International Trade Committee on Nov. 20th, 2020

[Doug Forsyth]

Yes, it definitely has been unique. Usually we start from the ground up and we build up. We have more than a few years of negotiating experience under our belt. We have a certain way of doing things.

In this instance, we started with the CETA. As I said in one of my earlier answers, we started the CETA negotiations about 10 years ago. They took seven years to complete, and they've been in place for three years now. Over that time period, we've built on some of the provisions in those negotiations. You'll see the results of those in the CPTPP and in the CUSMA, the recently negotiated NAFTA 2.0.

Those are some of the areas, when we look forward to the bilateral agreement, where we would see some scope for further elaboration. That just wasn't possible during the negotiations with the U.K., because they were very much part of the EU when we launched the negotiations so they had to do a CETA replication.

We were a little bit constrained, in terms of what we would like to do. That's why I think we're all looking forward to the new bilateral negotiations.

[Chandra Arya, Liberal, Nepean, ON]

You mentioned that in the transitional agreement on CETA there are, of course, quite a few similarities, but you also mentioned that there are significant differences with respect to market access for goods and the rules of origin.

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

Madam Chair, I have a point of order. Mr. Arya's comment wasn't interpreted.

[Chandra Arya, Liberal, Nepean, ON]

Okay, I will repeat it, this time slowly.

You mentioned that the bulk of the transitional agreement on CETA is similar. However, you also mentioned that there are some small differences—or big; I don't know—with regard to market access for goods and the rules on origin. Would you kindly elaborate?

[Doug Forsyth]

On the market access differences, the key areas of difference would be in the tariff rate quotas.

We negotiated amounts for the EU. The EU had 28 members at the time. We would not expect that we would get that amount of a TRQ in one single country.

Then it really comes down to what would be an applicable amount in a single country, like the U.K., and how that calculation would come about. It's very much part and parcel of negotiations.

Similarly for the rules of origin, the thing about those is the origin quotas, and those are products that don't qualify for tariff treatment. We negotiated a certain amount that could enter the European Union, and then it's just determining the amount for the United Kingdom respectively.

[Chandra Arya, Liberal, Nepean, ON]

You mentioned that you have sat across from your U.K. counterparts for the last two years. Was that for CETA, or for this, or for something else?

[Doug Forsyth]

That was just for this. In fact, when we were negotiating CETA, the United Kingdom per se was not at the table. It was an EU member state at that point, and the EU itself does its international trade negotiations for the member states.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Hoback, go ahead, please, for five minutes.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, witnesses.

I just want to go back to the timelines here. You said that you looked at the zero tariffs, when those came out in 2019. You did a notice at 2018. When you saw the zero tariffs, I'm wondering why you wouldn't, instead of walking away, just have said, “U.K., we like these zero tariffs. Let's lock them in. Let's do the deal based on what's here today. Let's get this done and signed up.” Why wouldn't we have gone that route?

[Doug Forsyth]

We certainly had that discussion with them at the negotiating table, around what zero tariffs would look like.

One of the challenges, when they released the MFN tariff and announced that they would make it MFN tariff-free is that they would do that for everybody. Now you're giving our American competitors and our Chinese competitors also zero tariff. They would want something in return from our side.

It wasn't clear why we would lock in zero tariffs for them in return when they would have access to our market and we would not have preferential market access into theirs.

[Randy Hoback, Conservative, Prince Albert, SK]

I don't get it. You could have secured market access for Canadian companies at 0%. That would have made our side fairly easy to negotiate.

Basically, the other countries didn't walk away. They kept talking. So obviously, the EU must have been indicating at that time that this was just temporary to keep their consumers happy while Brexit was ongoing, knowing full well that somewhere down the road these tariff numbers were going to change.

Why did we leave the table? Why wouldn't we lock that in, and actually say that this was a good deal for Canadian exporters? Why wouldn't we just finalize it based on those numbers? That was a good starting point. Now you're based on a starting point that they've created.

There's another question that I have. How receptive were they to Canada at the start? Weren't we in the top four of their priority to get done? How receptive were they after we pulled out and then tried to get back in?

[Doug Forsyth]

It's fair to say that we've always been high on their priority list. How high were we? I am not sure.

[Randy Hoback, Conservative, Prince Albert, SK]

Do you think that changed when you pulled out?

[Doug Forsyth]

I don't think so. We weren't the only ones that saw what they were doing.

[Randy Hoback, Conservative, Prince Albert, SK]

There are other countries that didn't pull out, that now have actual signed deals that are secure and concrete.

I've been told by my contacts in the U.K. that they would love to have done a deal with Canada from the start, because that would have meant a lot to them, but we walked away and they could never figure out why. Weren't there political reasons for walking away? You can't just say it was a bureaucratic reason.

[Doug Forsyth]

I think it was not in our interest to continue with them when they are going to offer—

[Randy Hoback, Conservative, Prince Albert, SK]

What did you base that off of? You say it was not in our interest.

We had zero tariffs, why wouldn't we have locked it in? Why was that not in our best interest? If I am a wheat grower in Saskatchewan and I have zero tariffs going to the U.K., why would that not be in my interest?

[Doug Forsyth]

I think it's part of the negotiation. What are we going to pay for that? Were we willing to have zero tariffs on all of our Canadian imports in return to compete with Chinese and American companies who had 0% in the U.K market?

[Randy Hoback, Conservative, Prince Albert, SK]

I look at that and I say okay, they're offering 0% to everybody, so let's lock that in. Why do we have to give up anything? They have already given it to everybody else. We could have made that argument to any supplier. If we said that they're giving the same discount to everybody else, we want to lock it in for a longer period of time. In fact, that's what other countries have done and we haven't, so I'm very concerned.

Looking at the time it's coming back, you've missed your deadline. We cannot put this through the House of Commons in the time frame to have continuity to move forward into the new year unless we ram it through like we did the USMCA. How do we do that?

What kind of consideration did you have in developing your timelines with our British counterparts to say that if they wanted to actually have this to be active at the end of December, we need to get it into Parliament in October or November? I don't even think the House leaders have put any types of resources toward passing this type of legislation, much less the Senate.

What part of that came into your equation? Were the minister's and House leaders' offices involved in helping you decide these deadlines?

[Doug Forsyth]

When we re-engaged with the United Kingdom in August…. After the minister spoke, I think it was, we had the timeline square in our view and we were negotiating toward that.

[Randy Hoback, Conservative, Prince Albert, SK]

What was that timeline?

[Doug Forsyth]

We clearly had December 31 in our sight.

[Randy Hoback, Conservative, Prince Albert, SK]

The minister's office is telling you and me that Parliament doesn't matter, because if you're saying that December 31 is your deadline, you're basically saying that we're somehow going to pass this before December 31 without seeing it, without our stakeholders having a chance to talk about it and without any type of oversight or review. That isn't going to happen. That's what I'm saying.

You've missed your deadline. I don't see how this is going to be done by December 31, unless the Liberals are going to pull something out of their hats, and unless it doesn't need parliamentary approval.

There was some talk earlier about a continuity agreement. Is that dead, or is that something that's still percolating in the background?

[Doug Forsyth]

I was going to say that the transitional agreement and the continuity agreement are one and the same. We are talking about the same thing.

[The Chair, Liberal, Judy Sgro]

Thank you.

We'll move to Mr. Sarai for five minutes.