International Trade Committee on Nov. 29th, 2018

[The Chair, Liberal, Mark Eyking]

I call the meeting to order.

Good morning, everyone. This morning our committee is going to embark on the Canada-Israel Free Trade Agreement.

Before we get into the clause-by-clause on that, we are very fortunate to have with us Mr. Carr. Welcome, sir.

As you're well aware, we're a very busy committee. We've accomplished quite a bit in the last couple of years. We've dealt with the European agreement, TPP, CPTPP, the Pacific Alliance, and the ASEAN countries, and of course one of the big ones was the whole North American agreement. We had studies also on the tariffs and the impacts of the tariffs on steel and aluminum. Today we're going to be doing the Canada-Israel agreement. We're a very active group. We have lots more on our plate in the upcoming months.

Thank you for coming. You know the routine. You have the floor, then we have almost the whole hour with you.

We want to stay focused, of course, on the Canada-Israel agreement, but if an MP has another question that's pertinent and not too political, it's good to go. I'd like to keep the questions short, and then the answers short, so we can get everybody to have a round.

Without further ado, Minister, you have the floor.

[Jim Carr, Minister of International Trade Diversification]

Thank you, Chair.

I recognize that we are, after all, politicians, so occasionally a question might be political, and that's fine with me.

Let me start by thanking you all for the important work that you have done and that you continue to do. You say the plate is full, but it's full with some pretty terrific ingredients that make for a meal for Canadians—a meal from which there will be growth and jobs for Canadians. That is facilitated by the excellent work you do.

I'll just say, as an aside, how much I honour the role of parliamentary committees. You really are the guts of our parliamentary system. This is the place where politicians are held accountable. This is a place where the ideas are debated respectfully. This is a place where the people of Canada can be well-assured that the business of running our country is in the hands of accountable, and in the case of this committee, thoroughly competent and able parliamentarians.

Let me start by thanking you for the very good work you do for our country, as well as for the opportunity today to talk about Bill C-85, an act to amend the Canada-Israel Free Trade Agreement Implementation Act and to make related amendments to other acts.

Canadians understand the importance of trade to our economy, and how much more important can it be than what Canadians have seen over the last number of months? For this reason, the government has pursued an ambitious trade negotiation agenda, the primary purpose of which is to diversify trade.

I'll give you a few examples of this—and Chair, you've mentioned some of them. Just last month Canada ratified the CPTPP with a speed reflecting the importance of this deal to farmers, ranchers, entrepreneurs and workers across Canada, and on December 30, as members of the committee know, Canada will add Japan, Singapore, New Zealand and Australia to our ever-growing trade network, with Vietnam joining the list early in the new year.

I'll pause for a moment just to say how quickly this agreement made its way through the House of Commons and the Senate, which is a tribute to the co-operation among parties as well as the importance of moving it quickly. We have a material advantage as a result of that speed that put us in the first tranche of six nations, giving the wealth creators an advantage over others that didn't make it quite so quickly. For all of your co-operation to make that happen, thank you again.

In September the government announced it had reached an agreement with the U.S. and Mexico. Our ambition throughout these negotiations was to make sure we had secure access to these markets, which are the most important markets in the world for us, and we achieved that goal.

Also in September we marked a one-year milestone for provisional application of the trade agreement with the European Union, the Canada-European Union Comprehensive Economic and Trade Agreement, or CETA, and in this past year Canada added $1.6 billion in increased exports to Europe and saw a 20% growth in container traffic at the port of Montreal.

We've had a new agreement with Ukraine in place since 2017, and we are working toward ratifying a modernized and inclusive trade agreement with Chile that will distinguish Canada as the first G20 country to adopt a gender chapter in a free trade agreement.

The government is actively pursuing opportunities in other important and fast-growing markets, and it's making inroads. Canada is in negotiations with our partners in the Americas, in the Pacific Alliance and Mercosur, and exploring possible negotiations with ASEAN.

Taken together, we have 14 free trade agreements covering 51 countries, connecting us to 1.5 billion of the world's consumers.

While market access is vital, alone it does not create jobs and prosperity for our people. Our businesses need the right tools to actively pursue international opportunities, especially in markets covered by our trade agreements. That's why the fall economic statement proposes an export diversification strategy to help grow Canada's overseas exports by 50% by 2025, with more help for small and medium businesses to help them explore new export opportunities.

The metaphor, colleagues, that I use is that these trade agreements are bridges negotiated by governments, but what has to cross those bridges are investment dollars, goods, services and people.

