International Trade Committee on Nov. 16th, 2020

[Mark Agnew]

I have not heard anything like that. I would in some respects actually draw some parallels between that type of idea, with all due respect, and the U.K. joining the CPTPP. Sure, great, and we would see benefits there, but we also have a mission-critical problem in front of us, which is that December 31 is rapidly approaching. Let's get the certainty we need by the end of this year, and we can think about some of the more aspirational bigger projects in a different track.

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

Another thing that's very annoying to me in CETA is the way that this has been dealt with from an agriculture perspective. I'm in an agricultural riding. Believe it or not, we have a trade deficit with the European Union in beef and pork.

What do our prospects look like with the U.K.? I mean, they're a little better, but at the same time, are we still going to have disagreements over antibiotics, growth hormones and other what we'll call non-trade issues?

[Mark Agnew]

Unfortunately, we'll still have them on January 1, because the U.K. is copying over the EU acquis rule book.

However, generally speaking, because the U.K., within the EU28, has been more North American-minded, if I could call it that, on some of these things, I am hopeful that we will be able to get some progress on the issues you mention, as well as on issues that are affecting the crop sector, in MRL misalignment, for example, which has impeded the ability of Canadian crop products to be able to access the EU market.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

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

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you, Madam Chair.

I would like to thank all the witnesses, not only for your appearance today, but because you are very much also on the front lines of this pandemic in supporting our business community. I know how important your work is in order to help see our Canadian companies and our entrepreneurs through to the other side, so thank you for that.

Let me begin with Mr. Kennedy, perhaps, as well as Mr. Agnew. There has been some discussion over the course of this committee meeting regarding consultations. I just wanted to check in with both of you to make sure that it was very clear. We are on the record as a government in saying that our objective with a short-term transitional agreement is to roll over the provisions of CETA.

Do you feel that the business community understands that objective and that what we are looking for is to create that stability through a transitional rollover?

[Trevor Kennedy]

I guess on my end that has been the understanding, yes. Among larger enterprises, that's the focus. As we do move into negotiations around an actual free trade agreement, there will be differing views, but right now everybody is very much focused on how we can preserve our market access under CETA and then rethink the relationship from there.

[Rachel Bendayan, Liberal, Outremont, QC]

I understand.

I think I heard you say in your opening remarks, Mr. Kennedy, that this transitional approach will allow time for consultation thereafter. Is that right?

[Trevor Kennedy]

Absolutely, and I know that CUSMA has been brought up in several instances. I think that's a great success story of working with labour, working with industry and working with other groups. I think we have been able to develop a really forward-thinking agreement in that context, and I would hope that with the Canada-U.K. agreement we can approach it from a similar standpoint.

[Rachel Bendayan, Liberal, Outremont, QC]

I'm going to pick up on the fact that you raised CUSMA, because I noted that a few witnesses are expressing some reservations regarding our ability to move quickly if an agreement is reached between the two countries.

I think CUSMA is a great example, particularly since it was this committee that was able to move quickly—holding meetings night and day—in order to ensure that was passed. I believe it was passed hours before the House rose for the pandemic. I think it is a nice thing to remember when comforting our business community that we can move very quickly as a government.

Mr. Agnew, I did want to raise something that was mentioned earlier on in committee and that is your July letter, “Strengthening Canadian Supply Chain Resiliency”. You mentioned a number of recommendations and ideas that I found very interesting. One of the areas of focus was really regulatory co-operation, and I think you put it best when you said that it is perhaps the least sexy part of trade, but also one of the most important.

I am certainly seized of the non-tariff barriers that are affecting our agriculture industry, as is the Minister of International Trade. In your analysis of the current agreement with CETA and how we might be able to go further, as you put it, what changes would you make to the regulatory co-operation? Or do you feel that the regulatory co-operation provisions that we have should be rolled over as is?

