International Trade Committee on Feb. 15th, 2018

[The Chair, Liberal, Mark Eyking]

I call the meeting to order.

Good morning, everyone. I'm glad everybody made it. What an icy morning it is out there. I hear we had some casualties.

What a dedicated committee, getting here even when they have accidents on the way. Is everybody okay now?

We have a very busy morning. We're honoured today to have our Minister of International Trade, Minister Champagne. Thank you for your good work. We didn't know you were a doctor.

[François-Philippe Champagne, Liberal, Minister of International Trade]

Well, I'm no doctor. I'm just a good Samaritan, I guess.

[The Chair, Liberal, Mark Eyking]

You're a man of many talents. Anyway, good job.

Welcome, sir. You've been here before and you know the protocol.

You have the floor, sir.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Thank you very much, Chair and committee members.

Let me apologize for being late. I'm quite happy to extend the meeting by whatever time that I was late. Obviously, the health and safety of our members is paramount, and I certainly wanted to make sure we could all be here this morning.

I also want to thank the committee. Yesterday I had the chance to again read the report that was produced on the trans-Pacific partnership from the year of work that you all did across Canada. I refreshed my memory yesterday by reading it again. I want to say thank you, because you spent a good part of the year criss-crossing the country, hearing from Canadians on the issue. Thank you.

If you'll allow me, Chair, I'll do brief remarks, as is customary, and then obviously engage with members on topics.

Thank you for for giving me the opportunity to update the committee on the trade initiatives undertaken by our government in Asia—including the new Comprehensive and Progressive Agreement for Trans-Pacific Partnership, CPTPP—and on our exploratory talks with China to establish a potential agreement. Lately, I had an opportunity to discuss those same issues with the Standing Senate Committee on Foreign Affairs and International Trade.

The increase in trade between Canada and large fast-growing markets in the Asia-Pacific region is a priority for the Government of Canada. So I'm happy to be able to discuss with you the government's progress in that area.

Allow me first to introduce the department representatives joining me today. These people have made a significant contribution to our recent achievements.

First, we have Tim Sargent, Deputy Minister of International Trade. We also have Bruce Christie, Associate Assistant Deputy Minister of Trade, Policy and Negotiations and Lead Negotiator of the CPTPP, as well as Kendal Hembroff, Director of the Trade Policy and Negotiations Division for Asia and Assistant Lead Negotiator of the CPTPP.

Canada is looking to conclude trade agreements that promote the interests of the middle class and create opportunities for exporters and well-paid jobs for the country. That is our main priority, and we will work on negotiating in the best interest of all Canadians.

For a trading nation like Canada, raising the standards of living for our middle class depends on robust international trade. That means support for rules-based order and the institutions that underpin it, as well as more high-quality trade and investment agreements between Canada and its partners around the world.

Canada has shown that it is ready to stand up for Canadians and defend our interests in order to get the best deal for Canada, because these deals have a lasting impact on our nation. Moreover, a progressive trade agenda opens more doors, raises standards, and positions the middle class for success.

We are the most diverse and open country on earth. A progressive trade agenda reflects not only our economic values but our social values as well. When global investors look to position their future investments and capital, they want stability and predictability. I'll put it to you, members, that's Canada. When the talent pool of tomorrow's economy seeks a place to build their business, they want diversity, openness, and all the creativity that comes from a society that embraces and encourages both. That's Canada.

The progressive trade agenda is not only the right thing to do, but the smart thing to do economically. Trade is a march to the top, not a race to the bottom. Canada is leading that charge, and while that takes more effort, it will pay economic dividends for the middle class for decades to come.

That is why, in September 2016, Canada and China announced the launch of exploratory talks to strike a potential agreement. So far, the two countries have held four series of talks. Canada and China continue to engage in dialogue in order to assess the scope of a potential comprehensive trade agreement.

In conjunction with exploratory talks, the Government of Canada held public consultations, between March and June 2017, on potentially concluding an agreement with China. More than 600 stakeholders and partners expressed their views. As a general rule, Canadians said they felt that an agreement presented both benefits and challenges.

Businesses mostly feel that an agreement could provide an opportunity to improve access to the Chinese market, and they have identified certain challenges they would like to address in the process, including non-tariff barriers in areas such as intellectual property. Some civil society groups, unions and Canadian individuals pointed out the importance of addressing challenges such as labour and the environment in the talks with China.

In line with our government's commitment to transparency, a public report summarizing the point of view expressed during the public consultations was released, in November 2017. That is a first for Canada's trade consultations.

During Prime Minister Trudeau's visit to China last December, Canada and China committed to continuing exploratory talks to ensure potential negotiations are based on a shared understanding of the issues to be negotiated as well as the scope and level of ambition of those negotiations.

