International Trade Committee on April 13th, 2010

[Ed Holder, Conservative, London West, ON]

Thank you. I'll share my time, starting with Mr. Cannan, please.

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

Thank you, Mr. Chair, and thank you to our officials for your hard work.

This is part of our global commerce strategy, the agreement we're moving forward, beyond NAFTA.

I appreciated the mention in your opening comments of the full-size vehicles as part of the auto pact. I know that when our trade committee went to the Middle East...they love our Ford Crown Victorias. The Crown Vics, I suppose, are the big ones there. It definitely helps our Canadian auto industry.

I have a couple of quick questions and then I'll pass it over to Ed.

Is the supply-managed sector protected within this agreement?

[Don Stephenson]

Yes.

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

There are three of us around the table here from British Columbia. The forest and pulp and paper industry is a big economic generator for our community, as for folks from Quebec and other parts of the country. Can you elaborate a little on how this agreement will help the pulp and paper industry? Do you have any statistics? What regions will specifically benefit from the agreement?

[Douglas George, Director, Bilateral Market Access, Department of Foreign Affairs and International Trade]

Thank you.

I would note just from the trade statistics that in recent years our second largest export was lumber, and about our sixth largest export was newsprint, so we do have those sectors represented in our exports.

Looking at western Canada and B.C., there are benefits to a range of products, largely agricultural products such as pulses, beef animal feeds, canary seeds, and forest products such as paper, paperboard, and wood building materials. When it comes to forest products, we exported $8.2 million to Jordan in 2009, which is up from $4.5 million in 2008. The elimination of Jordanian tariffs, which currently range between 15% and 30% on wood products, could benefit Canadian exports of goods such as doors, frames, joinery, shake shingles, and building materials.

We also exported $2.7 million worth of paper or paperboard products. The majority of these products weren't subject to duties, but there were duties on some products, such as toilet paper, paper towels, facial tissue, stationery boxes, corrugated cardboard. There is a range of products that would benefit from the FTA.

[Ed Holder, Conservative, London West, ON]

Thank you.

I'd like to thank our guests as well.

Mr. Stephenson, I was very compelled when I heard your comment—it's a theme you have sounded before in front of us—that free trade agreements bring about regional peace and prosperity. I think as much as it is important for trade for those affected, and whether it's a bilateral or a multilateral arrangement, I would say to you that the comment about peace and prosperity—and I sincerely hope members opposite believe it as well, and I know some do, but I hope all do—is in the spirit of what we're trying to do as we go forward as a committee.

Also, I heard said by a member opposite that free trade is important in terms of building economic capacity. Mr. Brison made that comment, and he's quite correct. I was also pleased, and I'd like to compliment the NDP, because what I heard was they're looking to promote business in a very positive way. I was encouraged by that.

[An hon. member]

Hear, hear!

[Ed Holder, Conservative, London West, ON]

But I want to say to Mr. Marr, If I may, through you, that I know there's some talk about promotional budgets and all, and I have a sense that the best promotion budget you can have between countries is to put in place a free trade agreement and let industry do what it does best. From your standpoint, you talked about going from zero to $12,000 as an initial step, but ultimately it's industry that's going to figure this out.

I would appreciate your thoughts on that, sir.

[Thomas Marr]

Thank you.

We see it as the proper role of government to try to level the playing field for our exporters, and this free trade agreement helps that immensely, given the fact that the Americans have been out in front of us for some years in this particular market.

But you're absolutely right. We think that with a level playing field and some good information to our industry, the ones who are interested in Jordan will take advantage of this. We would not be surprised to see an uptick in the business, based on the anecdotal information we have from exporters, who will either call to say that there is a 10% difference in tariff and we're not competitive because we have a sort of commodity or are just waiting for this to actually happen so that they can explore a little more deeply the opportunities there. We're quite confident. The primary responsibility rests with the private sector and their association.

[Ed Holder, Conservative, London West, ON]

I'd like to underscore that the primary responsibility rests with the private sector. I love that as the spirit. I know we would carry that forward as a committee, believing it on the whole, I hope.

One of our members opposite talked about FIPA. I'm wondering, Mr. Stephenson, whether that should be a “side by each”, or why it wasn't part of the original deal so that members could debate. If I understand correctly, the Canada-Jordan FIPA was actually signed in June 2009 and came into force in December 2009. What has to happen for it to be ratified is that it has to sit in the House for a period of 21 sitting days. If I'm correct, it's usually common that a FIPA agreement not be signed at the same time as an FTA, if there's already one in place.

