Good morning, everyone.
Good morning, everyone.
My name is Kirsten Hillman. I am the Associate Assistant Deputy Minister of the Trade Policy and Negotiations Branch at Foreign Affairs, Trade and Development Canada, and Canada's Chief Negotiator for the Trans-Pacific Partnership, or TPP, negotiations.
Mr. Chair, I am very pleased to have the opportunity to speak with the committee today in support of your study on the benefits of the TPP to Canada, particularly at such an important juncture in the negotiations.
With me today, from DFATD is Nadia Theodore, who is our director of the TPP division, communications and engagement.
I'd like to start by saying that I have read with great interest the exchanges that you have had with witnesses appearing before the committee in the spring, as well as more recently with several Canadian stakeholders in British Columbia. I noted in particular that a number of stakeholders in B.C. highlighted the importance of free trade agreements as a way of helping diversify Canadian trade.
They also cited the potential to lower both tariff and non-tariff barriers impeding Canada's exporters' access to key markets, including in the Asia Pacific, and the importance of competing on a level playing field with other global players.
The value of being part of the TPP as a transformative agreement, as they call it, was also expressed. If successful, the TPP with its current membership and as it continues to grow will undoubtedly set the terms of trade in Asia.
I note that the comments you have heard are similar to those we have heard from our own consultations with Canadians. Consultations have been a very important part of the process for us and have helped us inform our positions, the positions that we have taken throughout the negotiations since we joined. We continue to welcome the input of stakeholders, and have mechanisms in place to support an ongoing and productive consultation process.
From a comprehensive Canada Gazette notice as well as through meetings, briefings, and other methods we have used to engage Canadians, we've heard a number of views including those of Canadian businesses, provinces, territories, academia, civil society, and organizations and individuals. While a few concerns have been raised with specific elements of the negotiations, overall there is very strong and very broad support for Canada's participation in the TPP.
I'd like to talk a little about the TPP as a strategic opportunity for Canada.
Budget 2014 reiterated the government's commitment to opening new markets for Canadian goods, services, and investment. The government has demonstrated its commitment through the recent conclusion of the Canada-Korea Free Trade Agreement as well as through expanding trade with emerging markets in Asia and the Americas through our engagement in the TPP.
The TPP is an initiative that is squarely in line with the government's ambitious trade policy agenda. The global markets action plan, which is the blueprint for creating opportunities for Canadians through trade, identifies both the emerging and established markets in the TPP as priority markets for Canada, given the important opportunities they represent for Canadian businesses.
Broadly speaking, the TPP represents an important economic and strategic opportunity, I would say, in three ways. First, the TPP negotiations are a significant part of Canada's efforts to expand our commercial presence in the high-growth Asian markets. Second, being part of this transformative initiative enables Canada to be part of the rule-setting process that will impact how trade and investment are negotiated more broadly going forward. Third, the TPP provides Canada with the opportunity to work with our largest trading partner, the U.S., to pursue outcomes that protect and further enhance North American integration and supply chains.
I'd just like to turn to each one of these briefly.
First, the Asia Pacific is a priority region for Canadian businesses as well as for Canadian trade policy promotion. The Asia Pacific region is home to some of the fastest-growing economies in the world. And with both the U.S. and Japan, the world's largest and third-largest economies, respectively, the TPP market represents more than 792 million people and a combined GDP of $28.1 trillion. This is almost 40% of the world's economy.
The TPP holds significance for Canada's relationship in the Asia Pacific region and for our broader efforts to diversify Canada's trade and investment in order to create new sources of prosperity for Canadians. Solidifying and expanding Canadian access to global markets is essential to maintaining and enhancing Canada's competitiveness in an increasingly complex global environment. The TPP is among the best mechanisms we have to achieve that goal. This is particularly true as the TPP is expected to grow to include other countries in the region in the future. In fact, Korea has recently expressed strong interest in pursuing participation in the TPP. As more countries follow suit, the value of the TPP to us, from both a commercial and a geopolitical perspective, simply grows.
As a modern, high-quality agreement, the TPP will become the leading mechanism for Asia Pacific economic integration. For Canada, this expansion is fully in line with our trade priorities in the region and highlights the critical point that Canada's participation in these negotiations is essential.
Second, it is important for us to be part of the rule-setting process. Although there are currently other regional negotiations in the Asia Pacific, including the ASEAN-led Regional Comprehensive Economic Partnership, or RCEP, nothing in the region compares to the TPP in terms of level of ambition, comprehensiveness, or scope.
Canadian companies have long recognized that sitting on the sidelines is simply not an option when it comes to today's global economy. Participating in the TPP means that Canada is at the forefront of designing new rules governing trade and investment not only for the Asia Pacific region, but for the wider global market.
The TPP has been called a 21st-century initiative, but what exactly does that mean? To put it simply, it means that in addition to lowering tariffs we are placing significant emphasis on new and emerging challenges that our companies face in the modern knowledge-based economy and the highly competitive global market. For example, we're seeking strong rules in relation to intellectual property protection and enforcement for our innovators; we're seeking to raise the bar in relation to reducing non-tariff barriers to trade; we are trying to ensure effective competition rules for state-owned enterprises; and we're focusing on transparency and regulatory coherence. Negotiators are also pursuing rules that support small and medium-sized enterprises, and recognize the unique nature of the digital economy. We're working to support supply chains.
