Debates of Dec. 14th, 2010

Economic Negotiations with the European Union

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Mr. Chair, I have to interject here because the hon. member is simply incorrect.

Both Canada and the European Union are leaders in the promotion of the 2005 United Nations Educational, Scientific and Cultural Organization Convention on the Protection and Promotion of the Diversity of Cultural Expressions. This convention recognizes that cultural goods and services are different from tradable goods, because they have both an economic and a social nature. They convey identities, values and meaning. We are in agreement with the European Union on that. There is no difference in our opinion or the European Union's opinion.

I have to protest that the member's arguments that somehow we are cutting culture out of this simply are not true.

[Carole Lavallée, Bloc, Saint-Bruno—Saint-Hubert, QC]

Mr. Chair, the member does not understand how it works. Canada and the European Union signed the Convention on the Protection and Promotion of the Diversity of Cultural Expressions. This means that all Canada has to do with this agreement with the European Union is to simply write it in the preamble.

All they have to do is sit down and decide to resolve the issue of arts and culture right away. In fact, in the first paragraph of the preamble, all they have to say is that since the European Union and Canada signed the Convention on the Protection and Promotion of the Diversity of Cultural Expressions, which exempts arts and culture from a free trade agreement, they are exempting arts and culture and acknowledge that the UNESCO convention applies. Then, they no longer have to talk about it and can negotiate other things, such as the software industry, the biomedical industry or the aerospace industry, but they will not talk about arts or culture because these topics are already exempt. As the member said earlier, when something is exempt, it means that it is truly exempt and is not included. Let us remove these issues and stop talking about them.

[David Tilson, Conservative, Dufferin—Caledon, ON]

Mr. Chair, it is my pleasure to rise in the House this evening to speak to a key objective being sought by Canada in our negotiations with the European Union towards a comprehensive economic and trade agreement, namely ensuring real, effective market access for Canadian exports to the European Union. As the minister said this afternoon in response to a question, the focus of this agreement is jobs and prosperity.

In May 2009, Canada and the European Union announced the launch of negotiations towards a comprehensive economic trade agreement, also known as CETA. Based on the results of a 2009 joint scoping exercise, Canada and the EU developed a broad and ambitious negotiating agenda that would include a variety of topics from trade and investment to sustainable development.

CETA also marks the first international trade agreement where the provinces and territories will participate in the negotiations. Officials in Canada and Europe have indicated that provincial and territorial support is crucial to the success of the agreement.

Negotiations are continuing at a fast pace and are expected to be completed by the end of 2011. Negotiations are being undertaken both in Europe and, of course, in Canada.

The successful negotiation of a high-quality ambitious trade agreement remains a key priority for the Canadian government as the EU is the world's top single market, with a population of nearly 500 million and a gross domestic product of more than $19 trillion in 2009. In addition, the EU is the second largest trading partner in goods and services and the second largest source destination for foreign direct investment.

As CETA negotiations cover a broad range of areas, it could result in an agreement that is both broader and deeper than the North American Free Trade Agreement, NAFTA, Canada's most comprehensive free trade agreement to date.

Almost all of the speakers here tonight are members of the international trade committee. I am not. I am here to express my interest as the president of the Canada-Europe Parliamentary Association.

Given the importance of this agreement, the Canada-Europe Parliamentary Association has made significant efforts to remain abreast of CETA negotiations as well as engage with members of the European Parliament. These discussions have taken place in Europe and, more particularly, the Council of Europe in Strasbourg. We also met with members of the European Parliament here in Ottawa about a month ago. We are satisfied that negotiations are going well. Indeed, the European Parliament passed a resolution in May 2010 where it expressed support for the ongoing CETA negotiations.

Eliminating tariffs and creating rules of origin that enable Canadian goods to qualify for preferential tariff treatment are essential to gain effective and improved market access. I understand that good progress has been made on both, although more remains to be done.

On tariffs, negotiators have exchanged conditional initial offers on goods that would have 90% of all tariffs go to duty free immediately upon the implementation of the agreement. The second round of offers is being prepared over the next few months on both sides to see tariff eliminations being made even more ambitious.

On the rules of origin, Canadian negotiators are making steady progress towards an outcome that would take into account the integration of Canadian production into North American and global supply and production chains.

However, eliminating the tariffs and getting the right rules of origin are only half the equation. As tariffs come down, regulatory barriers take on greater importance in the ability of exporters to get their products into other markets. Thus, addressing and preventing regulatory barriers is the other half of the equation. Of course, this is easier said than done, particularly since the European Union represents perhaps the most complex regulatory environment in the world.

Effectively dealing with regulatory barriers hinges on: preventing or avoiding their establishment; reducing to the greatest extent possible the impact of those regulatory barriers that are put in place; and, ensuring the right mix of rules and procedures to enable us to efficiently and conclusively address them.

