International Trade Committee on May 1st, 2012

[Don Davies, NDP, Vancouver Kingsway, BC]

I'd like to move to the TPP. We know that Canada and Japan have officially indicated they're interested in joining the TPP negotiations. Would bilateral negotiations between Canada and Japan be set aside if both countries, or even one, joined the TPP negotiations?

[Ian Burney]

That's not our intent. Our intent would be to proceed with both in parallel, even with the assumption that Japan and Canada were both admitted to the TPP, because at that point there could still be no guarantee that the TPP would conclude successfully.

[Don Davies, NDP, Vancouver Kingsway, BC]

Is it the government's intention to pursue the inclusion of an investor state dispute settlement mechanism in the proposed agreement?

[Ian Burney]

Yes, that would be a standard feature of our investment chapter.

[The Chair, Conservative, Rob Merrifield]

Thank you.

We'll now move on to another questioner. We have Mr. Shipley.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chair.

Thank you for coming out, witnesses.

Again we are at a stage where we have, I think, a great opportunity for Canada, its industries, and its people to move forward and continue to grow Canada's economy.

One of the things my colleague talked about is agriculture. I've been fortunate in my life to be involved in agriculture. BSE put a bit of a barrier up for Canada, and that has now, I was glad to hear.... I think that we now have, as we understand it, under 21 and we're likely working towards the 30-and-over situation, where we can market livestock to Japan. We do not sell live. When I was in dairy purebreds, I used to be able to export live cattle and genetics to Japan, but I think in most cases we're talking about processed products that would go.

Could you talk to me a little bit about whether there is any concern or any processing criterion that would have to be in place or that is now a barrier for Canadian products to get into the Japan market? It may be premature, but it sometimes comes up.

[Ian Burney]

Do you mean with reference to beef specifically?

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Yes. It would be mostly with the livestock products, whether it's beef or any other products that may end up in the Japanese market.

[Phil Calvert, Director General, North Asia Bureau, Department of Foreign Affairs and International Trade]

Do you mean procedures in terms of processing—

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

When they're processed, in terms of sanitary...yes.

[Phil Calvert]

—slaughtering, phytosanitary procedures, marketing cuts, and those sorts of things?

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

I kind of take it that the answer is “not likely”.

[Phil Calvert]

Not likely. I think everyone has been very focused on expanding the beef access itself and getting that into the market. Canadian beef would be very well accepted.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

I'm just sort of wondering, as we look across—and the last question led to this one—the Canadian agriculture sector, which ones you would likely see gain the most benefit from having a free trade agreement with Japan. Let's just focus on the agriculture sector right now.

[Ian Burney]

I'll turn to Denis if he wants to add more to this.

We have substantial export interests in a number of categories within the agricultural area. Japan is a huge market for Canadian pork producers, and we know that they are very excited about the prospect of a free trade agreement with Japan. It's a huge market for us for canola, as it is for wheat, both durum and non-durum. It's a major market for soybeans, for barley, for malt, for beef, frozen french fries, maple products, icewine, and the list goes on. This is one of our largest overseas agricultural markets, with exports in the neighbourhood of $4 billion last year. This is an area where Japanese tariffs average over 17%. So it's a long list and it's an area where we think there could be very substantial benefits for Canadian companies.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Something that was brought up earlier was about non-tariff barriers and maybe trying to explain it, but I actually want to go a little deeper than that. What do you see as the challenging issues between Canada and Japan in terms of some of those non-tariff barriers that are there, and what is your level of confidence in being able to negotiate and work through those to the confidence of not only the government but the businesses and the sectors that would be impacted?

[Ian Burney]

I'll start and Denis may wish to add some thoughts.

These are very sensitive areas in Japan, and there's no question that this is going to be a challenging area of the negotiation.

In each area there's a different mix of measures that are affecting the level of access. There's the tariff. There are sometimes safeguard measures that are triggered based on volume. There are sanitary and other measures that have become impediments in certain areas.

