International Trade Committee on Oct. 6th, 2011

[The Chair, Conservative, Rob Merrifield]

We'll call the meeting to order.

First of all, I'd like to thank the minister for coming on the such short notice that was given and being able to be here. Our start time was held off because of the votes. I know the minister has something scheduled right after this, so I'm asking the committee to agree that we'll go through the first round of questioning after the minister's intervention and then we'll go from there into the second half of our meeting.

Mr. Easter, please be very quick.

[Wayne Easter, Liberal, Malpeque, PE]

I know the minister stayed up all night preparing these remarks, but we can read the remarks to save time. We should go to questioning right away.

[The Chair, Conservative, Rob Merrifield]

We're going to ask the minister for his intervention.

I thank the minister for coming and also the colleagues who are with him. The floor is yours.

[Ed Fast, Conservative, Minister of International Trade]

Thank you very much, Chair.

I look forward to our discussion today.

I'd like to thank the committee for responding positively to my letter requesting to appear before you to update you on the important negotiations under way between Canada and the European Union toward a comprehensive and ambitious trade agreement.

As you know, creating jobs and securing Canada's economic recovery remain the top priority of our government, and expanding trade is a cornerstone of our ambitious pro-trade plan. After all, trade accounts for 60% of our annual GDP, and one in five Canadian jobs is directly or indirectly dependent on trade. That is why broadening and deepening our trading relationships is a key part of our government's strategy to protect and sustain Canada's economic recovery.

That's also why we're moving forward with our ambitious pro-trade plan that will create more opportunities to sell our goods, products, and services to key markets around the world and protect and create more jobs for hardworking Canadian families here at home.

Under the Prime Minister's strong leadership, we've accelerated efforts to expand our trade relationships. Indeed, we've completed trade agreements with nine countries in less than six years. And we're in various stages of negotiations with many, many more. In fact, the WTO itself pointed out that “Canada's considerably expanded FTA agenda marks a departure with its past practice”.

We're proud of this record, because the benefits to Canadian families generated by international trade are clear. When we expand trade, prices for goods and services go down. Wages, salaries, and our standard of living go up, as does our productivity and level of innovation. And critically, businesses are able to hire more workers. In fact, just two weeks ago British Prime Minister David Cameron echoed these same benefits in his speech to Parliament.

Our ongoing negotiations with the EU include what are by far the most significant trade talks for Canada since the historic North American Free Trade Agreement was signed. I thank you for your interest in these negotiations as we move towards the ninth round coming up very soon right here in Ottawa.

I should also acknowledge the great support we've received from municipalities and provincial and territorial premiers across Canada. They recognize, as we do, that the benefits of an agreement would be enormous for Canada. The scoping exercise, which preceded these negotiations, indicated that a Canada-EU free trade agreement would be expected to boost our national economy by $12 billion each year and increase two-way trade by $38 billion, an increase of 20%.

At the level of individual families, essentially at the kitchen table, a free trade agreement with the EU would mean an increase of almost $1,000 in the average Canadian family's income, not to mention the 80,000 new Canadian jobs that are expected to be created. That's like adding the entire workforce of Moncton, Trois-Rivières, Kingston, or Abbotsford to Canada's employment ranks. It would give Canadian workers and businesses preferential access to the single largest goods-importing market in the world—much larger than the U.S., in fact.

We're talking about preferential access to a market with 500 million consumers, giving Canadian businesses a real competitive edge. When we look at specific sectors of our economy, the potential benefits of this agreement become even clearer. In manufacturing, for example, Ontario leads all provinces with over $12 billion in goods exported to the EU. Under this agreement we expect all industrial tariffs will either be removed immediately or be phased out over time. Removing tariffs in such a vital sector will allow Canadian businesses to expand production and hire new workers.

In Atlantic Canada, where potatoes, fish, and seafood are main export sectors to the EU, current tariffs average 11% but are as high as 25% on some products. Under this agreement, Canada is seeking to completely eliminate tariffs on all these products. Again, the benefits to Canadians are real.

In western Canada, the forestry, agricultural, and technology sectors will all benefit from preferential access to the European market.

We know that when Canadian businesses succeed abroad, they create jobs and prosperity right here at home. These are the tangible benefits of this agreement, and they will be felt in communities large and small across Canada.

