Welcome back, everyone.
As everybody knows, we had the votes in the House on Bill , the CPTPP, and it has been forwarded to us for review in order to report back to the House.
We'll proceed with the officials with us here today. Thank you for coming. The officials are going to give a short presentation, and then we're going to get a few questions from the committee members, if they have any questions. When we wrap that up, we'll go into clause-by-clause study.
Without further ado, Mr. Christie, thank you for coming and bringing your officials. You have the floor.
Good morning everyone.
As you may know, my name is Bruce Christie. I am the Lead Negotiator of the Government of Canada for the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the CPTPP.
I am joined today by a number of my colleagues, including Kendal Hembroff, Director General of the Trade Negotiations Bureau at Global Affairs Canada, who is also Deputy Chief Negotiator for the CPTPP. A number of subject matter experts are also present, several of whom participated in the CPTPP or original TPP negotiations.
I'm very pleased to have this opportunity to discuss Bill and the CPTPP with you today. Following my brief remarks, we'll be happy to take your questions and provide any further details on the text of the agreement and the bill itself.
By way of brief summary, the CPTPP is a comprehensive, modern free trade agreement that covers virtually all aspects of international trade policy across 30 chapters in total. It incorporates, by reference, a majority of provisions of the original TPP agreement with updated procedures on withdrawal, accession, and review of the agreement, as well as 22 suspended provisions.
Once fully implemented, the agreement will provide preferential access for Canadian goods, eliminating 95% of tariff lines among the CPTPP parties. This covers 99% of Canada's current export to CPTPP partners.
To support the benefits of trade tariff elimination and facilitate merchandise trade, the CPTPP includes chapters dedicated to establishing clear rules for goods market access, including national treatment, rules of origin, and streamlining customs procedures.
Beyond goods, the agreement also enhances Canada's access to CPTPP markets with respect to services, investment, and government procurement. Another chapter is dedicated to facilitating labour mobility to enable certain highly skilled business people and professionals to enter and work in CPTPP markets on a temporary basis.
Finally, the CPTPP also features chapters dedicated to the protection of the environment and labour rights. These chapters are enforceable through the agreement's dispute settlement mechanism.
In addition to the main text, Canada secured a number of bilateral side instruments with CPTPP members to build upon the agreement's outcome in areas such as autos and culture.
What does all this mean to the Canadian economy? The CPTPP will create the largest trading bloc covering the Asia-Pacific region, spanning 11 markets that represent close to 500 million people and 13.5% of global GDP.
The CPTPP also provides Canada with preferential access to seven new free trade partners, notably Australia, Brunei, Japan, Malaysia, New Zealand, Singapore, and Vietnam. The CPTPP will open up the Japanese market in areas where Canadian exporters have historically faced high tariffs and other barriers to entry. This will level the playing field for Canadian companies with respect to competitors such as Australia, which already have preferential access to the Japanese market. It will also help Canadian companies gain an advantage over competitors without such preferential access, such as the United States.
Beyond Japan, the CPTPP will also allow Canada to have preferential access to some of Asia's fastest-growing markets such as Malaysia and Vietnam, and the economic benefits of the agreement are expected to be wide-reaching, spanning agriculture, fish and seafood, forestry, mining, industrial machinery, services, and investment. The government estimates that implementing and ratifying the CPTPP will generate long-term GDP gains of $4.2 billion.
The agreement's high-standard rules help ensure Canadian companies, large or small, have meaningful gains from enhanced access to the Asia-Pacific region.
The agreement and its benefits to Canada will continue to grow as new economies join the accession process. In fact, a number of economies have already indicated an interest in acceding to this agreement after it enters into force, notably Colombia, Korea, Thailand, Taiwan, and the United Kingdom. Negotiations on the accession of new members will begin after the CPTPP enters into force.
The agreement will enter into force 60 days after six of the signatories have ratified the agreement. Three members have already completed the ratification process: Mexico, Japan, and Singapore. The timing of other members' ratifications is not clear at this point, but we're certainly expecting that six countries will have ratified this agreement by the end of this year and possibly sooner.
In closing, Mr. Chair, I would like to say that Bill will amend a number of federal statutes and provide the necessary authorities for Canada to meet its obligations under the CPTPP. Following royal assent, federal departments will carry forth their required regulatory amendments, after which Canada will notify the CPTPP depository that it has ratified the agreement.
