International Trade Committee on May 9th, 2022

[Stuart Trew]

Thank you for the question.

I suppose it is in the region, but there was a case recently in Pakistan. Maybe members of the committee will have heard of it. It was Tethyan Copper, which involves Barrick Gold. This is a case where Pakistan was recently ordered to pay the company $6 billion U.S. This was compensation for not being given a mining lease to dig a gold and copper mine on the border with Afghanistan. There were a number of problems with the result, one of which was the valuation of that took into account future profits. This is a major problem with ISDS. The company only invested about $200 million in Pakistan, but was ordered by this private tribunal, as you said, to pay $6 billion instead.

There were concerns that maybe there was corruption involved with the company in securing the lease, that maybe the Balochistan government didn't have the permission to give them the rights to dig in the first place. There were all kinds of problems with this case, and yet Pakistan was asked to pay. That was the same amount as an IMF bailout they received that year, because their economy was in such crisis.

This kind of case happens all the time. We can absolutely expect that down the road Canadian mining companies might...as has already happened. Mining companies have already used such processes to challenge Indonesia.

[Matthew Green, NDP, Hamilton Centre, ON]

One thing I'm sensitive to is the primacy of corporate law over what I think to be fundamental human rights and environmental rights. I reference, just by example, the Canada-Russian Federation bilateral investment treaty, which has the same dispute resolution system in it. I'm not clear that's been interrupted despite some of the heinous acts that country has committed and the sanctions that are applied to it.

In a like way, when I look at ASEAN, I think about Myanmar. I think about some of the other very real investigations on human rights and atrocities that are being committed by other countries listed within this study.

I just want to ask, through you, Madam Chair, if Mr. Trew would reflect on the way in which we ought to be considering, as legislators, the balance of international law. I reference the United Nations Declaration on the Rights of Indigenous Peoples versus these investor-state dispute resolution processes.

[Stuart Trew]

That's a big question. Just in general, it's a matter of balance, as you say.

The point of my presentation was that I wanted to make sure that, hopefully, the committee is thinking about ISDS in the context of these treaties because of the specifics of the region and the human rights situations in many of these countries. Labour rights are non-existent in a number of them, let alone with Myanmar.

[Matthew Green, NDP, Hamilton Centre, ON]

Just to be clear, whenever I hear “balance” I think “equal consideration”.

In your opinion, would you care to comment or extrapolate on whether or not we ought to be giving the very fundamental human rights and environmental rights consideration over, say, the rights of some corporation and its investors?

[Stuart Trew]

The CCPA believes that we should be stopping negotiating investor-state dispute settlement treaties of this kind. They don't add anything to the mix. They create a toxic environment in countries, especially where the people can see that their government might not be listening to their demands, but they have to listen to the demands of a foreign company that wants to build a mine somewhere that might be contested.

These things can actually create political instability in countries where Canadian investment exists.

[Matthew Green, NDP, Hamilton Centre, ON]

I want to be clear that there are two parts to this. The first part is our impact, in this agreement, on the labour markets abroad and their ability to then sue us for having our own protections domestically. Also, there is the mining sector, as you mentioned, and many more that are operating around the world in ways they wouldn't legally be able to operate here.

Through you, Madam Chair, for the last question and with about a minute remaining, could Mr. Trew please expand on ways in which those considerations need to be considered for the purpose of this study?

[Stuart Trew]

A number of instances have come up very recently in the backlash against ISDS. There have been concerns that COVID measures, for example, might trigger a new wave of disputes. There have been cases related to the introduction of new public services that end up competing with private services. For example, in Europe, completely legitimate decisions by government across a number of areas are getting challenged through ISDS. It can create a chill factor on governments that might be less inclined to introduce new public services down the road, for example. There are a number of areas.

I focused on climate and mining because it's top of mind. We obviously have to be reducing our emissions and countries will be doing that with greater speed, hopefully, in the coming years. If we can take out this cost and the uncertainty that ISDS creates, then all countries are better off—Canada, as well as Indonesia and ASEAN.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Lewis, you have five minutes, please.

[Chris Lewis, Conservative, Essex, ON]

Thanks so much, Madam Chair.

Thank you to all the witnesses. It's fabulous testimony this afternoon once again.

The first question, through you, Madam Chair, is for Mr. Chaffe.

You had mentioned the Indo-Pacific office. I'm wondering if you could expand on that a bit further. Are you planning on that being a Canadian office? If Canada takes the role, what exactly would that role be? What would that look like?

[Jack Chaffe]

That question was for me and then maybe Fawn could follow up.

It would be a Canadian office, from what I could see. Within that, on the beef end of it, we have Canada beef on the ground there doing the marketing. On the regulatory and the technical resources that we'd need for market access, that is where this diversification office would come into play.

I'll ask Fawn to follow up on that.

[Fawn Jackson]

Certainly, our idea would be to increase technical access and really work, as Janelle said earlier, to have great services at our consulates that already there.

How can we build on that? I don't think we have a completely clear idea of “This is where it must be and this is who must be in the office.” I would say the framework...to have the conversation about the bumpy roads ahead. We want to be proactive in making sure that Canadian agriculture products are given the best chance through negotiating trade agreements and, once they're in place, getting real market access past the trade barriers we inevitably end up facing.

[Chris Lewis, Conservative, Essex, ON]

Thank you very much for those answers.

Again, though you, Madam Chair, Mr. Stordy, you spoke about the pork producers, and generally speaking, they're doing okay. I can only assume you must have a lot of hurdles. I'm a bona fide grain farmer myself, so I know the price of everything is crazy.

You spoke specifically about labelling rules. What needs to be changed to make life a little easier for the pork producers with regard to the labelling rules themselves?

