International Trade Committee on Feb. 15th, 2024

[Larry Maguire, Conservative, Brandon—Souris, MB]

Is there any opportunity in Ecuador for the types of power developments that we have in Canada? We've been in South America for years in power development opportunities. I wonder how that affects Ecuador.

[Dean Foster]

I would say that really any services, investment or trade in goods opportunities would be opened up by this agreement. As was mentioned, this is the last puzzle piece in the Pacific coast of South America that we don't have FTA coverage with. They do not have an FTA with the United States. That gives a competitive advantage scenario.

Really, when you look at long-term commercial development.... We have a study that was recently done on our Canada-Chile FTA. After 25 years, we found a 400% growth of trade. I would think about the Ecuador FTA as a sort of piece of that broader puzzle. For our exporters and services providers who are experienced in the Andean region, this is another opportunity in that broader portfolio story.

[The Chair, Liberal, Judy Sgro]

Thank you.

Ms. Fortier, go ahead, please, for five minutes.

[Mona Fortier, Liberal, Ottawa—Vanier, ON]

Thank you, Madam Chair.

Thank you to the witnesses for being with us today for this important discussion.

Our government is committed to reconciliation, as we know, and that includes economic reconciliation. We talk a lot about how trade agreements can benefit Canadian businesses.

You touched on it a little bit, but I wonder if you could speak specifically to the efforts and actions that the department has taken and will have to take in negotiations with the Ecuadorian government to promote and facilitate access to the Ecuadorian market for Canadian indigenous businesses, and access to the Canadian market for Ecuadorian indigenous businesses.

[Doug Forsyth]

I think, absolutely, that is a key priority for the government and for us in our FTA negotiations. What we have seen, starting from a broad base, is that indigenous-based companies certainly have opportunities similar to the opportunities that other Canadian companies have. However, at the same time, because they're generally smaller, they generally don't look to export. We try to give them a boost, if you will, to do what we can.

We do that not only within the FTA but also outside of the FTA through our trade commissioner service at Global Affairs Canada. We work very closely with our colleagues to ensure that those opportunities are there for aboriginal businesses.

I would also add, though, that what we have done within an FTA is build on, with each recent FTA, trade and indigenous chapters—to build on language in each chapter to make sure that we are covering more and more bases. We did that with the Canada-Ukraine FTA. We were working on it under the Canada-U.K. FTA, just continuing to build on the chapter pieces, indigenous FTA pieces, in the trade agreement. It's certainly something that we continue to focus on and to do what we can on, both within the FTA and outside of it.

[Mona Fortier, Liberal, Ottawa—Vanier, ON]

I don't have much time. I'll move on to the next topic.

Global Affairs Canada mentions that Ecuador joined the Global Trade and Gender Arrangement and joined the Inclusive Trade Action Group in May 2023. Like other countries, Canada is also a member. The first group serves to promote gender-responsive trade policies, advance gender equality and empower women entrepreneurs. The second aims to help make international trade policies more inclusive.

I would like to know what the implications are of Canada's and Ecuador's participation in the Global Trade and Gender Arrangement and the Inclusive Trade Action Group, in terms of having gender provisions in a potential trade agreement between the two countries.

[Dean Foster]

We would see those as complementary initiatives. For example, all of the other members of the GTAG and the ITAG are partners with whom we already have free trade agreements. We're able to have more plurilateral discussions and to build further synergies with those partners. Then, in the FTA, we focus on our chapters on trade and gender, trade and indigenous peoples, and build co-operation activities bilaterally, one on one, during and after the entry into force of the agreement.

[Mona Fortier, Liberal, Ottawa—Vanier, ON]

Are there any specific measures to encourage businesses that include women who haven't had access to export markets before? We're working hard to create that opportunity for prosperity.

Do you have any concrete examples of how this could be done in the context of the trade agreement?

[Dean Foster]

Certainly. The intent of the chapter is to promote women-owned business trade—for example, women-led business trade missions. All those types of promotional activities are within the scope of what we have in mind. These are areas that our Ecuadorean colleagues are very excited to explore with us and are committed to pursuing through the trade agreement.

[The Chair, Liberal, Judy Sgro]

Mr. Baldinelli, you have five minutes, please.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Madam Chair.

I just want to quickly follow up.

Based on the excellent briefing materials that were provided by our staff.... I mean, they broke out some interesting statistics based on StatsCan data from 2022. Canadian exports to Ecuador were $603 million. Wheat was almost $300 million of that. Refined oil, secondly, was $164 million. Those two items were about 77% of our trade exports.

