:
Mr. Chair and committee members, thank you for inviting me to participate in your consultations.
Let me introduce myself. My name is Alain Lavoie, and I'm the president of an SME that publishes software in the information and communication technology field, or ICT field.
First, I want to narrow the scope of my presentation by saying that I'm not an expert on the Canada-European Union Comprehensive Economic and Trade Agreement. However, I'm a very active entrepreneur in Quebec's ICT ecosystem. I'll speak only for myself. I'll provide my personal view of the situation in my sector. Obviously, I consulted other entrepreneurs and organizations before my appearance today.
The ICT ecosystem includes a number of fields and expertise, such as telecommunications and equipment. It also includes consulting services, customized IT solutions and software, and I'll focus more specifically on these things in my presentation.
In Quebec, the gross domestic product of the ICT sector was $14.5 billion in 2013. From 1997 to 2013, the sector's GDP grew at an average annual rate of 4.4%. It grew twice as quickly as Quebec's total GDP, which increased at an annualized rate of 2.1%.
Overall, Quebec's ICT sector generated $31.4 billion in revenue in 2012, which amounts to an 11% increase since 2008. Three industry sectors are responsible for this growth, specifically IT services, telecommunications and software publishing.
In Quebec, the ICT industry employees 150,000 people, which is more than a number of other economic sectors. It also mainly consists of SMEs. In fact, SMEs amount to 96% of telecommunications companies. According to a recent survey conducted by the Quebec Technology Association, 78% of SMEs in the ICT sector sell on the international market. That proportion is only 11% for the SMEs in all the other sectors combined. The export of Quebec's ICTs amounts to 34% of the sales figures for the sector's companies. This provides potential for export growth.
That said, how is the Canada-European Union Comprehensive Economic and Trade Agreement being received by Quebec's ICT industry? I'll exclude telecommunications and equipment, because I'm not familiar enough with their issues to talk about them properly. The agreement is being quite well received by the IT industry. However, some comments and nuances must be mentioned.
Since we spoke a great deal about the agreement as a way to eliminate tariffs and tariff lines, and since IT is not generally subject to those things, we feel less involved. We did business before the agreement's implementation, and we'll continue doing business afterward. Our SMEs should be well informed and most importantly helped, in order to fully benefit from this agreement.
In terms of labour mobility, if this agreement can help our businesses hire people from foreign countries more quickly, we would be delighted.
The issue of government contracts in Quebec is causing some concerns because IT contracts are currently being awarded at a slower rate. Suppliers feel insecure when it comes to the opening of government contracts. Therefore, SMEs must be told that the access to larger markets should compensate for this. The opening of government contracts will force businesses to become more competitive.
Lastly, cloud computing and privacy, which are special cases in our sector, should also be discussed because they may lead to a virtual tariff barrier.
ICT is a predominant sector that can make a strong contribution to the growth of wealth and the entry of new money into Canada. Our IT and communications SMEs are likely to fully benefit from this agreement. Our governments should help them and should try to make the agreement understandable for Canadian and Quebec businesses, especially SMEs. Our governments should explain how the agreement will affect them, particularly in terms of the opportunities it will provide. These aspects aren't always clear for an SME.
What can our governments do? They can create programs to help SMEs market and export their products. They can also give SMEs information and work with industry organizations, such as the Quebec Technology Association and the Information Technology Association of Canada, or ITAC, to raise awareness of the agreement and explain how to benefit from it.
In conclusion, I hope my presentation has given you a better understanding of the issues faced by one of the finest or even the finest industrial activity sector in Canada.
Thank you again for inviting me to appear today.
:
Thank you very much, Mr. Chair. I want to apologize in advance because I will have to leave at 12:20, since I will have a roomful of students waiting for me at 12:30. I'd like to thank you very much for the opportunity to present to you.
I'm going to make five very quick points about Bill . First of all, and this may not surprise you, I don't think the foreign investor protection provisions in CETA are a good idea in the relationship between Canada and Europe. My view is that the inclusion of chapter eight in particular and article 13.21 of CETA are imprudent and not a justified concession of Canadian sovereignty. But I won't dwell on that point, because my written submission to the committee goes on at length about it.
