International Trade Committee on March 10th, 2016

[Tracey Ramsey, NDP, Essex, ON]

For the court system itself, would that be in place in 2017?

[Steve Verheul]

That will be in place on day one that the agreement comes into place.

[The Chair, Liberal, Mark Eyking]

You have over a minute left, Ms. Ramsey.

[Tracey Ramsey, NDP, Essex, ON]

I still have time? Okay.

You talked a bit about the harmonization and some of the industries that don't line up with the European regulations. Yesterday lot of us met with the National Cattle Feeders' Association. They expressed concerns to me about the differences between what's acceptable in EU and what they have here. They see that as a barrier to them and say that they won't be able to access that market because of the differences that exist.

Can you please let us know what other markets would potentially be affected by this lack of harmonization with Europe?

[Steve Verheul]

I'm not sure that any other markets would be affected. The EU has its own distinctive requirements for entry into the EU of these products. That doesn't have any bearing on what other countries might decide to impose in terms of requirements.

With the EU, during the negotiations we made a significant amount of progress in reducing those barriers. We agreed to various carcass wash treatments, including recycled hot water and lactic acid. Both of these were agreed to during the negotiations. Those were the top two priorities of the cattle and pork sector.

[Tracey Ramsey, NDP, Essex, ON]

Yesterday when I met with them, they told me that Europe wasn't going to accept that.

[Steve Verheul]

Those have already been formally accepted and are in place.

[Tracey Ramsey, NDP, Essex, ON]

All right.

[The Chair, Liberal, Mark Eyking]

Thank you very much.

We're going to move over to the Liberals. Go ahead, Mr. Peterson.

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

Thank you, Mr. Chair.

Thank you for being here today and for the informative presentation. This is new for us, as we are new members of this committee. We appreciate your taking the time to brief us, in part in anticipation of the European delegation coming in 12 days.

I have a couple of questions.

I know the financial analysis that was done—I think it's about seven or eight years old now—predicted benefits of up to 23% in GDP growth. Has there been any update to those projections from seven or eight years ago?

[Steve Verheul]

No, there hasn't been that kind of extensive analysis conducted since then.

I'll just mention, though, since you mentioned that analysis, that the analysis assumed a number of factors that could mean we would see even greater benefits.

For example, they assumed that the Doha negotiations under the World Trade Organization had been completed. That, of course, hasn't happened, so we would have that much of a greater margin of preferential access in comparison. They were also unable to analyze certain areas, such as services and government procurement, which would add further benefits to that picture.

The Europeans are working on an update of that analysis, and we will see it at some point.

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

Further to that, I think that earlier analysis also indicated that Canadians would see an increase in goods exported and that Europeans would likely see an increase in services exported under this agreement. Does that analysis still remain current today?

[Steve Verheul]

That analysis still remains current. We would both see increases in exports of goods, both from the EU side and from the Canadian side, and services as well.

On the services side, the market is quite a bit more underperforming than it is on the goods side, so there's more scope for growth on that side. However, I think that we could see some significant impacts on both goods and services.

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

What sorts of services do you see Canada importing under this agreement?

[Steve Verheul]

We'll be importing a broad range of services in which the EU has particular expertise. We have looked at everything from certain dredging services.... They have the capacity to have much larger types of equipment that they can provide and use in the Canadian market. There are water treatment processes, in some cases. Certainly they have some advantages on the engineering side as well. There are quite a few in which they would expect to gain increased access into Canada. That would apply to transportation as well.

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

Thank you for that.

I want to touch on the auto sector a little bit, because it's important in my riding. Do you see this agreement as being beneficial to the auto sector?

[Steve Verheul]

I do. I think we've received quite a bit of support from the auto sector itself.

One part of the elements in the negotiations that was particularly important to the auto sector was that we negotiated this tariff quota of 100,000 cars, which is about what the EU exports to us now. A number of manufacturers have been looking at the European market in a much different way, thinking that we could actually expand our exports significantly into the EU, particularly when some of our manufacturers are starting to develop global platforms rather than just plants dedicated to specific North American markets.

That will allow us to attract greater investment into the auto sector in Canada and make greater exports to the EU. Having that open access to the EU for those 100,000 cars as well as still having access to the U.S. puts us in a very valuable position. It makes us a very attractive investment location.

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

On that note, we've also been reviewing the TPP, as you know. You've been before us on that. There's been some concern within the auto sector about the consequences of TPP and some detriments that might flow from that. Do you see this agreement as mitigating some of those detriments?

[Steve Verheul]

With respect to the auto sector, we could see some significant potential benefits. It will certainly offset any potential negative impacts that may come from other areas. We'll really see an increased emphasis in the investment and attraction to the auto sector, and the auto parts sector as well, given the access to the EU market.

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

I would like to touch a little bit on the dispute resolution mechanism. What sort of appeal process is being contemplated right now?

[Steve Verheul]

The appeal process, as I mentioned a couple of times now, is something that's brand new.

What we've agreed is that there is a need or a desire to have an appellate mechanism after the initial decision is made. In the current system, with the current approach around the world, once that decision is made, there's very little recourse. There is some recourse, but there are very few options to try to overturn a decision that may not be in accordance with what you might have expected.

The appellate body will look at not only questions of law but also questions of fact, and will be able to review what the original tribunal has decided in those cases. I think it will provide the opportunity to correct any difficulties that may arise, and also provide us with a more consistent approach over time in terms of the rulings we get.

[The Chair, Liberal, Mark Eyking]

Your time is almost up. You have one minute.

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

On that, do you see this new process as a new precedent that's going to be prevalent in further trade agreements as we move forward?

[Steve Verheul]

We'll have to see.

It's certainly the EU's intention to try to pursue this type of approach in all of the agreements it currently has, including with its member states. The EU accounts for more than 1,400 bilateral investment treaties around the world. If it really does change all of those, then I think that starts to change the entire approach to investment around the world. It gets people thinking about what else can come forward, which is part of the reason we've agreed with the EU to work towards a multilateral approach on these investment disputes.

[The Chair, Liberal, Mark Eyking]

That ends our first round.

We're now going to go into our second round of questioning. We'll start off with the Liberal party.

Madame Lapointe, you have six minutes.