These are all the kinds of issues that make this, the TPP, a modern, 21st-century trade agreement.
That brings me to the third reason that the TPP is a key element of Canada's pro-trade plan. This initiative provides Canada with the opportunity to work alongside our largest trading partner, the U.S., in pursuing expanded opportunities in the broader Asia Pacific region. Our economy continues to be highly integrated with the U.S., and while we look to pursue new opportunities and to diversify trade to support sustained growth, we cannot forget the importance of promoting and protecting this relationship.
The potential offered by the TPP to strengthen the North American partnership was highlighted, as you will likely have seen, in the North American Leaders' Summit joint statement that was issued last month.
The TPP is giving Canadians an opportunity to protect and enhance North American supply chains, while advancing Canadian interests vis-à-vis our critical partner to the south, the United States.
Let me now briefly summarize our key objectives in the negotiations. Naturally, we are seeking an ambitious TPP outcome across all areas of the negotiations.
That said, with respect to the rules being negotiated under the TPP, several areas have been of particular interest to stakeholders. As such, we have been pushing for strong outcomes in relation to protection and promotion of inward and outward investment, strong and balanced rules on intellectual property rights and enforcement, improved regulatory transparency, and effective disciplines on crown corporations, among others.
We are also placing priority on improved market access for a wide range of goods, while also seeking gains through market access enhancements for government procurement and services trade, including for service providers. These are areas that could have significant positive economic impacts and that Canadian businesses have emphasized.
We're working hard to achieve outcomes on these and other issues in order to meet our goal of realizing tangible benefits for Canada.
The TPP countries are at an important stage in the negotiations, having concluded 19 full negotiating rounds, of which Canada has taken part in the last five. We have moved to a new format with frequent engagement at the level of technical experts, chief negotiators, and ministers.
Our most recent meetings were in Singapore. Chief negotiators met from February 17 to 21, while ministers gathered for four days from February 22 to 25. The meetings in Singapore enabled frank discussions among members on a path forward. They also allowed TPP members to reaffirm our shared commitment to conclude a comprehensive next-generation agreement that supports the creation and retention of jobs and promotion of economic development in all TPP countries. Members are aware of the work that needs to be done to meet these goals and will be continuing to resolve outstanding issues.
As for the next steps, negotiators have been working tirelessly over the last several months. These efforts will continue as TPP countries work to narrow the remaining gaps and move towards concluding the balanced, ambitious, next-generation agreement that we all seek.
Canada will also continue to ensure that a high level of engagement is maintained with the Canadian public, as well as with Canadian provinces and territories, particularly in areas of provincial/territorial jurisdiction and interest.
In conclusion, Mr. Chairman, free trade negotiations are increasingly important for promoting Canadian commercial interests around the world and therefore for creating prosperity here at home. Our competitors are negotiating agreements at a pace never seen before. Canada has risen to the challenge with our own ambitious pro-trade plan, and Canada's participation in the TPP is a key element of that.
The government is committed to ensuring that Canada pursues its interests across all sectors in the TPP in order to secure tangible benefits for all regions in Canada.
I thank the committee for this opportunity. My team and I look forward to hearing your views. I would also be happy to take any questions at this time.
Thank you, Ms. Hillman and Ms. Theodore, for coming. It's very welcome to have some of our professional civil service members who are involved on the ground with these negotiations. We appreciate your time and your being here.
I do have to comment on my friend Mr. Morin who spoke positively about supporting trade and treaties that are good for Canada. Most MPs get bombarded with a lot of emails that really try to spread misinformation with respect to trade.
In fact, each of the NDP members of the trade committee sponsored these emails or are part of websites called MPs for Transparency and all of these things. So, having officials involved in the negotiations here to dispel the myth that there's some secret agenda happening is not only welcome.
The most recent email that all MPs received as part of these email campaigns said that “there is no justification for negotiating” with the countries of the Trans-Pacific Partnership. I think your presentation was helpful because you showed exactly why there's a justification for being at the table. I'm going to use my short period of time to talk about that justification and I'll be sending this exchange back to the forces, the Council of Canadians and others, who try to really cause mischief and misinformation.
Your second part, I think, was the most critical in terms of rule setting. This is a market of 800 million—give or take—consumers representing a significant portion of the world economy and, if we're not setting the rules of trade for the generation to come, Canada will be a loser and our economy will suffer.
I'd like to you to just talk a little bit more about the rule setting and if possible to talk about the services aspect to Canada's economy. Often we think of trade as selling cars or resources, those sorts of things, but services account for 70% of Canada's GDP and 14 million Canadian jobs. Modern trade agreements like the CETA and others take into consideration the exchange of services and professional mobility, those sorts of things. Could you speak about that as part of the rule-setting process for the TPP?
Yes, absolutely. I'd be very happy to.
