International Trade Committee on Nov. 15th, 2016

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

I'm always on time. You know that.

[The Chair, Liberal, Mark Eyking]

You're the only one. You have eight seconds before the time expires.

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

I know I'm the only one. You have to learn about me. You have to learn something.

[An hon. member]

You're over your time now.

[Voices]

Oh, oh!

[The Chair, Liberal, Mark Eyking]

We're going to go to the Conservatives.

Mr. Hoback, you have five minutes.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

Again, thank you, Mr. Verheul, and thanks to your staff. All the hours you've put into this are sure appreciated. Speaking on behalf of farmers, forestry workers, and people in Saskatchewan, I know that they're looking at this as an opportunity and are excited for sure.

One thing I'd like have a little more clarification on is the market imbalance in the agriculture sector. What is the definition of that? What is the process for defining what would be considered a “market imbalance”? How do you see this actually working?

[Steve Verheul]

A market imbalance? Are you referring to the safeguards?

[Randy Hoback, Conservative, Prince Albert, SK]

Exactly. I mean the safeguards that they're saying they want in place. If they see this so-called market imbalance, again, define it. What does it look like? What would it trigger?

[Steve Verheul]

Let me give you a bit of context behind that first.

[Randy Hoback, Conservative, Prince Albert, SK]

Sure.

[Steve Verheul]

In CETA, we negotiated an outcome that does not have any built-in safeguards of their own. There are no safeguards either way in any sector in CETA, but what we did do when it came to agriculture is that we preserved our right to be able to use the WTO special safeguard for agricultural products. We did not have an outcome that allowed the EU to use that WTO special safeguard for agricultural products.

This is something the Walloons were concerned about, because they saw it as unfair that we would retain the safeguard and they would not. In the discussions they had with the European Commission, what they were talking about was the WTO general safeguard, which applies to all products and is frankly not that effective for agricultural products. We and other countries have rarely used it for that. As part of that declaration, though, Belgium wanted to be able to look at what was coming in, see if there were these types of market imbalances, and see if that would provide the kind of evidence that would be required for the WTO general safeguard.

I'll be honest. I don't think we're too worried about that, particularly given the size of the access we have for pork and beef—which is where the concern is—into the EU market, which is generally less than 1% of their market. That's not going to cause real injury to their market, which is one of the requirements under the WTO general safeguard. They will certainly be doing their assessments and their economic analysis of the product coming in, but in terms of the tools they have, at least under CETA, to address that, there's not really anything.

[Randy Hoback, Conservative, Prince Albert, SK]

As far as that goes, it just provides comfort to Belgium, but the reality is that because of the market size the impact would have a relatively small impact on the market or in terms of creating a distortions.

[Steve Verheul]

That's right.

[Randy Hoback, Conservative, Prince Albert, SK]

Okay. Looking at the British situation with Brexit, of course, how do you see it unfolding? How do you see us in CETA dealing directly with Britain outside of CETA?

[Steve Verheul]

Well, it's going to be a long-term project, for sure. As you know, the U.K. has been a keen supporter of CETA throughout the process, including up to the signature and all of the discussions leading up to that. They've also indicated an interest in being a part of CETA, at least until they get through their article 50 process of Brexit in terms of the rest of the EU.

We fully anticipate that CETA will be in effect. The U.K. will be a member of CETA until they reach that point where they try to agree with something with the rest of the EU on the Brexit.

Even then, depending on what they end up agreeing on with the EU, there could be a possibility whereby we could simply transfer the CETA obligations to the U.K. and, in other words, save ourselves a lot of time on negotiating a full free trade agreement, and basically transferring CETA to an agreement that also exists between Canada and the U.K. It might need a few tweaks, but I think that would be relatively easy to do.

[Randy Hoback, Conservative, Prince Albert, SK]

That goes back to the internal process in what I'm going to call a “separation”, for the lack of a better word, between the U.K. and Europe and which treaties and agreements follow that separation and which don't. Is that fair to say?

[The Chair, Liberal, Mark Eyking]

A short answer would be good.