So each product would present a different mix of issues we would want to look at. But our aim, obviously, is to increase the level of access that Canadian suppliers can get in each of those subsectors. So in terms of level of confidence, I would simply say that this is a high priority for us but we also know that this is an area of great sensitivity for Japan.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

I guess with your extensive—

[The Chair, Conservative, Rob Merrifield]

Your time has gone. We'll go to Mr. Shory, but you can get on the list again.

Mr. Shory, go ahead.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Thank you, Chair.

Thank you, witnesses, for being here this morning.

I'll follow what he was going to say—delving into consultations, I believe.

But before that, Mr. Burney, in your presentation you laid out the facts and plans and expectations in a real manner to understand our course. The overall objective, you said, was to solidify and expand Canadian access to global markets, which of course gives opportunities to our businesses to create jobs back home here and make us all prosperous in this country. You talked about extensive consultations, about which I'm going to ask quick questions.

We have all seen that Canadian provinces and territories have played a wider role in the negotiations that we have either finalized or are currently on the way to doing. For example, on CETA all the provinces and territories were consulted, I would say, actively, and the parties participated in all of the negotiations in a very timely manner, I would say. They were basically part and parcel of the negotiations. Will the same kind of consultation process be adopted while we negotiate with Japan?

[Ian Burney]

We absolutely will be consulting very closely on an ongoing and sustained basis with provinces and territories as we negotiate with Japan. We expect that there will be a high level of interest from the provinces and territories in this negotiation. We have a variety of mechanisms within the department to consult with provinces and territories on trade initiatives. I expect that we will be using them all.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Another thing I noted when I was going through the slides is that over the period from 2006 to 2011, our exports have, I see, increased and imports have decreased. What that means, and I am not an economist, is that we have more opportunities created in Canada for all of our workers and our business community. This creates jobs and brings wealth back home as well.

Coming back to the point about sub-national governments, one of the attractions CETA had was sub-national procurement opportunities. In the initial negotiations or initial consultations, do you think sub-national procurement will be part of the negotiations with Japan as well?

[Ian Burney]

Thank you. It's a very good question.

In fact, what has happened is that in December of last year the parties to the plurilateral government procurement agreement under the auspices of the WTO reached a new agreement that substantially expands the coverage we enjoy with all GPA countries, including Japan. As a result of that agreement, Japan will have access to the sub-national procurement that currently exists in the Canada-U.S. procurement agreement, and we will benefit from the much expanded procurement that Japan has made available through that agreement, including at the sub-national level.

So by virtue of our participation in the WTO agreement on procurement, we have just obtained a substantial increase in procurement access to Japan. That said, one can always look for more, and so one of the areas that we would be seeking to negotiate in the context of a bilateral with Japan is in opportunities, where they may exist, to go beyond that. Whether it would be from a process standpoint or in terms of incremental access remains to be seen. But the bar has already been raised quite high as a result of our joint participation in the WTO GPA.

[Devinder Shory, Conservative, Calgary Northeast, AB]

In your comments you mentioned as well that it would also contribute to Canada's growing trade policy engagement in Asia. I want you to elaborate on what that means and how we would benefit in that area.

[Ian Burney]

Well, one of the points I made in my presentation is that if you're able to land an agreement with a country like Japan, it adds quite a bit to your credibility as a negotiating partner in the eyes of others. Remember that Japan competes with other countries in Asia within the Canadian market, so to the extent that we're engaged in a deal that may give Japanese suppliers preferential access in our market, that may create an incentive on the part of our countries in Asia to want to negotiate with us.

The other thing I would say is that, beyond the specific benefits we would hope to obtain in the Japanese market, remember that Japanese companies are major leaders in a number of global supply chains. Something like 64 of the Fortune 500 companies are based in Japan. They are extremely connected throughout the Asia Pacific region and in global value chains. To the extent that we can help Canadian companies position themselves to participate in these value chains through an agreement with Japan, we open doors to opportunities throughout the Asia Pacific region and beyond.