The next four points are much more specific. My second is that Bill says in clause 9 that the agreement is approved. I think that raises an important question, namely, what about the agreement is being approved?” We know that portions of the agreement will not be provisionally applied in Europe, particularly those related to chapter eight and article 13.21 of the foreign investment protection provisions, and we know that there's uncertainty about how those provisions are going to fare in Europe at the European Court of Justice, in member states, and so on. There's even a prospect that the agreement as a whole will never be ratified in Europe. So why wouldn't clause 9 say something like “the agreement is approved for provisional application in Canada to the extent that it has been approved for provisional application by the European Union and European member states as applicable”? Because otherwise, Canada is in the position of unilaterally approving parts of the agreement and exposing ourselves to costs and risks of foreign investor claims when the other side to the agreement hasn't done the same.
That brings me to my third point, a very quick one. In subclause 8(3) there's reference to causes of action being allowed under the agreement in Canadian law based on chapter eight, the foreign investor protection provisions. That's just an indicator of how in this legislation, Parliament would apparently be approving one-way claims against Canada without the same right being available to Canadian investors under CETA due to the provisional application approach.
Maybe the federal government has a good answer to that point, but as the legislation is drafted, it seems to me very much open to the criticism that we haven't clarified which parts of the agreement we're applying and which parts we aren't.
Very quickly, in clause 11 the Minister of Trade is given the power to appoint the members of the roster under chapter 8. I just want to stress that this is a very significant power, because we could think of the members of that roster as, very simply, almost equivalent to Supreme Court of Canada judges in the extent of their powers to review the passage of laws, passage of regulations, and so on in Canada. Especially when it comes to deciding the budgetary implications of laws, members of that chapter eight roster will, I think it's fair to say, have even greater power than would Supreme Court of Canada judges in Canada. So to give the power to choose the roster members to one minister only, the Trade Minister, is too narrow, and it would be advisable to think about a more broadly based, publicly representative process to allow for appointment of those roster members, because they're going to be extraordinarily powerful—much more powerful than the other adjudicators who are appointed by other ministers pursuant to clause 11.
The last point is that in the case of chapter eight of the agreement, because there is this uncertainty about what the Europeans are going to do—they're talking about making it a fully judicial process, and about a multilateral court option—it seems to me to be putting the cart before the horse to be approving chapter eight in this legislation when we don't actually know what the final version of chapter eight may look like, and it could look very different once the Europeans are finished with it. For that reason I think it really calls for a pause with respect to those parts of the agreement that are not approved in Europe.
Thank you very much for the opportunity.
Thank you for inviting me to speak on behalf of the Canadian Agri-Food Trade Alliance, the voice of Canadian agriculture and agri-food exporters.
[English]
CAFTA represents farmers, processors, and exporters from the beef, pork, grains, oilseeds, pulse, soy, malt, and sugar sectors. CAFTA members account for 90% of Canada's $54 billion agriculture and agrifood exports, supporting 940,000 jobs across Canada.
To illustrate the important contribution of our sectors to the Canadian economy, I'll give you some numbers. In terms of GDP, Canadian agriculture and agrifood exporters generate a direct and indirect GDP of $30 billion for agriculture and $65 billion for food manufacturing. In terms of employment, our sectors represent 352,000 direct and indirect jobs in agriculture, along with 588,000 direct and indirect jobs in food manufacturing.
The specific contribution of our sectors is similar to the direct contribution of entire sectors such as universities, financial investment services, and arts and entertainment, and is even much greater than the contribution of the aerospace manufacturing sector.
Competitive access to global markets through free trade agreements is our top priority, and at the top of the list are Europe, Japan, and the Asia-Pacific region. Access for Canadian agriculture and agrifood products is a core benefit for Canada in the CETA agreement. CAFTA has long been a champion of the CETA agreement and of increased trade with Europe. We have attended many negotiating rounds and have met regularly with the negotiators and the government to ensure that the negotiated outcomes would provide real benefits for our exporters.
CAFTA was able to immediately and unequivocally voice its support of the agreement in principle when it was announced in October 2013. We were also pleased by the conclusion of the negotiations earlier this year and were present in Brussels for the signing of the historic deal. CETA offers tremendous potential and secures substantial access to one of the world's few billion-dollar markets, and it does so ahead of our major competitors.
