Evidence of meeting #6 for International Trade in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was agreement.
A recording is available from Parliament.
Noon
Conservative
Russ Hiebert Conservative South Surrey—White Rock—Cloverdale, BC
Sure.
You mentioned earlier the supply chain that emerged within North America because of NAFTA. Do you imagine a similar supply chain emerging with Europe or is the geographic distance too great to make that realistic?
Noon
Vice-President, Global Business Policy, Canadian Manufacturers and Exporters
It already exists in certain industry sectors. We have members, for example, in the aerospace industry or in the pharmaceutical industry that really have almost integrated supply chains that span the ocean.
There are specific industries. It depends on the value of the product and the nature of the goods you're manufacturing. Obviously there's an ocean that separates us; it's a bit different from a river, where you just cross a bridge and go over to the other country.
But I do see this agreement as having the potential to lead to a lot more integration of manufacturing supply chains across North America in industry sectors that have been facing barriers and hurdles in making that a reality. As Canadian and European manufacturers move into niche markets and become more agile and specialized, the more they can work together to serve global markets.
The short answer is yes. It has that potential, but there is already some of this happening, and it would be facilitated by the conclusion of a trade agreement.
Noon
Conservative
The Chair Conservative Rob Merrifield
Thank you very much.
I want to thank the witnesses for coming in and lending their expertise to the panel and to our discussion on this important free trade agreement.
Thank you very much for coming in and doing this.
Mr. MacLaren, you wanted a brief comment.
Noon
Canadian Chairman, Canada Europe Roundtable for Business
May I just say one last word? We're talking about an agreement today that's almost done, fortunately, and I welcome the committee's study.
But I would urge you, if I might now put on my hat as chairman of the Canada-India Business Council, and put off my hat of Europe--
Noon
Canadian Chairman, Canada Europe Roundtable for Business
I would urge you to hold hearings to do a study of Canada-India trade. We're embarked, as some members will know, on the first stage of a negotiation, and--
Noon
Conservative
The Chair Conservative Rob Merrifield
Actually, we have that on our agenda, and we will be facilitating that in due course.
Noon
Canadian Chairman, Canada Europe Roundtable for Business
You might also want to look at China, but that's a whole different story.
Noon
Voices
Oh, oh!
Noon
Conservative
The Chair Conservative Rob Merrifield
At any rate, we want to thank you for coming in.
We're going to suspend for five minutes now.
We can grab a sandwich and a coffee as we get the video conference with Nova Scotia set up.
12:05 p.m.
Conservative
The Chair Conservative Rob Merrifield
We'd like to call the meeting back to order. We'll ask members to take their seats as soon as possible, but we'll get started.
First of all, we want to thank Mr. Don Downe, from Nova Scotia—
12:05 p.m.
An hon. member
He's actually the Mayor of Bridgewater.
12:05 p.m.
Conservative
The Chair Conservative Rob Merrifield
The Mayor of Bridgewater? Very good.
We want to thank you, Mr. Downe, for being on video conference.
12:05 p.m.
An hon. member
It's the Municipality of Lunenburg.
12:05 p.m.
Conservative
The Chair Conservative Rob Merrifield
The Municipality of Lunenburg?
We have a lot of opinions on what you do.
12:05 p.m.
Voices
Oh, oh!
12:05 p.m.
Conservative
The Chair Conservative Rob Merrifield
Mr. Boutziouvis is going to join us in a second or two at the table, but we look forward to your intervention. We'll yield the floor to you first, Mr. Downe.
October 18th, 2011 / 12:05 p.m.
Don Downe Chair, Standing Committee on Finance and Intergovernmental Relations, Mayor of the Municipality of the District of Lunenburg, Federation of Canadian Municipalities
Thank you very much, Mr. Chair.
It's a pleasure to be here from High Liner Foods, just outside of Lunenburg in Lunenburg County. I appreciate being able to deal with this through this medium.
I have a small presentation on behalf of FCM that I'd like to go through first to bring all of you up to speed on the position that FCM has taken with regard to the negotiations.
Mr. Chair and members of the committee, I want to thank you very much for inviting us to speak to you today on this important issue.
We're pleased to be here to present the municipal perspective on this issue. Our president, Councillor Berry Vrbanovic from Kitchener, Ontario, asked me to share his greetings with you. I believe he's on the Hill today lobbying on another issue.
