International Trade Committee on March 4th, 2014

[The Chair, Conservative, Rob Merrifield]

We'd like to call the meeting to order.

First of all, we want to apologize to our witnesses for the delay. We were called back to the House for a vote, which happens from time to time.

We are finishing this wave of witnesses on our study of the European Union trade agreement. We have with us today, from the Canadian Chamber of Commerce, Cam Vidler, director, who is here in the room with us. Also in the room with us is Graham Cox, senior research officer for the Canadian Union of Public Employees.

Thank you for being with us.

By teleconference, we have with us Murad Al-Katib, from Alliance Grain Traders Inc.

Can you hear me, sir?

[Murad Al-Katib, President and Chief Executive Officer, Alliance Grain Traders Inc.]

Yes, I can. Thank you.

[The Chair, Conservative, Rob Merrifield]

Very good. Thank you for being with us.

We also have, by video conference from Winnipeg, Manitoba, from Bühler Industries Inc., Willy Janzen, chief financial officer.

Can you hear us, Mr. Janzen?

[Willy Janzen, Chief Financial Officer, Bühler Industries Inc.]

Yes, I can hear you.

[The Chair, Conservative, Rob Merrifield]

Okay. Let's start with the testimony, and then we'll have a full round of questions and answers.

We'll start with the chamber.

Could we ask you to keep your remarks as short as possible so that we can get all four in and also have fulsome questioning. We would appreciate that.

Mr. Vidler, the floor is yours.

[Cam Vidler, Director, International Policy, Canadian Chamber of Commerce]

Mr. Chair, I appreciate this opportunity to provide comments on the Canada-Europe comprehensive economic and trade agreement, or CETA.

My name is Cam Vidler. I'm the director of international policy at the Canadian Chamber of Commerce, which represents about 200,000 Canadian businesses of all sectors, sizes, and regions across Canada.

Today I'll talk to you about the Canadian Chamber's long-standing support for CETA and our assessment of the deal as announced. More importantly, I want to focus on the next steps that need to be taken to implement the agreement and realize its full potential.

The Canadian Chamber has been closely involved in the CETA negotiations since before they began. We took part in the private sector steering group for the joint study by Canada and the EU that would recommend the launch of formal talks.

Once talks were under way, we provided significant input, as needed, to the negotiators and worked frequently with our members, the government, and other stakeholders to raise the profile of the negotiations, and highlight their importance to Canadian business.

It's in this context we welcomed the announcement last October by Stephen Harper and José Barroso that after four years, an agreement in principle had been reached.

What do we think about this deal?

At the onset of the negotiations, our members were seeking an agreement that would reduce tariffs and expand quotas, open up markets for services and government procurement, improve trade facilitation and customs services, encourage regulatory cooperation, and protect investments and intellectual property, all backed by a robust dispute settlement mechanism.

Based on the technical summary that was released shortly after the announcement in October, we were quite confident that these objectives had been largely accomplished and that the deal will yield real and significant benefits for Canadian businesses, their employees, and their communities.

The government and other guests of the committee have communicated some of these benefits in great detail, so I don't want to go too far today, but I'd be happy to take questions after my testimony.

I think it's sufficient to say that CETA is an achievement that should make Canada proud, but it's time for us to stop patting ourselves on the back. There's a lot of hard work ahead to get CETA implemented within a reasonable timeframe and to make sure that Canadian businesses can fully exploit the benefits of this agreement.

I want to review the hurdles that remain before the deal can come into effect. The negotiating teams are still finalizing the text four months after the announcement. Once that text is complete, it must go through a formal legal review and be translated into the EU's 24 official languages. Based on the EU's bilateral agreements with Colombia, Peru, and South Korea, this first step could take up to a year.

The next phase is ratification. In Canada, that means getting assurances from the provinces that they will pass and implement any required legislation. In Europe, it means receiving separate approvals from the European Commission, the European Council, which represents the member states, and the European Parliament. It's not uncommon for the ratification process in Europe to take up to two years, and keep in mind this is after the translation and legal review has already been completed.

