International Trade Committee on May 11th, 2015

[Geoff Regan, Liberal, Halifax West, NS]

Thank you, Mr. Chair.

And thank you, Minister, and your officials, for joining us today.

I'd like to ask you about negotiations toward a Canada-Japan economic partnership agreement.

I have three questions on this. First, has Canada proposed to host the next round of negotiations? Second, has Japan agreed to our proposal? And third, if not, why not?

[Ed Fast, Conservative, Abbotsford, BC]

I think it highlights the fact that the Trans-Pacific Partnership negotiations, which include both Japan and Canada, are a very significant effort to open up the Asia-Pacific region for trade, to set the rules for trade going forward.

But parallel to that regional negotiation, Canada has also embarked upon bilateral negotiations with Japan. The reason we see bilateral negotiations as presenting an opportunity is that there are certain things that you can accomplish in a bilateral agreement that reflect the unique circumstances of a bilateral relationship that you can't achieve in a regional negotiation. That's why both Canada and Japan agreed to move in parallel.

[Geoff Regan, Liberal, Halifax West, NS]

I wonder if you can address the question. I appreciate that.

[Ed Fast, Conservative, Abbotsford, BC]

Yes, I was getting to that.

The reason that we have chosen to do them in parallel is that the TPP addresses most of the salient issues that one would seek to address in a bilateral agreement. That's why you have seen Japan place most of its focus on the TPP.

We of course have been pressing Japan to keep some energy in the bilateral negotiations. Obviously, Japan is very interested in energy security. Canada is a solution to Japan's energy needs, but their number one focus has been concluding negotiations within the TPP, which is why you've seen a less ambitious schedule of negotiating rounds in the bilateral discussions.

[Geoff Regan, Liberal, Halifax West, NS]

So did we in fact propose to host the next round?

[Ed Fast, Conservative, Abbotsford, BC]

We're just in the process of trying to nail down exactly where that round will take place.

Deputy Minister, have we settled on anything yet?

[Christine Hogan, Deputy Minister of International Trade, Department of Foreign Affairs, Trade and Development]

We have not got a date confirmed as yet, or a venue.

[Ed Fast, Conservative, Abbotsford, BC]

No date is confirmed as yet.

[Geoff Regan, Liberal, Halifax West, NS]

Let's go to the broader trade with Asia. The Conference Board of Canada says that our country makes up only 1% of all global exports to Asia, that we're the 23rd largest exporter to Asia. In fact, we've fallen from 16th to 23rd. Our previous high was 16th. Also, between 2013 and 2014 the value of our exports to China dropped by 5%. The question I guess is, in light of this shrinking market share, are you considering any new approaches to increase Canada's share of the export market in Asia, and particularly in China?

[Ed Fast, Conservative, Abbotsford, BC]

Let me focus on China, because our time is short.

[Geoff Regan, Liberal, Halifax West, NS]

It sure is.

[Ed Fast, Conservative, Abbotsford, BC]

Let me highlight a number of the initiatives and key milestones we've achieved over the last several years. Let me go back, say, five years when we were able to secure preferred destination from China. It took us a while to actually negotiate that, but what that now means is that Chinese tourists who are looking to come to Canada as tourists will now see Canada as being a preferred destination. Their ability to come to Canada as tourists has been dramatically increased, which is why we have seen significant increases in tourist flows into Canada from China.

The second milestone was when we brought into force the foreign investment promotion and protection agreement between Canada and China. What that agreement does, of course, is to set out a clear set of rules under which investments are made. If a Canadian company wants to invest in China and makes its investment, it now has a clear set of rules that will be applied to those investments. Not only that, but if there is a dispute between a Canadian company and a Chinese government at any level, and say there's alleged discrimination against the Canadian company, that dispute will not be heard within the domestic court system but will be raised to the international arbitration level, where our Canadian companies can have great confidence that the arbitrators will be fair and impartial and that it will be a fair process.

The next milestone I would highlight is the renminbi trading hub and related currency swap agreement we were able to negotiate with China. This will allow Canadian businesses to do business with China in the renminbi, which is their currency, and it reduces the costs of business transactions between our two countries, between companies of both of our countries. This is a significant competitive advantage.