Government sets the stage and government helps build the platform, but it's the SMEs that create the growth and the wealth. That's the partnership between government and the private sector that holds so much potential for us creating jobs so necessary for Canadians.

Recently I travelled to Asia, where I joined the Minister of Finance, Mr. Morneau, for the inaugural Canada-China economic and financial strategic dialogue. The discussions resulted in 48 tangible outcomes, including a commitment to modernize the WTO, strengthen co-operation on patents and trademarks, and co-operation in leading the global transition to a lower-carbon economy.

Canada also secured deals for the short term. Canadian businesses, Atlantic premiers and agriculture minister Lawrence MacAulay, my colleague, were prominent at the recent International Import Expo held in Shanghai. Our presence paid off to the tune of $1.67 billion in deals for Canadian businesses in life sciences, agrifood, aerospace and transportation.

I was just in Edmonton and Saskatoon, and while in Edmonton, I celebrated a deal between the Edmonton International Airport and EHL for China, which will establish Edmonton as an important North American hub for e-commerce and the movement of goods between Canada—and, in fact, all of North America—and Asia. This is a tangible outcome of the work we have been doing and will result in both growth and jobs.

In addition to China, I accompanied our Prime Minister to Singapore to attend events surrounding the annual summit of the Association of Southeast Asian Nations, or ASEAN, and their leaders. As members are aware, the ASEAN market is a significant one, with a population of nearly 643 million people and an ever-expanding middle class, representing the world's sixth-largest economy as a group of 10 countries. The visit, my second since becoming minister, was an opportunity to highlight Canada's comparative commercial advantages, to advocate for intensified exploratory discussions on a possible free trade agreement with ASEAN, to promote Canada as an attractive investment destination and partner, and to mark the success in southeast Asia of some of Canada's most innovative companies.

Our efforts signal to the world that trade matters, that rules matter and that we will not be drawn into the world of protectionism. Canada's commitment to the rules-based order is an essential strength, and we will put it to work for more Canadians. That's why I convened a ministerial meeting in Ottawa last month on World Trade Organization reform, which resulted in a clear message of support for the rules-based multilateral trading system and a common goal to take urgent action to strengthen and modernize the WTO.

We firmly believe our international trade relationships are mutually beneficial. This is demonstrated in the modernized Canada-Israel Free Trade Agreement, or CIFTA. Since CIFTA first came into effect more than two decades ago, Canada's two-way merchandise trade with Israel has more than tripled, totalling $1.7 billion in 2017.

Canada and Israel agreed in 2014 to modernize CIFTA, which at the time was a goods-only trade agreement. The result of those negotiations is an agreement that updates four of the original chapters, including market access, and adds nine new chapters, including intellectual property and e-commerce.

I pause here to acknowledge the work that was done by the previous government, by Ed Fast, and to say that it was very important work that built the platform upon which we have this now modernized agreement. I recognize that contribution to Canadian trade and thank you for it.

We have negotiated rules that are designed to help address non-tariff barriers, to contribute to facilitating trade, to make more trade possible and predictable, and to cut red tape, reducing some of the costs to companies for doing business. Once the agreement is in force, close to 100% of all current Canadian agriculture, agrifood and seafood exports to Israel will benefit from some form of preferential tariff treatment, up from the current level of 90%.

Meaningful market access for Canada's agriculture and agrifood processors was a key interest for these negotiations, and the government delivered, including unlimited duty-free access on sweetened and dried cranberries, on which the current tariff is 12%; baked goods, on which the current tariff is up to 8%; and pet food, which has a current tariff of 4%.

These important tariff outcomes for the agriculture and agrifood sector placed Canada on a more level playing field with exporters from the United States and the European Union, key competitors in this sector. They also give Canadian companies a leg up on competitors in other countries that do not have a free trade agreement with Israel.

In exchange, Canada agreed to eliminate tariffs on certain targeted Israeli agriculture and agrifood imports, such as certain fish and certain nuts, some tropical fruits, and some oils.

I want to reassure all honourable members and all Canadians that the modernized Canada-Israel free trade agreement, like its predecessor, fully respects Canada's supply management system. I am pleased that the negotiated outcome has the support of key Canadian agricultural stakeholders, including Pulse Canada, the Canola Council of Canada, the Canadian Vintners Association and companies involved in the processing of potatoes, cranberries, soybeans and pet foods.

