I call the meeting to order.
Welcome to meeting number five of the House of Commons Standing Committee on International Trade.
Today's meeting is taking place in the hybrid format, pursuant to the House order of September 23, 2020. The proceedings are available via the House of Commons website.
To ensure an orderly meeting, I would like to outline a few rules to follow. Members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting.
You have the choice at the bottom of your screen of floor, English or French.
For members participating in person, proceed as you usually would when the whole committee is meeting in person in a committee room. Keep in mind the directives from the Board of Internal Economy regarding masking and health protocols.
Before speaking, please wait until I recognize you by name. If you are on the video conference, please click on the microphone icon to unmute your mike. For those in the room, your microphone will be controlled as normally done by the proceedings and verification officer. When you are not speaking, your mike should be on mute.
Pursuant to Standing Order 108(2), the committee will now proceed with its study of trade between Canada and the United Kingdom and a potential transitional trade agreement.
We welcome our witnesses today.
From the Department of Foreign Affairs, Trade and Development, we have Steve Verheul, chief negotiator and assistant deputy minister, trade policy and negotiations; Sara Wilshaw, chief trade commissioner, and assistant deputy minister, international business development, investment and innovation; and Doug Forsyth, chief negotiator for the Canada-United Kingdom transitional trade agreement.
From the High Commission for Canada in the United Kingdom, we have Janice Charette, high commissioner for Canada in the United Kingdom of Great Britain and Northern Ireland; Nathalie Dubé, minister/counsellor (commercial/economic) and senior trade commissioner; and Aaron Fowler, chief agriculture negotiator and director general, trade agreements and negotiations.
Welcome to you all.
Mr. Forsyth, you have the floor.
Thank you, Madam Chair.
Good afternoon, honourable members. Thank you for the invitation to appear before the Standing Committee on International Trade to provide an update on the Canada-U.K. transitional trade agreement and Canada's discussions with the U.K. towards an agreement based on the Canada-EU comprehensive economic and trade agreement, or CETA.
We thank the committee for its interest in this topic.
As I believe we are all aware, in 2016 the United Kingdom held a referendum on its membership in the European Union, which resulted in the decision to leave the EU single market, customs union and free trade area.
That decision has clear consequences for the Canada-U.K. trade relationship.
For one, the United Kingdom leaving the EU means it can no longer be party to the CETA as of the end of the Brexit transition period, which is December 31, 2020.
Two, after over four decades of EU membership, Brexit will bring about significant changes in the United Kingdom's trade and economic relations with its largest trade partner.
Three, going forward, the U.K. may choose to take new approaches to trade. These will be of interest to close trade partners like Canada. Canada and the United Kingdom have historically enjoyed mutually advantageous commercial relations. Both sides are keen to work together to maintain our strong trading relationship post-Brexit and to seek to mitigate potential disruptions for stakeholders.
In September 2017, when the U.K.'s approach to Brexit was in its early stages, and then U.K. prime minister May met to discuss how to strengthen our bilateral relations, including in the area of trade. At that time, Prime Minister Trudeau and Prime Minister May pledged to seek as seamless a transition as possible for our trade relations.
Soon thereafter, officials undertook a trade dialogue aimed at substantively replicating the CETA on a bilateral basis as an interim measure in response to Brexit. As the U.K. was still formally part of the EU until January 31, 2020, it was not able to undertake new international trade negotiations at that time. However, it could discuss a replication of CETA. Our trade dialogue talks advanced in 2018 and into 2019.
A number of CETA chapters could be converted to bilateral provisions in a straightforward manner. Others required some minor technical modifications. A small but important list of chapters required intensive negotiations to turn the CETA obligations into Canada-U.K. obligations. For these areas, we undertook targeted consultations with implicated sectors and have been keeping them informed of developments.
In addition to providing these stakeholders with updates on progress throughout the trade dialogue, we have also been keeping provincial and territorial trade representatives informed via the Committee on Trade, or C-Trade.
As of March 2019, our discussions with the U.K. were quite well advanced.
Then, the United Kingdom unexpectedly announced a plan to offer duty-free access on 95% of all of its tariff lines to all World Trade Organization members in the event of a no-deal Brexit. As this change in approach by the U.K. would have significantly undermined the benefits of any preferential trade agreement between us, we paused these discussions.
Over the months that followed, Canada continued to closely monitor Brexit developments. We welcomed the ratification of a withdrawal agreement between the EU and the United Kingdom in January 2020. That treaty established the current Brexit transition period, during which the United Kingdom continues to participate in the EU single market and benefit from EU FTAs like the CETA. Canada was pleased to confirm its agreement for this arrangement with the EU and U.K., as it offered a longer period of certainty for our stakeholders.
In May 2020, the U.K. released a new most-favoured nation, or MFN, applied tariff schedule called the U.K. global tariff, or UKGT.
Then, in June 2020, the U.K. decided it would not seek to extend the Brexit transition period beyond 2020. Just for reference, the withdrawal agreement provided the option of a one-time extension to the end of 2021 or 2022.
