International Trade Committee on Nov. 16th, 2020

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

I mean with the U.K. as we move forward with the transitional agreement.

[Mark Agnew]

The work the trade commissioner service has been doing, I think, has largely been around informing companies of what is happening in Brexit and making sure they're able to start to take measures to mitigate their risk. I appreciate that there are difficulties in terms of being able to project a clear message as to what's going to happen, given the evolving situation, but I think, from what we've heard, that companies have largely been able to get the information they need. Of course, the uncertainty is still there for them nonetheless, to try to weigh up against.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. Gray.

We go now to Mr. Arya for six minutes.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Madam Chair.

I have two questions and I will limit myself to asking them to two witnesses. I would like to ask Hassan Yussuff to answer first, followed by Trevor Kennedy. All the witnesses have highlighted the various things they would like to see in this agreement between Canada and the U.K.

What is the one single thing you would like to see in this transitional agreement and beyond? I know agreements like this will need to have so many features, so many things, but what is the most important thing at the top of the list that you would like to see?

[Hassan Yussuff]

I think much has evolved since Canada negotiated CETA and of course other agreements. The most recent is CUSMA between Canada, the United States and Mexico. The one thing I would say is that whatever we do with regard to this transitional agreement—and, of course, a permanent agreement with the U.K.—there cannot be any less in terms of the provisions to protect workers. As well, of course, generally it protects the country in terms of investor-dispute mechanisms.

I'm not going to highlight one thing because in reality it would be unwise to do that, but I think with regard to a priority for the country, it cannot be any less than CUSMA. This has to be the standard moving forward with regard to any negotiations with the U.K.

[Trevor Kennedy]

We are also a multisectoral association, so we have a lot of different perspectives on this. The clear message I've received from our members is to reduce uncertainty. I believe the purpose of this transitional approach is to reduce or eliminate that uncertainty going into the next year. In the longer term, I think there will be a lot of opportunities to speak with businesses and labour and others to identify opportunities to enhance the relationship, but above all else it is to reduce uncertainty going into the next year.

[Chandra Arya, Liberal, Nepean, ON]

My second question is on the pandemic and how it has affected international trade. For Canadians, 60% of our GDP comes from international trade. Due to this pandemic, we are already starting to see disruptions in international trade. My thinking is that there is going to be some sort of reset in how international trade is conducted.

What, in your opinion, is the most significant change you see for Canada in terms of international trade, due to this pandemic?

[Hassan Yussuff]

My colleague Larry Brown has just pointed out something that I think is very apparent for the country, and of course just about all sectors of the Canadian economy are reflected in this. We cannot find ourselves in the position we did when this pandemic started, without access to things that are so basic to the fundamental health and protection of Canadians. We recognize fundamentally that countries will play politics, and the pandemic doesn't stop them from doing that. China, of course, has restricted certain exports to our country in a moment of crisis. The United States did that in a moment of crisis. We have to figure out how we're going to provide Canadians with PPE and other necessary equipment to make sure we can protect the health and safety of Canadians.

We can never allow a trade agreement to impede our ability to protect our population. Fundamentally, I think governments have to take that into consideration in any new negotiations we undertake.

[Trevor Kennedy]

I think one big issue preceded the COVID-19 crisis but has become more urgent today: trade diversification. Our members are still very focused on diversification, particularly this time looking at it within the lens of working with reliable trade partners. We think of the U.K., many partners in the Indo-Pacific and in Europe as part of that reliable trade network. We think this initiative and others to build more reliable partnerships, including more reliable supply chains, will be a focus going forward and stemming directly from this crisis.

[Chandra Arya, Liberal, Nepean, ON]

My third question, Madam Chair, is once again to the same two witnesses.

This pandemic has shown the shortcomings of international trade when we did not have access to the critical needs of Canadians. The concept of self-reliance is coming up now, at least on the things that are critical to the health and security of Canadians. However, as Canada, we are dependent on international trade.

Where do we draw a line between the need for self-reliance for our critical products and the need for the international trade flow to be smooth?

[Hassan Yussuff]

I think what we have seen as a result of this pandemic is the protection of population health and safety, and more importantly, ensuring that in the moment of crisis you're not going to be tearing up the country. I think governments have to make decisions. What in trade agreements is going to impede the ability for that to happen? We certainly have to learn from this experience because rest assured there will be a repeat and we cannot allow that to impact the Canadian government's ability to protect its own citizens.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We have to move on to Mr. Savard-Tremblay for six minutes, please.

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

I want to thank all the speakers for their presentations.

