International Trade Committee on Feb. 13th, 2024

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

I call the meeting to order.

This is meeting number 93 of the Standing Committee on International Trade.

Today's meeting is taking place in a hybrid format pursuant to the Standing Orders; therefore, members are attending in person in the room and remotely using the Zoom application.

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Pursuant to Standing Order 108(2) and the motion adopted by the committee on Tuesday, February 6, the committee is beginning its study of free trade negotiations between Canada and Ecuador.

We have a draft budget that's been circulated to all of the committee members in the amount of $15,150. Is there any discussion on that?

Is everybody in support of the draft budget?

[Some hon. members]

Agreed.

[The Chair, Liberal, Judy Sgro]

We have with us today, from Amnesty International Canada, Kathy Price, Latin America campaigns coordinator. We have, from the Canadian Centre for Policy Alternatives, Stuart Trew, senior researcher. From Cereals Canada, we have Mark Walker, vice-president, markets and trade; and, from MiningWatch Canada, we have Viviana Herrera, Latin America program coordinator, who is here by video conference.

Welcome to all.

We'll start with opening remarks and then proceed with rounds of questions.

Ms. Price, I invite you to make an opening statement of up to five minutes, please.

[Kathy Price, Latin America Campaigns Coordinator, Amnesty International Canada]

Thank you.

The UN working group on the issue of human rights and transnational corporations has called on all states to negotiate only such international investment agreements that are compatible with their international human rights obligations. The UN working group has also called on all states to conduct impact assessments of international investment agreements on human rights and the environment.

Canada must comply with this recommendation to ensure that trade and investment objectives do not put human rights obligations at risk. So far, we have heard only that Canada’s trade minister will table an economic impact assessment in Parliament alongside the text of any agreement reached with Ecuador. This suggests that human rights goals and indigenous rights goals are not a serious consideration. They must be.

We are equally concerned that while stakeholders in Canada were invited to a consultation about a possible FTA with Ecuador, human rights, environmental and indigenous peoples' organizations in Ecuador have been neither informed nor consulted. Canada says that mining and critical minerals are key areas for Canadian investment and avenues for growth in Ecuador. Those who will be impacted must be consulted. That’s why we made space in our input to get consultation for the voices of women human rights defenders with an organization called Amazonian Women Defending the Forest.

These indigenous women have faced death threats and attacks for speaking up about the impacts of resource extraction projects in their territories. This includes elevated levels of gender violence against women and girls, which have coincided with the arrival of mining and oil companies and militarization.

This is what Amazonian women had to say in a public statement and want you to know. They state:

Currently, our rights and our territories are being seriously threatened by Canadian companies like Solaris Resources and Aurania Resources, which do not respect the collective rights of Indigenous peoples and operate illegitimately in Indigenous territories in Morona Santiago. Therefore, without the participation and the free, prior and informed consent of Indigenous peoples, such an agreement would pose a clear violation to our rights, which have been recognized at the international level by the United Nations Declaration on the Rights of Indigenous Peoples, Convention 169 of the ILO on Indigenous and Tribal Peoples, and the American Declaration on the Rights of Indigenous Peoples.

Indigenous peoples' rights are not respected in Ecuador, even though it is a party to the ILO convention 169 and other international instruments. Authorities and companies disregard indigenous peoples’ rights through policies and large-scale projects, such as oil and mining, that have not received their free, prior and informed consent and have affected their territories, environment, health, water and food sources.

Last May, Executive Decree No. 754 was issued. It allows mining companies to commence activities without indigenous peoples’ free, prior and informed consent. The Office of the United Nations High Commissioner for Human Rights has expressed deep concern.

There are other issues of deep concern. Companies are being allowed to continue to install climate-destroying gas flares on their oil platforms, despite a court ruling. Human rights defenders who speak out against irresponsible resource extraction suffer false accusations and attacks. Indigenous leader, Eduardo Mendúa, was shot dead last February.

Let me finish by sharing the words of Pablo Fajardo, an environmental defender who is at risk because of dangerous false accusations made against him by Ecuador's Minister of Energy and Mining. This is what Pablo Fajardo authorized me to share with you. He states,

In all operations of Canadian companies in Ecuador, respect for human rights must come first. We cannot continue allowing more sacrifice zones. We are not against extractive activity. What we are against is the way things are being done now. The economic rights of corporations cannot be allowed to prevail over our rights to water, clean air, land, community harmony...