Soon after these events, Canada proposed a resumption of our discussions on a transitional trade agreement that could apply from the end of the transition period.
and her U.K. counterpart Secretary of State Truss confirmed that officials should re-engage in discussions on an interim agreement for the end of this year, with the goal of avoiding a “cliff edge” for business.
Both also agreed that we should look ahead to subsequent new bilateral negotiations to be launched as soon as next year. Despite COVID-19 restrictions, we undertook an intensive schedule of virtual discussions over the past few months. There has been very good progress, especially recently, and we expect to soon be able to announce a conclusion of talks.
A number of steps would then follow to prepare to seek the government's approval for signature and to table the bill in Parliament for its consideration.
This transitional trade agreement will not be like other trade agreements Canada has negotiated. It is an interim measure in response to the unique situation Brexit has presented, where a party to one of Canada's recent trade agreements, i.e., the CETA, can no longer be covered by its provisions. As such, Canada and the United Kingdom also plan to enter into subsequent new negotiations in the near term. Those future negotiations would be best tailored to our bilateral relationship, reflect the interests of the parties and respond to any post-Brexit developments.
Ahead of the launch of any new comprehensive FTA negotiations, the government will undertake consultations with Canadians and follow any policies in place for the notification of Parliament. Officials will look forward to providing this committee with updates on that future FTA initiative.
Returning to the transitional trade agreement discussion, Madam Chair, let me end by saying that throughout the Brexit process Canada has taken a constructive approach in seeking to avoid disruptions for our businesses. We have heard from a number of industry stakeholders, as well as provinces and territories, about the importance of maintaining a preferential trading relationship with the United Kingdom.
The trade commissioner service, or TCS, has been engaging with Canadian businesses on the implications of Brexit. The TCS has done this through a dedicated web page on Brexit for Canadian companies and in terms of direct client service. TCS remains committed to continuing to assist Canadian companies doing business with and in the U.K.
Whatever the ultimate outcome of Brexit, the United Kingdom will remain a significant market for Canadian businesses, and we will continue to work together to build on our strong trading relationship to grow our economies and benefit our people.
Along with my colleagues here today, I look forward to your questions and our discussions.
First of all, thank you very much for your presentation.
It was interesting. Yesterday I had a Zoom call with some members of the United Steelworkers here—the three locals that are making steel—and the conversation about England came up.
As we know, England had a very robust steel industry, but over time they had chosen not to be in the steel business. It's one of the things that sometimes you hear in North America: “too big to fail”. You think that the steel industry will automatically always be there. It certainly takes a commitment by a country that they want to be in the steel and aluminum business, because other countries are outsourcing it.
My question for some of our negotiators to kick this thing off, especially since it's fresh in the mind, is about opportunities. I'm using steel as an example, but that England does not manufacture....
What are the other opportunities going forward that we would be looking at negotiating and securing our current trade status on, and looking at perhaps new opportunities for various industries from coast to coast to coast?
That's through you, Madam Chair, to our representatives.
Thank you for the question, Madam Chair.
We definitely see the transitional trade agreement as an interim agreement, a first step.
We indicated early on that replicating the CETA is what we have available to us at this time. In order to ensure that continuity for businesses—Canadian businesses, exporters and producers—we wanted to ensure that continuity was in place.
We identified fairly early on that we would like to launch a bilateral agreement that best reflects the trade and the relationship between Canada and the United Kingdom. Part and parcel of our negotiations with the United Kingdom right now is how to best move forward with that.
When Secretary of State Truss and spoke in August, there was a clear commitment by both ministers to launch a bilateral negotiation once we completed the work on the transitional trade agreement. We expect to do that sometime next year. Of course, in advance of that we would do a full-scale consultation with all interested stakeholders.
It is very much the case that the transitional trade agreement is an interim step, from our perspective. Then we would have a full-scale bilateral agreement in place in the coming [Inaudible—Editor] launch the negotiations next year and then have it in place within a few years after that.
Thank you for the question.
It does have a lot of similarities to the CETA, and then there are some differences.
When I speak about where the areas of similarities are, I'm speaking very much about how it looks, the chapters, etc. I'll give you an example. Issues that can be replicated easily from the CETA include some of the institutional chapters, definitions, transparency exceptions, trade remedies, customs and trade facilitation and mutual recognition of professional qualifications, etc.
Areas that would require some minor technical changes from the CETA would include sanitary and phytosanitary measures, technical barriers to trade, government procurement and financial services.
The areas that require substantive discussion to bilateralize the outcomes would include market access for goods, rules of origin and origin procedures and investments.
Madam Chair, I'll take a run at that question.
We would be of the view that there are extensive opportunities available for agricultural exporters in Canada's agriculture, food, fish and seafood sector in the United Kingdom market, both as a result of maintaining continuity in terms of market access via a transitional arrangement, and then over the longer terms with respect to what we would obtain, hopefully, in a permanent FTA.
