Yes. It's good to see you again.
Thank you to the committee for the opportunity to be part of your study on a potential Canada-Mercosur free trade agreement.
The Canadian Centre for Policy Alternatives is an independent, non-partisan research institute.
In the testimony you have heard to date, a recurring theme is the at-best lukewarm support for the Canada-Mercosur free trade agreement, even from industry groups that have typically pushed for free trade agreements.
The Mercosur bloc is made up of some of the most important countries in the Americas. It is critical that Canada engage with them as partners on a range of matters. But on the trade front, the opportunities are constrained by both geography and highly similar trade profiles. For example, the list of top exports of Brazil and Canada includes fossil fuels, minerals, vehicles, and forestry products. In agrifood products such as oilseeds, red meat, grains, and cereals, Brazil and Argentina tend to compete with Canadian exporters in world markets.
A similar composition of our exports limits potential trade growth. Moreover, Canada currently has a negative trade balance with the Mercosur countries, a situation that has been worsening in recent years.
Negotiating a Canada-Mercosur FTA should not be considered a high trade policy priority. This is especially so given the pressing challenges Canada faces related to the renegotiation of NAFTA.
CCPA has long been concerned with the impacts of Canada's bilateral and regional FTAs on public policy matters only loosely related to trade. In our view, to create a fair and more just trade and investment model, it will be essential to eliminate investor-state disputes on mechanisms that threaten the right of duly elected governments to regulate in the interests of their citizens and the environment; scale back excessive intellectual property rights, especially those that threaten user rights, privacy, and access to affordable medicines; fully protect the right to preserve, expand, and create public services without trade treaty interference; ensure parties adopt and implement key international human rights commitments including those that protect indigenous rights and sovereignty; build in binding obligations to reduce and mitigate the effect of climate change; and include robust protections for cultural industries and cultural diversity.
The prospects for moving towards such a model in the context of a Canada-Mercosur FTA are limited at best. In their external trade negotiations, Mercosur countries, particularly Brazil, have traditionally been cautious about embracing WTO-plus commitments on intellectual property, trade and services, investment, and regulatory co-operation provisions of the sort that have been problematic in many recent Canadian bilateral FTAs.
This creates some space for a more progressive or at least less intrusive trade treaty model. If talks proceed, we strongly recommend that any Canada-Mercosur FTA not include investor-state dispute settlement mechanisms. Currently, Brazil has no foreign investment protection agreement with Canada. In fact, Brazil has never ratified an investment protection treaty that includes investor-state dispute settlement. Canada should also pursue the opportunity to eliminate ISDS from its current FIPAs with Argentina and Uruguay.
The flip side of Brazil's cautious approach is that it has also been critical of including binding labour and environmental standards in trade agreements. This creates a problem for our federal government's recent embrace of a progressive trade agenda. To be called progressive, a trade agreement must, at a minimum, include strong, fully enforceable labour standards. It is also essential to include obligations to ensure that each country enforces high domestic environmental standards while abiding by commitments under multilateral environmental agreements. Achieving these two prerequisites of a progressive trade agenda will likely be difficult in the context of an FTA with Mercosur.
To conclude, in our view, pursuing a standard market access deal with Mercosur based on our current FTA template should not be a priority. If the negotiations proceed, CCPA calls on this committee to urge that the government commission independent human rights and environmental sustainability impact assessments of the proposed agreement, and this should occur early in the negotiating process.
Canada should strive to have its policies mutually support each other. Environmental, human rights, and cultural policies and goals should not take a backseat to trade.
As this committee has also heard from previous witnesses, there needs to be a shift in emphasis from simply signing more bilateral market access deals to providing support for Canadian firms and workers to sell competitive products our international trading partners want while promoting good jobs, healthy communities, and a clean environment at home.
Thank you.