It is essential that this committee invite Pablo Fajardo and other witnesses from civil society organizations in Ecuador, who will be impacted by a free trade agreement between Ecuador and Canada, to provide input about the goals. This would be inclusive, progressive trade and investment.

Thank you.

[The Chair, Liberal, Judy Sgro]

We have Mr. Trew for up to five minutes, please.

[Stuart Trew, Senior Researcher, Canadian Centre for Policy Alternatives]

Thanks very much to the committee on behalf of the Canadian Centre for Policy Alternatives. I appreciate the chance to comment on a possible free trade deal with Equador. While I will focus my comments on the possibility that a future deal includes an investor-state dispute settlement process, I would like to stress up front that I do not think these negotiations should proceed at all under the current civil emergency in Ecuador.

It would be opportunistic for Canada to exploit the current crisis and to fast-track a contentious free trade deal that Ecuadorian civil society groups know nothing about and will almost certainly not be consulted about over the course.

The recently passed China-Ecuador trade deal was condemned by a large section of Ecuadorian civil society, including the country's Confederation of Indigenous Nationalities, for the threats it poses to the environment and the rights of indigenous peoples, especially from mining and the expansion of monoculture commodities such as cacao, banana and oil palm, which are responsible for significant amounts of deforestation in the country. These groups were not adequately consulted on the China agreement, and they have not been consulted, as far as I know, on the possible Canadian FTA.

In public statements, Canadian and Ecuadorian officials have said that they want to pursue an inclusive trade agenda, as was just mentioned, that benefits workers, indigenous peoples and sustainable development. That will not be possible under the current circumstances in Ecuador, and will not be possible under Canada's standard negotiating approach.

Coming back to investment, there would be no chance of an inclusive trade deal if it includes a standard Canadian-style investment protection chapter and ISDS. A recent UN report states that the ISDS regime “is not fit for purpose in the twenty-first century because it prioritizes the interests of foreign investors over the rights of States, human rights and the environment”.

Our own government cited these same risks as the reason it excluded ISDS from the renegotiated Canada-U.S.-Mexico agreement.

The Ecuadorian ambassador to Canada, a year ago, told The Hill Times that he hopes a possible Canadian FTA includes ISDS, since he said this would attract more Canadian mining and related infrastructure, such as the roads and power that go along with that.

Negotiating new investment treaty protections with Ecuador would be a terrible idea, given Ecuador's traumatic experience with ISDS, including several infamous cases from Canadian mining companies over the past two decades, and considering the brave decision of previous governments in Ecuador to pull the country out of the ISDS regime altogether, after it found the risks far outweighed the benefits.

As proof of this finding, in fact, the termination of Canada's investment treaty with Ecuador in 2017 has not affected Canadian investment flows into the country. Canada is currently the largest foreign investor in Equador, and that's without having treaty protections in place.

The option of disputing government decisions at ISDS tribunals instead of in domestic courts does not make projects more likely to move forward, but it can and frequently does undermine access to justice for local communities impacted by foreign investment. Their voices and their rights, under international human rights, indigenous and environmental treaties, tend to be ignored by ISDS tribunals, even where countries raise them in their own defence.

Large, and growing, ISDS awards into the billions of dollars can drain government funds from public services in extreme cases, as in Colombia, where money was moved from public services to pay for expensive ISDS claims.

Because of Ecuador's terrible experience under ISDS, the constitution in that country prohibits the government from ratifying international treaties that incorporate investment arbitration. However, this didn't stop the previous Ecuadorian government from including ISDS in a free trade deal with Costa Rica. That deal is currently in limbo, because the court declared it unconstitutional as a result of this constitutional ban on arbitration.

In conclusion, Canada should not launch negotiations with Ecuador until it is clear that the Ecuadorian government has a social mandate to do so, in particular from indigenous peoples and groups who are most impacted by foreign investment. There can be no inclusive trade deal with Ecuador if these voices are excluded from the discussion.

