International Trade Committee on March 10th, 2016

[The Chair, Liberal, Mark Eyking]

Thank you very much. That's it for questions and answers.

Now we're going to the NDP. Go ahead, Ms. Ramsey.

[Tracey Ramsey, NDP, Essex, ON]

I thank Karen for raising the issue around procurement, I think it's important that we have that conversation. Thank you for sharing with us what your negotiations were like with the FCM. It's an issue that concerns many Canadians, specifically in my riding. I live in southwestern Ontario, right on the border. After NAFTA, many municipalities in my region felt their hands were tied and were in fear of chapter 11 repercussions, so they made decisions based on the potential financial penalties they would face under that.

I know that FCM was pushing for more of a progressive enforcement that would start with a verbal engagement, then go to a public forum, then seek that financial financial penalty at the end.

We just lost a contract in Windsor. We have one of the highest unemployment rates in Canada, and we lost a contract that went to a non-local company, so this issue is very important to my region.

Can you tell me whether or not you were able to establish that progressive enforcement?

[Steve Verheul]

Yes, and that's another issue that we discussed at length with the FCM as the process went along. There are a number of provisions within government procurement to deal with that.

First of all there would be a discussion or a consultation to see if there was some way to deal with the issue before it reaches a higher level. There is also a bid review mechanism that will be established, so that if one company feels they weren't treated fairly, they could have the process reviewed. That's strictly within the context of that particular contract.

When it comes to potential investment claims, we have effectively excluded government procurement from an investor state dispute resolution.

[Tracey Ramsey, NDP, Essex, ON]

My second question is about patents for pharmaceutical products.

The technical summary of the final negotiated outcomes of the Canada-EU CETA stipulates that Canada's federal government is prepared to address incremental cost impacts if concessions to the EU in this area have a financial impact on provincial and territorial governments.

How would incremental cost impacts be assessed, and by whom?

[Steve Verheul]

The previous government made commitments on this issue. We have had signals from the current government that they also intend to address this issue. We don't know the specifics as of now, but certainly it would involve working very closely with provinces and territories.

Provinces and territories seem to be quite confident they would be able to supply the necessary data to show potential increases in the cost of drugs as a result of the changes made in CETA, but much of this still remains to be worked out, given that this government has not yet engaged provinces and territories in substantive discussions about how protections would be made.

[Tracey Ramsey, NDP, Essex, ON]

The other thing I want to ask is this. What do you think the impact of this greater protection of intellectual property for Canadian patents on pharmaceutical products will be on our health care system and the Canadian economy?

[Steve Verheul]

We don't anticipate the impact will be that significant, because we didn't go nearly as far as the EU wanted us to go. They have additional patent term protection of about five years, whereas we have agreed to an additional two years under very specific circumstances, with a number of exemptions to that as well.

During the negotiations, we consulted closely with the brand-name companies and very closely with the generic companies. They have largely supported the outcome on CETA, because we were able to attain many of the objectives that they had in the negotiations. They wanted an exemption for exports, and we got that. They wanted no retroactivity, and we got that. They wanted it to apply to a single patent, not multiple patents, and we got that. We have exclusions for pediatric extensions; we got that. As a result, I think we've tailored it in a way that we don't anticipate huge impacts.

[Tracey Ramsey, NDP, Essex, ON]

Then whether or not that extension was granted, would it be on an individual case basis?

[Steve Verheul]

Yes, it would.

[The Chair, Liberal, Mark Eyking]

Thank you very much, Ms. Ramsey, and thank you very much for the answers.

We only have time for one more question. The Conservatives have given their time over to Mr. Fonseca, which bodes well, because everybody got a chance to ask a question here this morning.

You have the final round.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Thank you, Mr. Chair.

Thank you, Mr. Verheul, and congratulations on all of your hard work and your team's hard work to get us to this point.

Canadians are very proud of our federalist roots, and to know that you consulted so deeply with the provinces, the FCM, the municipalities, as we've just heard, and the different sectoral groups that you met with on a very regular basis, and to hear what you had to say in regard to that, tells us that you spent most of your time on the consultation, compared to the negotiations. I think that was very important in terms of where this agreement is right now, and we're hearing some very good things.

Going forward, I'd like to know how you're going to keep those modes of communication open as pathways with the various groups as well as with the provinces and the municipalities. Do you continue to consult with them and keep them up to speed as to where we are?

