Thank you, Madam Chair.
Good afternoon, everyone. I am pleased to be here today to provide an overview of the government’s engagement on WTO reform, including Canada’s leadership of the Ottawa Group. In particular, I’d like to highlight some significant developments that have come out of the Ottawa Group since the onset of the COVID-19 pandemic.
I am joined today by my colleague from Global Affairs Canada, Kendal Hembroff, director general of the trade negotiations bureau.
As mentioned, Kendal last spoke to you on WTO reform a year ago in March, days before things shifted to the new realities we find ourselves in today. However, the important work continues and, in fact, has intensified.
First let me provide some context. Canada is a founding member of the WTO, which was created in 1995. The WTO is critical for Canada, as it governs trade between 164 members. Its framework of rules provides the necessary stability and predictability for an open Canadian economy to thrive. It is also the cornerstone from which all our free trade agreements are built.
Even prior to the pandemic, the multilateral trading system was facing an increasingly challenging environment, characterized by the rise of protectionism and use of unilateral trade measures. This led to difficulties in a number of areas: first, a stalemate in negotiations; second, a lack of consensus on how to treat developing countries; and, third, an impasse in appointments to the WTO’s appeal mechanism.
The pandemic has served to intensify many of these challenges. Against this backdrop, it has become apparent that we need a collective recommitment to the rules-based trading system and, in particular, to finding multilateral approaches to managing the global economic impacts of the COVID-19 pandemic.
The Ottawa Group has been a key vehicle for Canada to exercise leadership on WTO reform. As a small group of like-minded WTO members, created in 2018 with the sole objective of supporting WTO reform efforts, the group has been an effective sounding board on WTO reform issues and has positioned Canada to play a leading role in advocating on behalf of Canadian interests.
Most recently, the Ottawa Group has delivered excellent results in its response to the pandemic. Since the onset of the pandemic, the Ottawa Group has met twice at the ministerial level and four times at the vice-ministerial level. A key achievement of the past year was the endorsement of the June 2020 joint statement, “Focusing Action on Covid-19”, in which Ottawa Group members committed to a six-point work plan with concrete action items.
A direct outcome from this statement was the endorsement of a communication on trade and health during the November 23 Ottawa Group ministerial meeting. The communication calls on WTO members to avoid further disruptions in the supply chains of essential goods and proposes the launch of a multilateral WTO initiative on trade and health. This communication was presented to the WTO’s General Council on December 16, and has set the stage for a busy work plan through 2021 leading up to the 12th WTO ministerial conference, which is now scheduled to take place in November of this year in Geneva.
Ottawa Group members have also collaborated on a Singapore-led initiative against export restrictions on purchases of humanitarian food aid by the World Food Programme.
Canada has also not lost sight of the ongoing WTO reform work, and we are advancing discussions within the Ottawa Group. A key priority for Canada and other members is to address the current impasse in appointments to the WTO's appeal mechanism, also known as the Appellate Body. Driven by concerns about its functioning, the United States has blocked new appointments to the Appellate Body since 2017. The last Appellate Body member's term expired in December 2020, which means that the proceedings simply freeze if a party files an appeal.
For a mid-sized country like Canada, this loss of recourse to binding dispute settlement has serious implications. We are among the top users of the WTO dispute settlement system and have been a disputing party in a total of 63 disputes—40 as a complainant, 23 as a respondent— since 1995. For example, our overwhelming win on softwood lumber at the WTO from 2019 remains in suspended animation because of the lack of an appellate body. Nevertheless, we can and do use the strong legal arguments endorsed by the WTO report in our continuing advocacy and legal work on behalf of our softwood lumber industry and workers.
This situation provoked some creative problem-solving on the part of Canada and the EU to develop a bilateral interim appeal arbitration arrangement in July of 2019. That ensures the continued enforceability of WTO decisions and provides for those decisions to be reviewed by an experienced group of arbitrators.
This arrangement inspired the establishment of the multi-party interim appeal arbitration arrangement, also known as the MPIA. This arrangement has 25 participants covering 51 countries, including the EU and China, and will apply between participating members until the Appellate Body is functional again. In the meantime, Canada's priority remains finding a permanent solution to the Appellate Body impasse. Until that occurs, this interim arrangement safeguards our rights to binding two-stage dispute settlement with willing WTO members.
Canada is also playing an active role in a number of ongoing WTO negotiations, including negotiations to limit harmful fisheries subsidies. Fundamentally, this negotiation is about helping to preserve the sustainability of global fish stocks for future generations. Members had committed to concluding negotiations by the end of 2020 in order to meet a UN sustainable development goal. However, due to continuing divergences in members' positions and logistical challenges caused by COVID-19, the negotiations are still continuing. Canada has made a number of important contributions in these negotiations, including a proposal to discipline subsidies contributing to overfishing and overcapacity.
Challenges to the multilateral approach to negotiations have also led members to pursue negotiations through plurilateral approaches involving subsets of the overall membership. For example, willing members have launched plurilateral initiatives, also known as joint statement initiatives, in such areas as e-commerce, investment facilitation for development, domestic regulation for services, and micro, small, and medium-sized enterprises. These negotiations have the potential to deliver significant benefits for Canadian businesses of all sizes. Canada is actively participating in each of these.
Canada is also keen to see work launched in such new but important areas as trade and environment and industrial subsidies, as well as to continue to advance Canadian interests regarding the elimination of trade- and production-distorting agricultural subsidies.
On the organizational side, we recently welcomed the appointment of Dr. Ngozi Okonjo-Iweala as the new director general. We are pleased that for the first time the WTO has a director general who is female and who is from an African country. We look forward to engaging the new director general on WTO reform and the important work on the response to the COVID-19 pandemic and the global economic recovery. To this end, we have invited her to attend the next ministerial meeting of the Ottawa Group on March 22.
We also look forward to engaging with the U.S. on WTO reform. While early signals from the new Biden administration have shown a willingness to engage more constructively at the WTO, we should not necessarily expect that U.S. positions on a number of issues will have drastically changed. Bilaterally, and through its leadership in the Ottawa Group, Canada will seek to find areas of alignment with the U.S. to advance key WTO reform priorities.
With that, Madam Chair, I would like to return it to you for questions.
Thank you very much.