Ecuador exports to Canada about $679 million. Crude oil is number one at $178 million. Precious minerals and ores are at $150 million. Again, those two make up about 48% of the total exports to Canada. Those two items are quite important to Ecuador, I would imagine, in any trade agreement that it reaches with Canada.

Have they positioned any policies or taken any positions to Canada with regard to protecting crude oil exports to Canada?

[Doug Forsyth]

There are a couple of pieces on that. Thank you for that information.

We're just at preliminary discussions with Ecuador. We haven't delved into where our interests lie with specific products as we study their economy and what their dutiable exports are—that's from our assessment of where their interests might be—but they haven't expressed those interests to us directly.

Just to clarify, though, the MFN tariff rate on some of the products you mentioned coming into Canada may be zero. It may be similar for our exports to Ecuador.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Does it not concern the government, as an oil-producing nation, that Ecuadorean oil is being imported into Canada, instead of having us be allowed to service our own market?

[Doug Forsyth]

I guess it depends on the kind of oil that's coming in and what it's used for. Again, if it's coming in at no duty.... The MFN duty rate on that is zero. It could come from anywhere, whether it's Ecuador, the United States or....

[Tony Baldinelli, Conservative, Niagara Falls, ON]

How do the Ecuadorean oil environmental standards compare with the most ethically produced oil and natural gas in the world?

[Doug Forsyth]

That's an excellent question, and I think it's one that our ambassador would be best placed to answer when he's online.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Okay. Thank you.

There were riots in the streets in Ecuador previously, when the government moved to reduce gasoline subsidies and increase prices. Could you confirm that Canada is not going to introduce or insist on a carbon tax in this free trade agreement?

[Doug Forsyth]

As part of our discussions with Ecuador, we are looking at a comprehensive environment chapter. Whether Ecuador is interested in discussions about that, I'm not aware. However, given the fact that we are in preliminary discussions with Ecuador about launching an FTA, I'm not sure anything is off the table, frankly.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

The trade commissioner service mentioned that Ecuador's seeking to attract investment in project areas such as transportation, electricity, water, construction, telecommunications, education and so on. Right now, our largest investments are primarily in the natural resource sector.

Is it possible to define for us the nature of other investments and how significant they are in Ecuador?

[Doug Forsyth]

Certainly, mining is number one, as you know. Others, I'm not....

[Dean Foster]

I'm not aware of anything reaching this scale of our mining investment, which is—

[Tony Baldinelli, Conservative, Niagara Falls, ON]

There are those opportunities, like my colleague mentioned, like electricity generation and so on.

[Dean Foster]

Yes.

[The Chair, Liberal, Judy Sgro]

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

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Madam Chair.

There are some well-intentioned NGOs in Canada that advocate on behalf of the people of Ecuador—not all people, because obviously the government and the majority of the people of Ecuador welcome foreign trade agreements. Just to give a parallel example, a couple of hundred people in Quebec, led by Greenpeace, protested against the Northvolt $7-billion investment in Quebec, employing 3,000 people to manufacture batteries. Based on that, if the people in Sweden advocated to their government that the people of Canada are protesting, so let's not talk trade or investment in Canada....

We have to understand that the global south is changing. I know you mentioned human rights, gender equality and other social issues. I hope we know that Canada, as a developed country, can't be seen to be lecturing or preaching. I think we have to use our words carefully. We have to be more prudent and pragmatic. However, the well-intentioned arguments against Canadian business, against Canadian interests and against the free trade agreement that we intend to have with Ecuador are, in my view, a bit problematic.

When Canadian investments or any investments go to a country like Ecuador.... It is a middle-income country, it is not a poor country like many countries in Asia and Africa. Still, when investment goes there, with Canada being the largest foreign investor there, it creates economic development opportunities. It create jobs for Ecuadorean people. It creates infrastructure—roads, power generation plants, hospitals, schools. Those are the kinds of positive multiplier effects of the investment that goes in there. That should also be considered.

Talking of considerations, you did mention that the chief economist measured the benefits that this agreement can bring into Canada, which apparently are a bit modest. Did that economist calculate the lost economic opportunity costs from not having a free trade agreement wherein our competitors, to take the example of supplying lentils or wheat, have a free trade agreement, causing a potential loss of Canadian trade with Ecuador?