I call to order meeting number 32 of the Standing Committee on International Trade.
Today’s meeting is taking place in a hybrid format, pursuant to the House order of June 23, 2022. Therefore, members are attending in person in the room and remotely by using the Zoom application.
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As part of the motion adopted by the committee on Tuesday, September 20, 2022, the committee is meeting virtually today with Nadia Theodore, ambassador and permanent representative to the World Trade Organization.
Welcome to our committee, Ambassador Theodore. We will start with your opening statement of up to five minutes and then proceed with rounds of questions. We're very glad you were able to join us today to share some information and knowledge with the committee members.
I will turn the floor over to you, Madam Theodore.
Good morning, everyone.
As some of you may know, I wear three hats here in Geneva. I am the head of the permanent mission of Canada to the United Nations, the World Trade Organization and other international organizations. I am Canada's alternate permanent representative to the United Nations, and I am the ambassador and permanent representative of Canada to the World Trade Organization.
It is a real pleasure to be here today in my capacity under that third hat, as Canada's ambassador to the World Trade Organization, to update you on the latest developments at the only global international organization dealing with the rules of trade between nations.
The three pillars of the WTO—the deliberative, the negotiating and the dispute settlement pillars—are all of enormous importance to Canada. The work to maintain, improve and strengthen all three is ongoing. Working to uphold, safeguard and continuously improve the system has been a cornerstone of Canada's trade policy since its inception and remains so today. With that context, let me move to where we are today.
As was the case with many things due to the pandemic, the WTO 12th ministerial conference was delayed and eventually took place from June 12 to June 17, 2022. MC12, as it's known, produced a set of outcomes that represent the most significant package to come out of the WTO in recent years.
Could there have been a higher level of ambition? Well, Canada is a high-ambition, high-standard member, so the answer to that question will almost always be yes. However, the MC12 outcomes were significant and set the ground for the pathway forward.
Let me provide you with an overview of some of what was achieved.
Significant was the WTO agreement on fishery subsidies. It is the first sustainable development goal target to be fully met. It is the first SDG target met through a multilateral agreement, the first WTO agreement to focus on the environment and the first broad, binding multilateral agreement on ocean sustainability.
The moratorium on not imposing customs duties on electronic transmissions will continue to provide predictability for our businesses and our consumers, as members have agreed to extend the moratorium until the next ministerial conference or until March 2024.
Under the consensus-based decision that is commonly known as the ministerial decision on the TRIPS agreement or the TRIPS waiver, eligible developing country members may waive certain TRIPS provisions on patents for COVID-19 vaccines.
MC12 outcomes also included a package on WTO responses to emergencies, a ministerial declaration on the WTO response to the COVID-19 pandemic and preparedness for future pandemics, a decision on World Food Programme food purchases and a declaration on the emergency response to food insecurity.
This is where we are, coming out of the last ministerial conference.
Where are we going? As I already noted, Canada would have liked to have seen more ambition at MC12, and we are not alone in that regard. In all three of the pillars, members have already committed to doing more and under ambitious timelines.
Members have committed to the restoration of a fully functioning dispute settlement system by 2024. Members have begun work toward the implementation of the fisheries agreement and have already begun work on what I like to call the second generation of the fisheries agreement.
Discussions have already begun on whether to extend the TRIPS waiver to cover patents for the production and supply of COVID-19 diagnostics and therapeutics.
There is broad agreement among the membership that a way forward on agriculture is needed.
Members are also re-energized around the improvement of the deliberative function of the organization. Work around WTO reform of this function will feature prominently over the coming months.
The path to success will be as challenging as we know member-driven, consensus-based and legally binding success to be, but it is doable. Canada will continue our active engagement across all of the pillars. The Ottawa Group, inaugurated in 2018 under Canada's leadership, will continue to serve as a much-needed forum for incubating ideas and creating positive momentum across the organization. This will be of crucial importance in the lead-up to MC13, which is expected to take place before March 2024.
Before I close and hand it over for the discussion and questions, let me underscore that overarching in Canada’s engagement at the WTO is our commitment to constructive participation in the work on development across the organization and our active engagement on trade and gender and on MSMEs to ensure that these important issues are brought to the forefront.
We are also demonstrating considerable leadership in the area of trade and environment and serve as co-coordinator for the structured discussions on trade and environmental sustainability.