As you know, the FCM has been a national voice of municipal governments since 1901. We represent nearly 2,000 municipal governments, from the largest to the smallest, including over 90% of the Canadian population within our membership. Municipalities will be right in the middle of transforming our economy in the 21st century, building new transit systems, redesigning our water and waste water plants, and retrofitting everything from libraries to hockey arenas and more to be more efficient.
Canadian municipalities procure over $100 billion a year, investing in infrastructure and services that deliver and support our national economy. As Canada negotiates CETA, these investments need to be seen as part of the broader economic strategy within Canada so that we can cultivate and export our expertise, while at the same time protecting the rights of citizens and communities to make decisions based on their own interests. As such, a strong partnership among all levels of government during trade negotiations is required to maximize the benefit of these types of trade agreements, while at the same time minimizing the negative impacts and risks to all of us.
For more than two years, the FCM has had a very strong and clear relationship and position with regard to the new trade agreement that we're talking about. Municipalities support free and fair trade between Canada and the world; however, the Government of Canada must ensure that any new trade agreements reasonably respect and protect municipal autonomy and decision-making. We have established seven principles for fair trade that we have communicated to the federal government to guide their negotiations. Our objective is simple: to protect the municipal right, within reasonable limits, to do their work as the respective councils see fit.
Over the past year, the Minister of International Trade, Ed Fast, has joined us by conference call, and in person at our latest meeting in September in Nelson, B.C. The minister's latest correspondence with us, which is available on our website, shows that the Government of Canada understands our position. The minister's letter includes the government's specific responses and commitments to each of the seven principles that we've talked about.
For the benefit of your committee, I will quickly run through the seven principles of FCM's position on international trade.
The first one is reasonable procurement thresholds. Inappropriately low or broad procurement thresholds may force municipalities to tender projects when tendering is neither practical nor financially justified.
The second item is streamlined administration. Ensuring that municipal procurement policies are free-trade compliant will likely create new costs and may require specialized expenditures. The administrative design of these rules must be as streamlined as possible and developed in close cooperation with our municipal procurement practitioners.
The third issue is progressive enforcement. Enforcing provisions of any deal should be progressive and should not penalize inadvertent non-compliance, particularly in cases where municipalities do not have the expertise to appropriately apply the rules--in other words, this means making sure that these will be able to be dealt with and understood throughout the nation, whether you're from Toronto or from Lunenburg itself.
Fourth is Canadian content for strategic industries and sensitive projects. A trade deal must recognize strategic and public interest considerations before barring all preferential treatment based on country of origin. There may be industries of strategic significance to particular regions--such as transit--or projects where consideration of quality, public benefit, environmental protection, or business ethics means that a local government may wish to use criteria beyond the simple cost base of competitive pricing. This should be allowed within reason and that is where the provinces obviously will be playing a big role.
Fifth, a dispute resolution process like the one in NAFTA must ensure that the municipalities can appropriately defend their policies and bylaws as an order of government. Consultation and communication during negotiations are required to ensure any resulting agreement responds to provincial and municipal concerns. We have been working with a group at DFAIT, the Department of Foreign Affairs and International Trade, on a regular basis, and they realize that's important to us all.
Sixth is reciprocity. Canada's negotiation position must support reciprocity in Canada and foreign municipal procurement practices. In other words, we must be asking for similar access as that which is being asked of us as Canadians. In particular, the deal's construction-related procurement thresholds seem reasonable; currently, they're at $8.5 million. These are in line with the current World Trade Organization thresholds and are consistent with previous agreements, namely, the Buy American agreement last year.
We understand that the provinces and the territories will be in the lead in negotiating specific exemptions for strategic industries or special projects. It is critical that the interests of all governments work together to craft an agreement that protects the rights of municipalities to build, maintain, and operate the infrastructure that supports Canada's economic competitiveness and quality of life. We should not be put at a competitive disadvantage because of this agreement.
Indeed, the minister has committed to not signing any agreement that is not in the best interests of Canadians. This must include the communities in which they live as well.
There are still unanswered questions regarding the administrative enforcement provisions in dispute resolution processes within CETA. Municipalities will be monitoring the status of the negotiations as they continue to develop. All governments must continue to work together as part of a broad economic strategy, which includes international trade agreements. Developing municipal procurement policies that protect Canadians and our communities will require specialized expertise and must be developed in close cooperation with the municipal procurement practitioners.
