Madam Speaker, it is a pleasure for me to rise and speak about this historic agreement. My comments today on CETA will deal with the investor protection section of the agreement. However, before I begin I must comment on the significance, in my opinion, of this agreement to the current global context.
First, as the chair of the Canada-Italy Interparliamentary Group, and as a dual European-Canadian citizen, I must congratulate those who worked on the agreement and acknowledge the judicious and diligent work to complete the deal. Auguri. Félicitations. Congratulations to our Minister of International Trade and the minister's entire team. Canada has a small, open economy, and we are trade dependent. Trade generates growth and good middle-class jobs, and this deal would do that.
At a time in world history when it seems that walls are building around us rather than coming down, and populist rhetoric is providing false hope, the importance of CETA is not lost upon me. This view is from both sides of the Atlantic.
The CETA agreement is a progressive trade agreement that would deliver positive results and opportunities for citizens in the European Union and Canada. In my home province of Ontario, CETA would help drive economic growth and create stable and high-paying jobs for generations. The European Union is already Ontario's second-largest export destination and second-largest trading partner. Once in force, CETA would eliminate tariffs on almost all of Ontario's exports and provide access to new market opportunities in the EU.
Here are a few simple facts. The EU is Canada's second biggest trading partner after the U.S. and accounts for nearly 10% of its external trade. Trade in goods between the European Union and Canada is worth almost 60 billion euros, roughly about $80 billion to $90 billion Canadian a year. In 2013, European investments in Canada were estimated at 225 billion euros, while Canadian direct investment stocks in the European Union amounted to more than 117 billion euros.
Prior to CETA's entry into force, only 25% of the European Union tariff lines on Canadian goods are duty-free. Upon CETA's entry into force, the EU would remove approximately 98% of its tariff lines. Once CETA is fully implemented, this would increase to 99% of all of its tariff lines.
We should be proud of CETA. It is the most progressive trade agreement ever negotiated. It would help redefine what trade can and should be. It would lead to increased prosperity here in Canada, create well-paying jobs, and help strengthen the middle class. It is also a ground-breaking agreement in opening doors to increased access to the EU market for Canadian companies. CETA sets new standards for trade in goods and services, non-tariff barriers, investment, government procurement, as well as other areas, like labour and environment protection.
Just as important, the agreement would also help facilitate investment, a significant factor in achieving prosperity and job creation. Foreign direct investment, commonly known as FDI, is an important driver of economic growth, with new investment by foreign firms having the ability to provide a boost to national income and to create good, middle-class jobs for Canadians. Foreign investment here in Canada and Canadian companies investing in the EU can also promote trade by facilitating value-chain linkages and improving access to new technologies. Not only would CETA help facilitate foreign investment, but it would set a new bar for investment protection.
One of the most important things our government did right after taking office was to listen to the constructive criticism from the critics of CETA, both in Canada and in Europe, and to understand some of the legitimate anxieties people, organizations, and governments had. We heard many concerns regarding the investment protection provisions in CETA, and we have worked with Canadians, including industry and civil society alike, and with our EU partners, to address these issues and to prove that progressive trade policy is possible with CETA. Our government fully seized the opportunity and developed a new and improved approach to investment protection provisions.
A significant innovation in CETA is the transformation of the mechanism for the resolution of disputes between investors and states. CETA marks the first international trade agreement that establishes a permanent tribunal to hear claims by investors alleging that states have breached investment-related obligations. I repeat, a permanent tribunal. The CETA tribunal would consist of 15 members appointed solely by Canada and the European Union. Ethical requirements would be central to the process leading to their appointments, including not allowing members of the tribunal to act as counsel or expert witnesses in an investment dispute under any international investment agreement. Members would be appointed for a five-year term that may be renewed only once.
Individual cases will be heard before a three-member division of the tribunal, and those members will be selected on a rotation basis, ensuring that the composition of the division is random.
Such innovations address concerns about a perceived lack of arbitrator independence and will give greater legitimacy to the dispute resolution process. Moreover, as the members of a division hearing a specific case will be in a position to consult with the other members of the tribunal, we expect that the coherence of decisions will be much improved as a result.
In addition to the first-instance tribunal, CETA will establish a permanent appellate tribunal, thereby creating another precedent in international investment law. The appellate tribunal will function in a way similar to the first-instance tribunal. Its task will be to review decisions that are contested by either the foreign investor or the respondent state. In time, the first-instance tribunal and the appellate tribunal will develop a body of decisions that will constitute effective jurisprudence. This, in turn, will create greater legal certainty for both foreign investors and governments. It is very important that we have this.
The innovations made to the mechanism for the resolution of disputes are certainly significant ones, and our government is proud of them, but there are other innovations in the CETA investment chapter.
We have closed the door to provision shopping by clarifying that investors cannot seek to import provisions from other Canadian or European trade agreements through CETA's most-favoured-nation treatment article. CETA encourages the use of domestic courts by suspending the timelines for the submission of claims while domestic remedies are being pursued.
We added an article on mediation to encourage early settlement of disputes without recourse to the CETA tribunal. We have provided CETA with a mechanism for the early dismissal of frivolous claims. We have taken small and medium-sized enterprises into consideration and have added provisions that make it easier for them to access the mechanism for the resolution of disputes. We have made it mandatory for an investor who submits a claim while benefiting from third-party funding to be transparent and to disclose the identity of its funder. Importantly, we have established a committee that will provide a forum for the CETA party to consult on difficulties that may arise regarding the implementation of a chapter and on possible improvements to the chapter, especially in light of experiences and developments in other international fora.
It has also been Canada's long-standing practice to prevent so-called mailbox companies from benefiting from Canada's trade agreements. CETA is no different. To be considered an investor under CETA, a European Union enterprise owned by interests of a third party is required to have substantial business activities in the territory of the European Union. It cannot simply establish a mailbox company in the EU with the sole purpose of gaining access to the dispute resolution mechanism of CETA.
Finally, CETA demonstrates Canada's continued leadership with regard to promoting transparency in the dispute resolution process. Under CETA, all hearings will be open to the public, and all documents submitted to or issued by the permanent tribunal will be made available to the public.
The changes we made to CETA in addressing important issues voiced by Canadians and EU citizens alike represent a starting point in the development of a progressive trade agenda between a progressive Canada and a progressive European Union. This is an agenda that is linked to the government's domestic policy focus on reducing inequality and enhancing inclusive growth through such things as investments in infrastructure and increased child benefits. The idea is to ensure that trade policy makes a more meaningful contribution to this overall agenda and to ensure that trade is done in a way that really works for Canadians and our trading partners.
Canada will continue to seek ways to enrich the economic relationships we have with valued partners with the aim of achieving prosperity for all Canadians. However, it is very important to our government that we ensure that this is done in an inclusive and responsible manner. We are seeing this approach realized in CETA.
I am very proud to stand here and speak to this agreement. I believe it is transformational and, in the context of where we are in modern-day history, very much needed.