Thank you, Madam Chair.
Honourable members, thank you for giving me the opportunity to appear once again before the House Standing Committee on International Trade to speak on behalf of Bill C-18, an act to implement the trade continuity agreement, TCA, between Canada and the United Kingdom.
For Canada, international trade is central to our economic success and prosperity, and there is no doubt that trade will play a crucial role in our inclusive and sustainable recovery from COVID-19. This is why it is important for Canada not only to develop new trading relationships, but also to strengthen existing ties.
The U.K. is our largest trade market in Europe, and in 2019, it was the third-largest destination for Canadian merchandise exports worldwide. It is also a key source of innovation, science and technology partnerships. Two-way merchandise trade between Canada and the U.K. totalled $29 billion in 2019, making it our fifth-largest international partner. The U.K. is also Canada’s second-largest services trade partner, behind only the United States, amounting to exports of nearly $7.1 billion last year. The U.K. is Canada’s fourth-largest source of foreign direct investment, valued at $62.3 billion in 2019.
It is clear that our trade continuity agreement with the United Kingdom is critical to Canadian jobs by preserving a key enabler to our strong economic partnership—and that is CETA. The trade continuity agreement before you today ensures Canada and the U.K. can sustain and build upon our trade relationships by preserving the main benefits of CETA. As this agreement is based on CETA, a trade agreement Canadians are already familiar with, it will provide continuity, predictability and stability for Canadian businesses, exporters, workers and consumers. This is more important than ever as we all grapple with COVID-19.
Once the agreement is fully implemented it will carry forward CETA’s tariff elimination on 99% of Canadian products exported to the U.K. It will fully protect Canadian producers of all supply-managed products and maintain our priority market access for Canadian service suppliers, including access to the U.K. government’s procurement market, which is estimated to be worth approximately $118 billion annually. It will uphold and preserve CETA’s high standard provisions on labour, the protection of the environment and dispute settlement.
At the same time, while this agreement is largely a replication of CETA, it provides no new market access for dairy or any other supply-managed products. This outcome fulfills the commitment made by our government, the Prime Minister and the Minister of Agriculture and Agri-Food to not concede any additional market access for supply-managed sectors in the trade agreements this government signs on to.
When it comes to the U.K., we have a particularly special connection and enjoy a robust trade and investment relationship. Canada and the U.K. enjoy a deep and historic relationship, and both sides are keen to work together to maintain our strong trading relationship post-Brexit to ensure stability and continuity for our businesses.
When the United Kingdom held a referendum and, guided by the decision of its citizens, decided to leave the European Union, that decision not only affected the U.K.’s trade and economic relations with its largest partner, but it also meant that the United Kingdom can no longer be a party to CETA with Canada. Obviously, this had the potential to affect Canadian companies, especially if the U.K. chose to re-evaluate its trade priorities.
That's why this trade continuity agreement is so important.
Canadian businesses and workers in many sectors rely on our interconnected trade relationship, from farmers to fish harvesters to innovators. They have told us that what they want the most at this time is stability. This agreement provides exactly that.
The TCA ensures that Canada and the U.K. can both sustain and build upon our important relationship by preserving the benefits of CETA on a bilateral basis, fully protecting our closely integrated supply chains.
Madam Chair, this continuity agreement is good for workers and for businesses. It's good for both Canada and the United Kingdom. Without the TCA in place, Canadian businesses would have faced the uncertainty of new barriers and higher costs of doing business, particularly our agriculture, fish and seafood industries. With this agreement we can build a better future for both countries.
The TCA includes a commitment for subsequent negotiations to begin within a year of this agreement coming into force. My U.K. counterpart, Secretary Truss, and I have publicly committed to these negotiations.
We will, of course, seek the input of Canadians on their interest in a new bilateral discussion with the United Kingdom. I am looking forward to hearing from Canadians from coast to coast to coast through public consultations. I'm looking forward to working towards a high-quality, modern and comprehensive agreement that includes ambitious chapters on the environment, women's economic empowerment, labour and digital trade.
To those who have pointed out areas where improvements are sorely needed, we hear you. I am eager to get to work on those issues. We will return to this House when we are ready to table negotiating objectives for this new ambitious effort.
Right now, while we work to ratify this agreement both in Canada and the United Kingdom, we have signed a memorandum of understanding between both countries so that trade can continue to flow while the agreement makes its way through domestic approvals.
The TCA will provide stability and will remain in place until a new agreement, which we aim to reach within three years, is ready.
To sum up, Madam Chair, this trade continuity agreement is like no other trade agreement Canada has negotiated. We've heard from Canadian businesses and industries, as well as provinces and territories, about the importance of maintaining a preferential trading relationship with the United Kingdom. The successful ratification of Bill C-18 will go a long way to minimizing disruptions for Canadian businesses at this critical time.
Throughout the ratification process, and once this agreement is in place, Canada will continue to support Canadian companies doing business with and in the U.K. and the EU through what I call a “team Canada” approach to trade.
This is critical to Canada's economic recovery and future prosperity. As we look to turn the corner and build back better, it will be even more important that we continue to provide Canadian businesses with as many options and opportunities as possible.
This agreement maintains crucial ties and preferential trade terms with one of Canada's key trade partners. It ensures that Canadian businesses do not face yet another disruption or challenge at this time. Indeed, if this agreement were not in place, it would be another setback that Canadian businesses cannot afford.
This is why I urge all members to consider the benefits of the TCA and of maintaining preferential trade with a key partner, and show their support for Canadian businesses and our exporters.
Madam Chair, let me conclude by saying that the trade continuity agreement with the United Kingdom is good for Canadians, good for the people of the United Kingdom, and good for the strong, mutually beneficial relationship that our nations have built over the past 150 years.
