International Trade Committee on April 6th, 2022

[François Rivest]

I can confirm that this issue has been raised, but I don't know if it is being discussed at the moment.

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

Could you tell us if any other support measures have been proposed?

[François Rivest]

Export Development Canada, or EDC, provides services, such as insurance, to exporting companies. The Business Development Bank of Canada, or BDC, offers a financing program for companies with disrupted supply chains. Otherwise, there are not many business assistance programs, but there may be some for certain sectors.

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

You say that traditional support programs are already in place and accessible at all times. However, in a context where new sanctions are being imposed because of a situation as exceptional as a war between two countries—which we hope will not become global, even if Canada has decided to take a stand—are there other measures than those offered by EDC and BDC?

[François Rivest]

Unfortunately, I don't have the answer to that question.

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

Thank you, Mr. Rivest.

Madam Chair, how much time do I have left?

[The Chair, Liberal, Judy Sgro]

You have one minute and 36 seconds.

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

I'd like to go back to the modernization of the agreement.

Do our witnesses have any suggestions or ideas as to what could be included in a future agreement to make it as beneficial as possible?

[Jay Allen]

Thank you, Madam Chair.

As I have said, our agreement right now is pretty good. It covers goods. We've specifically identified cross-border trade in services—financial services, investment, telecommunications and temporary entry—as elements that will be added to a review. That was agreed on with Ukraine.

We're also looking to add good regulatory practices, trade and gender, and specific provisions to help SMEs. One of the issues we're looking at as well is improving the existing provisions on labour and environment and government procurement.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will move to Mr. Green for six minutes.

Go ahead, please.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you, Madam Chair.

If I recall correctly, in the testimony of the witnesses it was noted that Canada issued the most favoured nation tariff entitlement withdrawal order on March 3, 2022, to remove Russia's and Belarus's entitlement to preferential trade treatment and to add a 35% tariff rate to be applied on goods imported into Canada from Russia or Belarus.

Which imports does the withdrawal order not apply to?

[Michèle Govier, Director General, International Trade Policy Division, Department of Finance]

I'll take that if you like.

As mentioned earlier, it applies to virtually all imports. The first exception is that in cases where the tariff is already higher than 35%, which applies to a very limited number of products, the higher tariff would stay in place. The second exception is that there are 29 tariff items that are duty-free on an MFN basis but that also have a general tariff that is free, as a long-standing policy.

Most items under the general tariff are at 35%, but there are certain ones that are already at zero. Those include things like works of art and collectibles. They also include ferrochromium alloy and some petroleum products, but I would note that on the petroleum products we also have a ban in place.

[Matthew Green, NDP, Hamilton Centre, ON]

If I am clear, on February 28 the government announced that it would prohibit crude oil imports from Russia. Do those include refined petroleum as well?

[Michèle Govier]

I believe they do, but I'll defer to Global Affairs.

[Jay Allen]

Mr. Turner, could you help with this?

[Andrew Turner, Director, Eastern Europe and Eurasia Division, Department of Foreign Affairs, Trade and Development]

Yes, the measures that have been imposed apply to both crude and specific refined oil petroleum products.

[Matthew Green, NDP, Hamilton Centre, ON]

I'm just noting a National Post article, in which a subject matter expert suggested that all of the sanctions were designed to let the oil and gas trade continue and pointed out that while Canada and the U.S. have vowed to cease buying Russian oil, many European nations aren't following suit.

Just so we're clear on the record today—because it's my position that every dollar we are providing to Russia is a dollar that will ultimately be used against the Ukrainian people—are there any aspects of our oil and gas industry that are still actively trading with Russia through what I think the paper called “a battleship-sized hole” in some of these sanctions?

[Jay Allen]

Madam Chair, my understanding is that in Canada there is no trade in oil or gas products with Russia. I could be wrong about that. It's not my area of expertise.

What I will say is that there are certainly exports still going to Europe, and that's largely a product of the specific situation they are in. They are very heavily dependent on Russian gas, so it will take them time to wean themselves off of that.

[Matthew Green, NDP, Hamilton Centre, ON]

There are no goods that are excluded from the withdrawal order based on Canada's customs notice 22-02 from March 3, 2022.

[Michèle Govier]

As noted, the customs order does not impose a 35% tariff on petroleum. Just because of the way that is structured, on a pre-existing basis, there was an active decision not to include them. It's just because the general tariff for that product is not 35%; it's zero.

The import ban in place, which was imposed under different legislation, covers our imports of oil from Russia, so from Canada's perspective, we are well covered in that domain. I think for other countries the case is different.

[Matthew Green, NDP, Hamilton Centre, ON]

As it relates to that particular order, it's noted that the measure will be applied for 180 days on these imports from Russia and Belarus, and this period may be extended by a resolution adopted by the House. What factors should we consider as parliamentarians in deciding whether to extend the withdrawal orders application?

[Michèle Govier]

That would be at the discretion of parliamentarians to decide how they would like to proceed. In terms of deciding whether to introduce that type of resolution, it would be examining what the current situation is with respect to the situation in Ukraine, as well as whether it's still the appropriate measure, whether stronger measures might be warranted, etc. I think it would be looking at that as well as at the implications of the measure and the impacts it may have had in the Canadian market.

[Matthew Green, NDP, Hamilton Centre, ON]

On that very important note, Madam Chair, perhaps the witnesses could expand on what they believe might be at our disposal for stronger and more direct, extended or harsher sanctions, because it appears that, while symbolic, what the international community is doing ultimately hasn't to this point slowed down the aggression of the Russian invasion or the occupation of Ukraine. Could you provide to this committee some potential examples that we may want to consider in terms of tightening up or creating greater restrictions or sanctions?

[The Chair, Liberal, Judy Sgro]

Please give a very brief answer, Mr. Allen.

[Jay Allen]

The sanctions have been very effective. We are seeing a dramatic impact on the Russian economy, which will in turn have a real impact on the Russian ability to wage war.

There are going to be additional items that could be sanctioned. There could be other measures. Those at this point we're unfortunately not able to discuss, and quite honestly in my role I'm not familiar with them, but that would be a matter for politicians to look at.