International Trade Committee on Feb. 22nd, 2021

[David Chartrand]

Making us more competitive.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Okay, more competitive. Is that—

[David Chartrand]

Making us more competitive versus the suppliers—

[Randeep Sarai, Liberal, Surrey Centre, BC]

No trade barrier is preventing it. It's more of making some coordination here and making it more competitive from the domestic side to attract more investment so you can export more. That's what you're saying?

[David Chartrand]

That's it exactly, absolutely.

[Randeep Sarai, Liberal, Surrey Centre, BC]

The second part, you were saying to increase more “buy Canadian” policies. Everyone likes that, it's always a very popular thing to say we should be buying more. The contrary argument to that is other countries then impose the same restrictions or the same incentives in their countries, which poses a tit-for-tat problem that starts happening, where they'll say “buy U.K.”, and don't buy Canadian parts. How do we mitigate that? How do you think we should go about doing that, where we can encourage more procurement and more “buy Canadian” without hindering our exporters from getting into markets like the U.K.?

[David Chartrand]

We can set certain limits. We're not talking about “buy 100% Canadian” here. We're talking about other countries with trade agreements that have put provisions where, when there are government contracts, procurement issues—for example, the fighter jets we're going to be buying here in Canada—that we have a certain obligation for some Canadian content. I'm not talking about 100%; I'm talking about a certain percentage.

The issue we have is, okay, I understand that everybody bids, but as I said, we are disadvantaged right now by the lack of government support. By not having an aerospace policy, not having a sound foundation, not having anything structured in the way of financing supporting that industry, we expose ourselves constantly to complaints from foreign investors.

[Randeep Sarai, Liberal, Surrey Centre, BC]

So you're saying that when we do a large procurement like the fighter jets, we induce a Canadian context. That has been part of the procurement strategy. Everything that I've read....Aerospace manufacturers have been actually marketing that aspect of how much they'll contribute to [Inaudible-Editor]. Some have actually bowed out, because they are not able to comply with that.

My next question is to Mr. Agnew from the Canadian Chamber of Commerce.

In terms of tariff elimination, can you elaborate? You were talking about lobsters. You had a couple of others. What industries can we work on to eliminate tariffs? We're very close to 98%-99% tariff elimination.

How can we eliminate tariffs for other Canadian exports?

[Mark Agnew]

The main outstanding ones would be products that currently have a tariff rate quota in place. Those would be beef and pork, specifically.

[Randeep Sarai, Liberal, Surrey Centre, BC]

You said something about digital trade and market. How can we improve that, and how can we have that be part of the next trade agreement?

[Mark Agnew]

We've seen, in the last number of years, agreements like the USMCA and the CPTPP having these digital trade chapters that will particularly enable data to move easily across borders within certain privacy safeguards.

Although not currently in CETA, that is the sort of thing that should be replicated in the Canada-U.K. context, given the amount of cross-border investment between the jurisdictions.

[The Chair, Liberal, Judy Sgro]

Thank you.

Mr. Savard-Tremblay, you are next, for six minutes.

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

Thank you, Madam Chair.

I want to thank all the stakeholders for joining us.

I want to ask Mr. Chartrand a question. He explained the vital importance of the aerospace industry. He emphasized that it was equally important to have a strategic aerospace policy, given the strategic aspect of this sector. Of all the countries with a broad and diverse aerospace sector, Canada is probably the only one that doesn't have an aerospace strategy.

CETA, which forms the basis of this transitional agreement, has often been described as a progressive agreement. Mr. Chartrand, you also represent workers. In terms of workers' rights and other important issues for all unions, such as environmental protection, does it seem satisfactory? Or should we start from a clean slate when the time comes to negotiate something more fundamental?

I want to ask Ms. MacEwen from the Trade Justice Network the same question.

[David Chartrand]

In terms of workers' rights, as I explained in my opening remarks, the investor-state dispute settlement mechanism that existed under NAFTA has been withdrawn. I don't see any reason to make the same mistakes by including a system that would give all kinds of rights to foreign investors when workers don't have any rights.

In the event of disputes, investors have much stronger courses of action. If workers need to complain about a situation, a court doesn't necessarily make a ruling. In their case, dispute settlement is mostly done through mediation or discussions. However, this doesn't have any impact and doesn't lead to penalties. This doesn't prevent other countries or foreign investors from doing what they want.

I believe that Canada was the subject of 39 complaints through NAFTA mechanisms such as the investor-state dispute settlement system. Canada had to pay out about $600 million as a result of settlements. Billions of dollars have yet to be paid out. Most of these complaints involved environmental issues. Companies wanted to come here and set up shop without following Canadian environmental rules.

I don't see any reason to make the same mistakes by copying and pasting from the current agreement with the European Union or by including provisions that harmed us under NAFTA. By now, we should have learned from past agreements. We must avoid repeating these types of mistakes in a new agreement. Otherwise, taxpayers will have to pay a significant amount in compensation to private companies that come here and that don't want to follow our environmental rules.

[Angella MacEwen]

I would agree. The labour and environment chapters in CETA had really wonderful language. It was very aspirational language, although there was no enforceability. When CETA was signed and labour supported it, I was the economist at the Canadian Labour Congress at the time. We were told that if we signed this provisional agreement there would be a quick review and we would amend CETA to make it enforceable. The EU has dragged their feet on that completely. There have been no changes to date on the enforceability for either labour or environment within CETA.