These elements, or outcomes, of effective market access form the basis of Canada's negotiating approach to multiple chapters in the agreement affecting trade in goods, including those related to technical barriers to trade and regulatory co-operation.

Collaborative efforts between the European Union and Canadian regulators toward compatible regulatory approaches are the key to avoiding or preventing regulatory barriers. Our negotiations will build on existing regulatory co-operation between Canada and the EU and will seek to improve it by increasing its visibility by making it clear that regulatory co-operation is a priority between Canada and the European Union.

Generally speaking, regulatory co-operation is forward looking and while it can help to erode differences and facilitate compatible regulatory approaches, it will not necessary prevent all trade irritants. Seeking to improve the compatibility of European and Canadian standards is also a key to preventing regulatory barriers.

Currently, although Canada and the EU both rely heavily on international standards, we both maintain our own regional and national standards. For the EU this is necessary to facilitate the European single market, while for Canada this is necessary to maintain the integrated nature of the North American market. Bridging this gap will be challenging, but we know it is important to our exporters who face increased costs due to differing standards which, nevertheless, have the same intent and desired outcome underpinning their purpose.

Enhancing transparency in the regulatory development process is another important element in avoiding regulatory barriers. Through provisions addressing technical barriers to trade, we can take greater strides to ensure exporters and employees on both sides of the Atlantic do not get sideswiped by technicalities which have the effect of restricting trade.

Other mechanisms are necessary to tackle regulatory trade irritants. For this reason, to ensure both parties continue to enjoy the benefits of real market access, Canada envisions establishing a solid and responsive institutional framework in the agreement to effectively deal with instances of unjustified barriers or deviations from the obligations of the agreement.

It is important that both Canada and the European Union have a forum where concerns related to the bilateral commercial relationship can be raised and addressed in an efficient, rapid and transparent manner. This will be particularly important to address any technical barriers that might arise in the future.

Finally, to ensure the enduring value of the entire package, we are seeking an effective and efficient dispute settlement mechanism. While dispute settlement is always a last recourse, it is inevitable that concerns will arise that cannot be resolved through consultations. When this is the case, we will need a mechanism that allows us to resolve differences between us quickly and efficiently, allowing manufacturers and traders to get on with their business.

Thus, at its very essence, Canada is seeking significant, effective and enduring market access gains for its manufacturers and exporters. These gains will be enhanced by closer co-operation between our regulators and backstopped by a more robust trade policy implementation regime and an effective and timely dispute settlement process in a comprehensive economic and trade agreement with the European Union.

To put this in plain language, achieving real and effective market access in these negotiations will mean getting reasonable and practical solutions to the current barriers faced by the Canadian exporters and proactively dealing with future issues through greater co-operation. This will translate into opportunities and jobs for Canadians. That is why our government is moving toward a truly comprehensive free trade agreement with the European Union.

[Frank Valeriote, Liberal, Guelph, ON]

Mr. Chair, I will refer to the document, “Municipal Procurement Implications of the Proposed Economic Trade Agreement between Canada and the European Union”. It is an opinion that was prepared by Sack Goldblatt Mitchell for the Centre for Civic Governance at Columbia Institute. He refers to sub-national procurement and states:

In setting out the principles that should guide Canadian trade negotiations, the FCM [Federation of Canadian Municipalities] stressed the importance of: Canadian content for strategic industries or sensitive projects: A trade deal must recognize strategic and public interest considerations before barring all preferential treatment based on country of origin. There may be industries of strategic significance to a particular region, such as transit, or projects where considerations of quality, public benefit, environmental protection or business ethics means that a local government may be allowed to implement minimum Canadian content levels, within reason.

Thus under CETA, municipalities would no longer be able to restrict tendering to Canadian companies, or stipulate that foreign companies bidding on public contracts accord some preference for local or Canadian goods, services, or workers. As a result, municipalities would lose one of the few, and perhaps the most important tool they now have for stimulating innovation, fostering community economic development, creating local employment and achieving other public policy goals, from food security to social equity

I am wondering if the member would tell me whether he considers this as being one of the technicalities that he speaks to, these mere technicalities, that might upset a free trade agreement and how serious he considers the issue of sub-national procurement.

[David Tilson, Conservative, Dufferin—Caledon, ON]

Mr. Chair, the member speaks as if all these clauses are a done deal. They are still under negotiations and the negotiations will continue to the end of 2011 and possibly longer.

The municipalities and the provinces have been consulted and briefed regularly by the negotiators and are fully aware of all these items that the member has spoken to. Of course the municipalities have indicated their support for where the government is going in this area.

Government procurement, including at the sub-federal level, is one of the areas of negotiation as described in the Canada-EU joint report released in 2009. The obligations would only apply to agreed upon types of procurements. For example, international procurement obligations would not apply to non-contractual agreements such as grants or loans or items purchased for commercial sale or resale of contracts below specified dollar value thresholds.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Mr. Chair, this is not about free trade. This agreement is basically about the control of corporations over our way of life.

