International Trade Committee on Feb. 14th, 2022

[Yvan Baker, Liberal, Etobicoke Centre, ON]

When I speak to people who are really familiar with this issue, who do business in Ukraine or want to do business in Ukraine, many of them are also excited about the potential for this agreement to cover services, which you've alluded to several times in this meeting.

Could you expand a bit on which services we are talking about? Where is the greatest potential in services here?

[Jay Allen]

Overall, because the agreement doesn't cover services right now, it's about creating an environment that will be conducive to the services. We have to remember, when we talk about services, that it's about creating an enabling environment. It's about a set of rules and a set of understandings that create transparency and predictability.

With respect to particular industries, I'll turn it over to Darren Smith again. He's our expert on this.

[Darren Smith]

Thank you, Chair, for the question.

Canada does indeed have a diverse spectrum of services-based interests in terms of the Ukrainian market. You're looking at a range of professional services, such as engineering or architectural services. The area of environmental services is certainly one where you have Canadian expertise and potential in the Ukrainian market. Real estate services are an area that shows potential. Of course, my colleagues at the Department of Finance look after issues in relation to financial services, whether it be banking or insurance.

Some of these areas are perhaps not in the present context but more in the future. However, as Mr. Allen alluded to as well, with the increase or the potential for more goods-related trade, you also see a corresponding possibility for more services, with expertise being sold as well.

A good example would be that Canada has a lot of expertise in the area of simulation equipment, flight simulators and the ilk. Aside from the hardware itself, it's also the after-sale services that have strong potential, whether it be on the training component or on other elements that deal with the use of the equipment.

These are the kinds of things that we think the FTA can achieve in its modernization phase, expanding and diversifying the types of economic activities. As a services-based economy, we have a diverse capability that can be advanced in the Ukrainian context.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Baker.

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

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

Thank you, Madam Chair.

The Canada–Ukraine Free Trade Agreement contains rules of origin, as do a number of free trade agreements. Accordingly, in order to receive favourable treatment, or a preferential tariff, the product has to be made in Ukraine or Canada. The port of Odessa is Ukraine's largest seaport.

Do you think the port is still under Ukraine's control, or is Russia interfering in the operation of the port? In other words, how can we be sure the rules of origin are being adhered to in the midst of a crisis?

Have you observed any irregularities as far as the port is concerned?

[Jay Allen]

I'm not aware of any irregularities with respect to the main port. With respect to the rules of origin, they're pretty specific. It's clear what those rules are, and the need to respect them is there.

Right now, with respect to this situation, from what I'm aware of, things are flowing normally and relatively well. The situation in Crimea is obviously a bit of a different element.

Maybe Mr. Turner can add a bit to the port issue.

[Andrew Turner]

You're quite correct. There are no indications of any issues with regard to Odessa.

We are seeing the challenges of Russia's illegal occupation and attempted annexation of Crimea, as well as its destabilizing activities in the Donbass. There are those challenges, but not at the moment with Odessa.

[The Chair, Liberal, Judy Sgro]

Thank you very much, sir.

It's on to Mr. Masse for two and a half minutes, please.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair.

I'd like to follow up on some of the infrastructure that we could help with. With regard to border services, is there any part of a future agreement that we could do to help and assist with that? It could be everything from...facilitating or assisting with best practices for working on contraband and processing services that might be more efficient for trade to happen, not only for our benefit, but also for Ukraine's, with regard to their infrastructure on customs and immigration matters, especially related to trade.

[Jay Allen]

There are a couple of things there.

With respect to customs and trade facilitation, the actual border process for goods, there are procedures in every one of our FTAs about how it's meant to be done. We look at reducing red tape, but we also look to add co-operative elements to these agreements where our experts can talk to their experts and talk about best practices and the way we see things and the way we do things.

The second element, processing visitors and immigration, is typically not covered by our FTAs, except to the extent that it is covered by temporary entry for business people. That is something that we're looking to add in and then to refine through the modernization.

[Brian Masse, NDP, Windsor West, ON]

It's good to hear about that component too.

You mentioned here—and it was good testimony—the shifting type of trade between our two countries on the physical component. However, I also look toward the procedural and more intellectual component to it, because that will also underpin confidence, trust and so forth, and deepen the relationship with those.

