International Trade Committee on Nov. 15th, 2016

[The Chair, Liberal, Mark Eyking]

A quick answer, please.

[Steve Verheul]

Yes, it was. We did make it clear that any tankers coming in from foreign countries, and in particular the European Union, would be subject to the same safety requirements and the same environmental requirements that we have domestically. If they fall short in any of those areas, there clearly would be action taken against those areas. This is within our waters and subject to our requirements to make sure that we're protecting our ports.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Thank you very much.

[The Chair, Liberal, Mark Eyking]

Thank you.

I'm going to move over to the Conservatives now.

Mr. Van Kesteren, you have the floor for five minutes.

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

Thank you, Mr. Chair.

Thank you, Mr. Verheul, for being here. It's always great to hear what's happening and what your team has accomplished. These are exciting times. We've talked a lot about what the implications are and how some of these things are going to work their way through as we progress with this agreement.

I want to focus a little more on the actual signing and the implementation when this thing starts to happen, and specifically in regard to my riding. You're very familiar with my riding, so you know, for instance, that we are heavily agricultural, but we're also tied in very much with the auto industry. The other interesting aspect is the ethnicity that we have. We have a large Italian community in Leamington, and in the rest of the rural area, there's a large Dutch community.

What should I be telling my constituents to get ready for in terms of what kind of movement we may see specifically in southwestern Ontario, especially with the bridge nearing completion at about the time when this thing is going to start to happen?

[Steve Verheul]

Particularly from a CETA perspective, one of the things we've seen is that most Canadian businesses—I'm setting aside the large multinationals—have acquired a degree of comfort with the domestic market and a degree of comfort with the U.S. market. They're both understandable, and they're used to them. The European market is going to require a bit of extra effort, at least initially, because you're dealing with different people and, in some respects, a different system, so there has to be a bigger upfront effort made to position ourselves to take advantage of it, which is really what we need to do.

On the agriculture side, I think we're generally in pretty good shape. I think we know what we need to do. It's not all done, necessarily, but agricultural commodities have a long history of being effective in participating in export markets, so those, I think, we can deal with.

On the auto sector, I think we clearly have some challenges. We may have new challenges from the south, but when when it comes to what we do with Europe, I think we have to get out of that North American mentality alone and start thinking about what we can do to export to Europe, both with autos and, more likely, with the parts side.

We anticipate, from our analysis, that we can have some real gains that we can make on the parts side. We can draw in more investment to Canada on the auto production side. All of that is going to take an effort, and not just by the industry players. We have to be working together with them from the government perspective.

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

Will we see an increased flow of trade to the United States through Canada from Europe? If that's going to happen, should we perhaps be preparing some of the folks who have their roots in Europe to link a bit more tightly to the countries they come from?

[Steve Verheul]

I think that's good advice, particularly from the investment side, because I think we can expect further investment in Canada because of the notion that we now have access to the two largest markets in the world: the U.S. and the EU. Very few others have free access to both of those. When it comes to investment, we do want to make sure that it's viewed from the perspective as to what you can do in the U.S. market as well. Going back to cars, I think they're looking to make sure they can go both ways. I think the key will be the kinds of connections that are being made, as you mentioned, and that can facilitate making those connections much easier to turn into real business operations and linkages.

I would say, from that question, that you're thinking in the right direction.

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

Thank you.

[The Chair, Liberal, Mark Eyking]

We have to move on.

Ms. Ramsey, you have three minutes.

[Tracey Ramsey, NDP, Essex, ON]

It's clear that the government is moving towards privatization of infrastructure, certainly with our roads and other pieces, but also potentially airports. With the ratchet clause that exists in CETA, if we put things into the private sector and realize, for instance, that at an airport this hasn't worked out and public safety was at risk, and we try to pull that back, what could happen under the ratchet clause in CETA?

[Steve Verheul]

Well, it's really not so much a question of the ratchet clause, if you're doing that. If you're deciding that something is going to be moved to the private sector and, as you say, the experiment is attempted, doesn't work, and you want to bring it back in—

[Tracey Ramsey, NDP, Essex, ON]

You want to pull it back.

[Steve Verheul]

—the real barrier to that is whether you have to expropriate the private company that's doing the contract in the meantime. If you wait for the end of a contract, or if you provide payment on expropriation—which would not necessarily be a requirement of CETA, but there are domestic laws around this too—then there are implications. There is otherwise nothing preventing its being brought back into the public sector.

[Tracey Ramsey, NDP, Essex, ON]

Is there potential for us to be sued under the ICS or ISDS if that provision ends up being approved in Europe, more so than under the ratchet clause?

[Steve Verheul]

Under the ratchet clause, I think it would be highly unlikely, because the ratchet clause isn't going to come into effect so much in investment dispute. They're going to be looking at whether anything was expropriated in that kind of action and whether the investor was being treated fairly, particularly in relation to other players in the sector, whether they be Canadian or from other countries.

[Tracey Ramsey, NDP, Essex, ON]

If they felt they had been treated unfairly, they could use the ICS mechanism?

[Steve Verheul]

There's not really a provision for them to do that. There are provisions related to national treatment, most-favoured-nation treatment, and performance requirements. There are requirements for fair and equitable treatment. There are requirements against expropriation. Those are the kinds of challenges that we'd see in an investment dispute, not challenges related to the ratchet.

[Tracey Ramsey, NDP, Essex, ON]

Okay.

There have been quite a few changes over the past year, and one of them is the interpretive declaration. What is the legal weight of the interpretive declaration? It sits as an aside to the actual agreement.

[Steve Verheul]

Right. It really goes back to the Vienna Convention on the Law of Treaties. I'm going to put this fairly simply.

[Tracey Ramsey, NDP, Essex, ON]

I appreciate it.

[Steve Verheul]

It's not that you wouldn't understand it, but it would take me more time, I think.

[The Chair, Liberal, Mark Eyking]

The time is almost up, so a quick closing would be good.

[Steve Verheul]

It's going to be even faster now.

The Vienna convention basically says that if you're a dispute settlement panel, you first of all look at the words of the texts. If there's any ambiguity in the words of those texts, you can look to supporting evidence. The joint interpretive instrument is intended to be just that. It's an explanation of what the parties' intentions were when they concluded the negotiation, so it has that kind of legal weight such that any panel is going to at least have to consider what is said with respect to the intentions of the party in that document.

[The Chair, Liberal, Mark Eyking]

Thank you.

It looks as if we have enough time to do two full rounds, and every MP will have had their questions.

We're going to wrap up.

Last but not least, Mr. Fonseca, you have the floor for five minutes.