International Trade Committee on Oct. 25th, 2022

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ambassador.

I'm letting everybody go over a bit of their time simply because the answers are so important.

Ms. Barron, welcome to the committee today.

[Lisa Marie Barron, NDP, Nanaimo—Ladysmith, BC]

Thank you, Chair.

I'm happy to be here today. Thank you for the warm welcome, and I'm sending regrets from MP Masse, who's not able to be here today.

I'm sitting here thinking about how fortunate I am to be here on the same day as the ambassador and to hear the updates on all that's happening and getting caught up on this information, of course.

Ambassador, you gave updates around the fisheries subsidies. I appreciate you speaking about the narrative that occurred on this being a global problem that requires global solutions and about the subsidies that are prohibited, specifically with regard to the IUU, the illegal, unreported and unregulated fisheries. My critic role, just for context, is in the fisheries committee, so I'm particularly interested in hearing from you a little bit more.

You also talked about the importance of helping small businesses as another topic. How does that link together? How do members speak about the importance of having sustainability in an environment, while also ensuring that small businesses and fishers are part of the equation in decisions moving forward?

[H.E. Nadia Theodore]

Yes, that's a really great question.

I will say first that you are absolutely right: The agreement has several new measures that ban subsidies for illegal fishing, for overstocked fish and on the unregulated seas, as you mentioned.

I also want to note—and this goes to the second part of your question around small and medium-sized businesses—that the agreement, and where we landed on this agreement, was done within Canada's existing programs and is consistent with them. Canada did not have to make any domestic changes in order to fulfill our responsibilities under the agreement.

I say that because even though I wasn't at MC12 because I just took up my role in September, there was quite a discussion in the fishery subsidies negotiations around how we on the one hand recognize that at the end of the day, both protecting our environment and continuing to regulate subsidies in a way that allows us to protect our environment are required because, frankly, if we don't do it, there will not be any fish for our small and medium-sized fishers to fish, and on the other hand, that many domestic programs around the world are indeed set up to support small and medium-sized businesses in order for them to survive and thrive.

In particular, as you noted, and as you would very well know, in Canada, where we have very small and medium-sized fishers that depend on being able to fish and being able to export their product, finding that balance is really and truly important. I believe that the agreement we came up with at MC12 satisfies that.

I have to say that as part of the negotiations, we also recognize that there's a role for everybody to play within this realm of its being a global good and a global purpose. There is a role for all of us to play to help developing countries that might indeed have a little further way to go to live up to the commitments that were made and in particular to continue to be able to support their small and medium-sized businesses. As you know, Canada truly believes that climate change and environment are a global problem that requires a global solution, so as part of the agreement, we set up what's called a “fish fund”, which is a fund that will provide technical assistance and capacity building to qualifying members to help them implement the agreement.

As we all know, part of the purpose of multilateral trade rules—and the fish subsidies agreement is no different—is the idea that when members—in particular, developing country members and members that aren't necessarily as far along as perhaps a country like Canada is—are able to implement their commitments to the fullest extent possible, what it really does is help to create a level playing field and a degree of predictability and certainty for our Canadian companies.

Canada was really and truly quite open to the idea of this voluntary fish fund, because by providing assistance to developing members to bring them up to fulfilling their commitments under the agreement, it at the end of the day benefits them but also us, in particular our small and medium-sized companies in being able to navigate the rules of trade in global markets.

[The Chair, Liberal, Judy Sgro]

I'm sorry, Ms. Barron. There are 10 seconds left.

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

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

Thank you, Madam Chair.

First of all, thank you, Madam Ambassador, for being with us and for answering in French.

I'll try to be brief. I'll ask you a question, and then I'll give the rest of my time to my colleague Mr. Baldinelli.

Since the end of the Softwood Lumber Agreement in 2006, there have been several softwood lumber disputes at the WTO between Canada and the United States. Minister Ng announced last August that she intends to challenge the U.S. duties on softwood lumber, under Chapter 10 of CUSMA.

What's the status of our softwood lumber dispute at the WTO? Also, why is this still not settled after all these years? It's been 16 years.

Thank you.

[H.E. Nadia Theodore]

That's a million-dollar question. Frankly, if I knew why the softwood lumber disputes are not yet resolved,

I would be a very popular woman around town, I think.

You're right; we've been working on this with the U.S. for years.

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

We always hear that relations between Americans and Canadians are good, that things are going well and that everything is fine. But we can't resolve these conflicts.

[H.E. Nadia Theodore]

Things aren't perfect. In fact, they never are. I always say we're like a family. I don't know how it is in yours, but in mine, things aren't always perfect.

We'll always have problems with our American friends. That's for sure. Let's put it this way: in the case of softwood lumber, it's clear that the United States knows that its position is ridiculous. However, they don't want to give it up, so the problem is endless. It's also clear that Canada is right every time, but the U.S. continues to resist. There's no doubt that it's frustrating, and it's frustrating for everyone.

I wish I had a better answer.

You're right that it's frustrating. This has been going on for years and years, but the fight over it continues. I don't know what to tell you.

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

Thank you, Madam Ambassador.

I'll turn it over to Mr. Baldinelli.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Ambassador, congratulations on your appointment, and thank you for being here.

You mentioned the MPIA. I have two quick questions.

It was established, and 18 or 19 nations are taking part in it, but what is the value of having that institution if the Americans aren't participating in that panel?

You also talked about the one case that's come forward to the MPIA. Perhaps you can mention quickly what that deals with.

[H.E. Nadia Theodore]

I knew you were going to ask me what case it was, and I can't remember. I will look it up and come back to you. I can't remember what the case is, because it's upcoming with the MPIA.

I'm sorry, but what was the second part of your question?