A further complication in the case of CETA is that the European parliamentary elections this May could change the makeup of the trade committee, which has so far been a strong supporter of an agreement with Canada.

Throughout all these steps, the Canadian government will need to continue to exert the leadership that got us to where we are today. That includes close oversight of and support for the negotiating teams and further political interventions if necessary.

Canada must also strengthen public advocacy efforts in Europe. In addition to outreach by our embassies in Brussels and the national capitals throughout Europe, Canada should consider sending a high level delegation of parliamentarians and cabinet ministers, or a mix of the two, to meet with key players in the European ratification process, and particularly with the European Parliament and any new members that may be elected this May.

Back home, the federal government will have to focus its attention on the provinces and ensure that they are able to agree on the final text. The federal government should also consider convening the premiers or their representatives to discuss an action plan for any required implementing legislation.

For our part, the Canadian Chamber of Commerce has joined a number of other industry associations across Canada to form the coalition for Canada-Europe trade. This group will be advocating for this agreement's ratification in both Canada and Europe.

The actions I've just outlined will help ensure that CETA is put into effect as soon as possible, but the challenges don't end there. Many Canadian companies are already exporting to Europe or investing there—that's true—and they will quickly be able to take advantage of the framework that CETA puts in place. Others, however, particularly small and medium-size enterprises, will require assistance to understand marketplace opportunities, regulatory regimes, and political and legal institutions.

Certain countries in southern and eastern Europe, for instance, have particularly challenging business environments. The federal government needs to continue to raise awareness of the markets and production locations that will open up as a result of CETA and to raise this awareness among the Canadian business community. They have been doing a great job so far.

Efforts also need to be made to connect interested businesses with the trade commissioner service, Export Development Canada, and other agencies that offer trade promotion services both at the federal and provincial levels. Last year the global markets action plan highlighted the need for more effective trade promotion and economic diplomacy to complement Canada's new trade agreements. It will be important to review the current offering of services and their delivery in order to make sure they are properly resourced, coordinated, relevant, and accessible for businesses looking at the European market.

Finally, Canada will have to pay close attention to ongoing trade talks between the U.S. and EU, which they've named the transatlantic trade and investment partnership, TTIP, as you may be aware. Although CETA resolved a great number of bilateral trade barriers, the EU reserved certain issues, particularly in the area of regulatory cooperation, for their negotiations with the U.S., as often regulations are largely based on the European or the U.S. model.

Canada was able to secure some exemptions or derogations for exports to Europe that contained high levels of American content, in food processing and automobiles, for instance. The long-term access to the European market for North America's integrated supply chains will depend on the completion of an ambitious and comprehensive TTIP agreement. Canada should therefore push the American government and the European Commission to ensure that TTIP lives up to its name and contributes to the creation of a seamless trade relationship between all of North America and Europe. Canada should join Mexico, which has its own trade agreement with the European Union, and propose solutions to ensure compatibility between these different treaties.

We've come a long way since Canada and the European Union started discussing the possibility of a bilateral trade agreement, but we're not there yet. The government and business community have worked hard and secured a groundbreaking deal comparable only to NAFTA, and some would say beyond that. Yet the hard work will have to continue if the treaty is to be implemented and Canadian business is to realize its full potential.

With that I close my remarks and thank you for your time. I welcome your questions.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We were going to go to Mr. Al-Katib but there's a technical glitch, so we'll go to Mr. Cox.

The floor is yours, sir.

[Graham Cox, Senior Researcher Officer, Research, Canadian Union of Public Employees]

Mr. Chair, thank you for the opportunity to present today on the comprehensive economic and trade agreement being negotiated between Canada and the European Commission.

My name is Graham Cox. I'm a national researcher for the Canadian Union of Public Employees.

The Canadian Union of Public Employees, or CUPE, is Canada's largest union, representing 627,000 workers across Canada. CUPE members work in health care, education, municipalities, libraries, universities, social services, public utilities, transportation, emergency services, and airlines.

