Evidence of meeting #15 for International Trade in the 43rd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was negotiations.
A recording is available from Parliament.
Director General, Trade Negotiations, Department of Foreign Affairs, Trade and Development
This question is outside the topic of the WTO, but I can answer it if that is acceptable to the committee.
Director General, Trade Negotiations, Department of Foreign Affairs, Trade and Development
At this point, following the U.K.'s exit from the European Union, we have agreed to continue to apply CETA, which is the agreement we have with the European Union, until the end of the transition period. Right now that transition period is set to expire on December 31. Of course it could be extended.
We have not initiated discussions for a bilateral FTA with the U.K., but we will continue to consider that, and it will depend on developments.
Conservative
Michael Kram Conservative Regina—Wascana, SK
Why haven't we had these high-level talks on that matter?
Director General, Trade Negotiations, Department of Foreign Affairs, Trade and Development
At this point—
Director General, Trade Negotiations, Department of Foreign Affairs, Trade and Development
I can.
CETA still applies, and I think Canada needs to determine, as is the case when we decide to launch FTA negotiations with any trading partner, whether it is in our interest to do a bilateral agreement, and that's dependent on a lot of factors.
Liberal
Randeep Sarai Liberal Surrey Centre, BC
Are the delays by the U.S. on the appointment of judges or vetoing them causing the delay in the softwood lumber dispute resolution? Has it had any effect on that?
Director General, Trade Negotiations, Department of Foreign Affairs, Trade and Development
No, it has not had an impact on the specific pace of that case.
If we have not found a solution to the appellate body impasse by the time that panel decision is issued, then we will be in a situation where it's possible that either Canada or the United States could choose to appeal that decision, at which point it would essentially go into a bit of a void.
Liberal
Randeep Sarai Liberal Surrey Centre, BC
If the new appellate arrangement you have with the European Union comes into effect and the U.S. is part of that, how would the appellate regime change or alter? How would it be better for those having disputes or challenges?
Director General, Trade Negotiations, Department of Foreign Affairs, Trade and Development
The multi-party interim arrangement we're negotiating right now is intended to, as closely as possible, replicate the current appellate body. Because we have been looking for a solution that we could put in place fairly quickly, it does not attempt to include improvements or deviations from the current appellate body mechanism.
At this point, I think it seems unlikely that the United States, given what I've just said, would choose to join such an arrangement. If anything, the United States might, for example, decide to begin allowing for appointments to the appellate body. We wouldn't need an interim arrangement if the United States were prepared to continue with the current appellate body mechanism.
Liberal
Randeep Sarai Liberal Surrey Centre, BC
The interim arrangement isn't any reform of the appeal mechanism; it is simply an interim arrangement of the existing model we have, but done with the European Union and others.
Going from that, are there any reforms being done to the appellate measures? What I find is that the process takes so long. Coming from British Columbia and from a riding with one of the largest softwood lumber employers in the country, I find that waiting years and years really kills a lot of our industry. Unfortunately, a lot of smaller, individual manufacturers go belly up; they go bankrupt. By the time the resolution comes, whoever has bought their assets gets the anti-dumping duties back or whatever was enforced on them and by that time they're gone or they don't have the ability to last that long.
Is there any reform to make it more efficient and quicker to bring resolutions to the forefront faster?
Director General, Trade Negotiations, Department of Foreign Affairs, Trade and Development
One of the things we have tried to talk about with the WTO membership is whether there are ways in which we can try to ensure that decisions are rendered by the appellate body within a 90-day period. We have found that, over the years, the types of discussions and analysis the appellate body has undertaken have increasingly become quite complex. In many cases that has meant that, in fact, it has taken more than 90 days for the appellate body to issue a report.
We have looked at ways in which we can try to constrain that in order to try to ensure at least that the appeal process happens in a more timely manner.
Liberal
Randeep Sarai Liberal Surrey Centre, BC
The appeal process shouldn't be a tactical tool.
I find that when it comes to softwood lumber it's simply a tactical tool. As soon as the agreement ends, it is immediately imposed. You go through years and years of a waiting period until an agreement is reached again, and then the cycle continues. It should not be used as a method to just frustrate the system, but unfortunately, in this case, it is.
What are we doing to ensure that this is not used as a means where invalid...? Some disputes have some validity on both sides, and it's getting to the nuances or how they interpret them. In some, such as this, I find that it's simply used as a tool to punitively damage our industry.
Director General, Trade Negotiations, Department of Foreign Affairs, Trade and Development
Yes.
When the appellate body was created, it was never intended to be automatic. There's no requirement that every dispute actually go to an appeal. The reason it was created is that sometimes panels don't necessarily get it right. The appellate body was created to provide an overarching review process.
In an ideal world, an issue or an irritant with a country would not even need to go to the WTO dispute settlement mechanism. When we have irritants with countries, such as issues like canola with China or pulses with India, we do try for some time through advocacy, discussion and dialogue to avoid getting to the point of a WTO dispute. In part, that is because WTO disputes do take time. They are very resource intensive as well. We have sometimes had good success in avoiding having to go to a formal WTO dispute.