Thank you very much. I look forward to the discussion.
Thank you very much, Mr. Carrie.
That's a really good question, and it's so interesting, because 2024 does seem like a long time away.
As I'm sure you would know, in any negotiation—but certainly in multilateral negotiations—what seems like a very long time often ends up being a very short time in which to get over 160 members of the organization to come to consensus, so there's that.
Maybe what I'll do is say three things about the dispute settlement body, and in particular the appellate body, and the holdup.
Number one, you are absolutely 100% correct that the reason we are where we are with the the dispute settlement body and the appellate body is indeed that the United States, for some time now, has been blocking the appointment of panellists to the appellate body, which renders it not functional.
Number two, I would say that it's important to note that members have put together an alternate structure—if I could call it that—under the leadership of Canada, called “the multi-party interim arrangement”, or MPIA. I was trying to think of what the acronym actually means, because all we do is use the acronym here. That allows a group of members to use an appellate mechanism among themselves when and if the need to appeal a case comes up.
I think that's important to note, because it is not the case that disputes are not allowed to be heard and that if there is a need to appeal, there is absolutely no mechanism through which to do that. We do have this interim appeal mechanism that Canada has spearheaded and pioneered, which does provide us with an interim solution.
Number three, I agree with you that if we could get the United States to stop blocking panellists tomorrow, we would absolutely do that. Right now, what is happening here in Geneva is what I'll call a very thoughtful and inclusive process that is actually spearheaded by the United States—which is good news, since it means they're engaged—to bring together the membership to discuss what the issues are with the appellate body system and how we can move to address them in time for this 2024 deadline.
That process started in September and is in the sort of ideas-gathering phase. Then, starting in January, members are actually going to sit down, look at all of the ideas that have been put forward and see how we can put forward concrete proposals based on those ideas put forward by members.
The hope very much is that sometime before March 2024, we will indeed have come to a place where ministers will be able to sanction—to bless—whatever result will bring us to having a fully functioning dispute settlement system, which would include the ability to appeal by the entire membership, and not necessarily just by this interim solution that Canada has spearheaded.
I think it would be great if we could come up with something.
I've been around a little while, and it's a bit concerning when it takes so long. I think the Doha started in 2001, and we're at 2022 and we still haven't figured all that out yet.
The challenge is when we have managed economies such as China's. I think it was 2001 when China was admitted to the WTO. When we're talking about fair trade, free trade, I think the Americans have some legitimate issues with the process, just as Canada does. We can always talk about our softwood lumber issues as well.
I wonder how relevant the WTO is. Should Canada be looking at our trusted trading partners, people we can count on who will follow the rules, and with that, lead in there?
I want to ask you about the accomplishment with the fisheries subsidies and the agreement you mentioned in your opening remarks. I'm wondering how enforceable—
Sure. Maybe I'll address the fisheries.
As I mentioned, we concluded the fisheries agreement at the last ministerial conference. Once two-thirds of the membership have deposited their instruments of acceptance at the WTO, which really means they have done all of their domestic work they need to do, Canada included, it will enter into force and will indeed be fully enforceable at that moment in time.
Even though I did mention that we had already started negotiations on the elements that we were not able to conclude, it's really important to recognize that what we did conclude at MC-12 is absolutely a full agreement, and members are now going through their domestic processes at home. Once two-thirds of the membership have fully deposited their instruments of acceptance, it will indeed come into force and be fully enforceable.
First of all, thank you very much for those kind words. It really, truly is a pleasure to be representing Canada here at the World Trade Organization.
Let me say a couple of things. For the past several years, Canada has taken a leadership role in the organization at the WTO in the terms of both the policy piece of trade and gender and in particular women in trade—everything that is about mainstreaming issues of gender across all of our agreements. That is as...I was going to say “basic”, but that makes it sound negative. However, it is as basic as looking at how some of our agreements, when they were first negotiated, didn't take into account that some of the barriers faced by those companies that are actually using the agreements will differ, depending on whether they are women-owned businesses or not.
It's taking a look at that and at things that are a little bit more sophisticated and a little bit more cross-cutting across the organization—for example, looking at how the WTO as a negotiating body works and deals with women-owned businesses, or allowing them to participate as observers, for instance, in some meetings and events we have at the WTO, or working more closely with some of the WTO and United Nations organizations, in particular the International Trade Centre, which Canada just recently recommitted funding to.