With a population of 500 million people, the EU is the second-largest importer of agrifood products in the world. In 2014 Canada shipped $3.2 billion in agriculture and agrifood products to the EU, led by wheat, soybeans, oilseeds, pulses, canola oil, frozen foods, and maple syrup. This is only about 5% of our total agrifood exports. Really, our exports should be much higher.
CAFTA has expressed support for CETA as the EU market has the potential to result in significant benefits for our exporters. The agreement could drive an additional $600 million in beef, $400 million in pork, $100 million in grains and oilseeds, and $100 million in sugar-containing products, as well as a further $300 million in processed fruits and vegetables. Taken together, this is $1.5 billion in new Canadian agrifood exports to the EU.
This is assuming that negotiated outcomes provide for commercially viable access. Canadian agrifood exports to the EU currently face high tariffs, with an average of 14%. On day one of implementation, tariffs on almost 40% of products will be eliminated immediately. The tariffs are not the only part of the access equation, and for some sectors, non-tariff barriers are as important as tariff reductions.
In CETA, Canada and the EU have committed to working together to advance a number of non-tariff issues, and today, unfortunately, it is clear that commercially viable access that was promised for all exporters may not be fully achieved for some time, and certainly not by the time the agreement is implemented. CAFTA has long stated that in order to achieve meaningful access, CAFTA members needed to have both tariff and non-tariff barriers fully resolved before CETA implementation.
To date, the issues that remain outstanding include the timely approval of biotechnology traits, the timely approval and re-evaluation of crop-input products, and the approval of meat-processing systems. Throughout 2014 and 2016 CAFTA has strongly encouraged the completion of respective legal and political processes related to CETA while simultaneously completing the technical discussions so that the stated benefits can be realized in the form of commercially viable access for our exporters.
We've stated that our support for the implementation of CETA will be based on the extent to which the negotiated outcomes result in commercially viable access. Last August our members met with officials from Global Affairs Canada and Agriculture and Agri-Food Canada to discuss the value of a CETA implementation plan for Canadian agriculture and agrifood exporters as part of a path forward.
Today, given the slow progress that the EU is making to resolve these issues, CAFTA gives conditional support to the implementation of CETA, with three conditions.
First, CAFTA will support the implementation of CETA if the Government of Canada commits to a well-resourced advocacy strategy and a comprehensive CETA implementation plan for Canadian agricultural and agrifood exporters to achieve real access for all exporters. Such plans will focus on ensuring that the negotiated outcomes result in commercially viable access, including but not limited to the grains and oilseed sectors and the meat sector through the establishment of high-level working groups.
Second, CAFTA asks that the committee today recommend in its report on Bill that the Government of Canada commit to the CETA implementation plan for Canadian agricultural and agrifood exporters to ensure that negotiated outcomes result in viable access for our exporters. It must be noted that this implementation plan will need to remain in effect until such time as the market access outcomes contained in the agreement become commercially viable for all of our exporters.
Third, CAFTA asks that the Government of Canada exert every effort to resolve as many of the outstanding technical barriers as possible during the interim period between now and the date the agreement is implemented.
In closing, more work needs to be done. Due to the strong potential and CAFTA's history of working collaboratively with government, CAFTA supports the passage of Bill and the implementation of CETA with the three conditions outlined above. CAFTA will be pleased to report to the committee on a regular basis on the progress achieved for Canadian agricultural and agrifood exporters as CETA gets implemented.
Thank you.
It's nice to be back here. We were here not too long ago talking about the TPP agreement as well, which also affects pharmaceuticals.
The generic pharmaceutical companies in Canada, our industry, are primarily pharmaceutical manufacturers and exporters, and they are among the top R and D spenders across all industrial sectors. Our members operate the largest life sciences companies in Ontario and Quebec and directly employ more than 11,000 Canadians in highly skilled research, development, and manufacturing positions.
We are strong supporters of free and open trade, and we export quality made-in-Canada generic medicines to 115 countries. Our industry also plays a significant role in controlling health care costs. Generic drugs are now dispensed to fill 70% of all prescriptions in Canada but account for only 22% of the $26 billion Canadians spend annually on prescription medicines. Five or six generic prescriptions can be filled for the cost of one brand-name prescription today.