Canada is committed to taking the time required to make sure any future decision on whether to launch free trade negotiations with China is in the best interest of all Canadians. Should we pursue economic engagement with China, we will do so by creating more opportunities for the middle class. Progressive trade means that trade benefits all Canadians, puts people first, and reflects our standards and, very importantly, our values. We remain committed to building a stronger and more comprehensive relationship between Canada and China, based on a regular and frank dialogue, but we will take the time needed to ensure we get this right.

I wish to talk to you about the recently concluded comprehensive and progressive agreement for the trans-Pacific partnership, otherwise known as the CPTPP.

On January 23, Canada and 10 other countries concluded negotiations for a new agreement in Tokyo, Japan. Asia-Pacific is an important region and a priority market for Canada, and Canada is pleased to be part of the CPTPP, a trading bloc that represents 495 million people, with a combined GDP of almost $14 trillion. Canada has been intensely engaged in the new CPTPP from the first meetings of officials in May 2017 and has proposed suspensions and changes to secure better terms for Canadians. Our position on the CPTPP has been underpinned by extensive consultations with Canadians.

The Government of Canada conducted two sets of comprehensive public consultations with Canadians to seek their views on the original TPP consultation, initiated in November 2015, and a potential new agreement among the remaining TPP members without the United States of America. Collectively, since November 2015, the government has held approximately 250 interactions with over 650 stakeholders, including business and non-business associations, civil society organizations, think tanks, academics, indigenous groups, youth, and the general public.

The CPTPP incorporates, by reference, the provisions of the original Trans-Pacific Partnership agreement and will suspend 22 provisions once it goes into force. The suspensions cover a range of areas, including important provisions on intellectual property that were a source of concern for Canadian stakeholders.

Canada was also able to maintain its ability to adopt cultural policies, especially in the digital world, and has concluded important bilateral arrangements in the automotive sector with Japan, Malaysia and Australia.

In addition, the CPTPP contributes to Canada's progressive trade program in a number of areas, including labour, the environment, small and medium-sized businesses, transparency and anti-corruption.

That agreement is Canada's first free trade agreement that includes binding chapters on labour and the environment.

The CPTPP also contains a development chapter wherein the parties affirm their commitment to promoting and strengthening a trade environment that seeks to improve welfare, reduce poverty, and raise living standards, as well as focusing on women and economic growth, highlighting the importance of women being able to fully access the benefits and opportunities created by this agreement.

Once the CPTPP enters into force, it will become one of the largest free trade agreements in the world. In the area of goods, market access gains under the CPTPP will be significant, especially in CPTPP countries where Canada does not currently have free trade agreements and where tariffs remain high.

Gains from the CPTPP will benefit a wide range of sectors across all provinces in Canada, including financial services, fish and seafood, forestry, agriculture and agrifood, and metals and minerals. Our exporters and investors will benefit from more transparent and predictable market access, and potential gains from the CPTPP will increase as new countries seek to join the agreement.

This agreement will benefit Canada not only economically and commercially but also strategically, by allowing Canada to diversify our trade and by providing a platform to influence future trade rules in the very important Asia-Pacific region.

Mr. Chair, I'll now be happy to take questions from committee members.

[The Chair, Liberal, Mark Eyking]

Thank you, Minister.

Committee members, if you look at your agendas, you'll see that this is our big anniversary. We hit 100 today, 100 meetings since the 42nd Parliament, so congratulations. I think we almost have 10 studies under our belt. That's good work, all.

Minister, before the meeting I had a chat with the Canadian Cattlemen's Association. They are very supportive, of course, of our trade negotiations and agreements. They were also very complimentary on the previous government and the work that they did.

Their comment to me was that once things are signed, it's very important that we move quickly—aggressively, I guess—because among the other 11 members, there are a lot of cattle producers, beef producers. Their sense is that it's important to get our foot in the door and stake our claim quickly. I don't know if you have any quick comments on that before I move over to the other MPs.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Well, Mr. Chair, thank you.

I would like to thank the Canadian Cattlemen's Association. They've been with me in pretty much every city where I've been negotiating trade agreements. It's always a pleasure to have them with us.

They are quite right, Mr. Chair. I mean, one of the benefits of what Canada has achieved is the first-mover advantage. We know that in these markets, in the configuration of the CPTPP, Canada will have first-mover advantage in one of the very important markets for them, which is Japan. Therefore, we are going to proceed.

As you know, the signature date had been set for March 8, in Santiago, Chile. Following that, we will proceed, obviously, with ratification. The ratification process under the CPTPP requires six countries to ratify it, 50% of those that are signatory to the agreement. We understand the importance for the Canadian Cattlemen's Association. We will proceed diligently with your help, the help of the House of Commons, and obviously that of the Senate.

