International Trade Committee on Nov. 15th, 2016

[Steve Verheul]

Do you mean a plan to inform Canadians?

[Tracey Ramsey, NDP, Essex, ON]

Yes.

[Steve Verheul]

Again, I think we want to make sure.... This would be more for Health Canada than it would be for us, but I think that if we can anticipate that this is going to happen, we would certainly want to give people a heads-up. I think the problem at this point is that we don't really know. With the combination of what is happening between provinces and the federal government on health care agreements, that will affect prices.

We've found in our analysis that the price impacts of what would happen in CETA aren't necessarily all that relevant, because the price of drugs in Canada is already higher than it is in France, or the U.K., or Germany, even though we're a much smaller country. Also, those countries don't have an additional two-year period of protection. They have an additional five-year period of protection, but our prices are higher.

[Tracey Ramsey, NDP, Essex, ON]

I think the concern is the coupling of the transfers that will happen to the provinces next year with the increased costs for drugs.

My next couple of questions are around the court system, the ICS. I don't see any language laying out the appellate mechanism. Could you comment on when we'll see these details?

[Steve Verheul]

Yes. We deliberately didn't entirely complete the appellate tribunal system when we completed the negotiations, partly because we wanted to see how this would develop over a period of time, and we wanted a bit more time to be able to think about how this might function.

There have been an increasing number of discussions internationally with other countries about how an appellate mechanism could work as well, so I think we have a fair amount of time to start working on that, although we'll be starting very soon. Given that this will not be provisionally applied, we probably have a period of at least a couple of years to work all of that out.

[Tracey Ramsey, NDP, Essex, ON]

Along that line, Belgium and Wallonia have already said they won't accept the ICS, but if we get to a point where the EU member states are successful in removing this provision, will we then see legislation tabled to remove it from Bill C-30?

[Steve Verheul]

If it were to be removed entirely—and obviously a lot of things would have to happen before that happened—first of all, that would have to be an EU decision. Member states can't do it individually. If the EU came to us and said that they wanted to remove that system entirely, then we'd need to have a discussion and a bit of a negotiation at that point.

They've shown no indication of intending to come to us with such a proposal, but if we're going to change something down the road, whether it's in this area or in any other area, we'd need to have a negotiation first, see where we land, and then see whether there are required changes in any legislation coming out of that.

[Tracey Ramsey, NDP, Essex, ON]

But if they came with that as a precondition for ratification—

[The Chair, Liberal, Mark Eyking]

We're going to have to move over to the Liberals. I'm sorry, but your time is up.

Mr. Peterson, you have the floor.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you, Mr. Chair.

Thank you for being here today, Steve. We're happy to have you here, and congratulations from me as well. I know that you've worked exceptionally hard over the last seven years, and I know that our current minister and ministry and the previous ministers and ministry worked very hard to make this deal happen.

I'll take this time to congratulate Mr. Ritz, who of course was the agriculture minister at the time. He'll deflect that, I'm sure.

Congratulations to you, Steve, and to former minister Fast, of course, for the good work in getting us to where we are today, which is great. I think we now have to expeditiously get this in force and in effect so Canadians can start benefiting from this agreement.

You mentioned there are some time-saving processes or mechanisms that can truncate that 90-day window when it comes to the regulations and the approvals. Could you elaborate on what those might be and how we can implement them?

[Steve Verheul]

We're actually still in the fairly early stages of trying to determine what we can do. Most of the legislation is fairly straightforward, and once we get approval for the legislation from the House, we can move quickly through regulations. I would say that's for the bulk of the kinds of changes we have to make.

For some regulatory changes, there are built-in requirements for consultation processes, and in some cases those have specific timelines associated with them. We may have some built-in processes that we may have a hard time shrinking or compressing.

At this time, we're really trying to find some time savings wherever we can, so that we can move it through more quickly than we're expecting.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Okay. In any event, it's good to know that it's being examined.

I want to talk a bit about the auto sector. Magna International is in my riding and employs over 4,000 people in my riding. I've spoken with them, and I speak with them regularly, of course, and they're excited about CETA. Do you share this optimistic outlook of the auto sector that CETA is good for the industry here in Canada?

[Steve Verheul]

Yes, we do, actually. Certainly, when we first started the negotiation, we did hear some expressions of concern that as we were lowering the tariffs it would be easier for exports of cars from the European Union to come into Canada. Our thought at the time was that it would more likely have an impact of displacing some of the other cars coming from other sources into Canada, but I think, as we found over time, from the auto part side, in many ways we tend to have more of an advantage than the EU does. On auto parts, we're expecting to be more successful than the EU. We have various companies that are already established in Europe, so it'll be easier to go back and forth in terms of the kinds of parts they're selling there.

