International Trade Committee on April 26th, 2021

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Okay. That is on a diplomatic side, which is the normal thing to do. If you think about it, that's the normal thing to do. On the other side, how are we getting ourselves ready internally in order to be ready, if we have difficulties with one market, to move to other markets? That is going to require a strategy. You can call it a road map.

You are the department. You are delivering. What is the government telling you to do? What kind of direction are you getting from the government? Do you see a plan that is going to help us to overcome this not only for next year but for decades to come? How do you see that happening?

[Steve Verheul]

Well, it operates on a number of different paths. Obviously, for the U.S., as our main market where we export most of our goods, that's a priority. Issues like buy America are something that we're spending a lot of time on, and we have a very comprehensive strategy to address that.

At the same time, we are looking at diversifying our exports. We're looking at the European market. We're looking at Asian markets. We're looking at all the markets where we have free trade agreements, and we're trying to take fuller advantage of those and expand our exports to those markets as well.

Thirdly, we're working a lot with Canadian businesses to ensure they're equipped to be able to access those markets and to compete effectively in those markets.

It's really a multi-tiered kind of strategy that we are pursuing.

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Can you give a specific example of which industry we might lead with and that we believe is going to give us that replacement of business losses or market losses? I'm curious about that, because I think we have to start somewhere. We have to be able to say, okay, we're going to take a step back and we're going to have to think or rethink how we're going to achieve those markets again and to gain more markets. Is there any specific example you can give us? I think it would be very important for the study today.

[Steve Verheul]

Well, we're trying to avoid targeting a very small number of specific sectors. Certainly, we are taking full recognition of the important sectors in the economy and putting a lot of emphasis on those sides, but we also want to put a lot of emphasis on small and medium-sized businesses and on ensuring they're equipped either to get into the U.S. market or to diversify their interest into other markets. They cannot be single focus—

[Ziad Aboultaif, Conservative, Edmonton Manning, AB]

Do you believe that the manufacturing sector in Canada is ready to tackle new markets, and to what extent?

[Steve Verheul]

I think there's work to be done on that. I think there is a comfort with the domestic market. There is a comfort with the U.S. market. We have more work to do in Europe. We have more work to do in Asia to ensure that companies are both prepared and ready to take that extra step of trying to test out those kinds of markets.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will go on to Ms. Bendayan for five minutes, please.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you, Madam Chair.

Picking up on that conversation with Mr. Verheul, we were talking earlier about the current export numbers. With April 2020 as the comparison, we have increased our exports by 50% since that time.

Mr. Verheul, I wonder, from having spoken to some folks in different sectors here in Canada, including the agri-food sector, which has seen an enormous increase in their exports and has huge potential for Canada, if you feel that.... As you mentioned, now more work needs to be done on the implementation side in ensuring that Canadian businesses take full advantage of the many agreements that we already have on the international trade side. Do you feel that it would be important to assign a specific team in the department in order to facilitate the implementation and the successful use of our trade agreements?

[Steve Verheul]

Well, we are putting a lot of resources and effort behind that as we stand now. That is certainly a priority. It takes a number of different forms.

You spoke earlier about the notion of the digital funds that were coming out of budget as well. We're putting a lot of effort into digital agreements and working domestically with companies to enhance their digital capabilities. We're trying to provide as much assistance as we can in ways that will have practical, concrete results in terms of access to those markets. We have all these agreements and we can do better in most of them, and it's a matter of making sure we have the tools to be able to do that.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you.

I'll turn to the conversation on ISDS. As you know, our committee was engaged in a study on this and we wanted to hear from you following some of the testimony. One of the witnesses in particular mentioned that there may be a risk of scaring foreign investors away from Canada should we move away from including ISDS provisions in our trade agreements.

How do you feel about that statement and about those risks?

[Steve Verheul]

I don't really see that as much of a risk. What happened with us with respect to the U.S. in the CUSMA negotiations was because of a particular relationship we have with the U.S. on that issue.

Outside of the NAFTA cases we have had, we get very few cases against Canada by foreign investors. We get significant benefits out of having investor-state dispute settlement in economies where we do have investments in the mining sector and various other sectors. That has certainly allowed us to have a much better record in terms of our offensive interests in investor-state dispute settlement than what we have had to deal with in the domestic market.