Finally, ISDS should be a non-starter in any future negotiations. It contradicts the statements from the UN, it contradicts the government's own policy and it may in fact be illegal under Ecuador's constitution.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Walker, you have up to five minutes, please.

[Mark Walker, Vice-President, Markets and Trade, Cereals Canada]

Madam Chair, members of the committee, thank you for having me here today on Canada's Agriculture Day.

Cereals Canada is the national industry association for wheat, durum, barley and oats in Canada. We represent the full value chain, from farmers to crop development companies, grain handlers and exporters. Our members focus on the benefits of export-led growth facilitated by access to diverse global markets. Canadian cereals are a staple food exported around the world to over 80 different countries. In an average year, our wheat, durum, barley and oats sector generates $68.8 billion in economic activity in Canada, including more than 370,000 Canadian jobs.

Wheat production in Ecuador is insignificant. Their milling industry depends on imports to mill high-quality bread flour. Canada's cereals industry has established itself as Ecuador's leading wheat supplier and holds a 60% market share on imported wheat. Our industry views Ecuador as a market with significant growth potential. During the last five years, Ecuador's average annual imports of Canadian wheat were valued at over $285 million, a consistent top-10 export market for our industry. The nearly 750,000 metric tonnes of Canadian cereals exports to Ecuador each year account for 55% of Canada's exports to that country.

Cereals Canada supports bilateral trade negotiations with Ecuador to remove any remaining cereal import tariffs and to cement a rules-based trading system that protects market access for high-quality Canadian cereals. A key opportunity for FTA negotiations is the removal of remaining duties on Canadian oat imports. Ecuador retains an ad valorem tariff of 5% on oats other than those used for seed. Canada currently is the primary oat exporter in the Americas, and increasing market access to Ecuador will support market diversification of Canadian oat exports in South America.

Our sector has been supportive of the government's work to grow FTAs. These agreements have worked to reduce cereal import tariffs in the relatively few remaining markets where these tariffs still exist. The Canadian cereals industry has witnessed a shift in trade barriers from tariff-based to non-tariff-based, NTB, as the primary means of controlling imports. Unfortunately, there have been instances when, despite an FTA, market access has not increased. In these cases the use of NTBs frustrate potential gains from an FTA. While Canada has been able to grow our market share in Ecuador, experience in other wheat-importing markets, such as Peru, has shown that the imposition of import barriers through non-tariff measures remains a concern. In other regional markets, such as Mexico, we have seen government policy move away from science-based decisions and towards import restrictions on safe agricultural technologies.

When negotiating future trade agreements, and in implementing already agreed-to FTAs, Canadian trade officials—who do fantastic work, by the way—must increase their focus on including provisions governing the use of non-tariff barriers, risk-based scientific assessments, and timely, binding dispute resolution processes to reopen borders when barriers are put in place. These provisions would create the framework for a fourth-generation trade agreement, if you will.

The Canadian government and officials must continue to support the use of harmonized, science-based standards relating to maximum residue limits, MRLs. Science-backed MRLs harmonized at levels consistent with international guidance, such as Codex Alimentarius, provide transparent levels that protect consumers and support predictable trade. Canada's negotiators must recognize the trade-restrictive impact of setting MRLs and import tolerances at levels below harmonized international standards, and the market access obstacles this would create if Ecuador were to adopt this approach.

An effective binding dispute resolution mechanism to address non-tariff barriers, such as those based on sanitary and phytosanitary, SPS, issues, would be an important outcome in bilateral Canada-Ecuador negotiations. Canada's trade agreements should seek to provide an enhanced mechanism to effectively address these types of concerns. Rather than resorting to a multi-year international arbitration to determine whether an SPS claim is valid or not—as I'm sure committee members can appreciate, that would be quite challenging—a mechanism through which a panel of scientific experts, who can be quickly convened to consider the issue and quickly rule on whether there is a scientific basis, would be a preferable outcome in this sort of agreement. A bilateral trade agreement that includes good regulatory practices for non-tariff barriers would foster a stronger, predictable trade environment with Ecuador that allows food to reach markets where it is needed and contributes to global food security.

On behalf of our members, Cereals Canada expresses our gratitude to the committee.