I think on your first more general point around rule setting, what I'd like to pause on for a moment is the fact that the NAFTA and the WTO agreements are 20 years old. They are excellent agreements, the WTO at setting global standards, and the NAFTA being really the vehicle for our integration in North America and much of our prosperity and the establishment of North American platforms. They're very important agreements.
That said, as I was saying earlier, business has changed. The way in which we do business has changed. The digital economy has become much more important. Small and medium-sized enterprises are drivers of our economy. Emphasis on the kinds of rules that need to be put in place to help them is crucial.
For example, things such as lack of regulatory transparency, or having a licensing requirement in a foreign jurisdiction one day and having it changed the next day, can cause some of these small and medium-sized businesses such difficulty that they will retreat from international operations. Maybe they will operate in the United States, but further afield will be a little bit too precarious for them.
In terms of setting the terms of trade, of setting the rules for trade, our responsibility is to create the conditions under which these actors that are the creators of jobs in our country can grow, participate, and flourish, conditions such as regulatory transparency, regulatory predictability, lowering technical barriers, ensuring predictable and secure data flow, and ensuring appropriate protection of their innovation.
We've talked to a lot of businesses—the energy sector was one area—that create small tools and small implements that are used in the resource sector and have large markets in Asia. If as soon as they are sold they are retro-created, then their business, their innovation, and the value of that has been lost, so ensuring that those rules are in place and enforced in this region, and in this treaty as it expands to include other players in the region, is crucial for Canadians.
Did you want me to go on to services? I don't want to keep your—
The way in which we approach, and have historically always approached, trade negotiations is to balance the requirement...and a trade negotiation is no different from any other negotiation that one might have in any other business context or labour context. There's a certain amount of confidentiality that's required in order to maintain our negotiating partner's trust. People have to take steps to be able to test the waters with certain ideas, get reactions, and see if those ideas are worthwhile in an environment where they feel comfortable that this will not become public, or they won't take those chances.
Like any negotiation—I'm not telling any of you anything you don't already know—in that context there has to be a certain amount of negotiating confidentiality or it just won't work. Nobody can negotiate in the public eye.
That being said, this is a government initiative for the benefit of Canadians, for the benefit of our businesses, our citizens, our workforce. Therefore, the positions that we as public servants are asked to take at the table are informed 100% by the consultations we have within the government and in Canadian society at large.
We have a very robust consultation mechanism or series of tools in this negotiation, similar to everything we've had in other negotiations as well. We have our Canada Gazette process that we launched before the negotiations were initiated in December 2011. We received 79 submissions from companies, associations, civil society, provinces, individuals, and a variety of sources. We have a consultation mechanism whereby we have regular information briefings to hundreds of Canadian businesses in civil society, stakeholders, on a regular basis as the negotiations progress. We do this through webinars. We have an online tool and mailbox. We receive written submissions, we answer back, and we also meet with specific groups, either in the business community or others, who ask us to meet and discuss what's going on in their specific areas of interest.
Within the confines of the trust we have with our negotiating partners, we reach out in a multitude of ways to inform our negotiating positions. That is the mechanism we use to make sure that the information is getting out to those who are most interested in it in relation to the TPP.
The other thing that I think is really interesting about this negotiation, and that I've never seen before in my career in this area, is that the TPP itself, during all of the formal negotiating rounds, had what was called a “stakeholder day”. Negotiations were suspended for a day and stakeholders from any TPP country were invited to come and make presentations to not only negotiators from their own country but to negotiators from all TPP countries. Then we had a question and answer period.
I've never seen anything quite like it before. Many Canadian stakeholders participated in that. It also gave us an opportunity to provide them with a forum to talk to negotiators from every other TPP country should they so desire. I think really the openness of this negotiation is unlike anything I've ever seen before.
Yes, I can talk about that.
In the TPP it's been a bit of an iterative process for a few reasons: one, when we joined; and two, it's not a bilateral negotiation. Unlike the Canada-Japan FTA, for example, where a study was done before we joined that assessed a number of things, the TPP operates somewhat differently. Rather, the TPP represents or includes a variety of markets and countries that have been identified as priorities by our department and the minister through the trade policy agenda. Those priorities were based on consultations with Canadians, on assessments of market access barriers that exist in those regions and countries, on what we were looking for in improvements.
So there was an assessment through the global commerce strategy and its successors to identify core markets of interest for Canadian businesses. In addition, as the TPP has evolved, we have, as I said, a bit of an iterative process in assessing where it's at and the benefits as it progresses.
We have considered the opportunities that will arise from deepening our relationships with FTA partners, the U.S., Mexico, Chile, Peru, and others.
We have assessed the benefits of some of these new emerging markets, and our chance to gain new access into some of these areas, based on the high tariffs they had, based on some of the non-tariff barriers and regulatory or competitiveness challenges that we have with those countries.
All of the partners are listed as priority partners in our priority markets assessment under the global markets action plan. That is also the other area in which we have done the assessment.
I guess the answer that I can give you is. This assessment is coming at the TPP from a variety of different angles. It's an assessment that is ongoing as the negotiations are ongoing. As I mentioned, Mexico and Canada joined, and then Japan joined. It is a fairly organic process that we have in the TPP.