The outcome of CETA will require two main changes to Canada's pharmaceutical intellectual property laws. The first is called certificates of supplementary protection. This is the implementation of an entirely new IP, or intellectual property, measure for Canada. It will provide for two extra years of market monopoly for all new drugs in Canada. Importantly, generic pharmaceutical companies will be permitted to export from Canada during the period of additional protection. Most of the pharmaceutical IP text in Bill covers the implementation of certificates of supplementary protection.
The second large area in which changes will be required as a result of CETA is our PM(NOC) regulations, which involve the complex litigation system for pharmaceuticals in Canada, sometimes referred to as the patent linkage system. The details of these reforms will be spelled out in regulations, and draft regulations will not be published until sometime after Bill receives royal assent.
CGPA supports the general direction of the changes, which should address long-standing concerns of the generic pharmaceutical industry, such as the lack of finality to proceedings and the insufficient damages available for injured generic parties. That said, the devil will be in the details. At this point, we are both optimistic and uneasy about the impending changes.
Bill represents the most extensive legislative changes to Canada's pharmaceutical intellectual property laws in more than 20 years. In addition to provisions required to implement CETA, Bill C-30 also includes changes to the Patent Act that in some cases go beyond the requirements of CETA, and that is concerning to us.
CGPA has filed a submission with the clerk recommending six amendments to Bill . On SPCs, supplementary protection certificates, CGPA believes officials generally did a very good job of drafting clear provisions that track the letter and spirit of the CETA commitments in this area. That said, we have identified three priority amendments for the consideration of the committee.
First, CGPA is proposing an amendment to make it absolutely clear that there will be no retroactivity of the SPC provisions.
Second, CGPA is proposing an amendment that would address circumstances under which a combination product can be eligible for a certificate of supplementary protection. We feel this detail is far too important to be left to regulations.
Third, CGPA is proposing a cap on the total period of drug monopoly that can be granted for a certificate of supplementary protection that's calculated from the date of market authorization. Such a safeguard exists in both the European Union and the United States.
We are proposing three other specific amendments to Bill . The first pertains to what we believe are unintended consequences associated with the repeal of section 62, which has implications beyond the pharmaceutical sector. We propose that the substantive text from section 62 be reinstated.
The two amendments we are proposing pertain to concerns we have with respect to subsection 55.2(4) of the Patent Act, which is a critical provision for pharmaceutical IP litigation. CGPA is concerned that the changes to this subsection would facilitate the creation of new substantive rights or obligations that would be harmful to the generic pharmaceutical industry. At a minimum, the adoption of the changes would introduce more uncertainty into Canadian pharmaceutical IP law. These changes are not required by CETA. We have proposed that the existing language in the act be reinstated in both instances.
Now, these are overly simplistic descriptions of the issues, but we would be pleased to address them in greater detail if members have an interest. It is obviously impossible to cover such an important and complicated area in five minutes.
In addition to our proposed amendments, there are many other aspects that I would be pleased to speak to in the question-and-answer session, including the impact of the new measures on drug costs, and the role of pharmaceutical intellectual property in trade agreements.
While my remarks today were in English, we would be pleased to answer any questions you may have in either English or French.
Thank you.
:
Very briefly, they will be able to review a decision by the Supreme Court of Canada, by the Parliament of Canada, or by any provincial legislature to make a judicial decision, in the case of the Supreme Court, obviously, or to pass a law, in the case of Parliament or a legislature. They will be able to decide whether that law was legal or constitutional under CETA with the foreign investor rights and protections it provides. If they as the final decision-maker decide that it wasn't legal, then they can award compensation to be paid from the public purse to foreign investors, something the courts in Canada are very cautious about doing when they are reviewing, for example, the passage of laws or court decisions below the Supreme Court.
It's the ability to require budgetary transfers to a private party as a result of the passage of a law or the highest court decision of your country and to have those orders backed up by the existing international system that enforces commercial arbitration awards, meaning that if Canada refused to pay a very large award, our commercial assets abroad would be subject to seizure in other countries to make good on the award by the chapter 11 NAFTA tribunals.
I can't stress enough how profound a power of review that is over our country, and it's because of the extent of that power that you get this controversy about how it impacts the courts, judicial independence, the rule of law, democracy, regulatory flexibility, and all of it. There are ways to trim that power and make it more in accord with how we see courts operating in a western democratic tradition, but I think some of those changes are probably yet to come in the discussions that we'll see in Europe.
