International Trade Committee on Oct. 27th, 2016

[Tracey Ramsey, NDP, Essex, ON]

Thank you so much for your presentation, Your Excellency. I echo what my colleague has said about the importance of the relationship that we have with Japan.

Of course, we are watching what's happening in the U.S. with the TPP, so I guess my question would be, if negotiations fall apart because the U.S. does not take part, is Japan willing to engage in bilateral talks again with Canada, as we were before we entered into the TPP together?

[Kenjiro Monji]

We have already presented a bill and agreement to Parliament, so at this moment the government's position is to concentrate on the TPP.

As for a bilateral economic partnership agreement with Canada, it actually preceded the TPP. It is only that the TPP moved so fast, we decided to hold for a while and concentrate on that. We are not forgetting the bilateral EPA, but at this moment, as Prime Minister Abe mentioned, all the effort should be put toward the early entry into force of the TPP agreement.

[Tracey Ramsey, NDP, Essex, ON]

We're focusing our efforts there, as well. We've seen over 260 witnesses at the trade committee, and we have travelled across Canada, really trying to have a consultation process on where Canadians stand. I have to tell you that Japan is the country we hear the most about at this panel. The benefits of reducing tariff and non-tariff barriers for Canadian businesses have been well represented to our committee, and I think we understand the importance of having that, both for the Canadian businesses and for the people who would benefit in Japan.

You spoke a little bit about the process and about how it's sitting in Parliament right now. There was an article in Inside U.S. Trade which told us that there is opposition to the deal in the Diet.

Could you expand on that a little bit and let us know whether it's likely that opposition to the TPP in your Parliament will impede the process?

[Kenjiro Monji]

Frankly speaking, I'm not quite aware of what is actually taking place in Parliament. Even in Japan, things sometimes take place behind the curtains, but there are other deliberations in public places. It is natural that there are various opinions, including opposition from the other parties. I will simply mention one fact: after two elections in the lower house and upper house last July, the ruling party has a two-thirds majority in both houses.

I think that after the deliberation the government may be able to convince the opposition, but as I said, the ruling party has a huge majority in the house.

[Tracey Ramsey, NDP, Essex, ON]

Thank you for that.

You mentioned November 30 as the end of the Parliament sitting for this long period of time. Do you think that Japan is close to ratifying, or will they ratify before that date or do you think that it will end up being November 30 before you know?

[Kenjiro Monji]

I was once in charge of getting approval for the agreement from Parliament. It all depends on many other things, but once approval is made, normally we present the document immediately for the ratification accession to the agreement. We are not quite sure how long it will take. I think we already presented the agreement in June. Then the session ended, and we could not extend the session because of the upper house election. Also, there were unprecedented unexpected events such as the Kumamoto earthquake, so much time was not used for deliberations. That's why it has continued to go on. Now we have started deliberations in the Parliament. Once the deliberation finishes, once every party agrees that we have already touched upon many things, they will move forward, but we have to get the approval from both houses, the House of Representatives and the House of Councillors, the lower house and the upper house.

As I already mentioned, we hope to get approval as soon as possible.

[The Chair, Liberal, Mark Eyking]

Thank you, Your Excellency, for coming here this morning and having a dialogue.

We don't know what the outcome of the TPP will be, but whatever happens, our relationship will continue to grow. We'll continue to be a good partner with Japan, whether that be as a diplomatic partner or as a trade partner. Thank you for coming and we hope you can come again.

[Kenjiro Monji]

Thank you very much.

[The Chair, Liberal, Mark Eyking]

We have the Australian High Commissioner to Canada in the room, but we're going to suspend for a couple of minutes.

[The Chair, Liberal, Mark Eyking]

Would MPs take their seats.

Welcome, sir, to our committee.

As you well know, some people call Canada and Australia twins, given our origins, the size of our countries, and the makeup. All the conflicts we've dealt with over the last century, we've done it together. Of course, the British heritage is big with us.

