International Trade Committee on May 8th, 2023

[Chandra Arya, Liberal, Nepean, ON]

Madam Chair, I have a question for Jeff Nankivell.

Mr. Nankivell, Prime Minister Trudeau is going to South Korea and Japan in the near future. What are the two top issues in non-tariff barriers that you'd like the Prime Minister to raise with his counterparts when he visits there?

[Jeff Nankivell]

That's a good question, and I think there are others on the panel representing, for instance, the beef industry or the pulses industry, who would have views on that.

I think these are very promising markets for Canadian agricultural exports, and there is more work to be done in reducing NTBs in the area of agricultural exports. That's one area.

I would say the other is auto parts and automobiles, and I think the committee has heard about this at some length now. The industry in Canada, I know, has expressed frustration about the lack of access in the auto sector to those two countries, and there's a lot of potential to grow the two-way trade in the auto sector in those two countries.

[Chandra Arya, Liberal, Nepean, ON]

Okay, I just have a quick question to Pulse Canada.

Mr. Ross, it is possible that I may meet the Indian commerce and trade minister this evening. What is one thing I should ask him regarding pulse exports to India?

[Mac Ross]

I think I've already touched on the issues with their pea import policy, which has effectively banned us out of the market, but I think another thing that I'll add is just around the implementation of sanitary and phytosanitary import requirements.

While we know it's necessary for protecting human and plant health, it can really increase the cost of agricultural goods and have a significant impact on the price paid by the consumer in India. I think one of the things that could be raised is how Canada and India can work towards ensuring that SPS measures are science- and risk-based and do not impede the trade in food between our countries, because we do have outstanding SPS issues with India that we'd like to see addressed through the EPTA.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Savard-Tremblay, you have two and a half minutes, please.

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

Mr. Laird, once again with respect to this legislated right, we know that negotiations are under way with India and Association of Southeast Asian Nations, or ASEAN, countries to reach two separate trade agreements. However, as we know, the human rights record in those parts of the world is worrisome to say the least. Amnesty International has documented it. We know that environmental rights are being violated. Take palm oil, for example, and a great deal of other such products that are harvested in quite appalling conditions.

Let's say we pass environmental legislation on where certain products come from and under what conditions they are produced. What would we do if we were accused of having non-tariff barriers ourselves and then we accused other countries around the world of the same thing, and they told us we had put up barriers out of respect for human rights or the environment? How could we achieve that reciprocity?

[Ian Laird]

I think the member raises a fundamental principle in international agreements, which is that there should be reciprocity. If Canadians have treaties abroad to protect and promote investment, for instance, as I've discussed, then that should be reciprocated. We should look for that in our treaties.

If the Canadian government is engaged in non-tariff barrier activity that is limiting that investment or that trade, I would expect the dispute resolution processes would work for those foreign investors in Canada.

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

Does that mean, then, that we should refrain from legislating on reciprocity? When it comes to respecting human rights and environmental measures, we're not on an equal footing with India and the ASEAN countries, for example.

[Ian Laird]

Yes.

Unfortunately, there can be a disparate nature in terms of the basic footings. You'd hope that, if it comes to a dispute, tribunals would be sufficiently educated to be able to deal with those disparities and address them fully.

[The Chair, Liberal, Judy Sgro]

Thank you.

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

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

Thank you.

I will turn to Ms. Tranberg, at least to start.

I believe it was Mr. Lowe who brought up the issue around the unfair way that China has been treating Canadian beef exports around BSE. I took it that Brazil has a similar status as Canada, but China has reinstated them.

Is that the kind of thing we need? Some of these non-tariff barriers seem to be intractable, but in this case we have a situation where perhaps we could have a clause in our agreements, whether they're FIPAs or FTAs, that says there has to be equal or similar ways of treating countries that have similar issues.

I'm not sure if that was a clear question, but perhaps you could touch on that.

[Janice Tranberg]

If we could get to a point where we could put a clause like that in, I think that goes to the issue of reciprocity, but I'm not sure that it would work.