Is my understanding on that correct?

[Don Stephenson]

Yes, it is, and I'm glad to have the opportunity to provide a further piece of information in response to Mr. Brison's question.

In fact, Mr. Corporate Memory from legal services here beside me, Ton, was able to whisper to me that in fact the FIPA negotiations began before the FTA negotiations. As I noted earlier, both approaches are used commonly: a separate negotiation involving only a FIPA, or an FTA that has several chapters—goods, maybe services, maybe intellectual property, or investment. So it can be separate and it can be combined.

[Ed Holder, Conservative, London West, ON]

If Mr. Keddy had a chance to ask this question, he would. But in the words of my Cape Breton mother, why use 10 words when 100 can do the same thing? And that would be what I'm doing here.

What Mr. Keddy would say is, look folks, when it comes to deals and arrangements all around the world, we're already trading. Right now the way we're trading with Jordan is that we're paying a penalty to do it, and those tariffs run anywhere from 10% to 30%. As we say in French, ça ne fait pas de bon sens: it makes no good sense to put Canada into that kind of penalized position. All we're doing here is putting rules in place. The absence of that, obviously, is no rules or fewer rules, and I think that's an unhealthy environment for Canada. That would be my political statement.

My final question to you, Mr. Stephenson, would be this. Obviously, Jordan represents less than 1% of the whole Middle East panorama of opportunities, but I thought you said it very well when you said...we call it low-hanging fruit in business, but you would say “bite the dog in the ankle because it's closest”—I'm not sure exactly what you said.

I'd like to get a sense of your priorities. When we get Jordan done, and I believe there's a willingness around the table to do it, what would you see as your upcoming priorities, from a logical standpoint? You did a great job of enumerating the position of the department around the world globally, but where would you see your focus, knowing that we have some $11.5 billion of current trade? How do you see it growing?

[Don Stephenson]

The priorities in the global commerce strategy are still in all the big emerging markets—which, by the way, everybody else is after, too. If we are able to make progress with India, that would have to be among the priorities. We are now exploring with Brazil and MERCOSUR. Those would have to be the priorities.

With respect to the region, the minister has asked us to examine the opportunity for movement in other countries in the region, including the GCC, the Gulf Cooperation Council.

[Ed Holder, Conservative, London West, ON]

Let me interrupt to ask you a question. It strikes me, if I recall from a meeting we had in November 2009 on Jordan, that one of the things we talked about was that Jordan ratified a U.S. trade deal in 2001, and the EU's a few years—was it?—after that. I don't know the exact date.

Can you give us some logic as to how it financially benefits Canada to delay the Jordan free trade deal any longer? Help me understand that, please.

[Don Stephenson]

Well, I can't. Any delay in providing these opportunities to our exporters, although the impacts aren't large overall, can only be negative.

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

I call the question, then, Mr. Chair.

[An hon. member]

So why don't you bring it forward? It's been there for three months.

[Ed Holder, Conservative, London West, ON]

Well, that's not my call. I would tell you that if you want to push it along as fast as we can, we would do so. Ours is not a debate with you.

Do I have a final question, Mr. Chair?

[The Chair, Conservative, Lee Richardson]

Yes, you have one more.

[Ed Holder, Conservative, London West, ON]

The last question I have, then, which is different from the last question—which was supposed to be the last question—is this. I know you talked about the BRIC countries as among our priorities, and of course we have the EU and all, but I'm trying to understand better how the Jordan FTA helps us mature the relationships we have with the other trade agreements, in whatever form they are, in the Middle East.

I'm coming back to the last question, but I'm asking you to focus just on that. We said it's a priority; we said it's a piece in the Middle East. We know it's less than 1%. Why is it so critical?

[Don Stephenson]

It's because it's a demonstration of Canada's engagement in the region and availability for further discussions with other countries. It is in that sense.... I think the question was asked earlier whether it was principally symbolic in nature. Yes, it's symbolic, but also, in crass commercial and trade negotiation terms, it's a signal that Canada is available for such negotiations.

[Ed Holder, Conservative, London West, ON]

Thank you, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

Do you have nothing on Haiti?

[Ed Holder, Conservative, London West, ON]

I'll save that for the next round, sir.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Holder and Mr. Cannan.

Again, thank you to our witnesses for coming and for being so well prepared. I'm sure you'll be hearing from us more, and if other questions arise, we'll follow them through the deputy to the department. Thank you again for your appearance.

We're going to take about a one-minute break while we bid our witnesses adieu, and then we'll continue in camera.

[Proceedings continue in camera]