I call this meeting to order.
Welcome to everyone for meeting number seven of the House of Commons Standing Committee on International Trade.
Today's meeting is taking place, of course, in a 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 of the rules to follow.
Members and witnesses may speak in the official language of their choice. Interpretation services are available for the meeting.
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.
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We'll move on to the business of the day.
Pursuant to Standing Order 108(2), the committee will now proceed with its study of trade between Canada and the United Kingdom—a potential transitional trade agreement.
Before we begin this meeting, could I make a point of information for the benefit of all of our colleagues on the committee?
As you may have seen, I was called late Friday night to come to Ottawa early Saturday morning to make an announcement with that we have concluded negotiations on the Canada-United Kingdom Trade Continuity Agreement. I wanted to make sure that all members understood what that meant.
Essentially, the negotiations have concluded, but the text is not yet available. Lawyers in both the United Kingdom and Canada are working on this legal review as we speak. I understand that normally this type of review takes between two and four weeks. Obviously, we have our required process here to go through the House and back to committee, and, of course, back to the House and then to the Senate. The United Kingdom also has their legislative process to follow.
I am certainly open to discussing how we might forward as a committee, perhaps after we hear from our witnesses. I certainly recall everybody's interest in getting a deal done before the deadline of January 1. I know that is also of interest to our business community.
I would be curious to hear from our colleagues on how this committee's work can move forward in the most appropriate way, bearing in mind that we have important work to do as a committee as well.
I leave that with you, Madam Chair. I am happy to follow your lead as to how you would like the meeting to proceed.
We will now welcome our witnesses.
From the Canadian Agri-Food Trade Alliance, we have Claire Citeau, executive director; from the Canadian Association of Importers and Exporters, Kim Campbell, chair of the board of directors; from Livingston International, Robert Closner, senior vice-president and general counsel, and Candace Sider, vice-president of government relations; and from the Lobster Council of Canada, we have Geoff Irvine, executive director.
I will turn the floor over to you, Ms. Citeau, if you would like to lead off.
Thank you, Madam Chair and members of the committee for the opportunity to present to you today. It's a pleasure to be back.
As you know, CAFTA is the voice of Canadian agri-food exporters, representing the 90% of farmers who depend on trade and the producers and food manufacturers who want to grow the economy through better access to international markets. This includes the beef, pork, meat, grains, cereals, pulses, soybeans, canola, as well as the sugar, malt, and processed food industries. That's roughly 90% of what Canada exports in terms of agriculture and food, and about a million jobs across urban and rural communities in Canada.
We are grateful for the opportunity to speak with committee members today about the recently announced interim trade agreement with the United Kingdom, amongst other issues affecting our trade with the rest of the world. What I would like to imprint on the committee today is that Canada needs a permanent and meaningful trade agreement with the United Kingdom.
As committee members will appreciate, the U.K. is one of our largest and longest-standing trading partners in Europe. It is a high-value market, and the highest-value market for a number of Canadian agriculture and food products. Over the last five years, it absorbed, on average, at least a quarter of our total agri-food exports going to the EU-28. It's the largest market for Canadian beef and wheat, the second-largest for grains, the fourth market for pork, and an important market for processed foods, pulses and sugar-containing products among others.
It goes without saying that with the U.K. finally leaving the EU Customs Union at the end of the year, we cannot let the Brexit disruption disadvantage our exporters. Timing truly is of the essence. We cannot risk losing market share to our competitors, many of which are actively engaged in free trade negotiations. Others continue to negotiate free trade agreements with the U.K.
Although we have not seen the details of the text, we understand that the recently announced continuity agreement reflects CETA's negotiated outcomes. This is an important first step to ensuring that exporters preserve the existing access and benefits that are already in place. The temporary certainty and stability that a transitional agreement provides is welcome news for some of our members and the reason we call on parliamentarians to work together to pass this agreement before the end of the year.
However, for others, there remains a real fear that a transitional agreement will simply reinforce a situation that remains unacceptable under CETA due to the persistence of trade obstacles that continue to hinder Canadian agri-food exports. This is why we are urging both parties to return to the negotiating table as soon as possible in order to reach a comprehensive pact that removes tariffs and non-tariff barriers, provides liberal rules of origin and creates a level playing field that will enable increased trade and deliver commercially viable two-way growth for agri-food.
CAFTA remains concerned with the EU's unwillingness to remove trade obstacles that are preventing Canada from reaching its full potential under CETA. We are equally concerned with such obstacles being carried over to both a transitional deal and a future FTA between Canada and the U.K. At the same time, any transitional agreement should not be the template for a future bilateral negotiation during which CAFTA would seek more ambitious outcomes for agri-food exporters and the removal of technical barriers.
