Evidence of meeting #13 for International Trade in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was companies.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Jay Allen  Director General, Trade Negotiations, Department of Foreign Affairs, Trade and Development
François Rivest  Director General, Regional Trade Operations and Intergovernmental Relations, Department of Foreign Affairs, Trade and Development
Michèle Govier  Director General, International Trade Policy Division, Department of Finance
Andrew Turner  Director, Eastern Europe and Eurasia Division, Department of Foreign Affairs, Trade and Development
Markiyan Markevych  President, Crossways MK Consulting Ltd.
Delphine Adenot-Owusu  Executive Director, European Union Chamber of Commerce in Canada
Riva Walia  Managing Director, France Canada Chamber of Commerce Ontario
Clerk of the Committee  Ms. Dancella Boyi

4:15 p.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much, Mr. Allen.

We'll move on to Mr. Hoback for five minutes, please.

4:15 p.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

Thank you, Chair, and thank you to the witnesses here.

You know, this is an awkward study right now because of what's going on between Russia and Ukraine, with the horrific scenes we see on television and the war crimes that Putin is committing. It's just horrible. It must be tough for you guys to think about the people you are negotiating with, who are now, somewhere back in Ukraine, dealing with all this and trying to figure out how to keep their country together and progress. To be thinking about the future for them is day by day, while we're looking a year or two or three years down the road.

My question is on the process right now in light of what's going on. How do you take a step back now and relook at what we want in terms of results in a trade agreement with Ukraine in light of the situation today versus where it was when we started the negotiations?

4:15 p.m.

Director General, Trade Negotiations, Department of Foreign Affairs, Trade and Development

Jay Allen

We carefully evaluated with Ukraine what we wanted to do to modernize. That was obviously the product of the situation as it was, Ukraine's economy being where it was and Ukrainian society being where it was. This is a fundamental change. We will have to re-evaluate everything.

As the member noted, it is very difficult to have conversations. We have not had conversations with our counterparts. Some messages were sent immediately before the invasion, just simply to wish people luck and safety. We haven't had those kinds of conversations, and I don't expect we will in the near future.

4:15 p.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

In the meantime, you might as well park it, really, until we know exactly what we're dealing with, and then regroup at a time when Ukraine can regroup with us.

What are you and your staff focused on in light of that? You're not just assigned to Ukraine. The Asian deal is being talked about. A U.K. deal is being talked about. Would you redeploy resources to those agreements now and focus on that in light of what's going on?

4:15 p.m.

Director General, Trade Negotiations, Department of Foreign Affairs, Trade and Development

Jay Allen

We have a very full negotiating agenda. As the member correctly points out, there are ongoing trade negotiations with a number of different partners and yes, indeed, we redeploy resources. All of our resources will work on various agreements, so if we have a lightening of a load in one area, then those resources can be spread out to address another agreement.

4:20 p.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

Fair enough. That makes sense.

I often wonder, though: We had people who were on the ground in Kyiv who have been evacuated out of Kyiv. Maybe they're in Poland. I'm not sure where those resources are now, but people like our trade commissioners, just the staff that we had in Kyiv.... How are they acting in light of what's going on? Do they take on different roles now and maybe leave the trade role for more of a humanitarian role or a visa role? Do they fill those types of shoes when this type of situation happens?

4:20 p.m.

Director General, Trade Negotiations, Department of Foreign Affairs, Trade and Development

Jay Allen

All of our mission staff have been evacuated. I can maybe turn to Mr. Turner on that. He may have a better idea of where they are. Certainly, in terms of the functions they carried out at post, they will be redirected to help with other elements of the crisis.

Andrew, do you have any comment on what's happened with the staff and what they're focused on?

4:20 p.m.

Director, Eastern Europe and Eurasia Division, Department of Foreign Affairs, Trade and Development

Andrew Turner

Certainly.

Our staff are continuing to focus on providing Canada's support to Ukraine in the most relevant and useful capacities. At the moment, yes, the focus on trade promotion has shifted more to dealing with the emergency response. We have deployed more resources to focus on the consular situation, on providing humanitarian assistance, and on ongoing monitoring of the political and military situation.

We will continue to adapt our footprint to best respond to the crisis and best provide support to Ukraine.

4:20 p.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

Okay. That makes sense.

You know, again, I'm trying to stay on the topic of the Canada-Ukraine trade agreement; I really am, because that's what we're here to study. I want to make sure we do our work properly, but it's really tough not to get drawn into the Russian aspect of it.

If the chair could maybe give me a bit of liberty here, today, for example, we heard in question period about the SAMs, those missiles. Are we getting involved in the trade side of things, making sure that when Ukrainians are asking for specific items to help them defend their country...? Do our trade officials actually help in the process? Where do they locate them, how do they locate them, and how do they get them?

4:20 p.m.