Even on the car side, we have received a number of inquiries with respect to investing in Canada, because those car companies would then be able to serve not only the U.S. market, because of our access to the U.S. market, but also able to go back and serve the EU market as well since our access will be open.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Right. That's good. I think it's good for auto parts and also for the OEMs. I think it's a good deal for both sides of that industry.

What kinds of supports could there be through the department for small and medium-sized enterprises to tap into this new huge market? Obviously, if we don't tap into it, there's not going to be any help for any of our small and medium-sized enterprises here. What sorts of supports are going to be in place to make sure that we can take advantage of it?

[Steve Verheul]

That's a good question. From the perspective of trade negotiators, I think we're very much aware that we can negotiate the best agreement that there could be, but if nobody takes advantage of it, it's not worth very much.

Probably the most important part is getting it right in terms of giving the information that is needed, particularly to small and medium-sized enterprises, and helping them with any kind of advice they might need or with further information about accessing the EU market. We're putting a lot of emphasis on that.

We have been putting a lot of attention and a lot of resources behind the whole notion of how we can gear up the Canadian industry to take advantage of these new opportunities into the EU, and that effort is focused primarily on small and medium-sized enterprises, because our view is that the larger multinational companies are able to take care of themselves. They know how the rules work. They have a lot of advice already in their system.

We will see the Trade Commissioner Service being much more active, both in Canada and in the EU, on these kinds of efforts. We will have plans by sector as to how we can encourage more companies to take advantage of the opportunities in the EU.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you very much.

[The Chair, Liberal, Mark Eyking]

That was our first round. We will start the second round with the Liberals leading off.

Madam Lapointe, you have five minutes. Go ahead.

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

Thank you, Mr. Chair.

I want to thank the witnesses for being here today. My colleagues and I appreciate their presence and their ability to help us clarify certain points.

A little earlier, my colleague spoke about SMEs. My constituency north of Montreal has many wonderful SMEs, including Raufoss Canada, a subsidiary of the Austrian-based Raufoss Group. A number of those SMEs could benefit from exporting. You and the minister must have met with or consulted a number of large businesses. However, did you consult SMEs before entering into the agreement?

[Steve Verheul]

Yes, we have, and are doing that in increasing amounts. Again, the larger companies are easy. We can talk to them easily. We know who they are. It's really the small and medium-sized enterprises that are going to represent the greatest gains we can get out of CETA, but only if we can give them the information they need, talk to them about the opportunities that will exist in Europe, and help them along the way to be able to look at a market that they may not have looked at before. There are some SMEs already in there. There are many others that we think could find some good opportunities in the EU.

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

A little earlier, my colleague spoke about labour mobility.

You spoke more specifically about SMEs. You said that since they have less flexibility in terms of labour, they could benefit from labour mobility. What could you, the department and the minister, implement to help businesses that are able to transfer people?

[Steve Verheul]

It's part of an overall plan that we've been developing over the past probably six to eight months. It's really centred around an investment strategy, a trade strategy, whereby we're trying to look at all of the various potential interests into the EU and to, first of all, have some very targeted information that we can provide them and, secondly, assistance we can provide them, whether it's counselling or advice in the particular markets they might be interested in. This is something we haven't really done before to the same extent. Even when NAFTA came in, we didn't have an effort like this in place.

That's what we're focused on. We're trying to find ways such that, first of all, we can get a running head start into the EU market while it's open, as soon as it's open, and then make sure that we can get as much interest into the EU market as we can across the board.

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

I'll certainly promote these factors to the businesses and SMEs in my constituency.

A little earlier, you spoke about cheese and quotas. This interests me since I'm from Quebec. I want to make sure that I fully understand what you said. You spoke of shares of import allocations and you said that 30% would be allocated to new entrants. What was the situation before and how will it change?

[Steve Verheul]

Right. For all of our previous tariff quotas on cheese—and there haven't been very many—we have always allocated them on the basis of the companies that existed. The WTO tariff quota is the largest one. Companies who are interested have been having allocations of that quota for a very long period of time. I think we've learned some lessons from that as to how we should go forward in terms of what we choose as far as an allocation process is concerned. That 30% of new entrants works well for us, I think, because it means that we can bring new people into that process.

We want to be sure that people wanting an allocation are active in the industry, so that they can actually help to grow the Canadian dairy sector at the same time, rather than having somebody looking to make some quick returns from an allocation but who may not have a stake in the industry. We're trying to connect it back to the dairy sector itself to the extent that we can.

All of that is directed towards getting as much value as we can within the dairy sector for the increased cheese that will be coming from the EU.

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

Thank you. I appreciate your comments on the matter.

Mr. Chair, I believe my time is up.

[The Chair, Liberal, Mark Eyking]

Thank you.