The member mentioned that the communities had been consulted. I would urge him to to check with the FCM and other organizations, such as the Union of British Columbia Municipalities, to get their comments on this agreement which they feel would be devastating.

It seems that the government's answer for all the ills of our country is to open up more trade. Our agriculture committee did a study and we recommended local procurement for federal government institutions, which would make sense for local farmers. We were told that we could not do that because of trade obligations, so the government is going out to get more trade.

On the other hand, the state of Illinois has legislated that by the year 2020 that 20% of local produce in state institutions will come from local farmers. There seems to be an imbalance and I am wondering if the hon. member sees an imbalance in this.

We tried to negotiate a deal. We put everything up front and yet the European Union, with all its heavy subsidies, with its control and with its help for farmers, right now there is only 0.5% access to pork for their total production, and yet it wants to increase the quota for Canada.

I am just wondering if the member thinks there can actually be a fair agreement or if trade is really the answer, or should we be really careful especially when it comes to our way of life on procurement and especially when it comes to agriculture.

[David Tilson, Conservative, Dufferin—Caledon, ON]

Mr. Chair, of course we will be careful. We will be careful in all of the negotiations. We take great interest in protecting the rights of Canadians and in protecting jobs. To say that we are not doing that is unfair.

The member said that there were no negotiations or discussions with other organizations. The government has consulted with non-governmental organizations, trade unions and industry to ensure that their interests and concerns are taken into consideration in developing our negotiating position with the European Union.

As with every international agreement, our agreement with the European Union will be subject to the treaties in Parliament. When this agreement is reached, we will have extensive debate in this place as to the validity of this agreement and whether it should be passed.

Moreover, legislation to implement the agreement, like any other free trade agreement, will come to Parliament where parliamentarians will vote on it. This process will allow industry, non-governmental organizations and others to express their views.

Most of the members who have spoken today are members of the international trade committee. I am not a member of that committee but I am quite aware that every free trade agreement that has gone through this place has ended up in that committee and has been dealt with extensively, where it debated the pros and cons on whether those agreements should be passed.

[Gerald Keddy, Conservative, Parliamentary Secretary to the Minister of International Trade]

Madam Chair, I thank my colleague for his work on behalf of all parliamentarians as the chair of the Canada-EU Interparliamentary Association.

When a group of European Union parliamentarians travelled extensively throughout Canada last month, they also had fulsome discussions here in Ottawa under the member's guidance. I attended those meetings and I noticed how positive all of the European Union parliamentarians were about this comprehensive agreement benefiting both the EU and Canada.

[David Tilson, Conservative, Dufferin—Caledon, ON]

Madam Chair, the member is quite correct. It was about a month ago when a number of delegates from the European parliament were here and we discussed a wide range of topics, and this agreement was one of them. Although there many other topics mentioned, they will probably be discussed in the agreement.

We had a successful and positive debate. Members from both sides of the House were present at those meetings. The critics on immigration and international trade discussed a wide range of topics on which the European Union delegates expressed concerns, as did we. They also indicated to us that they, too, were pleased with the way the negotiations are going.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Madam Chair, I will begin by saying that although this is something we have been talking about for quite some time, it seems like it has been sort of on the periphery. We have never really engaged in a full-on debate about Canada-EU and the future that we have with it on this comprehensive free trade agreement.

I congratulate my colleague, the previous speaker, on a fine speech. He is the president of the Canada-Europe Parliamentary Association, an association on which I also serve. I have also served with him on several excursions to Europe. I will not go on about the discussions we have had with European parliamentarians. I think my colleague did that quite well, as have other colleagues in the House.

When I debate in this House, I always want to raise the bar on whatever new policy we are discussing or debating. I have never wanted to be one who opposes simply for the sake of opposing.

I will begin by saying that there are opportunities, not only for this country but for the riding that I represent and in Newfoundland and Labrador as a whole. There is an incredible amount of opportunities within this agreement that we need to engage in.

I am proud to see that all of us, even at this late hour, are engaging in this debate because it is a very important agreement that we must strive for but one that needs be thorough and one that needs to be debated thoroughly, which I hope we are able to do tonight.

I want to get into the nuts and bolts of this agreement as I want to talk about some of the foundations that have already been laid. Negotiations started around 2004. The discussion opened with many of the dignitaries from the European Union, Brussels and from Ottawa. Three negotiating rounds were held in 2005-06 covering issues such as regulatory co-operation and mutual recognition of professional qualifications, which is a major issue on this continent as part NAFTA and other trade agreements. It is a very important issue for most of us.