[Tony Baldinelli, Conservative, Niagara Falls, ON]

It was on the value of having the MPIA if the Americans are not members of it, as well as the challenges with the dispute settlement. If they're not appointing individuals to the appellate body and they're not participating in MPIA, one of the largest trading countries in the entire world is missing from those bodies. How effective can it really be?

[H.E. Nadia Theodore]

I would say it's still effective, because while the United States is a user of the system, they haven't “appealed into the void”, so to speak. That's what we call it here. It's not the case that they are trying to proactively agitate the system by appealing into the void, knowing they're blocking appellate body members and knowing they're not parties to the MPIA. That's a good thing, and it speaks to the continued usability of the system.

One hundred per cent, if the United States appeals a case before 2024 and is blocking members to the appellate body and is not part of the MPIA, I'm not going to pretend that this situation does not make it more difficult to resolve the appeal, but nothing prevents—and this has happened as well in a couple of cases here in Geneva—members from looking to find a solution entre eux, between or among themselves, to a dispute when they don't agree with the ruling.

I think I said this in my previous answer. Is it 100% ideal? Absolutely not. That's why we're working to find a solution, but at least it is something.

I found the case. It's the Colombia french fry case, which I should have remembered. It's the Colombia french fry case with the EU.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ambassador.

Mr. Arya, you have five minutes.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Madam Chair.

Thank you, Madam Ambassador, for spending a few minutes with us today.

You talked about the three pillars that work at the WTO. They are the deliberative pillar, the negotiating pillar and the dispute settlement pillar.

Instead of your three pillars, I want to take you back to the three pillars proposed by the Deputy Prime Minister in her speech a couple of weeks ago in Washington. I'm sure you must have heard it or read about it.

In my opinion, our Deputy Prime Minister said that globalization and the global trade system as we know them are almost done. She was specifically referring to the rules-based system of global free trade as we have practised it over the last several decades. It was quite successful, as far as trading went. However, the fundamentals changed during the pandemic and in what is currently happening in the world today.

The three pillars she mentioned are as follows, and I'm paraphrasing here. First, she said that the western liberal democracies—western Europe, North America, Australia, Japan and Korea—should have their own economic co-operation.

Then the second pillar she suggested—which I think she also acknowledged is the hardest—is what we do with the countries in the middle. These are the countries in Asia, Africa and Latin America that are not as liberal a democracy as we are and that do not follow the global orders-based system as we do. What do we do with them when it comes to, say, “friend-shoring”, the term that was used by U.S. Secretary Janet Yellen?

The third pillar our Deputy Prime Minister mentioned was that we have to deal with adversaries like China and Russia, although she did not name them directly. We have to work with them to tackle climate change and to deal with arms security. She said that we should go back to the way we used to deal with things during the Cold War, when we learned to contain them and engage with them at the same time.

These are the three pillars.

To start, I would like your opinion on her entire speech.

[H.E. Nadia Theodore]

Let me first say that I think that dissecting our Deputy Prime Minister's speech is probably best done with her in the room to be able to speak to what she meant, to not paraphrase, and to really have a discussion with her on what that all means.

What I can say, frankly, from my perspective, my seat and my mandate here in Geneva representing Canada at the World Trade Organization, is that regardless of how you characterize countries yesterday, today and tomorrow, having an international organization—and it is the only house we have, the only international organization we have—a one-stop shop where we, Canada, as a middle power can engage all of—

[Chandra Arya, Liberal, Nepean, ON]

I have limited time, so I will interrupt here.

In your opinion, will the current rules-based system of global trade survive and will it be of the same shape, say, five years down the road?

[H.E. Nadia Theodore]

I hope it's not of the same shape, because if things stay the same forever, that doesn't do us all any good. As the world changes—

[Chandra Arya, Liberal, Nepean, ON]

Will it be as positive as it is today?

[H.E. Nadia Theodore]

Absolutely it will be, if we do our jobs correctly.

If we are able to respond to the changes and the issues that are arising today that are of importance to all of us around the world—to our businesses, our citizens and to our consumers—and if we are actually able to use the global trading system in a way that responds to these new issues, absolutely it will be as strong. If I may say so, it will be even stronger.

That is part of what WTO reform is all about. That's part of what Canada's leadership is, not just at the WTO, but across our trade policy portfolio with regard to—

[The Chair, Liberal, Judy Sgro]

I'm sorry, Ambassador. Your information is so valuable and everybody has so many questions.

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

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

Madam Ambassador, our committee recently reviewed this issue. Parliamentarians and the electric vehicle industry were concerned about the U.S. Build Back Better Framework. The wording of the document was changed to require purchases to be made in North America rather than only in the United States.

Are you concerned that it won't pass the test of the North American free trade tribunals?

Are you concerned that this will eventually end up in your backyard?

[H.E. Nadia Theodore]

Thank you for the question, Mr. Savard‑Tremblay.

I really don't know if it's going to end up in our backyard, because there's nothing to stop member countries from bringing disputes to the WTO. That is happening with softwood lumber. Canada says the softwood lumber issue is ridiculous and unfounded, but the U.S. is making it a dispute anyway.

I have no idea whether a dispute will be brought to the WTO. Quite frankly, just because a member country brings a case to the WTO doesn't mean that Canada is wrong. That's not what it means at all.

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

I didn't mean to say that Canada was wrong. It was the United States that amended its own bill on this matter.

I know that experts don't necessarily agree on this. It becomes a legal debate. The biggest law first in the world may someday clash on these issues. They will do it eminently better than we can assume here.

As Canada's ambassador, I imagine that you're trying to anticipate what may end up in your backyard and what may affect us.

I'm hearing the bells ringing. I'll let you answer briefly.

[The Chair, Liberal, Judy Sgro]

Make it a brief answer, Ambassador.