International Trade Committee on Nov. 7th, 2013

[The Chair, Conservative, Rob Merrifield]

I call the meeting to order.

I want to thank our committee and the witnesses for being here. Our minister is here, the Minister of International Trade. We're pleased to have you here, Minister.

We're starting our study on CETA, the Canada-European Union comprehensive economic and trade agreement. It's historic and very important to Canada. We're excited as a committee to get into this study.

Steve Verheul, you've done phenomenal work on this.

We want to congratulate both of you on your outstanding work. You have your team of people with you.

We'll start with opening remarks. I yield the floor to the minister.

[Ed Fast, Conservative, Minister of International Trade]

Thank you very much, Chair.

Good morning to all of you.

Good morning, colleagues.

It is my pleasure to be here today to speak about the Canada-European Union trade agreement.

As all of you know, Prime Minister Harper and EU President Barroso announced a historic trade agreement in principle on October 18. At that time you may recall that we released an outline of the agreement. About 10 days after that, we tabled in the House of Commons the technical summary of the final negotiated outcomes. That document, and the other comprehensive information that has been made available, has everything Canadians need to know about the agreement. It will provide them with an opportunity to understand what it means to them and why this is important to Canada.

This is a continued commitment to what were the most open, transparent, and collaborative negotiations that Canada has ever undertaken in its trade negotiations around the world. I am very proud of the working relationship we've established with the provinces and territories right from the beginning. Together, we ensured that an agreement with the EU served their interests as well as the broader interests of the Canadian economy.

I'm pleased to inform you that all provincial and territorial governments have expressed their full support for what truly is the most ambitious and comprehensive agreement in Canada's history. This agreement, just so you know, is broader in scope and deeper in ambition than any agreement Canada has ever signed, and it may be broader in scope than any agreement that's been signed anywhere in the world.

Additionally, we have consulted with stakeholders across the country from all of our key economic sectors covering all regions of the country. Those consultations helped to inform Canada's negotiating positions at the table and helped to inform the outcomes that we now have in this agreement. In fact, countless industry and business leaders and people representing businesses of all sizes have enthusiastically endorsed this agreement.

Canadians clearly understand the benefits of this agreement and what it means to have preferential access to the largest consumer market in the world. By the way, it's also the most lucrative consumer market in the world.

I know that time is short and that many of you have questions, so I'll conclude by saying this. Mr. Chair, our government understands the importance of trade and exports to our economy. Exports are responsible for one out of every five Canadian jobs. We believe that deeper trade with the EU will be good for Canadian workers, Canadian consumers, and the families they serve. The benefits are estimated to add almost 80,000 jobs to our economy and $12 billion of additional economic activity. As the foundation of what is the most ambitious pro-trade plan to open new markets in Canadian history, this agreement is, as the Prime Minister said, a historic win for Canada.

I thank the committee for the opportunity to speak with you today. I've kept my remarks short. I know you have lots of questions to ask, so I'd be happy to take those questions at this time.

I should also add that I'm joined by colleagues from the negotiating team, Ana Renart and Steve Verheul. Steve was our chief negotiator with the EU.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

It is truly an exciting agreement. We're very keen to take a look at it, now that it's in the political realm, as it goes through our Parliament, and when we get the final text.

We'll yield the floor to Mr. Davies. You have seven minutes.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Mr. Chairman.

Thank you, Mr. Minister, Ms. Renart, and Mr. Verheul, for being here.

Mr. Minister, as I said before the meeting, we have a number of questions, and I think Canadians have a lot of questions about this deal. I will try to ask you some direct questions. I would ask that you try to keep your answers as concise as possible so we can get as much of this information out as we can.

Mr. Minister, we understand that technical discussions between Canada and the EU are still ongoing. Briefly, which elements or sections are still being discussed between Canada and the EU?

