International Trade Committee on March 8th, 2012

[The Chair, Conservative, Rob Merrifield]

So it's 27%, rather than two-thirds.

[Pierre Bouchard]

It is 27% for the overall Jordanian labour force and two-thirds for the apparel industry, which normally attracts the most attention.

In regard to the agreement itself, as in the environment agreement, the labour chapter is a short, principles-based chapter that essentially indicates to the readers of the free trade agreement that they should go see the side agreement because that's where all the obligations are.

The side agreement is basically composed of three components. The first one is a high level of obligation. The second is this robust dispute settlement mechanism that we were just talking about. The third one is cooperation.

On the level of obligation, both countries commit that the content of their laws can be challenged if they don't meet the four fundamental principles of the 1998 ILO declaration on fundamental principles and rights at work. These are the rights of freedom of association and collective bargaining, abolition of child labour, elimination of forced or compulsory labour, and elimination of discrimination.

Both countries also commit to providing protection for occupational health and safety, including compensation in case of injuries and illnesses. They also commit to establishing and maintaining minimum employment standards, including with respect to wages and hours of work, and they agree to commit to having protections with regard to migrant workers. These obligations can then be enforced through the dispute settlement mechanism. However, when it goes to dispute settlement, the number of obligations—what can be taken there—is a bit more narrow. It is in regard to the content of law, regarding the fundamental rights, the enforcement of all labour laws, and it has to be trade-related.

These issues can then be taken through the dispute settlement process, leading potentially to penalties if there is non-compliance.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Would it be fair to say that these side agreements level the playing field between Canadian companies' labour standards and environmental standards and those of their Jordanian competitors?

[Pierre Bouchard]

Absolutely. These agreements are about standards and about rights. We're not trying to dictate to those countries what their minimum wage should be, what level of compensation or benefits they should give to their workers. That's their decision.

What we're saying is that workers should have the freedom to associate, to form unions. You should not have child labour or forced labour. You should enforce your laws.

It's about respecting these obligations and respecting these labour rights, so that workers can freely decide and have the ability to ensure their rights are respected. That is, of course, levelling the playing field for Canadian companies.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

There was one other thing that caught my attention, and that was when I looked at the numbers that the U.S. experienced after it signed its free trade agreement in 2001 with Jordan, and then looked at what it accomplished less than a decade later. It moved from a total trade of around $500 million in 2001 to $2.2 billion, less than a decade later.

Is it your belief from analyzing the numbers and the opportunity that Canada will see a similar upside benefit from engaging in this free trade agreement?

[Marvin Hildebrand]

As mentioned, I think there's every prospect of that. The commercial environment has been opened up literally as wide open as it could. Perhaps my colleague from agriculture wants to comment specifically about that sector.

But in terms of the commercial environment, there are two aspects, in my view. There are the actual tariffs, which, as it was mentioned, will be virtually going to zero within five years. There's also the question of existent barriers and trade irritants. On that front, I'm not aware of any areas where our exporters are facing any problems or irritants or barriers that are keeping them out of the market.

In fact, the chapters on customs procedures and on provisions related to trade facilitation are intended to make the environment more transparent, simpler, and more user-friendly for our trading community. This, again, adds to the prospect of doing more business in a country like Jordan, as a result of this trade agreement, which notably changes the commercial environment.

Denis.

[The Chair, Conservative, Rob Merrifield]

Thank you.

Maybe Mr. Côté would want that answer from agriculture, but we'll leave that up to him. The time is gone in this segment.

Go ahead, Mr. Côté.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you very much, Mr. Chair.

I wanted to ask you questions, Mr. Landreville, about agricultural products and food products, especially processed food.

A large part of agricultural trade with Jordan concerns pulses, particularly lentils. I will confess that I have not done any research. Is it strictly for Jordan's domestic market? Is Jordan a hub for exporting our Canadian products to other countries in the Middle East?

[Denis Landreville]

Jordan could be a hub for the region. That is another reason why this agreement would be beneficial. Indeed, as you say, we could sell pulses, which are one of the main exports to Jordan.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

However, Jordan has good trade relationships with its neighbours. We will not get into that.

In terms of processed products, frozen fries were mentioned, among other things. Is there good potential in the Hashemite Kingdom of Jordan? Is it still very marginal?

[Denis Landreville]

In recent years, frozen potato exports have declined a bit. I cannot explain why.

However, it is worth noting that with this agreement, we would obtain parity with other exporters through the elimination of tariffs on frozen potatoes. As we have seen in other markets, when tariffs are eliminated on these products, there is a rise in exports to those markets. We can therefore expect a change in the trend.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Fine.

Quickly, we talked about poultry, beef and pork. Clearly, I can understand with regard to pork. Are there other products? For example, lamb must be low, if not non-existent, in terms of trade with Jordan.

[Denis Landreville]

I don't want to take too much of the committee's time. I don't have statistics for those products handy.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

That is fine.