This concludes my opening remarks, Mr. Chair, and now we will be happy to take your questions on Bill and the CPTPP in general.
Our office of the chief economist did an economic study looking at what the impact on trade and investment into Canada will be as a result of the ratification implementation of this agreement. We looked at how, especially given the fact that the United States had decided not to participate in the agreement....
We're anticipating through the study that yes, it's been reported that there will be some initial losses in the auto sector, but there will be significant gains in exports for Canada in key export sectors such as beef, pork, dairy, other agricultural products, forestry, lumber, fishing, mining and extraction, manufacturing, and services.
We see significant increases. I can give you some of the numbers. We see a 9.3% increase projected in agriculture, 36.6% in beef exports, 29% in pork, 10% in forestry and lumber, etc.
Through the economic modelling performed as part of the study done by Global Affairs Canada's chief economist, we see significant gains in our key export sectors as a result of this agreement.
Thank you very much, Mr. Chair.
I want to take this opportunity to thank the officials here. I know it's been quite a busy time, and the hard work you've put into this file is extremely important.
I want to talk a little about the historical context, because, you know, hindsight is always 20/20. In November 2015, just a couple of weeks after the election, and Mr. Obama had their first meeting, and I'm going to put a quote into the record here. Mr. Obama said, seated next to Mr. Trudeau in a small room following their first formal meeting:
||We are both soon to be signatories to the TPP agreement, and that's another area where we can continue to have important discussions. I know Justin has to review what's happened, but we think that after that process has taken place that Canada and the United States and the other countries that are here can establish the kind of high-standards agreement that protects labor, protects the environment, protects the kind of high-value-added goods and services that we both excel at.
Now, this was a year before the election in the United States—and I know the President and the at the time were BFFs, and I think they still talk and get good advice—but one of the reasons that things were not moved forward was these other side agreements, so to speak.
I was wondering if you could comment on the big structural differences between the original TPP and the CPTPP. What are the big differences we're getting now that, if we signed on then, would cause that much of a difference? As my colleague was saying here, right now we're stuck in this NAFTA situation, and if we had signed with a willing president way back then, we may have been able to avoid some of this really stressful stuff that our industries have to face right now.
First, I have to put on the record a protest. I'm only here because of a motion passed by this committee at the beginning of its work in 2015. I objected to this motion at the time. It was one invented under the previous government to deny me my rights at report stage.
It's a clever piece of work to claim that since committees are the masters of their own process.... When every committee passes an identical motion that affects any member of Parliament who is not in a recognized party to say that they will be invited to committee, the effect of that is to eliminate my rights, which exist under our Standing Orders, to present my amendments at report stage. Now that I have the opportunity to present them at committee, I no longer have the right to present substantive amendments at report stage.
My protest on the record is this. The motion you passed said that I must have 48 hours' notice, that I will be given 48 hours' notice to prepare amendments before clause-by-clause study. In this instance, we received the notice on Tuesday at 2 p.m. to have amendments prepared and submitted by Wednesday at 5 p.m., which is substantially less than 48 hours.
I mention this because since I'm not a member of the committee, all my amendments are deemed to have been submitted. I'm not allowed to vote on them. I am allowed to speak to them briefly, and I'm bearing that in mind. I just want to explain that I may try in report stage to submit additional amendments because the time of the notice was insufficient, even by the onerous provisions—and they are onerous, to me—of the motion by this committee and every other committee. It's astonishing when you consider that each individual committee is the master of its own process. The synchronicity of identical amendments is astonishing.
However, I'll pass over that and just say that I wanted to make it clear on the record that I did not have adequate notice to propose more than the four amendments I bring to you now.
I am prepared to proceed. Thanks, Mr. Chair.
I will group all four because they all go to the same point. All four of my amendments, which I hope will be considered seriously, are to removing the ISDS provisions. They are all found, as you know, in chapter 9 of the CPTPP and they are more specifically found in chapter 9, part B.
I want to draw to your attention as a committee that it's not necessary for purposes of achieving all the tariff benefits, the trade benefits, with the countries within the TPP. We can argue about the benefits and the irregularity, depending on what sector you're looking at, but for the moment let's just say the trade benefits found in CPTPP are unchanged in Canada's application of that provision if ISDS is removed.