The United Kingdom is Canada's eleventh largest destination market for agriculture, food, and fish and seafood exports globally. We've exported a little over $550 million to that marketplace over the last couple of years. As Mr. Forsyth previously mentioned, it's one that is particularly attractive to the grain sector. It's one that our red meat sector has identified as a key growth market for them in the European space. They have significant interest in that market, as do a wide range of other primary agricultural producers, commodity groups and value-added food processing industries, that they have communicated to us.
I wouldn't know where to rank it against non-agricultural interests, but I do see the U.K. market as one of significant opportunity for agriculture.
It's a pleasure to be with you this afternoon.
From our perspective in London, certainly we are seeing here in the United Kingdom that it is very interested in exploring the opportunity for an independent trade policy by which they will have more flexibility and more control over their trade policy after they have left the European Union. Of course, they're in a transition period now. As of January 1, they will be fully out of the European Union, out of the transition period.
Therefore, as Mr. Forsyth was saying, they have launched negotiations. Obviously they have the negotiations with the EU as a priority, the continuity agreements or these transitional agreements with parties that already have an agreement with the European Union, but they have identified the United States, Australia and New Zealand as really priority targets for bilateral trade negotiations.
Having been through the Canada-U.S.-Mexico agreement, we know, and Mr. Verheul knows better than all of us, the challenges of negotiating with such a significant trade partner. Also, the political events in the United States will also have an impact on the timing of negotiations.
Our objective here in the U.K. is to support Canadian businesses, Canadian exporters, to pursue whatever market opportunities they choose. We have a trade commissioner service. My senior trade commissioner, Nathalie Dubé, is also with us this afternoon and can talk about some of those services.
Really, I think the objective is to make sure we have the right framework in place. That's what a continuity or a transitional trade agreement will provide, the continuity of the benefits that we have through the CETA, and then really to be able to promote the opportunity of the U.K. as a business destination and make sure that we're supporting the development of those business relationships and really being ahead of the game. That's really our strategy here in terms of trying to make sure that we have solidified our advantages in this marketplace.
I'm sorry, but we're running out of time, through you, Madam Chair, to Ms. Bendayan. We don't have time to wait.
I know the minister is busy. She has too many things in the air right now. There should be two people in her job. That's not a criticism of her; it's a reality. She's trying to balance small and medium enterprises and trade, and trade needs a full-time person right now and we don't have that.
I'm sorry that this could be inconvenient to your schedule, but if she thinks this is going to be passed by December 31, how do we do that unless she's in here next week?
The concern I really have is that she's given direction to these negotiators that December 31 is the deadline. She's basically saying that there is not going to be any parliamentary oversight. She's basically telling us here that either we're all coming back the week of Christmas to do this or I'm not sure.... If December 31 is their deadline, that means we're coming back when? I don't know, but there's been no consideration for parliamentary oversight or for anybody to scrutinize the document.
The other thing that's really of concern to me is that there have been no consultations. This agreement looks to me like it could be a full-fledged trade agreement. There is no sunset. There is no trigger mechanism to say that by 2022 this will be changed over to an actual agreement. There's no game plan laid out, other than that we're going to all be nice people and go to the table sometime next year. He may not even get a mandate letter next year to proceed with negotiations.
These types of questions the minister has to answer, and she has to answer them now.
I would echo the comment that the can come more than once. If this is a real priority of the government, I don't think that's a lot to ask, particularly given that it's not the committee that established these timelines. It's the government that has created the predicament we're in.
As I said initially at the outset of this debate, I think one of the important reasons to hear from the soon has to do with getting an idea of how the government intends the parliamentary process with respect to the implementing legislation to unfold. That's not something that as a conversation.... I don't want to spend the limited amount of time that we're going to have to be talking about the content of the deal, which we still haven't seen—we're a month away from the deadline—and the content of the enabling legislation, which we also haven't seen and would have to be passed on the same deadline. I don't want to be spending that time talking to the minister about parliamentary process.
I'd appreciate understanding from the government how it is that they intend to try to shepherd this through Parliament in the time remaining before we're all submerged in these two documents, in what sounds to me a lot like a comprehensive trade deal and the enabling legislation to go along with it.
I think the minister should come without delay, and I think that if this really is a priority of the government, when they finally share some of the details within this agreement, she can come again.
Thank you very much, Madam Chair.
As for Mr. Hoback, I only wish him well. What can I say? I'm not trying to filibuster anything here. I'm simply bringing a perspective. I was saying that the committee needs to focus on the positive. We've heard much here today about the gains that are being made.
Ms. Bendayan's suggestion is one that I think is beyond reasonable, that is, to have a minister come in during the week of December 7.
What was originally proposed by the Conservative member whose name is not coming immediately to mind here—I apologize for that— was...I think December 4 was originally mentioned. Here, the week of December 7 is being mentioned.
The opposition is not wanting to bend at all on this. If the spirit of minority governments and parliaments is compromise, I would very humbly ask my opposition colleagues to entertain that compromise.
To address Mr. Blaikie's point—he has brought up the point of enabling legislation a number of times here—how can the committee itself meaningfully engage the minister without legislation already having been presented? It would be an exercise in optics on the part of the opposition, I think.
I'll leave it there, Madam Chair, in case someone else wishes to add something to the discussion.