International Trade Committee on March 10th, 2016

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

Thank you, Mr. Chair.

Thank you to the witnesses for joining us today. Their time is appreciated.

My colleague talked about British Columbia, but I'm going to focus on Quebec.

According to an article, the Government of Quebec will be able to create 16,000 jobs in the province, thanks to the agreement with the EU. Which sectors will experience that job growth?

[Steve Verheul]

I think it will happen across various sectors.

When it comes to Quebec, in the discussions we've had, agriculture certainly would be one component, but we would also expect to see significant gains in areas like transportation and manufacturing. Certainly Quebec has an interest in clean technology as well. In both goods and services, many of those areas would derive benefits. Quebec, as the province that was most interested in getting this negotiation going and was instrumental in making it happen, sees a real avenue into markets in Europe. Certainly France is a close partner, but there are others as well.

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

Thank you.

You just mentioned agriculture. I'd like to talk about cheese makers, specifically.

Quebec is home to 60% of Canada's cheese makers. I'd like to hear your thoughts on that particular sector.

[Steve Verheul]

With respect to dairy and to cheese in particular, there are really two aspects to it. We did provide access for only one dairy product, and that is cheese, although we also opened up milk protein concentrates, which is something the U.S. and others already have.

When we looked at the cheese access, while I'm not going to suggest it's not a significant number, we found it is a smaller number than the proportion by which the cheese sector in Quebec and in Canada has been growing over the years. We anticipate that the new access could be fairly easily absorbed into the Canadian market as time goes on.

The other element is that for the first time ever, we negotiated complete and open access to the EU dairy market. The EU has never provided that to any other country in the world. If we are able to export product to the EU, this is a market that other exporting countries—New Zealand, Australia, and the U.S.—would love to have access to. The EU market for dairy is the largest in the world. That gives us an opportunity that I don't foresee anyone else having for the foreseeable future.

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

You said that the impact on the cheese sector would dissipate over time.

Do you think cheese sales are on the rise in Canada? Will that balance out the effect of incoming European products?

[Steve Verheul]

Yes, I would say that I do think that will be the case, and I think we've seen—particularly in Quebec, as I'm sure you're aware—that there are many producers of artisanal cheese. There is a huge variety of cheese being produced in Quebec. We're starting to see some interest in those types of cheeses in Europe. I think that part of the cheese sector in particular has significant potential for growth, both in Canada and in the EU, and I think that certainly the kinds of cheeses being produced in Quebec will be able to compete with cheeses coming from Europe as well.

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

Thank you.

Now I'd like to turn my attention to another sector.

You said earlier that the agreement would benefit the sale of Canadian engineering services. In light of the government's intention to invest heavily in infrastructure, how do you see the agreement with the EU affecting the engineering sector?

[Steve Verheul]

I think that with the commitment to make significant new investments in infrastructure, the Europeans, particularly once CETA comes into effect, will be very interested in not only providing services but also supplying some of those contracts, and if the Europeans are more advanced than we are in those cases, it can be an advantage to us with respect to both the technology and the cost. I think we need to work with the Europeans as partners to make sure that those infrastructure projects go ahead as quickly and as inexpensively as possible.

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

What are your thoughts on the transfer of labour between Europe and Canada?

[Steve Verheul]

I think that the economic relationship between Canada and Europe, at least up until now, has been more oriented towards investing in each other's economy than in trading with each other. I think that while we do have a significant level of trade, we will see an enhancement of that. The European market is some 15 times larger than the Canadian market, and the tradition is that the smaller country will benefit more than the larger country, because we will have so many more opportunities. I think that will create jobs in Canada and create new opportunities that didn't exist before for us to expand our economy in relation to the agreement.

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

Do I have any time left, Mr. Chair?

[The Chair, Liberal, Mark Eyking]

Your time is up.

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

Thank you very much.

[The Chair, Liberal, Mark Eyking]

That's okay. They were good questions and good answers.

We're going to go to Mr. Ritz for six minutes.

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

Thank you, Mr. Chairman.

Thank you, ladies and gentlemen, for being here today. It's always good to have your presentation, and the very positive attitude you bring to this certainly makes us feel much better about what's been done.

I just have a couple of points for clarification. Mr. Hoback alluded to this aspect. In the eighties and nineties, a lot of small manufacturers were trying to get into the European market. They would get access to Germany and then they would have to go through a whole new regulatory thing with France or with Spain or whatever, and it was just a hodgepodge, a real quilt. That is eliminated now that we have one set of regulations with the European Union, and that's fantastic.

My first question is this. The Doha round failed to actually move forward, and as I see it, there is no way for that to happen, because it's now out of date. I remember Steve spending two weeks in Geneva watching the paint dry. This is all about rules-based trade, and now we have agreements like CETA and TPP that go way beyond what Doha was even projected to do.

Until we see the WTO actually catch up, how important is it that we continue to do these multilateral and bilateral agreements?

[Steve Verheul]

I'd have to say that it's very important, because I think that when we have an effort at the World Trade Organization that is not moving ahead, then it really does become a bit of a competition between countries to see who can get the greatest access to other markets and who can benefit the most from increases in access.

Now, clearly we've always had the position that a multilateral WTO approach was our primary objective, because that does benefit all countries, even the smaller developing countries, but given the situation we're in, when we have preferred access to these markets, it gives us a benefit and an advantage to compete that others simply don't have.

When we talk about CETA, for example, we will have better access than any other country to the largest market in the world. That gives us a huge advantage.

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

One role that I've seen that the WTO still fulfills is referee, but it's a very cumbersome process. We saw that with the country of origin labelling. It took years to work through the whole process.

With some of the ISDS rules and different things that we're starting to apply in these trade agreements, do you see that at some point in the future, all that refereeing will be done within the trade agreement, as opposed to relying upon the WTO?

[Steve Verheul]

I think that will really depend on the issue. I think that if it's strictly a bilateral issue, certainly countries will use the kinds of mechanisms we're developing now with CETA, because they tend to be more efficient and more timely and you can get through the process more quickly. There are a lot more modifications that have been included.

However, if a country feels that a number of partners or other countries may join them, then they may want to go to the WTO in order to get that additional support from other countries.

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

That's truly third party.

[Steve Verheul]

Yes.

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

On the regulatory co-operation aspect, I know there's a tremendous amount of discussion and work around that. My concern is that unless we have timelines attached to those negotiations and agreements as we move forward, they end up being a non-tariff trade barrier. I'm thinking of the low-level presence in GMOs. We saw what happened with triffid flax. I'm also thinking about maximum residue limits, MRLs. You're well versed in those.

Do you feel comfortable with what's being attached to the agreement? Do you believe we'll see a timely resolution, almost a proactive resolution, on some of those issues?

[Steve Verheul]

Yes, we do expect that. I think that in areas such as those that you've mentioned, we do have a specific working group on biotechnology that is targeted entirely in that direction of science-based decisions, timely processes, and getting through the process very quickly.

I think we'll see improvements in that area. Some of this has been done on a sector-by-sector basis, but when it comes to agriculture specifically, we've put a lot of attention into how we can address those barriers.

They're not all going to be gone by the time CETA goes into effect because, as you can imagine, barriers come up all the time. We've tried to set in place a process that will allow those problems to be dealt with much more quickly than in the past.

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

Thank you.

[The Chair, Liberal, Mark Eyking]

Mr. Ritz, you have a minute and a half remaining. Did you want to give it to Mr. Van Kesteren?

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

Thank you, Mr. Chair.