International Trade Committee on Nov. 7th, 2013

[Erin O'Toole, Conservative, Durham, ON]

Thank you.

I'm not sure if you are aware, Minister, but a few weeks ago a former European Parliament president, Patrick Cox, was in Ottawa and gave a speech. He talked about how he had followed the negotiations closely and truly felt that Canada had secured an incredible deal and has the unique distinction now of being the only country in the world with a North American Free Trade Agreement and a burgeoning European agreement across the Atlantic.

He also singled out the most favoured nation element to this, so that if the European Union, which we know is entering into discussions with the United States.... If better terms are secured in the future for another country, Canada will then benefit from those terms. Could you perhaps discuss that in more detail?

[Ed Fast, Conservative, Abbotsford, BC]

Thank you for that question.

Most favoured nation treatment essentially extends to Canada any future trade liberalization that the European Union may agree to in other negotiations it undertakes. This is of significant benefit for Canada. Because Canada will have an agreement with the European Union before many of its other key trading partners, we are in the position of having the opportunity to carve out market share well ahead of our competitors. That is even made easier because we know that as the EU continues to liberalize into the future, Canada may stand to gain significantly from that liberalization.

[Erin O'Toole, Conservative, Durham, ON]

One of the other unique hallmarks of CETA, of the European discussions, in my estimation, was really the engagement of the provinces, the territories, and key stakeholders. Certainly our friends in the NDP are saying we can't make a decision until we see the final text, but all of these key stakeholder groups have seen the agreement in principle. They've seen the final negotiated terms, and they all seem to be praising the agreement.

Could you describe really how that helped the government reach this deal, by engaging other levels of government and key stakeholders, and do you see that as a new trend for future negotiations, either bilateral or with other groups?

[Ed Fast, Conservative, Abbotsford, BC]

That's a good question.

I am somewhat surprised at the reluctance of the NDP to be open with Canadians and say where it stands on this agreement.

Right from the outset when we announced it, we immediately released an overview of the agreement. Within 10 days we had our officials craft a very detailed summary of all the key outcomes of this agreement.

All along the way, the provinces knew what was in the detail. The territories knew what was in this agreement. The municipalities, the Federation of Canadian Municipalities, understand what's in the agreement. Thousands of businesses across Canada understand what's in the deal. All of the key industry associations understand what's in the deal. Why? Because these have been open and transparent negotiations, where it's actually the stakeholders themselves who have informed the outcome.

That's why I'm so surprised that the NDP simply doesn't want to take a stand on this issue. It's a yea or a nay, because the information is out there. I welcome a more forthright response from the NDP. It cannot sit on the fence. We know that historically NDP members have voted against almost every trade agreement Canada has ever signed. I think it's time for them to let Canadians know where they stand on this agreement that will have such a positive impact on economic growth within Canada.

[The Chair, Conservative, Rob Merrifield]

Ask one quick question.

[Erin O'Toole, Conservative, Durham, ON]

Here's one quick question.

There has been a lot of discussion about the positives for agriculture, forestry, seafood, and all industry. One area that hasn't been covered a lot in the media has been services, professional services and the services industry that are caught by this agreement. Could you go into that in a little more detail, Minister?

[Ed Fast, Conservative, Abbotsford, BC]

I can assure you that one of the key offensive interests we had as we embarked upon negotiations was to achieve a robust outcome on services. As you know, services covers a wide range of activities. As you probably know, Canada is one of the world leaders in technical services, in design services. Canada is the fourth largest exporter in the world of engineering expertise. That's why it's so important that we have an outcome in services that works for Canada. In fact, the outcome we have been able to achieve in this agreement is the best outcome the European Union has ever given to any of its trade partners around the world.

By the way, services doesn't include solely the services themselves. It includes such things as labour mobility, temporary entry, intra-company transfers to allow companies to remain efficient so they can get their officials across to other countries where they do business, to transact business, to allow their technical personnel to go in and install machinery, and service machinery.

The agreement also addresses the issue of mutual recognition of qualifications, something which has really been a challenge for many of our professionals. For example, say Canada and Germany would like to recognize each other's credentials in engineering, where we desperately need engineers in Canada in certain sectors of our economy. This agreement will now expedite that. It will allow professional organizations, like the engineers, to agree among themselves that they will recognize each other's qualifications, thereby allowing them to do business across the Atlantic.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We'll now move to the Liberal Party. We have Mr. McKay.