At that point we had failed to reach an agreement. However, we suspended negotiations in May 2006 pending the outcome of the Doha round of negotiations with the World Trade Organization. They were not as successful as we had hoped but at least we were able to lay down some of the markers that we were striving for and some of the achievements that we were hoping to make to open markets to our own talents and economies, in addition to receiving products that were cheaper and provided inputs to our own economy.

In many respects this is highly essential and it has been essential since 2004, as we continue with this under two governments of different political stripes.

The 2007, the EU-Canada summit in Berlin conducted a joint study to explore the expected costs and benefits of a closer economic partnership. The European Union started out enthusiastically and, from all accounts, continues to be enthusiastic about this deal. The EU will gain $18.6 billion in extra activity, so this is something it obviously believe in and is enthusiastic about.

Canada could experience a $13.1 billion annual increase in GDP. Annually, this additional economic activity represents a .08% increase in the European Union's GDP and a .77% in GDP or 1%, which may not sound like a lot but it certainly is in dollar value when it translates into jobs.

One of the reasons we call this the comprehensive agreement is because of the benefits. Those numbers, of course, benefit us because we have a smaller country. We are looking at the largest commercial market that stands in front of us in excess of 500 million people and countless numbers of opportunities in what I consider to be an advanced nation of the 27 nations of the European Union.

I want to get into some of the numbers but I also want to touch upon some of the issues that may be considered to be contentious and will certainly receive a lot of discussion over the next little while.

I want to talk about agriculture for just a moment. As we know, agriculture in this country is dear to our hearts as we are a country with some of the largest agricultural land in the world as we know it. As a result, it deserves a lot of attention. Over the past little while we have seen a lot of attention being focused on agricultural issues with any trade agreement regarding Europe and Canada. The European Union made an agreement with South Korea that also involved a lot of talk and discussion around agriculture.

The European Union has a heavily subsidized agricultural system. It is the common agricultural policy. It is heavily subsidized. I do not know if the House is aware of this, maybe it was discussed earlier, but half the EU budget is invested into its common agricultural policy. They hold it near and dear. We have seen protests in the streets of France and Germany when they made even the slightest change in agricultural policy and food safety as a result.

Canada's top imports from the EU include wine, beer, liqueurs and chocolate. I am sure there would be some debate as to whether that is a noble gesture or not, but nonetheless it represents a lot of commercial activity.

Canada's exports to the EU are dominated by primary agricultural products.

The pattern here is that a lot of the products that come into Canada from the European Union are value-added products or, obviously, products that have been processed, whereas the products going out have been less processed, have less value added.

I am assuming that under a comprehensive free trade agreement that element could change dramatically. Coming from Newfoundland and Labrador, that seems to be the emphasis in economic activity. Certainly when it comes to exports, we want to create more value in the products that we put out there. We just do not want to take a fish out of the water and send it on its way without it being worked upon. I say that because it adds value into the product. With processed goods that are transported, I do believe genuinely, like what happened with the United States and Mexico, we could add more value to our products in a far greater free trade regime that we could achieve with the 27 nations.

We certainly seem to be achieving that now with the other association in Europe and nations such as Iceland, Norway and so on and so forth.

We have exported $1.6 billion in bulk agricultural products to the EU but less than one-half as much, $603 million, is in processed foods. I hope that this is something that would change.

When it comes to agriculture and agri-food trade through regulatory barriers, this is one of the issues that I discovered when I went to England. The minister of finance of Great Britain of the day was talking about how some of the agricultural products had been banned from the United States, in other words, products from the United States coming in, and it was under the guise of public safety, public health. But some of the nations pointed out to them that some of the tough restrictions that they have on some of their products, especially when it comes to agriculture, are way too restrictive, overly restrictive, and that the remedies they put in place were overly prescriptive, to the point where they were obscure. The issue became obscurity. It became a trade policy. It became a protectionist measure as many other nations did that.

I hope that we set up a regime whereby these issues are dealt with quickly. We have a lot of exports going out, as I mentioned. If we were faced with some of these trade barriers, the regulatory barriers, that would not serve the best purpose of this particular pending deal by the end of 2011.

One of the models that we could use would be the World Trade Organization's Agreement on Technical Barriers to Trade. It is called the WTO TBT. Obviously some of the products out there have to be banned for reasons of public safety. We genuinely do not disagree with that. But when they skew it and when they take it and twist it in such a manner that it becomes a protectionist measure, then there has to be that measure to allow the oversight so that it does not happen and it becomes an efficient system, far more efficient than what many nations now deal with.

Also, I want to talk about the major elements of this particular deal and some of the issues, such as market access for agricultural products. Trade in services is going to be a huge amount of this. Up to 70% of the services back and forth deal with the services sector alone. There does not seem to be a lot of contention with this, but let us hope this moves much more smoothly than it has been.

