Very quickly.
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.
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.
4 p.m.
Conservative
Ed Holder Conservative London West, ON
When I look at your testimony, you make several references to how the Pacific Alliance would represent the ninth largest economy in the world. They're not the ninth largest economy in the world; they're four countries that add up to that. But you've made many references—and I'm not being negative—to the Pacific Alliance as if it's one entity, and it's not. I sense that they're trying to beat up on Brazil.
I'm just trying to get a feel for how it all fits in.
4 p.m.
Political Director and Assistant Deputy Minister, International Security, Africa, Latin America and the Caribbean Branch, Department of Foreign Affairs and International Trade
The aim of the Pacific Alliance is deeper integration so they can act more like one entity. The degree to which they end up acting like one consolidated entity or a closer alliance remains to be seen, but the ambition is to act more like one entity.
To assess what we would get, we have to look at it on two levels. In terms of technical issues, if we would get more than we have under our current FTAs on the trade policy front remains to be seen. But if you look at it on a policy level, when you enhance relations with the individual members of the PA and the Pacific Alliance as a whole, you increase those contacts. When you increase those contacts among businesses, for instance, among folks in your trade ministries, your economic industries, you end up increasing business ties.
It's like a force multiplier, in producing additional trade benefits. The extent to which it's a force multiplier we don't know yet. As I said, we're at the exploratory stage, but I think it's pretty clear that the economic growth rates in the Pacific Alliance member countries lead Canada to believe that it's in our interests to enhance our relations with the Pacific Alliance. How has not been decided.
4:05 p.m.
Conservative
The Chair Conservative Rob Merrifield
This force multiplier almost sounds like [Inaudible--Editor] already.
Mr. Easter.
4:05 p.m.
Liberal
Wayne Easter Liberal Malpeque, PE
Thank you, Mr. Chair, and thank you, folks, for coming.
Somewhat along the lines Mr. Holder was on, what's the target date for completing the Pacific Alliance negotiations? Do you have a target date in mind?
4:05 p.m.
Political Director and Assistant Deputy Minister, International Security, Africa, Latin America and the Caribbean Branch, Department of Foreign Affairs and International Trade
As I said, we're gathering information about the evolving nature of the Pacific Alliance and the accession process for membership. The Pacific Alliance hasn't yet fully defined with precision the roles of observers, the requirements for new members, and the process for accession to full membership. We are not in active negotiation on Pacific Alliance at this stage.
4:05 p.m.
Liberal
Wayne Easter Liberal Malpeque, PE
So there's no date of an initial meeting, then, where Canada has met and set up a negotiating framework with the Pacific Alliance?
4:05 p.m.
Political Director and Assistant Deputy Minister, International Security, Africa, Latin America and the Caribbean Branch, Department of Foreign Affairs and International Trade
We have had multiple meetings with Pacific Alliance members at all levels, both political and official levels, to discuss what the Pacific Alliance entails and what the potential benefits for Canada would be. As I said, the alliance members themselves haven't set out the rules for accession for new members and the thresholds, and that is an important precondition before we move forward.
4:05 p.m.
Liberal
Wayne Easter Liberal Malpeque, PE
That may be why the first time that I heard Canada was involved in a Pacific Alliance discussion was when it was brought forward to this committee. My concern there, to be honest with you—and it's on the record of the committee, as we did that much in public—is that our committee would better spend its time looking at why the results of the trade agreements we do have are not as positive as they ought to be.
We're seeing two-year deficits in the beef trade now. We've had trade deficits over 10 of the last 12 months, I believe. That's why we were surprised when we ended up having the Pacific Alliance on the agenda.
Have there really been no rounds of negotiations as yet? That's what you're telling me.
4:05 p.m.
Political Director and Assistant Deputy Minister, International Security, Africa, Latin America and the Caribbean Branch, Department of Foreign Affairs and International Trade
Yes.
4:05 p.m.
Liberal
Wayne Easter Liberal Malpeque, PE
Has the department done any cost-benefit analysis of what the so-called alliance with the Pacific Alliance, or becoming a partner, would do for Canada?
4:05 p.m.
Political Director and Assistant Deputy Minister, International Security, Africa, Latin America and the Caribbean Branch, Department of Foreign Affairs and International Trade
Again, right now we're an observer, and there's a clear cost-benefit analysis to that. We're able to participate in alliance meetings and discussions, which allows us to assess mutually beneficial opportunities for closer engagement. As I said, the Pacific Alliance itself is still at an embryonic stage on a number of its elements of its menu.
4:05 p.m.
Liberal
Wayne Easter Liberal Malpeque, PE
I guess, at the end of the day, Ms. Buck, this is not like a trade agreement. This is an alliance of some concept in which we would be a partner. Many of these countries, when I look at them, have far, far different labour standards, labour rates, health and safety regs than Canada does. Their environmental standards are completely different. Are we in any way looking at lowering our standards to meet theirs, or is this just...? I still haven't got my head around quite what this is, to be honest with you.
