International Trade Committee on March 12th, 2021

[Steve Verheul]

Along with my colleagues from Agriculture and Agri-Food Canada, I have had fairly extensive discussions with CAFTA on the notion of a chief implementation officer, and we had the most recent of those discussions a couple of weeks ago. The discussion was more in the nature of exchanging ideas and posing some questions about whether this is the best path forward or not. Clearly, between our organization and AAFC, we do all of this work. What CAFTA seemed to be interested in is almost more the optical aspect of having a single place to go to, a single window. We can certainly look at something like that, but the notion of having a new position created that would deal with these issues would have a lot of overlap with what is already going on, and that person—whoever it might be—wouldn't necessarily have the same kind of hands-on knowledge as the rest of us who are engaged in all this.

So we talked about the issue. They were going to go back and think a bit more. On our side, we suggested that perhaps it would make sense to look at something like a regular summit, where we could have conversations between the agriculture sector and most of the people who are actually working on the ground on these issues, in order to make sure we get the details directly to them.

We see this as a process issue, and one that I think we can fix, so we'll continue that dialogue.

[Chandra Arya, Liberal, Nepean, ON]

Okay. As I mentioned, if experienced traders like CAFTA are thinking in these terms, I'm wondering what help is required by small businesses.

Anyway, in one of the previous committee meetings, we had, I think from the Asia Pacific Foundation of Canada, someone who commented that instead of unilateral trade agreements, say, with Indonesia, it would be good for Canadian supply management companies—the companies that are involved in supply chains—to have a regional agreement. Instead of focusing on Indonesia, it may be good to have a free trade agreement with a regional group like ASEAN. I know it may be difficult to achieve that. Maybe the process of a free trade agreement with Indonesia can be a stepping stone towards a free trade agreement with ASEAN. However, doesn't it look good to have region-based, multilateral agreements rather than unilateral free trade agreements?

[Steve Verheul]

Well, it certainly makes sense to have a broader agreement rather than a more narrow agreement, but as you kind of implied, it sometimes makes sense to do what you're able to do at a given point in time.

However, I would like to turn that question over to Kendal Hembroff, because she's been directly involved in those discussions, particularly with the ASEAN group and Indonesia.

[Kendal Hembroff]

Canada is continuing to pursue a possible Canada-ASEAN free trade agreement, which we've been pursuing since the launch of exploratory discussions three years ago. The pandemic has certainly reinforced the importance of an agreement with all of ASEAN, especially as an opportunity to be able to tap into regional supply chains.

That doesn't preclude us from pursuing the possibility of bilateral agreements with ASEAN member states, and Canada recently conducted public consultations to seek the views of Canadians on a possible trade agreement with Indonesia. That type of agreement could potentially be pursued in parallel with a Canada-ASEAN FTA, and it might actually allow us to reach an agreement sooner that is potentially more ambitious than might be possible on a regional basis.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Arya.

We'll go on to Mr. Savard-Tremblay.

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

Good afternoon.

My thanks to all the witnesses for their presentations and for giving us their time.

Could I check something with Mr. Verheul?

Has the Ottawa group on WTO reform had a meeting after November 23, 2020? According to the information we have, that is the date of the most recent meeting. Have there been other meetings since?

[Steve Verheul]

Yes, there have been. We have not had a ministerial meeting since then, but we do have one coming up. We have had, I think, two vice-ministerial meetings, and we've had ongoing meetings in Geneva among our ambassadors. We've also had meetings between many of us at headquarters and our counterparts. There's been a lot of ongoing dialogue taking place and a lot of activity.

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

The November 23 meeting dealt with a proposed WTO trade and health initiative. We read, for example, that the initiative “identifies short-term actions to strengthen supply chains and ensure the free flow of medicines and medical supplies”. That is all we know about it. Are there any more details on the matter? You have just confirmed that subsequent meetings have been held. Have those actions become more specific?

