Just before I start, I would like to inform the committee that we've submitted our report on NAFTA. We got it in under the wire before Christmas, and everything's out there.
We're going to have some future committee business. In the second hour, we'll talk about our Asia trip and whatnot, but our committee agreed to this study on the potential agreement between Canada and the Pacific Alliance, which would include Chile, Columbia, Mexico, and Peru.
We're going to have a few meetings with witnesses to get our heads around it and to see its potential. Today's our first meeting, and I welcome our guests here on the panel today, our witnesses.
We're short one witness, I think, Mr. Robertson. There was a switch of rooms, so we can continue. Then, when Mr. Robertson lands here, we can get him to jump right in.
It's great to see our witnesses here. Many of you have been to our committee before. We have quorum, so we'll get going. Thank you for coming before our committee. It's very important that we get your perspectives before we do anything from this side.
As you may well know, we try to keep the presentations to under five minutes each, so we can have lots of room for dialogue with the MPs.
Without further ado, I think we'll start with Mr. Alex Neve from Amnesty International.
Go ahead, sir. You have the floor.
Thanks very much, Mr. Chair.
Good morning, committee members. It's a pleasure to be back in front of you.
It is a time of peace in Colombia, which was lauded by the Nobel Peace Prize in 2016 for bringing decades of devastating civil war to an end. However, serious, widespread human rights violations continue. Last week we published an urgent news release highlighting the forced displacements of over 1,000 civilians over the course of just four days of renewed fighting. We've drawn particular attention to the concern that peace continues to be elusive for indigenous and Afro-descended communities, which have frequently been forced from their mineral and agricultural-rich lands during years of war, and are now facing obstacles and threats as they seek to assert their rights to restitution.
Mexico continues to face a devastating human rights crisis marked by years of enforced disappearances, now numbering an estimated 34,000 people, and extensive torture and threats and attacks against journalists and human rights defenders. Numerous encouraging laws have been passed to strengthen human rights protection, but have consistently fallen short when it comes to implementation. Ildefonso Zamorahas, an indigenous Tlahuica leader, has spoken up about logging in his people's lands in central Mexico for over 25 years. He has been relentlessly threatened and attacked. Ten years ago loggers killed his son Aldo. In 2015 and 2016 he was arrested and jailed for nine months, at which time Amnesty International recognized him to be a prisoner of conscience, targeted simply because he seeks to protect the environment and defends Tlahuica territory.
In Peru, an Amnesty International report issued last September documented callous and deliberate failure by the authorities to protect indigenous communities in the country's Amazonian and Andean regions from toxic contamination of their water supplies arising from metals such as mercury, cadmium, aluminum, arsenic, and lead, all linked to oil drilling and mining in the area. Meanwhile, human rights defenders who stand up against such concerns are regularly threatened, attacked, and subject to harassment through unfounded court cases.
In 2016 and 2017, Amnesty International activists around the world, including in Canada, stood in solidarity with Máxima Acuña, a Peruvian farmer and environmentalist who defied endless pressure from multinational and local mining companies determined to push her off her family's land.
In Chile, activists with the Defence Movement of Earth, Environmental Protection and the Access to Water, MODATIMA, have campaigned to expose illegal extraction of water in water-scarce regions of central Chile. Human rights defender Rodrigo Mundaca Cabrera and other members of MODATIMA are regularly threatened for this important work, including numerous death threats, which have intensified so much over the course of the last year that many MODATIMA activists are now fearful to leave their homes.
Amnesty International is not a trade policy organization. We do not answer the question before you on whether Canada should pursue a free trade agreement with the four countries of the Pacific Alliance with a “yes” or a “no”, but we are a human rights organization.
As these opening examples illustrate, there are serious human rights concerns in each of the four countries of the Pacific Alliance, and those violations very often occur in contexts related to economic and commercial activity associated with the business opportunities that stand to grow and expand with freer trade. There is danger for human rights defenders speaking out about the impact of business operations on the environment, and peril for indigenous leaders seeking to defend their land in the face of powerful economic interests. Labour leaders are threatened and killed. Contamination and pollution from mining and other activity are posing serious, even lethal, health risks, and there are acts of violence by company or government security forces when disputes and protests arise about a corporation's operations. That is why trade agreements and trade policy attracts Amnesty International's attention.
Ideally we encourage governments to pursue trade, business, and investment in ways that will advance human rights protection at home and abroad, but at an absolute minimum we insist that governments take measures and adopt safeguards that ensure that trade policy and business activity do not cause or contribute to human rights violations.
