International Trade Committee on April 25th, 2022

[Arun Alexander]

I'm sorry. I didn't hear, after vanadium, what minerals you were saying.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

I mentioned niobium, tantalum and mafic phosphate.

[Arun Alexander]

Thank you very much.

I'm not an expert on minerals by any means, and I apologize for that, but I'm assuming that these are critical minerals used in manufacturing. I would say that there is great potential for exporting these, especially as new technologies develop. I assume these are minerals that are used in high-tech products.

The supply chains of Indonesia and ASEAN are supplying the world with high-tech products, and I would see that there would be opportunities for exports of these products from Canada to the region.

Jay, is there anything you'd like to add?

[Jay Allen]

I think another side of it too is that, when we negotiate a trade agreement, it creates opportunities for inward investment. The production of minerals such as these is expensive, so looking for investment from outside the country is something that the government takes very seriously. An FTA with ASEAN or Indonesia or India presents an opportunity to try to attract that investment into these important industries.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Not all Indo-Pacific countries are as advanced as Canada when it comes to the traceability of goods and services.

How can we make sure a future agreement with ASEAN provides for an adequate traceability process?

[Arun Alexander]

Thank you very much for the question.

I'll maybe ask Mr. Allen to respond on ASEAN.

[Jay Allen]

If I could ask for clarification with respect to the question, what is meant by traceability, and in what sense?

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

I mean some sort of process to track and identify where components or goods originate, so we know they weren't obtained illegally, for instance.

[Jay Allen]

Thank you.

When we negotiate a free trade agreement, we put in what are called rules of origin. These rules of origin are specific to product. We put in place what we call PSROs, product-specific rules of origin, to help us determine exactly what goes into a product, and also the mechanism for tracing them back, the mechanism for ensuring that they meet the rules, because we only want goods that originate in the exporting country to benefit from the trade agreement. That's on the one hand.

On the other hand, if it's trade, for example, in a wildlife product that isn't meant to be traded, we have rules in our environment chapters that deal with that and commit countries to implementing their commitments under, for example, the CITES treaty, which is the trade in endangered species.

Those two elements I think cover off what the member was asking about with respect to how we go about ensuring traceability.

The other angle that I would say our trade agreements include is co-operation. We offer our partners co-operation with respect to these sorts of things to help them implement their obligations so that they can meet the terms.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

How much time do I have left, Madam Chair?

[The Chair, Liberal, Judy Sgro]

You have 20 seconds, Mr. Martel.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

All right.

Taiwan is being bullied by China virtually every week. Taiwan manufactures nearly 90% of the microchips required for electronics. If Taiwan ends up in the hands of the Chinese, it would put that supply chain at risk.

What type of agreement could Canada reach with Taiwan to send a strong message to China and protect that supply chain?

[The Chair, Liberal, Judy Sgro]

You may answer.

[Arun Alexander]

I will have to turn to Mr. Epp to speak about Taiwan. I'm not a specialist on Taiwan.

Go ahead, Weldon.

[Weldon Epp, Director General, North Asia, Department of Foreign Affairs, Trade and Development]

The honourable member is correct in pointing out the critical role that Taiwan plays in global supply chains for the high-tech industry. In fact, Canada has a very long-standing and rich partnership with partners in Taiwan on research, development and high tech. We've seen additional investments in that area.

It's a direct concern to our economy because Taiwan is one of our largest partners. They are 12th as an overall trade partner globally and fifth in Asia. It is not only an economic concern. It's also a national security concern to Canada.

Unfortunately, I cannot respond to the hypothetical of what we would do if there were a forced resolution to long-standing historical challenges across the Taiwan Strait. I would simply say that it is a priority for the Government of Canada to continue to encourage peaceful means to dialogue between authorities in Taiwan and those on mainland China.

We've made it very clear and the government has spoken out recently on a number of occasions, bilaterally but also with partners, to call out unprovoked and unprecedented military actions in the Taiwan Strait that we think destabilize not only the region but, as the honourable member has pointed out, global supply chains in a critical area for everything from cars to the phones in our hands.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Martel.