Put simply, an interim trade arrangement that preserves existing access and provides stability during a transition period is one thing; a real, meaningful, permanent trade agreement that provides ambitious outcomes and enables the sector to grow is another.
This interim agreement is a welcome stopgap measure, but it's not enough. The best way to show the world that free and open trade will protect the economy now and support recovery is by negotiating a permanent and meaningful free trade agreement that enables growth for both sides.
For this and for further FTAs, we would expect close engagement and consultations with the government and our negotiators in the design stage, throughout the negotiations process, but also in the enforcement and implementation of the deal.
In the time I have left, I would like to make one additional point.
As a trading nation, our road to recovery will go through trade and cannot be successfully navigated unless we unblock our major trade routes and reaffirm commitments to rules-based trade.
CAFTA, you will have seen, recently sent a letter to committee members requesting that Parliament, through this committee, undertake a competitiveness review of the trade agreements that have come into force in recent years to help ensure that the negotiated outcomes are living up to what was negotiated, and, most importantly, to identify where our trading partners are not fully honouring commitments made. This is especially important for agri-food exporters if our sectors are to be key anchors for growth and prosperity moving forward.
As you know, despite being in force for over three years, CETA has failed to deliver on expected gains, in large part because the EU continues to maintain a wide range of barriers and subsidies, imposing new barriers or failing to reduce those that were to be removed or eliminated through the CETA. This makes expected export growth to the EU elusive for Canadian farmers and agri-food exporters.
A recent report issued by the WTO and the FAO, echoed by a number of international institutions, demonstrates that international trade clearly is absolutely central to the future of agriculture and food and resilient supply chains. Really, no other sector is so inherently dependent on trade.
We've become an agri-food powerhouse in Canada precisely because we've specialized in making products that the world wants and needs. The global demand for agri-food presents an immense global growth opportunity for us, and we must be mindful that unless we're leading the pack, we're doomed to be left behind.
Harnessing the power of our sector to support Canadians now and into the future will require a proactive and collective effort to aggressively oppose protectionism and spend the political capital necessary to keep trade free and open.
I look forward to your questions.
Thank you, Madam Chair and members of the committee, for including the Canadian Association of Importers and Exporters on your agenda to allow for input on this important topic.
My name is Kim Campbell. I'm the chair of the association and we thank you for providing us the opportunity to appear before this committee to affirm our support for a transitional trade agreement between Canada and the United Kingdom.
The Canadian Association of Importers and Exporters is a national association that has been speaking on behalf of the trade community for almost 90 years. Our members include importers, exporters, Canadian manufacturers who both import and export, wholesalers and distributors, retail importers and supply chain service providers. We represent some of the largest importers and exporters in Canada, as well as small and medium-sized businesses. Our members import and export across most commodities and product lines.
I.E. Canada endeavours to be a trusted facilitator between business and government to inform and influence outcomes of policy and real-world application for the movement of goods across Canada's international borders.
The private sector needs transparency, predictability and ease of use in all its interactions with government, but really nowhere more so than at the border. The last few years have been very challenging for our members as two important pillars, transparency and predictability, have been shaken now that we live in an era of trade wars.
The COVID-19 pandemic has added another hardship to an already difficult environment. One really needs to be a geopolitical afficionado and tea-leaf-reader to manage the world of cross-border trade in our current environment. We applaud the Government of Canada and Canada Border Services Agency for their great work in keeping our borders open to commercial trade. We would have been at great peril without that predictability, and this effort should be commended.
The importance of our border was reinforced as we had to pivot to manage extreme supply chain disruption while at the same time ensuring critical goods moved to our citizens, including but not limited to personal protective equipment and food. For some additional excitement, we were forced to implement CUSMA with minimal information to guide the importers and exporters sector, and there was no transition period. We believe that some great lessons have been learned and hope that as we support the U.K.'s transition from the EU, the Government of Canada will support importers and exporters with transparency, predictability and ease of use in the transitional agreement.
We would also like to take the opportunity to share our work on a path to a smart and secure commercial border. We provided supporting documents in our submission to the committee for this hearing. This information might also inform your study of a transitional agreement between Canada and the United Kingdom.
Our members are focused on the mechanics of how goods move across borders. It is important to state that although the word “free” appears in these agreements, it does not mean that the goods are duty-free as a result of an agreement. The goods must qualify in order to be claimed as duty-free and there is a lot of process and regulation required for that to happen.