I'll open it up now to questions with regard to your committee. I thank you very much for the opportunity to say a few words.
12:15 p.m.
Conservative
The Chair Conservative Rob Merrifield
Thank you very much.
Our telecommunications are working fine. You came through loud and clear, so thank you very much for your intervention.
Before we go into questions and answers, we have with us Sam Boutziouvis, from the Canadian Council of Chief Executives.
The floor is yours, Sam.
12:15 p.m.
Sam Boutziouvis Vice President, Policy, International and Fiscal Issues, Canadian Council of Chief Executives
Thank you.
Mr. Chairman and committee members, thank you for the invitation to appear before this committee on international trade.
The Canadian Council of Chief Executives has a long history of support for measures to strengthen our economic relationship with the European Union. The CCCE supports an ambitious and comprehensive economic partnership agreement between Canada and the 27 member states of the EU.
Founded in 1976, the CCCE is a non-partisan organization that engages in public policy research, consultation, and advocacy. Its member CEOs, about 150 in total, lead companies that collectively administer $4.5 trillion in assets, employ more than 1.4 million men and women, and are responsible for a lot of Canada's private sector exports, investment, and training.
Our chief negotiators are meeting this week for the ninth round of negotiations toward CETA. It's a wonder that these negotiations have progressed as far as they have and as quickly as they have, given the economic and political challenges in Europe as well as globally.
The important discussions currently under way to restore health to the European financial system will be important to Canada. Several EU member states are in the throes of a debt crisis that will require great political skill, clarity, and vision to achieve a resolution. Meanwhile, the United States, our number one trading partner, and our number one priority internationally, faces a number of challenges that are familiar to all of us.
All of this is to say that there could not be a more compelling reason to stay the course with the CETA talks. In addition to slower growth in the U.S., in several EU member states, and even in China, we have faced and will continue to face the protectionist impulse in all of its various forms as public sector austerity measures are put into effect. At a time of tremendous global economic uncertainty, successful conclusion of these negotiations toward a comprehensive economic trade agreement will send a powerful pro-growth signal to investors and businesses, both within our borders and beyond. Deeper bilateral economic integration with the EU will bolster confidence and create important new opportunities for workers, businesses, and investors on both sides of the Atlantic.
As you know, collectively the EU represents the world's largest market in terms of gross domestic product, as well as the world's largest importer and exporter and largest investor. Next to the U.S., the EU is Canada's second-largest trading partner and its second most important source of foreign direct investment. Reciprocally, the EU ranks second as a destination for Canadian FDI.
Canada is learning that the first mover advantage can yield benefits. For example, negotiating and implementing the Canada-Colombia FTA gave our world-class western agriculture producers the first mover advantage over their competitors. It has worked very well thus far. The same first mover advantage will be strategically important, in our view, in the Canada-EU context. With the exception of Korea, Canada will be the only developed economy with a CETA or a trade agreement with Europe. As a result, it is our view that Canadians will benefit from the CETA in terms of jobs and growth, precisely because of this first mover advantage.
Canada and the EU should not delay or equivocate or diminish the ambition in the negotiations because of tough issues. Certainly, business leaders on both sides of the Atlantic will continue to pursue opportunities with or without new rules in place, but they will take greater interest in a negotiation that is deep, comprehensive, and meaningful.
Some of the priorities that CCCE has suggested should be part of a final CETA package--and we're not sure they will be part of a final CETA package--include: the elimination of all remaining tariff barriers and resolution of non-tariff trade barriers; the opening of services markets; broad reciprocal access to public procurement; measures to ensure the mobility of skilled personnel and service providers, as well as speedy progress towards mutual recognition of professional qualifications; stronger intellectual property protection, including in copyright, enforcement, and patents; measures to boost technological development and encourage closer cooperation on energy and environment; an ambitious regulatory cooperation agreement with a commitment to action in priority sectors; accelerated convergence in competition policy and tax administration, and we'll see if we can do that; a comprehensive dispute resolution mechanism that would be binding on state-to-state, and to the extent that an investor-state mechanism can be negotiated, we would obviously support it; and, of course, the involvement of our provincial governments in areas of either complete or partial provincial jurisdiction. Enthusiastic engagement on the part of Canada's provincial governments is important to the successful negotiation and implementation of a comprehensive agreement.