Liberal

Arif Virani Liberal Parkdale—High Park, ON

On a point of order, Madam Chair, this is a question that would probably be directed to officials from the defence department. I'm not sure our trade officials have the ability to answer that question.

4:20 p.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

I'm not asking about defence. I know that Defence would be doing that. I'm asking if our trade people are also engaged in those types of roles. It's pretty straightforward.

4:20 p.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much, but there is no time left. We have a very short meeting here, and we have another one coming up.

Mr. Arya, you have four minutes, please.

April 6th, 2022 / 4:20 p.m.

Liberal

Chandra Arya Liberal Nepean, ON

Thank you, Madam Chair.

The withdrawal order doesn't ban the import of goods from Russia or Belarus. It just increases the tariff rate to 35%. The only things that are banned from import are oil and probably gas from Russia and Belarus. Why is that? Do we have the mechanism to ban an entire range of goods from Russia? Is there any problem in our banning an entire range of goods? That's number one.

Two, this withdrawal order is applicable for 180 days. This can be extended by a resolution adopted by both houses of Parliament. Is that the requirement under the WTO, or is the requirement due to any of our own legislation? Can somebody explain that to me?

4:20 p.m.

Director General, International Trade Policy Division, Department of Finance

Michèle Govier

Maybe I'll start with that, and for the broader question I'll turn it back to GAC colleagues.

Yes, the requirement to have both houses of Parliament approve a resolution is within our domestic law, in the customs tariff, and it's part of the condition for this order.

I will note that we're one of the few, if not the only country among our like-minded partners that has something that can be done by order this way. Many other countries that take action on MFN require legislative changes. It's one of the reasons we were able to move so quickly to take this measure. However, there's also this 180-day requirement, noting that it is a deviation from our usual customs tariff.

In terms of broader bans, I will turn to Andrew to maybe speak to that issue.

4:20 p.m.

Director, Eastern Europe and Eurasia Division, Department of Foreign Affairs, Trade and Development

Andrew Turner

Certainly.

Madam Chair, Canada has imposed a wide range of measures to restrict imports and exports with Russia, not just in this immediate crisis. We've had some restrictions on exports of machineries related to oil exploration going back to 2014, in response to Crimea. In addition, then, to the new sanctions that are being put in place with the restrictions on oil, we have also imposed extended export control restrictions. All controlled goods are prohibited.

Through the Special Economic Measures Act, we have also imposed restrictions preventing the export of a whole range of goods and technologies that, while they would be generally commercially available, could still be of use to the Russian military—semiconductors, or engines for large trucks that would be used in civilian transport but could be used to move military personnel or equipment.

Canada has joined with the like-minded in imposing these restrictions. The intent of these measures is to gradually degrade the capacity of the military.

4:25 p.m.

Liberal

Chandra Arya Liberal Nepean, ON

Mr. Turner, my time is limited.

The things you elaborated on are more about export controls. I was asking whether there is any reason we have not expanded the banning of imports beyond oil.

4:25 p.m.

Director, Eastern Europe and Eurasia Division, Department of Foreign Affairs, Trade and Development

Andrew Turner

In terms of banning imports, we certainly continue to look at other options that could be imposed. In addition, though, we have imposed restrictions on access to Canadian airspace and Canadian waters. That would make it very difficult for Russian goods to be transported and brought into the Canadian market. While the goods themselves have not yet been banned, which is still under consideration, we have taken measures that would still have a very significant impact by preventing them from being brought into Canada.

4:25 p.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much. I'm sorry, Mr. Arya, but your time is up.

I want to thank all of our witnesses for appearing today. This is a very difficult subject we're dealing with right now, with what's going on in Ukraine. We appreciate your time and your contribution to this discussion.

We will suspend for a moment while our second panel is brought online. Thank you again to the witnesses.

4:30 p.m.

Liberal

The Chair Liberal Judy Sgro

I'm calling the meeting back to order.

We have from Crossways MK Consulting Limited, Markiyan Markevych, president; from the European Union Chamber of Commerce in Canada, Delphine Adenot-Owusu, executive director; and from the France Canada Chamber of Commerce Ontario, Riva Walia, managing director. We have two witnesses here, and the third one is attempting to join us.

Welcome, Mr. Markevych. I invite you to make an opening statement of up to five minutes, please.

4:30 p.m.

Markiyan Markevych President, Crossways MK Consulting Ltd.

Thanks, Madam Chair.

Hi, everybody. My name is Markiyan Markevych. I'm principal and president of Crossways MK Consulting, an investment consulting business. I've been doing business in Ukraine since 2014. I sit on the board of the Canada-Ukraine Chamber of Commerce, and I've been heavily involved with investment and trade between Ukraine and Canada, with investments for about $400 million, since 2014—direct investments into multiple industries.

I would like to focus my attention on three different topics, briefly.

