International Trade Committee on Feb. 10th, 2011

[The Chair, Conservative, Lee Richardson]

Ms. Hall Findlay.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Thank you, Mr. Chairman.

Thank you very much, everybody, for being here.

I have two questions. One has to do with the security perimeter and trade, and what we can do on the trade side.

The second one, if we have enough time, will have to do with the number of people we have on the ground. Maybe Ms. Watson can answer that, in terms of what we are doing in Washington, what we are doing at the state level, what we are doing with our consulates in different cities, and how many people we have on the ground. How has that changed, if at all, in the last number of years? If we can and have time, I would like to pursue that a bit.

But my first question—and it's no secret to anybody around the room—is that I have some real concerns about the security perimeter announcement, not because of our enthusiasm to thin the border from a trade perspective; I actually am worried that the security piece may in fact cloud what we want to accomplish from a trade perspective.

There's an awful lot of things that have thickened the border that are not related to security. I appreciate the value of seeing the President and the Prime Minister doing this, in the sense that it will clearly—Don, as you said—motivate people in both countries at lower levels to pursue this; that's good. I am worried that the security piece is going to end up being very political; it's going to cloud some of the things that I think everybody wants to see in terms of trade.

My question is, can we separate them out? Is there a way to effectively take out the pieces that are aspects of thickening the border—compliance requirements, some of the regulations, some of the parts in...that half of this agreement? Can we isolate those more effectively, away from the security piece, so that regardless of what's happening on the political side in terms of security and sovereignty, we can move forward as a committee, as a country even, on those issues?

I understand that this might be a bit challenging, but I want to make sure that we do proceed with those aspects, regardless of how cloudy the other piece might get. I just too often hear people saying that 9/11 has created a thickened border. I don't buy it, to be honest. I see an awful lot of protectionist policies; I see an awful lot of things happening at the border that are perhaps done in the guise of security because “oh well, we have to”, but I'm not really sure they're necessarily security-related.

I'm asking for your help, in effect, to separate those out so that we can focus on those we can move forward on.

You're shaking your head.

[Don Stephenson]

Well, what a difficult question. You're not talking to either an expert on borders or on public safety, a Canadian Border Service person who might be able to unpack it better than I can.

Can you unpack the security issues from the trade issues? Well—it's a bureaucrat's answer—yes and no. There are some things you can treat separately, and in the announcement last week the regulatory cooperation piece, which is directly related, is separated. There are, in the list of initiatives being taken with respect to the border, things that are separable, such as improving some of the infrastructure and some of the programs for trusted exports, or things like that.

Can you really fully separate these two issues in the modern world and in the context of security in the U.S., and for that matter, in Canada? It's a shared concern, security. No, I suppose ultimately you can't.

[Martha Hall Findlay, Liberal, Willowdale, ON]

I don't mean to interrupt, but if we want to address what Mr. Keddy was referring to—a significant increase in stoppages for compliance of a truck carrying fish or Christmas trees—how can we possibly not address that problem without having to get into a significant discussion about security and sovereignty? Those guys at the border are not asking for that truck to be unloaded and reloaded because of 9/11. And if they are, then I think that's misplaced.

I'm actually saying that I think we have to be able to separate them, because I am concerned that we're going to be caught up in the political discussion. I appreciate the fact that there were two main thrusts of the announcement, but I want to see trade improved between these two countries. I want to do this not because of a concern about the other, but more because of a concern about moving forward on the first.

[Don Stephenson]

In my business, we talk about disguised barriers to trade. The thing about disguised barriers to trade is that people disguise them—at least, when they're being successful—so it's very difficult to say whether a particular policy is in fact intended as a trade barrier or to address some other legitimate public policy objective.

I guess we would argue, as we will before the World Trade Organization, that the country of origin labelling system that the U.S. has now imposed is a disguised barrier to trade.

With respect to border security issues, you have to address both issues. I guess we are going to have to try to get to a system in which we're taking a risk management kind of approach. You can't inspect every truck, every ship, every person, so getting the programs that reduce the risk, if we can, will help the traffic move faster.

[Martha Hall Findlay, Liberal, Willowdale, ON]

I'm not sure what risk we're trying to reduce when we're asking that a truck full of fish be unloaded and then reloaded.

[Don Stephenson]

You'd have to ask somebody from Border Services or Public Safety exactly what risk they think they're inspecting for in this regard, or whether they would agree, perhaps, with you that this is a disguised barrier to trade.

That's about the best I could do.

[Martha Hall Findlay, Liberal, Willowdale, ON]

Thank you.

[Don Stephenson]

Perhaps that's an interesting case study that we can pursue—that particular border crossing and that particular product—to see whether we can make some improvement.

[Martha Hall Findlay, Liberal, Willowdale, ON]

The other question—and so as not to take time, it could even be answered by a follow-up in writing—is just about numbers: who is there on the ground, what did we have before?

[The Chair, Conservative, Lee Richardson]

Ms. Watson touched upon it earlier, but that might be useful. If you wouldn't mind, just send us a note with the current—

[Martha Hall Findlay, Liberal, Willowdale, ON]

What is there now, what was there five years ago, what was there ten years ago; that would be really helpful.

Thank you, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

Thank you.

We're going to continue this round. We can probably get through a final round.

Are you okay for another few minutes, Mr. Stephenson?

Thank you.

Mr. Holder, if you wouldn't mind splitting your time with Mr. Trost, we'd do about two and a half minutes each.