An important aspect of the modernized CIFTA that aims to ensure these opportunities are more widely shared among Canadians is its forward-looking framework, which includes new chapters on trade and gender, small and medium enterprises, and labour and the environment, as well as a new provision on corporate social responsibility. In this regard, the modernized agreement is a new forward-thinking partnership that reflects who we are as vibrant, diverse, open and democratic societies.

I had the opportunity to witness this first-hand during a recent visit to Israel. For those here today who may not know, Israel has a long-standing reputation for technological prowess, with a well-developed scientific and educational base.

We see room to expand and build partnerships in these sectors and many others. There are tremendous opportunities for Canadian companies in sectors such as aerospace, smart mobility, sustainable technologies, information communications technology, life sciences and energy.

When I was in Tel Aviv in September, I announced a pilot program to facilitate new cybersecurity solutions for the energy sector that will consider Israeli solutions to address the needs of Canadian natural gas delivery companies. There are also great prospects for forging increased partnerships in joint research and development.

Mr. Chair, I also visited Ramallah in the West Bank and had an excellent day of conversations with business leaders and government representatives. In Ramallah, we established the Palestinian-Canadian Business Council for the first time and made a significant contribution to women entrepreneurs. We felt very satisfied that we had that very important conversation with Palestinians in Ramallah.

Canadian and Israeli firms have joined forces to develop an ultraviolet water monitoring system that ensures the safety of drinking water. There are even more possibilities on the horizon that will change countless lives in communities around the globe.

With so much potential and opportunity on both sides, it simply makes sense that we work together to deepen our partnership and continue to knit our economies ever more closely together. Canadians want to do more business in and with Israel in the years ahead. A modernized free trade agreement between our countries is a surefire way to help make that happen.

Thank you, Mr. Chair. I welcome our conversation coming up.

[The Chair, Liberal, Mark Eyking]

Thank you, Minister.

You alluded to the SMEs. I'll let you know, and you probably do know, that our committee is doing a study right now. With all these trade agreements, we want to see how small and medium-sized enterprises can take advantage and plug into these agreements. I welcome you to see the results. We have had some really good presentations so far from many stakeholders, and some good ideas for the government.

We're going to go to dialogue with MPs, and I'd like to welcome some who are visiting us: MP Tabbara, MP Wagantall and MP Ste-Marie. Welcome to our committee.

Without further ado, we're going to start off with the Conservatives.

Mr. Allison, you have five minutes.

[Dean Allison, Conservative, Niagara West, ON]

Thank you, Mr. Chair, and to the minister, welcome, in your new role. I realize it's been over four months, so it's great to have you here for the first time. I also want to recognize your officials who are with you who I think always do excellent work on behalf of Canada.

Thank you, guys, for what you do.

We're obviously going to support this trade deal, so I will just get that out of the way right now. Thank you for recognizing the work that our former minister did. I'll do the same thing. I appreciate some of the things in the economic statement—not all of them, but obviously the accelerated capital cost allowance is important for business. We've heard that here.

I think the increase in SIF funding, or the strategic innovation fund, is good. The challenge remains still that SMEs don't qualify for that. As we've seen happen as a result of tariffs, specifically while the strategic innovation fund is good and helpful, it's only really good for larger companies.

One of the questions I want to talk to you about is competitiveness. That's always the challenge. I agree that both our governments have been very similar in trade deals and I think it's important as we move forward, but I think the challenge still remains that we lack a competitive advantage when it comes to a number of different issues in the economy. The challenge I have right now is it's great that we have trade deals, but if we're not competitive at home, it makes it difficult as we move forward. We can talk about the energy sector.

There are a ton of things, but my concern is that there have been major regulatory reforms in the U.S., as well as tax reform. This is our largest trading partner. I'm not going to talk about carbon tax and I'll leave that to my partner, but one of the challenges is that we're not nearly as competitive as we need to be. I'd just like to offer you a quick comment on that. Then I have another comment on trade commissioners.

[Jim Carr]

Competitiveness is extremely important, and it's across all sectors of our economy. That was recognized in the fall economic statement. You made reference to the accelerated capital cost allowance, which is very important.

I had an interesting conversation with an international CEO, a woman, while we were in New York for the United Nations General Assembly. I asked where Canada fits in competitively internationally, because she was in the business of moving billions of dollars around the world. I asked her, “When you look at Canada, what do you see?”