Welcome to the committee.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Thank you, Chair, and thank you, Minister. I particularly appreciated your short speech. It leaves more opportunity. Recommend it to your colleagues.

My first question is about the fuel quality directive issued by the EU. It's a bad precedent and it's clearly discriminatory against Alberta crude.

Have your negotiations addressed this, and is it contained in the agreement?

[Ed Fast, Conservative, Abbotsford, BC]

The fuel quality directive issue has been kept on a completely separate track from these trade negotiations. By the way, that was agreed to by both sides. There are from time to time irritants that occur between trading partners. The fuel quality directive is just one between Canada and the EU. There are others.

It was very clear from the start that our focus was to negotiate a trade outcome which really served the needs of both sides. It had to be a win-win, and it appears that it has become a win-win agreement. At the same time, we don't want irritants not directly bearing on that agreement to find their way into the negotiations in a manner that would frustrate our ability to bring this agreement into force. Both the EU and Canada agreed that we would keep the fuel quality directive on a separate track.

We are very forcefully engaging with our European counterparts to again highlight the fact that the current draft of the directive is discriminatory. It singles out our oil sands on a non-scientific basis, and we believe all decisions of this nature should be based on science.

[John McKay, Liberal, Scarborough—Guildwood, ON]

I don't disagree with you. It is regrettable when you're at the table that some of these significant irritants.... If you haven't dealt with it directly, does it get dealt with indirectly? A lot of Alberta crude ends up being mixed with U.S. crude and then shipped offshore sometimes to the European Union. Do labelling origins and things of that nature get involved in any of this discussion?

[Ed Fast, Conservative, Abbotsford, BC]

Labelling is something that was considered in our negotiations. In fact, we have sought and actually have secured outcomes that put in place processes and mechanisms, working groups, and joint committees that will be functioning on an ongoing basis to address these non-tariff barriers you refer to. Labelling is one of those. We believe there is great prospect here for Canada and the EU to resolve these kinds of issues in a proactive way before they become irritants between our two entities.

[John McKay, Liberal, Scarborough—Guildwood, ON]

That's actually good to hear.

The beef industry and the pork industry are not using the quota that they presently have. It's primarily due to the fact of non-tariff barriers, sanitary, phytosanitary, and that sort of stuff. While the agreement may say this, the reality for a producer is that.

If in fact this is a 21st century agreement, how are the non-tariff barriers incorporated into what is in other respects a good agreement?

[Ed Fast, Conservative, Abbotsford, BC]

You're quite right to raise it as an issue, because as I mentioned earlier, some of the biggest frustrations our exporters have are not on the tariff side; they're on the non-tariff side. These are all the barriers behind the borders.

You mentioned sanitary and phytosanitary challenges. That is something that is actually addressed in this agreement. I'm going to ask our chief negotiator to outline more specifically the kinds of mechanisms we put in place to address them.

Steve, do you want to jump in?

[Steve Verheul]

Sure.

There are a number of elements to this. We do have a chapter on sanitary and phytosanitary measures that goes well beyond any chapter in previous agreements. It reinforces the notion that we have to follow science-based risk assessments and science-based processes when we're addressing those kinds of issues.

We also have established a biotechnology working group with an orientation of looking at this from a science-based perspective. That will address issues like low-level presence of—

[John McKay, Liberal, Scarborough—Guildwood, ON]

Will that actually—

[The Chair, Conservative, Rob Merrifield]

Excuse me, Mr. McKay, your time has gone, but go ahead and finish.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Will that actually circumscribe a legislation...like a European Union...actually prevent them from imposing non-science-based—

[The Chair, Conservative, Rob Merrifield]

We'll allow a short answer.

[Steve Verheul]

Clearly both sides will retain their sovereign rights and take measures to protect their people and their animal health if need be, so it won't be entirely circumscribed. But I think what we've set out goes much further down that track than any previous agreement, in the chapter on sanitary measures, on the understandings we have already negotiated in specific areas like red meats, canola, and others. This goes far beyond what we've ever done before.

[The Chair, Conservative, Rob Merrifield]

Thank you.

Mr. Cannan, you have seven minutes.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair.