[Ed Holder, Conservative, London West, ON]

I wouldn't mind, but I was going to be splitting with—

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

He said Mr. Trost, but he pointed to Mr. Allison.

[The Chair, Conservative, Lee Richardson]

Carry on, Mr. Holder or Mr. Trost.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Thank you, Mr. Chair.

As was noted with the Buy America issues, procurement at the state and local levels was slanted—we'll say in protectionist fashion—towards local interests in certain situations. I'm interested in a few things.

One, do you see any other trade issues on the horizon, issues that you are dealing with, that would involve local and/or state government officials?

Two, how do you feel about and what do you see as the progress in dealing with local procurement issues as covered by the agreements we've had to deal with the Buy America issue? How can we expand to continue to engage the states and local governments to make sure that we don't have more procurement problems?

That's my question.

[Don Stephenson]

I may need some help from Laurent.

In terms of other issues at the level of state and local governments, I think the principal one is procurement markets, at least for Canada. When we get into regulatory matters we may find that, like in Canada, much of the regulation-making of interest to us is at state level. But for the moment I guess I would suggest that Buy American and procurement markets are the principal interest.

As for the question of whether or not we can make progress, first of all, we need to make progress on the Canadian side. That is to say, we need to make an attractive offer in respect to the reciprocal access that we would give to Canadian subnational government procurement markets, and ultimately that's, in a negotiation, what's going to drive to success. It has to be win-win or you have to be a lot more powerful than the other guy, one of those. So we're going to have to make an interesting offer and be prepared to be ambitious with respect to that offer.

By the way, the same set of issues is being discussed with the provinces and the territories with respect to the Canada-E.U. negotiation and to what extent the provinces and territories are willing to put their procurement markets on the table in order to get reciprocal treatment from Europe. So those two things should be watched together.

I am optimistic that with a good offer we would get some interesting progress on the U.S. side, although I won't underplay the challenge on the American side to marshal their state-level governments, and for that matter the large municipalities, that would be of interest to us. That's not less of a challenge for them than our coordination and dialogue with provinces and territories, except there are more of them. So we'll have to see.

Perhaps Mr. Cardinal would like to add something.

[Laurent Cardinal]

Maybe one part of last year's agreement was the acceptance of the provinces and territories to sign on to the government procurement agreement of the WTO. So already there, it's secured for Canadian suppliers the commitments that 37 states have taken under the GPA--

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

You said 36 states; that's what my memory.... Is it 36 or 37 states?

[Laurent Cardinal]

I think it's 37.

The way the GPA is structured, it's a positive list of entities, and even if the states had taken commitments, there are exceptions and exclusions to that. So maybe the progress that could be made on the list of entities covered is there's a way to shorten the list of exceptions.

It's also true for the provinces: the number of entities covered is also limited. So there's room for negotiations, depending on the interest on both sides of the border.

[Bradley Trost, Conservative, Saskatoon—Humboldt, SK]

Over to Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Thank you.

I'd like to thank our guests.

I had two questions, but in the interests of the time we have, perhaps I could ask Ms. Watson if you could undertake to provide a written response back on this basis if this is appropriate.

You talked about the 20 offices in the United States where we have representation and how our Canadian consuls general make a couple of trips to Washington a year annually. I think your quote was “I hope we've been a little bit more creative”. My sense is you probably have.

Perhaps I could ask you to undertake how you would measure, or how we as this committee could measure, the effectiveness of consuls general and if I might even say broadly the sense of how we are doing as trade team, if you will, in the United States. Because I think we have a pretty exciting ambassador, and I wish him every success. But I don't know how we measure this from an effectiveness standpoint. So I'd like to get some indication from you as to what your KPIs are or how you measure that from an effectiveness standpoint?

Briefly, Mr. Stephenson, if I could ask you, please, border thickening is an issue Ms. Hall Findlay brought up. From an economic standpoint, we all know the reduction of that makes practical sense. We call it border thickening, but it's just the challenges of doing business and getting through the borders from a commercial standpoint. I think there are some very significant problems there.

Canada gets it. I think Canada is really clear that we want the border reduced. I'm not as confident that the Americans do and whether it's for commercial purposes under that guise of security or what have you. I don't know that.

We watched a move here the other day, and it was interesting. It was a Maclean's-CPAC special on American-Canadian relations. You may well have seen it. And this is third-hand, but Ms. Napolitano, when challenged, effectively said when asked about the border thickening, “What's wrong with that?” She saw that, I thought--again third-hand--as a positive, which is contrary to where we're trying to take it with what the Prime Minister announced last week in terms of the declaration.

So my quick question, and hopefully it's a quick answer, is how do you feel the declaration on a shared vision for perimeter security and economic competitiveness will be a game changer?

[Don Stephenson]

I'll let Michael try.

[Michael Rooney]

Thank you.

Thanks for the question.

We talked a bit today about the security element of this and that security often might trump trade. I think, as I said earlier in my remarks, the evolution has got us to a point now where we can actually sit down and focus on the economic aspects of the border relationship in balance with the security aspects.

I think one important factor is beginning to dispel some of these myths that Ms. Napolitano and others have about Canada and the border, etc.

There are four elements of the declaration. One focuses particularly on trade and economic competitiveness, and through the dialogue we'll be able to go and address some of these issues you're talking about—thickening of the border, the security element of non-tariff barriers—and be able to move forward and look towards programs and plans that can facilitate business in the road ahead. I think it's an important declaration in that respect.

I think it just overall helps enhance the relationship, and I think the elements of the trade aspect of the declaration will go to address some of the issues we've spoken of today.