Her answer was very interesting. It was that on the regulatory and tax front, it's about a wash—that you had an advantage over the Americans, but the Trump tax cuts levelled that playing field. However, your major competitive advantage in Canada is your immigration policy and your access to talent, and your understanding that Canada's labour pool is not bound by Canadian borders but is the world. There is an international competition for workers—and not only skilled workers, colleagues, but also for semi-skilled workers, even for unskilled workers, right across the requirements of a modern economy such as ours.

Therefore, when you say “competitiveness”, let's not forget that there is also competition for talent internationally. That's where Canada not only succeeds but excels, not only through the minds of Canadians but of those international entrepreneurs who are looking to invest in various countries. It's also important to say that it comes at a moment where Canada's inclusiveness is in contrast to the policy of other nations.

[Dean Allison, Conservative, Niagara West, ON]

Thanks, Mr. Carr.

The Canadian Federation of Independent Business said that 60% of their SMEs have never heard of the trade commissioner service. We understand this has been a recurring theme as we've talked to SMEs. What are you guys doing to help push that message out? I think about what our trade commissioners and EDC and BDC do, and it's all great stuff, but the challenge is, how do we get this knowledge out to our SMEs so that we can take advantage of these trade deals?

[Jim Carr]

I agree with the premise of your question. We haven't done well. We have to do better. How do you do better? Step one is to make sure that the SMEs know about these programs we're offering for them. They don't, so the first order of business is to raise awareness across the country that we have these tools.

Colleague, I can tell you it's $100 million over six years for CanExport, $17 million over five years to expand the Canadian technology accelerators, $10 million over three years for export readiness, $25.4 million over the five years for digital IP. There's more. There is $60 million over five years for the trade commissioner service's digital presence. I could go on, but the point is that we're with you. We would encourage all members to join the conversation about how imperative trade diversification is.

Let me give you an example of what you can do as a member of Parliament—

[The Chair, Liberal, Mark Eyking]

You'll have to be quick, Minister.

[Jim Carr]

What we can all do as members of Parliament is hold town halls to send out communication within our own ridings to businesses to tell them what's available.

We've had a conversation in our caucus. I would encourage you to have conversations in yours.

[The Chair, Liberal, Mark Eyking]

Thank you.

We're going to go to the Liberals now. Mr. Sheehan, you have the floor.

[Terry Sheehan, Sault Ste. Marie, Lib.]

Thank you very much, Minister. You certainly hit the ground running. I've been watching your movement across this world, and you've been in many parts of the world promoting Canada. I appreciate that very much.

I'm from Sault Ste. Marie, and we're known as a steel town. That's our traditional base of business. However, through many years of efforts we have also diversified significantly into clean tech, innovation, and technology. We have an innovation centre. We have many small and medium-sized businesses working in the information technology business in clean tech. We're a microcosm of what's happening in Canada as a whole.

I was very interested in hearing your remarks about your trip to Israel. Could you share with us and delve into some of your experiences in the meetings you had in Israel as they relate to information technology? Were there any businesses you met with that you thought were interesting in clean tech and related industries? Even in Sault Ste. Marie, we have the Ontario Lottery Gaming Corporation, a $2-billion corporation that deals in different solutions related to online gambling. They also, however, have a big security presence. Could you share that with us, Minister?

[Jim Carr]

Israel is a leading nation in the world in start-ups. There have been books written about Israel as a start-up nation. It's a remarkable story of how a partnership between the chief scientist of Israel and entrepreneurs has led to such dynamic growth. When we were there, we were so impressed by how that growth has developed into almost a national culture of pride, and they have been able to lead the world. We look for ways to deepen and broaden our own relationships with Israeli entrepreneurs and Israeli scientists and also to learn as a government how public policy can facilitate growth within the private sector.

There are chapters within CIFTA that will reflect this by further enhancing e-commerce. There's a chapter on e-commerce alone, and on IP. There's a recognition within the agreement of the importance of those kinds of technological transfers and learning from what the Israelis have done.

At the same time, while we were impressed by what they have accomplished, they in turn were impressed by what we are accomplishing. We see more and more—and I saw it as recently as the last few days in western Canada—just how swiftly we are advancing in e-commerce and in IP. There is a natural relationship between Canada and Israel on this file. Also, don't forget the importance of the people-to-people ties that actually go back, historically, right to the birth of the state of Israel, and the ties between Israelis and Canadians, which are very deep and continue to deepen. That's also reflected in the environment within which both nations see ways to co-operate. A good example is this deal itself.