Since the details of negotiations between Canada and the European Commission were first released in 2009, our membership has debated, voted on, and carried resolutions at our national and provincial conventions expressing their concerns with the inherent threats of CETA.

I'm here to outline some of those concerns.

Investor-state dispute settlement, like the controversial chapter 11 of NAFTA, is often described as a charter for corporate rights, and has been included in CETA. Investor state has also been included in the U.S.-EU transatlantic trade and investment partnership, or TTIP, agreement. In both agreements, its inclusion has led to broad civil society opposition, with members of the European Parliament and national politicians also expressing concerns over these provisions. So much opposition has come about to the EU-U.S. negotiations that those negotiations have been put on pause while the Europeans conduct a public debate on the issue.

This opposition is not built on some small detail in investor state; it is actually the entire program of investor state. It seems that allowing corporations to sue your governments after democratically passing a law just because potential profits are undermined does not sit well with people.

Canada itself has long been a victim of investor-state provisions, including uses far outside of what was originally intended. Let me give you some examples.

Eli Lilly pharmaceuticals claims Canada's court decisions invalidating one of its company's patents is a breach of international obligations. There is a challenge from Lone Pine, which claims that the moratorium against oil and gas exploration activities under the St. Lawrence River, which was adopted in 2011, is a form of indirect expropriation without compensation of the company's potential future profits, not its current profits. AbitibiBowater was paid $130 million to drop a $500-million lawsuit against Newfoundland and Labrador after the expropriation of timber, water, and hydroelectric rights and assets.

In NAFTA, the investment panel has asked the Province of Newfoundland and Labrador to remove research and development requirements on offshore oil and gas production in the Hibernia and Hebron oil fields. The wealthy oil companies are asking for $65 million in compensation for the R and D policy, which they somehow argue is a “performance requirement” that is prohibited under NAFTA.

Other governments around the world are also starting to see the threat of investor state.

In Australia, the government report on investor-state provisions warned that there is a threat to Australia's ability to maintain its pharmaceutical benefits scheme and put health warnings or plain-packaging requirements on tobacco products.

In India, they have announced an intention to pause free trade agreements in negotiations that include investor-state provisions and to renegotiate recently signed agreements that include investor state.

South Korea has also announced that they are reviewing their policy and moving towards rejecting investor state.

In the United Sates, an open letter signed in 2012 by a large number of state legislators outlined strong opposition from their states to the U.S. signing the Trans-Pacific Partnership. Its focus of opposition was the potential inclusion of investor-state dispute settlement in the TPP.

Also, Brazil's government has refused to ratify agreements that include investor state.

Under NAFTA, there are currently 13 cases against Canada and Mexico that are still standing or have been awarded, with a payment of $325 million. Canada's share of those fines is $187 million.

CUPE members believe that trade with the EU should not require an undemocratic and unaccountable third party arbitration system to ensure that corporations have the right to maximize all their profits at all costs. CUPE members are also concerned that the investor-state dispute provisions in CETA will further limit the ability of government to provide quality public services and regulate corporations effectively.

The second issue I am raising today is about restrictions on local procurement in CETA.

Municipalities have passed over 80 resolutions against CETA. These include Toronto, where well-known Conservative councillor David Shiner said that there was absolutely nothing in the agreement for the people of Toronto. While CETA will not directly cause municipalities to privatize utilities, it will have a chilling effect on those who are considering creating new, or expanding existing public utilities.

CETA will also make re-municipalization very difficult. Once privatized, a service will have to stay open to private sector providers. If a municipality decides to bring those services back into the public sector, EU corporations will be able to bring suits against this move.

Hamilton city council, as an example, has been vocal about this concern since their negative experiences dealing with privatization of their water and waste-water treatment plants. It is our understanding that contract bidding on these projects for upgrades and development of waste-water infrastructure above a certain value will be open to EU companies.

