International Trade Committee on April 25th, 2022

[Arun Alexander]

We haven't opened the door to any trade without terms and conditions. As I said, we're still at a very high level in our negotiations. We're still in round one.

Indonesia has indicated interest in certain sectors, especially clothing, leather, textiles, agriculture and agri-food products for export to Canada, and motor vehicle parts as well. However, we're still at a very early stage in the negotiations. As the negotiations progress, we will get more into each of the sectors.

[Brian Masse, NDP, Windsor West, ON]

When, for example, arms manufacturing comes up, will that trigger any other review from CSIS, from our military or from any other agency that the government can now get some type of intelligence on? Is that going to take place? How does that take place in the process?

[Arun Alexander]

I'm not an expert on arms exports, I must say. We have an export permit system in Canada, so the export of arms to countries will be looked at on a case-by-case basis. The Minister of Foreign Affairs provides permits for the export of arms and armaments to countries. They would be looked at by various agencies and organizations in Canada before being exported.

[Brian Masse, NDP, Windsor West, ON]

The reason I'm asking this is that a number of years ago, Canada, with Indonesia, led a mission for the procurement of arms and military during the time East Timor was invaded. This is something that has quite a bit of history.

I guess what I'm looking for is the comfort of knowing—not only for the committee but also the government—when this starts to take place. I thought it would be a bit different in terms of the process. It's quite difficult, even for auto manufacturing and the politics around some of that, as well as production for environmental and labour issues. For military equipment, manufacturing and exchanges, it also becomes highly complicated.

[Arun Alexander]

Thank you very much for the question and the comment.

All I can say is that we have a very rigorous arms export permit system. That would be applied to Indonesia and other countries, as appropriate.

[Brian Masse, NDP, Windsor West, ON]

I'm wondering if we could get some help from the researchers regarding the process for this, in terms of how Canada engages in arms manufacturing trade during these types of general agreements.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Masse.

We'll move on to Mr. Baldinelli for five minutes.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Madam Chair.

Thank you to the witnesses for being here and for their presentations.

After reviewing the briefing material presented, I'd like to ask our guests this question: What are the key differences we hope to achieve in the ASEAN talks versus the bilateral talks we'll be holding with Indonesia?

[Arun Alexander]

Thank you very much for your question, honourable member. Perhaps I'll begin and then I'll turn to Mr. Allen, as well.

I think our overall goal is the same for both agreements—to increase access to key growing markets for Canadian businesses with respect to trade, services and investment, and to promote environmental stewardship, good labour practices and inclusive trade.

Indonesia is the largest economy in ASEAN. It is probably one of the more developed economies. We see the potential to conclude an agreement with Indonesia faster than we could with ASEAN as a whole. We're putting some priority on that. We see that there are great opportunities for Canadian companies and businesses in Indonesia, with its huge population and its growing and very vibrant economy. Our priority is to close an agreement with Indonesia in a timely manner.

With ASEAN, perhaps, with its varied membership and levels of economic development, it might take a little longer. We want to create opportunities for Canadian businesses as quickly as possible.

Jay, do you want to add anything?

[Jay Allen]

With respect to ASEAN, what we're looking to get out of it—where it differs slightly, as Mr. Alexander said—is.... It will likely take us longer, given differences in levels of development and the fact that we're dealing with 10 partners. Indonesia will likely come sooner, and because it's one partner that is relatively well developed, we're likely to get a higher level of commitment.

ASEAN holds a number of benefits for us. First, it gives us an agreement that spans the region. It gives us market access to 10 different countries, four of which are already CPTPP partners, with two of them having ratified the agreement. It would give us access to that. It would also allow us to integrate more into the regional supply chains, because we would have a common set of rules of origin that would allow us to cumulate, which is to use product from throughout the region in our own manufactured products and to sell into the region.

The other main goal of ASEAN, aside from the market access, is.... There's strategic value in doing an FTA with ASEAN. ASEAN plays a very key role not only in the economy but also in the security relationships in Asia. Deepening our engagement and relationship there will help us on a strategic front, both in terms of supply chains and our political relationships. All of those things come from having an FTA. It helps on a number of fronts.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Mr. Allen and Mr. Alexander.

In your responses, it seems like the higher priority among the two agreements would be the one with ASEAN nations, but you're indicating that it seems like an agreement with Indonesia would be easier to accomplish in the shorter term.

My question on that point is this: Can you confirm whether the agreement that would be considered the priority is the ASEAN agreement?

[Arun Alexander]

I'm sorry. I'm not sure I understood your question.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Of the two priorities, which one is higher for Canada?

[Arun Alexander]

I would say that both are priorities for Canada. I think it's just that we're more likely to conclude the Indonesian agreement before the ASEAN agreement. We're both working very hard to conclude agreements, but, given the context and membership of ASEAN, it is more likely that the Indonesian agreement would come first.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Mr. Alexander.

You mentioned environmental and labour practices as well. If you can answer quickly, will labour standards make their way into these agreements? Will that be a position the Canadian government will be forwarding?

[Arun Alexander]

The government intends to put forward strong labour standards in these agreements. We're seeking strong commitments with respect to collective bargaining, freedom of association and non-discrimination. We're looking to have enforceable agreement on those aspects.

We'll also look to have collaborative elements where we can work together to improve labour standards in ASEAN countries and work with Canada to improve standards, as we've done with Mexico under the CUSMA.

[The Chair, Liberal, Judy Sgro]

Mr. Baldinelli, you have five seconds.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

I'm just wondering about the consultation process. How does the department work to keep stakeholders updated and involved?

[Arun Alexander]

Thank you for the question.

We meet regularly with stakeholders after each round of negotiations, sometimes after each day, depending on the level of discussions. We meet with provinces each day after a round of negotiations. With private sector stakeholders, we meet after each round of negotiations, but we also have continual contact with them in between rounds to hear from them on their key priorities and their areas of concern.

There is continual engagement with stakeholders.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go to Mr. Miao, please, for five minutes.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you, Madam Chair.

Thank you to the officials who are joining us today.

A Canada-ASEAN free trade agreement would boost Canada's GDP by $1.2 billion by 2027, with much of the benefit coming from higher wages and improved terms of trade. Also by 2027, the bilateral trade impact of a free trade agreement would be in the range of $4.8 billion to $10.9 billion.

How do nations like Singapore and Indonesia contribute to this projected boost to Canada's GDP?

[Arun Alexander]

Perhaps I'll ask Mr. Allen to respond to that question.

[Jay Allen]

Countries like Singapore and Indonesia obviously offer relatively well-developed markets. With Singapore we already have an FTA, but even on top of that, there's a projected gain as a result of having an ASEAN FTA.

As Mr. Alexander explained, Indonesia simply offers a massive potential market. It is a booming market with a growing middle class and a massive population. It offers us the opportunity to sell them a lot of stuff.

[Wilson Miao, Liberal, Richmond Centre, BC]

As a follow-up question, how has industry been consulted or which emerging industry should be focused on, regarding a potential free trade agreement with ASEAN nations?

[Arun Alexander]

As I stated earlier, we engage in consultations with the industry on a continual basis, and especially after each round of negotiations. We listen to them to understand their needs, their priorities and their concerns.

We also had a very open Canada Gazette process where we received consultation submissions from a variety of stakeholders in the industry.

This all gets taken into account as we develop our processes and practices for negotiations. It's a very important part.