Evidence of meeting #69 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 region.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Kerry Buck  Political Director and Assistant Deputy Minister, International Security, Africa, Latin America and the Caribbean Branch, Department of Foreign Affairs and International Trade
Cameron MacKay  Director General, Asia-Pacific Trade Policy Bureau, Department of Foreign Affairs and International Trade
Neil Reeder  Director General, Latin America and Caribbean Bureau, Department of Foreign Affairs and International Trade

3:35 p.m.

Conservative

The Chair Conservative Rob Merrifield

We want to call the meeting to order.

We thank our witnesses for coming forward. We have our department here, DFAIT, with regard to our continuing study on the Pacific Alliance and whether or not we should be full members.

It has been a very interesting study up to this point. We've heard from three of the ambassadors. We look forward to your presentation. We'll follow that with some questions that drill down a little deeper. We look forward to your contribution to the committee and your answers to some of our questions.

Ms. Kerry Buck, I believe you'll do the presentation. If you want to introduce the rest of your group, we'll proceed from there. The floor is yours.

March 25th, 2013 / 3:35 p.m.

Kerry Buck Political Director and Assistant Deputy Minister, International Security, Africa, Latin America and the Caribbean Branch, Department of Foreign Affairs and International Trade

Thank you very much, sir.

The other witnesses with me from the Department of Foreign Affairs and International Trade are Martial Pagé, director general of the North America policy bureau; Neil Reeder, director general of the Latin America and the Caribbean bureau; and Cameron MacKay, director general of the Asia Pacific trade policy bureau, who is also heavily engaged on Latin American trade policy issues.

If you will permit me, Mr. Chair, I will start my opening remarks.

3:35 p.m.

Conservative

The Chair Conservative Rob Merrifield

Please go ahead.

3:35 p.m.

Political Director and Assistant Deputy Minister, International Security, Africa, Latin America and the Caribbean Branch, Department of Foreign Affairs and International Trade

Kerry Buck

It is a pleasure for me to be here today and to speak to you about the Pacific Alliance. The Pacific Alliance is a dynamic group of Latin American countries that together represent the ninth-largest economy in the world. It is in Canada's interests to pursue an enhanced relationship with this group, as I will explain. However, before I speak about the Pacific Alliance, I think it would be useful to situate our interest in developing a deeper relationship with this group in the context of Canada's broader goals in the region.

Prime Minister Harper has made it a foreign policy priority to strengthen our engagement with the Americas in matters of trade, investment, security, and development throughout the hemisphere. Our vision since 2007 has been one of a more prosperous, secure, and democratic hemisphere. Seven years on, our whole-of-government engagement in the hemisphere has never been stronger.

Canada's strategy for engagement in the Americas is delivering results for Canada and for the hemisphere on three pillars: pillar one, increasing economic opportunity; pillar two, strengthening security and institutions; and pillar three, fostering lasting relationships. These three pillars are interrelated, as I will explain, including in the context of the Pacific Alliance.

The first pillar is increasing prosperity.

Latin America and the Caribbean is an economically dynamic and politically stable region. The sustained economic growth it has experienced in the past decade and the growing middle class across the region offer significant opportunities for Canadian businesses and investors.

Canada's efforts to liberalize trade and promote investment with countries of the Americas are working—many barriers to trade and investment have come down and trade flows are growing.

To date, Canada has concluded free trade agreements with Mexico, Chile, Colombia, Peru, Panama, Costa Rica and Honduras, more such agreements than with any other region in the world.

We have also put into place nine foreign investment protection agreements, 28 air transport agreements, five MOUs on trade and investment, and two science and technology arrangements.

Total two-way trade between Canada and the region, including Mexico, increased 32.1% from 2007 to 2012, and there are over 3,500 Canadian companies active in the region. In some countries, we are also the largest source of foreign investment, which contributes to economic opportunity in both Canada and the host country.

Second is strengthening security and institutions. We know that opportunity, jobs, and growth require peace and stability. For one example, the activities of organized criminal networks, including the illicit drug trade and associated violence in some countries in the Americas, threaten security and good governance and make it difficult to maintain an environment where trade and investment can flourish.

To assist these countries, since 2008 Canada has invested over $2 billion Canadian through international assistance, multilateral contributions, and security-focused programming to improve security and strengthen governance in Latin America and the Caribbean, so that our partners can uphold freedom, democracy, human rights, and the rule of law.

We have placed special emphasis on programs in Central America, a key transit region for drug trafficking northward. For example, the Prime Minister announced a new $25-million security cooperation program for this region last year at the Summit of the Americas in Cartagena. In Colombia, Canadian funding has also helped to clear mines and explosive remnants of war from acres of land, thus allowing it to become arable land used productively. These are just examples of ways in which security underscores and buttresses our economic interests as well.

