International Trade Committee on Oct. 6th, 2011

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

Thank you very much, and I thank you, Minister, for coming today.

In your presentation to us this morning you talked about Ontario leading in terms of all provinces--$12 billion of goods exported to the EU--and that we expect all industrial tariffs to be removed. The word is “expectation”. You've indicated your discussion not only with the industrial users but with the provinces.

Can you tell me a little about the provincial response, in terms of Ontario, to the discussions around the CETA agreement?

[Ed Fast, Conservative, Abbotsford, BC]

I've spoken to Sandra Pupatello, my counterpart in Ontario, and she understands that an ambitious free trade agreement with the EU will be beneficial to Ontario. Manufacturing in Ontario accounts for 94% of the province's total goods exports and 58% of Canada's total manufacturing exports.

If we can build on that by opening up this huge market, the largest common market in the world, you can imagine the benefits not only to Ontario but to every other province. I have a list of products in each of the provinces that will stand to benefit from greater access to the European Union. Once Canadians understand how critical this agreement is to their long-term prosperity, they will see that the opposition being raised in certain quarters in Canada is simply ideologically based. It isn't based on the merits and the facts of the arguments.

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

It was asked by the opposition what the benefits are. You talked about boosting our economy by $12 billion per year. A trade increase of $38 billion, a 20% increase, could mean an increase of $1,000 per average Canadian. That's incredible, not to mention about 80,000 new jobs. Those are pretty ambitious numbers--spectacular, quite honestly. Any Canadian could look at that and ask why we didn't do this before, if it means so much to our economy.

How did you come up with those numbers? Are they reflective of what they will actually be?

[Ed Fast, Conservative, Abbotsford, BC]

Those numbers come out of what is called a scoping exercise. It's a study that's done as a precursor to free trade negotiations. What that scoping exercise does is estimate the impact on the industries and the added value of increased trade in each of the countries. I think the scoping exercise is an extremely conservative estimate of the benefits that will accrue to both the European Union and to Canada. We believe that the opportunities may even exceed what this scoping exercise reported. There are huge opportunities for Canadians to tap into this huge market, the largest in the world, which we presently don't have significant access to.

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

I'm going to pass it on, if there's time.

[The Chair, Conservative, Rob Merrifield]

There's one minute.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Thank you, Mr. Chair, and thank you, Minister.

Minister, we have this ambitious free trade agenda and there are all kinds of benefits that we understand. We thought the NDP didn't understand it, but it seems they do understand and they're coming onboard. However, the Liberal member is going off somewhere.

Can you tell us how you had these things done so fast?

[Ed Fast, Conservative, Abbotsford, BC]

Well, Mr. Shory, it's not only my name that's Fast. Ever since our government was elected in 2006, we have focused on trade. Trade is critical to our long-term prosperity. If we want to see economic growth, if we want to create jobs, we're going to have to identify new markets and we're going to have to shore up existing markets and expand them. That's why we've been aggressive in exploring new trade relationships. We've negotiated trade relationships with nine different countries and we're negotiating with many more. It is my hope that as we do so we will continue to build long-term prosperity for Canadian families, who rely on trade and economic growth to pay off mortgages, to send their kids to college, and to save for retirement.

[The Chair, Conservative, Rob Merrifield]

Very good.

Thank you, Minister, for coming in as quickly as you have and for answering these questions. We regret the votes, but we all want to respect your time as well as the committee's time. Thank you for coming in. We'll suspend now for a couple of minutes.

[Wayne Easter, Liberal, Malpeque, PE]

Mr. Chair, the minister said he had a list of products that will benefit. Could he table that list of products with this committee?

[The Chair, Conservative, Rob Merrifield]

Well, we can ask that, but we'll suspend now for a few minutes.

[The Chair, Conservative, Rob Merrifield]

I call the meeting back to order.

We have with us, from the Department of Foreign Affairs and International Trade, Mr. Steve Verheul, chief trade negotiator, Canada-European Union, and Ana Renart, deputy chief trade negotiator, Canada-European Union.

With that, we'll entertain your interventions at this time and then we'll go to questions and answers.

Please go ahead.

[Steve Verheul, Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade]

I'm sorry, Mr. Chairman, but I think the understanding was that there would be no opening comments from my side.

[The Chair, Conservative, Rob Merrifield]

That's fine. I wasn't aware of that. If you want to go right to questions and answers, we'll go to Mr. Chisholm.

Go ahead.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Thank you, Mr. Chair.

