Mr. Speaker, as I was saying for Canadians who are watching or reading this debate, in due course this is about implementing a free trade agreement between Canada and a small number of European nations that form the European Free Trade Association: Iceland, Liechtenstein, Norway and Switzerland.
It is important to remember that the negotiations began in 1998 through the former Chrétien Liberal government to pursue this bilateral trade negotiation. It was signed on January 28, 2008 in Switzerland and then tabled in Parliament on February 14, 2008, three short months ago.
What does this agreement do? What are the important points of analysis that have been treated at committee that we need to make sure Canadians understand?
The first thing the agreement does is it eliminates duties on non-agricultural goods and selected agricultural products, not all, but only selected ones, giving our Canadian exporters better access, almost preferred access to Canada's fifth largest merchandise export destination.
The agreement also lays the groundwork for a better deal, a more comprehensive deal on services and investment with the European free trade association countries, as well as free trade talks with the broader European Union. This is extremely important for Canada as we move forward progressively, bilateral deal by bilateral deal to consolidate our trading relationship more formally with the European Union, and hopefully ultimately through a free trade agreement with the EU which, as we all know, is expanding rapidly. It comprises now some 26 to 28 nation states and is expanding in terms of massive economic opportunities for Canadian exporters.
We heard talk about the sensitivities around the shipbuilding sector. These are legitimate sensitivities and impressions that were asked at committee repeatedly by the shipbuilding industries and different labour representatives who did more than the yeoman's share of work in terms of making sure that what has arrived here in the House today addresses the concerns around shipbuilding.
As my colleague from Charlottetown has mentioned, it does something that has previously not been done here in Canada. It is certainly an interesting precedent for us to follow. What it has done here is it has actually included the longest tariff phase-outs for any agreement with a developed nation. There are 15 years of phase-out for the most sensitive vessels and 10 years of phase-out for other sensitive vessels with no tariff reductions in the first three years.
These are very important fiscal mechanisms that will help to cushion the transition in the shipbuilding sector as we ramp up our trade with the four nation states involved.
We also know that shipbuilding here domestically will be supported through a $50 million renewal of Industry Canada's structured financing facility or the SFF as it is known. That will also help deal with the adjustment in the shipbuilding sector as we move to formalize this bilateral trading agreement.
Experts have also included what is called a snap back provision, which raises tariff levels to what is called most favoured nation status and rates for up to three years if the agreement results in a serious threat to domestic industry. That is very powerful protection for our Canadian shipbuilding sector.
It has gone further. As an individual who has had the privilege of working on international trade disputes in Europe, what I like about this bill is that it also includes a process for binding arbitration and, of course, relevant dispute resolution mechanisms which are attached to it. This would really help deal with differences that might arise going forward.
Once this agreement is, hopefully, ratified and entered into, it would give us transparency and predictability. If we do enter into disputes with the EFTA, we would have a better and more transparent process for binding arbitration and dispute resolution already laid out and agreed upon. That would save countries and trading partners tens of millions of dollars of legal fees, of fighting costs, of lost energy and would help deal with differences in advance before they actually occurred.
Also in the bill, from an agricultural perspective, is this. Specifically, Canadian agricultural supply management and what are called “buy Canada” government procurement programs would be explicitly protected. That is important from a supply management perspective. It is also important, in my view, from an environmental perspective. It is important because I predict that in due course we will see much more local buying occurring as citizens in Canada become more attuned to, for example, questions of agricultural input and, for that matter, impacts on overall greenhouse gas emissions and atmospheric challenges. I believe that will start to drive more local and domestic consumption, which will have a bearing on our supply management systems, and I think speak volumes to keeping our supply management systems as they are presently constituted.
Why is this so important? How big is this in order of magnitude for Canadians who may be watching the debate?
These four European free trade association countries are the world's 14th largest merchandise traders and are Canada's 5th largest merchandise export destination. That is not inconsequential for a nation as deeply dependent on international trade as Canada has become.