You might have heard some of the comments I made to the Ambassador of Japan. Our committee has been travelling the country, every province, and the territories, talking to big stakeholders, consumers, interested groups.

As you well know, it's a deal that's big. It could be one of the biggest trading blocs in the world. We have committee members from right across the country on our trade committee.

Of course, we always have other issues we're dealing with beside the TPP. Our biggest trading partner is the United States, so we keep a very close eye south of the border, and we're in the final chapters of the European Union trade agreement. Our committee is fairly active and we have a lot on our plate, but we're glad you're here to give us your perspective on where Australia sits on the TPP.

The floor is yours, sir. Also, welcome to the delegation that's with you today. It's good to see them here too.

Go ahead, Mr. High Commissioner.

[His Excellency Tony Negus, High Commissioner of the Commonwealth of Australia to Canada]

Mr. Chair, it's a great privilege to be here with you.

Thank you for the opportunity to make an opening statement to the committee on behalf of the Australian government.

As you know, Australia is also in the midst of our parliamentary process on the TPP. Our Joint Standing Committee on Treaties has already held several public hearings and received submissions from the private sector, peak bodies, unions, non-government organizations, academics, special interest groups, and members of the public. Last month, our Senate also voted to establish a separate inquiry into the TPP. Once these inquiries have concluded, Parliament will then need to consider the legislation necessary to implement the TPP in Australia.

As we and other TPP countries move through our domestic ratification processes, the question looms large as to what the next few months will portend for the future of the deal. As you know, the TPP needs the U.S. as well as Japan to ratify it in order to enter into force.

I'll acknowledge that there's a great deal of uncertainty about what will happen in the coming months in the U.S., and Australia is watching developments there closely, like the rest of the people. I can only reiterate the statements of our Prime Minister Malcolm Turnbull and trade minister Steve Ciobo that in Australia we are cautiously optimistic that the U.S. will ratify the TPP.

The Australian government is working hard to promote a narrative to support what we think empirically is absolutely clear, which is that open trade bolsters economic reform and stimulates growth. Australia, much like Canada, is a nation whose prosperity has been built on free and open markets and participation in global commerce, a nation that has everything to gain from lowering trade barriers and increasing integration with the world's most dynamic region, the Asia-Pacific.

From our perspective, the TPP is a premier example of a trade deal that will raise living standards, create jobs, and drive regional integration. The TPP represents the largest trade-liberalizing deal concluded anywhere in the world for over 20 years. Really, not since the Uruguay round of multilateral negotiations has such an ambitious, comprehensive, and market-opening deal been achieved.

The deal will integrate 12 economies, as you've heard, in the Asia-Pacific region, which together account for around 40% of global GDP. The 12 TPP countries include two of the largest economies in the world, the United States and Japan, as well as other G20 economies, such as Canada, Australia, and Mexico. The TPP has the potential to bind together our shared neighbourhood under the banner of trade liberalization, creating closer economic and geostrategic ties. To paraphrase former Australian trade minister Andrew Robb, who retired at the last election but was one of the central figures in our push to get this deal done, the opportunities this presents for innovation, knowledge, and services-based trading nations are limited only by the imagination.

With that introduction, I want to address two issues today: first is what the TPP means for the Australia-Canada relationship, and second, some of the unique features of the TPP which we think makes it a 21st century agreement.

Australia and Canada have always enjoyed an extremely close and broad-based relationship, as echoed in your comments. We have similar systems of government. We are both resource rich. Our developed economies are services-based, and our populations are small relative to our large and often challenging land masses. Links between Australians and Canadians have always been warm, and contacts between our Parliaments, officials, academics, and communities are extensive. Our armies have fought side by side on too many occasions and have also co-operated regularly in peacekeeping operations.

Although our trade relations date back to 1895, and we have had a narrow, preferential merchandise trade agreement with one another in the past courtesy of our Commonwealth membership, we've never really extended this until now. The TPP will be a significant step forward in our bilateral economic relationship and will create new opportunities for exporters, businesses, and investors in both countries.