As a precedent I want to suggest to you that Canada has proceeded to ratify the comprehensive economic and trade agreement with the European Union, CETA, knowing full well that several European Union nations want to opt out of the investment chapter of that agreement.
Furthermore, recently Japan has negotiated a new trade agreement with the European Union, and they decided in the course of negotiations to leave out any investment chapter. Although it's become a dogma to expect an investment chapter in the context of a trade treaty, in the essence of trade agreements—which is liberation and open access to markets—investment treaties are not necessary for that, and again in the CETA, European nations have said they don't want to accept those provisions as they give increased rights, superior rights, to foreign corporations that are not available to domestic corporations.
In evidence to this committee—and it was a while ago, so I went back and reviewed the work of this committee and its excellent report in April 2017—you heard from a number of witnesses. Just to refresh your memory, my amendments today would meet the concerns of the Trade Justice Network, the Manitoba Federation of Labour, the Canadian Environmental Law Association, the NGO group Open Media, the Quebec Association for the Taxation of Financial Transactions for the Aid of Citizens, the Canadian Association of Physicians for the Environment, and the Canadian Cancer Society, and speaking as independent legal experts, York University law professor Gus Van Harten and University of Toronto law professor David Schneiderman. These are the people who spoke to the committee and expressed numerous concerns about the investor state dispute resolution.
You might be wondering why the amendment says “PV”.
It stands for “Green Party”. It may be because under Mr. Harper, someone thought that “G” could be taken to stand for “government”. So “PV” means “Green Party”.
We have amendments PV-1 to PV-4.
The amendments are all to the same effect: to remove the investment sections of the CPTPP. You can ask the officials again, but it will not affect the portions that you're most concerned about, the ones about getting in early and being able to start getting the tariff benefits for various sectors of the Canadian economy. This would just mean that in the future, a Malaysian corporation, for example, couldn't bring an investor dispute arbitration against Canada.
As you heard, and it's in your report in evidence, we are the most sued country in the developed world under the investment treaty of chapter 11 of NAFTA. We have lost many of those cases, and it was not because we were not following proper trade regimes because we have not.... For instance, in the S.D. Myers or Ethyl Corporation or Bilcon cases, none of them were about Canadian government decision-making to advantage domestic corporations and prejudice foreign corporations. In other words, the animus isn't trade-related. They were acts taken by the Parliament of Canada or ministers of Canada, such as Environment Minister John Baird. They were decisions taken that were appropriate within our laws as a democracy, and later we find we owe millions of dollars to foreign corporations that don't deserve a dime.
Therefore, I beg you to seriously consider having a full debate on whether we should include an investment chapter when we don't have to.
Yes. Thank you, Mr. Chair.
In this particular amendment, it's clear that we're not looking at a removal of this provision, which is something that I'm supportive of. I think it's unfortunate that we can't see a full removal of it, but what I'd like to propose in the amendment are some improvements to this process, because it is largely unaccountable.
The amendments I've put forward here would make the membership of the chapter 28 dispute resolution panels more broad-based and accountable. It wouldn't leave the power solely with the minister. The minister would have to refer to separate parties, separate bodies, and provide opportunities for public participation.
If Canada is going to continue down the path of including this type of investor-state provision, why is there not an attempt to improve these provisions? Why isn't there an attempt to bring them into the public eye, as we heard from Ms. May and as I believe one of the officials referenced earlier said that others are doing? This really speaks to the ability, first of all, to remove that power essentially from one minister, a power that we think is not responsible or in the best interests of Canadians, but ultimately we would be able to have these panels, at a very bare minimum, be more broad-based and accountable, and as I said, provide those critical opportunities for public participation.
The main criticism we've heard, other than the cost and the cooling effect it has had on provincial legislation in trying to implement some things in Canada—and I'd say the cost in the cases is significant—is the fact that it's in secret. There is no ability for the public to engage in this process whatsoever, and I do not believe that Canadians support this type of secretive panel, appointed by the minister, meeting without Canadians having knowledge as to what we're being sued for, why we're being sued, and the amount we're looking at. That's anti-democratic.
