International Trade Committee on Nov. 3rd, 2020

[Steve Verheul]

That's probably the most significant holdup at this point in time.

Until we can demonstrate that we don't have this in Canada, it's going to be a bit of a challenge to assure the EU that this is not going to be an issue with our bilateral trade. That is another issue we're working on. Unfortunately, these issues always take longer than we think they should with the EU, but we are making progress on those issues.

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

Okay. It's just that I look at it and wonder how much it could cost to test every container of pork going to the EU. How much does it cost to do a test?

[Steve Verheul]

I don't know the cost of the test offhand. Ideally, what we would look for is to be able to assure the EU that we don't need those kinds of tests because we will have taken the necessary steps within Canada, before the product is shipped to the EU, to an extent where we can assure them that it's just not an issue.

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

I can't disagree with what you're saying, but at the same time, if there's a way to do the test to satisfy them until we demonstrate the other, it would seem that it would be the route to go. I know that when the announcement was made on this trade deal, when it was fully implemented it would be $600 million a year for beef and $400 million a year for pork. If I'm correct, and I might be wrong, it's only $7 million a year for pork. We actually have a red meat trade deficit with the European Union, which is completely baffling, to my mind.

I guess it would be better for the minister, maybe, to answer some of this, but is there a strategy to turn this around? To me, this would be one of the great failings of the government, to implement a trade deal with 500 million people, and when we're one of the kings of beef and pork production in the world, we have a.... We were worried about a problem with cheese from France and Italy, and here we are getting blown out on beef and pork.

Is there a strategy to correct this? It won't be too many years until this is fully in force on the red meat side. What can we do to get this fixed immediately?

[Steve Verheul]

One of the things we have to do, and I think the most important thing we have to do, is to continue working with our own industry on our side to make sure we're taking the necessary steps to meet the conditions that are required to enter the European Union. It's a bit of work with the EU, but it's also a bit of work with our own production. The EU has very specific requirements for getting into their market. We're not able to change those very easily, so to some extent we have to meet those requirements. That does require some changes in certain production practices on our side.

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

Fair enough. But if we use that pork example—

[The Chair, Liberal, Judy Sgro]

Mr. Lobb—

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

Oh, it couldn't be five minutes yet, Madam Chair.

[The Chair, Liberal, Judy Sgro]

I'm sorry, but it is. I stretch it out as much as I can for everybody.

Ms. Bendayan, go ahead, please.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you very much, Madam Chair.

My first question for the officials relates to some of the progress made with the Ottawa Group over the last number of weeks and months. I understand there was a meeting this summer. I'm wondering if you could update the committee on how that important work is going in order to reform the WTO.

I'm not sure who would like to take the question.

[Steve Verheul]

I will take that question, Madam Chair.

The Ottawa Group has been a particularly valuable vehicle for Canada to have influence in discussions around the WTO. I think what we have seen is that, when we look around the various conversations taking place at the WTO, the only real mechanism for trying to advance issues is the Ottawa Group. It's essentially the only game in town right now in terms of really trying to make progress.

You mentioned the meeting that I think took place back in June. We did establish a work program at that point in time. We've had a total of five meetings at the ministerial level since we formed the Ottawa Group, and five meetings at the deputy ministerial level. We are starting to make some significant advances on some of these issues. For the moment, at least, we're putting a particular priority on access for medicines and medical supplies and trying to ensure that trade will flow as easily as possible for those types of products. At the same time, we're also looking at areas like electronic commerce, trade facilitation and more predictable trade in agricultural products.

It's all about trying to find ways to ensure that trade will move and we won't have the kinds of export restrictions that we've seen from many countries as a result of the pandemic. The Ottawa Group is beginning now to demonstrate that it can deliver some actual results.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you very much. That's very helpful.

Switching gears a little to our exporters, I'm looking at a StatsCan report for August 2019 to August 2020, and it appears that the number of exporters in metropolitan, urban areas fell by about 14.5% compared to a decline of about 10% for exporters outside metropolitan areas. We're talking about a 16% decline for Montreal and about 15% for Toronto, which is fairly significant. I'm curious how you might explain that difference and what policies we might be able to put in place to address that discrepancy.

[Steve Verheul]

I think that's probably a question that may be more easily answered by my colleague Sara Wilshaw.