Amnesty International welcomes the government's efforts to advance a progressive trade agenda generally described as including strength and provisions in trade deals with respect to environmental protection, labour rights, gender equality, and the rights of indigenous peoples, all of which is important and very welcome. But, the key question remains, how do we ensure that these and other serious human rights concerns will be adequately safeguarded as trade deals are negotiated and implemented—in other words, that there will be more than just words on paper?
Amnesty International has therefore repeatedly called on the Canadian government, over many years now, to commit to carrying out independent expert, transparent, and comprehensive human rights impact assessments of all bilateral and multilateral trade deals, both before a deal is finalized and at regular intervals thereafter, with any potential harms identified by such assessments addressed to ensure compliance with international human rights obligations. Our recommendation with respect to any potential deal with the Pacific Alliance is that it be subject to robust human rights impact assessments.
Thank you very much.
Before going into my own comments, I want to say that I agree wholeheartedly with my colleague Alex's concerns about human rights, labour rights, gender rights, indigenous rights, and the concerns that are raised about things that happen in many parts of the world. I think we all share those concerns, but I'm here today to wholeheartedly support our engagement with the Pacific Alliance. It really comes from a different approach to how one can deal with the sentiments and concerns raised about some of the challenges that people in different parts of the world—and frankly, in Canada—still have to deal with.
We at the Canada West Foundation certainly—and it's worth repeating—wholeheartedly support Canada's signing of the open trade agreement with the Pacific Alliance. We've supported the government's efforts in response to the invitation to become an associate member. This is a tremendous opportunity for us. Just as a reminder, only Canada, Australia, New Zealand, and Singapore have in fact been invited to become associate members. This is not only a terrific opportunity for us to expand economically, but also socially and with other forms of engagement with the countries involved in the Pacific Alliance.
Importantly, this would be an opportunity to expand our engagement in Asia. At first blush that might not seem obvious, but the Pacific Alliance was partly formed because the Latin American countries involved in APEC felt as though their influence was maybe not as strong as it might have been. Therefore, the formation of a bloc, the Pacific Alliance, was an opportunity to improve that influence. Canada's involvement in it would allow us to participate in that increased engagement with Asia. Peru and Chile already, for example, have trade agreements with China. Those opportunities to learn from their experiences can only help us in our continued negotiations with China and, indeed, with other countries in Asia.
In sharing the concern about human rights and various other issues, this is the challenge that we always face whenever we're discussing trade agreements, even with the sentiment behind the so-called progressive trade agenda. We pride ourselves in this country on being pretty progressive. We're not perfect by any means. We're not perfect on gender equality. We're not perfect on indigenous rights. We're not perfect on labour rights. We're not perfect on environmental concerns.
To some extent it is challenging. Other countries look at Canada coming onto the world stage and sometimes, frankly, appearing to lecture them on how they should be behaving and how they should be treating different sectors in their domestic economies and societies. The fact that we do as well as we do is indeed something to be very proud of, but trade agreements really need to focus on trade. On the concern for human rights and having a progressive agenda, Canada can do far more by leading by example, as opposed to lecturing others on what they need to do. We are in a far better position to lead by example the more we engage economically and the more we engage socially.
Fundamentally, even though my colleague, Mr. Neve, and I can have similar concerns, we come at the whole concept of trade very, very differently. We are very much of the view that the more we engage in trade, the more we engage economically, and the more we engage socially, the more we have an opportunity to expose some of the things that happen, the greater the opportunity to be more engaged in helping change those things, as I've said, by leading by example.
My third and final point—I won't speak for long, as I look forward to the questions—is that we already trade. Whenever we talk about trade agreements, and obviously this is about the Pacific Alliance today, but this comment holds true for whenever we engage in trade negotiations, the history of Canada is one of trade. It started with wood and fur. We trade a lot. Canada actually trades more, relatively speaking, than almost any other country in the world. Trade agreements don't all of a sudden create trade. We already trade with China a lot. We already trade a lot with the Pacific Alliance countries. Indeed, we already have trade agreements with all four of the Pacific Alliance countries.
The point I want to make is that whenever we engage in a trade negotiation, there are people who say, “We don't like this about that country, we don't like what they do internally, we think they should do this or that”, or “we need to be able to be seen to be encouraging better behaviour and more progressive behaviour”. These are good sentiments, but a trade agreement doesn't start or stop trade.
Sure, from an economic perspective, we encourage the greater engagement. From an economic perspective and a social perspective, we encourage trade agreements because they can open trade more fully, but the point I want to make is that—
That's right. We're in Alberta, P.E.I., New Brunswick, and Ontario.
