International Trade Committee on April 27th, 2022

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

Ms. Nguyen, in my region, we produce a lot of aluminum, and we actually use a new process, ELYSIS. It allows us to produce aluminum without an environmental footprint.

In your opinion, are there any commercial opportunities in terms of green aluminum in Vietnam?

[Julie Dai Trang Nguyen]

Thank you for your question.

Again, our trade council is not an expert in aluminum. In terms of environmental protection, Vietnam has a new environmental protection law, which came into effect last January. This law requires owners of factories to use the best available technology to control pollution and to limit environmental impacts. The law also defines residential communities as essential parts of the environment to be protected. I believe that, with this new law, the environmental impact of doing business in Vietnam, including in the area of aluminum, would be resolved.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. Nguyen.

We move to Mr. Virani for five minutes.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Thank you very much to all the witnesses. I'll go a little bit quickly because I have three questions.

First to Mr. Agnew, welcome back. It's always good to see you. In your opening statement you had three or four different key points. One of them was about robust digital trade provisions. This is something I'm quite seized with because we know that a lot of the world and economic activity are moving to digital platforms and so on.

There's something called the Digital Economic Partnership Agreement, which was started by New Zealand, Chile and Singapore, a member of ASEAN. Could you comment on things like the DEPA and its utility in terms of providing some of those digital trade protections going forward for different nation-states?

[Mark Agnew]

I think it's important to have those agreements. The more of these we have, the more embedded into international trade law the digital trade provisions are. There are two that I'll cite specifically.

One is cross-border data flows, ensuring that if a company's going to operate in a market, it doesn't have to store data locally as a condition of doing business. Certainly, the view we have and that our members have is that data is actually more secure if it can be monitored out of a central location rather than having locally stored servers.

The other critical area as well that a DEPA and related agreements provide is around customs, duties and moratoriums on electronic transmissions. The WTO has an agreement on this. Every two years we have to go through this torturous renewal process, so embedding that permanently into the international trade rule book, I think, is quite valuable for companies. The idea of putting a tariff on electronic transmission is just conceptually very difficult and, I think, in practice would be very difficult to implement for our businesses and governments.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Thank you very much, Mr. Agnew.

Mr. Cho, I'll turn to you. It's good to see you. Thank you for your commentary here.

I want to build on something that was actually asked of you by Monsieur Martel about critical minerals. We're seized of this.

We are a country of vast natural resources. I understand we have at least 16 of the top 30 critical minerals that are required for electric vehicle batteries. We obviously have, in my province—and in your province because I know you're a Torontonian—various critical minerals in the Ring of Fire, for example. We're trying to invest heavily in unlocking that kind of resource wealth and using it for the sustainability goals we all share.

From your perspective, is the Korean business community seized of the fact that this is a pressing priority for Canada? How can we leverage that further in terms of developing relations between our two nations economically?

[Sonny Cho]

Yes, one thing we're trying to do more, now that we're getting out of the pandemic lockdowns, is that we'd like to invite more Korean corporate executives to come visit. We used to focus mostly on Toronto, Montreal, Waterloo, the technology hubs, but we should also start giving them the tours of the other parts of the provinces and give them a good understanding, but also educate Korean Canadians. Even a lot of Korean Canadians don't realize how knowledgeable our workforce is and how many good natural resources we have. There are lots of opportunities.

Educating locally and also abroad is critical in getting deals done. I think a lot of them still don't know much about Canada. All they know is that we have great schools, and it's a nice and safe place to send their kids. We do get a lot of students at universities and colleges, but I think we should take them to northern Ontario, northern Quebec and other parts where there are lots of resources.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Just briefly to Mr. Moffatt, I was quite seized with your testimony. Thank you. It was quite illuminating.

I just want to ask you, given the success we had with CUSMA, where we have an environmental protection clause inserted into the agreement and we had indigenous negotiators with us at the table when we were dealing with Mexico and the United States, and that we've committed as a government to UNDRIP and passed it as a Parliament, do you see some potential in using those kinds of patterns going forward with countries like Indonesia and Malaysia, to address some of the environmental protection concerns that you very rightfully raised about palm oil?

[Shane Moffatt]

I think those are the kinds of global commitments that are central to making this deal really work for people and planet. As you'll no doubt be aware, Canadians care deeply about climate change, biodiversity loss and indigenous rights. Our position really is to ensure that, in any trade deal, our international commitments in those areas are aligned with the text of the deal and the consequences and the commodities that flow through that deal.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We move to Monsieur Savard-Tremblay for two and a half minutes.

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

Thank you, Madam Chair.

I would like to address Mr. Farmer, who represents the Canada-ASEAN Business Council.

Mr. Moffatt, the representative of Greenpeace Canada, shared his concerns about palm oil with us earlier. In his view, there should be more traceability. Rather than rewarding large multinationals for contributing to deforestation, traceability would encourage smaller companies that produce in an environmentally responsible manner.

Mr. Farmer, given your expertise in trade between Canada and this region, I assume you have already addressed this issue.

Do you have any comments on that?

[Wayne Christopher Farmer]

I'm not up on the particular subject matter of palm, but it is a big industry here. I would say that in the last, probably seven to eight years, perhaps a bit longer, the problems that Mr. Moffatt outlined have been widely recognized. Certainly a lot of the multilateral financing institutions, the domestic financing institutions, as well as the buyers, people like Unilever and that, have taken tremendous steps forward to ensure that some of those issues are addressed in terms of more sustainable harvesting, growing and processing of palm, and in fact, are tracing the source of their palm additives that go into their food products. Progress is being made.