Security is improving. This is creating an environment where individuals and businesses are better able to prosper and grow.

The third pillar is fostering lasting relationships.

Relationships across government, the private sector, civil society and people-to-people ties are fundamental to achieving long-term results. Canada needs to be engaged in the region in order to better identify and pursue shared goals and values. We have extensive linkages in education, tourism and migration, through large diaspora communities from the region now resident in Canada. Over 4 million Canadians visit Latin America and the Caribbean every year.

Canada is committed to remaining a strong partner as the region continues to grow and innovate. This means solidifying our existing relations, looking for new opportunities to deepen our relations with key partners in the region. In order to build effective partnerships to tackle issues across the region and to find mutually beneficial trade and investment opportunities, we need to know and understand each other. And to do this, we need to work together. This is an important reason why Canada needs to engage with the Pacific Alliance.

Now I will turn to Canada's relationship with the Pacific Alliance. Conceived in 2011, the Pacific Alliance was formed by Chile, Colombia, Peru, and Mexico, as you know, to create an area of deep integration by promoting the free movement of goods, services, capital, and people. These four countries are strong proponents of economic openness and fiscal responsibility, and have already established a network of free trade agreements among themselves. They are among Canada's most like-minded partners in the region. They are also a regional economic powerhouse. The four Pacific Alliance countries together have a combined population of 207 million, and account for 49% of Latin America's exports, and 34% of its GDP.

As I said at the outset, with a GDP of $1.9 trillion Canadian in 2011, if the Pacific Alliance were counted as a single country, it would represent the ninth-largest economy in the world. This is just slightly larger than Canada's GDP of $1.76 trillion in the same year. By 2020, according to some estimates, the Pacific Alliance's GDP could reach $3.6 trillion, equivalent to Germany's current GDP. Total merchandise trade among the countries of the Pacific Alliance and the world amounted to $1 trillion Canadian in 2011, compared to Canada's total trade of $893.9 billion. This is 46% more than the global trade of South America's principle trading bloc, Mercosur, in the same year. Between 2000 and 2011, the bilateral trade of the Pacific Alliance countries with the world has averaged an annual growth rate of 8.8%, whereas Canada's was 5.2%.

This kind of growth is leading to changes, not only in relationships inside the region, but also in the relationship between the region and others. The Trans-Pacific Partnership is a case in point, where countries are coming together—three of the Pacific Alliance countries are members of the TPP—across the Pacific to build a new trading alliance that better responds to the new global environment, and Canada must continue to be part of these changing dynamics.

The Pacific Alliance countries recognize this. By working together to protect and advance their interests, they're building relationships for the long term. For Canada, this group of countries represents an economic motor in the region, with the potential for deeper trade and investment relations over the long term. Canada's total merchandise trade with the Pacific Alliance members more than doubled, from roughly $16 billion Canadian in 2000, to nearly $40 billion Canadian in 2012. The Pacific Alliance countries accounted for more than two-thirds of Canada's two-way trade with the whole Latin American region.

The countries of the Pacific Alliance remain one of the largest destinations for Canadian direct investment in Latin America, accounting for nearly two-thirds of Canadian direct investment in the region. In 2011, Canadian direct investment in the countries of the Pacific Alliance totalled $25.7 billion. Individually, Canada's bilateral relations with the members of the Pacific Alliance are some of our strongest in the hemisphere. We have free trade agreements and extensive investment with all four members.

Since NAFTA took effect in 1994, Canada-Mexico merchandise trade has grown almost sevenfold, surpassing $30 billion Canadian in 2012. We are now among each other's largest trade and investment partners, and have developed a comprehensive relationship that encompasses a wide range of bilateral, trilateral, regional, and global issues.

Canada-Chile bilateral merchandise trade has more than tripled since the CCFTA came into force in 1997, reaching Canadian $2.5 billion in 2012. Canada was the largest source of new direct investment in Chile over the last decade.

On Colombia, our FTA with Colombia came into force in August 2011. Colombia is now Canada's second-largest merchandise export destination within the Pacific Alliance region. Two-way merchandise trade in 2012 reached Canadian $1.5 billion.

Trade relations with Peru have also seen substantial growth since the implementation of our FTA in 2009. Two-way merchandise trade totalled more than $4.2 billion in 2012, which is a 49% increase over pre-FTA levels in 2008. By 2011, Canadian investment in Peru was $7.7 billion, an increase of more than 100% over pre-FTA levels. Canadian interests in Peru are focused in the extractive and financial sectors but there is some diversification going on as well.

I give you these statistics to provide clear evidence that Canada already has strong economic relations with the Pacific Alliance countries. But as they bind us closer together, it is in Canada's interests to deepen our relationship with them, as a group, in the context of our engagement in the Americas and also with a view to our trans-Pacific interests.