Those are my questions, Madam Chair.

Thank you very much to the witnesses.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

It's on to Mr. Lewis, for five minutes, please.

[Chris Lewis, Conservative, Essex, ON]

Thank you very much, Madam Chair.

Hello, colleagues.

Thank you, witnesses, for your testimony this afternoon. It's been a very interesting and busy day, to say the least.

Through you, Madam Chair, my first question is for Mr. Allen, about the auto trade.

I did some quick research this morning. I believe that, back in 2019, exports from Canada to Ukraine were $8.15 million with regard specifically to auto. Also in 2019, imports to Canada were $3.81 million. I have not been able to find any more recent numbers.

For my first question, sir, can you tell me if those were domestically built products specifically for our exports, or would they have been European products that came to Canada and were exported to Ukraine?

[Jay Allen]

Madam Chair, that's a good question.

Based on the rules of origin, I would have to expect they were Canadian-made vehicles.

I'll have to turn to Dean Foster, who's up here with me, to see if he has any information about that. Right now, unfortunately, I don't have a breakdown of what vehicles we sold. I will say that last year, it was the third-largest component of our trade. It was 13.5% of our trade.

Dean, do you have any more recent numbers?

[Dean Foster, Director, Trade Negotiations – Africa, Americas, Europe, India, Middle East, Department of Foreign Affairs, Trade and Development]

I agree that it's a significant growing traded good.

I don't have any reason to believe it would be European-origin cars that would be exported from Canada, as they're collected in the trade statistics through Statistics Canada. My assumption is that they are, indeed, Canadian.

[The Chair, Liberal, Judy Sgro]

Mr. Foster, excuse me for interrupting, but could you please turn your camera on?

[Dean Foster]

My apologies. I lost my video at some point during the meeting. It appears I'm not able to turn it back on.

[The Chair, Liberal, Judy Sgro]

Okay. My apologies for the interruption.

Please continue.

[Chris Lewis, Conservative, Essex, ON]

Thank you, Madam Chair.

Thank you, Mr. Allen and Mr. Foster. I appreciate that.

I'll just build on that, if I could. Obviously, in Essex, along with Mr. Masse in Windsor West, we are very much automotive-driven, not only with jobs, but with the industry itself. I know we're going to be working very hard with regard to electric vehicles.

With regard to Ukraine, are they also heading in that direction? Is there an opportunity here that we could be looking at to ensure that with all the fantastic work that Canadians do and the industry does, we can export EVs across the ocean over to Ukraine?

[Jay Allen]

As somebody who grew up in Windsor and whose parents still live in Windsor, I can tell you I'm keenly in touch with the auto industry.

Absolutely, this agreement is designed to allow us to sell things like EVs. It's designed to allow us to have partnerships with respect to developing technologies, using technologies and commercializing technologies.

[Chris Lewis, Conservative, Essex, ON]

Thank you, Mr. Allen.

I know this is going to be a question that nobody really can answer, but I'm going to ask it anyway. It really has to do with with the elephant in the room, which is whether they are going to go to war or whether they are not going to go to war. But I won't ask that question.

What I will ask, because I think it's really important in the conversation today, is this: What risk management is put in place today with regard to our trading with Ukraine? Do we have a plan to deal with this, or does this need to be a conversation going forward? I'm just very curious if we have a plan today to deal with our trade with Ukraine.

[Jay Allen]

Obviously, our trade with Ukraine is already established. We have export controls for any products that would be sensitive, which are things that we would not want to go. Thankfully right now, we're not in a situation where that's a reality.

I don't want to speculate too much about where we would go with this. Suffice it to say, we are monitoring the situation very closely and we would provide advice to the government based on the situation on the ground and what's in the best interests of Canadians.

[Chris Lewis, Conservative, Essex, ON]

Thank you, Mr. Allen.

Madam Chair, thank you very much.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Lewis.

You have 30 seconds. I don't think you can get a question in there in 30 seconds. Well, you might be able to.

Mr. Miao, go ahead.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you, Madam Chair.

Thank you to all the witnesses attending today.

Mr. Allen, you mentioned in your opening remarks that CUFTA included a review clause that commits the party to review the agreement within two years of entry into force. Is that a standard clause to include in an FTA?

What were the intentions, and from which parties, when negotiating that clause?