The CCCE has emphasized that a Canada-EU economic partnership would possibly be a catalyst for further multilateral liberalization in critical areas. To Canada, the WTO remains the pre-eminent forum for global trade liberalization. Sadly--and just as a bit of a response to the exchange between Mr. MacLaren and the member from the Conservative Party--the Canada-Europe talks are not going to be the catalyst we envisioned a couple of years ago to push the Doha development agenda, which still remains stalled at the WTO.
There's going to be a WTO ministerial meeting this December where some hard questions will have to be asked, and they're going to need answers. Such questions include the following. What now for the WTO and the DDA? How does the WTO frame a forward agenda, given the inability to come to a final deal, which has taken over a decade to negotiate? Should the WTO consider plurilateral negotiations as opposed to continuing with the omnibus multilateral deal? That's an issue that I think some of our negotiators have raised in Geneva.
In 2006-07, CCCE embarked on a strategy to pursue market access opportunities in a number of priority markets in both developed and developing economies. For example, CCCE provided input and supported the perimeter security and regulatory cooperation vision enunciated by President Barack Obama and Prime Minister Harper last February. We hope these action plans will be released soon, because we think we can move the dial a little bit on our trade.
As Bank of Canada Governor Mark Carney has indicated, there is a $30-billion gap in our trade with the U.S. and that needs to be filled. We need to fill this gap and grow our trade even further, but more needs to be done on the Canada-U.S. front. The CETA will help, especially given estimates that our trade could rise by as much as 20% vis-à-vis the CETA being negotiated and agreed upon, but our gaze must also turn to Asia and Latin America.
Just recently, the CEO of Manulife, and my CEO, the Honourable John Manley, visited Japan with a small group of CEOs. The purpose was to discuss an economic partnership agreement and possible trade negotiation with Japan. Tomorrow, the CCCE will release, with the Canada-China Business Council, a paper written by Professor Wendy Dobson on an Asia and China strategy for Canada. The paper calls for the development of a road map of engagement with priority Asian countries, including China, as well as regional groupings like the Trans-Pacific Partnership.
Asia's rise is the single most important force transforming the world economy. The CCCE is planning a major initiative regarding Canada's future prosperity in a world in which economic power is shifting towards Asia.
In August, Prime Minister Harper and Brazil's President Rousseff announced a CEO forum, as well as several other initiatives. We have work under way to try to stand up the CEO forum as quickly as possible to support both the Prime Minister and President Dilma Rousseff with a number of initiatives to enhance our commercial relationship.
Just to wholeheartedly support Mr. MacLaren, we're going to launch the Canada-India CEO forum. The forum should enhance our commercial relationship and provide advice toward the Canada-India economic partnership agreement, which just got under way.
We also have a little bit of research under way on Australia and on whether or not we can enhance our relationship with Australia in a meaningful way.
Canada is deeply integrated into North America, but needs to do more. Canada is a Pacific nation, but must look more intently and with greater purpose towards Asia, China, and Japan. But Canada is also an Atlantic nation, and here I'll repeat what I think everyone at the table knows, but I think it bears putting on the record. We have close linkages with the EU. We share a history. We're home to millions of people of European descent and we share important values and a deep respect for the rule of law and good governance. We're trusted partners. We're members of NATO. We're trying to advance global security mutually. We share a massively important relationship with our common ally, the U.S.
These are powerful imperatives. Coupled with the imperative to achieve greater growth, jobs, and prosperity, this is an irresistible case for Canada and the EU to finish these negotiations as soon as possible in 2012.
Broadly, there is very strong support for closer linkages with Europe. This can't be dismissed by the likes of Maude Barlow and the Council of Canadians. In fact, the report of this committee in 2011, Mr. Chair, suggested strong support for a closer relationship with Canada from the European perspective, so the sentiment is reciprocated that there's strong support for doing something with each other.
Access to markets in Europe for goods, services, and skills are three important benefits of the CETA. In addition, the CETA will allow governments to find cost savings while maintaining service levels through more direct competition for government procurement contracts.
As well, the CETA, through the direct involvement of provincial governments in areas of exclusive or partial jurisdiction, will help build a stronger economic union within Canada.
Finally, in areas where the CETA will open up our markets, partially or wholly, to greater competition, I, for one, am confident that Canadian business leaders, small, medium, and large, will rise to the occasion.
Thanks.