At a public consultation organized by the PQ government on October 5, 2012, Quebec's lead CETA negotiator, Pierre-Marc Johnson, conceded that since Quebec's wind energy has been privatized any re-nationalization or bringing back into the public sector of wind power generation in Quebec would have to lead to compensation paid out to the private sector and/or through ISDS provisions.

My third and final issue is the intellectual property provisions in CETA.

Intellectual property provisions that have been leaked indicate that CETA contains some of the damaging provisions that led to a mass opposition to and collapse of the anti-counterfeiting trade agreement. The drug patent provision in CETA will cause an increase in cost of about $1 billion according to the Canadian Centre for Policy Alternatives' recent study. We understand that this may be a low estimate as the estimate does not include the predicted 20% increase in the more costly biologics over the next decade.

While the federal government has said it will cover the increased cost of these new monopoly rents, this increased cost will still have to be paid for by the public. CUPE has long advocated for a public health care system, and massive increase in costs are a concern to our members as they work in and use the public health care system.

In conclusion, CUPE is calling for the text of the agreement to be released for open and democratic debate by Canadians before negotiations are finished and finalized, and that the investor-state provision be considered to be removed.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We do have our technology working again.

Mr. Al-Katib, can you hear us?

[Murad Al-Katib]

Yes, I can. Thank you.

[The Chair, Conservative, Rob Merrifield]

Very well.

The floor is yours, sir.

[Murad Al-Katib]

Thank you very much, Chairman, honourable committee members, fellow panel members, ladies and gentlemen.

I will keep my comments and perspective more to the economic advantages and opportunities that Europe can provide to Canadian companies and to the Canadian economy as a whole, as it seems that others who have appeared before the committee have more than adequately commented on and discussed the strategic importance of the EU and its relations with Canada and the world.

First of all, I'll start with a quick background. I think I come with a unique perspective. As a Canadian-born entrepreneur and first-generation Canadian, I have travelled extensively throughout my life internationally in my business, and I've built a global company, that was founded in my house in Saskatchewan. Over the last decade, we've managed to build a global company headquartered and run from Saskatchewan.

I want to talk to you a bit about what I call the trade imperative, and the continued growth of emerging markets, and give you my perspective on how the EU can be an important part of the international success of Canadian international business.

To give you a quick background, we're in the business of lentils, chickpeas, peas, and beans. [Technical Difficulty—Editor] company in 2003, with revenues now of over $1 billion, with exports to 108 countries around the world, and manufacturing and processing facilities on five continents.

As a man with a true passion for Saskatchewan, I took a look at the emerging agri-economy here and saw the new crop potentials in lentils, chickpeas, and beans. I wanted to ensure that we had a value-added story whereby we were adding value, creating wealth and opportunities in local communities, and taking advantage of directly exporting to the international marketplace.

My company is headquartered in Regina. We have 31 processing facilities on five continents. Europe is a key part of our overall business in that we operate sales and trading offices in the United Kingdom, Netherlands, Spain, and Switzerland, with approximately 45 full-time staff and sales of over $200 million into Europe.

If you look at our case specifically through our participation in global value chains, we are a Canadian company which has invested in production, sales and distribution assets in companies across the globe. We've created significant global agrifood and food ingredient opportunities, employing over 1,000 people in our operations. I think more businesses in my sector and others have the potential to be successful in the same way.

To be clear, I've dedicated my business career in Saskatchewan to fulfilling business success through the trade imperative. With only one million people and the blessing of a tremendously productive resource-based economy in Saskatchewan, we have to look at markets beyond our borders to succeed. This includes Canadian borders. We have only one million and 34 million people respectively in Saskatchewan and Canada.

For me, Europe is a key market of concentration, and will be a focal point for our growth strategy in the coming five years as we move our company further up the value chain to a food company from a commodity company. As I indicated, the EU is a great place to do business.

