Evidence of meeting #67 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 chile.
A recording is available from Parliament.
Conservative
The Chair Conservative Rob Merrifield
I'll just challenge you, Mr. Easter. If you ask me another question, I'll answer that question and you'll relinquish the floor in doing so.
Liberal
Wayne Easter Liberal Malpeque, PE
—the minister to come.
Again, Mr. Chair, this committee and Canadians deserve clarity on the issue; either the leaked EU document is factually incorrect or it's not. The Minister of International Trade owes it to this committee, and the government owes it to this committee, to declare what is fact and what isn't fact.
As I wind down, Mr. Speaker, I'd like to refer to a speech by the European Commissioner for Trade, in which he described the required process by which the European Parliament is kept fully informed of the progress of trade negotiations as a result of the Treaty of Lisbon.
Mr. Chair, I think this is something we could learn from. These trade changes significantly alter the debate over EU trade policy. No one can now claim that EU trade policy-making is a bureaucrat-to-bureaucrat exercise devoid of scrutiny and passion. The European Parliament brings a broader range of voices and opinions to the debates on trade and ensures that these debates happen with full transparency. It is so different from here, Mr. Chair.
In short, the Lisbon treaty requires that the commission shall keep the Parliament informed of trade negotiations.
Those points that were raised were confirmed by the European Parliament in a resolution of June 8, 2011 on Canada-EU trade relations, a resolution that was sent to the federal government and each of the provinces.
Paragraph 19 of the resolution reads:
...since the entry into force of the Lisbon Treaty, the Council has been required to obtain the consent of Parliament for all international trade agreements and both the Council and the Commission have been required to keep Parliament immediately and fully informed at all stages of the procedure; [it] calls on the Council to provide Parliament immediately with all information in the stages of the procedure for which it is responsible, in particular concerning negotiation directives it has adopted and any modifications thereof; [it] calls on the Council and the Commission to keep Parliament involved at all stages of the negotiations and to take Parliament's views fully into account.
The reason I read that, Mr. Chair, is that in Canada we are a democracy too. We're not fully informed. We haven't had the minister here on the CETA agreement for 17 months. It's time we did have him here to answer for whether it's misinformation or a strategic way of trying to get their position forward. I don't know, but we need the minister and his chief negotiator to answer those questions.
As a last point, Mr. Chair, the EU trade commissioner has, in quite a number of speeches now on relations with the U.S., certainly been emphasizing the negotiations with the United States and not mentioning Canada at all. That worries me that we might find ourselves in the same situation as we did with South Korea, that we had in fact been displaced by the United States in our trading relationship there. That would indeed cost the country.
For all of the foregoing, Mr. Chair, it's crucial that we hear from the minister to find out, first, why the negotiations seem to be at a standstill from Canada's point of view and way over the deadline the minister had suggested they would meet; second, determine if the government still believes in and has CETA as a priority; and third, determine what areas, be they supply management, procurement, drug costs or others, that we as a committee need to be addressing.
I've said before this committee a number of times that we're not doing as well in our trade agreements as we had hoped we would—for 10 out of the last 12 months we've had a trade deficit. Two years in a row now there's been a trade deficit in beef.
I very sincerely believe that we as a committee should be looking at these things so that we can help the government, industry, Canadians add value by way of the trade agreements. We can't do it if the committee is not willing to have the minister before us and get his views on the matter. Therefore, I would encourage the government members to support the motion and allow the minister to come before this committee so we can get some up-to-date information and answers.
Thank you very much, Mr. Chair.
Conservative
The Chair Conservative Rob Merrifield
Okay. You've made a passionate plea for your motion.
I will just let the committee know that we have the ambassador here only until 4:30. He has a time restraint.
Mr. Keddy, the floor is yours.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
Mr. Chairman, thank you for recognizing me. I'll try to be succinct as I can.
Obviously, anyone looking at today's orders would see that we have an hour set aside to debate this motion, from 4:30 to 5:30. Unfortunately the honourable member presented absolutely nothing new in the case he made. He managed to turn a motion into a filibuster. Worse yet, we have been extremely discourteous to our guests who were invited here today not just by the chair but also by the entire committee. So this type of behaviour is really quite unconscionable, and I move that we adjourn debate and go back to the orders of the day.