Thanks, Minister Fast, and Steve and your team, for the outstanding job on this historic agreement and the opportunity to inform Canadians a little more about the magnitude of this agreement. I know you said that Canadians are aware, but I don't believe there is the awareness level that we need to bring to our businesses. An agreement is only as good as the businesses that engage and take advantage of the open markets.

I come from the Okanagan, home of the number one Pinot Noir in the world, and Stockwell Day, who was your predecessor as the trade minister. I was on the trade committee back in 2009 when our committee adopted the European Free Trade Association agreement, EFTA, as it's known. The four countries of that association.... It was ratified and was opposed by the opposition, by the NDP. Now we're not sure about this agreement with 28 CETA member state countries.

Could you elaborate on the difference between the countries of CETA and EFTA?

[Ed Fast, Conservative, Abbotsford, BC]

Four countries chose not to join the European Union. You mentioned them: Norway, Iceland, Switzerland, and Liechtenstein. Canada negotiated a trade agreement with them a number of years ago. We are actually having discussions about modernizing that agreement to make it more comprehensive, like the CETA agreement will be.

That said, both EFTA, which is the organization of four countries you spoke to, as well as this agreement with the EU.... The EU is a group of countries that do share our common values, which is why we believe we've been able to secure such a comprehensive outcome here. Both sides knew that there were tremendous opportunities to remove trade barriers and really drive economic growth.

For Canada it's an issue of almost immediate access to a market of 500 million consumers. This is a market that is extremely wealthy, comparatively speaking. It is a market that thousands upon thousands of Canadian businesses have been unable to penetrate because of high tariff barriers and because of all these non-tariff barriers that Mr. McKay referenced. We've worked very hard to secure an agreement that actually measurably removes these barriers to trade and provides new opportunities for Canadians.

As I said in my opening remarks, we expect there to be tremendous additional economic activity generated by this agreement. We expect there to be an additional $12 billion of GDP added to our economy, the equivalent of about 80,000 new Canadian jobs, the equivalent of $1,000 for the average Canadian family.

Now, that doesn't mean every Canadian family will receive $1,000; it means that on average that would be the impact of this agreement.

That's something we should be celebrating.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

You mentioned in your opening comments about NAFTA, and alluded to the fact that 20 years ago the sky was falling according to the naysayers on the agreement. In the Okanagan, the growers were ripping out all the grapes and replanting. They had no idea of the opportunities that were there.

Could you elaborate a little more as to what you see are some of the benefits of this agreement? I know agriculture spoke highly about the pork and beef industry, for those sectors. Are there any other ones? One in five jobs is trade related, 20% of our GDP. In the last 20 years there's been about 4.5 million jobs created through NAFTA. You alluded to the potential 80,000 jobs through this agreement.

Could you expand a bit more as far as some of the other benefits across sectors are concerned, for not only today but 20 years down the road? What are the spin-off effects?

[Ed Fast, Conservative, Abbotsford, BC]

I'd be glad to. You referenced the naysayers 25 years ago when Canada first negotiated a trade deal with the United States, which then morphed into NAFTA. As you know, those naysayers alleged we were going to lose our sovereignty, lose our control over water. They said we were going to hollow out our economy, lose millions of jobs, that Canadian culture as we knew it would be gone. Well, none of that came true.

The reality is that NAFTA has been a huge benefit to Canada. Our trade is three times today what it was back then. In fact, our trade with Mexico has gone up almost seven times since NAFTA was signed. Freer and more open trade is to Canada's benefit. It's a great benefit to the global economy, which is still struggling to move out of the recession.

In terms of broader benefits, we've talked about services and about government procurement. Some of the sectors that have lauded this agreement would be the beef industry and the pork industry. The people in the canola industry I just met with are completely excited about having this new opportunity.

I've travelled across Canada since we signed the agreement in principle. I've been in Atlantic Canada, where they are excited about the new opportunities for fish and seafood products. I've been in Quebec, where they talked about their aerospace industry and their advanced manufacturing industry. I've been in Ontario. We talked about the auto industry. We've opened up a new market to them in the EU. I've talked about the forestry industry across the country, but specifically in my home province of British Columbia, where tariffs will be removed. They have opportunities now to very significantly increase their exports into the EU market. This is a great agreement for Canadians.

Quite frankly, we won't even experience the fullness of these benefits until a generation has passed. As more and more Canadians and Canadian businesses understand the opportunities they now have in the EU market, more and more of them, over time, will take advantage of it.