Mr. Yussuff, you mentioned the investor-state dispute settlement mechanism. Our committee will be studying this mechanism over the next few weeks or even months, depending on the schedule.

Mr. Brown also touched on this topic, so my question is for both of them.

Can you elaborate on the practical implications of this mechanism? What are you calling for today, in practical terms?

NAFTA created this mechanism. NAFTA was later replaced by CUSMA. Once CUSMA has eliminated this type of mechanism, should we no longer accept any agreement that includes it?

[Hassan Yussuff]

Absolutely.

I think CUSMA has fundamentally recognized the corrosive nature of chapter 11 in trade agreements. More importantly, I think the ultimate argument we make is that the domestic course is good enough for Canadian investors, if they have a claim against their government regarding infringement.

Why should foreign multinationals have a different mechanism? Why isn't our court system the place for them to seek redress if they believe our government action in some way impedes their ability to operate their business? I don't think there should be two mechanisms. Fundamentally, I believe the decision to eliminate this in CUSMA was the right decision. Equally, I think it should now be eliminated in any future new trade agreements because all it will do is continue to manifest itself in a way that will continue to undermine the democratic institutions of our society.

[Larry Brown]

There are two things. The core issue of ISDS has always been that international corporations have more rights that challenge domestic government than the citizens of the country do. That just strikes me as so absurd from the get-go that I'm not sure how we ever got those into a trade deal. I know that obviously they asked for them, but why a government would ever agree to give corporations more rights than its citizens strikes me as a very strange proposition.

Let me read from Norton Rose Fulbright, but not the national union of Norton Rose Fulbright. That's a big law firm.

What they say is some of the “steps taken by governments...to address the unprecedented economic impact of the virus on the world economy, such as...the payment of state aid to airlines”—that's from their letter—“and the restriction on the import and export of commodities..”. They then say right after that, “some of these measures will affect foreign investors and their investments in host states, triggering investor-state disputes.”

We're not imagining that the existence of ISDS...and that's in the Trans-Pacific Partnership and it's in CETA.

According to law firms, some of the things that our governments have had to do to cope with the pandemic are going to.... After the pandemic has passed, the law firms are going to wait. They will give us the grace period. They'll wait until the pandemic has passed and then they're going to pounce with a whole bunch of ISDS clauses.

My personal view is that we should be doing two things. First we should be making sure that we never sign another agreement with an ISDS clause in it, because they're just unfathomably off base. Second, we should double back and get rid of the ISDS clauses that we have in existing agreements. There's a whole movement internationally for ISDS amnesty, to say that any action by governments that they took during the pandemic to control the health of their citizens or the health of their economy would be exempt from ISDS clauses. We should be signing on to that and making sure that happens.

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

Madam Chair, how much time do I have left?

[The Chair, Liberal, Judy Sgro]

You have one minute, Mr. Tremblay.

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

In that case, I'll proceed quickly.

Mr. Yussuff and Mr. Brown, both of you touched on the environmental side of things. You spoke about the fact that some previous agreements referred to the environment, but didn't include any real binding provisions.

Wouldn't it be enough to simply state that an agreement as a whole will be subject to global environmental agreements?

[Hassan Yussuff]

I think it's absolutely unequivocal that trade agreements need to address the environment. It would be absolutely absurd not to do so given that trade could exacerbate, and, more importantly, impact the important role we need to play in regard to how we're going to meet our climate change objective in the Paris Agreement. It's fundamental.

Of course, CUSMA did not make any mention of this. The United States government wants nothing to do with mention of the environment. Now that the other administration is about to leave, I'm hoping that the new administration would see fit to say they need to remedy this problem in CUSMA.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will move on to Mr. Blaikie for six minutes.

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

Thank you very much.

Mr. Brown, you mentioned a study looking at CETA and the economic consequences of CETA.

I'm wondering if you would mind tabling that with the committee.

[Larry Brown]

I'd be happy to.

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

Thank you very much.

Because of our time constraints, I'll put the question quickly to each of our witnesses about whether they have studies that would seek to quantify the economic effect of having a transitional deal with the U.K. versus not having a transitional deal with the U.K., and whether they would be prepared to table any such studies that they may be aware of.

Mr. Kennedy, would you be willing to table anything with the committee to that effect?

[Trevor Kennedy]

We haven't conducted any impact assessment. What I've heard is purely anecdotal from member companies and speaking about what impact it would have on their businesses.

I'm not sure if there have been any studies conducted, but I'd be interested to see those as well.

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

Thank you.

I'll go to Mr. Agnew.