[Geoff Regan, Liberal, Halifax West, NS]

So, Minister—

[The Chair, Conservative, Randy Hoback]

I'll have to stop you there.

I'm sorry, his time has gone, Minister.

Mr. Cannan.

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

Thank you, Mr. Chair, and thank you, Minister Fast, and to your hard-working staff.

I have had the pleasure of being on the committee for over nine years, and I know you have a great team of hard-working officials that travel around the world to make these agreements possible. The Prime Minister's goal is to use trade as a stimulus and to open the new markets, so I thank you for your passion for people and enthusiasm for this initiative as well.

Following up on my colleague, Mr. Gill's, comments about when Mr. Modi came to Canada and had the opportunity to meet with him, as you did with several constituents.... I know we're looking at potentially exporting apples from, I say, the best riding in Canada, Kelowna—Lake Country, and cherries to China, and wine to South Korea, some of the new markets that are opening up.

This weekend I had some constituents meet with Philippines President Aquino when he was in Vancouver for a community cultural event, and a female there said that we have to get a trade agreement with the Philippines. I know Prime Minister Stephen Harper announced that you will be leading a trade delegation to the Philippines later this month. I simply want to know if the purpose of this trip is similar to the trade mission and delegation you took last year to Laos and Myanmar and to other Asian countries?

[Ed Fast, Conservative, Abbotsford, BC]

The Philippines is of great interest to Canada. Right now it is the fasting growing economy in Southeast Asia. If you look at Asia, it's the second fastest growing economy, next to China.

This is a market that we need to take notice of. Of course, we also have an advantage there. We have a very large Filipino diaspora in Canada, some 800,000 strong, and they provide us with the connectivity between Canada and the Philippines to do business, to increase tourism, to increase educational flows between our two countries.

We announced during President Aquino's visit that we are now embarking upon exploratory discussions toward a free trade agreement. That means that we're going to sit down with our Filipino counterparts and explore the opportunities for successfully concluding trade negotiations and the level of ambition that both parties are aiming for.

This is a very significant step forward for Canada in engaging not only with the Philippines but also with the larger Asian region and those 10 countries there. In fact, as you know, Mr. Cannan, I believe I'm the first trade minister to visit every single country within Asia. There are 10 countries, and I've had a chance to visit each one, many of them more than once. I've even visited Laos, which had been neglected for many years. It's important that we engage with that region because it is becoming a dynamo when it comes to economic growth.

My trade mission to the Philippines will, of course, focus on a number of areas where Canada has strengths. Agrifood and food processing is one. Waste energy is another one. There's a company out of Vancouver that is now actively putting in place a waste energy plant that is more than just about energy. It's also about using that energy in things such as freshwater coho production, and greenhouse production. This is where Canada's expertise really shines. So I'm looking forward to visiting the Philippines, and I expect I'll be bringing a fair-sized delegation with me.

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

Thank you, and once again thanks for your energy in travelling and visiting those countries that had been left off the map for so many years. It's important to make contact as you continue to open new doors.

As you mentioned in your opening comments, our committee has been doing a study on small and medium enterprises, trying to help them engage in other markets besides the United States, our number one trading partner. There always will be $1 million a minute and $2 billion a day in trade between us, and we continue to look at 35 of the 50 states of that number one trading partner.

But we also need to expand, and that's why we're looking at what are called the Go Global workshops. I'm looking forward to hosting one with you in my riding this summer.

Also, we've heard how some of the small businesses that have come here were not aware of the services available from your department and government officials. So maybe you could share a little bit about the role of these workshops, how they're helping out SMEs, and what you have experienced to date.

[Ed Fast, Conservative, Abbotsford, BC]

So far we've been able to connect with 2,000 different businesses across Canada. We've held 18 of these workshops, in every region of the country.

One of the benefits of these workshops is that we get to profile all of the tools the federal government makes available to small and medium-sized businesses once they make the decision to explore exports abroad, such as the trade commissioner service, which I mentioned earlier. These are the world's best trade experts. I would put our trade commissioner service up against any in the world. We have about 1,000 of them around the world and across Canada in 160 different locations. In China alone we have offices in 15 different cities, with 100 trade commissioners active in China to support small and medium-sized businesses.

