International Trade Committee on May 9th, 2022

[Stuart Trew]

Do you mean with an ISDS mechanism that would monitor the companies or without, just in general?

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

Without this mechanism, in general, do you consider that the mining companies that invest in this region of the world are subject to sufficient accountability obligations?

[Stuart Trew]

I like to think that countries know best how they want to manage their resource sectors. In the Indonesian case, there is an investment law that would cover foreign and national investors in exactly the same way. I would say that's probably sufficient.

With mining companies being able to take out insurance when they operate abroad.... It's a hugely risky sector, obviously. The problem we have with ISDS, and a number of countries have with ISDS, is that it removes that risk onto the public sector for anything that could possibly go wrong, and then some. It basically steps on the pedal in support of the mining companies for them to be able to claim for future lost profits when things don't go their way.

Is it perfect in Indonesia? Probably not, from the perspective of the mining companies. However, I don't think it's the role of the Canadian state to be stepping on the gas, as I've said, for them on behalf of other interests that might be impacted by mining in that country.

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

In this sense, this mechanism could, for example, threaten the foreign investment law that has been adopted in Indonesia.

Is this true?

[Stuart Trew]

Perhaps it wouldn't threaten the law necessarily, but it would create a different law for Canadian mining companies operating there, like a law that's more conducive to their interests. Both would exist. The national law would exist for national mining players, and then international mining players, like Canada, if there's a treaty, would get these extra super-laws that tend to treat countries quite favourably in disputes as they come up.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

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

[Matthew Green, NDP, Hamilton Centre, ON]

In summary, so that we're clear, is it fair to say, or do you agree with the statement that ISDS erodes domestic sovereignty to make decision-making on labour, environmental issues and basic matters of trade?

[Stuart Trew]

Absolutely.

[Matthew Green, NDP, Hamilton Centre, ON]

Okay.

Without wanting to stay on that lane, I want to provide some value to the committee in terms of where we might be able to find a better alternative. Are there examples that you know of in trade agreements where rights-based approaches that respect international law, the environment and perhaps labour can be used or have been used to actually uplift the disproportionate power relationship between G7 countries and the rest of the global self?

[Stuart Trew]

That's an interesting question. Not within the ISDS chapter—

[Matthew Green, NDP, Hamilton Centre, ON]

No, no. We're throwing that out. We've already determined, at least I have, that that's a problematic feature. If we were to leave that out, are there other mechanisms on the positive side that might actually uplift the working-class conditions and material conditions of workers around the world, given our relationship with them to trade?

[Stuart Trew]

First of all, I'd like to commend the Canadian government in one respect when it did come forward with what it called the most progressive and strongest labour chapter provisions, absolutely. Nonetheless, it's been rejected by Indonesia.

There are examples in the CUSMA that are quite good. The labour language is much better. It's easier to enforce. There is no onus on workers to prove that a violation occurred as a result of trade, which was impossible to prove in case studies brought under previous agreements. There is also this rapid response mechanism that, granted, is a bit heavy handed on the part of the United States in Mexico, but it's working. It's producing democratic workplaces in Mexico, overturning the bad unions and putting in place more democratic unions.

[Matthew Green, NDP, Hamilton Centre, ON]

In my final 30 seconds, I would like to ask Mr. Trew, and anybody else for that matter, to provide any additional testimony in consideration of the testimony they've provided today, particularly as it relates to the way in which the ISDS impacts their industries, both for and against, or ways in which they see other trade agreements that might be able to help provide a rights-based approach to trade, one that centres on international law, the environment and human rights. That would be greatly appreciated.

Thank you, Madam Chair.

[The Chair, Liberal, Judy Sgro]

Does someone want to give a very brief comment?

[Matthew Green, NDP, Hamilton Centre, ON]

I was just asking for it in writing, Madam Chair.

[The Chair, Liberal, Judy Sgro]

Okay. Put it in writing.

Thank you very much.

We'll go to Ms. Gray for five minutes, please.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

Thank you, Madam Chair. It's great to see all the witnesses here today.

My first questions are for CAFTA.

Ms. Citeau, it's nice to see you again. You mentioned in your opening testimony the lack of respect for trade rules during this time of COVID. We know that a lot has come out, likely as a backlog at the WTO, but I was wondering if you have any thoughts on what needs to be in place separate from that.