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

We're going to move right to the MPs for the rest.

The Conservatives are up first, for five minutes. Mr. Allison, you have the floor.

[Dean Allison, Conservative, Niagara West, ON]

Thank you, Mr. Chair.

Thank you, Minister, for being here today.

To our officials, thanks for the great work that you do. I know that we are very proud of how you represent us on the world stage.

I have a very quick question—so many questions, so little time.

You're going to give some of us a technical briefing today of the CPTPP. My question is, when is the full text going to be available for the public?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

It will be as soon as possible. You know these agreements very well, and their process. There needs to be legal scrum, and translation. We are proceeding diligently, but our aim, as we've said before.... You know, transparency and openness have been key. Thanks for the work of this committee as well, when you consulted Canadians.

We'll make it available as soon as possible.

[Dean Allison, Conservative, Niagara West, ON]

That's very definitive. Thank you.

In regard to Chinese steel, before I arrived here, the committee did a study and made some recommendations. Can you tell us any of the tangible steps your government is taking to deal with the whole issue of Chinese steel dumping? Obviously, it's an irritant with the U.S. as well. I just want to know what kinds of things you guys are up to.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

It is a very important situation. Obviously, as you know, Canada is co-operating with other countries in the world through the WTO, and we will continue to collaborate.

I think part of the solution is certainly in the international arena with the WTO, making sure that Canada joins its voice with those of other countries. I would also say that being part of these agreements, which provide....

If you allow me to just step back a minute, when the U.S. decided to withdraw from that about 12 months ago, the trade ministers met in Lima, Peru, about 10 months ago. Part of the question, just to get to your point, was, where do we go from here? Is everyone going back home, or do we all collectively believe that having a rules-based system, with mechanisms to enforce fair trade rules in the region, would be beneficial to our countries? We came to that conclusion.

To answer, we will continue at the WTO, but I also think that agreements like the CPTPP are providing a framework wherein Canada can have influence as the second-largest economy currently in the trading bloc.

[Dean Allison, Conservative, Niagara West, ON]

Thanks.

My question now is about China. You talk about progressive deals. Obviously, I won't get into what's different with this CPTPP versus the one we did. I may leave that to some of my colleagues.

We talk about China. There are clearly human rights issues. Clearly the country is challenged by any kind of progressive rules or things like that. They manipulate their currency. They subsidize their industries. They dump steel. John Chang, a winery owner—and I know your government has been seized with this—from my area is presently being held against his will on trumped-up charges.

You start to talk about a deal with China, and I think we understand that it's important. Our agriculture markets want access. These are important things. What is the government prepared to do on the other side to make sure that reviews are done on a number of different things? Trade is one thing, but how are we going to protect Canadian businesses on the other side, when clearly this country is not prepared to follow any rules, certainly not any rules that we would normally play by in North America as a free society?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

This is a very important question, and I'm quite happy....

I would say it's doing what we're doing now. As you may have seen last time in Beijing, we're not rushing into anything. We've been pretty clear that we would engage with China with our eyes wide open, on our timetable and according to our principles. You've seen that. We have said that we will continue to have exploratory discussions as to whether we should have a trade agreement with China.

I would say to you that the items you mentioned are very important to Canadians. I think Canadians expect us to open markets, but not at the expense of the environment, not at the expense of labour rights, and not at the expense of making sure women and men have an equal chance in trade. That's why, when we come to these negotiations, as I think you've seen, the CPTPP is a fair trade agreement with an enforceable labour and environment chapter. We also have a chapter on governance. We have a chapter on small and medium-sized businesses.

I guess my point to you is that we're not rushing into anything. We want to make sure we have the right basis. That's why we took more than a year. As you know, we had four rounds of officials discussing the content of what should be discussed with our Chinese counterparts. Again, we were engaging when we were in China recently and we are still engaging now, but on the basis, as I said, of eyes wide open, on our timetable, and with clear principles as far as the Canadian side is concerned.

[Dean Allison, Conservative, Niagara West, ON]

Thanks.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Thank you for your work on the files, and all your colleagues. You've been very helpful.

[The Chair, Liberal, Mark Eyking]

Thank you, gentlemen.

We're going to move over to Madam Lapointe for the Liberals for five minutes.

Go ahead.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Welcome, Minister, ladies and gentlemen, public servants. I'm happy to have you with us today.

You are already familiar with my riding, which you have visited. It is located in a northern suburb of Montreal, and it is home to many businesses in the aerospace industry, as well as agrifood processing companies. There are also automotive parts companies, but also many maple and apple producers.

I would like to be able to tell my constituents what business opportunities will be available to small and medium-sized businesses in the new agreement that has been signed, the CPTPP.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Thank you for your question.