Let's walk through a few quick statistics that illustrate the point. Canada and the EU have a long history of economic cooperation. The 28 member states have a population of nearly 500 million and a GDP of over 13 trillion euros, according to Eurostat. The EU is the largest single market for the investor and trader, and as [Technical Difficulty—Editor] it represents Canada's largest trading partner in goods and services, with the EU totalling over $52.2 billion, an increase from 2007, the EU is now around $62.4 billion, up about 3.9%. We have a growing relationship.

As former chair of the small and medium-sized enterprise advisory board for the Canadian international trade minister, and through such roles as serving on the global commerce strategy renewal panel examining the refresh of Canada's global commerce strategy, I've spoken as a dedicated supporter of the potential benefits for Canada from increased bilateral trade agreements with such strategic and economically important emerging market countries as Turkey, South Africa, Indonesia, Vietnam, and Colombia, to name a few.

In terms of benefits of free trade agreements to small and medium-sized enterprises, it has been shown that smaller businesses tend to benefit more from such agreements than do larger ones.

While I was the chair of the SME advisory board, we tabled many recommendations to the minister and the international trade officials at DFAIT focused on free trade agreement commercialization programs to ensure that the agreements do indeed deliver for Canadian jobs, sustainable economic growth and prosperity as we continue to develop Canada's position in the global marketplace.

As an example, the Canada-Chile Free Trade Agreement increased total bilateral trade between the two economies from $757 million in 1996, the year before implementation, to over $2.5 billion in 2008. In 1996 there were approximately 500 [Technical Difficulty—Editor] exporters to Chile, and the number had more than doubled by 2008. SMEs accounted for 69% of total exports in 2008 under that agreement, up from 59% in 1996.

The EU opportunity is a single market and customs union many times larger than Chile or even the whole of South America. In [Technical Difficulty—Editor] approximately 8,050 SME exporters were exporting into the EU, exporting nearly $16.7 billion, or 53% of Canadian exports by value.

The United States remains the dominant economic relationship for Canada. The CETA allows us a once-in-a-lifetime opportunity to truly have the opportunity to achieve growth by diversifying our export base. CETA, balanced with further inroads in key emerging markets such as China, India, Turkey, and others, will provide a robust platform for the transformation of international business for Canadian companies. I believe, as an entrepreneur doing business in both regions, both in Canada and in Europe, these types of development agreements are necessary and positive for both of us to continue the economic strength and opportunity that both [Technical Difficulty—Editor] really enjoying.

I will end my comments and will be available for questions when you're ready, Mr. Chair.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We'll now move to Mr. Janzen from Bühler Industries.

The floor is yours, sir.

[Willy Janzen]

Hi. My name is Willy Janzen. Thank you for the opportunity to do this presentation.

I'm going to talk a little bit about the history of Bühler Industries. It's publicly traded and has been since 1994, when it was listed on the Toronto Stock Exchange. Last year we had sales of $344 million. Sales in the geographic regions of the United States were at 51%. Canada was at 34%. Russia, Kazakhstan, and Ukraine were at 12%, and others at 3%. Bühler Industries employs over 1,100 staff, primarily in Canada, and spent $8.5 million in R and D in 2013.

Bühler Versatile, which the inquiry was made to, is a wholly-owned subsidiary of Bühler Industries. Versatile manufactures both the four-wheel-drive tractors and the row-crop tractors and has manufactured over 100,000 tractors since 1965. Versatile was purchased in 2000 from Case New Holland. Prior to the acquisition, Versatile exported thousands of row-crop tractors to the European Union market. Canada had a testing site for EU certification in the past, but no longer does. We have issues in exporting to the EU, so we don't specifically.... Although we are working with regard to exporting to the EU right now, we have some issues that we are currently addressing.

Today, Canada has no certification site for tractors to be shipped to the EU market. We're working with a company in the United Kingdom and in the United States to complete the certification process. This cost is estimated at $200,000. There is no additional certification cost that we are aware of when shipping tractors from the EU to Canada. The EU testing and report process is expected to last several months. Witnesses from Europe will need to fly to Canada to witness the tractors and ensure that they're fully functional based on European standards. Once all the reports are complete, the tractors will need to pass certification in Europe, so we'll have to send the tractors to a European state for the completion of certification.