As we're looking at negotiating new agreements like we're discussing here, what needs to be in place to ensure that trade rules are respected and enforced?

[Claire Citeau]

I think the real value in free trade agreements these days is in the framework and the mechanisms for co-operation. Yes, they reduce tariffs, but they also bring partners back together to look at issues through a number of committees that are to be set up.

There's a committee on agriculture. There should be a committee on SPS—sanitary and phytosanitary barriers and measures—and a committee on technical barriers to trade and so forth. Ultimately, all of these committees are to roll up all these issues and bring them back to the highest levels for resolution. It's really important that these operate on a regular basis and that they actually function.

In parallel to these, there should be also industry-to-government committees so that we can keep track of where the issues are at and so there are some transparency and accountability for how issues progress.

There should be also a review of how these free trade agreements deliver on outcomes. I think it's one thing to negotiate free trade agreements. It's another thing to implement them. Having an implementation plan or process to track how they deliver outcomes and whether companies are actually able to benefit from a commercial perspective would be important.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

That's great. Thank you for that.

I know there's been a fair amount of conversation today about non-tariff barriers. You touched on a couple of them right now. I'm wondering if you can give us a list of what some of those specific non-tariff barriers are that you hear about the most.

[Claire Citeau]

I would say that at the top of the list.... For example, you mentioned COVID, and right at the onset, Italy renewed its mandatory country of origin labelling, which discriminates against durum wheat and is also against EU law.

There is also a need for the sustainability practices of our farmers to be recognized in Europe on the canola side, to have better access, essentially, as was promised in the agreement. Staying with Europe, the meat processing facilities don't have their practices recognized by the EU. Our members here can further expand on this.

There is a long list. We do have our own, and certainly the market access secretariat and CFIA have a list, and last time I heard, I think there were over 300 issues on that list, so it's a lot of work for them to tackle.

[Tracy Gray, Conservative, Kelowna—Lake Country, BC]

What might be useful for this committee as we're looking at making suggestions going into a new agreement would be to table those, maybe, as part of this study, just so we can see what they are. It would be helpful in moving forward in negotiating an agreement, if that's okay, because I know we're running out of time here.

I want to squeeze in one more question.

I'd like to go to Ms. Jackson at the Cattlemen's Association.

In your previous conversations at this committee on the Canada-U.K. trade, you highlighted how, despite Canadian beef farmers were gaining capacity on exports of beef to the U.K., non-tariff barriers continued to be persistent, so much so that quotas actually aren't even being met.

What needs to be done differently in future trade agreements with Indo-Pacific countries so that beef ranchers can use the full quota given to them?

[Fawn Jackson]

Yes, it's an excellent point now, because in fact we're not actually exporting anything to the U.K. anymore. It has become so difficult to trade into that market.

Certainly, as we're looking at new trade agreements, we're using the example of the CPTPP as something that we would want to build off and CETA as something that we would not want to build off. We're very excited to see new economies interested in the CPTPP, for example, and very hesitant if others are interested in lowering the progressive trade nature of that agreement.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Miao, you have five minutes.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you, Madam Chair.

I'd like to direct my questions, through the chair, to Mr. Carey and Ms. Whitley.

What kind of opportunities do you anticipate a potential trade agreement with Indonesia would bring to farmers who run small and medium-sized enterprises? Can you please also elaborate on what tariff and non-tariff barriers Canada should seek to eliminate in a potential trade agreement with Indonesia?

[Dave Carey]

I can start, and I'll ask Janelle to weigh in at a more detailed level.

Farmers don't necessarily decide where their products end up. It's a bulk handling system. About 20 million tonnes get rolled up. When there isn't trade volatility, their prices tend to be higher, and they don't ever have issues selling their products domestically, and then they get shipped out.

I'll ask Janelle to speak to the specifics of the region, but I think the one opportunity we do have when we establish a relationship to look at a free trade agreement is to use language included in CUSMA and CPTPP—progressive language around science-based equivalency and around how we treat biotechnology and adjudicate scientific disagreements in a transparent and expeditious way. There's a lot of opportunity if we adopt the progressive language in CPTPP and CUSMA, and, as my colleague Fawn said, veer away from language like that in CETA, which is not nearly as progressive.

I'll ask Janelle to weigh in on a more detailed level.