International Trade Committee on March 25th, 2013

[Cameron MacKay]

MFN provisions are sprinkled throughout most of our FTAs, and there can be exemptions from them as well. But our own trade, in terms of imports from the Pacific Alliance countries, already exceeds the 90% duty-free category because our FTAs have been in force for some time and are quite liberalizing.

[Don Davies, NDP, Vancouver Kingsway, BC]

I'm concerned about this issue of harmonization and integration. It's obviously not about tariffs, because tariff reduction has already been accomplished among all members and Canada. As the ambassadors have told us, this is about integration and harmonization.

What sectors of the Canadian economy will be harmonized with Peru or Chile or Mexico? Can you give us some examples? Can you tell us whether that harmonization will be up to Canadian standards or lowered to the standards of those countries? I'm making an assumption, of course, that most of the standards are lower in those countries than in Canada.

[Cameron MacKay]

I can't answer the question simply because the Pacific Alliance members are currently negotiating among themselves to determine what harmonization they will achieve, and how their own agreement will work. They haven't concluded those negotiations, and we haven't seen any of the detail. But the purpose of the Pacific Alliance, as we understand it, is to go beyond the normal trade policy rules—again, these are countries that already have free trade agreements with each other—and turn to cooperation in other areas.

[Don Davies, NDP, Vancouver Kingsway, BC]

In what areas will that be, Mr. MacKay? I'm trying to get a sense of the areas.

[The Chair, Conservative, Rob Merrifield]

Sorry, Mr. Davies, your time has gone.

I'll allow a short answer.

[Cameron MacKay]

Ms. Buck mentioned some in her opening remarks.

[Kerry Buck]

Just briefly, as I said, it's a trade-policy plus agreement because it also aims at facilitating movement of persons and migratory transit for tourism, business, and cooperation between immigration and consular authorities, and it promotes cooperation mechanisms in areas such as the environment; innovation, science, and tech; micro, small and medium-sized enterprises; social development; and other areas as agreed by participants.

It's a very embryonic alliance. Our understanding is that those areas haven't progressed that far, but that's the ambition. It goes beyond harmonization into areas of cooperation.

[The Chair, Conservative, Rob Merrifield]

Very good. Thank you.

Mr. Holder, the floor is yours for seven minutes.

[Ed Holder, Conservative, London West, ON]

Thank you, Chair.

I'd like to thank our guests for being here today and providing us with some background.

You come with a bias. I think it's clear that you're saying that we need to engage, and I want to press on that a little more. I think it's a little different from the prior testimony by three of the four ambassadors from the countries concerned. Ultimately, it came out that the first ambassador supported Canada's full membership. A second—it might have been Colombia—certainly leaned that way, if I recall. I wasn't sure about Peru. I think they hinged it more specifically than the others on visas and the like. I'll come back to that as well, but first to Mr. MacKay.

I wasn't aware that a country had to have FTAs with all four countries to participate. There are nine observer countries. Are you saying that all of the countries: Australia, Costa Rica, Spain, Guatemala, Japan, New Zealand, Panama, and Uruguay have FTAs with all four countries? You're clear on that?

[Cameron MacKay]

I think the countries you just listed are observer countries—

[Ed Holder, Conservative, London West, ON]

Exactly.

[Cameron MacKay]

—but the four members themselves already have FTAs with each another. They have made it clear that to join that group of four members as opposed to being observers, the acceding country must already have free trade agreements with those four.

[Ed Holder, Conservative, London West, ON]

With all four. I'm not sure that was clear in prior testimony, but it's good to clarify to make that sure.

Ms. Buck, when Mr. Davies asked about sufficient staffing to do what you do, I think you said that you're always feeling stretched, but that you always deliver. I revert to, “It's never enough, but we have enough”. So in my view you have enough.

[Voices]

Oh, oh!

[Ed Holder, Conservative, London West, ON]

I'm not sure, but I think so, because just as in business we've had to do the best we can. And compliments to what DFAIT does, as a broad comment.

Ms. Buck, you mentioned in your testimony why it's important for Canada to engage with the Pacific Alliance. To engage is one thing. Observer status is engaging. But when you're married, you're really committed. Are you talking about marriage or are you talking about dating? Which do you think it is?

[Kerry Buck]

Thank you, Mr. Holder. It's an analogy I've used myself in trying to describe where we are with the PA.

We're at the exploratory stage. We've been gathering information about the evolving nature of the Pacific Alliance and the accession process for membership—so both in terms of processes and thresholds for memberships, but also what's inside the Pacific Alliance box, if you will. We've been gathering information, but at the same time the Pacific Alliance members themselves are only now developing more precision on—

[Ed Holder, Conservative, London West, ON]

Forgive me for interrupting. Are you at the stage of suggesting that you'd like to go beyond dating?

[Kerry Buck]

We're at the stage of assessing whether we should go beyond dating.

[Ed Holder, Conservative, London West, ON]

So we're not quite there yet. This is serious because it begs the following question. Let's say that the Pacific Alliance is all it will ever be. So you have the four countries and the observers hanging around on the edges, dating, but they never get into a formal relationship. Say that was the sum total. Knowing, as Mr. MacKay has said, that we have trade deals with all of these countries, it begs the question: if that were the sum total of all the Pacific Alliance countries, why would we need to go beyond dating?

Those are my analogies.

[Kerry Buck]

Yes, we have FTAs with all of the Pacific Alliance members, but the Pacific Alliance goes beyond those trade deals in two aspects. It could potentially bring additional benefits to Canada—I say “potentially” and I'll get into that in a second—in two respects.

Having an FTA is an important gateway to improve the bilateral trade relationship, but there are other tools you need to use to bring that to fruition. Talking to and further engaging with the members of the Pacific Alliance itself helps enhance those relationships and helps to promote trade under the existing FTAs. That's point one.

Point two, as I made before, is that it goes beyond trade policy. It will eventually go beyond trade policy into other areas of cooperation to enhance integration.

[Ed Holder, Conservative, London West, ON]

I would have thought those bilateral agreements we have done would give us that flexibility, the ability to do just what you said.

Here's the question. Peru and Colombia, I think at this point, still appear to be leading sources of illicit drugs, which I'm very concerned about. By Canada being at the table, how does that combat the illicit trade? How would the Pacific Alliance relationship be affected by this?

[Kerry Buck]

There are two answers. The short answer is that our understanding is that, as I said, the Pacific Alliance, on some of the non-trade policy areas of cooperation, hasn't progressed that far yet. The members have some substantial ambition, but in terms of concrete details we're not aware of significant progress in those areas.

Yes, illicit drugs bother us. We have been working with the region, using bilateral security programming throughout the region, to help prevent the illicit flow of drugs through a number of...I mentioned the amount of security programming.

No, we don't need the Pacific Alliance to tackle the problem of illicit drugs, but deepening relations with the Pacific Alliance can potentially help enhance ties across a range of both trade and non-trade issues.

[Ed Holder, Conservative, London West, ON]

Presumably we could do that while still dating the PA, because we have free trade agreements, which give us that access relationship amongst them all.

[Kerry Buck]

Yes.

[Ed Holder, Conservative, London West, ON]

What I'm getting at with all of this is to understand the following. At the end of this we want to make a recommendation, as a committee, one way or the other whether it makes sense for us to do this, to go beyond dating.

I'm trying to understand this. I didn't get satisfactory responses, with deep respect to the ambassadors, about becoming more than just engaged. In other words, it's not 100% clear to me.