International Trade Committee on April 13th, 2010

[The Chair, Conservative, Lee Richardson]

Welcome to the eighth meeting of this session of the Standing Committee on International Trade.

As a committee we are anticipating a bill to come to us from Parliament. I don't know if we're particularly presumptuous, but that's usually the way these things go. To properly prepare the committee for that legislative function, we are asking the department today for a briefing on Canada-Jordan matters generally, but this is all to the end of what we presumed to be a free trade agreement coming this way.

We have had most of these witnesses here before and we're grateful that they've come back to get us started down this path. We're going to follow our normal practice of allowing an opening statement, just by way of briefing, but we find that a lot of the questions the members want to know come out of the questions and answers. So we'll do a seven-minute round after questions. Because we are about 10 minutes late starting, we'll go the full hour here, if that's all right with our witnesses.

I will begin by introducing Don Stephenson, the assistant deputy minister of trade policy and negotiations. He has been with us before. We also have Doug George with us. He's the director of bilateral market access. We have Ton Zuijdwijk, the general counsel with market access and trade remedies in the law division. We have Thomas Marr here as well, acting director general, Middle East and Nagreb.

From the Department of Human Resources and Skills Development, we have Pierre Bouchard. Welcome back. Thank you again for being here.

And from the Department of Agriculture and Agri-Food, we have Denis Landreville, lead negotiator, regional agreements, negotiations and multilateral trade policy directorate.

With that introduction, I take it, Mr. Stephenson, you're going to begin with a brief overview.

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

I will.

Thank you, Mr. Chair. I am very pleased to appear before the committee to speak to you about the Canada-Jordan Free Trade Agreement and the related agreements on the environment and labour cooperation.

My presentation today will briefly highlight Canada’s general free trade agenda, note some of the benefits of the Canada-Jordan FTA, as well as discuss generally Canada’s relationship with Jordan.

I was going to conclude by introducing my colleagues, but that has already been done. I brought along a lot of people to show that the process of negotiating free trade agreements is a multi-departmental responsibility. It was also to ensure that we would win if a vote were held.

In terms of the general free trade agenda, in accordance with government priorities, including the global commerce strategy, the government is pursuing a robust trade negotiations agenda. This aggressive pursuit of free trade 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.

The government’s ambitious regional and bilateral free trade agreement contributes to Canada’s future prosperity, productivity and growth. Building on the North American Free Trade Agreement and other free trade agreements, the government has recently implemented agreements with the European Free Trade Association and Peru, and has concluded agreements with Colombia, Jordan and Panama.

Last year, we launched negotiations toward a Comprehensive Economic and Trade Agreement with our second largest trading partner, the European Union, with whom we have held two successful rounds of negotiations; the third is coming up in two weeks. Negotiations remain ongoing with partners such as the Caribbean Community, Central American countries, the Dominican Republic and Korea. We have held exploratory talks with Morocco and Ukraine. We are also working with India to study the possible parameters of a comprehensive economic partnership agreement.

And we are exploring opportunities with countries like Japan and Brazil/Mercosur to deepen trade and economic cooperation.

We still face a measure of global economic uncertainty, and in a growing number of countries, Canadian companies are at a competitive disadvantage because their competitors have preferential market access under some form of free trade agreement. 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.

Highlighted in both the Speech from the Throne and 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.

Jordan is a growing market for Canada, with 2009 merchandise exports of $65.8 million and 2009 merchandise imports of $16.6 million. The top Canadian exports in 2009 included vehicles; forest products; machinery; pulse crops, mainly lentils and chickpeas; ships and boats; and plastics. The top 2009 imports included both knit and woven apparel; precious stones and metals, mainly jewellery; vegetables; and inorganic chemicals.

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.

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 vibrant market, which continues to grow, but it will also provide a platform for expanding commercial ties and raise Canada's profile in the broader Middle East.

A free trade agreement with Jordan demonstrates the importance Canada places on further developing relations with Jordan, especially given its role as a moderate Arab state that promotes peace and security in the Middle East. This free trade agreement is also a concrete demonstration of Canada's commitment to enhancing regional peace and security by improving economic conditions.

The Canada-Jordan free trade agreement is a first-generation goods agreement that does not cover services or investment. Our interests with Jordan, as they relate to services, are being adequately addressed in the agreements in the World Trade Organization, and the Foreign Investment 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 a variety of provisions, including market access, rules of origin, customs procedures, and enhanced commitments in the area of technical barriers to trade, trade facilitation, and dispute settlement.

The Canada-Jordan free trade agreement also contains principle-based chapters on the environment and labour cooperation, expanded upon in the parallel high-quality agreements with strong binding obligations. Under the agreement, Canada and Jordan are committed to promote corporate social responsibility.

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.

Over the last decade, Jordan has consistently demonstrated a leadership role in the pursuit of peace in the Middle East. Canada and Jordan have strong bilateral relations, based on common interests and values and people-to-people links.

Both countries 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. 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 three agreements into force on a mutually agreed-to date as soon as possible.

Mr. Chair, my colleagues and I would be happy to answer the committee’s questions.

Thank you.

[The Chair, Conservative, Lee Richardson]

Thank you. I'm just looking at the clock and wondering whether we will get two rounds. Before we start, I think we might make a quick judgment as to whether we just go to 10-minute rounds and limit those to the parties. You can decide how you want to use them and go with that.

I think that's probably the best thing to do. You can split your time if you want, but we're going to have 10-minute rounds, one for each....

[Ed Holder, Conservative, London West, ON]

I love diversity. Do you think we could get seven minutes and then three five-minute rounds in? Is that possible?