How one qualifies to claim no duties on their goods is extremely complicated and confusing. Those of us who work in this space have a hard time keeping up, as each agreement has its own unique set of rules and requirements. Each agreement also has its own form or format to certify that the goods qualify, and each commodity has its own rules. This applies to importers claiming a free trade agreement at time of import and exporters having to provide the certification to their customers who are importing Canadian goods into their respective countries. It is important to emphasize that many of these goods are required inputs to create the goods manufactured in Canada.
This is not a “one and done” undertaking. These certifications need to be completed once a year and are specific to the individual part that a business would be importing or exporting. In addition, the regulator may come to you four years later and state that they do not think you qualified and make you pay back all the duties and taxes. It is no wonder that small and medium-sized enterprises are not utilizing these agreements at the rate we hoped to see.
Our members are currently managing, for the third time this year, North American, NAFTA or CUSMA, certifications. For a majority, the bulk of this work occurs at the calendar year end. The uncertainty for the importers and exporters trading between Canada and the U.K. adds to the many burdens they already face.
Cash flow is paramount to the survival of many businesses during this pandemic. Just the reinstatement of duties at the border on goods entering from the U.K. on January 1, 2021, might be the end of such businesses' existence. It will also impact their customers in the United Kingdom and will encourage them to look for lower-cost alternatives.
We respectfully submit the following recommendations as key elements for a transitional agreement:
One, allow the use of existing CETA certification to substantiate free trade duty status. Two, adopt the same rules of origin and certification requirements that exist under CETA. Three, allow importers to certify goods during the transitional period if new documentation will be required.
In summary, we fully support a transitional agreement between Canada and the United Kingdom and look to the Government of Canada to support business with transparency, predictability and ease of use in cost and process.
Thank you for allowing our members to participate in your study of a Canada-United Kingdom transitional trade agreement and the potential impacts to importers and exporters if not implemented.
I look forward to answering any questions you may have.
Good morning, honourable Madam Chair and members of the committee.
On behalf of my colleague Robert Closner and myself, we would like to thank you for the opportunity to speak with you today.
To provide you with further context for our appearance, we'd like to state that our issues are related in a broad sense to Canada-U.K. trade, as they are related to any major cross-border trade relationship our country currently has.
As Canada’s largest customs broker, we represent approximately 25% of the goods imported into Canada, across tens of thousands of importers representing a broad range of industry sectors. We employ over 2,000 Canadians across the country, and we have been supporting clients during the COVID-19 pandemic, keeping supply chains moving in the wake of this unprecedented global public health response.
These imports are fundamental to our economy's ability to fulfill its full potential for export markets. As an example, from data on the cross-border flow of goods in the auto sector, a product will cross the border two or three times before it becomes a finished good. Imports and exports have never been more interdependent.
We know that the pandemic has demanded fast and bold responses from national governments. Livingston International extends our thanks to Canada’s federal government for its significant economic relief efforts during the COVID-19 pandemic, given the difficult environment for businesses, communities and Canadians in general.
We also understand that all businesses must evolve to survive. Alongside this evolution incumbent on the private sector, we also believe government must become partners in developing flexible regulations that allow businesses to operate efficiently during these challenging times. I’d like to thank members of Parliament, Tracy Gray and others, for first raising our issue with during her appearance before committee.
To further Ms. Gray’s line of questioning, we believe we are uniquely positioned to provide insights for this committee on the unintended consequences of one key measure implemented to address this crisis. By ensuring the movement of goods across international borders, customs broker firms play a critical role in maintaining access to foreign supply of goods and restarting and stimulating Canada’s economy. Our challenges present a unique but critical perspective.
Customs brokers are licensed by the federal government and can be considered government’s original trusted traders. Through this pandemic and beyond, customs brokers have and will continue to be a valued partner in the global supply chain, facilitating trade on behalf of importers and acting as the conduit to Canada Border Services Agency and in turn to Revenue Canada.
For goods to clear customs at the time of release, the duties and taxes on the goods being imported are required to be paid at the time of clearance, or the importer must rely on a release-prior-to-payment bond. As most importers of record do not have their own bond, they rely upon the bond of their customs broker to facilitate clearance in a timely manner. Custom brokers are required to invoice, collect and remit significant outlays of duties and taxes on Canadian imports on behalf of the importer of record, and if the goods have been imported using the broker's bond, the risk of payment lies entirely with the broker.
Robert will provide further details on our current position.
