Good afternoon, Madam Chair.
I'm pleased to be here today to provide an update on the government's engagement in the reform of the World Trade Organization, the WTO, including Canada's leadership of the Ottawa Group.
I am joined by several colleagues from Global Affairs Canada, namely Colin Bird, director of the Trade Policy and Negotiations Division, Darren Smith, director of the Services Trade Division, John Layton, executive director of the Trade Remedies Division, and Don McDougall, deputy director of the Investment Trade Policy Division.
Allow me to begin by providing a bit of context. The WTO is critical for Canada because it governs trade between 164 members and it provides a stable and predictable framework of rules and market access for Canadian companies accessing world markets, backed up by binding dispute settlement.
Canada is a founding member of the WTO, which was created in 1995, and has a long history and a solid reputation as a committed multilateralist. In fact, members are reminded of Canada's contributions to the multilateral trading system every time they walk through the doors of the WTO Secretariat building in Geneva. Canada donated the large wooden doors to the old International Labour Organization headquarters, where the WTO now sits.
Over the last few years, the multilateral trading system has faced an increasingly challenging environment, characterized by the rise of protectionism and the use of unilateral trade measures.
Beyond difficulties in concluding negotiations in a number of areas, current challenges include divergent positions on trade priorities, a lack of consensus on how to treat developing countries, an overloaded dispute settlement system, and a stalemate surrounding vacancies to the WTO's appeal mechanism. Such challenges put the credibility and day-to-day functioning of the WTO at risk.
Against this backdrop, several years ago Canada took up a leadership role to build support for reform of the WTO and to identify concrete initiatives aimed at reforming the organization.
As one of the more visible examples of our contributions, Canada has been at the forefront of efforts to reinvigorate the WTO and is playing a leading role in the Ottawa group, a group of reform-minded WTO members first brought together by then minister for international trade diversification Jim Carr in October 2018. The group of 13 WTO members is diverse in terms of geographical representation and levels of development. It remains small, to allow for meaningful exchange of views, but it is meant to support broader discussion involving all WTO members.
Since its creation, the group has met at the ministerial level four times, most recently in Davos this past January.
One of the key achievements of the Ottawa group has been its role as a sounding board for the exchange of ideas. For example, the group has identified ways in which to improve transparency for businesses, especially small and medium-sized enterprises, through more timely reporting and notification of new government regulations, laws and/or measures affecting trade.
Canada has also played a leading role in discussions on how to resolve the impasse in appointments to the WTO's appeal mechanism, also known as the appellate body, which is the most pressing issue facing the WTO.
Driven by concerns about the appellate body's functioning, the United States has blocked new appointments since 2017, so that, as of December 2019, there is a lack of quorum, which means that appeals can no longer be decided. Under these circumstances, a member deciding to appeal a panel finding can prevent the resolution of a dispute by effectively appealing into the void and undermining the legal rights of WTO members.
For a mid-size country such as Canada, this loss of recourse to binding dispute settlement has serious implications. We are an active user of the WTO's dispute settlement system and have been party to a total of 63 disputes since 1995—40 as a complainant, and 23 as a respondent.
The situation has provoked some creative problem-solving on the part of Canada.
This past July, Canada and the European Union developed a bilateral interim appeal arbitration arrangement to allow for appeals between ourselves until such time as the appellate body impasse is fixed.
Most recently, in Davos, this past January, Canada and 16 other WTO members built on the success of that arrangement by agreeing to work towards a similar interim arrangement that would apply between participating members until the appellate body is again functional.
While Canada's priority remains finding a multilateral solution to the appellate body impasse, these types of interim arrangements help safeguard our rights to binding two-stage dispute settlement with willing WTO members until the appellate body is functional again.
Canada is also playing an active role in a number of ongoing WTO negotiations. Although the current comprehensive multilateral round of negotiations launched in 2001, known as the Doha round, has reached a stalemate, negotiations continue on a stand-alone basis on several fronts.
That includes negotiations to address harmful fisheries subsidies, which have reached a critical stage. Fundamentally, this negotiation is about helping preserve fish stocks for future generations, but systemically, it is seen by many as a critical test of the WTO's negotiating function. Members are striving to conclude negotiations in time for the next WTO ministerial conference later this summer, and Canada has made a number of active contributions, including a recent proposal on overfishing and overcapacity.
Canada is also playing an active role on agriculture and has recently sponsored a statement by the Cairns Group in January calling for the reinvigoration of discussions to eliminate trade- and production-distorting agricultural subsidies, which represents a key interest for Canada and Canadian agricultural producers who face a very uneven playing field in trying to access international markets.
Challenges to the multilateral approach to negotiations have also led members to pursue negotiations through plurilateral negotiations, which involve only subsets of the entire WTO membership. For example, willing members have launched plurilateral negotiations, also known as joint statement initiatives, on e-commerce, investment facilitation for development, domestic regulation for services, and micro, small and medium-sized enterprises. These negotiations have the potential to deliver significant benefits for Canadian businesses of all sizes, and Canada is actively participating in each.
Due to external circumstances related to COVID-19, the ministerial meeting of the Ottawa group that was scheduled to be held in Ottawa on March 18 has been cancelled as of a few hours ago. Efforts will continue on how best to plan our work in the lead-up to the 12th WTO ministerial conference, in Kazakhstan in June.
A key priority for Canada in the months ahead will be to deliver on a commitment made by the group in January, in Davos, to enhance its efforts to engage business and our citizens on WTO reform efforts. It is safe to say that there is almost unanimous support that the WTO needs to be reformed in order to ensure that the organization is relevant and fit for purpose for the 21st century. The challenge, however, is that collective agreement on precisely what that means remains elusive.
Perhaps that is a good note on which to end my comments. As you can see, I have a few experts here to help answer any specific questions the committee might have.