Then there is government procurement. My colleague from Guelph brought this up earlier. From what I can gather, one of the major issues that allowed us to get to the table is when the Europeans were able to engage our governments at a sub-national level, as the provinces were brought on board. Most, if not all, the provinces signed on in the beginning, with the exception of my own province, but that has to do more with seals, and I will leave the seal hunt to another day. Nonetheless, the procurement one is actually an issue we really have to watch out for because in this particular situation some of the municipalities could be constrained to the point where they do not receive the flexibility they had before.

[Gerald Keddy, Conservative, Parliamentary Secretary to the Minister of International Trade]

Madam Chair, I thank the hon. member for his intervention here this evening and engaging in this important debate in this place. You covered a lot of issues in his speech. I think you covered them all, and I will try to be brief.

[The Deputy Chair, NDP, Denise Savoie]

I regret to interrupt. I would just ask the hon. member to direct his comments through the chair.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Shame.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Madam Chair, I do not know what the noise is in the House beyond of course your wisdom, but I will follow your good advice.

Because my hon. colleague covered a wide range of issues in his speech, I am going to ask him a wide-ranging question, and that is regarding the opportunity that we have before us.

We have WTO negotiations, multilateral negotiations that have completely stalled. Countries around the world, if they want to trade, are being forced, as Canada has been forced, to sign bilateral agreements with individual nations. We have an opportunity here with the EU to sign a third or a fourth generation-level agreement that will set the tone and raise the bar for every free trade agreement ever to be signed after this, and lead the way for the rest of the world in what we should be doing in trade agreements.

I would like the hon. member's comments on that statement.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Mr. Chair, what we are looking at here, the comprehensive element of this particular trade deal, is what I mentioned earlier, but the sub-national level is something that we have to be extremely careful about. However, there is no doubt about it. This trade deal, when it happens, and I do believe it will at the end of 2011 into 2012, is going to raise the bar in many respects. Even with agriculture, it is going to do that as well.

Investments is another thing, the protection of investments in nations.

I am not worried so much about the Germanys and the Englands, Great Britain as well as France. It is getting into the former eastern European nations, we have to look after our own businesses as they attempt to expand into Europe. That is something that we have to watch out for. An investment regime similar to chapter 11 in NAFTA is something that has to be discussed.

There have been problems with it, no doubt. Coming from Newfoundland and Labrador, we just went through a major issue on chapter 11, but at the same time, we have to provide the balance so that we become the principal beneficiaries of our own resources. Some of that may fly in the face of trade negotiations across the way, but we cannot turn our backs on any opportunity it provides for us.

I would love to get into one sector, very briefly, that is going to benefit in my province. The seal hunt, not so much, but there is an insatiable appetite for shrimp in western Europe right now and we have a tariff currently on our northern cold shrimp that is a punitive measure that we can erase. We can open up the shrimp market and provide value-added products from our shrimp into that particular market.

I appreciate the question. I wish I had more time because I could go on and on, but apparently I will not.

[Alex Atamanenko, NDP, British Columbia Southern Interior, BC]

Madam Chair, I would like to thank the hon. member for his comments and his speech. I have had the opportunity to be in his fine province and even had a Newfoundland tie given to me years ago by a person by the name of Andrew Crosbie.

The last time I was in Newfoundland, I was there with my Food for Thought tour, and I met with some folks who explained the tremendous initiatives in regard to local food in St. John's. I am wondering if the hon. member is aware of the potential harm that this agreement could have to local food initiatives across the country.

As well, with regard to agriculture, is he aware that regarding the Canadian Wheat Board, the government's loan and initial payment guarantees for the CWB will not be permitted? This is article x3, page 267 of the agreed European text. The loss of the government's loan guarantee alone could cost farmers an estimated $107 million a year, and also, according to a document I have, there is a risk of an increase in contaminated imports because only after a problem has occurred can action be taken. That is article 9, page 45 of this agreement.

I would like him to comment on this, please.

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Madam Chair, I wish I had more time to talk about this. I will get into it point by point.

First, welcome to Newfoundland and Labrador, and Mr. Crosbie treated the hon. member well, obviously.

The other point is that when it comes to the agriculture and the Wheat Board issue alone, there is no doubt about it, there will be elements of our agricultural policy, and I am no expert, that it infringes upon. Keep in mind, as a working document, as I like to call it, this thing has to be worked out or it will fall.

He talked about $107 million. That is certainly punitive by any stretch of the imagination. I certainly hope that this will be one of the things that continues to be discussed and it looks like it will be. Whether it satisfies everybody, I doubt it, but nonetheless our farmers have to have that ability to be the principal beneficiaries of their own labour, and to do that, we have to build in some comprehensive, flexible policies to allow it.

I will give another example. There is a movement around the world that is talking about eliminating fisheries subsidies. That will be a problem for us who invest in small craft harbours. That will be a problem for us who receive EI based on fish landings. That is the second element of it, and in addition to the agriculture elements that he brings up, I do want to say to him, however, that there are problems here.