It is no secret that one of the New Democratic Party's concerns about what is happening within Canada is that there will be massive cutbacks, including cutbacks for food inspection. Food safety is a concern for me, as a member of Parliament. I am concerned for the health of my fellow citizens.

Of course, Canada has already gone through pretty difficult events that have damaged its reputation. I was thinking of the beef export crisis. We were excluded from big markets for a long time.

It is a matter of interpretation because we cannot predict the future. However, could my concerns about food safety and Canada's reputation in Jordan in particular, but also in the Middle East in general, if ever Jordan becomes a hub, be well founded? We have to consider that these are new markets that could be very promising for our products.

After all, before exporting, we monitor things here. The Hashemite Kingdom of Jordan may not be very demanding, but the people could be very sensitive if there are problems with the quality or safety of Canadian products.

[Denis Landreville]

At the moment, according to the information I have, there is no impediment to our meat exports to Jordan. It is an open market. Based on current trade, I would say that, for now, there is no impediment to our beef exports or other meat exports to Jordan.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Very well.

That is all, thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Shory, you have five minutes.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Thank you, Mr. Chair.

Thank you, witnesses, for coming to our meeting.

I was going through the presentation, and one of the comments you made was that Jordan has already notified us that they are ready to enforce it, basically. It seems that our Parliament has to pass it for implementation. We will basically enforce it. It will be beneficial from the Canadian perspective, as well.

I want to touch on the comment you made that it will be beneficial for SMEs, as well. I want you to elaborate on how it will be beneficial to SMEs when we open that market.

[Marvin Hildebrand]

I would come back to the chapters on rules of origin, customs procedures, and trade facilitation in the agreement. What we're doing is modernizing the commercial relationship with this agreement and creating an environment that is as user-friendly, barrier-free, and transparent as possible. All those things benefit stakeholders across the board, but there are instances in which there are very complicated markets and all kinds of barriers. Larger companies tend to be able to surmount these hurdles through economies of scale more easily than SMEs.

This is relevant for SMEs because of the transparency and the streamlined nature of things, including the process of origin certification. For a product to benefit from the preferential tariff under a free trade agreement, it has to originate in the territory of the parties. The process for certification is very simple in our system. The government's not involved and it's the exporter who makes that determination, does the certification, and keeps the records, which can be made available if they're needed. For all of those reasons, it's a good-news story for SMEs as well as other stakeholders.

[Devinder Shory, Conservative, Calgary Northeast, AB]

You made a comment about how exports from Canada had doubled since 2003. You mentioned $70 million. I can tell you that the NDP started this legislation in the period before the election by saying that it would have minimal economic gains and would not be worth it. If you wish, I can read the statement, but I won't go there.

I just want you to make a comment. How much will this FTA, once it is implemented, boost the economy? In reference to our free trade agreements with different countries, I want you to reiterate once again that it is very important to open new markets to provide new opportunities to Canadian businesses.

[Marvin Hildebrand]

I have couple of points.

First, when projections are made, from whatever source, about future trade flows and increases stemming from free trade agreements, the benefits often go beyond what's measurable in tariff reductions. The increased awareness and the overall buzz in the trading community, together with the increased information about the market and other intangibles, are contributing factors that often end up creating a result larger than might have been anticipated.

Second, with this particular agreement, the investment in negotiations was relatively small. The agreement was negotiated over three rounds, over a period of about six months, from February or March of 2008 until August 2008. It was about as quick a negotiation as could have been anticipated. So the investment was modest, and the benefits appear to be quite promising.

[The Chair, Conservative, Rob Merrifield]

Thank you. Your time's gone.

Mr. Ravignat.

[Mathieu Ravignat, NDP, Pontiac, QC]

Thank you.

My thanks to the witnesses for taking the time to be here. It's much appreciated.

In over 15 years of experience with the NAFTA labour side deal, there has never been a single case where either party sent a complaint to a review panel on labour. What do you think will make this side deal any different?

[Pierre Bouchard]

Thank you very much for this question. It's actually a very good question.

It's pretty simple. The NAFTA side agreement was considered a breakthrough at the time. It was a first-generation agreement. We're now in the third generation, if you wish. It's a very simple fact. About 70% of all complaints under the NAFTA side agreement were about freedom of association, collective bargaining, and fundamental rights. According to the agreement, those complaints cannot go beyond ministerial consultations, even if we wanted to.

Under these agreements here, not only can the enforcement of labour laws in regard to these fundamental rights go to dispute settlement, but we can also challenge the very content of the law in regard to those fundamental rights.

We are talking about scales of magnitude between what we had in this agreement and the NAALC that was negotiated 18 years ago. This agreement, which is a modern agreement, is streamlined and is much more efficient.

[Mathieu Ravignat, NDP, Pontiac, QC]

Okay. There can be a ministerial consultation in this process, and then there's a review panel for determination of non-compliance. In the eventuality that there is one, who would be sitting at that review panel on the Jordanian side?