International Trade Committee on July 9th, 2020

[Michael Kram, Conservative, Regina—Wascana, SK]

Thank you, Mr. Partyka, for your presentation today. I'm glad to hear that you and your business seem to be weathering the pandemic better than most.

I'm very curious about your experience with the federally funded Wataynikaneyap project in northern Ontario. Could you tell us about the bidding process for that particular project, and why you feel your company was not successful in that particular bid?

[George Partyka Sr.]

The project was in two stages. The first stage was done so that a major contractor could be selected. We had tendered our offering to several bidders for the whole project. The entire project was then left to one contractor and then it was rebid. After it was rebid, we were working on it for about a year and then, come January, we were advised that the project went to the South Koreans.

I'm not sure where we were in position, but some of it covered transformers that were already dumped and other transformers were not, so it didn't fall under the dumping provisions. Why were we not awarded the project? I'm assuming it was all price, but I couldn't comment as I don't have that information.

[Michael Kram, Conservative, Regina—Wascana, SK]

You've made past dumping complaints against the South Koreans. Can you give the committee an idea of how involved a process it is to file such complaints when you believe dumping is happening?

[George Partyka Sr.]

First, there was another supplier, a manufacturer, that also entered into the dumping complaint. This was done both in the U.S. and in Canada. We had won twice in Canada. There was a five-year period and then a second five-year period, so for 10 years we were able to prove that the dumping was occurring from South Korea. That is supported through a lengthy process. It probably went on for about a year. We hired lawyers in Ottawa to contact the governments and the trade tribunal. This went on for a period of a year. A lot of the information that had to be shown was that you were harmed and also that they were dumping. We got support and information from a lot of customers in Canada that showed this was the case.

[Michael Kram, Conservative, Regina—Wascana, SK]

From your perspective, could you tell the committee what the federal government needs to do with future free trade agreements to stop these dumping practices from happening?

[George Partyka Sr.]

On policies, I guess one thing I found out off the record was that some of the tariffs were not being collected. The reason for this was that they were not being reported properly.

Further to that, I believe Michèle's point was that there has to be better regulations put in place so that clarifications on what type of product is being imported and from where are better regulated and supported through CBSA. I think CBSA is very busy, and perhaps there are some issues they have with paperwork and in trying to get these products identified. As a result, there may be some erratic reporting that goes on that doesn't help identify the products, so tariffs cannot be collected. Regulations have to be improved. I believe CBSA has to be better supported.

There's obviously some better control on pricing from procurement fields. I believe there are some policies, but right now, with the world open globally, it's very difficult to control where prices are coming from and whether those standards are being met. We do a lot of investments to make sure we comply with standards. We test in accordance with standards, but I believe there is probably some flexibility going on out there that I'm not aware of. Perhaps CSA standards have to be strengthened a little more.

I'm pretty aware that the Canadian Welding Bureau does not go to Asia and approve plants for the welding, whether it's good for -50°C or -40°C. I can't vouch for that, but I'm pretty sure CWB doesn't go there and make sure of that.

[The Chair, Liberal, Judy Sgro]

Thank you very much, sir.

Mr. Dhaliwal.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

My questions are going to Ms. Citeau and Mr. Langrish.

Minister Ng has stated publicly that a future Canada-U.K. free trade agreement will be based on a U.K.-EU free trade agreement. Based on this statement, what are the members of CAFTA thinking about this statement?

Also, to Mr. Langrish, what is not in the CETA that can be added when the new negotiations take place?

[Claire Citeau]

Perhaps I can go first. I want to clarify that earlier on I had a lot of technical difficulties. There was an echo and I could hear people talking three times, so it was very challenging.

Particularly as it comes to the statement you're talking about, I'm not sure I clearly understand what specific statement you are referring to. I understand it's about the U.K. As it pertains to the U.K., given it's one of our largest trading partners in Europe, and with under six months until the U.K.'s full separation from the EU and the fact that some of our competitors are already deeply engaged in full-blown negotiations with that import market, our view is that Canada should formally engage. We should seek to conclude negotiations on an ambitious Canada-U.K. free trade agreement that removes tariffs and non-tariff barriers, provides liberal rules of origin and secures a level playing field in this at the earliest time.