Thank you, Madam Chair, for the interest in learning about the opportunities for a potential Canada-Ecuador free trade agreement. I look forward to your questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much, sir.

Ms. Herrera, please, you have up to five minutes.

[Viviana Herrera, Latin America Program Coordinator, MiningWatch Canada]

Thank you.

Thank you, members of the committee, for inviting us to this hearing.

MiningWatch Canada is a Canadian organization that for over two decades has worked in solidarity with indigenous peoples and non-indigenous communities struggling to protect their lives and territories from human rights abuses and environmental damage across Canada and by Canadian mining companies operating internationally.

Our partners in Ecuador are concerned about the lack of transparency and consultation regarding a free trade agreement between Canada and Ecuador. In a statement signed by our partners and other Ecuadorian social and environmental organizations, they talk of high levels of socio-environmental conflicts related to territories where Canadian mining is active. They say, “The territories are treated as sacrificial—a mentality which will be even more difficult to reverse if an FTA further cements legal protections for these investments.”

A central focus of this free trade agreement will be support for foreign investment in mining. Given the often violent imposition of mining development in Ecuador, it can be anticipated that a free trade agreement with Ecuador will exacerbate environmental conflicts, human rights violations, the militarization of territories and threats and intimidation against indigenous leaders who speak out against Canadian mining projects. Meanwhile, Canada still has no meaningful mechanism to prevent or provide redress for such abuses.

The most recent cases of violence related to Canadian mining in Ecuador involve Adventus Mining and Atico Mining. In July 2023 in an attempt to impose the pro-mining executive decree 754, vast police repression and intimidation were unleashed against indigenous and campesino communities opposing these two companies' activities.

Volker Türk, the United Nations High Commissioner for Human Rights, expressed his concern over the violence. He condemned the decree that allowed companies to start mining operations without free, prior and informed consent from indigenous communities. He said, “People directly affected by mining projects or activities must be heard, not repressed”.

The Canadian embassy visited both mining sites in a visit organized by the mining companies just a few weeks before the military crackdown, and it failed to denounce the violence.

Despite a large social movement against Canadian mining in Ecuador, Canadian mining companies and embassy officials have been actively involved in promoting the expansion of Canadian mining projects in the country, undermining indigenous self-determination. For example, in southern Ecuador, in a citizen-led initiative in 2021, 80% of the residents of Cuenca voted in favour of protecting water and against industrial mining in a fragile ecosystem that supplies water to tens of thousands of people in and around the city of Cuenca.

In the Amazon in 2019, the indigenous Shuar-Arutam people declared their territory free of mining and that their right to say no to mining projects must be respected. Canadian Dundee Precious Metals and Solaris Resources continue to pursue these projects, despite this clear rejection.

A free trade agreement that enhances corporate access to markets and capital will lead to greater impunity for Canadian mining companies that violate human rights, given that no mechanism currently exists in Canada to hold these companies accountable for such abuses.

Another major concern is the inclusion of an investor-state dispute settlement. The ISDS mechanism is commonly used by Canadian mining companies to sue countries in private supranational tribunals, for example, if they are denied mining permits. This restricts a government's ability to deny permits to protect their territories and water, or the human rights of their citizens.

Therefore, Canada must take ISDS off the table. As the Canadian government gets ready to initiate conversations with its Ecuadorian counterpart, we call on the Canadian government to halt diplomatic support for Canadian mining investments in territories that have already said no to mining.

No free trade agreement should advance without indigenous peoples' free, prior and informed consent. Canada suffers from a lack of accountability in its mining sector. As such, Canada should not advance any new trade with Ecuador without an empowered independent Canadian ombudsperson for responsible enterprise and without having enacted rigorous human rights and environmental due diligence.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go on to the members of the committee.

Mr. Jeneroux, you have up to six minutes, please.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Thank you, Madam Chair.

Thank you to the witnesses, and happy agriculture day as well.

Also, thank you to my fellow members of Parliament on my side for letting me go first on this important study.

If we could, I would like to start with looking at the top three exports to Ecuador. I have them listed as wheat, at $299.3 million; refined oil, at $164.8 million; and vegetables, at $34.7 million.