Thank you very much for appearing. I've been looking forward to the opportunity to speak with you and hear a bit about the negotiations.

I want to start with a couple of things. I was reviewing your testimony before the committee in November. You stated that no analysis had been done by the department with respect to the potential additional costs to the health care system of the extension of patent protection under intellectual property. I'd like to know if that's still the case or whether something has been done.

There has been some work done by other groups about what the potential impact will be on our health care system. I'm hoping you have a handle on that.

[Steve Verheul]

Thank you very much.

There has been some ongoing analysis on all of the issues, of course, as the minister indicated. But on this particular issue, since we have not made any concessions in the negotiations to date on that issue, we haven't done any in-depth, extensive analysis because we have no intention at this point to move in that direction.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

I appreciate that. Let me, however, register this concern. It has been said many times through these negotiations that you have your formal face-to-face meetings--there have been eight rounds and there will be nine--and once those are done, that's when the horse-trading starts.

I have to tell you that I would hate to think there's going to be horse-trading with an issue as important as the extension of the patent protection rules on pharmaceuticals, given the potential impact. Who knows what exactly that's going to be? I have to tell you that I'm concerned we're going to move into that phase and you and your officials won't know the true impact. Let me just leave that with you.

I also want to ask you about one of the issues around fish. The minister talked about the east coast, and I know, from talking with officials and companies on the east coast, that there certainly is some interest in having increased access to markets. There are also issues around ports and access to ports and the whole question of rules of origin. I wonder if you could please explain what progress you've achieved on these issues and whether those concerns have been resolved.

[Steve Verheul]

At this point, we are fairly advanced on the fish issues, and certainly we have had an offer from the European Union that offers the potential to go to complete duty-free access across the board on all fish products, which is of extreme interest to us.

The EU has raised a number of concerns with us with respect to fisheries-related issues, including some investment restrictions and the access to ports issue, to which you referred, as well as some minimum processing requirements maintained by some provincial governments. We're working our way through those issues. At this point, we're quite confident that we'll be able to come up with a package that satisfies both sides.

[Robert Chisholm, NDP, Dartmouth—Cole Harbour, NS]

Thank you.

Again, you stated in your testimony last November that you were looking at modifying the kinds of investment protection provisions used in free trade agreements. Could you expand on what types of modifications you're looking at or proposing for this round?

[Steve Verheul]

Sure. We actually haven't made a lot progress in that particular area because on the EU side they only recently gained a mandate from member states to negotiate in this area of investment protection. Prior to that, they had no mandate, and the competence previously rested with member states.

The EU received their mandate I think on September 12, a little less than one month ago, and we had our initial discussions on investment protection last week in Brussels. So those discussions are at the very early stages. The EU does come from a different perspective than we do--in some ways--on investment protection, but we've been struck from our initial discussions about how close we are on most of the major issues.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Shipley.

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

I notice a lot of interest, so I'll keep to the point here.

I talked earlier with the minister regarding manufacturing in Ontario and the significance of what manufacturing means across this country, not only to Ontario.

When my colleague across the way talked about supply management and about where our position is on it, I was struck by his words. He said “Is it the right way to go?” I'm not sure what that means, but in my mind, when I listen to that I'm not sure that the NDP is actually as solidly behind supply management as we are. The minister reinforced it. I don't need to ask you to reinforce it.

In agriculture we're also talking about beef, pork, grains, and oilseeds. Can you help us a little bit and expand on the value that means to the agriculture community and to that industry?

[Steve Verheul]

Thank you.

Yes, we've been holding intensive consultations with the agricultural sector on the benefits they could foresee in this negotiation and eventual agreement. We heard virtually across the board that there is very strong interest in the EU market—everything from the grains and oilseeds sector...beef is certainly very large, pork is of significant interest, fruit and vegetable producers are coming to us, and we heard about potatoes earlier today. What we need to bear in mind is that the EU market is not necessarily one of the easiest markets in the world to get into. So while those tariffs will be gone, we will have to also achieve what we need to achieve on other related issues—non-tariff barriers, technical barriers to trade, some sanitary and phytosanitary barriers to trade—and we're looking at all of those.

The message we've been giving to the agriculture sector, and even more importantly to the EU, is that we are negotiating real market access--not just removal of tariffs, not just removal of border measures, but whatever it takes to get into the market. The agriculture sector sees great potential in the EU market, given the size of it.

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

Thank you very much.

[The Chair, Conservative, Rob Merrifield]

Mr. Holder.