The International Trade Centre is a joint WTO and United Nations organization that is geared towards helping small businesses, in particular women-owned, youth-owned, youth-led and indigenous organizations, particularly in developing countries, to access markets. It's also creating the environments in those developing countries so that they can also better utilize exports from other countries that are looking to enter their markets.
Thank you very much, Ambassador Theodore. I want to jump in with another question.
You also mentioned, when you talked about Canadian leadership, the Ottawa Group, which we've had in place since 2018, as another illustration of Canadian leadership at the WTO. You mentioned at the end of your remarks a bit about trade and the environment.
I want you to connect that to something you addressed with Mr. Carrie—namely, getting the fisheries subsidies hammered out. How do you connect ensuring the sustainable development goals that are being met in line with protecting global fish stocks with the broader agenda to ensure that the work of Canada at the WTO, and the WTO writ large, is ensuring that we are handling trade in a more environmentally sustainable manner? Can you connect those two for us, please?
As I mentioned, the fisheries subsidies agreement is indeed the first agreement that fully meets one of the SDGs, that being SDG 14.6. Indeed, it is around controlling and regulating subsidies for fish stocks. It is the first multilateral agreement that actually deals with trade and environment.
Canada has, as I mentioned in my comments, through our work on the trade and environment sustainability discussions and our leadership role in concluding the fisheries agreement.... Again, that is actually a concluded agreement. We have just continued the work to go even further. There is more to hammer out, but we actually do have an agreement, which is very important, and which Canada played a leadership role on. That was the result of all the members, through the leadership of Canada, recognizing that sustainability issues and environment issues are at the core now of every multilateral organization, whether we like it or not. Issues surrounding sustainability and environment are crucial to the way we negotiate trade agreements and the way we set up the environment for trade for our companies.
As the common global good that the environment is, all members at the WTO recognize that this global problem of climate change requires global solutions. That is why the WTO, through leadership by Canada and by others, has taken that step with the fisheries agreement, but is going further right away with the second generation of an agreement and is also continuing work on trade and environment writ large across the organization.
Thank you, Madam Chair.
Good morning to all my colleagues.
Thank you for being with us today, Madam Ambassador.
Since the obvious thing that nobody wants to talk about is the issue of the Appellate Body, the body responsible for dispute resolution, I was a little surprised that you didn't mention it until you were asked specifically about it. We know that this is the major problem we are having.
You told us about the Americans' good intentions and the fact that they had a plan. Finally, we can say that the Americans are committed to thinking about the issue, but that's pretty much it. Am I summarizing the situation correctly?
Thank you very much for your question.
No, I wouldn't say that they're just thinking about the issue. They're doing a little more than that. They've been thinking about it for a long time. The United States has been telling us for years that they've had problems with dispute settlement at the WTO; they've been saying it for years.
Today, we are about to begin work to resolve the situation for a specific reason, which is that in June, the ministers gave WTO members a very clear mandate to find a solution. There's no question that this is an issue, and we're working hard to resolve it, but it's also very important to know that Canada and other WTO members have been able to reach a multi-party interim appeal arbitration arrangement, or MPIA. So there is a way to resolve disputes at the WTO. It's not as if there's no way to bring a particular case with the WTO. There's a way to do it. It’s certainly not the best way, and it’s not a permanent solution, but at least it allows a group of members to resolve disputes among themselves when necessary. So it's very important to point that out.
It's also important to note that we're not just thinking about the issue; we're working hard to find solutions. As I said, we'll begin the process in January to find concrete solutions.
That's a good question.
I think WTO reform is a very good thing. I am thinking, for example, of having deep discussions about what the organization is and whether it's achieving its objectives. We also have to think about the best way to regulate international trade and to study issues in depth. I think that's very important.
Just because we're trying to improve them doesn't mean that some aspects aren't good. It all works. It's a very important organization, especially for a country like Canada, which depends on its exports and the international market. There have to be multilateral rules. That said, there's always room for improvement.
I think the answer to your question is yes. We can think about it, and we're not because things aren't working. Things are working well, but they can be improved.
