International Trade Committee on May 1st, 2012

[Ian Burney]

When one refers to non-tariff barriers, it means things like regulation and technical barriers. In the agricultural sector this can sometimes refer to sanitary and phytosanitary measures, or SPS. It can mean several things, such as customs procedures. In the context of a free trade agreement, we will try to negotiate a chapter on the facilitation of trade to overcome customs procedures, a chapter on SPS in the agricultural sector, and a chapter on technical barriers, to address all of those issues.

[Lise St-Denis, Liberal, Saint-Maurice—Champlain, QC]

What are the chances that the two parties will agree on these matters? Are they open to that?

[Ian Burney]

We are fairly optimistic. In the course of our discussions in the context of the joint study, the approach seems to have been similar to the one used in free trade agreements we have signed in the past. This is also the case for Japan. It is a very complex country, which implies many things. I am not saying that it will be easy, but as it now stands, we are fairly optimistic.

[Lise St-Denis, Liberal, Saint-Maurice—Champlain, QC]

In your presentation, you said that two provinces in particular had been extremely positive: Quebec and British Columbia. In regard to which product or which aspect were they so positive?

[Ian Burney]

These are the two provinces which made a written submission, but I do not think they specified in relation to which products. In the west, that would involve forestry products and manufacturing, and in Quebec, there would be a whole range of products.

[Lise St-Denis, Liberal, Saint-Maurice—Champlain, QC]

A whole range of products, or natural resources?

[Ian Burney]

Yes, as well as the manufacturing, aerospace, chemical and pharmaceutical sectors. There are a lot of opportunities in Quebec and in the west.

[Lise St-Denis, Liberal, Saint-Maurice—Champlain, QC]

Would Canada and Japan abandon negotiations if they each were admitted into the Atlantic-Pacific treaty?

[Ian Burney]

Do you mean the Trans-Pacific Partnership?

[Lise St-Denis, Liberal, Saint-Maurice—Champlain, QC]

Yes.

[Ian Burney]

We are pursuing both agreements simultaneously. We would really like to be part of the Trans-Pacific Partnership, and Japan is also holding consultations to participate in the partnership. We believe that it is worth pursuing bilateral negotiations at the same time. There is no guarantee that we will become part of the Trans-Pacific Partnership. But even if we did, there is no guarantee that there would be a resolution. It could take a long time and I therefore believe that it is worth pursuing the bilateral process, as well.

[Lise St-Denis, Liberal, Saint-Maurice—Champlain, QC]

Thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We'll now move to Mr. Cannan.

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

Thank you, Mr. Chair.

My thanks to Mr. Burney and the witnesses. It's always a pleasure to have you here as we move to expand our robust trade agenda.

I wanted to follow up on Mr. Holder's comment about the timeline. We have our cattle association and agriculture community, and working in conjunction is a big issue. I know that we have the trade office working overtime and deployed across the world. Mr. Fast is living out of a suitcase and opening doors around the world. I think he's in Australia or New Zealand right now.

So is there any general timeline? I see you're going to go May 8 and then take the lay of the land from there. Maybe you could give us a broad perspective on how you see the negotiations unfolding.

[Ian Burney]

That's a good question, and it's one of the objectives I have next week, to discuss timelines with Japan.

From a Canadian standpoint, we'd like to move this forward as quickly as possible, but it takes two to tango in a negotiation, and we know that both countries have very full dance cards. In the case of Japan, we understand that they will soon be launching negotiations with the European Union. There's the possibility of a trilateral negotiation that's being discussed among Japan, China, and Korea. It's possible that might end up being a series of bilateral agreements. Japan has been discussing the possibility of negotiating with Mongolia. And from our perspective we also have a multitude of negotiating initiatives.

All I can say is that we would like the process with Japan to move forward as quickly as possible, and we will be exploring further next week what the art of the possible would be.

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

Excellent.

I think we all agree that a transparent rules-based system is going to be beneficial for both countries. I come from the Okanagan in the interior of British Columbia, and forestry is a big economic generator for British Columbia, and also for Quebec, as you mentioned. We have a sister city in Kasugai. I had the privilege of leading a delegation there when I was on city council in 2000. I spent nine days in the country there.

We just had a forest conference not too long ago, and I notice that the industry has reached out—it's just devastating what happened with the earthquake—and is trying to work in partnerships from a compassionate perspective as well to help rebuild their country.

What do you see as the opportunities for the forest sector with a more transparent, rules-based trade agreement in place?

[Ian Burney]

I think that's one of the sectors where we would hope to see some of the strongest gains. I think the average level of Japanese tariffs is around 4%. The average tariff in the forestry sector is around 3.4%, but there are peaks as high as 10%. In a low-margin business like forest products, that can make a significant difference. There are also a variety of non-tariff issues and regulatory issues that affect the export of wood and wood products that we would want to take a closer look at in the context of the negotiations with Japan as well.

Particularly at a time when diversification is so important for the industry, I think we would be making maximum efforts to achieve a good outcome in the forestry sector for Canada.

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

I'd be remiss if I didn't mention that they'll get a couple of cases of Nova Scotia wine and some icewine from.... It's a big export market as well, potentially, for the Asia-Pacific gateway.

I want to follow up on my colleague from the Liberal Party's comment about the non-trade barriers. Could you elaborate on some of the informal barriers that might be a challenge within the present Japanese trade agreement, their trading system?

[Ian Burney]

Basically, the non-tariff issues we would be addressing in I think three main areas of the agreement.

We would hope to have a chapter on technical barriers to trade, where we would hope to go beyond the commitments in the WTO agreement on technical barriers to trade.

In the agricultural sector, there are the sanitary and phytosanitary measures, where we would hope to have in the agreement a chapter that would lead to a robust consultation mechanism so that we have an ability to address those issues before they become irritants.

In the trade facilitation chapter, we would be addressing a wide range of issues that impede or block trade at the border, so a wide variety of border measures can be addressed through those mechanisms.

It's hard to get specific in terms of the measures we would be targeting in a negotiation. I mentioned that we would be needing to continue to consult with stakeholders, and one of the key objectives of doing that would be to work with industries to identify specific issues that have been a problem so that we can address them in the context of the negotiation. They vary from industry to industry.

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

We don't have FIPA, do we?

[Ian Burney]

No, we do not. Investment is another area where we would hope to have a significant benefit from having a comprehensive FTA.

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

With a shared services and investment sector, who would be the biggest winners in Canada for that?

[Ian Burney]

Investment is a real success story in both directions. Both Canada and Japan are extremely active in each other's market, and there are household names in terms of the major Japanese companies that are operating in Canada already: Honda, Toyota, Bridgestone, Canon, Fujitsu, and on and on. They're also increasingly active in the energy sector.

We both have advanced, predictable, stable legal systems, so the incremental benefit of having access to international arbitration between Japan and Canada may not be as great as it would be with a different partner, but the greater security that you have through a rules-based framework will provide an additional level of stability and security for investors seeking to go into those markets.

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

I did the geneaology on the Cannan name, and unfortunately we're not related—different spelling. They're very successful.

I look forward to working together.

Thank you very much.

[The Chair, Conservative, Rob Merrifield]

I'm not sure the negotiators can do anything with that.

Mr. Sandhu, for five minutes.