International Trade Committee on Dec. 11th, 2020

[Matthew Green, NDP, Hamilton Centre, ON]

If I could, in my last question.... I know that cannabis legalization has been a grey area of law with Indian Act territories, and I know there is tremendous interest in local cannabis deals having access to both domestic and international markets.

Would you care to comment on how this has been a barrier for cannabis trade within first nations communities?

[The Chair, Liberal, Judy Sgro]

Give a brief answer, please.

[Patrick Watson]

Thank you.

I would just say that those rules are determined by each individual first nation community. I would defer to their leadership.

Thank you.

[Matthew Green, NDP, Hamilton Centre, ON]

Is there—

[The Chair, Liberal, Judy Sgro]

I'm sorry, Mr. Green. Your time is up.

We move on to Mrs. Gray, for five minutes.

[Matthew Green, NDP, Hamilton Centre, ON]

Just as a point of order, I do have a timer here and—

[The Chair, Liberal, Judy Sgro]

You had two and a half minutes, sir.

[Matthew Green, NDP, Hamilton Centre, ON]

I time it quite sharply.

[The Chair, Liberal, Judy Sgro]

So do I. Thank you.

Mrs. Gray, go ahead, please.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Thank you, Madam Chair.

I'd like to thank all the witnesses for being here today.

I have a couple of questions for Mr. Kennedy. You were going into a number of different observations during COVID-19 pandemic time and then after this time. One of the points you mentioned was around non-tariff barriers, how they have become even more prevalent and how to deal with them.

I'm wondering if you would be able to expand on that a little bit with some of your own observations on how we move forward on those.

[Douglas Kennedy]

Thank you very much for that question.

I think Mr. Groleau has outlined some of the issues we face on pure trade issues.

The point that I was trying to make is that if we're looking at economic engagement, as opposed to just exporting, there are issues in terms of the way industries operate in general, such as subsidies, taxation, state-owned enterprises and their treatment, investor protections against states and against contract enforcement, and copyright. There are lots of other issues on which there are no global platforms, or limited global platforms. Increasingly, organizations like the WTO are being stymied or sidelined in that people are opting for bilateral agreements.

In terms of Canadian companies' engagement with international markets—be it IP licensing, joint ventures or traditional exporting—I believe getting these sorts of trade infrastructures or engagement infrastructures in place is as important as tariffs, in many cases, because tariffs have been trending down in a lot of cases. In some cases, they are no longer particularly important compared to quotas, industry standards, labelling and a plethora of other issues that are stymying trade and putting sand in the machinery of international economic engagement.

I think those would be worth working on, even separately from the traditional trade agreements.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Great, thank you.

Can you just expand a little bit on the state-owned enterprises issue, the thoughts around that and how Canada might want to approach those types of organizations coming in at a post-pandemic time?

[Douglas Kennedy]

That is an extremely difficult question, because with state-owned enterprises or state-controlled enterprises—which doesn't necessarily mean owned; it could be regulated enterprises, airlines and so on—you have issues of favouritism in procurement, for example. In some cases, the treatment of foreign competitors is somewhat opaque in many countries, so trying to get clarity, particularly if you could get multinational or multilateral clarity on.... What is a subsidy? How is that defined? Subsidies can be narrowly defined, as they tend to be, but it can also be in terms of procurement, state support for research and so on.

There is a whole range of issues where it would be much easier for Canadian companies to compete if there was a common understanding of what those were, and enforceable standards globally.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Thank you.

One of the other things you mentioned was that you were noticing more of a regionalization in terms of how a lot of countries and even industries might want to regionalize a lot of their distribution and trade. Can you go into that a little more? What would be the proximity of that? Are we talking about countries that have borders? Are you talking about larger areas? Can you maybe expand a bit more on that and specifically on how Canada might fit into it?

[Douglas Kennedy]

That is a very good question.

It's difficult, because it really varies by industry. For example, in terms of regional supply, my colleague Mr. Kingston mentioned CUSMA and the auto industry.

With the auto industry, Canada basically works off a North American platform. Some of our parts manufacturers are global, but essentially, in terms of assembly and market and so on, we have decided to go regionally. It would make sense for us, because the market is here, that in some cases portions of the procurement done overseas would move here, or for us to at least diversify sources of overseas procurement.