[Steve Verheul]

Yes, and in fact I had discussions with provinces and territories as the latest steps of the legal review were being completed, as well as the investment changes. I consulted closely with them on that, and with industry as well. I kept those discussions going.

I think we now have the challenge—and we've been working on this now over the last while—that we can negotiate the best agreement in the world, but if Canadian companies and exporters aren't taking advantage of it, it's not going to do that much good, so I often make it clear in presentations that negotiators don't trade anything. All we do is negotiate opportunities. It is now at that point in time when we have to ensure that Canadian businesses and exporters are positioned to take advantage of it, and that requires a lot of work between now and when the agreement gets implemented.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

It seems that you got it right when it came to this model of consultations and negotiations. Can you compare the process with the TPP to what you've done with CETA and tell us the similarities and differences?

[Steve Verheul]

I wasn't personally involved in the TPP negotiations. I think the approach that was taken in TPP drew from some of what we had established in CETA, because there had been a gap since NAFTA, which was over 20 years ago. That was our last big agreement, so when it came to CETA, we recognized that we needed a completely different model. The same principle applies to the TPP. A completely different model was needed for consultations to make sure negotiators were informed of objectives, priorities, and what needs to be done. I really can't speak to the TPP since I wasn't directly involved.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

My next question, and you mentioned it, is how prepared companies are to take advantage of the CETA agreement. We've known about it for years. How prepared are we?

[Steve Verheul]

I think we've still got quite a bit of work to do.

The larger companies don't need a lot of help. They either have in-house expertise or they have advisers or brokers who can help them deal with whatever needs to be dealt with. They have all the resources they need to access the market.

Where we really need to focus is on small and medium-sized enterprises that may have never contemplated exporting to the EU. We need to make sure they're aware that these new opportunities are coming up and that this is an opportunity to expand their business beyond the relative comfort of the U.S. and our domestic market. This is our real chance to achieve significant growth by taking that leap, but it does require a lot more education and a lot more promotion, and that is what we're engaged in right now.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Have you had signals from any European companies or organizations that are looking to set up shop now here in Canada, not just to take advantage of CETA but also with our NAFTA agreement, so that they have access to the North American market?

[Steve Verheul]

Absolutely. We have had delegations from member states. Belgium brought the largest business delegation they've ever taken anywhere to Canada last fall, primarily to the west. We've had other delegations coming from Italy and various other member states as well, so they're starting to show a lot of interest.

We've also had conversations with specific companies that are looking to set up in Canada because of that exact notion, that they would have access to the EU market and access to the U.S. market from a Canadian base. That really does put us in the ideal position, because in the past we've always been in the situation of the U.S. making an effort to be the hub and to have spokes of agreements with other trading partners. This gives us an opportunity to be in the centre of it, and that can be a tremendous advantage.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

That's excellent.

What sectors would some of those companies or organizations that have visited be in? Could you name any of the companies that have travelled here?

[Steve Verheul]

I'll decline to name companies, but I can tell you that we've received a number of expressions of interest in the auto sector and for various industrial products as well. Certainly there's been a big emphasis on new technologies—information and communications technologies, environmental technologies. There in particular, there's a lot of interest in trying to take advantage of new developments, new technologies, and new opportunities that could exist here.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Are these their own initiatives, or are we courting these companies and organizations to come and look at the opportunities?

[Steve Verheul]

A lot that we've seen have been their own initiatives. They've heard about CETA and they've heard about the benefits that could accrue. However, we've also been doing some promotion, particularly with our missions in the EU member states. They have been out trying to inform companies of the opportunities in Canada.

What we've also seen in the past, particularly with an agreement of this size, is you get a boost just by creating interest. People hear about the agreements, so they start to think about it, whereas they might not have thought about it earlier. Even the attention on the agreement itself starts to get more people looking at whether it could be an opportunity for their business or their exports, and that can have a snowball effect in moving forward.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you very much for that question, and thank you very much, folks, for coming. It really gives us a good snapshot before we meet the delegates coming from Europe. If anything else comes up that we might need to know before we meet with that delegation, get it to us. It would be much appreciated. Thank you very much for coming.

We're going to suspend just for a few minutes now, because we have a big list of things we have to finish.

[Proceedings continue in camera]