairman.

Good afternoon to everyone.

Mr. Stephenson, in your statement you said that the Canada-Jordan Free Trade Agreement addressed the concerns of Canadian exporters, and that it will level the playing field with their competitors from other countries, who have already signed free trade agreements with Jordan, such as the United States and the European Union. However, when we are sometimes presented with free trade agreement undertakings, we are told that, since the United States or the European Union still have not signed a free trade agreement with the country in question, we must quickly position ourselves because, when one country trades with another, they tend to keep the same suppliers, and so on.

Don't you think that this is a little contradictory?

[Don Stephenson]

When we negotiate our free trade agreements, we are mercantilistic. We are looking for advantages, we want to give Canadian exporters an advantage over other exporters from other countries that may not have signed free trade agreements, or at the very least, we want to level the playing field, if other countries have signed agreements before us. The game is fairly clear and we always seek benefits for Canadian exporters.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

But the argument may be different every time.

[Don Stephenson]

It is always to open new markets.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

Based on what I understand, that's a legitimate pursuit.

I have a slightly more technical question. You also said that, in addition to tariff elimination, the free trade agreement contains a variety of other provisions, including rules governing market access for goods, rules of origin, customs procedures and enhanced commitments in the area of technical barriers to trade.

I would like you to provide us with concrete examples of technical barriers to trade which would be abolished, streamlined or minimized under a free trade agreement like this one.

[Don Stephenson]

Maybe Doug will have some specific examples.

First, under the agreement with Jordan, technical barriers, that is, the standards and rules governing the safety of agricultural products, and, for instance, standards for market products, fall under WTO agreements. As far as the free trade agreement with Jordan is concerned, these issues are governed by WTO rules.

As far as concrete examples with regard to the Jordanian market are concerned, I will ask Doug if he knows of any.

[Douglas George]

I don't have any examples offhand, but it does establish a process, through the technical barriers to trade area, within the agreement to resolve any bilateral issues. I think it's probably more expeditious to do it through the bilateral than through the WTO, in certain cases.

[Jean-Yves Laforest, Bloc, Saint-Maurice—Champlain, QC]

I will now let my colleague Mr. Guimond ask a couple of questions.

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

My questions are for Mr. Gauthier.

Mr. Stephenson did not really talk about the trade benefits in the agricultural sector. But in your view, as our chief agricultural negotiator, what are the real opportunities for Canada in this agreement?