Conservative
The Chair Conservative Rob Merrifield
Okay. The motion is non-debatable.
All in favour?
(Motion agreed to)
Thank you.
Sorry about that.
The floor is yours, Mr. Ambassador.
His Excellency Roberto Cristian Ibarra Garcia Ambassador of the Republic of Chile to Canada, Embassy of the Republic of Chile
Thank you very much, Mr. President.
Good afternoon, everybody.
Ladies and gentlemen members of the Standing Committee on International Trade, thank you.
I would like to thank you, Mr. President, and members for their kind invitation to speak on the Chilean perspective with regard to the Pacific Alliance, consisting today of four members, Chile, Colombia, Peru, and Mexico; two observer candidates, Costa Rica and Panama; and six observers. In this last category we find Canada, Australia, Guatemala, Japan, New Zealand, and Spain.
Chile, as all of you know, currently occupies the pro tempore presidency of the alliance, which has been created to achieve, in a participatory way and by consensus, an area of integration aimed at developing progressive steps toward the free circulation of goods, services, capital, and people. This big undertaking also aims to prompt the greater growth, development, and competitiveness of our economies, with special emphasis on the Asia-Pacific region.
Since its birth, coming from an initiative of the former President of Peru, Alan Garcia, in April 2011, the Pacific Alliance has developed an intense agenda of meetings at the level of heads of state, ministers, and deputy ministers of foreign affairs and trade. As well, it has constituted a cabinet and nine technical working groups: movement of businesspeople and facilitation of migratory movements, coordinated by Mexico; trade and integration, including trade facilitation measures, coordinated by Chile; trade in services and capital movement, coordinated by Colombia; cooperation, coordinated by Peru; institutional issues, coordinated by Peru; communication strategy, coordinated by Mexico; government procurement, coordinated by Chile; intellectual property, coordinated by Colombia; and regulatory improvement, coordinated by Mexico. These last two groups, intellectual property and regulatory improvement, are only having exploratory talks with no mandate for negotiation.
These working groups have been doing their job in a very disciplined manner; their results are destined to move forward in a series of definitive high-level commitments, among them tariff liberalization, a goal aimed to be achieved for 90% of goods by March 31 this year, within 10 more days.
Likewise, the alliance is engaged in concluding negotiations in several areas this year, deepening the existing bilateral free trade agreements among the four members. These areas include: market access for trade in goods; rules of origin; phytosanitary and sanitary measures; technical obstacles to commerce; facilitation of trade; customs cooperation; services, including financial products; marine transportation; telecommunications; air services; professional services; investments; and public procurement.
At the same time, we have established a mechanism of cooperation between trade promotion agencies to increase the presence of goods and services from members through institutional cooperation in international markets. For instance we are thinking of joint trade offices. We also agreed to attract investment and trade among the members during a macro business round to be held in Cali, Colombia, next June.
In August 2012 the Pacific Alliance Business Council was created to promote initiatives within member countries and the business community in general, as well as to develop recommendations and suggestions to governments to improve this integration process. Their members will suggest joint actions to access foreign markets, mainly in the Asia-Pacific region.
As you can see, ladies and gentlemen, this is an ambitious project that Chile decided to associate with enthusiastically from the beginning. Why? Because we have verified, essential common elements that link us with the other associates or like-minded countries who share fundamental values of democracy, respect for human rights, and all fundamental liberties. There is also our effective commitment to free trade as an instrument destined to promote the prosperity of our people. Another consideration was the positive behaviour observed in our economies in the last years in terms of political stability, clear rules, and responsible management. Finally, there's the interest in gathering our efforts to face the challenges presented by the international economy and the boom of the Asia-Pacific region as a zone of greater dynamism in the world.
We are aware, Mr. Chairman, of the great dose of strong political will required for this project to function. We know this will require a substantial amount of flexibility and mutual concessions. But our governments have resolved to undertake this road with energy and determination, with the dynamic working plan that seeks to reach agreements gradually in all the areas, about which we are definitely optimistic.
We are also conscious about the interest generated by the Pacific Alliance in the international community, which is explained by the requests received from several countries to participate at different levels. In this sense we took note of the desire expressed by Canada, which became concrete in the summit in Paranal, Chile, in 2012, to which Minister John Baird was invited.