I'd point out that, although there are a large number of big companies involved in this, they are very big employers of people in these countries and are raising their living standards. I would argue that greater engagement by Canada and other foreign countries that are the purchasers of these goods have consistently helped to improve the situation. There may be a little way to go just yet, but I think that having us at the table and working with Indonesian counterparts on these issues would only strengthen and improve the situation on the ground.

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

To improve the situation, therefore, Canada could legitimately be quite strict in terms of the conditions under which it would agree to trade in such production.

Is that right?

[Wayne Christopher Farmer]

Look, I think we all share a concern for the environment and sustainable practices, and on the labour front as well. I think our members at the council would echo that.

As I said, I do believe that a lot of progress has been made. Certainly, we want to get those points across in our negotiations with the Indonesians and with ASEAN on general agricultural labour practices in this part of the world.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Masse, you have two and a half minutes, please.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair.

I just want to follow up with Mr. Moffatt.

What other types of challenges are there? Palm oil production is getting a lot of attention, but are there others that you would flag as important?

[Shane Moffatt]

Absolutely. As I mentioned, rubber is a very significant import from Indonesia into Canada as well.

There are other commodities. Writing paper, for example, is one of the top five imports from Indonesia to Canada. Both of those commodities have been heavily linked to deforestation, displacement of local communities, human rights violations and violations of indigenous rights.

My comments regarding palm oil, I think, pertain to risky commodities writ large.That's why it's really essential to build some of the provisions into any agreement that addresses transparency and sustainability and really centres the needs of local communities versus some of those big businesses that currently dominate not just the palm oil sector but a whole host of risky commodities in the region.

[Brian Masse, NDP, Windsor West, ON]

There are two aspects of this. I'm hoping you can answer this, but you may not be able to. Are there one or two that would have a heightened political sensitivity in our discussions? Likewise, is there one that might have an international ownership component that might be challenging for Canada to address?

If we bring these forward, which ones have a heightened political sensitivity and which ones might have a corporate sensitivity?

[Shane Moffatt]

I'm not sure I'm very well placed to address which one of these commodities might raise political sensitivities. From what I understand from my colleagues in the region, the production of these commodities across the board is of concern to many people in the region as well as to people here in Canada.

How much political sensitivity they generate I'd defer to some of the experts.

[Brian Masse, NDP, Windsor West, ON]

That's fair enough. I'm sure we'll hear.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Masse.

Committee, the bells are ringing. Does the committee want to stay until 5:30, so that we can finish the other two speakers on this round? They are Mr. Baldinelli and Mr. Sheehan. All right.

Mr. Baldinelli, you have five minutes, please.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Madam Chair, and thank you to my committee colleagues.

I'd like to thank our committee witnesses for being with us today.

I just want to build on some of the earlier testimony from Mr. Farmer.

I was interested in some of your comments. You indicated the need for these trade agreements and you talked about using them to share best practices, learnings and so on. I was just wondering what some of that learning and those best practices are that could be used in these upcoming negotiations with not only Indonesia but ASEAN countries as well.

[Wayne Christopher Farmer]

I think Canada has an excellent trade negotiating team within Global Affairs Canada. I think approaching an agreement where you have 10 different nations at 10 different stages of development with the concerns that we have in balancing the economic opportunity with our commercial trading values and values as a nation is always going to be a bit tricky.

There are very creative ways that those can be balanced. I mention again that this is a starting point in a journey that will continue going forward. A lot of the ASEAN trade agreements that have been struck, particularly if we follow what's happened with the Australia and New Zealand relationship, have been agreed to at a certain level. Then, over a period of time, as that relationship has deepened and the commercial ties have been more valuable, they've been revised to become more comprehensive, more detailed and to encompass more things.

Looking at it in that direction, I think we need to put our creative hats on and recognize that we're here for a long-term haul and that we can address those through our negotiations and bring those ideas to the table.

I'd also like to mention that in some of the areas we've discussed, the region itself is also adopting many of the ESG and environmental labour concerns that we have been talking about here this afternoon. As a source of critical minerals, Canada would be very welcome in this part of the world.

Much like we have, in this part of the region there is a concentration risk on certain things, like critical minerals, particularly with China. There is the desire to diversify supply chains into jurisdictions that are respecting more labour and environmental rules to create a critical mineral production with this ESG compliance. That would be a very strong point in Canada's approach to this part of the world and the industries here that require those materials.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Mr. Farmer.

Building on that notion of rules and moving forward, my colleague Mr. Martel spoke about it with Mr. Agnew, and you talked earlier about our need for having our domestic affairs in order before we can open up our markets to the world. I just wanted to build on that. You referenced taxes, regulations and access to labour.

Mr. Agnew, in your opinion, are Canada's affairs in order today so that we can get into these upcoming trade negotiations? Are we in that position right now?

[Mark Agnew]

Yes and no. I think there are certain sectors that are well positioned. If you look at, for instance, our agriculture exporters, we have a great comparative advantage here.

The one area, though, where I think we have a lot of work to do is in the energy sector. Mr. Arya referenced earlier the Indonesian delegation, whom I had a chance to also meet with today. One of the comments I made is that there is a need for us to improve our regulatory process if we want to export future hydrogen or even natural gas. We need to have more regulatory predictability if we're going to be able to tap into those markets in the energy sector, for instance.