So, on the one hand, we have this desire for medicines and medical supplies to flow freely and for supply chains to be strengthened. On the other hand, we have a political desire to depend less on external markets for medical products. How can it all be brought together?

[Steve Verheul]

That is certainly something we've been focused on very intently.

Since having the meeting back in November, we have been working towards trying to develop a statement that could be presented to the WTO General Council. We initially presented a statement to the WTO General Council on December 17 of last year. We did get quite a bit of support, but we've been working on it since then to build some broader support. We've also been conducting outreach activities. Now our target is to try to build support for the adoption of a WTO declaration on trade and health at the General Council meeting in May.

We're also looking forward to the next ministerial conference, the MC12, in Geneva—as I mentioned, it would be in November of this year—so we can take a look at where we are on the trade and health initiative and also see if we can start to get a broader negotiation going for these issues, to meet the very objectives you outlined. We want to make sure we can avoid a lot of the difficulties we've had over the past year by removing export restrictions and making sure that any actions taken in periods of critical shortages are targeted, transparent, proportionate and temporary. We're trying to get rid of all kinds of tariff restrictions. All in all, it is an effort to try to make sure that trade, particularly in these types of products, moves as freely and openly as possible.

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

Thank you. So I gather that this will be better defined shortly.

I would like to go back to a question I asked the other witnesses who appeared just before you. It deals with softwood lumber.

We know that there was a judgment in Canada's favour last year. But a number of industry representatives have certainly advised us that nothing was settled, because there is still no agreement. As we know, the Canada—United States—Mexico Agreement did not allow the matter to be settled.

Nevertheless, what is the effect of this judgment and how will it determine Canada's strategy?

[Steve Verheul]

The softwood lumber issue has been a long-standing irritant. We have a total of six legal cases that we have been pursuing on softwood lumber against the U.S. over the past number of years. We have cases under the earlier NAFTA that have not yet led to a conclusion. We have cases that we've initiated under the new trilateral agreement, CUSMA, and we have two ongoing cases before the WTO. We have a number of challenges out there.

We've met with a considerable degree of success, as we usually do in these cases on softwood lumber. However, in particular, we have concern that both softwood lumber cases we have taken to the WTO have been appealed. Given that the U.S. took the action they did to ensure we do not have a functioning Appellate Body, those cases have essentially been appealed into the void. There's no immediate resolution.

We think that the arguments in the original panel decisions on those issues are still very helpful to us. We're still pursuing, within the trilateral context with the U.S., the remaining four cases. We tend to win almost all of these cases, so we are hoping that will put enough pressure on the U.S. to start thinking that maybe it's time to get back to the negotiating table to try to sort something out.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Verheul.

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

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

Thank you very much.

I was hoping you might be able to share with the committee some of the early signals and signs coming out of the new Biden administration.

This study committee started under the Trump administration. Obviously, the Appellate Body's work had been compromised by the fact that it didn't have enough members. I think that was part of the genesis of the Ottawa Group, and it was part of what was going on when we started this study.

It's a pretty significant change to have a new president now in the United States. I'm just wondering if you want to provide some reflections about what you think that means for the WTO generally, and also what you think it means for the work of the Ottawa Group.

[Steve Verheul]

We have seen some important and significant differences coming out of the Biden administration so far. They've certainly indicated a very strong willingness to engage with allies and work with allies to try to find solutions, and we've already started some very good dialogues in that direction.

When it comes to some of these trade issues in particular, the Biden administration has not really taken a position yet on how it's going to approach these issues, particularly the impasse on the Appellate Body questions. We're going to have to wait and see for a bit longer.

We've been having dialogue with officials within the U.S. trade representative's office, and those have been constructive as well, but they're basically telling us that until the new U.S. trade representative is confirmed in her position, they're reluctant to go too far out in terms of what the positions might be.

With respect to the Ottawa Group, I think certainly once Katherine Tai is confirmed as the U.S. trade representative, which we expect will happen within days, we will be seeking to have a meeting with her and the Ottawa Group to start the process of trying to dig into this issue to see if we can find some solutions.

