International Trade Committee on Nov. 29th, 2016

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

Okay.

One of the trade officials was here a couple of weeks earlier. My recollection is that we will agree to apply only what Europe has agreed to apply, so what they provisionally apply, we will also agree to. I think only what's agreed to will apply for both sides. That's my understanding of how we're going to go forward on that. We'll have to check the record to see whether I'm wrong, but that's my recollection of what the government official said. Hopefully that is the case.

You mentioned that you think the arbitrators under this system will be as powerful as judges and that therefore there needs to be a better mechanism to appoint them. What sort of powers do you see these arbitrators having that others may not?

[Dr. Gus Van Harten]

Very briefly, they will be able to review a decision by the Supreme Court of Canada, by the Parliament of Canada, or by any provincial legislature to make a judicial decision, in the case of the Supreme Court, obviously, or to pass a law, in the case of Parliament or a legislature. They will be able to decide whether that law was legal or constitutional under CETA with the foreign investor rights and protections it provides. If they as the final decision-maker decide that it wasn't legal, then they can award compensation to be paid from the public purse to foreign investors, something the courts in Canada are very cautious about doing when they are reviewing, for example, the passage of laws or court decisions below the Supreme Court.

It's the ability to require budgetary transfers to a private party as a result of the passage of a law or the highest court decision of your country and to have those orders backed up by the existing international system that enforces commercial arbitration awards, meaning that if Canada refused to pay a very large award, our commercial assets abroad would be subject to seizure in other countries to make good on the award by the chapter 11 NAFTA tribunals.

I can't stress enough how profound a power of review that is over our country, and it's because of the extent of that power that you get this controversy about how it impacts the courts, judicial independence, the rule of law, democracy, regulatory flexibility, and all of it. There are ways to trim that power and make it more in accord with how we see courts operating in a western democratic tradition, but I think some of those changes are probably yet to come in the discussions that we'll see in Europe.

I think I promised a short answer there. It wasn't too short, and I apologize. I am a professor, so sorry about that.

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

No problem. I appreciate the feedback.

Last of all, I do find the investor-dispute discussion interesting and fascinating. Theoretically speaking, is there a mechanism that you would agree to in any trade deal? I know this is Europe and Canada, and you're saying they're sophisticated parties that don't necessarily need any investor-dispute mechanism. Is there a mechanism that would look good to you in some theoretical trade deal? Is there any mechanism that would be beneficial to both parties?

[Dr. Gus Van Harten]

I've long been a supporter of an international judicial process to resolve the most sensitive and problematic disputes about protection of foreign investors as well as foreign-investor responsibilities. I think it has to be limited to egregious cases, because otherwise the number of cases overloads the system. That's why I tend to think, whether you talk about foreign-investor protections or responsibilities, that you still always have to give the primary role to domestic courts, stipulating that you can go to the international level only once you've shown that domestic courts are totally unfair and that it's not realistic to send the litigant there. I'm very much a supporter of that kind of a process. The existing ISDS mechanism has been improved a bit by ICS but it still has a lot of really big flaws.

By the way, if anyone would ever like to follow up with me by email, I'd welcome any questions. My policy is that I talk to anyone free of charge, time-permitting, and it would be a privilege to talk to any of you. I will always make time for members of Parliament.

Thank you.

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

You're one of the few lawyers who would say that, so we appreciate it.

[Dr. Gus Van Harten]

I have to go.

Thank you very much.

[The Chair, Liberal, Mark Eyking]

Thank you for joining us, sir.

[Dr. Gus Van Harten]

Good luck.

[The Chair, Liberal, Mark Eyking]

We've finished one round. We're going to try to get everybody on here.

Madam Lapointe, go ahead.

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

Thank you, Mr. Chair. I want to welcome the witnesses.

Thank you, Mr. Lavoie, for being here today.

In your business, you focus more on IT. Do you see any new opportunities resulting from the signature of CETA? I know you said earlier that SMEs needed help with accessing markets. However, do you see any business opportunities resulting from this agreement?

[Alain Lavoie]

I'll answer again on behalf of SMEs, and I can also answer on behalf of my business.