During the summer, I had the opportunity to visit Nova Scotia and P.E.I. to talk directly with people involved in exporting sectors about the importance of this agreement. Take fish and seafood—as I mentioned, this is a critical sector in both provinces. The EU is the largest import market of fish in the world, valued in excess of $18 billion last year. Just think of the benefits to the hardworking Canadians employed in this sector if we were able to expand their ability to export to this market. In fact, we met with Ian Smith, the chief executive officer of Clearwater, one of the world's leading seafood companies, based out of Bedford, Nova Scotia. Speaking for this major employer of hardworking Canadians, Mr. Smith said:

A trade agreement with the European Union would give businesses on the East Coast a level playing field on which to expand, compete and invest for growth and to benefit workers. We welcome the government's efforts to strengthen the transatlantic ties that make our economies stronger.

In P.E.I., I met with people involved in agrifood exports, which represent about 65% of P.E.I.’s exports. Potatoes are a good example, with worldwide exports of potato products reaching over $52 million a year. However, due to tariffs of as high as 18%, only $2 million of potatoes were shipped to the EU last year. Yet the EU market for potatoes is in the billions of dollars.

I visited Cavendish Farms in New Annan, P.E.I., a huge employer on P.E.I. In fact, it’s one of the biggest employers in the riding of Malpeque, as my colleague Mr. Easter knows well, and one that relies on exporting its products around the world. Cavendish Farms currently exports to the U.S., the Caribbean, Central America, and Asia—but not to the EU. Our government is hoping to change that. In fact, the people at Cavendish Farms told me they've seen a surge in trade with Iceland, a 40% increase as a result of the agreement our government concluded with the European Free Trade Association two years ago--40%. Imagine what a trade agreement with the entire European Union would mean for a company like Cavendish Farms and the workers it employs. Cavendish Farms told me during our visit that the EU opportunity is very significant to them. Just imagine what it would mean if the 40% surge that Cavendish Farms experienced in Iceland were to be replicated across the entire EU zone.

That's what I mean when I say trade is a kitchen table issue. It has a direct impact on people's jobs and how they provide for their families. Trade is key to protecting and strengthening their financial security and stability. That's why I'm pleased by our progress to date and very hopeful that we'll be able to conclude a truly ambitious agreement in the near future.

We've moved forward in several key areas, including goods, services, investment, government procurement, and many others. The negotiating text is well advanced, with a number of chapters closed. We've narrowed down the remaining chapters and isolated the key differences in our negotiating positions. We're actively seeking ways to bridge these last gaps. Let me tell you, the political will to do so is very much there on both sides.

With negotiations making excellent progress, I feel it's vitally important that Canadians understand the great benefits of this agreement and are not misled by those who fearmonger and misrepresent the immense opportunities that a free trade agreement with the EU will open up for Canadians.

Let me also be crystal clear on one point, Mr. Chair. Although there is still much to be discussed and negotiated with the EU, we will only conclude a free trade agreement that is in the best interests of Canadians. As I've made clear to the FCM and to municipal leaders, we're committed to preserving government powers and abilities to regulate. Canadian products, services, and commercial expertise are for sale. Our government's powers and ability to regulate are not. Foreign companies doing business in Canada, as always, must comply with all our laws and regulations.

Mr. Chair, let me conclude with these thoughts.

Free trade has been a powerful engine for Canada's economy. Indeed, it is the lifeblood of our economy. It is a kitchen table issue for Canadians.

In other words, Canadians intuitively understand that their long-term prosperity is inextricably linked to improved trading relationships around the world. History has proven it.

That's why I'm committed to broadening and deepening our trading relationships with emerging markets around the world. In fact, tomorrow I will be departing for China on a trade visit in order to help expand opportunities for Canadian workers and companies in that high-growth market.

Last week, I was in Japan and Indonesia, working to strengthen and expand our trade relationships with those markets. A month ago, I was in Latin America, exploring deeper relationships with that dynamic market.

But what we can't afford--and will not do--is to neglect our relationships with our biggest and most established trading partners: the United States and the European Union. That is why we're continuing to remain focused on broadening and deepening those trade relationships.

As I mentioned earlier, the potential benefits to Canadians under a free trade agreement with the European Union are immense. Canadian businesses, workers, and families in every region of our country will benefit from the tens of thousands of jobs that this agreement will create. The agreement will open up new markets for fish and seafood, potatoes and cherries, forest products and plastics, grains and oilseeds, beef and pork, and many, many other products that have, for the most part, been shut out of the world's largest common market.

