International Trade Committee on Dec. 1st, 2016

[The Chair, Liberal, Mark Eyking]

I call the meeting to order.

Good morning, and welcome to everybody this morning.

Mr. Hildebrand, it's great to see you and your colleagues here.

As you know, we asked you to come here today to give us a bit of insight or a briefing on the agreement with Ukraine, how it came about, and what's in it. We're glad you came.

Later on this morning we're going to be meeting with the minister, and it would be helpful for us to know a little bit more about the agreement, where it's at, and what it may include.

Welcome again, sir, and welcome to your colleagues. You have the floor. Go ahead.

[Marvin Hildebrand, Chief Negotiator, Canada-Ukraine Free Trade Agreement, and Director General, Market Access, Department of Foreign Affairs, Trade and Development]

Thank you very much, Mr. Chairman.

Good morning to all the committee members.

Perhaps I will begin by briefly introducing my colleagues at the table. Alessandro Longo is with Agriculture and Agri-Food Canada. Brooke Davis is with Global Affairs Canada and is the deputy chief negotiator on this initiative. Stacy-Paul Healy is with the legal bureau at Global Affairs. Pierre Bouchard is from Employment and Social Development Canada. He was one of the negotiators on this deal, as were Stacy-Paul and Alessandro. Pierre, obviously, was involved in the labour chapter of the agreement.

Mr. Chairman, if I may, I will give a very brief opening set of remarks, focusing on Bill C-31, which is the legislation in question here concerning the Canada-Ukraine free trade agreement. The bill, of course, is called the Canada-Ukraine Free Trade Agreement Implementation Act.

Canada already complies with many of the obligations under the Canada-Ukraine FTA, or CUFTA, as we refer to it. However, before this agreement can be brought into force, a statutory authority is required for Canada to implement some of the provisions of the agreement.

Bill C-31 contains the provisions typically found in an implementing bill for Canada's bilateral free trade agreements. These essentially fall into three groups: one, authority to implement institutional provisions of the agreement; two, amendments to Canadian law necessary to implement the agreement; and three, coordinating amendments.

Bill C-31 starts with provisions to enable Canada to implement the institutional provisions of CUFTA—for example, establishing the authority for ministers to appoint individuals to committees and to dispute settlement panels and other bodies established under the agreement, and also the authority for the Government of Canada to pay its share of expenses related to the operation of the agreement. Bill C-31 also authorizes the Governor in Council to make orders for carrying out provisions of the act, such as the suspension of benefits following dispute settlement.

Second—and this is the second group of elements of Bill C-31—the bill amends seven existing Canadian laws to enable the implementation of CUFTA. At the heart of these changes are amendments to the customs tariff to implement preferential tariffs for Ukrainian goods in line with the market access provisions in the agreement. There are also changes to the Customs Act that support these market access provisions. An example is authority to check whether goods qualify for tariff preferences under the agreement and to provide advanced rulings to assist companies in knowing how goods will be treated under the agreement.

The customs tariff and the Canadian International Trade Tribunal Act are also being amended to implement provisions related to bilateral safeguard measures that may be taken if injury is caused to domestic producers due to increased imports.

The dispute settlement mechanism in the labour chapter of the agreement can result in a monetary assessment made enforceable in domestic law through amendments to the Crown Liability and Proceedings Act and the Department of Employment and Social Development Act. There are also amendments to the Financial Administration Act to authorize the Governor in Council to issue directives to crown corporations for the purpose of implementing the agreement.

Third, Bill C-31 contains amendments to coordinate with Bill C-30, which is the Canada-EU Comprehensive Economic and Trade Agreement implementing legislation. Because both bills amend the same parts of the Customs Act, the coordinating amendments ensure that the amendments made by Bill C-30 do not undo the amendments made by Bill C-31, and vice versa.

That provides a brief overview of the contents of Bill C-31, Mr. Chairman.

I would be happy to address any questions that you or other committee members might have.

[The Chair, Liberal, Mark Eyking]

Thank you.

Before I start with the MPs, I have a couple of quick questions. I'm looking at the imports and exports and I see one of our biggest exports is coal. I'm assuming it's coming from British Columbia. Would that be coming from the centre of British Columbia, and going on ships up through the Suez Canal? Is that how it works? It was a big increase. It went from $32 million in 2014 to $131 million, so can you give me a little explanation of that?

[Marvin Hildebrand]

I can give you a little explanation of that, Mr. Chairman. The exact routing and logistics would not be known to me, but I can tell you a couple of things.

One is that there is trade in coal both ways, and it is a significant flow of different types of coal in both directions. It is duty-free in both directions currently on an MFN basis for both Canada and Ukraine, so there are no tariff concessions that apply. That product will continue to be duty-free.

With respect to the volatility or the significant change in volume, as you know, this being a bulk resource-based commodity, there are different suppliers from around the world, and price sensitivity is another supply and demand factor. These volumes tend to be characterized by a certain amount of fluctuation over time.

[The Chair, Liberal, Mark Eyking]

Thank you.

I see the other big one is frozen fish, which is increasing quite a bit.

Okay, we'll start our dialogue with the MPs here, and begin with the Conservatives.

Mr. Hoback, you have the floor for five minutes.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair, and thank you, witnesses, for being here this morning.