[Mark Agnew]

I think the regulatory co-operation provision should be rolled over to get the process started on day one. In terms of what we'd like to see going forward there's ensuring greater transparency amongst regulators for the decisions they make. I think the experience of some of our members, particularly in the agriculture sector, is that the EU has arrived at decisions, but how they've arrived at them, I think, has been overly politicized. Shining a greater spotlight on that and enforcing a science basis to these would be quite helpful.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you, Mr. Agnew.

I'll let you have the opportunity, as well, to respond on behalf of your membership. I appreciated your introductory remarks, but when it comes to our business community understanding the objective of the transitional agreement, do you feel that's reasonably clear?

[Mark Agnew]

I think people understand the content of what we're trying to reach.

I think the one aspect where we could improve communication is actually around the transitional nature. It's not clear exactly what “transition” means. It could mean a lot of things to a lot of different people. Are we talking two years, three years or four years?

If you're a business that wants to plan out long-term contracts in the U.K., you'll need that certainty. Certainly, then, I would encourage an abundance of communication as part of this committee's report, or whatever output it has, on that transition point.

[Rachel Bendayan, Liberal, Outremont, QC]

That's very helpful. Thank you.

[The Chair, Liberal, Judy Sgro]

We're on to Mr. Hoback for five minutes.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Madam Chair, and thank you, witnesses and everybody, for being here this morning.

Mr. Kennedy, when did we first learn that we're probably going to have to do a trade deal with the U.S. on Brexit? When did we first become aware? Just humour me.

[Trevor Kennedy]

I think it goes back, now, two years or so ago. We were negotiating—

[Randy Hoback, Conservative, Prince Albert, SK]

So it was two years ago, and we still don't have any real solid consultations, and we don't have a game plan for a final agreement.

The point I'm trying to bring up right now.... The Prime Minister was in the media last week, and I remember they brought up bandwidth and how the U.K. doesn't have bandwidth, which I think is relatively insulting to the U.K., because they do.

The other thing that's happened is the U.S. election. You have the U.S. sitting there close to a deal, and all of a sudden now the U.K. said they'll wait for the new administration. If we had done the consultations, and we had done all the work we should have done, we actually could have come in now and done an agreement where we could have been putting the final touches on something.

The reality, though, is that we looked at the tariff schedules when they first proposed them and said that was good enough. We never talked about digital trade, and we never talked about regulatory co-operation. We walked away, which is really dangerous. Now we're in crisis because we're in November, and by the end of December they want to get this through not just the House but the Senate. This government doesn't do anything unless it's a crisis, and it's frustrating.

When you come to timelines here, what is going to happen? I'm loading a ship today that's going to hit in January. How do I price those goods?

Maybe I'll go to you, Mark. How would you price it?

[Mark Agnew]

In the absence of clarity, I would price on the assumption that you're going to have whatever the U.K. global tariff is—

[Randy Hoback, Conservative, Prince Albert, SK]

A high tariff.

[Mark Agnew]

—for that product.

[Randy Hoback, Conservative, Prince Albert, SK]

As you're pricing your product, and you want to export to the U.K. and you've added the tariff in it, what would some country that has an agreement, like Chile, do? It would come in and take our market, and this government doesn't get it.

They've tried to spin this transition agreement. If they had done this a year ago, I could have said that maybe that makes sense. However, now we have to do it. We don't have a choice, because they're totally unprepared to do anything other than a transition agreement.

How does that put Canadian businesses front and centre? How does that deal with the issues you brought up, Mr. Agnew?

[Mark Agnew]

The correct answer is that it makes our products less cost-competitive.

[Randy Hoback, Conservative, Prince Albert, SK]

Do we still have first mover advantage?

[Mark Agnew]

There will be businesses that have managed to lock in a relationship with a buyer in the U.K. I think there will be folks who can ride it out, and certainly we have something at least signed but not ratified, so hopefully there would be a degree of certainty. However, if that situation continues, then it does call into question, perhaps, some of those relationships.

[Randy Hoback, Conservative, Prince Albert, SK]

I'm a durum farmer in southern Saskatchewan. I sell durum to Warburtons in the U.K. They also buy our hard red spring wheat. How do I price that today?