We have EDC, Export Development Canada, which provides financing and insurance products for exporters. We have the Canadian Commercial Corporation, which provides government-to-government contracting services. Essentially the Government of Canada provides a sovereign guarantee for the performance of a Canadian company's obligations when it sells to a foreign government. That provides that foreign government with great assurance that the product or service they're buying is going to be as contracted for.

We have other products as well. We've developed a tool called the Canadian Technology Accelerators for Canadian start-ups that are looking to be exposed to the international marketplace for capital and new customers, and to connect with others in their field of business. We don't want to lose them as Canadian companies, so even though we have many incubators and accelerators across Canada, we have opened up 12 of these across the United States, in Cambridge in the U.K, in Paris, and in New Delhi. Also, I expect we'll be opening others, to make sure our Canadian companies that want an international experience can get that experience but can do it under a Canadian umbrella. We want them to stay Canadian.

These are just some of the tools we're using to inspire our SMEs to now take up our challenge and begin to think “export”. To those that have exported but only to the United States, we're saying, “Okay, spread your wings. Look beyond North America, because some of the fastest-growing economies are beyond our North American boundaries”.

[The Chair, Conservative, Randy Hoback]

We'll move to Ms. Liu, for five minutes.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Thank you for joining us today, Minister Fast.

Canada is part of the Environmental Goods Agreement negotiations at the WTO, and the provinces play a crucial role in fostering the clean tech and green energy sectors. Are the provinces included in the negotiations?

[Ed Fast, Conservative, Abbotsford, BC]

As with all of our negotiations on trade agreements and investment treaties, we consult regularly with the provinces to make sure they have input into our negotiating positions at the table. That, of course, applies to the territories, as well.

The environmental goods negotiations really were spawned by the outcome of something that took place within APEC. APEC is a group of 21 countries in the Asia-Pacific region that are looking to increase the integration of economies within that region. APEC decided to look at 54 different environmental goods and either eliminate or dramatically reduce the tariffs on those to ensure that countries benefited from greater environmental awareness and cheaper environmental goods, so that we can address the environmental challenges facing all of our countries.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Can I just get a “yes” or “no” answer to the question about whether or not provinces are at the negotiating table?

[Ed Fast, Conservative, Abbotsford, BC]

They're not at the negotiating table, but they are regularly consulted. Typically, sub-federal governments are not involved in trade negotiations anywhere around the world. There is one exception. During our trade negotiations with the European Union, the European Union asked that our provinces be brought to the table when we were negotiating in areas that had impacts on their jurisdiction. I believe the outcome we were able to reach reflects the fact that our provinces had that input in the crafting of the agreement.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Thanks for your answer.

Australia recently concluded a comprehensive trade agreement with China, and we know that your government rejected an offer by the Chinese government to negotiate a similar deal with Canada. Can you explain why the Conservative government rejected that offer and tell us whether giving Australian business first market access, or what you just referred to as a first mover advantage, to China is a wise policy?

[Ed Fast, Conservative, Abbotsford, BC]

Actually, let me correct you.

We didn't reject an offer of negotiating a free trade agreement with China. What we have said is that for the time being there are a number of other avenues that we have to deepen our economic engagement with China, which allows me to raise that final milestone that I didn't get a chance to raise earlier. And that is ten-year multiple entry visas, which will make it so much easier for Canadian business people to do business in China. Because you'll be able to get a multiple entry visa, you can use it again and again for periods up to six months over a ten-year period or for as long as your passport is effective.

We believe there are many different ways of engaging with China.

I also note that Australia is, of course, in some ways unique because Australia's largest trade partner is actually China. Canada's largest trade partner is the United States, by far. Just to give you a comparison, our bilateral trade with China is somewhere in the order of $80 billion a year. Our bilateral trade, if you include services, with the United States is somewhere in the order of $800 billion a year. We have a trade agreement with our largest trade partner. They will always be our largest trade partner and we are not forgetting about them. But we have said that we want to diversify Canada's trade all around the world, we want to diversify our markets all around the world, so that Canadian companies can be successful wherever they look to do business.