International Trade Committee on March 13th, 2012

[Ed Fast, Conservative, Abbotsford, BC]

On the first one, we have certainly concluded that any violations of the procurement or other provisions under a trade agreement with the European Union would be the responsibility of the Canadian government. It's pretty clear that it is Canada that ultimately negotiates and enters into this agreement. So if a claim is made and there's a successful challenge of an alleged violation, the Government of Canada would be on the hook. The provinces and the municipalities understand that.

On the second issue, I will repeat what I've said time and time again. This government is committed to defending Canada's system of supply management. You know that.

[Wayne Easter, Liberal, Malpeque, PE]

You're not answering my question.

[Ed Fast, Conservative, Abbotsford, BC]

On what is being discussed at the table, as you know, those negotiations are ongoing. What I can assure you is that we continue to vigorously defend Canadian agriculture interests at the table, as we committed to do.

[The Chair, Conservative, Rob Merrifield]

Thank you, and thanks for those questions on the estimates.

Mr. Shory.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Thank you, Minister, and thanks to your staff, and the department as well, for doing all the hard work you have been doing on this file.

My questions will not be on estimates but on the India file.

Minister, in your opening statement you said that one in five Canadian jobs were trade-related, and that Canada's economy depends on our success as a trading nation. Now India, with 1.2 billion consumers, is one of the largest and fastest-growing emerging economies in the world. As we move towards an ambitious trade agreement with India, the ties between our countries, both economically and culturally, are becoming even stronger, and this can only benefit Canadians' jobs and economic growth.

In your recent trade trip to India, you focused on education and the potential of infrastructure being built in India. I'd like you to make some detailed comments on what the government has been doing to build on our relations with India. During all these negotiations, did you have any consultations with stakeholders, and whom did you have those consultations with? What interest has industry been showing?

[Ed Fast, Conservative, Abbotsford, BC]

Thank you, Mr. Shory, for that excellent question.

The Prime Minister has made India one of his priority markets and has asked me to focus on it. We are now negotiating a comprehensive economic partnership agreement with India. It is a huge opportunity for Canada. Our current bilateral trade is something on the order of $5 billion a year. When you look at that compared with the size of the population of India, I think we would all agree that we can do much better. This is a unique opportunity for Canada to deepen that trade relationship by negotiating a trade agreement with India.

It's not only trade. Canada and India have concluded negotiations on a foreign investment promotion and protection agreement. Why is that important? When Canadians look to India to invest, they see an unfamiliar legal environment, an unfamiliar regulatory environment, and an unfamiliar business environment. Some of them might not be willing to enter the market unless there's additional predictability introduced. That's what FIPPA does. It sets out a common set of rules under which Canadian investments are made in India, together with Indian investments in Canada. At the same time, it sets out a clear set of rules under which disputes are resolved. This is often a concern. If I go and invest in another country like India, and I get into a dispute, am I going to be treated fairly? That's what the foreign investment promotion and protection agreement does. It sets out a clear set of rules, takes the dispute resolution out of the domestic context, and resolves it at the international level.

We are also finalizing negotiations on amendments to a nuclear cooperation agreement. We're finalizing negotiations on a social security agreement. These are all agreements that are intended to deepen our engagement with this amazing country that is likely to become the most populous in the world within the next decade.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Minister, you may wish to make a comment on the consultation process, if there is one.

[Ed Fast, Conservative, Abbotsford, BC]

As with any trade negotiation that Canada undertakes, we consult broadly with all of the key stakeholders—the Canada-India Business Association as well as business people right across the country. All of us have an interest in opening up this new market to Canadian businesses. We want to open up the market, and we want to make sure that businesses seeking to penetrate that market are successful.

[Devinder Shory, Conservative, Calgary Northeast, AB]

You made a comment about all these unfamiliar things between Canada and India. I'm sure there are also some complementary areas between the two countries. Take the automotive industry. Somebody was telling me that in Delhi they sell between 8,000 and 10,000 new cars every year. Canada, for its part, is one of the largest exporters in that area. Are there some other areas as complementary as this?

[Ed Fast, Conservative, Abbotsford, BC]

Thank you.

Yes, we do have significant areas of complementarity. Let me give you a few examples.

As you know, Canada is the largest exporter of pulses to India. Pulses are used very broadly in terms of food—agrifood—and Canada is the largest supplier to India. Another area that we clearly have complementarity in is the area of potash for fertilizers. Some 50% of Indians are involved in agriculture in one form or another, and they do need fertilizer in a very significant way. Canada is a key supplier to India of potash.