Our two-way merchandise trade is perhaps understandably constrained by the tyranny of distance, and also by the fact that our export profiles are fairly similar. Nevertheless, we have carved out markets for each other, notably in agricultural products, machinery, ore, and medicines. The TPP will ensure that we maximize the opportunities for further development. Even if Canada doesn't particularly need to buy a shipload of our barley, nor we your wheat, chances are that our preferential supply chain arrangements negotiated in this deal will deliver products that combine Australian and Canadian agricultural products that will end up in other TPP markets. The result is that the TPP will create more opportunities for business and lower prices for consumers.

While trade is modest, our two-way investment market is significant. Canadian investment in Australia is currently around $39 billion Australian, and Australian investment in Canada is almost $43 billion Australian. You know that the Australian dollar and the Canadian dollar are fairly close, so those figures transpose quite easily. The TPP will enable this to grow and diversify, with both countries raising our investment screening thresholds. Australia will commit to not screen private Canadian investments in non-sensitive sectors below $1.094 billion Australian. Canada will not screen private Australian investments below $1.5 billion Canadian.

Australia and Canada boast sophisticated service sectors, and the TPP will provide greater access and certainty of operating conditions for service suppliers in each other's markets. There are significant opportunities for suppliers from both countries of professional services, including legal, engineering, and architectural services, as well as further opportunities to bid for a wide range of government procurement contracts, such as in education and in environmental services.

Australia and Canada have also made reciprocal commitments on the temporary entry of business persons under the TPP. The enhanced certainty on entry and lengths of stay for various categories of business persons, as well as their spouses, will enable commercial relationships between our countries to grow.

Overall, the TPP will create a platform for the freer exchange of goods, services, capital, and people between our nations, not to mention the significant gains we both realize in the other 10 TPP markets.

The TPP will also make doing business across the region easier, by setting common international trade and investment standards between member countries, reducing red tape and business costs. This includes more transparent and efficient customs procedures, a single set of documentary procedures for products traded under the TPP, and mechanisms to address non-tariff barriers.

As a 21st century agreement, on top of its broad, liberalizing market access commitments, the TPP includes a suite of first-time-ever trade rules, setting a new benchmark for global trade agreements.

In areas such as competition, e-commerce, labour and environment, and transparency and anti-corruption, the TPP breaks new ground.

For the first time in any trade agreement, the TPP contains disciplines on state-owned enterprises that are principally engaged in commercial activities, which will level the playing field for Canadian and Australian businesses competing with large state-owned enterprises in overseas markets, to help ensure our businesses can compete fairly for contracts.

The TPP includes the most comprehensive and current rules on e-commerce in any trade agreement, guaranteeing the free flow of data across borders for service suppliers and investors as part of their business activity.

The levels of environmental protection set out in the TPP are extensive and will support international environmental conventions. For example, TPP parties have agreed to take measures to control the production, consumption, and trade of certain substances that deplete the ozone layer, consistent with the Montreal convention. They have also agreed to take measures to implement their obligations under the convention on the elimination of trade in endangered species.

The labour chapter is also the broadest ever agreed by Australia in an FTA and requires all TPP parties to enhance compliance with internationally recognized labour rights such as the elimination of forced labour, abolition of child labour, freedom of association, and the right to collective bargaining.

The agreement also addresses for the first time the specific needs of small and medium-sized enterprises with a view to helping them take advantage of the opportunities available.

Finally, for the first time in any trade agreement, the TPP includes robust provisions for combatting corruption and bribery of public officials and other acts of corruption adversely affecting international trade and investment. These anti-corruption provisions will provide greater transparency and certainty to individuals and businesses seeking to trade with, and invest in, TPP parties.

To conclude, the Australian government is firmly committed to the TPP.

I'd like to thank you again for the opportunity to appear before you this morning. We would, of course, be happy to answer any questions. Whilst I'm not an expert on trade deals, we'll do our best to take those questions as we can.