Mr. Walker, you mentioned that concern about the non-tariff trade barriers, particularly on cereal, and the 5% on oats. Have you seen any signs in some of your earlier discussions that this is something the government is considering? Also, if you could perhaps weigh in, maybe in a bit more detail, that would be a great opportunity to make sure the government is aware of some of those concerns.

[Mark Walker]

I would respond by highlighting our fairly consistent asks, both at this committee and to trade officials. We see the government's trade agenda as a great opportunity for building these structures within these agreements to make sure that reliable dispute resolution is available across SPS measures and to make sure that it's binding, timely and effective.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

It's also Ecuador and the share of exports by province and territory. For my home province of Alberta, it's very high, with 44.6% of the exports. That's $269.2 million. We've seen a recent trade agreement come through that really focused heavily on implementing a carbon tax within the country. We're concerned—and watching this closely, obviously—that this potentially might be for future trade deals.

Is there any indication you've seen, Mr. Walker, in some of your work? As we know, the last time the Government of Ecuador attempted to remove a fossil fuel subsidy from gasoline and diesel, there were riots, and the army had to be called in. I can only imagine that something like a carbon tax would be untenable in a situation like this.

[Mark Walker]

It has not been our experience that prices on carbon and carbon taxes would be a standard clause in a trade agreement. Generally, we would be cautious and wary of sustainability provisions making their way into a trade agreement. Our industry, as I mentioned, supports export-led growth, and we would want to see that continue within any future trade agreements.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

To go back to some of the non-tariff trade barrier concerns, just to be clear, you're supportive of removing the 5% on oats.

[Mark Walker]

Yes.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Is this something you've had success with in other trade agreements that you can reference?

[Mark Walker]

To us, tariff-free access is becoming table stakes. The government has done a good job of negotiating with the negotiators down to levels that are virtually tariff free. That is becoming an expectation that we would want to see continue.

We believe that removing the tariff on oats will have significant impacts on exports to Ecuador and then throughout the region as well. It is a growing market for oats, and one that we would like to see continue.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Yes, I don't necessarily disagree with you. I'm just curious about whether there are other examples you can point the negotiators towards that are perhaps a good example that they can follow.

[Mark Walker]

Definitely. The Canada-U.K. FTA was being negotiated, and we have tariff-free access under the trade continuity agreement, which we're happy to see continue. We were looking to that agreement to see improved dispute resolutions on a variety of SPS issues. We look forward to those negotiations continuing.

[Matt Jeneroux, Conservative, Edmonton Riverbend, AB]

Other products with high tariffs include textiles, vehicles and agricultural goods. We would sometimes see those tariffs at 11.2% in 2021. Obviously, this is an opportunity to lead by example. We're certainly supportive of some of those barriers being discussed and implemented and moved as part of this trade agreement.

I guess I would allow you the opportunity to share why that's important, particularly to the cereals community but to the agriculture community in general. In my last 50 seconds or so, I'll turn it over to you to do that.

[Mark Walker]

As for tariff-free access, Canadian agriculture products compete as premium goods. They're not very price-competitive, so the lower the tariffs we have, the better we do. Canadian farmers produce some of the most fantastic crops in the world. Having tariff-free access allows us to maintain and create new markets.

[The Chair, Liberal, Judy Sgro]

Thank you.

Mr. Miao, you have six minutes, please.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you, Madam Chair.

I welcome and thank all the witnesses for being here today.

Mark, it's good to see you. Happy agriculture day to all the farmers and members of the agriculture sector in Canada who put food on our table.

I also had the pleasure of visiting Cereals Canada in Winnipeg last summer to talk about the importance of my private member's bill, Bill C-244, to our agriculture sector in Canada. I know that Cereals Canada provides services to cereal producers across Canada, from advocacy to market support. If anyone has a chance to visit it, your lab is very impressive.

I understand that cereals are important in our agricultural exports with an annual export value of over $10 billion. In terms of Ecuador, cereals were ranked the highest-value Canadian export in 2022. When I visited the wheat fields in the Prairies over the summer, some of the farmers shared with me the damage that climate change has caused to them, especially on the harvesting side and on the agriculture and agri-food sector as a whole. While we are advancing and building a more climate-resilient economy, diversification is also very important.

Mark, could you share with the committee the importance of trade diversification to our cereals sector?