This alliance is showing leadership in the region, promoting good governance and open markets. Their efforts to break down the barriers between them have the potential to create opportunity and prosperity in the hemisphere at large as well as across the Pacific.

Since its inception in April 2011, Canada has been following this positive and fast-moving initiative very closely.

3:45 p.m.

Conservative

The Chair Conservative Rob Merrifield

Go ahead.

3:45 p.m.

Liberal

Wayne Easter Liberal Malpeque, PE

On a point of order, Mr. Chair, normally you would tune up witnesses a little bit when they're over their 10 minutes. This is the Department of Foreign Affairs and International Trade. Our presentation time is normally 10 minutes, and I think—

3:45 p.m.

Conservative

The Chair Conservative Rob Merrifield

That's fine. I'll look after that as a point of interest.

Go ahead. Just continue. We're about 12 minutes in, so we'll keep it on. But we have a two-hour session, so I don't see the need to curtail you too terribly much. You're just about done. Go ahead.

3:45 p.m.

Political Director and Assistant Deputy Minister, International Security, Africa, Latin America and the Caribbean Branch, Department of Foreign Affairs and International Trade

Kerry Buck

Thank you. I will shorten it slightly, Chair.

3:45 p.m.

An hon. member

Propaganda—

3:45 p.m.

Conservative

The Chair Conservative Rob Merrifield

Don't worry about him, just go ahead.

3:45 p.m.

Political Director and Assistant Deputy Minister, International Security, Africa, Latin America and the Caribbean Branch, Department of Foreign Affairs and International Trade

Kerry Buck

What are the Pacific Alliance's objectives? The ambitions of its members go well beyond lowering barriers to trade. They're also collaborating to promote trade and attract investment, with a focus on Asian markets. They have taken necessary steps to integrate their stock markets and have removed visa requirements for members in order to facilitate the free movement of capital and people.

Further, to advance cooperation among themselves and with third parties, the members of the alliance established the “Pacific Cooperation Platform”, which will promote cooperation activities in: environment and climate change; innovation, science and technology; micro-, small- and medium-sized enterprises; social development; and education mobility, that is, the creation of scholarships.

But there are still many unknowns in this evolving initiative, in particular how far its members are really prepared to go in their collaboration. Also, members have yet to elaborate how observers can engage substantively in the work of the alliance. And, because it is so new and the alliance has not yet admitted any new members, it has yet to define the requirements and a process for accession.

Looking forward, we're actively drawing on our bilateral relationships with the individual members of this alliance to engage with them and to define and build our relationship with them, as a group.

Further, Canada will participate in the upcoming leaders summit planned for May 23, 2013 in Colombia, which will be our first summit as an observer. We understand that Colombia will also be inviting representatives of the Canadian private sector and those of other observer countries to participate in the Business Council of the Pacific Alliance, which will bolster ties and dialogue and make proposals to leaders.

In sum, the Pacific Alliance is an exciting new regional initiative among key partners and close partners for Canada. It is still a work in progress, but one that is moving rapidly, and we're actively engaged with the members and with other observers to make sure Canada is enhancing our relationship with the Pacific Alliance, as a group, as it goes forward.

Thank you.

3:45 p.m.

Conservative

The Chair Conservative Rob Merrifield

Thank you very much.

Well, you can see how keen our members are to ask questions, so we'll start right now.

Mr. Davies, the floor is yours.

3:45 p.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

Thank you, Mr. Chairman.

I'm just going to ask if you could keep your answers as brief and to the point of my questions as possible, because we have a lot we'd like to ask you. Thank you for being here today.

Do any of our guests know how many chief negotiators DFAIT has who are capable of leading trade negotiations on Canada's behalf? Does anybody know that number? If so, what is it?

3:45 p.m.

Political Director and Assistant Deputy Minister, International Security, Africa, Latin America and the Caribbean Branch, Department of Foreign Affairs and International Trade

Kerry Buck

That is both a qualitative and quantitative question. We can get you the number of our experts in our trade policy bureau and revert to the committee with that.

3:45 p.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

Can you give me a general idea? Are we talking 10, 20, 50...?

3:45 p.m.

Political Director and Assistant Deputy Minister, International Security, Africa, Latin America and the Caribbean Branch, Department of Foreign Affairs and International Trade

Kerry Buck

I would prefer to revert to the committee with the exact numbers of the experts in our trade policy bureau.

3:45 p.m.

Conservative

The Chair Conservative Rob Merrifield

[Inaudible--Editor]

3:45 p.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

Thanks.

I'd also like you to give us the number of DFAIT staff who support those negotiations as well, so that I can get an idea of how many we have, and I'll tell you why. I'm concerned about our resources.