In terms of SMEs, I gather this agreement will provide access to a very large market. Quebec's ICT sector is very active abroad. As I said earlier, 78% of Quebec's SMEs sell products on international markets, but this activity amounts to only 34% of their sales figures.

Given our current concerns regarding exports to the United States, I think our sector could make a lot of money through its exports. We need to harness the potential of this agreement, and make the most of it extremely quickly. We must take advantage of the momentum to enter the market.

This morning, I met with representatives of firms from France that already want to set themselves up here. A movement has been launched around this agreement that will push many people to set themselves up here. However, we must also be able to set ourselves up abroad.

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

Before the agreement was signed, did you ever consider doing business in Europe? You spoke of opportunities that exist. You said that 78% of ICT businesses already operate abroad and that this activity amounts to 34% of their sales figures. You seemed to say that the businesses mainly export to the United States. Therefore, this would increase the range of cash flow or sales opportunities.

[Alain Lavoie]

Exactly.

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

Has your business already explored the European market?

[Alain Lavoie]

Yes. As a business, we sell systems that help draft legislation and regulations, and we're interested in all the Commonwealth countries. We're currently looking at a possibility in England, which may not be part of the agreement. However, we're also exploring other locations, such as the Netherlands.

Obviously, bids must be submitted in the language of the country. If we want to make a name for ourselves in Germany, we'll need to submit bids in German. We're using the EFIGS program, which provides translations in five languages, namely, English, French, Italian, German and Spanish.

There will be constraints, but basically this may make things easier. I would say that, for my company, comparative law will become very worthwhile as a result of this agreement.

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

Do you think we have the same standards as the Europeans for legislative content management?

[Alain Lavoie]

We have the same standards as the Commonwealth countries. However, in civil law countries, such as France, other standards apply. In any event, the law adapts quite well from place to place.

I'm not an expert on the matter. I'm a technologist and not a lawyer. In our business, lawyers look at these issues, but we don't have much trouble adapting our software to various legislative contexts.

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

My next question is for Mr. Keon and Ms. Cox.

Do producers of generic drugs account for most of Canada’s pharmaceutical manufacturing capacity?

Would CETA’s intellectual property provisions likely lead to greater development or manufacturing of brand-name drugs in Canada?

[Jim Keon]

Generic drug manufacturers are the primary manufacturers in the pharmaceutical industry. As I said, more than 11,000 people develop and manufacture products in Canada and export them to over 100 countries.

With a 12-year extension of the patent, the challenges will be greater than they are now. Therefore, the export provision is very important. During the extension period, companies in Canada can start manufacturing products and exporting them to countries where the patent has already expired.

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

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you.

I'm going to move over to the Conservatives.

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

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

Thank you, all, for being here.

Jim and Jody, it's good to see you again. I think we saw you at finance more than at this committee, but it's great to see you.

I think, Claire, we probably had the same opportunity.

On the way back to committee after votes, Madam Lapointe and I were talking about the spinoffs, which are the unintended consequences. Oftentimes, we can see clearly where a trade deal is going and who it's going to benefit, but sometimes it needs to play out. It's incredible how we talk to different firms and organizations that benefit from trade deals. I want to go in that direction just a bit.

Claire, you represent a large group. You represent a group that is really known for innovation. I think there are others here today that are as well. Do you see that as an equal opportunity? We all, as I said, quickly look at what will happen immediately. We also look down the road at how when one firm lands a contract and begins to sell, another will supply that firm, and how that has helped your organization and has really built the economy up in the people you represent. Can you share that with the committee to some degree?

[Claire Citeau]

Do you mean in terms of innovation?

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

I'm talking about the unguided hand, such that one firm is possibly supplying someplace in Europe, and the others around that firm benefit as well, and the economy and innovation continue to grow. Have you seen that?

[Claire Citeau]

Yes, we have very much so. It's a sector in which, really, you don't see one farmer or one processor exporting alone. There are multiple players and stakeholders involved along that chain from research to transportation to labelling. There are a number of other stakeholders attached to this who help the sector differentiate, innovate, and be more competitive in global markets by providing differentiated and innovative products.