That is another tool in our tool kit that can be very successful in resolving problems more quickly.
Conservative
Randy Hoback Conservative Prince Albert, SK
Thank you, Chair. I have just a few quick questions.
In regard to agriculture issues, I'll use the example of India and the pulses. Here's an example where we know there's not a problem. It seems that there's no remedy or no way to get a remedy, even with the threat of going to WTO. In the scenario that we're facing right now with the reforms that are ongoing, where does something like this fall? Is there any resolution in sight?
It seems that as the resolution gets closer, all of a sudden the willingness of that country to negotiate or find a settlement becomes stronger and stronger.
In that scenario, how does that look?
Director General, Trade Negotiations, Department of Foreign Affairs, Trade and Development
It's a good question. Every case is different. The way we ultimately resolve these disputes can also vary. Sometimes a country may be motivated to resolve an issue because of a change in its domestic situation. It may be in response to pressure from their own domestic stakeholders. It could be as a result of a negotiated solution between two parties.
I can't really provide a general answer to that.
Conservative
Randy Hoback Conservative Prince Albert, SK
What I always find frustrating is why we wouldn't launch the dispute right away. Knowing that we've started the process and that they know it's started, wouldn't there be more incentive for them to create a negotiation?
If you don't launch the action—like Italy on pasta or durum, for example, or China now on canola—they may not take you seriously. Once you launch it, then they take you seriously. I think even with softwood lumber, until you launch it and get it close to resolution, they won't take it seriously.
I can even use the example of wine and Australia taking us to the WTO on the excise tax. I'd like to think that now that we're close to seeing that come to fruition, we're actually going to take it seriously and maybe negotiate something with Australia and other countries on this.
Why do we wait so long to launch these appeals? As Mr. Sarai said, when you're in the softwood lumber industry or any other industry, that collateral damage over that period of time as you wait is so expensive and damaging. It creates a scenario where you can't recover. I think a lot of countries know that, so they just stall it and stall it knowing that the competition will be gone in three years anyway.
Director General, Trade Negotiations, Department of Foreign Affairs, Trade and Development
Decisions to launch a dispute are complicated and take into account a lot of different considerations. Oftentimes, they also require considerable consultations with Canadian industry. In some cases, Canadian industry is not necessarily unified in their view as to whether or not Canada should launch a formal dispute.
I would certainly agree that registering the problem with a trading partner at a very early stage is really critical. Sometimes these issues can be resolved fairly quickly. Sometimes governments are not even aware at the national level that these measures exist or could be potentially offside of a country's trade obligations. Sometimes it requires getting certain people in the room together.
We agree that these issues have to be raised very early on. Sometimes we choose to do that through formal consultations at the WTO, which is a precursor to launching a formal panel. In other cases we have found good success in doing it through other channels.
There's no one-size-fits-all approach, but we do take into consideration whether or not launching a formal dispute may serve to actually elevate the issue within a foreign government.
Conservative
Liberal
Vance Badawey Liberal Niagara Centre, ON
Thank you, Madam Chair.
I want to continue on from where I left off earlier, as well as piggyback on Mr. Sarai's questions and what I was getting at with the appellate body.
Frankly, when an appeal is brought to the WTO, it does place a sense of vulnerability on the sector because of the time not only during but afterwards as well, depending on the decision.
What mechanisms are in place to overcome non-favourable WTO decisions that come down from the body? What contingency plans do we have in place to help sectors overcome some of those decisions? The more I think about it, I realize that the more appropriate question would be this: Do we actually need the body?
Look at NAFTA. We have dispute resolution as part of NAFTA. Would it not be more appropriate, more disciplined, more mature with respect to how to conduct a business activity and less arbitrary if the body was dismantled altogether, and what was actually encouraged—I say “encouraged” because I don't want to use too strong of a word—was that these arbitration arrangements, as we have here in an interim fashion would be once again encouraged with a new association?
Director General, Trade Negotiations, Department of Foreign Affairs, Trade and Development
Madam Chair, maybe I could start with the second question.
It's quite true that under our bilateral and regional FTAs we have, essentially, a one-stage dispute settlement process. There's no appeal mechanism.
In the case of the WTO, there was a decision taken during the Uruguay round by members who felt that it would be important that we have a second level just in case the panel didn't get it right the first time. That was really the primary purpose of adding that second level. I think it's a valid question in terms of whether or not we need a second stage of appeal.
We have found good success at the WTO in terms of that two-stage process. It's true that there are certainly appellate body decisions that we do not necessarily fully agree with and that we wish maybe had gone in slightly different directions, but we have seen a lot of value in that two-stage process. The reality is that we have a very limited number of cases that we have pursued under our bilateral and regional FTAs in terms of state-to-state dispute settlement. Part of that is because of the two-stage system at the WTO. The other part of it is that we also have the strength of other WTO members. There's a certain normative value as well in terms of those decisions.
I've now forgotten what your first question was.
Madam Chair, would it be okay if I asked the member to repeat it?