We must be looking for an edge in a fiercely competitive global economy. Our competitors are actively doing this. Ultimately, our success depends on how well Canada opens the door for us around the world. We need to be at the table as well.

[Jason Langrish]

When you posed the question, the screen froze, and I didn't hear it, but I'm assuming you want to know about the prospects for a Canada-U.K. agreement. Is that correct?

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

That's number one. Second, is there anything that we did not have in CETA that you would like to see moving forward?

[Jason Langrish]

Generally speaking, I agree with Claire's remarks with regard to having an ambitious agreement. I think we need to have something there. In my opening remarks, I said that I thought there was going to be a hard Brexit. In fact, if I'm being blunt, I think that the U.K. political leadership believes that the economic fallout can, to a degree, be pinned on COVID. I think they see a bit of an out here. I mean, if you look at the way the negotiations are going between the U.K. and the EU, it's not very good. The best that they're going to be able to achieve by the end of the year, if they do get an agreement, is a very skinny, tariff-only agreement.

Starting with that point, we had a rollover agreement, a CETA-like agreement, that was in place and basically ready to go and replace and cover the U.K.-Canada relationship; however, the British government came along and surprised everyone by saying they were going to remove import tariffs. That was a big piece of the agreement that they were giving away for free. I think the negotiators in the department in Canada are a bit unsure about exactly what the U.K. may put on the table next. I just don't know that we're going to be able to have an agreement in place prior to knowing the resolution between the U.K. and the EU.

For example, how would you treat rules of origin if they're outside of the EU Customs Union? For instance, typically you need at least 50% to 60% of content in your goods to qualify for duty-free status. A U.K. that is outside of the European single market, will they be able to meet those provisions? We won't know if we even need to negotiate rules of origin until we know what they have agreed upon, so I think realistically we probably will not have an agreement in place until 2021.

I think we can take quite a high level of ambition into these negotiations. Where I would like to see better progress.... We still do not have conformity assessment in place two years on in the CETA. Basically what that means is, if a product is certified in Canada and exported over to, say, Germany, it doesn't have to be retested and recertified again. It's seen as being equivalent. We agreed to this in CETA, but the problem is that it still has not been implemented.

We also see continuing problems with technical barriers to trade. Claire has raised this on the agricultural front. I think we need a more robust process for preventing technical barriers to trade. There's also been some confusion around the regulatory co-operation provisions. The regulatory co-operation committee within CETA is for going after future regulatory barriers; however, I think most people, certainly in the private sector, believe it's a forum for dealing with existing regulatory barriers. I think there needs to be more clarity around this in a future agreement.

I think that—

[The Chair, Liberal, Judy Sgro]

Sir, I have to interrupt. The time is up. Thank you very much.

We'll go on to Monsieur Savard-Tremblay.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Good afternoon.

I would like to thank all the witnesses for their presentations.

Ms. Rioux, your presentation emphasized the need for trade in supply chains, but also the exemptions that must be maintained. In other words, not everything is a commodity, and we will have to be able to clearly draw the line in future agreement negotiations.

In anticipation of an agreement with the United Kingdom, you said we could base it on CETA. In fact, rumour has it that the new agreement will probably be very much like CETA. We may simply take CETA and turn it into a bilateral agreement this time.

However, how can we ensure that your concerns about exemptions, which have been more or less honoured in CETA, will be addressed this time around?

When the signing of CETA was being debated, people said the government ended up sacrificing cheese for beef. In the end, neither of the two industries really managed to break into the much-touted big market. We were told that the market would be huge, but it turned out to be harder to break into.

What do you feel we could correct in CETA, now that the time has come to plan for a new agreement with the United Kingdom, which is no longer bound by European Union agreements?

[Michèle Rioux]

That's a multi-faceted question.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Indeed.

[Michèle Rioux]

I'll try to answer.

I'm going to start with your last point, about deregulation and the need to break into the European market despite the many technical barriers.

Last month, we took part in a meeting with the Belgians. It was hosted by Global Affairs Canada. We talked a lot about the impact of CETA. The enthusiasm or flow of trade didn't necessarily materialize. A point that came up repeatedly was that negotiating an agreement wasn't enough; ensuring oversight, implementing business strategies and delivering support were also needed. Mr. Langrish mentioned regulatory co-operation, and we stressed the importance of that aspect in our efforts.