[The Chair, Liberal, Mark Eyking]

Thank you for that presentation.

I could add that I was in Australia a couple of years ago. My family rented a motorhome. We only got to see the east coast, but we went up to Hunter Valley and the Blue Mountains, and to Fraser Island. It's just beautiful. Once you learn to drive on the other side of the road, you're all right. You guys are pretty accommodating when we're on the wrong side, and you know we must be from Canada because we're tootling along. Anyway, it's a great place to visit.

We're going to do the same as last time, committee. We'll have one section of four minutes for each party.

We're going to start with Mr. Van Kesteren of the Conservatives.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Mr. Ritz is going to start.

[The Chair, Liberal, Mark Eyking]

Mr. Ritz, go ahead. You guys have four minutes.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Thank you for attending here today. It's almost unprecedented to have ambassadors and high commissioners of your status before our committee, but it's excellent that you're here and it shows the importance of the TPP.

You mentioned a lot of what joins us together, but there are tremendous synergies in the seasonality between our two countries. You said you weren't going to ship us any barley and you didn't want any wheat. We actually complement each other extremely well in a lot of those marketplaces simply because we can do that off season.

You did talk about the process, but you didn't talk about a timeline. Is that still up in the air, or do you have an idea of what the timeline would be?

[Tony Negus]

The parliamentary processes are under way, and as I mentioned, the Joint Standing Committee on Treaties is currently examining this. We don't think there will be a lot of change in legislation, perhaps around our customs procedures regarding tariffs and those sorts of things, and that really won't be determined until the end of the process and the recommendations are made by the treaties committee.

We're thinking we want to do this as quickly as possible, but realistically it won't be before the beginning of next year.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Okay. The Ambassador of Japan was here just before and I noticed you were listening and watching. He talked about the stability of the geopolitical atmosphere in that whole area of the world and, of course, being part of that.

When we look at some of the other countries that are potentially joiners to the TPP, do you agree that there will be a tremendous amount of stability at the geopolitical level when this is done and we move forward?

[Tony Negus]

I certainly would agree with his comments in that regard. I think the more that countries trade with each other and understand each other, in that regard, it can only benefit the wider group.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

We always say a high tide floats all boats. That's what we have here.

[Tony Negus]

That's right.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Thank you.

[The Chair, Liberal, Mark Eyking]

Dave.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

I want to carry on where Mr. Ritz left off. We talked at length about the benefits to our nation, and now we're talking about the benefits to other nations, the different sectors and how they'll be. Last week we talked a little bit about the consumers, and Mr. Ritz led you into this, and the Ambassador of Japan did a fine job talking about why it's important to citizens of the world to have better trade relations. I want to take it in another direction.

When we think about China and the hegemony of their movement, is that a concern for you and does this agreement possibly help stem that and maybe move us in the right direction?

[Tony Negus]

Certainly, the agreement's not designed to prevent anyone, anywhere, doing anything, other than fostering trade.

I do have a few notes on this, which I will just refer to.

As I said, the TPP was not negotiated with the intent of opposing any or containing any country. In fact, it's open architecture allows other members to join. I know the Japanese ambassador mentioned that, as well.

China has expressed an interest in the TPP and is also involved in negotiations with our Regional Comprehensive Economic Partnership again. Of course, Australia only just signed an FTA with China in the last four months and we're moving ahead in our own bilateral arrangement there. But the RCEP involves Australia and a number of TPP parties, including Singapore, Vietnam, Malaysia, and Brunei, as well.

In Australia's view, the TPP and RCEP present complementary pathways to the realization of APEC's long-term economic goals. But it's certainly not designed, from our perspective, to contain or to hedge against any particular country.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

China has come a long way. All of us agree that what we're seeing is they're moving in the right direction.

Do you feel, then, that this agreement will continue to encourage them to move in that direction and just make for a better, more peaceful world?