Our government clearly understands that trade must be a win-win for both parties. That's why we're consulting broadly with Canadian stakeholders. I've personally spoken to my counterparts in most of the provinces, who have expressed support for an ambitious trade agreement with the EU. I've also consulted with the Federation of Canadian Municipalities, which understands the benefits of an ambitious trade agreement. We've also consulted broadly with key industry stakeholder groups and organizations to ensure their views are taken into account.

Mr. Chair, our government will continue to pursue its ambitious, job-creating, low-tax, pro-trade plan. We know that our plan is working, having created close to 600,000 new jobs since July of 2009. We will keep Canada's economy heading in the right direction, ensuring the long-term prosperity of all Canadians.

Thank you. I look forward to your questions.

[The Chair, Conservative, Rob Merrifield]

We want to thank you for coming in and sharing that with us. I can hardly imagine Mr. Easter not wanting to hear about potatoes in P.E.I. and the importance of this free trade agreement to that.

I do want to emphasize just how important this free trade agreement is to Canada.

The time is tight and I will only entertain questions that relate to the free trade agreement.

Mr. Chisholm, you have five minutes. We'll do the first round.

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

Thank you, Mr. Chairman.

Minister, thank you for coming.

I must say, though, right off the top, that it feels to me as if you've been trying to pick a fight with us on this trade stuff from the beginning. I will continue to say that we recognize, as do many Canadians, that there is a lot to be gained from trade and from this trade deal. I won't say it again, because I only have five minutes, but I want to make that crystal clear.

While I haven't talked to Ian, I have talked to John Risley from Clearwater about trade and international trade. You may know that John has expressed publicly his concern about the other side of the trade issue, and that is on the impact trade can have. He feels, as we do, that we need to understand what the impacts are. We have to understand what the positives of trade are and move in that direction and work closely with those sectors that will benefit.

It's our responsibility, I believe, to understand what the impacts are, because these are negotiations and there are trade-offs. I think you have to acknowledge that. There will be impacts. Now, you decide, right? Your negotiators and you will decide or we will decide whether those are the right trade-offs, and we'll have that debate. We want to try to make sure that people are paying attention to what some of those trade-offs are.

I think of things like the supply management issues. We can have a debate on whether, in the long run, supply management, protecting our dairy sector and others, is the right way to go. It's an area of some significant concern for Canadians. While they've heard some things, they're not sure, especially those sectors directly affected, whether those programs are in fact being protected or they are going to end up coming off the table.

There are issues around procurement. We've also talked with the Federation of Canadian Municipalities. These are real concerns people have, and they directly relate to the possible loss of jobs in our communities. I think it's fair that there be an open and transparent discussion about what those impacts will be.

With regard to intellectual property, Minister, especially as it relates to patents, but not just that, the impact on our health care system is potentially quite significant.

We need to know where you're going and where your negotiators are going on those issues.

[The Chair, Conservative, Rob Merrifield]

Okay, let's hear about that. You have a couple of minutes to answer. Go ahead.

[Ed Fast, Conservative, Abbotsford, BC]

Thank you for that question. I appreciate that.

I want to make it very clear that I'm not picking a fight with anyone. What I am doing is promoting an agreement that I believe, if negotiated properly, will represent a huge win for Canada.

You suggested that supply management was something people could have a debate over. I can assure you that our government is not having a debate on supply management. We have made it very clear time and time again over the last six years that we will strongly defend our system of supply management. I can assure you of that.

On the issue of procurement, we are very much aware of the sensitivities at the municipal level. That's why I've consulted widely. In fact, I asked for a meeting with the board of directors of the FCM. As you know, that board is quite large. We met in Nelson, B.C., and we had a frank and open dialogue. I sensed that there was a general consensus that an ambitious trade agreement with the EU is something that will benefit Canada. I've also assured the municipalities that we are very sensitive to their particular concerns. Obviously, this is opening up a procurement market in Canada, but it's also opening up a procurement market in the European Union that is worth in the order of $2.4 trillion--not billion but trillion dollars. It's a huge opportunity for Canadian companies to participate in a market that to date has been largely shut to them.

We have made every effort to make the process of consultation and the process of negotiation transparent and collaborative. In fact, I will state very openly that I believe this is the most collaborative and transparent process Canada has ever undertaken with respect to free trade negotiations.

[The Chair, Conservative, Rob Merrifield]

Thank you.