[The Chair, Conservative, Lee Richardson]

No, that's what I'm saying. I don't think we will, because we have some trouble keeping it to seven minutes at times.

[Ed Holder, Conservative, London West, ON]

Well, that's the chair's prerogative, sir.

[The Chair, Conservative, Lee Richardson]

I'm going to turn off the microphones at 10 minutes.

You're very familiar with this. All our witnesses have been here before. We're going to cut off the microphones at 10 minutes, which will include the answers.

Monsieur Laforest, vous êtes d'accord?

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

Okay, fine.

[The Chair, Conservative, Lee Richardson]

We're going to start with the Liberals.

Mr. Silva, I'll let you divide your time as you like.

[Mario Silva, Liberal, Davenport, ON]

Thank you very much. I want to thank the witnesses for being here.

I'm not sure if you can answer this. Maybe it's a political question.

Given that the nature of this deal is that it's relatively small, and I understand where we're going with it given the fact that Jordan is a moderate country in the region and we're looking for strategic partners, it makes sense. I'm not saying I'm critical of the deal, but I wonder how much of it is more symbolic. Is this part of a larger package that we're trying to do for the region or just a symbolic one-off? Is it more symbolism than real economics at play here?

[Don Stephenson]

I certainly think it's fair to say that we have both commercial trade and political objectives in this case. It is a small but growing market, and it's a start in a region where otherwise we are not represented.

Finally, as I said in the opening remarks, our companies are at a disadvantage to the United States and the EU where there is preferential access because they have agreements with Jordan. But again, that said, the importance of this agreement is at least equally a political one.

[Mario Silva, Liberal, Davenport, ON]

You spoke about the issue of corporate social responsibility. I also realize that the labour agreement you have is not as comprehensive as the ones you have with both Colombia and Peru. How do you separate the two, given the fact that labour regulations are so important, if you're also going to be dealing with the issue of corporate social responsibility?

[Pierre P. Bouchard, Director, Bilateral and Regional Labour Affairs, Department of Human Resources and Skills Development]

I'm sorry. I think I missed part of your first comment.

[Mario Silva, Liberal, Davenport, ON]

I'm basically tying the two together: strong policies on labour laws that we have put in place both in Colombia and in Peru that are not here, and at the same time, when you speak about corporate social responsibility, you can't really separate the two. So if that is the objective, as Mr. Stephenson has talked about, that there's going to be enforcement of corporate social responsibility, even though I think the legislation and the policy you have in place is quite weak, isn't whatever we have in place further weakened by having labour policies that are not as strong as they could be?

[Pierre P. Bouchard]

Thank you for your question. The labour agreement is certainly in the same category or generation of agreements as we've negotiated with Colombia, Peru, and all our ongoing negotiations. It has the same kinds of clauses. Obviously each agreement is a negotiated outcome, so they're not identical agreements, but certainly for the most part and the most important clauses, these are very similar agreements. This agreement with Jordan is, I would say, overall just as robust and comprehensive as the ones we have with Colombia and Peru.

[Scott Brison, Liberal, Kings—Hants, NS]

A FIPA is part of this. In this case, why has the FIPA been separated from the legislation? I can't remember that being done in other cases, and I'm curious as to the rationale for that.

[Don Stephenson]

Well, because FIPAs and FTAs are very often negotiated separately. In this case, they were negotiated in parallel. But in the case of the FIPA, there was no legislative requirement to bring it into force, so after the treaty was tabled in the House with 21 days, we were in a position to bring it into force.

[Scott Brison, Liberal, Kings—Hants, NS]

Isn't the FIPA part of trade agreements quite frequently the most contentious politically among those who are often opposed to trade agreements? Isn't the whole investor state area of trade agreements typically the most contentious?

[Don Stephenson]

Well, there are certainly elements of investment agreements that can be contentious, but there are elements of FTAs that can be equally contentious. Let me use, for example, access in the area of dairy, which is sensitive in a lot of countries. So I can't really characterize one as more contentious than the other.

[Scott Brison, Liberal, Kings—Hants, NS]

But if you look at those who are most frequently opposed to free trade agreements, the investor state provisions are often the lightening rod, and it strikes me as being less than transparent for the FIPA part of this agreement to not be tabled in the House's part of the debate. I have a different view towards FIPAs than perhaps my colleague, Mr. Julian, but I would not diminish his right as a legislator to scrutinize and to debate an investor state provision.

Mr. Chair, if I may, I'd like to have a quick question on the pan-Pacific trade discussion.

Why is it that the U.S. is boycotting Canadian participation in that discussion?

[The Chair, Conservative, Lee Richardson]

I don't think this is the appropriate time to ask the question. You might ask the minister that question in the House. These people are here today to give us a—

[Scott Brison, Liberal, Kings—Hants, NS]

But we're more likely to get a decent answer here, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

Well, no doubt, but that's not the point. The point is we're here to talk about Jordan today.

[Scott Brison, Liberal, Kings—Hants, NS]

I have Jordan on my mind.

This is separate from the pan-Pacific trade discussion, but it is not a question specific to Jordan: we're all interested in the issue of Haiti and the development of Haiti as it moves into a period of reconstruction and development.

Brazil's foreign minister, Minister Amorim, proposed at Davos this year that the industrialized world eliminate all tariffs on Haiti to try to create the capacity for it to develop a sustainable economy, particularly in manufacturing and particularly in textiles. I'd be very interested in your views broadly on the notion of that type of policy to try to build economic capacity for the people of Haiti. So it would be beyond an aid obligation relationship—

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

Mr. Chair, on a point of order, I'd just like to try to clarify. I know there was an earthquake, but I didn't know Haiti had moved to the Middle East. So I wonder what is the context to the question.