We'll move on to Ms. Dhillon for five minutes, please.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Thank you, Madam Chair.

I appreciate all the witnesses being with us today.

Can you give the committee an update on how implementation of the CPTPP with Canada is going?

[Arun Alexander]

I'll turn to Mr. Allen to respond to that.

Go ahead, Mr. Allen.

[Jay Allen]

I'm happy to say that last year CPTPP saw its eighth signatory, Peru, ratify the agreement and become the eighth party to the agreement. On that front we're doing very well. There are still three left to ratify: Chile, Malaysia and Brunei, and we're working with them to support their eventual ratification.

We are in the process of negotiating the United Kingdom's accession to the agreement, which has been going on now for about a year. We also have accession requests from China, Taiwan and Ecuador, as well as a number of other countries that have signalled their interest in joining the agreement as well.

With respect to the implementation, it seems to be going very well. Generally speaking, our trade with the region is doing very well.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

How would you say Canadian businesses have benefited from the agreement's implementation? Has the agreement been especially positive for any specific sectors?

[Jay Allen]

I don't have specifics with respect to individual industries, but what I can tell you is that, for a number of countries, we've seen dramatic growth in our exports of beef and pork, for example. We're seeing increased exports of manufactured goods to a number of countries, including Australia.

Overall, our exports to Australia, Japan, New Zealand and Singapore as a group rose by 9.4% in 2021 over the pre-CPTPP levels. We're up over 9% in trade with those key economies in the first three years of the agreement. With respect to Japan in particular, our trade is continuing to increase. I think we were up 16.4% in 2021 over 2020, so the numbers are generally going very well. Our industry has been very pleased with it.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Thank you.

This question is for any one of the witnesses. Canada is committed to increasing access to global markets for all Canadian businesses and to ensuring that Canadian businesses have the ability to compete in global markets. Where do you find that Canadian businesses can be placed in markets such as the Indonesian market, which is now considered to be a fast-growing market? How can Canadian businesses benefit from that?

In your opinion—it's a huge question—what are the contributing factors that make Indonesia a fast-growing market?

[Arun Alexander]

Thank you very much for the question.

It is indeed a large question, and I will try to start answering it. I might turn to my colleagues in the trade commissioner service to add to my answer. On the factors that make Indonesia an attractive market, I think one is the size of the market. It has a very large population—over 250 million people—and a growing population as well. Also, the increased wealth, especially the growing middle class, will create opportunities for sales of agricultural products, automobiles and automobile parts into the market, so there are really great opportunities for that.

A key priority for the government is inclusive trade to ensure that the benefits of trade accrue to the largest number of businesses and people possible, so a key priority for us is to ensure that under-represented groups in trade do benefit from the agreement both by ensuring there are provisions in the agreement to assist under-represented groups to take advantage of the benefits of the agreement and by promoting the agreement to under-represented groups in Canada. That is a key priority.

Maybe I'll ask Mr. Goodinson to speak about the trade commissioner service and its priorities in the region.

[Steven Goodinson, Director General, Trade Commissioner Service Operations, Department of Foreign Affairs, Trade and Development]

Thank you, Mr. Alexander. That was an excellent response on behalf of the trade commissioner service. I don't have a lot to add except to say that in Indonesia, as elsewhere, the trade commissioner service works a lot with small and medium-sized exporters to increase their market access and to make business connections for them to increase their sales.

I would say that among the priority sectors for the Indonesian market for the TCS in the next fiscal year are sectors as diverse as agri-food, mining, infrastructure, information technology and clean tech—all ones that we have discussed recently.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much to our witnesses for the very valuable information as we begin our study. I know we will see you again as we continue with this study.

We are now going to go in camera, so members and authorized staff who are participating virtually, please log off of this meeting and use the in camera Zoom link.

I will suspend for a few minutes until we get that done. Thank you again.

[Proceedings continue in camera]