I talked about the sub-national government level of procurement. That too is going, in company with organizations like the FCM. However, I hope that we all engage in what will be an incredible opportunity for us to receive goods and to put our goods abroad much easier than we have. We are an island on the east coast. We do not have the access to the American market that the rest of the country has. We do have access, and hope to get better access, to the European Union. We are getting it and we want to get it improved.

[Frank Valeriote, Liberal, Guelph, ON]

Madam Chair, I want to thank the member for Bonavista—Gander—Grand Falls—Windsor for his wonderful speech. It was very comprehensive.

My question of the member is how does he feel about a municipality, hoping to spur local innovation, spur the local economy and protect the environment, being sued by a corporation from Europe that might have provided a lower tender on a particular project to that municipality, notwithstanding that the ultimate economic benefit that municipality might gain would far, far exceed the difference in those two quotes? How does he feel about that?

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

It is a perfect point, Madam Chair. We have already experienced it. AbitibiBowater sued the government for $500 million through chapter 11 in NAFTA. We had to settle out of court. I would love to have been a fly on the wall to hear some of the discussions, because I have a mill, quite frankly, operated by them for a hundred years that they have not cleaned up and I hope that they will. That discussion should have been had.

I will leave that for another day, but nonetheless, I will talk about the fact that yes, in many cases, the local municipalities have to have some built-in way to bolster their own economies. We already see it, and to face penalties that are major from a foreign nation will be a crippling one. I think that the Federation of Canadian Municipalities has some very good ideas about this and I certainly hope it brings them to the table.

I will give a good example. Ontario's Green Energy Act has some built-in policies that would bolster the local economies. Would that face a challenge under an investment regime set up by this free trade agreement? It possibly would, but we have got to address that by showing an example. The Europeans want to protect their own as well. Let us not kid ourselves. Let us come out with something comprehensive. We have a year and a bit to go. It is time to start talking turkey, as it were, with these comprehensive trade agreements and sub-national governments.

[Deepak Obhrai, Conservative, Parliamentary Secretary to the Minister of Foreign Affairs and to the Minister of International Cooperation]

Madam Chair, I am happy to note that the member opposite is willing to support this free trade agreement. Sure, free trade agreements require a lot on both sides. It is a normal interest for both sides to want to protect the industries, but at the same time, look at the larger picture that benefits Canada.

Every time we have had free trade agreements with other countries it has benefited this country. Let me ask the hon. member, will he be able to tell his colleagues from the NDP how important this is for his economy, for the Canadian economy, and why it is important for us to have an agreement that would be beneficial for both of us?

[Scott Simms, Liberal, Bonavista—Gander—Grand Falls—Windsor, NL]

Madam Chair, I think that everyone in the House has a good handle on this issue. Members who say they cannot stand it and have to throw it out by all measure really have a wrong-headed way of looking at it.

I mentioned the example before. The shrimp processing industry in my province stands to gain substantially by reducing punitive tariffs. The only way we are going to get there is to engage in a dialogue that puts us into a legitimate framework so that it does not happen again. That is what happens in comprehensive free trade agreements, despite some of the flaws.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Madam Chair, tonight I want to talk about trade. I come from the riding of Niagara West—Glanbrook. We are close to the U.S. border and certainly a lot of our manufacturers, flower growers and a number of other businesses have tried to over the years sell into the U.S. market and they have been very successful until recently with the economic downturn. One of the challenges we have is finding markets, finding places for some of those products.

What I believe we have done as a government, which is important, is that we have looked for an opportunity to try to open up those markets. Some parties will fundamentally be against free trade agreements. There has never been a free trade agreement that some parties have ever found that they could support. However, as a business person and someone who understands the need to access different markets, I think this is crucial, and some of the markets and some of the deals we have done, whether it be with Panama, Colombia or now with the European Union in particular, which is why we are here tonight to have this take note debate, are of critical importance.

If we are going to expand trade, which means that we are going to create jobs here at home, we are going to need to continue to expand markets. Quite frankly, the economy has been tough the last couple of years and we all understand that. The challenge with that is if we have people buying fewer goods and services, whether it be the U.S. or other countries, we have to find other ways and other markets where we are able to do that.

I am thankful for this opportunity to speak on this take note debate tonight on the ongoing negotiations with the European Union. The European Union is our second largest trade and investment partner with enormous potential for growth. I know the numbers have been talked about tonight, but we export some $44.3 billion. We import some $54 billion from the EU right now. Direct foreign investment in Canada is $163.7 billion and investment abroad from Canadian companies into the European Union is $148.9 billion. With an $18 trillion market, there is certainly a great opportunity for our Canadian companies to compete.

Certainly over the course of testimony over the last little while, we have heard from companies like SNC-Lavalin, which is a great Canadian company that is trying to build on its success in the market, and other companies that are trying to expand.