[Sara Wilshaw]

That is a very interesting result. I'm not sure I've seen that StatsCan report, but thank you for drawing it to my attention.

I know that our chief economist has been looking at exporters, and she put out a very interesting stat last week, noting that the number of Canadian SMEs exporting went from 19,600 in February down to 15,600 in April but is now back up to 18,400. It's still 6% lower than it was in February, but it's a significant improvement.

While I'm not sure I can identify the reasons StatsCan had noted some differences between urban and rural in those export numbers, they are coming back up, which is encouraging. Hopefully it means that our exporters are learning, as we all are, to work with the technology and to access e-commerce platforms and do things virtually. As I think I've said, as well, we have lots of supports for folks in that space, including financial support under the CanExport program.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We're moving on to Mr. Savard-Tremblay for two and a half minutes.

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

I want to thank all the officials here today.

At this point, I want to ask you a broad question. Over the coming weeks, based on our committee's priority studies, we'll be focusing on the agreement on the horizon with Great Britain.

Where do things stand with regard to a possible transitional agreement?

[Steve Verheul]

Madam Chair, I think the discussions we've been having with the U.K. have advanced considerably since we resumed discussions back at the end of the summer. We now feel that we're within range of agreement on an outcome to the transitional agreement that we've been talking about.

To remind members, we are looking at negotiating an outcome that will allow us to have a transitional agreement in place as the U.K. exits the EU so that we don't lose the preferences we've negotiated under CETA in relation to the U.K. As part of that negotiation, we would also expect to negotiate a full free trade agreement after the U.K. is entirely out of the EU. The discussions we're having on the transition agreement with the U.K. are going reasonably well. We are making some progress. We think we're fairly close to the finish line, but we're not quite there. As you can imagine, in any kind of trade negotiation, the most difficult parts are the ones you deal with at the very end.

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

Thank you. It's nice to finally have some answers.

Initially, we suspected that this transitional agreement would be very similar to CETA. What major stumbling blocks have prevented the agreement from being signed as easily as hoped?

I imagine that it will be much more difficult to establish a permanent agreement. However, at the transitional agreement stage, why haven't things been as easy as expected?

[The Chair, Liberal, Judy Sgro]

Mr. Verheul, can we have a short answer, please?

[Steve Verheul]

Okay. It will be very short.

The main challenge was that we were taking the CETA, which was an agreement with all of the EU members, and trying to convert it to a U.K. agreement only. That did require us to negotiate on some market access issues in particular, which meant separating what we had provided to the EU in CETA and converting that into what we would provide to the U.K. and what they would provide to us in a bilateral transitional agreement. A lot of the issues were very easy, but there are a handful of issues where we do have to have actual negotiations to reach a landing zone.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will move on to Mr. Blaikie, please, for two and a half minutes.

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

Thank you very much.

On that question, to what extent is the European Union involved in those negotiations at all? To give you an example, in the last Parliament, I travelled to the U.K. and to Ireland and had the opportunity to ask a question in each forum about the market access that was granted in the dairy sector, for instance. Folks in the U.K. were of the view that they could get an equal or a certain share of what was granted under CETA. Folks in Ireland were very much of the view that this market access belonged in CETA.

To what extent are you talking to folks in the European Union throughout these negotiations? Are they actually at the table, or is Canada having to shuttle between a table with U.K. negotiators and a table with CETA partners?

[Steve Verheul]

Well, we're certainly continuing to talk with our EU counterparts, whom of course we know very well from our negotiations, but they are not at the table. We are keeping in touch with them, but they are not actively engaged in any of the discussions between Canada and the U.K. on these issues.

The decision we made fairly early on was that we would leave the various concessions and commitments made in CETA between Canada and the EU as they were. We did not take access out of the CETA to provide to the U.K. Instead, we tried to transfer all of the areas where we had rules-based kinds of approaches to the Canada-U.K. discussions, and the market access issues would be largely transferred but did not involve taking access away from the Canada-EU agreement.

That's the premise that we developed early on. The U.K., understandably, is not concerned about that, given that they're not giving anything up. It's up to us to sort the rest out with the U.K., which we are actively doing and, as I mentioned earlier, we are getting quite close to an outcome.

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

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

I'm sorry, Mr. Blaikie. The time is up.

We will move on to Mrs. Gray for five minutes.