The first is that it's been tough with what's going on, and we received the invitation before the war broke out. We are talking about free trade agreements, and I've been heavily utilizing that. Our companies have been utilizing the free trade agreement, and now the circumstances are a little different. I just came back from Poland, where I've been for the last three weeks. It's unfortunate times. Nevertheless, I think we have to focus on helping Ukraine and the Ukrainian people in the meantime, and focus on the future. This is very important.

Ukraine will win this war, 100%, and it will be an independent, democratic state.

Even prior to the war, what Ukraine needed was investments. I know we're talking about free trade, but this is all tied up. Ukraine has brains, hands and grains, and it needs help. The specific help that I'm talking about is the EDC. Ukrainian companies need the trade credit insurance, expert financing, which will enable Canadian and Ukrainian companies to do this efficiently, more effectively and in greater schemes.

Another area I've been involved in is through the Canadian Chamber of Commerce, with the CUTIS program. GAC and CUCC partnered together for the CUTIS program, Canada-Ukraine investment and trade support. I think we need more of these programs.

The program has been very successful. We have increased investments tremendously. We have increased trade over the last four years. We need more programs like that to help Ukrainian and Canadian companies.

When we talk about bilateral trade between Canada and Ukraine, I think the area that is very much in need is services. Specifically, Ukraine has probably one of the best procurement systems in the world, called ProZorro. CUCC is trying to set up ProZorro systems through which Canadian companies can directly bid on projects in Ukraine. Again, EDC comes into the picture, with its arsenal, its weapons, to help Canadian companies manage and work effectively in that field.

On the last one, more specifically when talking about trade, one type of company that Canadian investors are directly involved in is agriculture companies. There are specific products in agriculture. I'm going to be very specific here: There are dry egg shells, which come in three different forms. That can be looked into extensively. Right now, there are tariffs on them, and if we eliminated that.... Those are products that have a long life—24 years. That can be looked into as an angle for Ukraine, Canada and the U.S., where Canadian-Ukrainian products can be exported to and imported from Canada under no-name labels. It could be a great working relationship with the Canadian companies, providing three-way trade.

That's all for me. Thanks, Madam Chair.

4:35 p.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much, Mr. Markevych. We appreciate the information.

We will now go on to Ms. Adenot-Owusu.

Welcome to the committee.

4:35 p.m.

Delphine Adenot-Owusu Executive Director, European Union Chamber of Commerce in Canada

Madam Chair, members of the committee, let me first thank you for inviting me to appear before the committee.

I would like to clarify that I am speaking in the context of my mandate within the European Union Chamber of Commerce in Canada. So we represent the interests of European Union businesses and chambers of commerce in Canada. Our chamber does not represent any Ukrainian business interests and has only peripheral expertise on the Canada-Ukraine Free Trade Agreement.

With this reservation, I would like to express our solidarity with Ukraine, its people and its representatives. We support the measures adopted by European governments and the Canadian government and their allies to stop the Russian invasion. As necessary as they are, the sanctions and restrictions adopted so far, combined with Russian countermeasures and the disruption of trade with Russia and Ukraine caused by the conflict, have not been without effect on our economies and industries. The sanctions have multiple repercussions and will require a variety of responses from all of us in the short and medium term.

The conflict in Ukraine has had an immediate effect on energy, commodity and food prices, and this is having an impact on all our economies. Developments in commodity prices and financial markets since the start of the war could reduce gross domestic product, or GDP, growth, and push up inflation. To address this, some European governments have already announced tax cuts as well as quick, targeted and time-limited measures in the form of new state-guaranteed loans or direct aid for fossil fuel-intensive companies.

The war in Ukraine has thus harmed industries directly affected by the sanctions and restrictions put in place by Canada and its allies, foremost among them the financial industry, the dual-use goods and technology industry, the transportation, mining, oil and gas equipment and supplies industry, the aerospace industry and the high-tech goods industry. These are complemented by hundreds of companies with an industrial and commercial presence in Ukraine and Russia, including in the automotive, manufacturing, agricultural and agri-food sectors.

In the event of a prolongation of the conflict, with associated restrictions, a thorough sectoral impact assessment would be in order to possibly adopt sectoral or targeted aid for industries and companies particularly affected by the conflict. Many European and Canadian companies will also seek to redirect all or part of their production to other markets. As such, any efforts to improve the implementation of the Comprehensive Economic Trade Agreement, or CETA, and other agreements, or to advance ongoing negotiations, would be welcome.

Many supply chains have been affected directly or indirectly by this conflict. I will focus today on three particularly critical chains.

First, there is the energy supply chain, which has already been mentioned. It could be hit even harder in the event of a halt to exports or an embargo on Russian oil and gas imports. At a time when Europe will be seeking to diversify its energy mix, there are many avenues for this committee and Canadian negotiators to explore, which are also in line with the necessary transition.

