International Trade Committee on March 10th, 2016

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

Thank you, Mr. Chair.

Thank you for coming. It's fascinating.

I want to talk about some of the benefits. My riding is close to where you come from, Steve, so you know that we're at the funnel of all this trade to the United States. I'm thinking about the opportunities for Canadians and I specifically want to target diaspora. This is a point that was raised somewhere else.

Within my riding, where we've contacted a number of people, we're going to start to reteach the Dutch diaspora how to speak Dutch. You know what happened when we were kids? Our parents would say, “We wonen nu in Canada”, and we were never taught any Dutch, so now we have to reteach that.

Tell us about that, and the opportunities that the different ethnic groups right across this country will have once this agreement takes place. What are some of the opportunities for them?

[Steve Verheul]

It is interesting that you mention that, because one piece of analysis that we did was to look at the percentage of citizens of Canada that have come from EU member states or have a heritage from EU member states. I think we came up with a final number that was over 80%.

Those linkages, as you well know, are still very strong. When I've travelled to various member states, I've used that in many of my presentations. I've said how many hundreds of thousands of Slovakians or whoever else might be in Canada now. Those kinds of linkages are the way that a lot of business gets built, as you can imagine. It's because of those contacts.

I think the diaspora that we have from the EU gives us a head start on developing those relationships. A big part of this, particularly in the early going of CETA, is going to be developing those business relationships so that we can start to get more products and services moving, get more investment, and try to get in well in advance of other countries that may have agreements in the future, particularly the U.S. I see that as a significant factor.

[The Chair, Liberal, Mark Eyking]

Thank you very much.

Thank you very much for that question, Mr. Van Kesteren.

We've going to move over to the Liberals. Ms. Ludwig, you have six minutes.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Thank you, Mr. Chair.

Thank you again for your excellent responses.

In 2015, I was very pleased to be living in a community in my riding of New Brunswick Southwest where we welcomed the ambassadors of the CETA member countries, and we welcomed them as well to my home town of St. Andrews. Many people and many businesses across the Atlantic region are very, very much in support of the CETA deal, so I wanted to put that out there.

I also represent a riding with five international border crossings and one deep-sea port, and we also border on the port of Saint John, which is the third-largest port in Canada.

I have a number of questions, so I'll probably get cut off.

In terms of the United States, if the United States is not a member of CETA, Canada should have a significant advantage to be the springboard between goods from the U.S. to Europe, and from Europe back to the U.S. How prepared logistically are our rail services, our port infrastructure, our trucking, and our shipping to accept the goods from the U.S. to export to the EU and vice versa? That's my first question.

[Steve Verheul]

It's not really an area of my expertise, but we are expecting increases in traffic under CETA, and the ports in the east will see the greatest increase in this traffic. We do have to make sure that we're prepared to accommodate it and we would very much want that to not become a bottleneck and inhibit the trade in any way.

It's not our department and not our area of responsibility, but it's something that we clearly have to make sure is addressed in order to take full advantage of the agreement.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Okay. Thank you.

I represent a riding that is a high producer of seafood products. In terms of Health Canada, CFIA, and the Canada Border Services Agency, have food inspection standards been negotiated between Canada and the EU? Let's say a herring that's been imported from the EU to Canada will pass inspection because there are agreed-upon inspection standards in the EU between Canada and the member country.

[Steve Verheul]

That's certainly well advanced. I'm not going to say that there will never be any problems, because these are always ongoing issues. Particularly when you have a new species of concern or a new disease, new measures often have to be taken, but the sanitary and phytosanitary measures chapter of CETA is more advanced than any other chapter of that type that we've negotiated. It has specific provisions to make progress both on the meat side as well as on the fruit and vegetable side, and we also have measures with respect to fish and seafood.

There will be an ongoing process to some extent to make sure that we're dealing with issues as they arise, but as we start out, we certainly don't anticipate any problems, and all of the exports that we are currently making to the EU are certainly not an issue at this point in time.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

On that same thought of dealing with issues as they arise, do you forecast that we may need additional staff in some of those departments to accommodate the increased flow of imports and exports?

[Steve Verheul]

Well, I wouldn't really want to speculate on that. We'll certainly need to keep on top of it. I think we'll probably have to do a bit of an internal review to ensure that everything is going to be on track, because we're anticipating a significant increase in movement and traffic back and forth. However, until we see what the actual size of that is, we'll have to see whether our existing resources are able to accommodate the increase.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Okay. Thank you.

How does CETA change Canadian municipalities' existing selection criteria in competitive bids, if at all?

[Steve Verheul]

The fact that we've included municipalities in the government procurement obligations for the first time has meant that some changes have been made. We had extensive discussions through the negotiations with the Federation of Canadian Municipalities. I spoke to them on almost a monthly basis, and one of the interests that they expressed was in making sure that they would still have the flexibility to favour local companies in certain circumstances.