Today, we don't focus solely on trade barriers, tariffs and the opening of borders to trade. We are actually looking at which rules can constitute restrictions, as well as which ones are necessary for protection. That's what the COVID-19 pandemic has caused us to think about. It's making us take a serious look at the current rules designed to eliminate barriers and improve access to foreign markets and exports, on both sides of the Atlantic. At the same time, it's making us think about the standards we want to put in place with the Europeans. I think we can go very far, even with the United Kingdom.

As far as e-commerce and social media rules go, I would say they're a bit more resistant to the approach taken by the Americans, which is naturally a defensive one. All of that highlights just how important regulatory co-operation will be going forward, not only to clear the way for trade, but also to build the institutional foundation for clear rules and consideration of the broader public interest. I do a lot of work with cultural industries. That's very important as we speak. As you know, Canada's legislation is going to be amended. We don't want to end up with problems because of trade policies and disputes.

I'm not sure whether I missed anything, but when it comes to exceptions, whether for trade in cultural products or cheese, it's quite a specific area with underlying social issues at play.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

I have 20 seconds left. Since the preambles to my questions and your answers were lengthy, I won't have time to ask you anything else.

I'll simply thank you for your answer.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Go ahead, Ms. Mathyssen.

[Lindsay Mathyssen, NDP, London—Fanshawe, ON]

Thank you to all the guests for appearing before the committee. I will build on what my colleague was getting at.

My question is for Madame Citeau and Madame Rioux.

I think we all understand the benefits of trade, especially in the agricultural sector. No one disputes that. Having access and growing markets are key. However, often within these very large multilateral agreements, we're pitting one sector against another. Within the agricultural sector, we saw a key loss under CETA, the CPTPP and the new NAFTA in our supply-managed sectors of about 10%, so even within one industry there was quite a lot of division.

As for how we look at future trade, there have been discussions today that we can't lose sight of multilateral negotiations. However, we're seeing so much conflict within that.

Have you thought about potentially looking at sectoral trade and the benefits it would have, so that we're not pitting one industry against another?

[Claire Citeau]

I think in general we much prefer multilateral regional agreements because of the market opportunities that are much larger in scope and the rules of origin that we seek. Bilateral agreements are something that Canada has done. Our preference in recent years has been for multilateral agreements.

As for sectoral agreements, they are limited to such areas as co-operation. They do not address tariffs and non-tariff barriers in significant, comprehensive ways for our sector. It's not something our membership has been advocating for, at least to my knowledge, in recent years.

[Michèle Rioux]

Good afternoon. Thank you for your question.

Sectoral agreements could be explored. Historically, they have had a lot of success. In particular, I've studied the agreement on basic telecommunications, which was later generalized. I think you can get a lot of mileage out of sectoral agreements. That said, they can also work against you, because when you have something to give, there are often trade-offs that have to be made. With sectoral agreements, however, you simply can't make trade-offs. In short, the potential is there, but it's not always a win-win situation.

[Lindsay Mathyssen, NDP, London—Fanshawe, ON]

In terms of the negotiations we saw with the new NAFTA, there was an elimination of the investor-state dispute settlement mechanism. New Democrats were quite happy to see that. Within the CETA agreement, of course, there was the highly controversial investor court system, which is very similar to ISDS. It has caused a lot of controversy within the European Union as well.

If we do move forward with a U.K. deal, I would like to hear the panellists' feelings on the insurance that a future FTA doesn't include something like ICS or ISDS.

[The Chair, Liberal, Judy Sgro]

Whoever would like to answer Ms. Mathyssen's question, please do so briefly.

[Michèle Rioux]

That's a complex question, but I'll give it a go.

Even if we were to negotiate an investor-state dispute settlement mechanism with the United Kingdom, there would still be other venues where disputes could be brought forward.

While I won't say whether I'm for or against the mechanism, there are ways to have the same mechanism or something along those lines. The mechanisms are being discussed all over the world. We are seeing the pendulum swing the other way. A more nuanced approach is being taken, including when it comes to state protection.

We'll see what happens with the European Union and CETA, but we are witnessing innovation at the institutional level, which will probably develop and could eventually be modernized.

Historically, I don't think it's an area where we've necessarily seen stability. I think it's important to stay open to the possibilities.