For other industries, it may not be such an issue if you can move production very quickly from one place to another. If you're doing plastic housewares, confectionary or whatever, those are not so difficult, but a lot of complicated manufacturing—for example, very high-run manufacturing—requires scale.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Kennedy.

We'll go on to Ms. Bendayan.

[Rachel Bendayan, Liberal, Outremont, QC]

I'd like to thank all the witnesses for having accepted our invitation to appear on a Friday afternoon. We're very grateful to them.

My question is for you, Mr. Groleau. I'd like to thank you for your statement and would like to draw your attention to the fact that the committee heard from Ms. Citeau of the Canadian Agri-Food Trade Alliance. In response to one of my questions, she told us that it was very important to understand that the problems with CETA had nothing to do with the wording of the agreement itself, but what rather with, "the reluctance of the European Union to comply with commitments and to eliminate barriers". She then explained what these barriers were. I'd like to hear your comments on this.

We also heard from Mr. Gobeil of the Producteurs de lait du Québec. I asked him for suggestions about how we could work closely with Quebec's dairy producers, and he told me:

We need to help producers and processors find new opportunities in value-added markets. It could be in animal production, dog and cat food for example. There is also the baby formula market. It's important to find value-added Canadian markets.

I spoke about this with Minister Bibeau. She explained to me that we had large-scale processors here in Canada, which makes it difficult for smaller companies in the market. As an expert in this field, do you have any suggestions?

[Marcel Groleau]

There are several parts to your question.

First of all, with respect to CETA, it's true that the problem is not in the actual wording of the agreement. The problem is that Canada doesn't force Europeans to meet their commitments, in particular with respect to non-tariff barriers. As was mentioned, there's one for wheat and one for beef, for example. I won't list them all because you're no doubt familiar with them. In short, I fully agree.

The world dairy protein market is based on a very low price caused by a surplus of this protein. Supplies are therefore available in Oceania, the United States and Europe at a price that is really below its actual value, and used to make value-added product products like animal feed or baby formula.

However, Canada has trouble selling this protein at a competitive price because of its climate, production costs and the scale of its enterprises. Undertakings that would like to invest in processing this protein should therefore be supported.

Our large-scale dairy processors are prepared to do so, but they hesitate to enter this market because of world competition and everything that I've just explained. Indeed, the major players like Nestlé are very difficult to dislodge from the markets they hold. We should therefore provide assistance to firms prepared to invest in state-of-the-art equipment to process milk protein into value-added products.

[Rachel Bendayan, Liberal, Outremont, QC]

Good.

Earlier, you also mentioned considering the possibility of an international approach to agricultural trade, or even simply an agreement for the food sector. By this do you mean the United Nations, the World Trade Organization? How can we give…

[The Chair, Liberal, Judy Sgro]

Can we get a short answer, Mr. Groleau, if possible?

[Marcel Groleau]

I consider it to be somewhat like the approach adopted for climate. No single country can settle the climate issue. It's a world issue. The same is the case for food. We think that the Food and Agriculture Organization might be an appropriate body for an international agreement on sustainable food. Canada could certainly be a leader in this area.

[Rachel Bendayan, Liberal, Outremont, QC]

That's very interesting.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, committee members.

I want to thank the witnesses for being with us today.

As we said, a Friday afternoon is not always the best time to have witnesses, but we thank you all very much for your information. All of you can leave the screen if you'd like, as we have some committee business to take up for our last few minutes.

As the committee is aware, of course, the report on the Canada-U.K. potential trade agreement, the interim report, was tabled yesterday on behalf of the committee. Of course, the other agreement was tabled on Wednesday.

We need to talk about.... I'm going to make a suggestion for our meeting of January 25 that we have three witnesses on COVID-19 and the exporters recovery plan and that, at the same meeting, we provide analysts with instructions to write a report on the issue of the recovery plan for COVID-19. We would then use the balance of the time to discuss future business.

At the moment, WTO is outstanding for us to complete, based on what we previously approved.

Is the committee okay with that, or are there comments?

Yes, Mr. Hoback.

[Randy Hoback, Conservative, Prince Albert, SK]

Yes, I'm just kind of curious. We were given notice that we have to go through the CCC appointments within 30 days of receiving that notice, and that notice was received on December 3. How are we going to figure that out?

[The Clerk]

I have to check if it's sitting days or calendar days. I don't remember, so I have to check.