In this particular case, atypical BSE is a disease that happens to cattle later on in their lives. It's completely natural. This is not the BSE that would shut down the border. When you have an atypical BSE case, as long as we can prove that everything is working and we've identified it as we should, then we should be able to move forward quickly.

When this happened to Canada, other countries around the world took their time, did their quick analysis and then shortly afterwards opened markets back up for us. That's indeed what happened to Brazil. They had an atypical case in February and by March markets had already opened back up. Our atypical case was in 2021 and we still don't have access to China with beef products.

Truly, we've been informed that this is more of a political issue than even a trade barrier. They're using this as an excuse to create a trade barrier.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

I'm sorry. The time is up.

Mr. Carrie, go ahead, please.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you, Madam Chair.

Mr. Kingston, I'll start with you.

For young people I talk to, one of their dreams is to own a home, and it seems to be getting further and further out of reach. Today I was listening to the radio, and in the U.S., the average cost of a new car is $48,000, which is $750 per month for a payment. A lot of this seems to be out of control. People don't know how they're going to afford things.

Let's look at the ZEV mandate of this government. They set a policy, but they don't consult properly. They expect everybody else to pay for it, and we could talk about the provinces and the charging infrastructure, the grid. There seems to be no flexibility. Everybody gets criticized if they don't do it their way.

My concern is what Mr. Seeback started with, the coupling of these regulations and the costs that are set at the feet of Canadians. Could you go over, just for the committee's knowledge...? If I'm an auto investor and I want to sell cars here, how many different regulatory systems do auto manufacturers have to face if they want to invest or sell in Canada? That's the first question.

With all the decoupling of regulations, what does it do to the cost of cars? For example, a young person wants to buy a traditional car versus an electric car. What is it doing to the costs for investors and for individual consumers?

[Brian Kingston]

To answer your first question in terms of the number of regulations that automakers deal with, it is a highly complicated regulatory environment. It's a miracle that vehicles roll off the line as quickly as they do when you look at a plant and you consider all of the layers of regulation, and it's not just emissions standards. Vehicle safety is absolutely critical. There are privacy and cyber concerns, and the list goes on and on, hence the reason it's so important to have an aligned and coherent regulatory environment to make sure that production and Canada's competitiveness are maintained.

When it comes to the ZEV mandate, it has potential to drive significant costs, not just from a regulatory environment perspective but also from a Canadian consumer perspective. The current price gap between an electric vehicle and a gas-powered vehicle is about $14,000 Canadian. That gap will close over time because manufacturers are investing so much, but we have other challenges on the supply side as demand increases. The current estimate is that we need 300 new mines globally for nickel, cobalt, lithium and graphite between now and 2035 to meet EV assembly targets—300 mines. I don't see a scenario where those 300 mines are operational within the timelines the government has projected.

What's the impact? The regulation proposed by Environment Canada says very specifically that low-income Canadians will disproportionately be affected by this. They will face higher costs for both gas-powered and EV vehicles and will have the hardest time charging their vehicles, because low-income Canadians in a higher proportion live in apartments and multi-unit residential buildings, where charging is very difficult to access.

These are real challenges that need to be addressed, and the current approach does not address them.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much.

In the theme of the government's bringing in legislation without really consulting recently, I'd like to talk to Mr. Lowe with the National Cattle Feeders' Association.

You're probably aware of Bill C-282 and the criticism that there wasn't enough consultation. I was wondering if you could comment on this bill being a potential trade barrier.

Also please elaborate a little bit. You mentioned the veterinarian situation between Canada and the U.S. You'd think that we'd be able to get that one figured out. Could you let us know the status of this dispute between Canadian and U.S. veterinarians and what it means for the market here for Canadians and the costs?

[Will Lowe]

In regard to veterinarians, I think a lot of this stuff goes back to some of the issues we had with COVID and with border issues at some of our ports. It has become a labour issue on the veterinary side. It's to no one's surprise that veterinarians here in western Canada and across the country are harder and harder to.... We're putting fewer graduates through college, and we're seeing older veterinarians in Canada retire. I'm thinking that the situation is similar in the U.S.