My country has developed an encouraging role in the Canadian accession process and we observe with satisfaction that the Canadian decision is being materialized at an internal level, with examples such as the study initiated today by this committee.
With the purpose of making a further contribution to this exercise, allow me to present some pictures and figures that will illustrate better what is the starting point of the Pacific Alliance and its enormous potential that is committed to develop ahead.
First, you will see a comparison between the GDP of the alliance and the median GDP of Latin America. We have 35.8% of the population of Latin America. We are now the second largest economy of Latin America and the Caribbean, the ninth in the world economy, and we have 2.9% of the world's trade.
Trade openness is 60% of our GDP. In the case of Brazil it is 24%, and in the case of Latin America it is 51.3%.
In this next slide you will see the size of the market. We have a population of 207 million, which represents 34% of Latin America's GDP, and 50% of Latin American exports.
You each have documents that compare Chile and the Pacific Alliance.
As well, you will note the comparative GDP growth of the Pacific Alliance, which is very interesting as you can see that the forecast for this year places the world at 3.6%, and Latin America and the Caribbean at 3.9%, Brazil at 4%, Chile at 4.4%, Colombia at 4.4%, Mexico at 3.5%, and Peru at 5.8%.
You can also see that we are of course very open trading countries. Chile is trading with 72% coverage of the world, Peru 54%, Mexico 65%, and Colombia 39%. That means there is a big net of free trade agreements.
This next slide illustrates a few of the challenges that are affecting us. As you can see, we have some recent free trade agreements, between Chile and Colombia, and Colombia and Peru, which have big coverage. The older agreements are less open, so we will have to face challenges to change that situation.
Here you will note the relationship between the Pacific Alliance and world trade. Chile has $160 billion; Peru $83 billion; Colombia $100.6 billion; and Mexico represents trade of $700.4 billion.
On this next slide there is a sort of formal problem with it, so I would like to pass over it. We are going to replace it afterwards.
Here you have investments, and in investments of course, as you know, Canada is very strong in Latin America, and you can see that in Latin America it has concentrated a huge amount of investments. In Latin America last year Brazil was the number one, and we achieved $26 billion in investment. Then Mexico, Colombia, Argentina, and Peru. That means the region is becoming a recipient of enormous amounts of investment, and with the projects that are still under study, I think this amount of investment, especially Canadian investment, is going to increase in the next few years.
Here in Latin America we are starting to be investors in our own region, as you can see. Chile has $55.6 billion U.S. that's invested in the world, but a part of it is in the Pacific Alliance. Peru is at $1.2 billion, Colombia at $31.2 billion, and Mexico $98.5 billion. That's a big space to cover because our investments are not so huge yet in the region, so I think we can do much better with the alliance.
This next slide is very interesting because it shows you the attractive business environments and the position of the four countries of the alliance that are very well positioned if you compare the world and other countries, even very important countries.
Allow me, after this general introduction, to show you a couple of slides about Chile and the Pacific Alliance. This is our bilateral trade. Chile's exports to it were $4.063 billion, mostly non-mining and chemical goods. Imports were $6.875 billion U.S. This is the composition of our trade with the Pacific Alliance. As you can see, the mining has been decreasing very dramatically in the last year, probably because nowadays we were selling our mining products much more to Asia and North America. On the contrary, the other products are increasing, so there is much work to do in that sense as well.
Then there are some figures about Canada and the Pacific Alliance. The first one relates to your exports to and imports from Latin America and the Pacific Alliance. This shows you that the Pacific Alliance countries, as partners for Canada in the region, are probably the most important, or the ones who have the main part. But, of course, there are many things to do if you think that Latin America only accounts for 2.8% of the Canada's exports and 9.2% of its imports. Of course, you import much more from our region than you sell to it, so I think the alliance could be a very good opportunity to balance the situation in the next years.
Then for investment—
NDP
Don Davies NDP Vancouver Kingsway, BC
By your own clock, Mr. Chairman, we're approaching 14 minutes. The witness is entitled to 10 minutes. Although we'd like to hear more, we also want a chance to ask questions.
Conservative
H.E. Roberto Cristian Ibarra Garcia
It's very short what I have remaining. I'm trying to do my best and as quickly as possible. I just need 2 minutes.
H.E. Roberto Cristian Ibarra Garcia
All right. This is a slide about foreign investment and you can see how the Pacific Alliance has been concentrating that.