This is a deal that I think everybody on this committee can agree on. It's something that we think is important to do. I can remember back to my days at Case New Holland when we were selling equipment into Ukraine. Our biggest issue at that time wasn't selling the product—they wanted the product—it was actually getting the cash and figuring out how to get paid. I can remember shipping sunflowers into Poland to get U.S. dollars to get paid for machinery, and you could just see all the opportunity and potential in that marketplace for Canadian products, especially on the agricultural side. I haven't even talked about the manufacturing side and everything else.

In this agreement that you've negotiated, as we're looking at it now, has anything substantially changed from what it was before the election?

[Marvin Hildebrand]

In terms of the...?

[Randy Hoback, Conservative, Prince Albert, SK]

I mean the agreement itself.

[Marvin Hildebrand]

The negotiations were concluded in July of 2015, and in the months that followed, the Canadian and Ukrainian officials completed a detailed legal review and translation of the agreement into—

[Randy Hoback, Conservative, Prince Albert, SK]

Is the gist of the agreement the same, then?

[Marvin Hildebrand]

The substance of the agreement didn't change at all, not at all. It was merely the formatting and the commas and everything like that, but there were no substantive changes.

[Randy Hoback, Conservative, Prince Albert, SK]

What has been set aside, then, in the implementation agreement? What has been done in regard to looking at the markets, looking at the potential for Ukrainians doing business here in Canada and partnering with Canadian companies to sell to other places in the world, and also with Canadians selling into Ukraine or working with Ukrainian industries to sell into other parts of the world? Can you give us any idea of any thought processes there? Is EDC ramping up? Is BDC ramping up? Just give us some insight into that.

[Marvin Hildebrand]

There are a couple of things.

One is that already certain things have happened in the year and more since the negotiations concluded. The Canada-Ukraine Chamber of Commerce has been very active. There was a major event, as some of you will be aware, in Toronto in June of this year, and it pulled in many business interests from Ukraine and also from across Canada. It was a major event over a period of several days that had the effect of raising awareness and of also providing an opportunity for people to get together and learn more about potential partners in the other country.

In terms of the efforts on the part of Global Affairs Canada, this is part of a whole area that we sometimes refer to as “after care” in terms of the trade agreements that we enter into. It is something that is very important to Minister Freeland. It's part of her mandate as trade minister. As a practical matter, there is a branch of the department that focuses on sectors investment and business development, which is not represented here today, but it takes the lead in those kinds of areas.

They are very much engaged in terms of this agreement, in terms of CETA, and also in terms of other recent agreements like that with Korea, to make sure that they're availing themselves of all the tools, mechanisms, and technologies to get out to businesses across Canada to raise awareness.

[Randy Hoback, Conservative, Prince Albert, SK]

I know in Saskatchewan we have a lot of Ukrainian welders and mechanics because we had such a shortage in those fields. Are we going to have easier access to that labour market as required? One of the issues that always happens is that we get the welders, but we don't get their whole family or family members. Are we going to have the ability now to attract the employee plus their family, to make it easier for them to come to Canada and fill our job vacancies and positions?

[Marvin Hildebrand]

This agreement does not actually address the temporary entry of business professionals, nor of other categories of workers.

[Randy Hoback, Conservative, Prince Albert, SK]

Does it deal with professionals and the movement of professionals back and forth between the countries?

[Marvin Hildebrand]

It doesn't, actually. It does not include the whole area of services, which is normally where the temporary entry of professionals and business persons would be found.

[Randy Hoback, Conservative, Prince Albert, SK]

Is that something that needs to be worked on into the future then, would you say?

[Marvin Hildebrand]

There's a provision in the agreement, the review clause, that obliges the parties to get together within two years following implementation of the agreement to discuss the possibility of expanding it into areas such as services, which would include temporary entry.

[Randy Hoback, Conservative, Prince Albert, SK]

So we have a vehicle to actually look at that sometime in the future.

[Marvin Hildebrand]

We do.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Hoback.

We're going to go to the Liberals now.

Mr. Dhaliwal, you have the floor.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Thank you, Mr. Chair.

Thank you to the presenter.

I'll carry on where Mr. Hoback left on the services sector. Why would we not include the services sector when we have this sector included in every other agreement, whether it be TPP or CETA? What are the reasons, and what would it take to include those sectors?

[Marvin Hildebrand]

The inclusion of the whole services cluster, which includes cross-border financial services, temporary entry, and telecommunication services, is something that was very much of interest to Canada in these negotiations. In fact, it was part of negotiations for a good part of the process. We tried every way possible to get on the same page as Ukraine in that area. Ultimately, it just was not possible, due to various constraints, including the nature of Ukraine's preferred model vis-à-vis that of Canada in terms of how to memorialize concessions and commitments in this area.

The offsetting factor for Canada in this area is that Ukraine is a recent member of the WTO. They acceded to the WTO several years ago, and their services commitments in the WTO are very robust. They're very strong. We have very good coverage that way, as fellow WTO members, to their services market. As a practical matter, our services interests are actually quite well addressed and accommodated through the WTO.

I wouldn't say that we couldn't have had some incremental gains. That's a hypothetical question, I suppose. As it stands, we're in quite good shape on the services front vis-à-vis Ukraine.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Thank you.

I had interns working with me during my previous terms as an MP. They were really excited to have this type of trade finalized, and I'm sure they're very happy.

I come from British Columbia. I would like to know how signing a free trade agreement with Ukraine will help British Columbia.