International Trade Committee on May 1st, 2023

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

Thank you, Madam Chair.

I would like to thank all of the witnesses for their presentations and greet my colleagues.

Mr. Harvey, good morning and thank you for being with us. We are familiar with the great mess that was the Comprehensive Economic and Trade Agreement between Canada and the European Union, where negotiators or the political class had explained to Quebecers that there would be setbacks in certain sectors, but that in exchange, there would be more opportunities in the European market. We now know that Ottawa had not anticipated the non-tariff barriers. That's what we're finding out today.

The European Union uses these non-tariff barriers in part to address civil society aspirations, such as environmental concerns, among others. On its website, Global Affairs Canada explains that Canada must be able to pursue its objectives “while adopting regulations in the public interest in the least trade restrictive manner“, inother words, balancing policies that are good for the public with requirements for openness to trade.

Do you feel that this balance has been struck as far as Canada is concerned?

[Michael Harvey]

I don't know if the balance is there, but trade has increased between Canada and the European Union in recent years. That is positive. The Canada-EU Regulatory Cooperation Forum can help find a way forward when there are disputes.

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

So it would allow us to align domestic regulations so that there are not too many disparities between countries, for example in their level of environmental regulation. If one country has more than another, we need to balance that out.

[Michael Harvey]

No, I don't think it is. It's more about sorting out misunderstandings between countries that have similar regulations, but disagree about whether one country's system works to the other's standards. More importantly, it allows them to discuss and explain to each other how to prevent completely legitimate principles, such as environmental regulation, from being a backdoor way to prevent access to products and services.

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

We are an export economy and your membership includes both Canadian and foreign investors. So you are in a position to speak for everyone. How does Canada compare to its trading partners in terms of balancing its domestic policies and its trade obligations?

[Michael Harvey]

As Ms. MacNeil has shown, sometimes we use our systems in such a way that it causes problems for companies here, whether we use them correctly or not. We have to keep that in mind when we are in other countries. When I was a diplomat and I was abroad, I would sometimes comment on local systems, and people would ask me if I thought we were treated better in Canada. There needs to be a balance, and this forum exists to help find ways to resolve this issue.

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

Currently, even though trade with the European Union has increased, some people have told us about significant non-tariff barriers. Can you give us any examples? You gave the example of environmental measures that are legitimate, but that can also, in a hidden way, favour domestic companies to the detriment of Canadian or Quebec-based businesses. Do you have any other examples?

[Michael Harvey]

The Canadian Cattlemen's Association has been talking about this a lot recently. However, I don't generally like to get into the details of certain disputes which I am not as familiar with as members from other associations who may appear before this committee.

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

That's fine.

Canada is currently holding discussions with India and the Association of South-East Asian Nations countries to pave the way for trade agreements. I assume you support these negotiations. Correct me if I'm wrong, but you're seeing a lot of challenges and a lot of opportunities there as well.

That being said, we know that there are human rights abuses in these countries and regions. It's been documented by Amnesty International, among other groups. We've had witnesses here at the committee who have told us about the Philippines and Malaysia, and about human rights and environmental rights violations. One of the things we heard about is the production of palm oil, which may represent an opportunity for many of your members and many of the companies you represent. However, the operating conditions there can be catastrophic and disastrous on many levels.

In your view, would Canada be justified in also having non-tariff barriers to prevent lower-cost products manufactured under those types of conditions from competing with our own products?

[Michael Harvey]

I would just like to point out that we are not against non-tariff barriers, because it is perfectly legitimate to legislate and regulate labour and environmental conditions. However, we do not want this to be a hidden way of preventing access to products that represent the same environmental, social and other standards. As a general rule, we believe that it is better to enter into discussions with these countries and we believe that the freedom to trade will lead to improved working conditions with regard to the environment.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go on to Mr. Cannings for six minutes, please.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you to the witnesses who are here before us today.

I'd like to start with Mr. Harvey.

Some of the most egregious non-tariff trade barriers we face in Canada, the things that really affect our economy most, are of our own making. There are interprovincial non-tariff trade barriers. I know that we are talking about international ones here, but just for my riding, we have trade barriers on the transportation of wine across provincial boundaries. There are regulations around labour laws and transportation in general.

I'm wondering if this is a problem when we go to the international stage and demand fixes. Is this something that other countries and agencies can throw back at us, saying that maybe we should work on our own problems in our own backyard first? It seems that we haven't taken care of this in Canada.

[Michael Harvey]

Everybody in the world is living in a glass house on these issues. At the chamber, you'll hear my boss, Perrin Beatty, talking a lot about interprovincial trade barriers and the need to improve our regulatory system inside the country. Obviously we have a lot that we can do, and every time you show that you live in a glass house, you invite somebody else to throw a stone.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Getting back to some of the conversations around the dispute settlements and when these regulations—which are perhaps set up for good reason, whether for environmental reasons or labour issues—are used in a discriminatory fashion, what are the best? You mentioned the CETA mechanisms as being some of the best. What makes them better than the other mechanisms we have available to us?

[Michael Harvey]

Partly it's the institutional nature of having committees or councils where the two sides meet to talk through issues in a way that allows them to come to a solution, but in part it's just the fact that the EU members and Canada, as advanced industrial democracies, are maybe better able to talk things through. It can be more difficult with countries that have systems that are a lot different from ours.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

These are basically state-to-state dispute mechanisms, or—

[Michael Harvey]

In the CETA, you often bring regulatory authorities from Canada and regulatory authorities from the EU together to talk through disputes. Of course, there's no such thing as a Canadian regulatory authority; they're all over the map. What's important is for our diplomats on the ground to look at each dispute to see who are the right people in the EU and who are the right people in Canada and push to have those meetings to talk through disputes.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

If I have two minutes, I'll go to Ms. MacNeil to talk about clotted cream. I never thought I'd be debating about clotted cream in the House of Commons when I began this job.

Be that as it may, you mentioned some of the challenges you've had with the WTO. You mentioned CPTPP and how the U.K. becoming part of that won't solve your problems. Is there some way we can work to fix that?

Let's take the CPTPP as an example. Obviously some mechanism has been proposed. Is there a way we can alter that at this juncture to give you some relief there?

[Lisa MacNeil]

Absolutely. I think the best solution for us would be to fix allocations. The challenge with the CPTPP is first of all that the accession's probably not going to happen until 2025, so we're talking about something that's a couple of years out. The allocation method today is disastrous for us, because I think there are 56,000 kilos that would be allowed for distributors that we would share equally. As a result of that, we wouldn't be able to bring in as much clotted and double cream compared to what we are even able to do today with the supplementary process.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Right, and with the WTO, is—

[Lisa MacNeil]

Well, the WTO is a challenge because it's a two-tiered quota system and we've been pushed out of tier two since 2016. Tier one quota is the cans. Picture a can; you can pour it. In the way the WTO quota is allocated, it's anything that's 10% cream or above. I don't know about you, but I don't think we want to be pouring 10% creamers on our scones with jam. It's a challenge that it's such a broad category, and we're this niche product that simply doesn't fit properly.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I know nothing about the WTO, really. I'm new on this committee. Maybe you could explain how that could possibly be changed. Who has to make those decisions? Is it is a Canadian decision?

[Lisa MacNeil]

It's the Canadian government that decides on the allocation.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Okay. Well, that makes it easier, hopefully. We just have to pressure the government to....

[Lisa MacNeil]

I would say that we hope the government continues quickly with this TRQ review so that the allocation method can be fixed.