For example, two-way Canada-EFTA non-agricultural merchandise trade is $12.6 billion. Canadian exports in 2007 to the EFTA totalled $5.1 billion. What are we selling? What constitutes the $5.1 billion? It is nickel, copper and pharmaceuticals, particularly as our life science industries explode in and around the Montreal catchment area and in other clusters that are servicing around the country, including here in my own community of the city of Ottawa. We also export forms of machinery, precious stones, metals, medical devices, aluminum and aerospace products, which are not inconsequential with Canada's burgeoning aerospace industry. We export pulp and paper, which is more traditional, organic chemicals, autos and parts, and art and antiques.
In the same year, we imported more. We imported some $7.4 billion worth of products, which included such important assets and products as mineral fuel, other pharmaceuticals, organic chemicals, machineries and medical and optical instruments. One can imagine, when we are talking about Switzerland and Norway, the kinds of high tech investments that have gone on there. We are talking about clocks, watches and many other products.
When we look at bilateral trading arrangements or multilateral trading arrangements, we often examine the concept of what is called “foreign direct investment”. We take, in this case, a cluster of four nation states and compare it with Canada. We want to know how much the four nation states are investing in Canada and how much Canada is investing in those four nation states, the EFTA. The news is overwhelmingly good because we are net winners. In fact, we are massive winners when it comes to how successful Canada has been in attracting investment into this country from the EFTA.
For example, in 2006 Canadian foreign direct investment in those four countries was $8.4 billion. In the same year, their investment in Canada was $15.6 billion. With $8.4 billion of our investment going there and $15.6 billion coming here, that is a net win for Canada at a time when the world is moving aggressively forward to a rules based,liberalized trading regime system. Whether it is Mercosur, the European Union, NAFTA and beyond, bilateral or multilateral, that trend is seemingly unstoppable.
However, when we look at the trend, we also measure the question of foreign direct investment: how much is coming here and how much are we sending there. That is not in terms of products sold, goods and services, but overall investment, and, in this case, Canada is a massive winner with almost twice as much investment being attracted here from the four countries as we are investing there. It is very promising for the future.
When it comes to the question of agricultural products and supply management, some comments were made earlier by the member for Halifax, I believe, about supply management. Here I think we should be cautious. The National Farmers Union has obviously raised some important questions around the agreement as to whether it might or might not negatively impact supply management by undermining Canada's position at the World Trade Organization. It may or it may not but in committee, from what I can recall in the transcripts I have read, I have seen no single supply management group indicating any profound concerns. The dairy sector may or may not feel some effects if this is ratified, but the Dairy Farmers of Canada were expressly consulted and at the time said that it had no deep concerns about moving forward.
That is not to say that we should not watch what flows from this negotiation in terms of the practices in those four countries and what we can learn from their subsidies in the agricultural sectors, particularly in anticipation of our negotiations with the European Union.
Why is that so? The last time I looked, 40% of the overall European Union budget was dedicated to the common agricultural policy, a massive agricultural subsidy program which, early on in the European Union's formation, lead to rampant corruption in countries like Italy and Spain where huge tracts of land were actually put into fallow status while farmers were collecting massive subsidies from the European Union. Those abuses were exposed and the European Union has moved to correct those difficulties, much later on, of course, in its existence. However, it does speak to Canada making sure that we deal appropriately with this level of subsidy. When we talk about 40% of the European Union's budget, we are talking about billions and billions of dollars.
It is also important to move forward with this agreement because, frankly speaking, the EFTA is a minor negotiation for Canada within the much larger context of the international trade portfolio. It probably will not gain a lot of media attention and probably will not form part of the next election in terms of core issues addressed at the door, but it is one of those areas where we can make progress and, again, progress because it is in anticipation of cracking the big nut, which is to begin to expand our negotiations with the European Union, which is very important for Canada's trading future.
I give great credit to former Prime Minister Chrétien for his perspicacity, his forward looking vision and his understanding of the need in 1998 to commence these negotiations to expand our bilateral and multilateral trading regimes--