My colleague, the hon. Minister of International Trade, elaborated on the many gains for Canada in such an agreement. I certainly echo his words in noting that the successful conclusion of these negotiations is a priority for this government and is part of our commitment to build the future economic security and prosperity of Canada.

I would like to take a few moments to highlight a significant component of the agreement, government procurement and its role in setting the overall level of ambition for the agreement as a whole. For the European Union, expanded access to Canadian government procurement markets is its number one priority. In assessing the potential for increased trade between our two sides, the European Union identified government procurement, particularly at the provincial and territorial level, as an area for significant growth in our current levels of trade.

Since 1996, both Canada and the European Union have had commitments to each other on government procurement under the World Trade Organization Agreement on Government Procurement. In addition, Canada has procurement commitments with the United States under NAFTA and the recently concluded Canada-U.S. Agreement on Government Procurement, which our government reached to secure for Canadians, businesses and workers, the only exemption from buy American rules in the world, as well as under free trade agreements with Chile and Peru.

As the commitments between Canada and the European Union under the World Trade Organization Agreement on Government Procurement are currently limited, there is considerable benefit in building upon these existing commitments and expanding into new areas.

In particular, the European Union is seeking broad coverage at the federal, provincial and municipal level, including coverage of crown corporations and expanded coverage in the utilities sector.

Given the importance the European Union has placed on government procurement in the negotiations, the government is committed to achieving ambitious commitments in this area in order to make gains in other areas of importance to Canada and ultimately to successfully conclude these negotiations. At the same time, the outcome must be balanced. Where the EU has flexibilities and limits on the extent of openness in its government procurement, we will be matching these.

Negotiating an ambitious agreement requires extensive consultation. We have been closely collaborating with industry groups, all federal departments and agencies, and crown corporations, some of whom are considering international procurement commitments for the first time, as well as provinces and territories that are also breaking new ground with this agreement.

At the federal level, consultations are being undertaken with more than 100 departments and agencies and all 48 crown corporations. Support from these groups is vital to both achieving the level of ambition required in this chapter and also to demonstrating federal leadership in our commitment to the agreement.

Federal leadership and ambition is also important to our ongoing work with the provinces and territories. Provinces and territories have shown tremendous engagement in these negotiations, forming part of the Canadian delegation in the negotiations and working within their respective jurisdictions to build support and secure ambitious outcomes. The involvement of provinces and territories is crucial to the success of these negotiations.

I want to add that the trade committee travelled to the European Union to discuss with its colleagues on the trade committee in the EU, as well as a couple of the member states. This was a concern that they had. They wanted to make sure that our provinces, territories and municipalities were engaged, and this is certainly something our government has noted and has been involved with them from the outset.

The involvement of the provinces and territories is crucial, as I said before, to the success of these negotiations. Before launching the negotiations last year, the European Union pressed for assurances that provinces and territories would fully support the negotiations and would make binding commitments in areas that fall wholly or partially under their jurisdiction, most notably in government procurement.

In working with the provinces and territories to develop commitments regarding their procurement markets, there are important precedents, which serve as a basis for these negotiations. Provinces and territories have a number of internal trade arrangements, which establish similar rules and procedures for the area of government procurement, such as the Agreement on Internal Trade, the New West Partnership agreement between the western provinces, the Atlantic Procurement Agreement and the Trade and Cooperation Agreement Between Ontario and Quebec. In addition, Ontario and Quebec each have a procurement agreement with the State of New York.

Most recently, in February of this year, our Conservative government reached an agreement with the United States on government procurement, which included commitments for certain provincial and territorial procurements. This resulted in provinces and territories taking on international procurement commitments for the first time.

While some of these commitments have been offered to other countries, including the European Union, under the WTO Agreement on Government Procurement, the commitments being sought by the European Union under our bilateral negotiations are broader.

Provinces and territories have made significant progress in the course of these fast-paced negotiations. The continued support and commitment from all provinces and territories remains essential to the successful negotiation of a high-quality and ambitious agreement with the EU.

While the European Union is seeking the expanded commitments of government procurement in these negotiations, Canada's procurement markets are already generally open and transparent in practice. In fact, European firms are already winning large contracts at both the federal and sub-federal levels.

Generally, government bodies at all levels of government abide by a core set of principles in their procurement policies and practices. These include competition, in order to foster efficiency of public spending, and transparency, which ensures the contracting activities are open, fair and honest. It also includes equal treatment of potential suppliers, in ensuring they are subject to the same conditions, and accountability, to ensure that mechanisms are available to address any concerns.

Indeed, at the federal level, the government has a legislated a commitment to these principles, which secure value for money for Canadian taxpayers through the Financial Administration Act. By applying these principles and opening a wider range of procurement markets to a new trading partner, Canada is ensuring that taxpayers will receive greater value for money while also providing a more fair and transparent environment for business in Canada.