But I also will note that it's a two-way street. As you know, Indian companies such as Tata and Birla have made very significant investments in Canada as well.

We're looking for this to be a two-way street. Magna is of course a significant investor in India, and there are many other companies, such as Bombardier, that are also very active in that market. This is a huge opportunity for Canada to sort of pry open this door of trade and investment that hasn't been as open in the past.

[The Chair, Conservative, Rob Merrifield]

Thank you, Mr. Shory. Your time has gone. We'll leave it there, on that very positive note.

Mr. Ravignat.

[Mathieu Ravignat, NDP, Pontiac, QC]

Thank you, Minister, for your time.

I'd like to bring in an issue that comes right from the ground in my riding, and that's the issue surrounding the quality of drinking water and waste management. Municipalities, and particularly small municipalities, are already strapped for cash. They already don't have a lot of resources. Certain foreign companies would gladly take a loss to penetrate certain markets. We know that the SNC-Lavalins of this world want access to the European market, but I wonder at what cost for small municipalities.

What the people in small municipalities are concerned about is the respect of environmental standards. We're talking about the health of individuals, so I wonder what provisions are in the agreement, in CETA, to ensure the protection of municipal drinking water and waste water and the protection of the environment. I wondered if you'd consider explicitly including drinking water and waste water management in annex II of the reservations in CETA.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you for that question.

First of all, you quite rightly indicated that municipalities are strapped for cash. One of the benefits of CETA is that, given the fact that it may create more competition for the goods and services that communities buy, they'll be able to get better value for money. I made that point earlier. So I think what we have to do is look at the benefits as well as some of the concessions that are made in any trade negotiation.

Now, you talked about health. You've talked about water quality. You talked about the environment. I can assure you, none of those are being compromised in our negotiations for a free trade agreement with the European Union. If I in any way felt that was the direction in which our negotiations were going, I would not be signing off on any agreement. That is the commitment. That is the standard this government has set, which is that we will only sign off on agreements and we'll only negotiate agreements that actually represent the best interests of Canadians going forward.

I think you're aware of the fact that none of Canada's health regulations, none of Canada's water regulations, none of Canada's waste water regulations, and none of Canada's environmental regulations are in any way compromised in these negotiations. I can assure you that I'll make sure the agreement reflects that.

[Mathieu Ravignat, NDP, Pontiac, QC]

But you won't consider creating an exemption for water and waste management in this agreement, in CETA?

[Ed Fast, Conservative, Abbotsford, BC]

What I've told you is that we are not in any way providing exemptions from Canada's regulations relating to all those matters of health and the environment. We are protecting the ability of provinces and of municipalities to regulate in those areas.

[Mathieu Ravignat, NDP, Pontiac, QC]

Okay.

Let me go on to my second issue of concern. As you know, there have been significant studies noting increases in costs related to the cost of medicines and other products with raising IP standards. One such study has indicated that CETA would increase prescription drug costs by approximately $2.8 billion. What precisely do you expect will happen to the price of medicines in Canada by harmonizing our IP laws with those of Europe in this agreement, in CETA?

[Ed Fast, Conservative, Abbotsford, BC]

I would start off by cautioning you not to prejudge the outcome of these negotiations. As you know, there are quite a number of areas that still have to be discussed and negotiated.

I can assure you that we are in regular touch with the provinces. As recently as three weeks ago I met with all of my counterparts in the provinces, and this issue, as well as many others, was raised. At the end of that process, all of us came to a consensus that it is in Canada's best interests to satisfactorily conclude negotiations for an ambitious free trade agreement with the EU.

The areas you've mentioned, which are the cost of medicines, pharmaceuticals, and IP protections, are all areas that have yet to be negotiated. I can tell you that our negotiators are meeting as we speak, and they expect to have additional sessions going forward over the spring and summer.

Again, my commitment to you and my commitment to Canadians has always been that we will only sign off on an agreement that truly moves Canada's trade agenda forward and is of significant benefit to Canadians.

[The Chair, Conservative, Rob Merrifield]

Thank you.

Mr. Hiebert.

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

Minister Fast, it is so good to see you here again. I appreciate all the work you're doing on behalf of our nation.

As I reflect on the work that you and the government have done in the last while, it's truly remarkable how much has been accomplished. The level of ambition I would say is so high for our country and these agreements that we're negotiating.

Looking at some of the places where we have concluded negotiations, I just want to follow up on some of them. My colleague Devinder Shory asked you about India.

I'm looking at Panama and wondering if you could help the committee and the public understand the significance of that free trade agreement. Especially in light of the fact that they're widening the Panama Canal, why would it be important for us to secure a strong trading relationship with this country at this time?