[Ed Fast, Conservative, Abbotsford, BC]

You're absolutely correct, Mr. Davies. All of the substantive and political issues have been resolved between Canada and the EU, but there are modalities across a range of chapters that still have to be resolved.

Those discussions are ongoing. We expect those to conclude over a period of, say, two to three months. We're hoping to get them done sooner rather than later, because this agreement is important to Canadians and we want to make sure that we start to realize the benefits of the agreement as soon as possible.

I'll pass this on to Mr. Verheul. He perhaps can be more specific as to the chapters that remain to be addressed in terms of technical discussions.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

[Steve Verheul, Chief Trade Negotiator, Canada-European Union, Department of Foreign Affairs and International Trade]

I think there are probably three categories of issues that remain to be completed. For some of them, it's simply a matter of getting the language right.

First, with the agreement in principle, some of that has to be translated into actual textual language in the various chapters. We have some language issues across a number of chapters that have to be resolved.

Second, we have some outstanding technical issues in areas like rules of origin, which is always a huge task in any free trade agreement negotiation, and there's more work to be done there. We have some more work to do on services and investment reservations and describing exactly what those reservations are going to capture. The basic decisions on the level of ambition have already been completed, but there are some drafting issues that remain there as well.

Third, we also need to sort out the entire structure of the text. It's figuring out what is going to be a chapter compared to a potential annex to one chapter or another. It's figuring out how the text is going to look at the end of the day.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

Ballpark estimate, when can Canadians expect to see the final text of CETA?

[Ed Fast, Conservative, Abbotsford, BC]

I'm not going to give you a firm date because that's difficult to determine. As I said, we expect it will take a number of months to sort out the technical discussions that were just referenced by Mr. Verheul. Beyond that, the drafting of the text then takes place.

Understand that this is not unlike any other trade negotiation. When you come to an agreement in principle, you've basically settled upon all of the key elements, but at the same time, the actual legal text will likely occupy hundreds, if not thousands, of pages as you put flesh to the bones of this agreement. The commitment—

[Don Davies, NDP, Vancouver Kingsway, BC]

So we're talking months.

[Ed Fast, Conservative, Abbotsford, BC]

Yes. The commitment we've made is that as soon as we have a text available, we will make it available to the public, just as we made this detailed summary of the outcomes available to the public last week.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you, Mr. Minister.

Let's get into some of those details.

Due to the provisions extending patent protection for brand-name pharmaceuticals, the Prime Minister has indicated that CETA will increase the cost of pharmaceutical drugs in Canada. What is the government's estimated cost for these extensions?

[Ed Fast, Conservative, Abbotsford, BC]

Well, Mr. Davies, you're wrong. The Prime Minister did not say that the additional patent protection is going to increase the cost of drugs. He said it's possible that it may. There are steps we can take as a government to make sure that delays in the patent processing system are reduced or perhaps even eliminated. That would make this additional protection unnecessary.

We have, however, said to the provinces, “Listen, if there are additional costs”—which won't kick in until eight to ten years from now—“we're prepared to keep you whole.” That was the commitment we made to the provinces, and as you know, every province and territory came out very clearly in support of this agreement.

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Minister, do you have an estimated range of that potential liability?

[Ed Fast, Conservative, Abbotsford, BC]

It would be very difficult to determine that because this would be eight to ten years out. There have been a lot of figures floated in the media as to what it might be. All of them are based on speculation. Some of them have ranges of a billion dollars, and I can tell you that our internal calculations indicate it's nowhere close to that.

[Don Davies, NDP, Vancouver Kingsway, BC]

Well, that's what I'm asking. What are those internal calculations, Mr. Minister?

[Ed Fast, Conservative, Abbotsford, BC]

Those continue to be done. As I say, it would be speculation to try to determine to an exact dollar figure what that could be. It of course does not take into account, Mr. Davies, the fact that we have every intention of taking steps to try to minimize the delays that this additional protection is intended to cover.

