International Trade Committee on Dec. 1st, 2016

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

I know that.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

—she's very close to the Ukrainian market. I think that a desire you and I share, and I hope everyone around this table, is to do as much business with Ukraine as possible.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Sure.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

I'm very happy to look into how EDC can more strongly support Canadian businesses working in Ukraine.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you.

We're going to move over to the Liberals.

Mr. Dhaliwal, you have the floor.

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

Thank you, Mr. Chair, and thank you, Minister.

I congratulate you on signing free trade agreements with 29 countries. That's a great achievement in the first year.

Minister, you mentioned that this is the most progressive trade agreement, and it is surprising to know that it was stalled from September 2014 to November 2015, when you took over. I would like to know something, so that British Columbians and Canadians can know it. In layman's language, what were the changes you made that made it the most progressive agreement in the world?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Thank you very much.

Interestingly, I find a similar question, although perhaps with a different emotional tone, from both sides of this table.

As we've been discussing, what had happened was that CETA was stalled, and it was stalled around European concerns about ISDS. When we looked at the agreement, we found that we shared those concerns, and we were happy to work with the Europeans to develop the most progressive ISDS system that exists in a trade agreement.

We made changes in two particular areas. One was on the substance. We strengthened the right of the state to regulate, particularly in the interests of the environment and when it comes to labour standards. We clarified that it was the job of democratically elected states, and not of a trade agreement, to choose which parts of the economy should be in the private sector and which should be in the public sector, and that this agreement should not restrict, for example, the right of a government to choose to renationalize some area.

That's very important, and I think that speaks to concerns people have. People want to be able to elect a government and through that election to choose what will be public, what will be private, what will be environmental standards, and what will be labour standards. They don't want a trade agreement to decide that, and that is one of the things we were very pleased to change.

The other element we were pleased to change was the process and how the ISDS system worked. We have created a system in which the arbiters, the judges, have a much clearer ethical line. They cannot be lawyers in private practice one day and arbiters the next. That's really important. We've also created a system in which the choice of who sits on the panel is not dictated by the company that is choosing to bring a case, so both the process and the substance have been improved.

Something else that's worth explaining is that when it comes to the dispute settlement system, this is the one element of CETA that the Europeans determined was of national competency. That means that it is the element of the agreement that will not be provisionally applied, if and when the agreement is ratified by the European Parliament and by us.

In the way we structured the work we're doing on improving ISDS, there are some areas that are open to discussion. This is really a very important landmark development in how dispute settlement is done in international trade, and we have embarked on a very important conversation with Europeans on how to create the next-generation, more progressive dispute settlement process. I think it's something Canadians can be very proud of.

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

When you made all these changes, what was the reaction on the European side, if there was any?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

It was these changes we made to the investment dispute settlement process that unblocked the agreement. As a result of these changes that we made—and I want to thank Steve Verheul, with whom I worked on them very closely—we were able to move the agreement forward, finalize the legal scrub on February 29, and move the agreement through the European system.

Those changes were also absolutely central in securing support of key European countries, particularly France and Germany. France and Germany had been hesitant, even critical, of the agreement prior to those changes. Right after we made those changes, I travelled to Brussels, Berlin, and Paris. There we had public announcements of support for the agreement from Germany and France. That's really what got it going.

[The Chair, Liberal, Mark Eyking]

Thank you.

Your time is up, Mr. Dhaliwal. We're going to go to the NDP now. Ms. Ramsey, you have five minutes. Go ahead.

[Tracey Ramsey, NDP, Essex, ON]

Thank you, Minister.

I appreciate the concerns you mentioned in your comments about trade and the way it's affected people globally and here at home. The way to deal with these concerns is head-on. I think pushing this deal through and denying the very real concerns that Canadians have does it a disservice.

I've asked this question of you in the House, and I have yet to receive a response. Canadians have very serious concerns around the costs of pharmaceutical drugs in CETA. Mr. Verheul visited the committee and said that they don't really have an analysis on the increased cost of drugs due to the patent changes. Do you have internal studies projecting the cost of drugs to Canadians? Can I have just a yes or no on that one?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

I'm going to start by addressing your assertion at the beginning.

First of all, thank you for your question and thank you for the hard work you do on the trade file. I know that you're very focused on it and that you care a lot about your constituents.

I do want to challenge one assertion, which is the idea that we are somehow rushing with CETA. This agreement, and I think Steve, of all people, can—

[Tracey Ramsey, NDP, Essex, ON]

But thinking in comparison to TPP, what's happening around TPP at the committee level—

[Chrystia Freeland, Liberal, University—Rosedale, ON]

Steve can point to the fact that as a country, we have been working on CETA for seven years.

The legal document, which is the one that we are going to be voting on, was finalized on February 29 of this year—

[Tracey Ramsey, NDP, Essex, ON]

I'm sorry, Minister; I was referring to the committee process—

[Chrystia Freeland, Liberal, University—Rosedale, ON]

We've had a lot of time to look at it and study it and I believe very strongly, as I believe do the majority of Canadians, that it's very important, particularly in this protectionist moment in the world, to get this agreement in place to start creating the jobs and growth that it will create for Canadians. It's also a very important moment to be diversifying Canada's economic relationships.

On the pharma question, I think it's important for us to bear in mind, as I think Steve said in his testimony to the committee, that we are very mindful of this issue. This is something my colleague, the Minister of Health, is working on very attentively.

We do need to bear in mind that we have time. The new elements—

[Tracey Ramsey, NDP, Essex, ON]

Do you have internal studies?

[Chrystia Freeland, Liberal, University—Rosedale, ON]

The new elements in the pharma space that CETA is going to bring in will not actually have an impact on Canadians for eight years—

[Tracey Ramsey, NDP, Essex, ON]

We have heard that here.

[Chrystia Freeland, Liberal, University—Rosedale, ON]

—so it's important not to have a false sense that when this agreement enters into force, those provisions will immediately enter force.

More broadly, what CETA does highlight is that we need a broader look at Canada's pharma strategy, and that is something that my colleague, the Minister of Health, is doing.

I think it's also worth pointing out and worth Canadians knowing that drug prices in European countries like Germany, France, the U.K., are actually lower than in Canada, so the issue is—

[Tracey Ramsey, NDP, Essex, ON]

Minister, I'm sorry. I have to apologize, but we only have five minutes—

[Chrystia Freeland, Liberal, University—Rosedale, ON]

—one about health policy and not exclusively about trade policy.

[The Chair, Liberal, Mark Eyking]

Go ahead, Ms. Ramsey.

[Tracey Ramsey, NDP, Essex, ON]

Do you have internal studies projecting the cost of drugs to Canadians?