[Ed Fast, Conservative, Abbotsford, BC]

Thank you for that question.

Canada has paid a very special interest to the Americas region, and specifically to Central America. As you know, it is a region of the world that presents very specific challenges in terms of security and economic prosperity.

When we're able to engage with countries like Panama, we have a unique opportunity to lift more people out of poverty by engaging with them in trade. We're providing new opportunities for them to sell their goods into our markets. When you lift them out of poverty, that also contributes to developing stronger democratic institutions.

One of the things I've focused in on is making sure this government's direction is towards engagement rather than isolation. Panama is a perfect example. It is a country that has so much potential. It's a country Canada has decided to engage with.

We're hoping to not only improve their opportunities for trade, and through that process lift more people out of poverty, but it's also an opportunity for us to invite them into the family of nations that respect robust human rights, environmental standards, and labour rights.

You mentioned the canal. The canal of course is going to be of significant benefit to Panama. We're pleased to see that. It also represents a challenge for Canada in terms of our west coast ports. That is one of the reasons, as you know, we've invested heavily in infrastructure in the Asia-Pacific gateway, to make sure our ports, roadways, and railways become more efficient so we can get our products to and from market more efficiently.

We're going to have more competition from the Panama Canal. Being engaged with Panama provides us with the opportunity to contribute to building their society and building a stronger democracy. Hopefully Panama has its own opportunity to become a model for some of the other countries in the region that perhaps have not progressed as much as Panama has.

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

Another country in the region is Brazil. You and the Prime Minister were down there recently to discuss trade relations. You've also identified it as a critical market. It's one of the four BRIC countries that has tremendous opportunity with a growing population. For the benefit of the committee, I wonder if you could again expand on the economic compatibilities between our two economies and why this opportunity is so important for Canada to seize at this particular time.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you.

I've had the opportunity to visit Brazil twice over the last eight months. It is a country and a region of the world that perhaps Canadians have not paid enough attention to.

As you know, Brazil has very significant economic growth. It is the economic powerhouse in South America, and I'm certainly committed to deepening our engagement with Brazil and also with its partner countries in MERCOSUR, the four countries being Brazil, Argentina, Uruguay, and Paraguay.

One of the areas in which Brazil lacks very significantly is the area of infrastructure investment. They have struck a plan that calls for infrastructure investments exceeding $800 billion over the next ten years. It turns out that Canada is one the world leaders in infrastructure and in transportation.

I would like to open up that market to our Canadian companies, because they can provide expertise that presently isn't available within Brazil. We have a great opportunity to partner with Brazilian companies, providing the kind of infrastructure investment and transportation investment that they so desperately need.

My assessment is that the lack of infrastructure is holding back Brazil from even greater economic prosperity. My understanding is that some 30 million Brazilians have been lifted out of poverty over the last decade or so. That's good news. That's why we need to continue to engage with Brazil. There are significant opportunities there to develop not only our economy, but to assist them in developing a strong democracy, a strong economy. I take that role very seriously.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Côté, you have the floor.

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

Thank you, Mr. Chair.

Mr. Minister, thank you for being here to answer our questions.

Mr. Minister, I will start with a question that was raised recently in the media. The French President, Nicolas Sarkozy, told the European Parliament about his desire to pass a Buy European Act similar to the Buy American Act, which is being negotiated but at a slower pace. Patrick Kron, Chairman and CEO of Alstom, a major French manufacturer of railway equipment, said he was in favour of this.

Since we are negotiating a free-trade agreement that could make us vulnerable and weaken our position on the European market, aren't we negotiating a sucker deal?

[Ed Fast, Conservative, Abbotsford, BC]

Thank you for that question.

Our government has made it very clear time and time again that we oppose protectionism. We believe that increased protectionist measures around the world are toxic to the global economic recovery. It is one of the reasons why we are focused on eliminating trade barriers, rather than erecting new ones.

I'm not going to comment on President Sarkozy's comments. I will say that our negotiations for a free trade agreement with the European Union have a singular purpose. That is to eliminate trade barriers, both tariff barriers and non-tariff barriers.

We could eliminate all the tariff barriers in the world, but if there are still opportunities to establish non-tariff barriers, for example with standards that prevent our goods from entering those markets, we still haven't achieved a whole bunch. What we're looking for within the CETA negotiations is an ambitious agreement that addresses both tariff and non-tariff barriers.

Those negotiations are intended to avoid the very issues that Buy American raises. It's one of the reasons why we have challenged the Americans in terms of our fully integrated economies: why would you do this on your side; you're hurting yourself as much as you are Canada.