International Trade Committee on Nov. 24th, 2016

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Excellent.

[The Chair, Liberal, Mark Eyking]

Thank you.

We're going to go to the NDP now.

Ms. Ramsey, you have five minutes, I believe.

[Tracey Ramsey, NDP, Essex, ON]

I couldn't agree more with my colleague across the way, that we share so much in common with Europe. One of the things that a lot of Canadians share with our European counterparts is the concern around the ICS, the proposed court system.

Mr. Sinclair, I wonder if you could speak about the court system changes that have taken place over the last year, the resistance in Europe, and also the fact that CETA doesn't safeguard against the precautionary principle when we're looking at these cases.

[Scott Sinclair]

Thank you for the question.

The investment court system, I think most experts who've looked at it would agree, is not actually a court. It is another form of investor-state dispute settlement.

It does, as I mentioned earlier, make some procedural improvements around issues such as having a fixed roster and trying to deal with the issue of conflict of interest, but it doesn't deal with it completely, as you will hear in future testimony. There's still a built-in incentive to find in favour of investors at least some of the time, because it's still a pay-as-you-go system. The arbitrators are not salaried nor are they denied the ability to, in future, work for litigants in investor-state dispute-settlement cases.

So there are some procedural improvements, but on the substantive side, it's very much like the traditional investment-protection agreements like NAFTA, which Canada hasn't been sued under. In certain circumstances, for example, on the fair and equitable treatment provision, there is language in CETA that, I would argue, even goes beyond the minimum standards protection provisions of NAFTA, which have been among the most abused provisions. They can be used to challenge, as I said, non-discriminatory regulation like an environmental assessment or like a moratorium on wind farms.

CETA has language that allows arbitrators to take into account, when they're interpreting these absolute standards of protection, things such as whether a government policy is manifestly arbitrary or whether the government, through a specific representation, has created a legitimate expectation that was subsequently frustrated. That line of argumentation is one that has been exploited and abused by investors both under NAFTA and in other agreements. It's quite a concern.

[Tracey Ramsey, NDP, Essex, ON]

The other thing I'd like to ask you to speak about is CETA's impact on public services.

[Scott Sinclair]

As I mentioned before, there are some protections for public services, but these are limited. Probably the most important way in which they're limited is that there are no “reservations”, as they're called, country-specific exceptions, allowed against this fair and equitable treatment provision or the expropriation provisions of CETA in section D.

There's nothing in CETA that forces a government to privatize, but let's say they privatize waste-management services and a European investor becomes established. If a new government comes in and reverses that in a way that displaces that European investor, it would have the right to bring a claim against Canada through the investment court system, even if we had a reservation in that area, which we don't. There are no reservations allowed against these fundamental investor rights.

[Tracey Ramsey, NDP, Essex, ON]

Since you're coming to us from Europe today, as I asked earlier, where does this sit in Europe? It has to go back, and this morning we were hearing reports that this won't actually pass through the EU Parliament until early next year, but then it's going to go out to the member states.

Can you speak a little bit about that process and what you see—

[The Chair, Liberal, Mark Eyking]

I'm sorry, but you have only 15 seconds. I don't know if there's time for a question and an answer.

If you want to make a short comment, Mr. Sinclair, go ahead.

[Scott Sinclair]

I would.

I'm quite astonished that there's been no contingency planning for the prospect of a European member state failing to ratify. Canada is making permanent changes to its patent law based on an agreement that may not be fully ratified. There is a lot of concern here about the investment court system.

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

We have a few minutes left for the Liberals, and I think Madam Lapointe wants to take that.

Go ahead. You have the floor.

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

Thank you very much, Mr. Chair.

Mr. Leduc and Mr. Littler, I would like to talk about cheese again.

If I understand how it currently works, the new cheese import quotas would be reserved for existing producers.

[Yves Leduc]

No, because there hasn't been a decision yet about how to allocate the new quota.

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

I'm talking about your proposal.

How could a new small cheese producer who wants to have access to the markets take advantage of the import quotas?

[Yves Leduc]

In the statement in the Canada-EU agreement, some provisions state that 10% of the quota will be allocated year after year to new players. So it seems that there are already provisions in the agreement that would enable new players to take advantage of part of the accessible quota in the future.

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

Mr. Littler, you said that there was room in your proposal for new businesses and that there was a way for them to keep these quotas.

[Karl Littler]

We would envisage there always having to be a reserve for new entrants, because we wouldn't want an ossified system.

Let's understand that this is European-produced cheese to be consumed by Canadians at the end of the day. Presumably they're not buying it directly, which means they're buying it from a retailer. That's a relatively simple chain. What's being proposed by the Dairy Farmers of Canada is to take a non-Canadian-produced product and attach it as a quota higher up the chain, where there will be another price-taker along the way and it becomes an economic cross-subsidy, if you like. We hugely value what the dairy farmers bring to the table, but we do see the imposition of intermediaries, whether they're giving quota to Canadian producers or quota to distributors, as an unnecessary and frankly a cost-added part of the chain that ultimately is the Canadian consumer.

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

Thank you.

Mr. Leduc, would you like to add anything?

[Yves Leduc]

In the same way, small businesses that are not importers will ultimately have to have access to an import network. Small retailers that would like to benefit from a share of the quota will not necessarily be exempted from the costs that Mr. Littler is referring to.

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

Thank you.

That clarifies things.

[The Chair, Liberal, Mark Eyking]

Thank you, Madame Lapointe.

For the record, you can see I'm drinking milk up here. We should all drink more of it.

That ends today's meeting on CETA. It was a very good meeting. We had very good witnesses, a lot of information on very different topics and different sectors, and good questions and dialogue with the MPs.

Thank you again for coming today. We might need to draw on you for some other trade agreements down the road. You never know.

The meeting is adjourned.