Honourable Madam Chair and members of the committee, many thanks for allowing us this opportunity to speak with you.
On March 27, the Department of Finance announced that businesses could defer customs duties and tax payments until the end of June. While the goal of increasing liquidity for Canadian businesses was commendable, it has had a considerable impact on the brokerage industry.
The deferral period placed Livingston and many of our fellow customs brokers at considerable risk. As of June 30, there was a total of $751 million in duties and taxes owing on imports covered by Livingston's brokerage bond. Livingston paid the entire balance notwithstanding that we had only been able to collect $680 million of the duties and taxes, resulting in an unprecedented draw on our credit line and in turn a credit risk of $71 million. Additional unpaid importer duties and taxes continued to accrue during the following months. Through significant increased investment and effort, we have been able to reduce the overall outstanding balance on a year-to-date basis for duties and taxes to approximately $12 million as of November 11.
In addition to Livingston's efforts, our primary industry association, the Canadian Society of Customs Brokers, as well as other related industry associations, has been in contact with the government since the announcement in March regarding the unintended consequences of duty deferral. Our concerns are directly related to the material cash-flow and credit risk burden that has been transferred to the brokerage industry. Existing government regulations were never designed to address the resulting scenario nor do they offer appropriate protection to the brokerage industry given our current economic climate.
Members of the committee, I trust you can appreciate that we are still carrying a sizeable credit risk. Furthermore, we expect that because of continued regulated closure of non-essential services and related economic impacts, the risk of non-collection of current or near-term unpaid duties and taxes has increased significantly. The impact of this deferral, although not intended by government, has been to place the brokerage community at a significant financial risk despite the critical role we have played throughout the pandemic.
There has been, prior to COVID, and continues to be, a tightening of the insurance and surety markets globally. This has resulted in an increased cost to obtain surety bonds or increased requirements for cash collateralization of bonds.
As the cost and difficulty of obtaining surety bonds increases more, importers of record will rely on their brokers' bonds to have their goods released. This will result in increased cost and liability for customs brokers. With the introduction of the new CARM initiative—or CBSA's assessment and revenue management—all importers of record will eventually be required to obtain their own individual bonds. While we ultimately support this initiative, if the bond market does not improve, this will result in slowing the flow of trade into Canada and conversely the export of finished goods.
It is imperative that the brokerage industry remain viable to continue to facilitate trade on behalf of importers. However, current gaps in government regulations, inclusive of consistency and clarity, could result in uncollectible debts being thrust upon customs brokers, which would impact our ability to move goods across the border in an efficient and timely manner.
Many customs brokers cannot absorb this debt and will instead change their business practices to require the importers of record to remit duties and taxes in advance of clearance of the importation instead of taking on the risk themselves. This contributes to significant delays in the moving of goods across borders, with consequences for our economy.
The United States is expected to pass legislation to partially address this issue. In 2019, representative Peter King introduced the Customs Business Fairness Act, presently before Congress, which proposes a technical amendment to section 507(d) of the Bankruptcy Code, which would in effect allow subrogation for customs brokers or sureties who have paid duties to the government on behalf of a bankrupt importer. We need similar legislation in Canada.
To address the issue of liability in the near and long-term, we recommend the following actions by government in this budget cycle.
First, we recommend that discussions commence with the Canada Border Security Agency and industry stakeholders on introducing legislation that protects customs brokers in the event of importer bankruptcy. The aim of the new legislation would be to extend protection to brokers who front payment of duties and taxes in good faith on behalf of importers, thus reducing the significant liability for unsecured claims.
Second, we recommend a framework to allow brokers to withhold payment on bad debts. The Receiver General has vast statutory powers in the event of an importer of record’s bankruptcy and could provide a mechanism whereby brokers were eligible to file a claim for reimbursement of duties and taxes remitted on behalf of an importer of record when they are unable to collect on that debt.
Third, the creation of a consistent strategy and transparent policy to deal with importers of record defaults is critical. Currently we have been advised that matters will be dealt with on a case by case basis, creating uncertainty and instability for importers and customs brokers, hindering their ability to operate effectively.
I will stop there to allow some time for your questions. Thank you once again for providing us with this opportunity to speak with you today.
Thank you, Madam Chair and members of the committee We appreciate your having us here today. Greetings from the east coast.
The Lobster Council of Canada is the only table that represents the entire lobster value chain. We're unique in that respect. We have harvesters, dealers, live shippers, processors, first nations all represented around our table. We've been around for about 10 years and we focus on the market.