[Rachel Bendayan, Liberal, Outremont, QC]

If I understand correctly, each case should be really examined to determine whether, in negotiating a free trade agreement, Canada should be pushing for an ISDS provision or not.

[Steve Verheul]

That is absolutely right. Every market is a little bit different. In some cases it's going to make perfect sense, particularly if we don't have much confidence in the domestic court system in a particular country. That may be an issue.

Yes, it needs to be examined on a case-by-case basis.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you for clarifying that.

Madam Chair, do I have much longer?

[The Chair, Liberal, Judy Sgro]

You have 50 seconds remaining.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you.

Turning to a subject that was raised earlier, a colleague of mine asked about some of the non-tariff barriers that are causing some concern for our exporters. To my mind, the budget is not the right place to be addressing non-tariff barriers, but I'm sure you and your team, Mr. Verheul, are working on those issues at the moment.

Can you give us an update on where those discussions stand?

[Steve Verheul]

It is something we're spending an increasing amount of time on because one of the results we often see after we have a free trade agreement in place is that we have dealt with most of the obvious barriers, but non-tariff barriers can crop up. They can be harder to get to.

When it comes to our CETA agreement with the Europeans, there is a lot of focus on non-tariff barriers.

Similarly, when we're talking about the ongoing implementation of the CPTPP, we're focused on barriers that we're experiencing there, as well as with other countries that we don't have formal trade agreements with. We have issues in India. We have issues in China. We're spending a lot of time on those issues as well.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will move on to Monsieur Savard-Tremblay for two and a half minutes, please.

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

Thank you.

Mr. Verheul, you said earlier that, in some cases, investor-state dispute settlement, or ISDS, is necessary when the justice system can't be trusted.

Are you also willing to say the opposite, in other words, that it isn't necessary and that it should be avoided when we trust the justice system of our partners, as is the case with the United States, for example?

[Steve Verheul]

I think there are a couple of issues related to that.

The circumstances of our ending up with a result where we don't have an investor-state dispute settlement mechanism with the U.S. under the new agreement comes out of the history we've had under NAFTA. We didn't think that was a particularly good path to follow, going forward.

It doesn't mean that investors may not have concerns in the U.S. It's quite possible they will. Similarly, U.S. investors may have continuing concerns in Canada. I think there was a unique circumstance there.

Going back to discussions we've had in the past, ideally we do like to have investor-state dispute settlement so that we don't just have it in markets where we have concerns about domestic courts or about the ability to enforce investor rights, but also look at a model that could apply more broadly. That is what we tried to do in the CETA negotiations.

[The Chair, Liberal, Judy Sgro]

You have 30 seconds, for a very short question.

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

Okay.

Nevertheless, are you willing to say that this won't necessarily be required when we have agreements with western countries and countries governed by the rule of law, for example?

[Steve Verheul]

It also ties into the kinds of changes we're making to our model—the foreign investment protection agreement—going forward. We have been including more inclusive trade provisions. We're trying to strengthen the government's right to regulate in relation to that. We're trying to ensure that the process is going to be ethical and predictable. If you were to have the right kind of model, and we think we are getting there, that could apply in virtually all markets.

[The Chair, Liberal, Judy Sgro]

Mr. Blaikie, you have two and a half minutes.

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

Thank you very much.

I want to return to the original question I posed to the minister. I don't think we got much by way of a political response.

At the administrative level, has there been any direction, or are you looking at trying to assess, as you continue to have preliminary talks about possible trade agreements, whether there's a list of goods and services, or certain sectors where you think a different kind of approach is needed? Has there been any thought on how to structure those things into a trade agreement, or to ensure they're kept out of trade agreements?

One of the things we've heard recently at this committee for another study is the suggestion of trying to develop some kind of more regional supply chain for vaccine production and PPE, for instance.

How does that inform your work? Is your work effectively unchanged by the pandemic? Does the nature of the trade discussions you're having foresee exempting anything from a trade agreement, or treating it differently from just another commodity on the market?