For a time, we had BSE issues. That was from 2003 until now, with the negligible risk status change that happened last year. That was 20 years in the making from our first BSE case. That issue is very slowly rectifying itself.

On Bill C-282, we see it as an impediment. It just throws up another irritant to the U.S. It's protecting one industry at the expense of other industries. We see protecting supply management as one of those things that becomes a trade irritant, especially when we're looking at the potential for another country of origin labelling protectionism non-tariff trade barrier in the United States.

We're asking the United States to not implement country of origin labelling. We've gone through this numerous times in the last 20 years. Canadians have always won those cases, but then we go and introduce Bill C-282, which protects one industry over another. We highlight an issue but the U.S. can say, “We're looking at country of origin labelling, but you're protecting your industries as well.”

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Lowe.

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

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you, Madam Chair.

Thank you to all the witnesses for being here today. I'd like to go to Mr. Kingston first.

Has your association pursued any initiative or strategy to identify or mitigate any NTBs? If you could prioritize the removal of NTBs in future trade agreements, how would you do that?

[Brian Kingston]

Thank you, Mr. Miao. That's a great question.

We do, and we regularly consult with members on any NTBs they're facing. Again, I've mentioned a couple, but there have been challenges in the Japanese and Korean markets in particular. While we do have trade agreements, we do see NTBs when it comes to auto manufacturers from North America accessing that market.

Another NTB to highlight is on the rules of origin front. Canada and Mexico recently won a case against the United States and the USMCA that had to do with auto rules of origin. That was a successful Canadian-led approach to address this, but we've yet to see the Americans come into line on that. It's important that we negotiate reciprocity off the top, but we have to have functional dispute settlement mechanisms with provisions to ensure companies comply should they lose a case.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you for that.

Next, I would like to go online to Mr. Ross.

How have recent trade deals signed by Canada impacted Canadian pulse exports? Have you seen NTBs diminish because of deals such as the CPTPP or CETA?

[Mac Ross]

Thanks for the question.

I think there are a couple of things on this one.

For one, the only market in the world where pulses are politically sensitive and often subject to protectionism is India's. That's why, in this future agreement—not an agreement that we've negotiated already—it's going to be extremely important for us to address that.

To your question around agreements that have been signed—whether it be CETA or CPTPP—I think CPTPP has been important in reducing duties in some of these markets where we're trying to diversify away from some of our historical markets—like China and like India—into new markets. That has been important, but at the same time, we've still seen NTBs arise. A specific example would be in Vietnam, where their regulation of wheat seed, without any apparent technical justification, has hindered our ability to grow our exports into that market.

I'd say that with CETA, more generally, we do have concerns around some of the stated policy directions from the EU when it comes to things like mirror clauses and their regulation of crop protection products and how that may—not currently but in the future—present some real non-tariff barriers for Canadian pulses. More broadly, those agreements are important for us in our diversification efforts.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you.

I'll go next to the Asia Pacific Foundation.

Last year you published a paper entitled “A Free Trade Agreement for Canada and India: Is the Time Finally Right?” Are there any lessons that Canada can learn from other deals, such as the ones between Australia and India, when negotiating our own deals?

[Jeff Nankivell]

Thanks for the question.

Obviously, it's a difficult market. That's why what we're talking about is an early progress trade agreement. I think it's significant, by the way, that this is kind of a new approach for Canadian trade negotiators to accept less than a full deal, to take less than a full loaf, when it comes to a trade agreement, where we aim for very high standards.

I don't have a recommendation on a specific lesson learned from the Australians' experience. I think it's important for us to be watching these things very closely. Australia would be a closer analogue to Canada than the U.K., which is also in similar negotiations with India, because of the nature of our economies.

When you're looking at these things, you also have to look at what's in the other deal, at what they got and what they conceded, in the language of trade agreements. I mean, these things should always be win-win, but there are concessions and there are things that you feel you get. We need to really look at what it was the Australians needed to concede and see if we're comfortable with making similar concessions in the Canadian context. While we have similarities with the Australian economy as a major commodity exporter, we're not exactly the same, either.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Baldinelli, you have five minutes, please.