As you pointed out, Canada already has free trade agreements with all four member states of the Pacific Alliance. I think it's clear to anybody who might be listening to this that there are only four members: Chile, Colombia, Peru, and Mexico. Canada has free trade agreements with all four of them. We just concluded one with Colombia in 2011, as you pointed out. We just concluded one with Peru in 2009, and with Chile and Mexico in 1997 and 1994.

We're also of course involved in the TPP, as you've also mentioned, which is another Pacific bloc. So we have the Trans-Pacific bloc and we have the Pacific Alliance.

In the Trans-Pacific bloc, of course, as you have also acknowledged, four of the five proposed members of the Pacific Alliance, including Canada, are already members engaged in the Trans-Pacific Partnership trade negotiations.

Canada is negotiating right now CETA; and with India, Japan, and I understand South Korea; and the TPP.

So I'm just wondering, at this point do you have any evidence to give to this committee as to whether or not you think DFAIT has the resources to conduct another set of negotiations with the Pacific Alliance, given that we already have trade agreements with its individual members and we're already at the TPP table?

Does anybody have an opinion on that?

3:50 p.m.

Political Director and Assistant Deputy Minister, International Security, Africa, Latin America and the Caribbean Branch, Department of Foreign Affairs and International Trade

Kerry Buck

As a civil servant, I will always talk about not having enough resources, but resources are what they are. DFAIT has the resources it needs to deliver on its mandate.

There are a number of us engaged on the Pacific Alliance, both inside and outside the trade policy bureau, as we are in other trade and what I'll call “trade-plus” negotiations, because the Pacific Alliance goes beyond trade policy issues.

So it's a very difficult question to answer with a very clear number. I'm engaged, and a huge swath of my Latin American and Caribbean bureau is engaged as well, and we're outside trade policy type of work.

3:50 p.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

Maybe you could give me a qualitative answer. We're politicians, and you're working inside DFAIT. I'm just trying to get a sense of the state of resources in DFAIT right now.

Do you feel stretched, or do you have lots of negotiators and lots of time so that we can open up a Pacific Alliance and put resources, money, and negotiators to that? Can you give us a sense of whether you feel you have the resources to do that or not?

3:50 p.m.

Political Director and Assistant Deputy Minister, International Security, Africa, Latin America and the Caribbean Branch, Department of Foreign Affairs and International Trade

Kerry Buck

Again, that's a qualitative answer that's difficult for me.

We're always feeling stretched. I've been in DFAIT for over 20 years, and we're always feeling stretched and we always deliver. We work hard, we work too hard, but we deliver.

3:50 p.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

Okay.

I want to talk about duplication. I've already pointed out that we have the Trans-Pacific Partnership and the Pacific Alliance. Both talks are explicitly aimed at creating a Pacific-based trade bloc. Canada, Mexico, Chile, and Peru—leaving Colombia out—are already at the negotiating table, presumably discussing similar things, or the very same things, that would be the subject of Pacific Alliance talks.

Is that not an inefficient duplication of resources? How many Pacific trading tables do we need to open up right now with the same countries?

3:50 p.m.

Political Director and Assistant Deputy Minister, International Security, Africa, Latin America and the Caribbean Branch, Department of Foreign Affairs and International Trade

Kerry Buck

Before I pass this to Mr. MacKay for a more detailed answer, the Pacific Alliance is about two things. It's about reaching out to the Pacific region, but it's also about deeper integration amongst the members to enhance trade and cooperation amongst them—which isn't focused solely on the Pacific region.

So in answer to your question, no, I don't see it as a duplication at all. I see them as complementary initiatives.

I'll turn the floor over to Mr. MacKay to answer in more detail.

3:50 p.m.

Cameron MacKay Director General, Asia-Pacific Trade Policy Bureau, Department of Foreign Affairs and International Trade

Maybe I can just add that the Pacific Alliance, as we understand it, is a new initiative among four countries that already have free trade agreements with each other. Indeed, one of the requirements of joining the Pacific Alliance is that the new members have to already have free trade agreements with all of the existing members.

The TPP is different in the sense that not all of these countries already have free trade agreements with one another. It's a much bigger grouping. It's already trans-Pacific. It's quite a different animal. Its purpose is to create basically a free trade zone across the Pacific with 21st century rules, etc., to support that trade.

So these have two different objectives, I would say, and potentially complementary.

3:50 p.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

If I may burrow into the integration and harmonization aspect, one of the ambassadors said that very thing and we know that 90% of the goods within the four Pacific Alliance members are going to be tariff-free in a week. Canada has free trade agreements with them. I presume we have MFN provisions in each of those agreements.

Is that correct? I ask because I would image that means those tariffs reductions will automatically apply to Canada as well.