I'm currently a member of the domestic advisory group for CETA, and it has been incredibly frustrating for us. We were promised that we could make this deal more progressive over time, and it simply has not been possible. The labour actions we have available to us within the CUSMA are far more concrete than what we have available through CETA. There's virtually no benefit to the labour or environment chapters right now in CETA.

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

How much time do I have left, Madam Chair?

[The Chair, Liberal, Judy Sgro]

You have a minute, sir.

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

In that case, I'll turn to Ms. MacEwen.

Briefly, could you tell us what concrete measures set out in CUSMA may be implemented? What could be done to strongly encourage the government to negotiate future chapters in this area when the time comes to negotiate a permanent agreement?

[Angella MacEwen]

Certainly the advantages in CUSMA are that there are specific avenues provided for workers to be able to make labour complaints if a company is reducing their standards, and the burden of proof is shifted. In previous labour agreements, you had to prove that it was affecting trade, that somehow these labour or environmental violations were happening in a way that affected trade and investment.

In CUSMA, the burden of proof has shifted to where you have to prove that it's not affecting trade, because it's an almost impossible bar to get to. That one piece would be the biggest shift, I think.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. MacEwen.

We'll go on to Mr. Blaikie for six minutes, please.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

Ms. MacEwen, I want to circle back to something you mentioned in your opening remarks when you talked about not just trade policy, but social policy.

We've heard often at this committee about the extent to which certain Canadian businesses and producers are frustrated by some of the restrictions on getting into the European market, even under CETA. We see that in a context where the Canadian government has often been willing to make the kinds of sacrifices they're asking of their trading partners and that their trading partners don't seem willing to make.

Canada has made significant concessions on its supply management system, for instance, even though that puts a lot of strain on supply-managed producers. They've had to suck it up and find a way because the government hasn't had their backs. We expected our trade partners to reciprocate on that, but they don't. In Canada, Liberal and Conservative governments have been mystified by this, and a number of our businesses are mystified by this.

In fact, whereas the conversation here—and I've certainly seen this at the trade committee—is really about economic policy and a belief that at the end of the day trade policy is for the people who have something to trade, many of our trading partners recognize that trade policy is also social policy, and that trade policy decisions have social consequences, not just economic consequences.

I wonder if you could speak a bit to that issue for the benefit of the committee and any Canadians who might be listening. I think this continues to be an ongoing problem in the discussion about trade here in Canada, in that we don't have many political parties—certainly not the two that have governed this country—that appreciate the social dimensions of trade policy. Maybe you could provide us just a few reflections on that for the next two minutes or so.

Then, with the time I have left, I'd like to ask Mr. Chartrand a question.

[Angella MacEwen]

Absolutely. I think that's incredibly important. You can't separate people from the economy. Anything that impacts the economy is going to impact people. When you have trade deals that affect very narrow sectors, you're going to have very localized impacts. If you're affecting farmers, for example—I grew up in a farming community—that's going to affect the whole community. There's no way that the impact to their economic livelihood doesn't also impact the society, the culture, that they've built.

Quebec, particularly, often recognizes this in trade deals, in terms of cultural industries that they have to keep their culture alive. Quebec does a better job at this than Canada does as a whole, I think, in terms of recognizing the importance of culture and the importance of society. What you will see is that Canada will follow both the letter and the spirit of the trade agreement, where other countries will find ways around it in order to protect the social impact or the cultural impacts that they're looking for.

It is a difference in approach, and I think that when we are dealing with countries that treat trade deals differently, we should keep that in mind, so that we're not, as you say, undermining our industry and our culture at the same time, and not getting that reciprocation that we thought we were going to get.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

One example, for instance, is that we've seen a pretty significant depopulation of rural Canada, over a number of decades now.

Is it fair to say that although some of those trends might be present in Europe, they haven't seen it to the same extent, and that, in part, their trade policy is about trying to...? In addition to being able to export more products, it's also first and foremost about sustaining vibrant rural communities in Europe and they haven't seen the same rate of depopulation that Canada has seen.

[Angella MacEwen]

Exactly. For example, European countries have used environmental protection legislation to protect small farmers in a way that no jurisdiction in Canada has.

I worked for a period of time at the Nova Scotia Department of Agriculture, and I wrote a background paper on this, trying to encourage the Government of Nova Scotia—to show them—that these things are possible. We can protect farmers in rural communities in a way that's consistent with trade deals. However, the province was afraid of the repercussions of ISDS, so they weren't willing to go forward with types of amendments that would protect those rural communities.

[Daniel Blaikie, NDP, Elmwood—Transcona, MB]

Thank you very much.

Mr. Chartrand, one of the things that the pandemic has put in focus is the degree to which Canada has not had real planning for a number of different sectors. That's a theme that we heard when we were talking about the impact of COVID-19 on trade. We heard about the lack of industrial planning in Canada. We've seen it on the vaccine front. We've certainly seen it, as you quite rightly pointed out, on the aerospace front.

How does Canada negotiate a trade agreement with another country where there are a lot of aerospace consequences? I think of Northern Ireland, for instance, where there are a number of manufacturers that work both in Canada and Northern Ireland without having a plan for the industry. How can you have a coherent trade policy for aerospace, if you don't have a plan at home for what you want out of the industry and who it's meant to benefit?