I thank the committee for the invitation to appear this morning. You're right, Cavendish Farms began operations in P.E.I. in 1980. At that time, Cavendish Fries was shipping 25 truckloads of product per week. As of last year, we were shipping 815 truckloads of French fries per week.
Most of North America's quick-service restaurants are our customers, and over half of the retail frozen potato market is Cavendish's. We are also one of the largest private label manufacturers, and most of the retail and restaurant clients use Cavendish. We're the fourth-largest frozen potato processor in North America, and we have four plants in Canada: two in P.E.I., one in Ontario, and one in Alberta. We also have one in North Dakota.
Aside from providing product to the U.S. and Canadian marketplaces, we've exported to over 50 countries in the last three years and produce over 1.46 billion pounds of product per year.
Right now we're building a new plant in Lethbridge, Alberta, that will triple our capacity out of Lethbridge. Obviously, that product has to find a market, which makes us very interested in this conversation today.
Right now our market share in TPP countries ranges from zero to 6.7%, but we see a lot of opportunities in several of these markets. Currently, the duty rates on our import product ranges from zero in the several of the countries, because we do have some trade agreements—and I had some slides but for technical reasons I couldn't provide them today—to 10% in Japan, and about 5% in Australia and New Zealand, I believe.
In the U.S., our duty rates are the same as our competitors'. As I said, we're the fourth-largest potato processor in North America. Two of the big three are based out of the U.S. Currently, our competitors in the American market, while they have the same duty rates, do have a logistical advantage over us, in that they have easier port access because of where they are located. They're closer to the market, so they have fewer days of shipping time, which is an advantage in our world.
Now that the U.S. has opted out of the TPP, we see this as an opportunity to equalize the game, or certainly to give us a leg up in these particular markets.
Of course, duties are only one of the obstacles to trade. There remain some non-duty barriers. Japan, the largest import market for frozen potato products outside of North America, has non-traditional requirements on food quality and safety. They also require their own packaging.
Mexico, which is one of the top three markets for frozen potato products, has passed laws that require unique retail packaging compared to the rest of the world.
Malaysia has cultural sensitivities that require unique SKUs, stock-keeping units.
In Chile and Peru, where we see significant market opportunities, there are non-traditional barriers to trade that include microbiologic and inorganic testing, which are not required in other markets in the industry. Just getting our product registered in both of these markets can take over a year, which means that it's very difficult to respond in a timely manner to market forces there.
In order for Canadian producers to be able to be competitive and to meet the competition around the world, we fully support Canada's ratifying the Trans-Pacific partnership agreement.
I think a lot of people have that same question, because you're absolutely right that we do have free trade agreements already with each one of the four members. What we don't have is a relationship, one that deals with some of the issues that will be covered in this new arrangement, as things move and change so rapidly, and there are digital economy issues and labour mobility issues. Those are things that aren't necessarily covered in those agreements already that can and should be.
So there's a broadening of the opportunity, but there's also the value in having an agreement with the Pacific Alliance as a bloc. The Pacific Alliance created itself to become a bloc. The irony is that North America really ought to be more of a trading bloc in terms of the rest of the world, and obviously that's a challenge, but to have an effective trading bloc, you need to have internal regulations, and internal harmonization, for example.
Frankly, even under NAFTA, North America was unable to do that as well as we might perhaps have done, and we can always hope, but that is something the Pacific Alliance has done. So not only do we have the agreements with each one but also we have the opportunity to take advantage of the harmonization that they have been building among themselves. Add to that the fact that they have increased relationships with many of the Asian countries. Through APEC, through the fact that, as I mentioned earlier, both Peru and Chile have agreements themselves with China, there is an opportunity for Canada to use that conduit, if you will, to enhance our trading and other relationships with other countries.
I'd just add that if the other members that were invited to become associate members—Australia, New Zealand, and Singapore— joined, that would add to our engagement with those countries as well, which is an added benefit.
Thank you for the question, because that is very much on our minds.
The human rights provisions in the free trade agreement we have with Colombia are unique. It's the only trade deal Canada has with those provisions included. It was an opportunity, but sadly in our view, at the end of the day, it was a missed opportunity to achieve what I put in front of you today as a recommendation: this idea of having an independent, comprehensive, human rights impact assessment.
It's neither independent, nor comprehensive. It's not independent, in that it is carried out by government officials on both sides of the deal, by Canadian and Colombian officials. What is truly needed for any impact assessment in the human rights realm, environmental realm, and gender realm is for it to be truly done on an independent basis.