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Minister, I want to move to water, because Canadians are always concerned about the provision of clean, safe public water. Does the agreement in principle include a market access and national treatment reservation for the collection, purification, and distribution of water services in Canada?

[Steve Verheul]

With respect to water, we've taken the same kind of approach that reflects commitments we've made in previous agreements, primarily the General Agreement on Trade in Services at the WTO. There we do have openings for sanitary sewage treatment and various forms of water treatment. Those we've reflected in CETA as well.

We have taken reservations where we do have areas that we have not previously committed to, but we don't have any new obligations in CETA that we haven't had in previous agreements.

[Ed Fast, Conservative, Abbotsford, BC]

Mr. Davies, I can add to that by saying that bulk water sales have never been on the table. There is nothing in this agreement that will require Canadian municipalities to privatize their water systems.

Essentially, water has not been on the table, despite suggestions to the contrary.

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Minister, thank you for that.

Is there anything in the agreement that would prohibit or impair the republicizing of public services once they've been privatized?

Let's say a city decides they want to privatize their sewer treatment, as Hamilton did, and they decide 10 years later that the costs are too high, or the service isn't good, and they want to bring it back in the public realm, as Hamilton did.

Is there anything in CETA that would prohibit the taking back of that service to the public sphere or that would subject the municipality or province to a lawsuit from corporations for loss of profits?

[Ed Fast, Conservative, Abbotsford, BC]

You'd have to be very clear on exactly what you mean. There's nothing limiting at all a municipality's right to determine whether their water system is public or private.

If a municipality made the decision that they wanted to go private, and halfway through a contract that they'd signed they decided they wanted to change, they obviously would have to negotiate an outcome with that private service provider.

I can tell you that we've made it very clear that municipalities will not in any way be committed to privatizing their water systems. There are significant carve-outs in other areas as well, including health services and social services. We've provided a lot of flexibility to the municipalities to address such things as grants and loans to promote local economic development. As you know, there are very reasonable thresholds we've ensured are in place under which municipalities have the ability to contract locally rather than more broadly.

We believe we've arrived at the kind of balance Canadians were looking for, and certainly the balance that municipalities were looking for, because the Federation of Canadian Municipalities has actually come out and endorsed this agreement.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. O'Toole.

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

Thank you, Mr. Chair.

Welcome, Minister. I'd like to echo the chair's comments on congratulating you and Mr. Verheul and your team on such a historic agreement.

In my first question, I want to dive a little deeper into something you said, Minister. You described the European trade agreement as broader in scope and deeper in ambition than previous deals.

Can you talk a little more about that and perhaps about the key sectors of our economy that will benefit?

[Ed Fast, Conservative, Abbotsford, BC]

Thank you very much for that question.

What makes this agreement broader in scope than any other agreement we've signed is that it covers so many areas that were never even contemplated in NAFTA. For example, the issue we were just talking about, which is government procurement; this agreement actually extends government procurement obligations down to the provincial and municipal levels, including listed crown corporations. This is very significant. It benefits both sides because it's fully reciprocal. Canadian companies have access to the EU's government procurement market of $2.7 trillion a year.

Government procurement is an issue that was never addressed to that extent in NAFTA, for example. Issues such as intellectual property, issues such as environment and labour and sustainability, issues such as regulatory cooperation.... This is a source of great opportunity for us with the EU because many of the barriers that Canadian companies face in the EU are not necessarily tariffs, although many of those tariffs are high and 99% of them will be eliminated, but beyond that, it's all the rules and regulations and standards behind the border that really frustrate Canadians. By engaging in regular discussions with the EU on such things as regulatory cooperation, we're going to be able to improve the environment in which Canadians do business when they look to the EU.

This agreement really goes beyond many of the traditional areas of negotiation. Essentially what we've negotiated here is a 21st century outcome. NAFTA was a 20th century outcome. We believe this agreement will be the gold standard for the 21st century going forward.