For the life of me, I can't understand why the Government of Canada would be sending people to meetings on some nebulous concept that we've never heard of until three weeks ago, when we've got other really serious issues. This book, which is in many ways fiction, is called the budget. It's outlining some of the concerns we have in our energy sector, with prices discounted 30%. Our manufacturing sector is in decline.
Don't you think those are the areas that we should be looking at? How do we add value in Canada? How do we enhance our manufacturing sector, rather than off into the wilderness at some nebulous meeting where we have no idea what the results are going to be?
4:10 p.m.
Voices
Oh, oh!
4:10 p.m.
Conservative
4:10 p.m.
Political Director and Assistant Deputy Minister, International Security, Africa, Latin America and the Caribbean Branch, Department of Foreign Affairs and International Trade
I'll just respond for a second and then ask Cam MacKay to come in as well.
There are two points. It is fair to say that Canada's exports to the four countries of the Pacific Alliance have increased tremendously since we signed FTAs with them, and that was my purpose in giving those statistics in my opening remarks. Overall, total merchandise trade is one example where trade with the Pacific Alliance has more than doubled, from $16.1 billion in 2000 to nearly $40 billion in 2012. It is clear that there are clear links with the FTAs that we have signed with Pacific Alliance members. That is point one.
Point two is that the economic growth rates of the Pacific Alliance are extremely high. They are an economic powerhouse in the region. We have close ties with them; Canada is already deeply embedded in their economies. You call it nebulous. It's embryonic: these things grow. They solidify. This is very, very new. It was formed in 2011. That's normal progress for this kind of regional alliance, and we're talking to alliance members to gather the information about where the Pacific Alliance is headed. But on observer status, we are already observers. It was clearly in our interests to do so.
On your other question—which I could take as rhetorical—whether we are going to weaken our standards, no, we won't be weakening our standards. It's to Canada's economic benefit to enhance our engagement with the Pacific Alliance partners. We've been doing it for a while.
4:10 p.m.
Liberal
Wayne Easter Liberal Malpeque, PE
I would just follow up on that, Mr. Chair, before Mr. MacKay comes in. Can we not do that? There is a matter of establishing priorities, and having trade talks all over the place while we're doing worse in trade may not be setting the priorities right. That's my concern.
4:10 p.m.
Director General, Asia-Pacific Trade Policy Bureau, Department of Foreign Affairs and International Trade
Mr. Chair, perhaps I may just come back to some earlier points that were raised about Canada's FTAs and their impact on trade deficits and trade balances with individual countries. I know that the committee has asked about this before.
Free trade agreements really aren't a tool to try to balance trade with individual countries, one by one. Canada's experience has been very much in line with what the World Bank and others would predict from free trade agreements, which is that within 10 years roughly of negotiating a free trade agreement, trade tends to double, going both ways. If you already have a deficit, the deficit might grow; if you already have a surplus, the surplus might grow.
What really matters is Canada's overall surplus or deficit on trade. Canada has traditionally run a surplus. Since the recession, since the financial crisis of 2008, we've slipped into deficit for a while, but that really has nothing to do with the bilateral free trade agreements that we negotiate.
I just don't think we should make too much of looking at individual trade balances with particular countries in Latin America. The FTAs don't impact on that.
4:10 p.m.
Conservative
4:10 p.m.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
Thank you, Mr. Chairman.
Welcome to our witnesses. It's good to have you back here again.
I have a couple of questions and a couple of rhetorical points, actually.
We already have free trade agreements with the four founding members of the Pacific Alliance. In your own words, this is a new, evolving agreement, and I think we understand that. I'm surprised that the opposition members didn't do their homework a little better. It is a very opportune time to study the Pacific Alliance and for Canada to be in at the ground floor of these evolving negotiations.
We spent a lot of time at this committee with the official opposition and the opposition parties studying Brazil and Mercosur, which is a closed agreement; it is very, very difficult to get into. We've managed to sign a science and technology agreement and some side agreements with Brazil, but are really going nowhere, and we have these four countries, with which we already have FTAs, and their net growth is 46% greater than the value of Mercosur. On that basis alone, why wouldn't we examine this?
I'm not saying that Mercosur is going nowhere. I'm saying it certainly appears to have stalled, and there are some challenges with it, so why wouldn't we as a country look at other emerging agreements evolving in Central America and South America?
4:15 p.m.
Political Director and Assistant Deputy Minister, International Security, Africa, Latin America and the Caribbean Branch, Department of Foreign Affairs and International Trade
Thank you. And again, I might ask Mr. MacKay to respond as well.
As I said at the outset, these four countries of the Pacific Alliance are among our closest partners in the hemisphere, not only on the trade front but also on broader political security issues as well. They're our most like-minded. The Pacific Alliance, for us, is a way of enhancing those relationships across the board. So it's FTA-plus, as I said before.
I just want to flag as well that this in no way takes away from our focus on Brazil.