I really enjoyed visiting your riding and I hope to go back.

You talked about the aerospace sector and the farming sector. Those industries will benefit from this agreement. In an agreement like the CPTPP, it is important to reduce tariff barriers. Some signatory countries are currently imposing high tariff barriers, and that reduces our export opportunities. You talk about maple syrup, but there are also seafood, pork and beef products, which are very important markets. This agreement will enable us to reduce tariff barriers to facilitate access to markets.

The next step—I'm also saying this to the chair of the committee—will be to work together to promote these agreements. Success is not just about concluding agreements, since agreements have to lead to opportunities, jobs and economic prosperity for Canadians.

The reduction of tariffs, which were among the highest, will certainly help us export more. As parliamentarians, we have a role to play in all our ridings. We have to promote these agreements, so that our small and medium-sized businesses, among others, can benefit from new tariffs and the regulatory framework we have implemented to facilitate exports.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you.

I have two other questions for you. The first is about the exemption of cultural products. At some point, the CPTPP discussions stalled in that respect. As you know, that is an important issue for my riding. I would like you to tell us a bit more about it.

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

Thank you.

This is an important issue. The committee members will realize that Canada's negotiators stood their ground, be it in Da Nang or throughout the process, to improve the existing agreement.

You talked about culture. For Canada's cultural industry, we managed to get protection that will help us invest in culture, preserve it and promote it. This is an extremely important issue. I have to thank the Prime Minister for that. Canadians know that we fought every step of the way to preserve this very important sector. The same goes for the automotive sector, where we made substantial gains in terms of access to Japanese, Malaysian and Australian markets.

This shows that Canada does not want to conclude any old agreement. We have an agreement that benefits Canada. We are ready to stand up and say that it's not yet time to move forward and that we must continue negotiating. That is what we did in Da Nang and over the past few weeks, until the Prime Minister announced that we would sign an agreement.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you. That's very important in my riding.

You talked about Malaysia. I assume you know that the committee will be going to Asia next week and visiting Malaysia, Thailand and Singapore. What do you suggest we look at specifically for international agreements?

[François-Philippe Champagne, Liberal, Saint-Maurice—Champlain, QC]

I'm happy that the committee is going to Asia-Pacific, which is a very important region. It accounts for 14% of the global economy, or nearly $500 billion only in the region. I was going to say the CPTPP region, but the committee is well aware that we have also launched exploratory discussions with ASEAN, China and India, which I visited recently.

In my humble opinion, it would be worthwhile for the committee to look at non-tariff barriers. Around the world, we see that tariffs are being reduced, but we have to keep an eye on non-tariff barriers. Finally, what matters to Canadian business owners is having access to markets. I would like to say to the members of the committee that our department has launched an initiative that is sort of similar to an emergency response team to look into non-tariff barriers.

If Canadians note any non-tariff barriers, they can go to a website and report it to the department. Within 24 hours, the agents will know what the request or comment was. Then they will check in trade agreements what provisions apply and will notify the individual who made the request.

That is how we are trying eliminate non-tariff barriers under our agreements, but also to acquire the information we need to negotiate future agreements. We have to be very aware of non-tariff barriers. This is inspired by best practices around the world. I wanted to ensure, as did the deputy minister, to reduce non-tariff barriers and provide Canadian business owners with an opportunity to inform us, so that we can stand up for them in those areas.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you. We're going to move over to the NDP now.

Ms. Ramsey, you have the floor for five minutes.

[Tracey Ramsey, NDP, Essex, ON]

Good morning, Minister.

I'm pleased to hear that you have read our report. That means, then, that you're aware of the information that over 50,000 Canadians wrote to us and that over 90% of them opposed the TPP during our study. We had a Tufts University study that said 58,000 jobs would be lost in Canada under the TPP. Really, there were some warnings to us, including from the government's own economic impact analysis, which showed 0.2% growth by 2036, which by all accounts is quite negligible. I think that in signing the TPP, you've successfully pitted Canadians against one another across this country, and that's a shame.

I will tell you that we recognize that there are pieces of the TPP that are important to certain sectors. However, as you know, I'm an an auto worker—I represent a region in southwestern Ontario that was blindsided by the signing of the TPP—and auto workers and auto companies like the Canadian Vehicle Manufacturers' Association, the Automotive Parts Manufacturers' Association, and Unifor are united in opposition to the TPP. We're at a disadvantage, of course, because none of us have seen the TPP in its current iteration, except for those present here. There have been distinct calls from those groups to be able to be privy to that information. I can tell you that people in southwestern Ontario are in shock, and they're very nervous about their jobs.

I wonder if you can please speak to what you see in the CPTPP that will counter the losses of jobs, in particular with regard to the auto sector.