[Gary Stordy]

With pork and beef, we have a history of dealing with country of origin labelling disputes in the U.S. where the laws had an impact of over $1 billion. To get that resolved, it took over seven years through a WTO process.

There are situations—and it's also impacting other sectors—where countries are introducing country of origin labelling rules. Right now, we're watching the product of U.S. rules to see where that discussion goes. It's a problem when new things are being implemented that could impact trade outside of free trade agreements. The discussion is about needing extra time and requirements to pay attention to what's happening, so we can see it in advance, and having the technical ability or even political ability to intervene to make our case as to why it's going to impact, or whether it's a good or bad decision. You're hearing today that there is a need for extra resources—staffing, knowledgeable technical people on the ground in important markets—to help facilitate that. One is an early-warning system. Two is how we deal with it. Three is how we try to resolve it.

[Chris Lewis, Conservative, Essex, ON]

Thank you, Mr. Stordy.

Madam Chair, I have about a minute left, so the last question in this round will be for Mr. Trew.

Sir, I think it was last weekend, or maybe the weekend before—I don't know; I forget the days, these days—I was with my colleague down in the Niagara Region. We visited the Vineland research centre. Ironically, there is a very similar research centre in my riding. I believe you touched on research on this front.

As the government and Canadians work to ensure the disease comes out of the vines and the disease comes out of the animals and all of those things, is the same thing happening in the ASEAN countries? Can anybody answer that?

[Fawn Jackson]

I would note that, globally, we work collaboratively on a number of different issues. There's the livestock research centre in Kenya, for example. Certainly, we all have an interest in making sure we're addressing these issues, which seem to come up more and more.

I would also say that, in the face of climate change, we certainly recognize that food security is going to be at the top of everybody's mind. Investment in research within Canada that can feed into the global context is extremely important for all of our futures.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Next is Mr. Miao, please.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you, Madam Chair.

Thank you to all the witnesses for joining us today in person and virtually.

I'd like to ask Ms. Citeau a question, through the chair.

Can you please elaborate on what effect a signed ASEAN free trade agreement would have on Canadian agri-food exporters?

[Claire Citeau]

Sure.

What it would do mainly is provide a framework. This is already a region that we do a fair amount of business with, both on the trade and export and import side. However, the rules that govern our trade right now are those of the WTO. Having a free trade agreement with that particular region would not only reinforce, improve and enhance some of those rules and disciplines, but it would also lower all of the tariffs that some of our exporters continue to be subject to.

Not only would the framework lower the tariffs, it would also improve the overall trading environment and provide a huge opportunity for our sector overall to diversify. If you look at our free trade agreements in the world right now, we have the CUSMA, the CETA and the CPTPP, although not all countries have yet ratified the agreement. There is this whole region in the world that is vast and growing. This is really where our members see growth moving forward.

[Wilson Miao, Liberal, Richmond Centre, BC]

To follow that, how has the CPTPP benefited Canadian agri-food exporters? How could lessons learned though the successful signing of the CPTPP help in the signing of an ASEAN free trade agreement?

[Claire Citeau]

If you look at just the numbers in the Asia region, on average, our exports have grown by about 15% since the deal was implemented. It has been higher for some members. Others are catching up. The big prize in that region is Japan, but there's also Vietnam and other deals. Hopefully, Malaysia will ratify soon.

What it would do, again, is provide an opportunity to diversify. There are committees that have been set up, and some of the non-tariff barriers that our members have experienced are being worked on, so there are definitely lessons learned there that we can apply to a deal with the ASEAN as well.

It's an opportunity to diversify and perhaps expand supply chains in the region. Overall, the membership of CAFTA has a preference for regional agreements versus bilateral agreements, because we have an opportunity to enhance our supply chains through cumulative rules of origin in the region. That is certainly something that our food processing sector is looking at with great interest.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you very much.

Through you, Madam Chair, I'd like to direct the following question to Mr. Carey or Ms. Whitley.

Currently, where do believe the most opportunity exists in the Indo-Pacific region for your members and how can that be improved upon?

[Dave Carey]

I'll start and then pass it over to Janelle.

The biggest markets that we're looking at within the Indo-Pacific region are Thailand and Vietnam, as well as Malaysia. One of the reasons that we look at it as such an opportunity is it is not only an economic opportunity, but also a risk management tool. At one point, 60% of our exports were going to China. That's too much trade exposure. Right now, we still have 75% of our canola exports going to five markets. Having more opportunities to sell Canadian products abroad is good for farmers.

I'll ask Janelle if she has any more in-depth comments for that region.

[Janelle Whitley]

It's similar to Dave's answer.

One of the main benefits would be to have this platform to diversify into the region, particularly meal into Thailand and the Philippines, and oil into Malaysia and India. As many people have testified before, the region has a strong population, a growing middle class and an increasing interest in heart-healthy products. We feel that canola could be well positioned if we had the tariff reductions and the clear rules of trade to be able to provide an opportunity for our exporters to pivot between markets.

Specifically, we have an exciting opportunity in Canada, with seven million tonnes of crush capacity potentially coming online in the next few years. With that, we'll have more oil and meal to sell globally, and the Indo-Pacific is very much an area we'd like to capitalize on to sell more into the region. There is a high, growing demand for high-quality feed, more interest from the aquaculture sector, trends towards plant protein....

There are lots of opportunities that we would like to see reflected in the trade agreements and the strategy being put forward by the government.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go to Monsieur Savard-Tremblay for two and a half minutes, please.

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

Thank you.

I'll continue along the same lines, Mr. Trew.

You are asking us not to give more powers to the mining companies operating in this part of the world. You tell us that certain violations have already been committed and that these mining companies have enough powers for the time being.

In that regard, do you believe that the mechanisms in place to monitor the activities of these companies are sufficient?