This amendment speaks to that, and I hope I'll find some support for this amendment in the committee.
Again, this is an attempt to have some accountability, some transparency, for the expenses that will be required for this panel to exist and for this arbitration to happen. Obviously some funds are going to be required. The Canadian government should be transparent and open with Canadians about what those expenses are, and reporting is, I think, the best way to do that. I don't believe that what I'm putting forward would change the spirit of the wording or be opposed, but I will ask that question to the officials in a moment.
I think that within three months after the end of each year, the minister should lay before the House a report that sets out the expenses that have been incurred by the commission during that year. I believe Canadians strongly support open, transparent government. It's certainly something we've heard from this government, although there's been serious lack of it in their actions. This is an opportunity, I believe, for the government to show Canadians that they're serious about being accountable, being transparent with the money they're spending.
Canadians are not happy with some of the decisions the government has made recently with the public purse. This would be a way for the minister to very easily provide this to Parliament. I don't think it would infringe on any of the rights of the member states or countries that are involved in this agreement. It would be simply for our own domestic interest, so that we would know exactly how much this panel is costing us and exactly what's involved there.
Therefore, I'll ask the officials, before I close my remarks, if they view this particular amendment to be possible within this agreement.
Again, this amendment coming forward from the NDP is really about more transparency and accountability. It's about requiring an annual report on jobs, on the trade imbalance, and on non-tariff barriers.
In the first part we're asking for an analysis of the jobs created and jobs lost. We've had a lot of conversations at the trade committee about this. Certainly think tanks and groups come before us with economists who express their views on using one particular modelling type. They come forward to tell us their estimate of how many jobs will be created, but we really don't have a way to revisit that and to really understand whether that has happened, for good or bad. I think it would be really helpful and important for Canadians, and certainly for us as parliamentarians, to know the impact and to know whether jobs were actually created or lost out of this agreement, and where they were created or lost.
In this particular agreement, when we look at the report that came from Global Affairs economists, there is an acknowledgement, which we heard today from our officials, that there will be job losses in the auto sector in Canada. It's really just about wanting to reflect back on our agreements and to have a report that tells us whether we created jobs or lost jobs by having that analysis after the agreement.
The second part is about the balance of trade, and certainly the President of the United States has been railing about trade imbalances over the summer. Again, I think it's really incumbent on us all to understand whether our trade balance with the countries we've signed agreements with is working. Is it something from which we're seeing a benefit?
In this week alone, a reporter from the CBC did a story on our own Stats Canada figures. A year after signing the European agreement, CETA, our trade has actually gone down. We have a tremendous volume of imports coming into the country, but overall we are actually exporting less than we were a year ago when we signed that agreement. Instead of reporters having to go out and chase these stories to put these pieces together for Canadians, I think it would be important to have a mechanism that would give us this annual report to tell us the state of our trading relationships with these other countries.
It's something we talk about at this table often. We speculate about it and wonder, and then we reflect back on where we've seen successes and where, unfortunately, we've seen losses. The amendment would put this more into effect so that we would have this annual report to the House of Commons so that we would have an understanding of that trade balance.
Lastly, this is a huge issue for us when we talk about non-tariff barriers. I can't count the number of people who have sat in front of this committee and said that tariffs are really meaningless to them at this point. It's about the non-tariff barriers, because yes, they have access to these countries, but they can't get into them. Then we see stories popping up, on a recurring basis, on our pulses and different agricultural products across our country, showing that they're being denied entry into a country with which Canada has a written agreement. They're being denied on the basis of non-tariff barriers.
I know that in the CPTPP there was an attempt to address some of these concerns with the committees that have been struck, but the committees themselves don't have teeth. They're not really able to resolve the issues brought forward before the committees.
I know that our agriculture sector in particular really suffers under these non-tariff barriers. It's been so significant to them that it's prevented them from seeing what is being touted as the benefit of these agreements, because essentially they end up at the doors of these countries or the ports of these countries and they're denied. They end up leaving perishable product sitting in ports all across the globe, the loss of which they can never recoup.