The agreement with Colombia is also not comprehensive. The review that's part of the Canada-Colombia agreement is very narrowly focused on identifying any specific tariff reductions that are linked to that deal, and then drawing a direct line from those tariff reductions to a human rights violation.
Thank you, Chair, and thank you to our presenters today.
I think we're at a point where modern trade agreements have become about so much more than just trade. Therefore, to say that we could somehow extract them at this point would, I think, be very difficult, because the stories Mr. Neve brought us today—horrific stories of human rights conditions that most Canadians would be shocked to learn about—are happening in the countries that we're considering as trading partners.
We can't continue to trade with no regard for its impact on people. That means on people here in Canada, but also on people in the countries we're trading with. We need to ensure that we have robust human rights provisions that are enforceable, that allow people who are working on the ground in these countries on behalf of Canada to have mechanisms to challenge this behaviour, particular when it's a Canadian company that's participating in the behaviour. We could certainly look to what's happening in Mexico in the extraction sector for examples of that. Of course, an ombudsperson has been announced, which we're supportive of, but that needs some fleshing out.
I don't believe that Canada should promote lower standards in accepting this, because it also hurts Canadian workers. When we accept lower standards in other countries, it has a direct impact on workers here in Canada, because we start to compete on very uneven playing fields, if you will.
We had the Global Affairs officials here on December 11, and I did ask them about the human rights tools they were using in the Canada-Pacific Alliance agreement. We couldn't get a direct commitment from them. I specifically mentioned Guiding principles on human rights impact assessments of trade and investment agreements, which I'm sure you know well—it's been published by the UN. You've mentioned another tool that you're bringing us today.
What tools do you feel the government should be using, and what training do our trade negotiators potentially require to understand the impact and use of these tools?
Good morning, panellists. Thank you so much for being here.
I am going to be transparent and say that there's a strong New Brunswick connection.
Mr. Neve, we'll see you again hopefully in St. Andrews.
Mr. Richard, thank you for joining us.
Ms. Findlay, it's nice to meet you today.
I have a number of questions. Firstly, from someone who's taught international trade for almost 20 years, one of the things that I would always tell my students in New Brunswick is how important it is that we are at the table. An agreement is valuable because it represents people who have come together to agree upon different terms, different rules. I'm certainly very proud of what the government has done with the progressive trade agenda. While I see it less as about lecturing, I do think this agenda is an important part of the discussion. If we're not having that discussion, whether about human rights or the role of women and indigenous people, then who is going to have that discussion with these nations?
I'll form my questions largely around that.
I also want to get back, Mr. Richard, to the questions on infrastructure, so I'll proceed quickly.
Ms. Findlay, you had mentioned the importance of domestic policy and working with businesses. I couldn't agree more. If we look historically at the number of trade agreements that we have penned in Canada, we have not done a reciprocal amount of work, I believe, in helping companies get more engaged with trade, whether it's indigenous people, whether it's women, but also with the small or micro businesses.
Mr. Richard, if we look at a company like Cavendish Farms, you are well integrated in the international trade market. For the micro businesses with one to four employees, and that are about 54% of Atlantic Canadian businesses, what's the spinoff for them from you as a larger company, or medium-sized company on an international scale? How can the micro businesses benefit?
I believe associate membership with the Pacific Alliance would make sense for Canada. For Canada, the Pacific Alliance is the right platform to advance our interests in Latin America. They are business-minded and embrace the rules-based democratic order.
Canadian investment in the Pacific Alliance is estimated to be in the ballpark of $40 billion. The economic health of a lot of Canadian firms, especially in resources and finance, is tied up in the economic well-being of the alliance.
The “Pacific pumas”, as they are sometimes called, have more than 221 million consumers, with a combined GDP that would make them the sixth biggest economy. The four countries are responsible for approximately 33% of Latin America's total gross domestic product, 50% of Latin American exports, and 40% of the total foreign direct investment capitalized in the region.
Their goal, as you have probably been discussing, is the free movement of people, goods, and services. They are negotiating their stock markets, and they even share embassies in some countries.
My belief is that the Pacific Alliance is a good match for Canada, especially as other key Pacific partners—Australia, New Zealand, Singapore, and now South Korea—are also looking at associate membership.
Since the days of the coureurs des bois and the Hudson's Bay Company, Canada has been a trading nation. According to Global Affairs, our trade-to-GDP ratio is around 70%, one of the highest in the world. During the past century, we have become a nation of traders. One in five jobs depends on exports. The progress and prosperity enjoyed by Canada is thanks to trade liberalization. My view is that participation in the Pacific Alliance should be part of a broader strategy, which I think we're undertaking, that will increase opportunities for our goods, services, and particularly—interestingly enough, in the Pacific—for our pension funds.