We focus on marketing and promotion of Canadian lobster, on building our brand around the world, on market intelligence, on communicating within our sector about what's happening in the market, and also on market access and dealing with market access issues, which come up all the time.
We've very thankful to work with your very good officials in GAC and with trade commissioners, whom we find to be excellent for us out in the world.
There is an important, mature and steady market for Canadian live and processed lobster. Over many decades of trade with our commonwealth partners, our exporters have developed strong relationships with restaurant chains.
Can you hear me okay?
Thank you. The Wi-Fi is a little unstable.
That's with restaurant chains, independent distributors, retailers and other importers that value high-quality Canadian seafood.
Our exporters have developed really strong and important brand recognition in live lobster, processed lobster and value-added specialty products in the U.K.
Since coming into force in 2017, our trade has benefited from the free and open access provided by CETA, the comprehensive economic and trade agreement between Canada and the European Union.
As the U.K. moves toward leaving the European Union very shortly, it is vital to our industry that an interim agreement be finalized—and the good news is that it seems like it has just to be ratified—and then a permanent trade agreement be negotiated that will provide equal or better access than CETA gave us between our two countries.
Between 2015 and 2019 the export value of live and processed lobster to the U.K. has remained very steady at about $32 million per year, with strong growth in lobster meat, a return to demand for whole, in-shell frozen lobster and steady live lobster values.
With the closures of restaurants worldwide and the fact that, typically, 70% of Canadian lobster is consumed in the food service sector, lobster exporters have had a tough 2020, like most exporters have. However, many have been able to pivot to directing sales through retail and e-commerce verticals, which has proven to be encouraging and beneficial to everyone in the value chain that I just talked about.
This change in market focus, a significant drop in market demand due to the pandemic, and price decreases on the shore and in the market have dramatically impacted the export value of lobster products to every market, and the U.K. is no exception. Lobster export value for the nine-month period to the end of September 2020 was down 52% from the same period in 2019.
For our live lobster shippers, the pandemic has also impacted air freight options. We take our product to market by plane for live lobster and in container for frozen. Major air carriers have cancelled their flights due to lack of passengers, and our major competitor, the U.S., currently enjoys better air freight options and a shorter transit time to Europe. The benefits of the CETA agreement have helped our live shippers overcome this freight and time-to-market challenge, and we would not want to go backward with a lapse in tariff-free access.
Given that our major competitor is the United States, which also is negotiating with the U.K. on a trade agreement, the Canadian negotiating team should exercise all effort and speed so that Canadian seafood will benefit from being first to secure a favourable trade deal with the United Kingdom.
Another concern noted by lobster exporters involves documentation and certification. It will be vital to our industry that there be a seamless transition to a replacement document certification regime between Canada and the U.K. that will involve the relevant federal agencies.
The largest issue facing our sector is the risk of no interim deal with the U.K., which would mean a return to the MFN tariffs at the beginning of next year, and be in place until an agreement can be reached. Hopefully that's not going to be a problem since it sounds like we have an arrangement already figured out.
Just for reference, though, to put this in clear and easy-to-understand terms, if we don't have a deal, customers of our exporters would be facing an 8% tariff on live lobster, a 16% tariff on whole, in-shell frozen lobster, and a 20% tariff on lobster meat. Both of those last two items are very close to their phase-out, down to zero within the next year.
Given the importance of the market to Canadian live lobster shippers and processors and the ongoing negative market impact of the pandemic, it is critical that an interim agreement with the U.K. be made before the end of the year, and that a more formal agreement be negotiated in 2021.
Thank you very much.
What I can do, without providing details, because we have not yet seen the text of the recently announced interim agreement, and I think it's important that we see the text as soon possible, is to provide some brief examples of what the situation could look like on the grain side moving forward.
The reason that our grains and [Technical difficulty—Editor] exporters are pleased with the interim agreement is that with no agreement in place, they would lose the preferential tariff gains that were granted under the CETA. For them it certainly provides much-needed stability, which is very welcome. In the beef sector, for example, there are definitely concerns about non-tariff barriers, in particular at a time when the EU and the U.K. continue to send products into Canadian markets. I understand that they will appear this afternoon, so I will leave it to them to speak to the procedures and volumes that leave them with questions about the viability of the access promised. The pork side is similarly on the fence. They welcome the continuity that the deal provides, but we have to see what the market and conditions will really translate into for them.
