International Trade Committee on July 9th, 2020

[Chris Lewis, Conservative, Essex, ON]

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Sarai.

[Randeep Sarai, Liberal, Surrey Centre, BC]

This is for you, Ms. Citeau.

Canadian pulses and grains are two of our major trading commodities, and in my riding we have a big port of grain terminals that are just being completed. There are also a lot of lentils and pulses that get exported out of some of the rail and port terminals there.

The concern has been valid—Mr. Hoback has said it—that many countries have used non-tariff trading penalties. How do you see...? When foreign entities or countries unilaterally impose non-tariff barriers, we know they have no validity. They're simply made to protect their own commodities or be punitive for other various reasons. What measures do you think, other than trade commissioners, would be able to prevent this from happening or have better punitive measures so that those countries don't do that again?

[Claire Citeau]

There are mechanisms. There should be bilateral mechanisms in the case of bilateral free trade agreements and regional mechanisms in the case of regional free trade agreements such as the CPTPP. There is also the WTO, which sets the basis for the rules and, as you said, there are a number of countries that have adopted a number of non-tariff measures disguised as protectionist measures, in our view, so there are legitimate but way too often illegitimate reasons.

Tariffs used to be one of the most important factors in free trade agreements. Now tariffs are only the tip of the iceberg, and non-tariff barriers are what countries have used to block agri-food exports. It's really important that we continue to work, not only on a bilateral basis but also at the WTO to enforce the rules.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Do you anticipate more protectionist measures as the global environment becomes more “me, me”, or “my country only”, or the protectionist environment increases, or do you think it has stabled off because of food necessity?

[Claire Citeau]

That is very much the fear. We saw how quickly countries were to adopt various measures to restrict trade. We can only fear what may come ahead, in particular as countries have talked about the need to turn inward to secure their own food supply.

In our view, we need to diversify and reinforce supply chains. We have proven that they work. They have continued to feed Canadians and the world during the crisis. We certainly have a lot of the resources to continue to do so. The need to turn inward should not be the response. What we need to do is actually to push on the pedal, diversify and make sure that trade works and is based on rules so that there is stability and predictability of trade.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Thank you.

Mr. Langrish, can you tell us how much trade has increased with Europe since CETA was implemented? Do we have a number yet? I know that the time frame has been short since its implementation and taking effect, but do we have a number?

[Jason Langrish]

I believe there was a study report issued late last year. If my memory is correct, the Europeans had done a bit better. They had about a 10% or 11% increase in trade. Canada had about a 6% or 7% increase. I'd need to check, but I believe the numbers are roughly those.

It is worth bearing in mind one thing, though. The protectionist measures taken in Italy dramatically reduced durum wheat exports into the European Union. If that hadn't occurred, Canada's exports would have increased and the numbers would be much stronger.

[Randeep Sarai, Liberal, Surrey Centre, BC]

It's an ongoing challenge when we talk to businesses, especially small and medium-sized businesses. They're not as aware of the opportunities that CETA perhaps has for them. What's the best way we can increase the knowledge or the awareness of the opportunities with CETA so that small and medium-sized enterprises in Canada all over the place can actually play ball as if they're a European Union member under CETA and ship their goods and trade with CETA? Are there better ways or practices used by other countries to increase trade in this regard?

[Jason Langrish]

That's a tricky one. The definition of a small and medium-sized enterprise varies. In Germany a $2-billion or $5-billion company is still considered an SME, whereas in Canada it's generally much smaller.

Typically, SMEs don't have the resources to participate as aggressively in international trade. Most of it is global supply chains. It's larger corporations and their suppliers. Most of it is intracompany trade, so it's dominated by larger corporations. The way that small and medium-sized enterprises tend to participate is in these supply chains. They tend to be contractors to the larger firms. As George mentioned, his business is largely providing materials to these larger.... I guess in the case of the Wataynikaneyap power project, Fortis, I believe, is one of the principal procurers. That's often how it occurs.

I think one of the things is not to separate SMEs from the larger corporates. They occupy the same ecosystem. When you see the larger Canadian firms going into the European market—if you're doing trade missions, say, and things of that nature—I wouldn't separate them and have just an SME trade mission and then a large corporate trade mission. I'd put them all together.

[The Chair, Liberal, Judy Sgro]

Your time is up.

Thank you very much to our witnesses. All of you have really given us some very valuable information today. Stay safe and stay well.

To the committee members, thank you all for coming today. I think it was a very informative day. Please stay well and stay safe.

I adjourn the meeting.