The agreement will also guarantee the same treatment for Canadian suppliers in EU procurement markets.

According to the European Commission, the European procurement market is estimated at 1.7 trillion euros or about 2.25 trillion Canadian dollars. That is 16% of the EU's gross domestic product. Despite the size of this market, many Canadian firms operating in Europe have indicated they face barriers in accessing and securing procurement contracts due to lack of transparency or insufficient knowledge of European procurement procedures.

This agreement will help establish clear rules and expand coverage of procurement markets for both Canadian and European suppliers and will provide access to various resolution mechanisms should concerns arise in the future. It will also serve to ensure greater transparency and fairness in procurement processes. The government's objective is to provide Canadian and European companies with secure and predictable access to procurement markets at all levels of government on both sides.

In order to benefit from such opportunities and to secure an equally ambitious outcome for the EU in this and other areas of importance to Canada, we are committed to achieving ambitious and comprehensive commitments to government procurement.

We have made significant progress thus far in this government procurement, and we are now in the final stages of preparing the initial exchange of offers. While many entities and jurisdictions have shown incredible initiative and flexibility in preparations toward Canada's offer, there is some distance to go.

In closing, I want to urge all members to support Canada's ongoing free trade negotiations with the EU. Encouraging provinces and territories to be ambitious in their offers of government procurement, rather than the knee-jerk protectionist inclinations of free trade naysayers, will inevitably lead to even more ambitious outcomes for Canadian exporters and employees in the European market.

[Frank Valeriote, Liberal, Guelph, ON]

Madam Chair, the member opposite speaks with some enthusiasm about his government giving up local autonomy and the rights to local procurement in exchange for whatever else might be in the trade agreement.

First, I am wondering if he is aware that in the Canada-U.S. procurement agreement many municipalities in the United States refused to negotiate away their right of local procurement, and second, I am wondering how he feels about the rights of municipalities to prefer local industry to spur innovation, to spur the economy, to protect the environment. I am wondering if he is prepared to give that up at any cost.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Madam Chair, I think there are a couple of key points to mention. I think the first one is that there have been extensive consultations with the provinces, as well as the municipalities. We certainly would never want the municipal governments to give up anything that they could do cheaper, that they could do better locally, and by all means we encourage them to continue along those veins.

In terms of my enthusiasm, really I am looking for other opportunities for our Canadian businesses. Part of what this deal entails is an opportunity for us to look at the markets that we can probably bid on in the European Union. I look at the market that is over there and quite frankly I see a lot more opportunity for our Canadian companies, not only to bid on what we are doing here locally and what we have here in this country, but also to give our Canadian companies an opportunity, as I mentioned earlier, to bid on a much larger market in the European Union, which would benefit some of my local companies in Niagara.

[Malcolm Allen, NDP, Welland, ON]

Madam Chair, I want to thank my colleague, the member for Niagara West—Glanbrook who geographically is my neighbour.

I will remind him what the Thorold council said about two and a half years ago when I paid it a visit. When it came to free trade, the council said “No, thank you very kindly”. In fact so did nearly 80% of the regional governments in the region we both live in.

Nonetheless, what we need to talk about is this free trade model of which my hon. friend there are some naysayers. Let me say nay.

It is not about whether or not we want trade, which of course gets thrown back this way all the time. Of course we are a trading nation and have been since the voyageurs, but there are ways to develop trade and there are ways to develop trade differently, and what we are saying to the government is that it should explore that.

When it comes to sub-national governments, as we call them, I call them municipal governments, I call them councillors and mayors and premiers of provinces. I guarantee that the EU is looking at the Samsung plant that is supposed to go to Windsor and Tillsonburg and saying it would rather see it stay in Spain and Germany. I guarantee the EU is looking at Bombardier in Thunder Bay and saying that it would rather build those cars in Italy. I guarantee that the EU is looking at our agriculture products and saying that we cannot call that Quebec cheese by that name any more because that is not on, as far as it is concerned.

I wonder if my friend from Niagara West—Glanbrook would like to explain how indeed the flower producers in his region are going to ship those flowers all the way over to Europe, especially if they are tulips, and try to get away with it.

At the end of the day, the EU has been doing this for a long time, breaking down borders, moving back and forth. Ask it how well it is doing. Ask those folks who left Poland to go to Northern Ireland to work how they are doing when they went all the way back to Poland under the model the EU gave them. Ask them how well they are doing. They will tell the member they are doing very poorly.

Ask Canadian workers if they are better off today than they were in 1995 and the answer according StatsCan will be that they are worse off or exactly the same, and the StatsCan report actually proves it. Of course we are going to lose that soon with all that census material.

The top 1% are doing really well; those at the bottom end of course are not doing so well; and the ones in the middle, that great big chunk in the middle who we want to make sure prosper, have not.

Let me ask this. Is free trade working for workers in this country?