For sugar and processed food products, there has been little uptake of opportunities in the EU because of a number of measures and trade-distorting subsidies that make our export uneconomic to the EU. As for the U.K., a traditional deal certainly provides welcome quota access. I will leave it to them to provide specifics as well, knowing that, again, we have not seen the text. It appears that over time there could be measures that could help reduce our trade deficits with the U.K. in food products.
Thank you very much for your question.
I definitely would concur that it's the non-technical trade barriers that seem to be the challenge, especially in the food space. It's things like what kind of ingredients have to go into foods. The U.K. might have restrictions, and actually so does Canada on the flip side on some things as well.
I think it's industry-specific. Probably the bigger challenge is around things that are health and safety issues like food and items like that. Probably we just need a little more time to reflect and give a fulsome response back to specific sectors.
Part of the challenge, too, is with helping our exporters. It's just the complications of trade. All exporters would have to report their exports to the U.K. It's just having to get onto a system, create documentation and those types of things, especially for small and medium-sized enterprises. We could probably think about how we can support people better to do that.
You're always excited to get your sale, but then all of a sudden you can't get your goods to the market because there's a whole bunch of complication that you didn't understand. That's where a lot of the failure and challenges occur.
Thank you very much for that great question.
For us, because we're so close to a drop-dead date here, our request or recommendation was to adopt the existing way that you qualify for duty-free status at the border. That's an additional complication. When goods come across, you actually have to qualify and there's a whole bunch of rigour in terms of a document that you have to give to the customs officials.
With very few weeks to go, we have zero understanding of what that requirement would be. That's why we're asking for continuity of the existing CETA framework.
What we learned with CUSMA was that we had only a couple of weeks to come up with certification, with no guidance. We had to go through the text, figure it out on our own, take our best guess and go.
Thank you, Madam Chair.
Picking up on that conversation regarding a sunset clause, I just want to make sure that everybody is clear about what that is. When our witnesses talk about the importance of predictability and stability for our business owners, a sunset clause would effectively repeal the trade agreement, possibly before the conclusion of a comprehensive trade agreement, so that would be the opposite of providing continuity for our business owners.
I have a question for Ms. Citeau about our industry.
Perhaps you could confirm the following. Without the transitional agreement, if we look at the United Kingdom's tariff schedule, we're talking about tariffs of about 16% on beef, around 12% on lamb and 8% on poultry.
When you learned over the weekend that we had reached a continuity agreement with the United Kingdom, how did your association and its exporters react?
I believe that you said this earlier. However, I can confirm that the agreement will include a commitment to return to the table to negotiate a comprehensive agreement with the United Kingdom in 2021.
I want to ask you to commit to providing certain documents to the committee so that we can be prepared for any eventuality. I'm talking about documents that set out the quantities of exports and products that may be subject to tariffs according to the United Kingdom's tariff schedule.
Mr. Irvine, I might ask you the same question. Would it be possible for you to file with the committee the documents detailing the quantities? For example, you mentioned that an 8% tariff would apply on live lobster. I think you mentioned 16% for whole frozen lobsters and 20% for lobster meat.
If we could just have an understanding as a committee of the quantities of those exports so that we can prepare for any eventuality, Mr. Irvine, that would certainly be appreciated.
I want to point out that just prior to the pandemic, with the United Kingdom leaving it was really important for us to continue to negotiate, with all that was going on. Again, therefore, I emphasize my congratulations to all involved in getting us to this point, because 2020 has been a very challenging time. Within that context, we have to recognize that we were able to get to this point.
My understanding is that 98% of products that are being protected tariff-free between Canada and the United States, until such time as we get to the point of the long-term deal, which is going to be debated in the House of Commons.... This committee has always been proactive, and we've undertaken this really important work.
I have a few questions about this really important subject matter, because we know we are no longer going to be covered as of January 21, 2021.
One question I wanted to ask in particular was this. We had an earlier presentation from Gerry Fowler, from Manna International Inc. He deals in organic soybeans. I wanted to ask whether any of the committee presenters had any idea about how these particular soybeans would be treated under the current situation.
Gerry Fowler is from Sault Ste. Marie, but he trades substantially and has been doing so for 20 years with the United Kingdom and Europe, in particular in organic-certified soybeans that are non-genetically modified. It's quite a niche market. He represents a number of farmers across Canada who are exporting into the United Kingdom.
Through you, Madam Chair, to our presenter perhaps from the agricultural group, I'll ask if they have any information on this. If they don't, they can provide it to me later.
Okay, thank you very much. I just wanted to ask, because it's very important. Obviously it's a great market.