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

One of the issues that's come up lately in respect of the WTO has to do with the TRIPS provisions and intellectual property rights. It's something I'm hoping we're going to soon be able to do a deeper dive into at this committee.

Obviously Canada has not yet signed on to the proposal for the waiver. I'm just wondering, what are some of the concerns that Global Affairs has about such a waiver?

[Steve Verheul]

First I would like to make it clear, because I think there's been confusion off and on, but we have not rejected the proposal for a TRIPS waiver. Obviously a significant number of WTO members support a TRIPS waiver, and the proposal was put forward by India and South Africa, as you know, but also a number of members are opposing the waiver proposal outright, so there's no consensus on a way forward. That leaves us effectively stuck, at least for the moment.

Therefore, we have been trying to see if we can find a way for Canada to dig a little deeper into some of the issues and if we can try to find solutions that could be accepted more broadly. That's the tack we've been taking. We very much want to find a solution.

Most recently we've started to support what is clearly a parallel track of the WTO director general's so-called “third way effort”, which involves a dialogue directly with the pharmaceutical industry, looking at where we have production challenges and how those can be fixed, and where we have distribution challenges and how those can be fixed.

The problem is very clear. How we can best address it is an ongoing challenge. We're certainly optimistic about this third way that the WTO director general is pursuing. It doesn't mean we drop the issue of the TRIPS waiver. We continue to work on that as well. It's a matter of trying to make sure we can solve this issue as quickly as we possibly can. We don't want to get into a position where we're going to get stuck and not make progress.

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

On Wednesday, about 30 civil society organizations in Canada wrote the Prime Minister in support of the TRIPS waiver. I'm wondering whether that letter has been brought to your attention, appreciating that it may take a little time for those things to travel within government, and whether your plan as you proceed on this issue would be to consult with those organizations, as well as the pharmaceutical industry, to get a sense of where Canadian groups are on this and to try to represent the will of Canadians as much as possible in this matter.

[Steve Verheul]

We would certainly be happy to consult with those groups to talk about this issue, to start to see if we can find paths forward. We recognize the challenge of this and it's essential that we find solutions to it, so we're very happy to engage in those discussions and to continue to work to find solutions to this.

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

Thank you very much. I appreciate those insights into the issue.

That's all for me, Madam Chair.

[The Chair, Liberal, Judy Sgro]

You had 15 seconds left, so I was trying to let you know there was no time.

Now we'll move on to Mr. Lobb for five minutes, please.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Thank you, Madam Chair.

Thank you again for coming to committee.

How much does Canada pay every year to the WTO? Is there a fee that we have to pay?

[Steve Verheul]

Yes, there is, but I have to confess that I don't know what it is offhand. It's scaled to the economic size of each of the memberships, so the larger economies pay the most and we pay somewhat less.

[Ben Lobb, Conservative, Huron—Bruce, ON]

Is one of the problems with where we are with the WTO today versus 25 years ago that we can't even agree on what a developing country is? Is that an outstanding issue, do you think, on this situation? I'm guessing China, India, Brazil, Mexico and others are all classified as developing countries, and there are some arguments for that, obviously. However, when they're in the top 20, and some are in the top 10, how can we have a legitimate organization that can't even recognize what's developing and what's developed?

Do you have any thoughts on that? I'm sure it's contentious.

[Steve Verheul]

Yes, it is contentious, and the actual discussion is more in the nature of yes, we recognize there are developed countries and there are developing countries, and we're not necessarily arguing with that distinction. Where the debate more recently has been is that there are significant differences between or among developing countries. There are very advanced, very large economies in some developing countries. Other developing countries are very small in economic terms, have little influence and are in a much different situation, without the same kinds of advantages that others have.

The challenge is, how do we differentiate among developing countries in the kinds of obligations we would expect them to take on?

[Ben Lobb, Conservative, Huron—Bruce, ON]

Isn't it true, though, that most countries in the WTO are in the developing category?