Secondly, there is the supply chain for critical materials and minerals. A strengthening and acceleration of the co-operation between the European Union and Canada in the framework of the strategic partnership on raw materials now seems crucial, as well as an increased triangulation with Washington on these issues.

Third, the supply of agricultural and agri-food commodities in many regions could be affected, which could cause serious short- and medium-term food security problems globally.

To conclude, I would like to add a final word on the Canada-Ukraine Free Trade Agreement, which, at the end of the conflict, could prove to be an extremely valuable tool to support and help rebuild a ravaged Ukraine. Three dimensions seem particularly important to us today: a facilitation of trade in food, basic goods and materials needed for the reconstruction of Ukraine; the adoption of an inclusive approach and the establishment of transparency mechanisms to facilitate access to public procurement for businesses, especially SMEs; and, finally, the inclusion of mechanisms to facilitate professional mobility between the two countries.

On these considerations, Madam Chair, I thank you. I am at the disposal of the members of the committee to answer their questions.

4:40 p.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much.

Please go ahead, Ms. Walia, for five minutes.

4:40 p.m.

Riva Walia Managing Director, France Canada Chamber of Commerce Ontario

Madam Chair and members of Parliament, thank you for this invitation.

The ongoing Ukrainian war is certainly a watershed moment in the history of our modern world. The outcomes of this war will define how societies will transcend and how humanity will evolve from here on. We are certainly witnessing the global and the local impacts of this Russian invasion of Ukraine on our economy, as well.

With regard to the modernization of the CUFTA, which is in front of this committee today, I would like to bring forward three important aspects. I do not want to divert into the aspects that are already very much in front of us, but I want to talk about solutions.

First and foremost, I would like to highlight the incremental risk of European dependence on Russian oil and gas, which is the primary reason Europe has been considering an energy transition in the first place. Even though this is the right thing to do, it's not the easiest. I believe that Canada, therefore, has a very strong role to play in the world and, in particular, on the European stage today. While we in Canada do not face an immediate threat to our energy security like Europe does, we are certainly likely to face the pressure to expand our role as a safe and secure source of fossil fuels, coupled with a very strong and stable economy.

Canada, therefore, has a very unique challenge to fulfill in routing some of the oil and natural gas to Europe through channels that are actually non-existent today. Therefore, it's imperative for Canada to rethink the export infrastructure and our role as a supplier to Europe, as well as our role in rebuilding Ukraine. Additionally, this could present a very significant challenge for Canada's efforts to reduce greenhouse emissions by 2050. This presents an opportunity for us to consider additional ways to reduce greenhouse gas emissions and also to formulate policies that will allow us to meet our global targets by 2050.

This brings me to the second point, which is really Canada's role in supporting Ukraine when this war is over. I'm hoping this will be ending soon. Historically, Canadian companies have recognized the strengths of Ukraine in IT and white-collar jobs. The Canadian-Ukraine Free Trade Agreement has a pivotal role to play in rebuilding Ukraine post the Russian invasion by bringing jobs to Ukraine.

As we modernize CUFTA, large-scale Canadian companies like Fairfax have definitely invested strongly in Ukrainian companies. There is an opportunity for us to have additional provisions in this free trade agreement that would enable more Canadian companies to invest in Ukraine and human capital to move freely between the two trade partners. This is also one of the recommendations of the global task force on refugee labour mobility, which I was a part of, earlier today. These measures will concretely support rebuilding and the thriving of the European economy in the free world.

Lastly, I would like to bring to your attention to CUFTA and the parallels that I can draw to the ratification of CETA in France, which, as we all know, is the Canada-European trade agreement, in which France is a big stakeholder. Sitting where I sit, as the managing director of the chamber of commerce and managing $10.8 billion of bilateral trade between France and Canada, I can assure you that ratification of CETA was not an easy task. My colleague, Delphine, from the European Union chamber, would agree with this as well.

We can learn from CETA and translate what we learn into CUFTA to ensure that we are able to effectively leverage the steps we need to take that will play an important role in rebuilding Ukraine and modernizing CUFTA. In particular, I would like to draw attention to the lack of information for Canadian corporations about this free trade agreement that also exists between France's and the European Union's companies and Canada. There is a constant, ongoing effort between the French chamber of commerce and the European chamber of commerce to educate investors and large corporations in Canada on what the free trade agreement between the largest European nations and Canada may mean for businesses and the Canadian economy. It seems to be a never-ending process for us.

Therefore, I urge this committee to put the right set of resources to ensure that the right information and education sessions are available for companies in Canada, as well as Ukrainian companies, for the free trade agreement or the modernization thereof, so that there is clarity on how to proceed and how to get the maximum benefit out of CUFTA for both Ukrainian and Canadian organizations.

4:45 p.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much. I'm sorry; the time is up.

We go to Mr. Martel for five minutes, please.