Overall, with 98% of the products being protected that are tariff-free, we've talked about a lot of things, such as that the devil will be in the details and that an agreement will be introduced and debated in Parliament. I would like to talk, however, about what tools your clients are using right now, in particular small business and women entrepreneurs. What kinds of tools are at their disposal in expanding their exports and imports, or also as well in taking a look at opportunities for what I'll call new folks?
I think one thing this pandemic has done is cause a lot of people to start to think like Gerry Fowler and say, “I am in Sault Ste. Marie”, or “I'm out in western Canada”, or “I'm out in eastern Canada, but I know that I can virtually get through to some market”.
Do you have you any comments about what your small businesses are doing? In particular, there was a recent announcement about virtual trade missions. Are any of your clients interested, or are they aware?
Thank you, Madam Chair.
Thank you, Madam Chair.
I would suggest that we go forward with an interim report. That's just my own feeling. I feel that there's a lot of good information that we can include in this interim report. In my estimation, one would be that the U.K. is reporting that this is basically just a rollover of CETA. I think that would be important information to include in the interim report, that we basically have a rollover of CETA.
Another thing that might be interesting in an interim report is the difference between what the U.K. offered in the beginning, which was basically 95% no tariff versus 98%. That's for preferential access. It would be interesting to see what we gave up to gain the extra 3%.
The other thing we can include in this interim report is maybe the importance of more transparency in negotiations. This would be over a number of years, even before 2015. There needs to be more information, there needs to be more consultation, and it needs to be more open and transparent. In an interim report, we can include the importance of that.
I have the utmost respect for my Liberal colleagues, for sure, and when we were in government as well, it's very difficult to ask members of the government to defend an interim trade deal when they know 0% about it. If you at least have some information, it would be good. It would be good as a government to be able to defend that.
When I read in some of the U.K. publications that this trade deal is going to be good for Scottish beef and Scottish salmon, I raise a bit of an eyebrow, considering that we're supposed to be the beef exporting country in this deal. It's a good result for U.K. wine and U.K. spirits; we can see the spirit side of it. Then, in a bit of what I don't want to call a sovereignty issue, but in Ontario, I read in a U.K. paper that they're talking about more competitive access to the LCBO, which is a provincial regulator.
There's a lot of value in an interim report and it could give guidance to future deals. It could give guidance to the long-term deal between Canada and the U.K.
That's a long ramble, but that's a little about what's on my mind on the value of an interim report and another trade deal.
Thank you. I appreciate it.
Basically, I completely agree with my Conservative colleague. The negotiations ended just 48 hours ago, and the text should certainly be produced.
We must go through the normal process, which is very important. I'm an international trade lawyer, and I think that the lawyers must review the text. We have no choice but to go through the process. As soon as the text is available, we could study it properly.
I find it interesting that my Conservative colleague agrees with the idea of an interim report. Personally, I'm in favour of it. We've already heard several relevant presentations. I believe that the will be available next week. I emphasized that the committee members would want to ask the minister questions as soon as possible. This was clear based on our last meeting. I'm announcing that she will be here on Monday to answer our questions.
After her presentation on Monday evening, and depending on what she says, we'll have more information to include in an interim report, if that's what all the committee members want. That said, if my colleagues would rather wait for a more comprehensive report at a later date, I'm also open to the idea.
Thank you very much, Madam Chair.
I just want to bring everybody back to what this study actually is. That's what our focus is. We're confusing and bringing other things into the conversation.
The study actually is no less than three meetings, and we've now had three meetings, to receive an update on the federal government's progress in negotiations of a Canada-United Kingdom transitional agreement; to hear from stakeholders affected by implementation of the new Canada-U.K. transitional agreement; and to study the impacts of a lack of a transitional agreement with the U.K. Then it goes on with the rest of the wording.
When we look at what the study was when we all mutually agreed to do this as the first study in the order of business for this committee, we also knew that in tandem there were negotiations going on. Therefore, I don't really see anything as changing here. All of us, as a committee, had agreed last week to an interim report, so here we are.
I'm unclear what the analysts mean that they don't have sufficient information, because we've actually had three meetings. The motion said a minimum of three meetings and we've heard from the primary groups that we were looking at hearing from. Regardless of the government's announcement and that we don't yet have any text or any details, I think we can still move forward with the work of this committee and just continue on with what the study was and what it is.
I think we can just continue on.
I think we are all just sorting through this. I apologize if my remarks aren't quite as cogent as they might like.
I think there is an issue that comes up with respect to the study in general. We have been setting the potential for a transitional trade agreement, what it might look like and what people would like to see in such an agreement.