I think I promised a short answer there. It wasn't too short, and I apologize. I am a professor, so sorry about that.
:
I'll answer again on behalf of SMEs, and I can also answer on behalf of my business.
In terms of SMEs, I gather this agreement will provide access to a very large market. Quebec's ICT sector is very active abroad. As I said earlier, 78% of Quebec's SMEs sell products on international markets, but this activity amounts to only 34% of their sales figures.
Given our current concerns regarding exports to the United States, I think our sector could make a lot of money through its exports. We need to harness the potential of this agreement, and make the most of it extremely quickly. We must take advantage of the momentum to enter the market.
This morning, I met with representatives of firms from France that already want to set themselves up here. A movement has been launched around this agreement that will push many people to set themselves up here. However, we must also be able to set ourselves up abroad.
:
Thank you, all, for being here.
Jim and Jody, it's good to see you again. I think we saw you at finance more than at this committee, but it's great to see you.
I think, Claire, we probably had the same opportunity.
On the way back to committee after votes, Madam Lapointe and I were talking about the spinoffs, which are the unintended consequences. Oftentimes, we can see clearly where a trade deal is going and who it's going to benefit, but sometimes it needs to play out. It's incredible how we talk to different firms and organizations that benefit from trade deals. I want to go in that direction just a bit.
Claire, you represent a large group. You represent a group that is really known for innovation. I think there are others here today that are as well. Do you see that as an equal opportunity? We all, as I said, quickly look at what will happen immediately. We also look down the road at how when one firm lands a contract and begins to sell, another will supply that firm, and how that has helped your organization and has really built the economy up in the people you represent. Can you share that with the committee to some degree?
Madame Citeau, my next questions are to you.
Looking at the agricultural sector, certainly in my riding we have dairy, blueberries, maple syrup, and fish and seafood products, and we also have processing.
In the area of blueberries, for example, there is not a lot of value-added processing there. I would like to know opportunities you think there might be for value added in the Atlantic region with regard to Europe?
As well, might there be a drop in price to the Canadian consumer, based on the economies of scale and the fact that the businesses are paying one mortgage and paying their operating costs in a standard way? Might an increased capacity help scale the price and lower costs to the Canadian consumer?
:
We know that when free trade agreements are implemented, typically tariffs come down or are reduced. Non-tariff barriers come up right after, as a result, for example, of countries not adopting international standards, lack of compliance, or at times blatant and creative ways of introducing regulations that will have a protectionist impact, and certainly a commercial impact, for our exporters. Countries have the right to introduce their own regulations for a number of domestic safety reasons.
The particular issue we're facing today with the CETA agreement is that non-tariff barriers are happening even before the agreement is implemented. Those currently are in two very specific areas.
There's the timely approval of biotechnology traits and the timely approval and re-evaluation of crop-input products. In that regard, the European Union, as part of CETA, has committed to timely approval of those traits and has not yet done so, and that creates anxiety for our farmers.
The second very specific issue is in the area of the approval of meat-processing plants, in particular the area of carcass washes. Again, it's another area in which the EU has committed to working together to advance these issues before the agreement is implemented, but currently our farmers, our beef and pork producers, don't have the approval they need. If the agreement were implemented today, they would not be able to export, regardless of tariffs coming down.
What we're asking for very specifically is a commitment to having a plan for the CETA agreement for our agricultural and agrifood exporters, to ensure that the negotiated outcomes provide for real commercially viable access by the time the agreement is implemented.
I want to thank our excellent witnesses. It's been just tremendous to see the diversity we have and the knowledge all of you bring, be it in ICT, agriculture, generics, or pharmaceuticals. It's good to know that many of you have been around for many, many years, so you have that knowledge and you've been at the table. I know many of you worked closely with your provincial counterparts who were leading the charge on CETA.
My first question is going to Jim and Jody.
I know you worked with the Province of Ontario, in which you do a lot of your manufacturing, to get some of the wins we needed in this very comprehensive agreement with the generic sector. I know that in Europe they kept pushing for 25 years. Helping the minister and the different levels of government at the table, you were able to negotiate that down to 20 years. Can you tell me a little bit about that?