Services today account for about 70% of the Canadian economy. We're good at trade and services, notably banking, insurance, and engineering. Think of Scotiabank, which is now one of Mexico's biggest banks and is of growing interest in Chile, Columbia, and Peru; or of Manulife in Asia; or of SNC-Lavalin or Brookfield in engineering and infrastructure projects around the world.
The trade explosion, of course, began with the Canada-U.S. FTA, and then the NAFTA. These deals opened up access to the U.S. and Mexican markets and gave us, I think, the confidence to compete internationally. We've had a slew of other agreements since then, including the Uruguay round, and we have more trade agreements in Latin American than in any other part of the world.
The recent negotiation of the Canada–Europe agreement, CETA, and now the FTA with the Pacific nations, the CPTPP, give us even more opportunities for sales and investment. However, you might ask, if we already have free trade agreements with Chile, Columbia, Mexico, and Peru, why do we need to take the next step of associate membership in the Pacific Alliance?
First, we must take our opportunities where they come. We must consider Pacific Alliance associate membership against a backdrop of “America first” protectionism with our biggest trading partner, and no foreseeable conclusion to the somewhat zombified WTO Doha round. With the Trump administration having removed the U.S. as the anchor of trade liberalization, middle power groupings such as the Pacific Alliance need to pick up the slack to sustain the rules-based order that serves our interests.
Second, for Canada, the Pacific Alliance would consolidate our position as a first mover within the best trade agreement in the Americas, just as we've done within the Pacific through CPTPP, and the transatlantic through CETA. It's always better to be a driver setting the course in the front seat rather than a late passenger along for the ride at the back of the bus.
Canada would become a leader within the Pacific Alliance by virtue of being the biggest economy in what would constitute the most liberalized caucus of trade nations in the world. While it's about trade, it's also about building deeper cooperation through regulatory integration and addressing emerging issues like the digital economy, the environment, and women's empowerment.
Canada can benefit, I think, from linking to the best parts of the Pacific Alliance. The “accumulation of origin” is also an argument for associate membership, weaving the four FTAs we have with those four countries into a somewhat seamless web, which will make it easier for us to do business.
The Pacific Alliance's innovative approach means working on one-stop shop initiatives for foreigners looking to do business in the Alliance and implementing flexible rules of origin so that we can integrate into value chains.
Third, deeper bridges with the alliance will bolster the deep linkages we have developed in the region. What better place to advance the progressive trade agenda than with these progressive democracies? We've already begun. Last year the Canada-Chile FTA was revised to include gender rights.
Fourth, associate membership will give us more place and standing in the Americas. The Pacific Alliance countries share values and an outlook on the world similar to Canada's. They are liberal democracies with open economies. Given the periodic illiberal governance in parts of the hemisphere—think of Venezuela—the stable and open economies of the Pacific Alliance stand in stark contrast.
Canada should support efforts in integration within the region and the best way to do it is within the alliance. Ties of history and migration have given us strong links across Asia, the Pacific, and the Atlantic, but our ties with south of the Rio Grande, in fact, are relatively recent.
Our relationship with Mexico, our third-largest trading partner, increasingly solidifies with significant Canadian investments in mining, banking, and manufacturing. Over two million Canadians travel there each year. But the investment in tourism flow is mostly one way. We need to do more to bring Mexico and our other Latin American partners to Canada to study, work, invest.
The government's consultations on membership in the Pacific Alliance need to look at potential problems. For example—
In every case, can those organizations be more efficient? Can they be more effective? I think yes. It's always an opportunity to improve.
The challenge also lies not just in what they do, but in our overall education about the opportunities. You're absolutely right: there are an awful lot of larger businesses even that either don't know about the opportunities, or don't have the confidence to actually embrace them. It's a continuing effort in Canada.
We don't do nearly a good enough job at it, oddly enough, given that we're such a strong trading country. We're actually doing specific case studies at the Canada West Foundation for smaller businesses. For example, we're looking at NAFTA. We're looking at Pacific Alliance. We're looking at all of these trade agreements, and most of the stats come out in terms of GDP or overall trade, overall imports, and overall exports. That doesn't mean anything to a small or medium-sized business. The opportunity is there for us to do much more in educating them about the specifics. For example, with NAFTA, what happens when NAFTA goes, or if it does go? What does that mean for the actual products that I sell or I import? We're not getting that information to businesses. It's still much too macro.
What the answer to that is, I'm not sure. I do think that some of those organizations could do more in that regard. You're absolutely right. It's really important. Open the door but people need to be able to go through.