The fact, though, that there is now an agreement signed—although we haven't seen it—means that we're at the end of the study of a potential trade agreement, and I think we could publish a final report on it, because what we don't know is just as important as what we do know.
We might report back to the House some of the things we don't know. Some of the open questions that have been raised are things that are important to consider. We could issue a report, wrap this up and then move on to the study of the actual agreement.
I'll be honest. I don't know that there's a lot of point in meeting with witnesses on the Canada-U.K. trade agreement until we have the text of the agreement, because we're going to be asking people to come to make presentations to committee, but nobody actually knows what's in the agreement.
We saw a little bit of that today, when we were pressing witnesses who don't know anything about what's in the agreement to give their opinion about something they don't know about. It's hard for me to imagine that we're going to get productive testimony, because everyone is going to want—and not wrongly—to defer until they know what is actually in the agreement before giving any real, meaty comment on what they think works and what they think doesn't.
Again, this isn't a considered position, given that the agreement was just announced on the weekend. We don't actually know when we're going to get it. If it takes four weeks to do the legal scrubbing and the translation....
Parliament isn't even supposed to be sitting in four weeks' time. I think that takes us to December 23 or thereabouts; I'm not exactly sure.
I don't know what the government is doing and I don't know how the committee is really supposed to respond within the context of a process that is completely unclear and in the context of studying a document we don't have access to.
I think what we could do, then, is wrap up what we've heard so far within the context of this study and report back on that: the things we know—not much—the things we don't know, which is even more, and then undertake the study that we would normally undertake anyway. There should be enabling legislation, and we'll call witnesses to hear about it.
How we get that done before December 31, I have no idea. I'd be interested to hear how the government thinks it could be accomplished, when they don't think they can even deliver the agreement to parliamentarians until at least two weeks from now.
From the point of view of what we do know as a committee, we could wrap up this potential future-oriented study and then begin again with witnesses once we have the text of the agreement.
I put that out for discussion.
I also hear what Ms. Gray is saying. We could just proceed with this study and roll it into a study of the legislation when it comes, but we may well want to hear from the very same witnesses again once we've seen the text of the agreement. I wonder about calling them now and then calling them two or three weeks from now. I ask whether it wouldn't be better just to wait until we actually know what the heck the government has committed the country to. Then we can ask for people's opinions on it.
I'm thinking about this in a hundred different ways and trying to figure out what the best way to proceed is.
The reality is, I don't have an agreement. Until it's tabled in the House, even though it has supposedly been signed I don't have it. I have to report on what I have at hand today. I think that was our game plan. Translation requires this time frame, so they required this deadline.
I think we have to proceed with the interim report, table it in the House and then look, moving forward, at how we can proceed further. We can adapt an interim report. In the final report we can change things around and have our final report afterwards.
As for the implementation legislation, I'm not sure what it looks like either and how it's going to work through the House. I agree with Mr. Blaikie that the time frame is really very tight.
The other thing that I think is very important is that we're listening to witnesses right now who haven't seen the agreement and are laying out their expectations. I want to know what those expectations are so that when I look at the actual agreement I can weigh it and say: “Wait a minute. You were told in your consultations with these guys that this is what they expected, and here is what you delivered.”
I think we have to highlight some of the problems that happened in this agreement so that they are never repeated again, and the interim report will help us do that.
Thank you, Madam Chair.
I believe I stated this at the beginning of the meeting, but I'll just correct the record.
The Canada-United Kingdom continuity trade agreement has not been signed. The negotiations have concluded. We have reached an agreement, but there is no text for signature yet. That is what the lawyers are preparing right now.
I would just encourage all members to take note of that. It is not like there is a signed agreement sitting in anybody's drawer at the office that we are not sharing. There is no signed agreement yet.
Again, as I mentioned, this is all happening very quickly. The announcement was made on Saturday morning, and the minister is appearing on Monday next in order to respond to some of the concerns and questions that have been raised by colleagues on all sides regarding next steps and the passage in the House.
I think I'm hearing a consensus. Certainly, Mr. Blaikie has raised a proposal that I find very interesting. I won't speak for others, but I think it follows very well from what some of the Conservative colleagues have been saying, in that perhaps we should conclude our interim report with as much information as possible at this time, and then move on to a full study of the agreement once we have the text and once everybody can appreciate the details of this continuity agreement.
Madam Chair, I don't know how you wish to proceed, given the time. Would you like me to put forward the proposal? If another colleague would like to do so, I am certainly open to perhaps Mr. Blaikie putting it forward as I believe it was his suggestion.