International Trade Committee on Feb. 2nd, 2015

[Bruce Christie]

Since we negotiate the expanded agreements based on the advice and requests we receive from our carriers, we normally would see the demand there and see them grow. Having said that, there are certainly examples where one of our domestic carriers has asked for additional rights, which we've negotiated on their behalf, and then they've stopped taking advantage of those rights because the route becomes unprofitable to them or there are other changes in the market.

I don't know of any further analysis we've done to measure the ebb and flow. Perhaps Marc would have a comment.

[Marc Rioux]

The trend is clearly upward over time. Yes, as Mr. Christie said, sometimes a carrier will cancel a service for commercial reasons. But overall we're seeing a clear upward trend in terms of traffic being carried by carriers under the suite of agreements that we have.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Good, thank you.

You note a couple of statistics in your remarks. You talked about how the open agreements we have concluded cover approximately 72% of Canada's international passenger traffic, and that Canada has also concluded or offered an open agreement to countries representing about 91% of Canada's overall international two-way merchandise trade.

It seems to me that on the merchandise side there is 9% open. Is any of that worthy of going after, or do we ever envision a 100% success? It's almost a yes or a no.

[Bruce Christie]

I guess the answer to the question is that the reason we're at 91% is that we proposed open skies agreements for those reasons you outlined, and the other countries have said they're not interested. They preferred a more piecemeal approach, or a gradual approach.

[The Chair, Conservative, Randy Hoback]

Mr. Davies.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

Mr. Christie, I just want to clarify that cabotage applies to the transport of cargo as well as people. Is that correct?

[Bruce Christie]

Yes, it does.

[Don Davies, NDP, Vancouver Kingsway, BC]

Okay, thanks.

I think a question has been asked of you a couple of times about why certain countries are not on our list to negotiate open skies agreements with. You mentioned Brunei and Kazakhstan. You've mentioned a couple of commercial considerations, such as the size of the market and whether consumers have a desire to go there.

I wonder if there are any political considerations that go into assessing the decision to negotiate with a particular country, or not.

[Bruce Christie]

Yes, there are, but I really wouldn't be able to get into the details of those at this time.

[Don Davies, NDP, Vancouver Kingsway, BC]

Okay. Is there a reason you couldn't?

[Bruce Christie]

They would touch on national security.

[Don Davies, NDP, Vancouver Kingsway, BC]

Okay, so there could be, generically, national security considerations.

The reason I ask is that Brunei, which I note is a country we're negotiating with as part of the Trans-Pacific Partnership, last spring adopted a form of sharia law that punishes homosexuality and adultery by death in that country, and criminalizes other things. You can have appendages removed for various acts.

I just wonder if considerations like that would be part of a decision as to whether or not we would want to expand the transport of people between the two countries.

[Bruce Christie]

I assume it would be. If we were to seek a negotiating mandate from our two ministers, the Minister of Transport and the Minister of International Trade, they would have to look at all factors in terms of the bilateral relationship between Canada and that country, and some of these issues at play. Our ministers would certainly take those issues into consideration in deciding whether or not to grant the negotiating mandate that we're seeking.

[Don Davies, NDP, Vancouver Kingsway, BC]

We have some great research from our analysts. They've provided us this information that I'm going to put to you. It says:

According to a December 2008 report prepared for the Government of British Columbia entitled Analysis of Canada's Bilateral Air Services Agreements: Policy Focus on Asia-Pacific Region, one striking difference between ATAs negotiated by Canada and the United States relate to the signature of confidential addenda. Whereas U.S. law proscribes—

I guess it prohibits

—the signature of confidential addenda to such treaties, many ATAs negotiated by Canada include confidential addenda on commercial matters, such as air fares, seat capacity and flight frequencies.

Is this analysis accurate and does it represent the current situation? If so, has Canada considered adopting an approach similar to the U.S. regarding transparency in ATAs?

[Marc Rioux]

As I mentioned earlier, we now have 112 partners around the world. There are very few instances where we have confidential annexes to the agreements. We don't promote such an approach; however, quite often when we negotiate with another country, the other country will request that some information be placed in a confidential annex. In those instances, if we think this can get a deal that is good for Canada, we will accept the request. Quite often, and in fact more often than not, these annexes contain language or clauses that have no economic relevance. They have more to do with customs or security matters.

[Don Davies, NDP, Vancouver Kingsway, BC]

I see.

In the same report, there's this quote:

Transport Canada officials in charge of bilateral [ATAs] are not ready to accept Open Skies if there is a “risk” for the Canadian “flag” carrier to lose traffic to foreign carriers, even where Open Skies are shown to benefit the Canadian economy as a whole.

Is that analysis accurate and does it represent the current situation?

[Marc Rioux]

As I said before, the interest of Canadian carriers is a consideration that we have to take into account. After all, they are the entities that offer the services. But it's not the only factor we take into account. We also take into account the interest of Canadian airports. In many instances we have negotiated agreements where carriers did not agree or did not want us to negotiate. We have also tried to negotiate agreements that would, over time, benefit all regions of the country.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thank you.

[The Chair, Conservative, Randy Hoback]

Mr. Gill, you have five minutes.

[Parm Gill, Conservative, Brampton—Springdale, ON]

Thank you, Chair.

I have a question. You mentioned the ATA that we have between Canada and the U.S. The U.S. and the Canadian carriers basically are able to fly in and out in I guess an unlimited fashion. How do most of these ATAs with most countries...? Is it in a similar fashion? Is the number unlimited or does it vary? What's the criteria that's used?

[Bruce Christie]

In an open-skies type of agreement, those types of rights are unlimited, but in the list of expanded agreements, they all take on a nature of their own. In some cases, we start by negotiating three frequencies per week to one destination in each market, and then we would gradually move that up to five, or to daily or twice-daily service. For an open-skies type of agreement, under the blue sky policy none of them have restrictions in terms of frequency or the number of destinations.

[Parm Gill, Conservative, Brampton—Springdale, ON]

Once you've signed an ATA with a particular country.... Obviously, I'm assuming that there's more than one airline interested in that particular one. How do you determine which airline actually takes that? What's the criteria used to determine that?

[Bruce Christie]

We would designate the airlines in the agreement, and it would be based, on our side, on the interest of the Canadian carriers that are interested in accessing that market.

[Parm Gill, Conservative, Brampton—Springdale, ON]

But if you have more than one interested, how do you determine who gets it?

[Bruce Christie]

We would negotiate an agreement to allow all of them access to the market, if we could.