Now the municipalities will have the availability to do their procurement however they see fit when they are under the thresholds that have been established under the agreement, and those go as high as close to $8 million. When it comes to construction services, they're allowed to establish environmental and social criteria that can limit it, and they can also include requirements with respect to quality, with respect to price, and with respect to local knowledge, to some extent. We've incorporated in discussion with the Federation of Canadian Municipalities a number of flexibilities that will allow municipalities to pursue their objectives with a considerable margin to manoeuvre.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Do I have time for one more question?

[The Chair, Liberal, Mark Eyking]

You have time for a quick question and a quick answer.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

How has CETA clarified the treatment of investors holding public debt that has been restructured? Can certain investors be treated differently on the basis of legitimate policy objectives?

[Steve Verheul]

Yes. In fact, I think that question is close, word for word, to what we have negotiated. This is an example of one of those cases in which Canada came into the negotiations with a desire to protect those types of actions from dispute settlement by investors. The EU came to this rather late, but I think it is evident that the experience the EU went through with Greece in particular reinforced the need to have protections when it comes to public debt.

The key will be that whatever actions are taken will not be discriminatory against EU investors. If we treat all investors the same, then we should be on pretty safe ground.

[The Chair, Liberal, Mark Eyking]

Thanks for those questions.

We're moving over to the Conservatives.

Mr. Van Kesteren, you have five minutes.

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

This is exciting stuff. I really get cranked when we start talking about all the opportunities.

To get back to southwestern Ontario, you're familiar with that and you know the agricultural.... We have a large collection of greenhouses, but it pales in comparison with the Netherlands. I think we have one-seventh the number.

I want you to talk a little about the opportunities, the technology that we will be able to export to get up to.... I think we're at a critical mass in Leamington at this point to be able to start developing new technologies ourselves. Going back to my riding, however, how is moving into the States and being able to trade with the Europeans going to put us at an advantage, let's say with the Americans, who are starting to dabble in greenhouses, starting to build them in Ohio and places such as that? Maybe you could talk about that for a second.

[Steve Verheul]

I think that's another area where there is significant potential for growth in both directions in many ways. As you mentioned, we are certainly far behind the EU in scale, in terms of greenhouses and the extent to which they utilize them in Europe, in particular in the Netherlands, among other places. We can benefit from that technology in many ways, and we can also benefit in terms of the kinds of markets we have.

At the core of your question, I think, is the real issue: that we will have open access to the EU market and we will have open access to the U.S. market. That puts us in a more advantageous position. To have open access to the two largest markets in the world is going to be a very privileged position, not only broadly but even in terms of production in greenhouses and the kinds of investment we could attract, because we could also see Europeans wanting to invest in further greenhouses in Canada because they have access to the U.S. market.

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

Of course, Europe is faced with many challenges, such as how to get rid of their animal waste. We of course have larger.... We are starting to see some really talented people move into the territory.

One of the charges that have been laid is that there hasn't been enough consultation. I wonder whether you could tell us how many debriefings you've been involved in with all these groups that we're concerned about, such as dairy, for instance.

[Steve Verheul]

I would say that consultations constituted probably the largest part of my job during the negotiations. I spent far more time consulting than I did negotiating.

We had a structure for the first time in CETA, given the scale of it, that was even larger than we had for NAFTA 20 years ago. I had a core steering group I consulted with that represented national organizations. I had a group of about 50 to 75 businesses, selected for different reasons, that I informed regularly about the negotiations. We also had sector-specific groups, whether for autos, agriculture, or fish and seafood, to go into more detail on specific requirements. Even textiles and apparel and others had specific groups to consult with. Then we had consultation at the provincial and territorial level as well, and they did their own consultations in turn.

I would say without hesitation that in this negotiation, we consulted more broadly and more intensively than in any other negotiation we've ever done.

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

Thank you for doing a terrific job.

Mr. Ritz has a question.

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

I have just a couple of points for clarification.

The British are going through a process whereby they might remove themselves from the EU. What kind of a hand grenade is that going to throw into the agreement?

On the ISDS, there's a discussion that I see popping up in the media all the time that somehow this final agreement we have agreed to on the appellate body supplants domestic courts, and so on. I would like your view on that, because I know Investment Canada is alive and well, and continues to be.

Those are the two final points.

Thank you.

[Steve Verheul]

First of all, on the issue of whether the British might leave the European Union, I think we are all watching that date of June 23 and what might happen then very closely, because it will have a significant impact on the EU.

If the scenario that we wouldn't like to see occurs, then our agreement with the EU would remain. We have already had some discussions with the U.K. about the implications. If that comes to pass, then I think the U.K. will first of all be looking to negotiate some kind of arrangement with the EU, and then they will want to be replicating some of the agreements that the EU has as well, so that they don't lose access. We very much hope that we will be able to negotiate in the EU as it is now, or conclude and implement an agreement with the EU as it stands now.

On your second question, there has frequently been this discussion about whether investment dispute resolution in trade agreements displaces or supplants domestic courts. The fact is that domestic courts don't have the jurisdiction or authority to adjudicate international treaties. When we have protections in international treaties, we have to have a means to enforce those when it comes to investment or any other area.

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

Parallel?

[Steve Verheul]

It has to be a parallel approach because you simply can't pursue the obligations in the agreement in a domestic court.