Due to the certification process, some of the changes we are working on are as follows.

There are changes to lighting for on-road transportation from field to field. There are no issues once the tractors are in the fields, but there are issues when they're on road.

There are changes to braking, as the EU requires the brake on the final drive, which means that the brakes will need to be relocated to each of the wheel hubs. Currently, the brakes are actually designed to stop the drive shaft. This is accepted anywhere in the world but the EU.

Finally, changes to the steering are required as a result of the on-road transportation requirements. The tractor needs to be redesigned to meet certain power off steering requirements. If the engine stops, the tractor must be able to complete a 360-degree circle. Again, these are not requirements in any of the other countries that we have shipped to.

In addition to the changes above, decals and manuals need to be added, of course, which we would expect.

Also, Canada recently passed legislation requiring tractors and construction machinery to move to the new tier 4 final engine emissions standards. Canada allows 750 tractors to be imported that are not compliant with the new engine. They have copied the United States legislation, which also allows the import of 750 non-compliant tractors. The EU only allows for an import of 50 non-compliant tractors instead of the 750 allowed by Canada. The non-compliant engine is at a tier 4 interim level, which the EU calls stage IIIB. The fully compliant engine is a tier 4 final in North America and is called stage IV in the EU.

Versatile recently has shown its tractors at the 2103 Agritechnica show in Hanover, Germany, for the first time, which generated a lot of interest in its tractors, and today we are working towards a solution in starting to be able to ship tractors to the EU. As you see, tractors that we manufacture right now are exported to the United States, Africa, Australia, and China, but I left out Ukraine, Kazakhstan, and Russia. Most recently, we have had some orders into Romania, which we have not yet shipped.

I'm available for questions at the end of this session. Thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you very much. That's a lot of information. I'm sure it has stimulated a lot of good questions.

We'll start with you, Mr. Davies. You have seven minutes.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you to all the witnesses for appearing before us. Welcome to the committee.

Mr. Vidler, the Canadian Chamber of Commerce must represent a broad spectrum of businesses across the country. I think it's commonly accepted that every trade deal has certain benefits and certain challenges. There are winners and losers in every trade deal. There are adjustments that are made as Canadian businesses benefit, and some have to readjust in response to competition from a trading partner. In the Canadian Chamber of Commerce, have you identified any sectors or businesses that think they may not benefit under CETA?

[Cam Vidler]

It's hard to tell with some of the specifics in terms of who's benefiting and who's losing without the final text being available, obviously.

We represent, as you said, a wide range of sectors and regions. There are parts of our membership in supply-managed sectors, for instance, for whom this is going to be a challenge. The committee has been made well aware of the issues that they're going to face, and we encourage the government to work with them to identify ways of making that transition easier. In many cases, businesses have made investments under an understanding that a certain framework exists here in Canada, and we think that needs to be respected.

That said, the benefits of the agreement are certainly positive from a net perspective. We don't think that deals of such magnitude should necessarily be held up by the concerns of a particular sector or region.

[Don Davies, NDP, Vancouver Kingsway, BC]

Procurement is an important issue in CETA. For the first time in history Canada has negotiated a deal that will make sub-federal procurement subject to the trade deal. Have you consulted any members or heard from any members of the Canadian Chamber of Commerce who have historically benefited from local procurement policies, who have expressed concerns that they may lose business as a result of changes?

[Cam Vidler]

No, I don't have any specific concerns that were raised there. I would say there are certain sectors in Canada that had adapted to a model of procurement that tended to require local production, and that's not necessarily just Canadian companies. That could be other companies that have located in Canada for the purposes of servicing government contracts, so for them, the benefits are perhaps not as substantial, but they do recognize the benefit of the world moving toward a model where government procurement and purchases are open to competition because it will give them more opportunity in the future in other markets.