[Steve Verheul]

Well, I'll try, but it's not an easy question.

The separation agreement is going to be immensely complicated. First of all, they have to work out exactly how close—or not close—they're going to be. Are they going to be part of the common market within the EU or are they not? Are they going to have a customs union or are they not? They have some 43 years of common regulations to start to unwind. The more they unwind those, the further they are from being able to easily access the rest of the EU market. It's going to be an incredibly complex negotiation, and it can go in a number of different ways.

We will be monitoring it very closely, and I think the crystal ball of figuring out when that's going to come together, given that they're not even going to initiate the process until sometime next year and it's a two-year process at minimum.... It is a long-term project.

[The Chair, Liberal, Mark Eyking]

Thank you.

We're going to move over to the Liberals.

Ms. Ludwig, you have the floor.

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

Good morning, and congratulations. Thank you very much to all of you for all your hard work. It definitely has proven very fruitful for all of us.

Mr. Verheul, you noted in your presentation that 60% of Canada's GDP is generated by trade, and that one in five jobs are linked to trade. There are more than one million small to medium-sized enterprises in Canada, yet only 41,000 report exporting.

I represent the riding of New Brunswick Southwest. We are deeply entrenched with lobster, fishery, wood products, and science. Of Atlantic Canadians businesses, 54% are micro-businesses. They generally have one to four employees.

Here's my question to you in my short amount of time: what are the plans or the strategies for helping the micro-businesses that have one to four employees take advantage of the tremendous CETA opportunities? That will be a regional concern for us.

[Steve Verheul]

Yes, right. It depends a bit on the sector. There is an overall approach, but it also depends on the sector.

If you're talking about the fish and seafood sector, there will be a particular focus on that and on helping the fish and seafood sector across Atlantic Canada to be able to access the EU market more easily. There's a likelihood that there would be some marketing effort across the Atlantic that is designed and focused specifically on the EU market so we can start to sell our products over there. There will be some internal adjustments being made to ensure that we can produce to the EU market in terms of the specifications and expectations they have. On the fish and seafood side, I think there will be a lot of attention paid to that, and we'll be in good shape.

For other areas in agriculture, for example, in New Brunswick, there will be a focus on that as well. That kind of sector will be given a lot of attention.

For anything outside the fish and seafood sector and agriculture, I think that will fall under this broader effort we're doing to try to address much smaller and medium-sized enterprises. We'll be getting the information out, telling them what they can expect in the EU market, and giving them guidance as to how to begin that process of exporting to a market that is quite different from the U.S. or the Canadian market that they've been used to.

A whole training exercise will be conducted, with a lot of promotion at the same time.

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

Thank you.

The Port of Saint John is aligned with my riding. It is the third-largest port and the busiest port in Canada, and they are definitely making some significant changes with the structure of the crib system and the overall roll-on roll-off in terms of the ships. There are many who feel that since the U.S. is not a signatory in CETA there could be tremendous gains and opportunities for Canada as a springboard between the U.S. and the European Union.

How do you see that as an opportunity and how do you see us preparing on the infrastructure side for the increase in terms of rail opportunities to and from the ports and in trucking and others?

[Steve Verheul]

I think that's something that we need to put a lot of focus on, because the situation as we see it is exactly the way you've described it. We expect significant new traffic coming into Canada. It's largely going to come through the eastern ports. We want to make sure that those eastern ports are able to handle that increased level of traffic.

I think we have a real opportunity there, particularly for the ports, to see a lot more business coming through, but we have to make sure that we have the systems in place so that all of the connections to rail traffic or truck traffic are all established and we can operate that as smoothly as we can. I think that does require some improved systems, some improvements to being able to manage that as effectively as we can. We have heard from all of the ports, and they all see this as a significant new opportunity once CETA comes into effect.

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

Thank you.

The last point I wanted to make is that our government is looking at a coastal strategy in terms of the horrendous situation where there could be a tanker accident. Most people don't realize that 97% of the tanker traffic is actually in eastern Canada, not western Canada. Was that part of the discussion in the CETA negotiations in terms of the increase in tanker traffic?