It's such a significant issue. It's really where we're going in terms of trade, because we're signing so many agreements in Canada in which the tariffs themselves are no longer the issue presented to us by the witnesses who come before us. It really is about the issue of non-tariff barriers. I think we have to start looking at them in a holistic way, and this report would at least allow us to understand and get a reflection from people who are exporting about what has happened in the year of the CPTPP: Where are we one year on? Do you think you've been able to get into these markets? Have you created jobs? Have you lost jobs? What is your balance of trade on a year-to-year ongoing basis?
That's the spirit of this. I hope to see support from members on the committee, because I do think this is a culmination of our work. We're looking to have an ability to understand better the impact of the trade agreements that we sit here and listen to, dig into, and try to understand. Certainly the TPP and now the current CPTPP have been the largest focus of our work over these past three years. We saw 400 witnesses. We travelled across the country. We spent an incredible amount of time on the report that Ms. May referred to earlier, which we brought before Parliament. We've been very engaged in this issue in the House of Commons. As opposition members, we raise on a constant basis the reports that come out in the media about how Canada is faring in terms of trade.
In that spirit, I hope to get support from my colleagues, and I will leave it at that.
How about I give a description of all of the amendments? Then, if there are specific questions, we could go into more detail. In fact, we have experts from some of the departments that are specifically mandated with these particular acts, if you have more detailed questions.
Under the bill there are a number of amendments to Canadian statutes. One is the Export and Import Permits Act, which authorizes the to accept payments and to receive securities as specified by the minister in relation to an allocation method or import allocation.
There are also amendments to the Financial Administration Act, which authorizes the Governor in Council to issue directives to Crown corporations for the purpose of implementing the CPTPP.
There are also amendments to the Trade-marks Act to expand its application to goods that have a mark applied to them that is confusing with a registered trademark.
There are amendments to the Invest in Canada Act to extend Canada's net benefit review threshold of $1.5 billion in enterprise value for non-state-owned enterprise investors to CPTPP parties.
There are amendments to the Customs Act to do three things: to authorize verification of the originating status of goods and withdrawal or denial of preferential tariff treatment; to implement provisions related to advance rulings; and to provide refunds of duties paid on goods from CPTPP parties for which preferential tariff treatment under the CPTPP was not claimed at the time of accounting.
There are amendments to the Commercial Arbitration Act to permit the submission of a claim by an investor of a CPTPP party on its own behalf and on behalf of an enterprise to the tribunal.
There are amendments to the Canadian International Trade Tribunal Act to empower the tribunal to undertake bilateral safeguard investigations.
Finally, there are amendments to the Customs Tariff to implement preferential tariff treatment for goods from CPTPP parties in domestic law and to implement provisions related to bilateral safeguard measures that may be imposed on goods of another CPTPP party.
Regarding the first question, the threshold will be raised to $1.5 billion for CPTPP countries, and that's for net benefit.
I just want to make it clear that there are two different kinds of reviews in the Investment Canada Act. There's net benefit and national security. In national security, there is no monetary threshold. Any investment can be reviewed for national security purposes, but for net benefit, you're right: a change in threshold from $1 billion to $1.5 billion would mean that an investment of, for example, $1.2 billion would no longer be reviewed under net benefit from CPTPP countries.
As it relates to the second clause, clause 48, the purpose of that is a transitional provision, essentially. We discussed earlier about the timing of the CPTPP coming into force. If there was an investment being considered by the minister that had been made by—let's take as an example a Singaporean investor—between the time that they ratified the agreement, which has already happened, and by the time we ratify it, and that amount was again in that range, this transitional provision would be deemed to have not been filed. It would be treated as if it was now below the threshold, which is the new higher threshold.
(Clause 19 agreed to)
The Chair: Folks, we're going to stop there. It's been a very productive, busy day. We got up to 20 done. We've got about 30 more to do Tuesday, plus we're going to come back to clause 12 for Ms. Ramsey on Tuesday also.
There's just a little bit of housekeeping here. There's some discussion of how we'll be dealing with things next week. Tuesday we're going to try to finish this. We're thinking of getting the witnesses on the tariffs on steel and aluminum starting Tuesday, October 2. That's when we're going to start with the witnesses. I encourage everybody to get their witnesses in. That leaves Thursday open next week, probably, and I think Simon has mentioned that he's going to have the Pacific Alliance Agreement ready for Thursday.
That said, we'll see you all Tuesday.
The meeting is adjourned.