Also, a point needs to be made about government procurement here, that basically what we're looking at is encouraging competition of suppliers providing services, products, goods to governments, and at a time when we're in a fiscal squeeze, from our perspective that seems like good public policy.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

We did hear from steel manufacturers in Halifax, for instance, that were worried they would lose business to Spanish steel manufacturers. There is a high unemployment rate in Spain and they have lower costs. We have heard some of those concerns.

Mr. Cox, I'm going to turn to you. This government tells us that the only way to negotiate trade deals is behind closed doors, that the text can't be released to anybody; you have to complete the deal and you can't release that to the Canadian public because that's just the way it's done.

We know that the U.S. is making the TPP text available to legislators as they bargain the text. We know that the European Union has recently announced in January that they are going to publish the investment chapter and put it open for public consultation in Europe.

I'm just wondering what you think about the level of transparency that has typified the government's approach to trade negotiations.

[Graham Cox]

We're very unhappy.

Our members are not happy about the level of transparency around all the trade agreements that have been negotiated behind closed doors, and we think that we could learn a thing or two about the way the trade agreements are being negotiated now, especially the TTIP agreement in the U.S. within the EU. They've engaged in a consultation. They put negotiations on pause. It's not as the negotiations are going on; they've actually paused negotiations around issues like investor state, because it's such an important issue for civil society. The EU even has a process through the European Commission to fund the alternative voices around the table to make sure they are heard.

[Don Davies, NDP, Vancouver Kingsway, BC]

You mentioned TTIP. I want to get into that because what the European Union is doing with the United States in negotiations now is they put out a press release where the chief negotiator, Karol de Gutch, said:

—existing arrangements have caused problems in practice, allowing companies to exploit loopholes where the legal text has been vague.

He also said:

I'm determined to make the investment protection system more transparent and impartial, and to close these legal loopholes once and for all. TTIP will firmly uphold EU member states' right to regulate in the public interest.

Further, the press release stated:

The Commission wants to use the opportunity to improve investment provisions already in place to protect investments by EU-based companies in the US, and vice versa. In practice this would mean referring explicitly in the deal to states' right to regulate in the public's interest.

In other words, what the EU is saying is nothing short of an explicit phrase in a trade deal that says the trade deal will not impinge on states' ability to govern or legislate in the public interest is good enough.

You've seen the draft investment chapter that has come out. It was leaked in November. Do you have any concerns in that regard that CETA will impact or restrict the ability of Canadian governments to legislate in the public interest?

[Graham Cox]

I think any agreement that includes investor state limits the ability to regulate. So even within the EU-U.S. agreement, even with that language, I would worry about the implications of including investor state, but certainly we're concerned about that.

[Don Davies, NDP, Vancouver Kingsway, BC]

Okay.

Mr. Al-Katib, I have a question for you.

Everybody's concerned right now in Canada about the amount of grain that's sitting unable to get to market. We have over 5.5 million tonnes of grain, enough to fill 60,000 railcars, sitting on the Prairies waiting for shipment.

Can you give us some insight as to why this problem exists and what we can do, if anything, as a government to address that concern and help our farmers get their product to market?

[Murad Al-Katib]

It's a very complex issue that would take a lot of discussion, but the current backlog I think is as a result of multiple factors. We've obviously had a very difficult weather situation, over the last four months in particular, with very extreme cold temperatures across the entire country. Also, there's just the overall movement of resource commodities in general, with oil, forestry products, the mining sector, and the grain sector all hitting the transportation system simultaneously.

We have a very inefficient supply chain in general. It's a combination of all the players in the chain: the shippers, the rail system, the ports, the transloaders, the vessels. The entire system is broken and it needs some very significant attention. There are public policy things that need to be done. We're very active in the Canadian Special Crops Association—I'm the chair of that organization—in working with our federal MInister of Agriculture and provincial governments to attempt to have everyone understand railway accountability is something that needs to be ingrained in legislation.

The system whereby the various players in transportation enjoy certain regulatory protections should have a policy mandate. We need to ensure that public policy mandate is met, and we're going to be very actively looking at that.