To conclude, Mr. Chairman, ladies and gentlemen, in light of these figures and without prejudice of the careful evaluation that every pertinent instance has to perform in Canada's decision regarding the degree of its involvement in the Pacific Alliance, Chile firmly believes that this instance will definitely generate some new opportunities for Canada in various aspects as follows.
There will be an integrated economy and attractive markets for Canadian investments both for internal markets and as a platform for the Asia-Pacific region.
Market access conditions, flexible and single rules of origin and accumulation, as well as improved services commitments and disciplines will create new opportunities for Canadian companies.
Common disciplines, regulatory harmonization, and trade facilitation measures will make life easier for economic operators.
Membership in the Pacific Alliance would facilitate a more solid position for Canadian businesses in the region and better integration and understanding of Canada regarding Latin America and vice versa, with all the benefits that will come with that.
Even challenges like the free movement of people will be worth facing if you consider the advantages that progressive, flexible migratory aspects will bring for tourism, and better knowledge and exchanges among our students, academics, government officers, and business people.
I will finish this presentation by telling you that my country values the efforts that Canada is making to approach the region. In the case of Chile, we have a solid bilateral relationship politically as well as strong economic ties. As you know, you were the first developed country with which we signed a free trade agreement 15 years ago. It is not a coincidence either that the progressively increasing level of your investments has made your country number one in the mining sector and the third globally in our economy.
Finally, the association agreement signed in 2007 with Canada has opened the door to a proactive agenda in matters such as the environment, defence, science, technology, innovation, and education among others. The link to the Pacific basin that Canada and Chile share has not yet been developed to its potential, and therefore we have a challenge in common that an initiative such as the Pacific Alliance is willing to undertake.
Thank you very much.
Conservative
The Chair Conservative Rob Merrifield
Thank you very much.
I know the questioners are very eager, so we'll start with Mr. Davies.
NDP
Don Davies NDP Vancouver Kingsway, BC
Thank you, Mr. Chairman.
Thank you, Mr. Ambassador.
I don't think there's been a chance to ask you, but would you be able to stay with us for an extra 15 minutes to answer questions, sir?
H.E. Roberto Cristian Ibarra Garcia
Yes. It is important for me to stay. I will have to make an arrangement in my agenda, but I will stay for 15 minutes.
NDP
Don Davies NDP Vancouver Kingsway, BC
If it is possible too, we'd like to have you for the full hour.
Thank you.
Mr. Ambassador, obviously there are trade agreements among the four countries involved, and you've explained that at the end of this month a trade agreement that will reduce tariffs on about 90% of goods will come into force.
Canada also has trade agreements with each of the four partners. I'm just wondering if you could explain briefly what you see as the differences between those agreements and the subject matter of the alliance.
H.E. Roberto Cristian Ibarra Garcia
All right. Thank you very much for the question.
Of course, we have these free trade agreements, but some of them are not very comprehensive. There are many products that are excepted from those agreements, and so in the alliance we are trying for much more foreign engagement, for a wider opening of our markets. The negotiations for tariff elimination and rules of origin and accumulation shall be concluded by March 31, 2013, with a minimum of 90% of goods having tariff elimination. That means that with all the goods that are not considered in our free trade agreements—in the technical committees we have been working on a list—we think that by that point we can manage to be at 90% of our goods with no taxation.
NDP
Don Davies NDP Vancouver Kingsway, BC
Just so we understand, the Pacific Alliance announced that a free trade agreement making 90% of products tariff-free should be finalized by March 31, 2013. So if that's done, if that's accomplished, what would be the benefit to Canada joining as a full member if 90% of goods are already tariff-free and we already have free trade agreements with all four participants?
H.E. Roberto Cristian Ibarra Garcia
It's not up to me to evaluate the benefits for Canada. I think I can speak for the members of the Pacific Alliance. I can tell you that for us it's going to be an improvement regarding our free trade agreements, because we will have 10% of sensitive things—
NDP
Don Davies NDP Vancouver Kingsway, BC
It's to address the 10% that are not the subject, in part. Is that it?
H.E. Roberto Cristian Ibarra Garcia
We have 10%. From that 10%, we have 3% that we are giving ourselves three years to deal with, and the rest seven—