[Terry Sheehan]

That's reflected in Sault Ste. Marie. It's a small northern Ontario town, but we have the synagogue, the Beth Jacob. We have a very proud community up there.

I wanted to touch on the CPTPP. In your remarks, you mentioned that being one of the first signatories gives us extra ability. I bring that up because in Sault Ste. Marie we have Manna International, which deals with organic agriculture of different varieties, in particular soybeans. They've been dealing with Japan for the last 20 years. They're dealing with Belgium and other places in Europe.

Could you explain to us what exactly was the advantage of our getting this deal done expeditiously?

[The Chair, Liberal, Mark Eyking]

Give a short answer, please.

[Jim Carr]

The short answer is that it means there'll be two tariff reductions before other countries are even part of the agreement. The first comes on the 30th of December, and the second comes only a few days later, when we're into 2019. That's the first advantage that we get, along with five other nations. Vietnam has been the seventh.

That's why the work of this committee and of the House of Commons and the Senate was so vital to put us in the first tranche. It's going to give our exporters a significant advantage, and that's going to be measurable in the volume of trade, because there will be instant tariff reductions on December 30th and a second set of reductions a few days later that will benefit the nations that were part of that first tranche. That's us. That's why it's important.

[The Chair, Liberal, Mark Eyking]

Thank you.

We are going to move over to the NDP now. Ms. Ramsey, you have the floor.

[Tracey Ramsey, NDP, Essex, ON]

Thank you.

Thank you, Minister, for being here.

You mentioned tremendous opportunities. There was an opportunity in this agreement to advocate for a peaceful two-state solution between Israel and Palestine, but unfortunately the CIFTA that you've presented to us is a missed opportunity in this way. The European Union-Israel deal had provision for it, had language in there, and I'll read to you what it states between the parties. It talks about the provisions of the agreement itself, and it says:

—relations between the parties, as well as all the provisions of the agreement itself, shall be based on respect for human rights and democratic principles, which guides their internal and international policy and constitutes an essential element of this agreement.

We have strong international commitments towards this from Canada. We've certainly signed on to several of them, and so I want to ask you, Minister, why the government didn't include a similar general line at the very least on human rights protection.

[Jim Carr]

Thank you.

We know that Canada is committed to a two-state solution. That is our policy towards the conflict. We continue to be committed to that objective. We also fully understand that the impetus for a two-state solution must come from the Palestinians and the Israelis. There are obstacles that are beyond the influence of nation-states such as ours, but we stand ready to offer our help, as we have historically, in the conflict.

[Tracey Ramsey, NDP, Essex, ON]

Can I ask, Minister, why we didn't include the same language as the EU deal does?

[Jim Carr]

Well, you know that the promotion and protection of human rights right around the world are core to Canada's foreign policy—this is a foreign policy decision—and that our government will always stand up for human rights, including women's rights, indigenous rights and freedom of expression.

[Tracey Ramsey, NDP, Essex, ON]

I just think there was a great opportunity to do that and in a non-controversial way. This language already exists with one of our large trading partners, the EU, so I really need to specifically ask why we didn't include that in this agreement.

[Jim Carr]

This is a foreign policy issue. You know of our commitment to a two-state solution. You know that contained within CIFTA itself there are path-breaking chapters on corporate social responsibility and on gender rights, in an enforceable chapter negotiated for the first time, and we think that as Canadians we can be very proud of those accomplishments.

[Tracey Ramsey, NDP, Essex, ON]

I just want to be clear that you could include it in a trade agreement. There is precedent for it. It has been done before, so it isn't just a foreign affairs issue. It is something that's been addressed in a trade agreement with, I would say, one of our closest partners, the EU, so there is absolutely a space for that to happen in here. My question really was why that hasn't happened.

Maybe in that spirit I'll move a motion that I have here at the committee. It's a motion with regard to the committee's study of Bill C-85, an act to amend the Canada-Israel free trade agreement implementation act and to make related amendments to other acts:

That, with regard to the Committee's study of Bill C-85, An Act to amend the Canada-Israel Free Trade Agreement Implementation Act and to make related amendments to other Acts, the Committee invite witnesses to appear to discuss the state of human rights in Israel and the occupied territories of Israel.

I'll just put that forward, Mr. Chair, and move that right now, please, for a vote in the committee.

[The Chair, Liberal, Mark Eyking]

The motion has been put forward. Is there any debate?

Let's call the question.

[Tracey Ramsey, NDP, Essex, ON]

Could we have a recorded vote, please, Chair?