Mr. Keddy.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you, Mr. Chairman.

Welcome to the minister and welcome to our negotiators. It's a real pleasure to have you here today. I'm going to be sharing my time with Mr. Cannan, so I'm going to be brief. I do want to drill down into one point and I think it's important to note it.

I've been a member of Parliament for 14 years. We seldom have a minister ask to come to committee about anything. You broke the all-time record held by your former colleague, Minister Day, for coming to committee the quickest I've ever seen a minister come to a committee. For that, on behalf of the committee, I'm going to thank you.

It's nice to hear the NDP say they're going to support this CETA, that it's in the best interests of Canada.

I appreciate, Minister, that you came into Atlantic Canada, that you talked to the people on the ground and the message you received from them is much different from the message we get from the opposition critics.

I know Mr. Cannan has a number of questions he wants to ask, so I'm going to share the limited time with him.

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

Thank you, Mr. Chair.

Thank you, Minister Fast, for attending, as well as your assistants.

To Mr. Chisholm, I want to reassure that Mr. Fast is not a fighter; he's a lover.

[An hon. member]

How would you know?

[Voices]

Oh, oh!

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

That's what his wife said.

[The Chair, Conservative, Rob Merrifield]

I'm going to call the meeting to order here. I told you I'd limit the questions.

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

I know we're not here to talk about the NHL kicking off their season today, but I noticed in one of your speeches you were looking for a miracle in Toronto and having the Maple Leafs win the Stanley Cup this year. But we're going to focus on something more realistic.

Mr. Chisholm said there is a lot to be gained for all Canadians, 80,000-plus jobs, a $12 billion, two-way economic boost to our economy of over 20%.

We both spent nine years in local government and we know the importance. I appreciate your consultation with the FCM, but also the provinces have a big role to play in the negotiations. Maybe you could inform the committee as to what the consultation process has been to date, including the provinces and territories.

[Ed Fast, Conservative, Abbotsford, BC]

As I mentioned in my speech, I have consulted broadly with my provincial counterparts, but beyond that, as you all know, the provinces have been involved in these negotiations to a larger degree than they ever have been involved in previous free trade negotiations. In areas of their exclusive jurisdiction or partial jurisdiction, they have been participants in the process, and those consultations continue.

Those consultations also continue with our municipal partners because they also play a critical role and because this agreement will impact them. It will also provide significant opportunities for municipalities and their residents to create new job opportunities, a new value for their communities.

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

I had a chance last year to travel with some of the members of the previous trade committee over to the EU. The manufacturing sector has a lot to be gained. Could you elaborate a little bit more on some of the beneficiaries to our manufacturing sector from across Canada to this CETA agreement?

[Ed Fast, Conservative, Abbotsford, BC]

As you know, Canada has a very strong manufacturing sector, especially in Ontario. Ontario, as I mentioned in my speech, will benefit in a very significant way in opening up new markets in Europe.

As you know, we're also leaders in terms of the auto industry. We're leaders in the area of plastics. We're leaders in the area of chemicals. There are so many different areas where we would like to open up new markets.

The European Union market essentially comprises 500 million consumers, of which 100 million would be considered coming from still emerging economies. That represents huge opportunities for business people in Canada to sell into that market. This is a new group of consumers who are looking to buy our products. One of the challenges is that we've had tariffs that have prevented us from having a level playing field in terms of competition.

There are also non-tariff barriers that prevent our businesses from competing fairly in the European Union. These trade negotiations are going to focus on both of those areas, not only the tariffs but also the non-tariff barriers that our companies have faced in trying to do business and to penetrate the European Union market.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Easter, five minutes.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

Thank you, Minister and the chief and deputy negotiators for CETA, for appearing.

On the CETA agreement, have you done any cost-benefit analysis that might be available to the committee?

[Ed Fast, Conservative, Abbotsford, BC]

As we've said before, Mr. Easter, we have done internal analyses of many parts of the negotiations that are being considered. Moving forward, I've made it clear that we will not be signing an agreement unless it is in the best interests of Canada.

[Wayne Easter, Liberal, Malpeque, PE]

How can you determine that if you haven't done a cost-benefit analysis?

[Ed Fast, Conservative, Abbotsford, BC]

As I mentioned, Mr. Easter, we are doing internal analyses on a regular basis, as these issues--

[Wayne Easter, Liberal, Malpeque, PE]

So it's not available.