I'm happy to be here today. Thank you for the warm welcome, and I'm sending regrets from MP Masse, who's not able to be here today.
I'm sitting here thinking about how fortunate I am to be here on the same day as the ambassador and to hear the updates on all that's happening and getting caught up on this information, of course.
Ambassador, you gave updates around the fisheries subsidies. I appreciate you speaking about the narrative that occurred on this being a global problem that requires global solutions and about the subsidies that are prohibited, specifically with regard to the IUU, the illegal, unreported and unregulated fisheries. My critic role, just for context, is in the fisheries committee, so I'm particularly interested in hearing from you a little bit more.
You also talked about the importance of helping small businesses as another topic. How does that link together? How do members speak about the importance of having sustainability in an environment, while also ensuring that small businesses and fishers are part of the equation in decisions moving forward?
Yes, that's a really great question.
I will say first that you are absolutely right: The agreement has several new measures that ban subsidies for illegal fishing, for overstocked fish and on the unregulated seas, as you mentioned.
I also want to note—and this goes to the second part of your question around small and medium-sized businesses—that the agreement, and where we landed on this agreement, was done within Canada's existing programs and is consistent with them. Canada did not have to make any domestic changes in order to fulfill our responsibilities under the agreement.
I say that because even though I wasn't at MC12 because I just took up my role in September, there was quite a discussion in the fishery subsidies negotiations around how we on the one hand recognize that at the end of the day, both protecting our environment and continuing to regulate subsidies in a way that allows us to protect our environment are required because, frankly, if we don't do it, there will not be any fish for our small and medium-sized fishers to fish, and on the other hand, that many domestic programs around the world are indeed set up to support small and medium-sized businesses in order for them to survive and thrive.
In particular, as you noted, and as you would very well know, in Canada, where we have very small and medium-sized fishers that depend on being able to fish and being able to export their product, finding that balance is really and truly important. I believe that the agreement we came up with at MC12 satisfies that.
I have to say that as part of the negotiations, we also recognize that there's a role for everybody to play within this realm of its being a global good and a global purpose. There is a role for all of us to play to help developing countries that might indeed have a little further way to go to live up to the commitments that were made and in particular to continue to be able to support their small and medium-sized businesses. As you know, Canada truly believes that climate change and environment are a global problem that requires a global solution, so as part of the agreement, we set up what's called a “fish fund”, which is a fund that will provide technical assistance and capacity building to qualifying members to help them implement the agreement.
As we all know, part of the purpose of multilateral trade rules—and the fish subsidies agreement is no different—is the idea that when members—in particular, developing country members and members that aren't necessarily as far along as perhaps a country like Canada is—are able to implement their commitments to the fullest extent possible, what it really does is help to create a level playing field and a degree of predictability and certainty for our Canadian companies.
Canada was really and truly quite open to the idea of this voluntary fish fund, because by providing assistance to developing members to bring them up to fulfilling their commitments under the agreement, it at the end of the day benefits them but also us, in particular our small and medium-sized companies in being able to navigate the rules of trade in global markets.
Thank you, Madam Chair.
First of all, thank you, Madam Ambassador, for being with us and for answering in French.
I'll try to be brief. I'll ask you a question, and then I'll give the rest of my time to my colleague Mr. Baldinelli.
Since the end of the Softwood Lumber Agreement in 2006, there have been several softwood lumber disputes at the WTO between Canada and the United States. announced last August that she intends to challenge the U.S. duties on softwood lumber, under Chapter 10 of CUSMA.
What's the status of our softwood lumber dispute at the WTO? Also, why is this still not settled after all these years? It's been 16 years.
Things aren't perfect. In fact, they never are. I always say we're like a family. I don't know how it is in yours, but in mine, things aren't always perfect.
We'll always have problems with our American friends. That's for sure. Let's put it this way: in the case of softwood lumber, it's clear that the United States knows that its position is ridiculous. However, they don't want to give it up, so the problem is endless. It's also clear that Canada is right every time, but the U.S. continues to resist. There's no doubt that it's frustrating, and it's frustrating for everyone.
I wish I had a better answer.
You're right that it's frustrating. This has been going on for years and years, but the fight over it continues. I don't know what to tell you.
I would say it's still effective, because while the United States is a user of the system, they haven't “appealed into the void”, so to speak. That's what we call it here. It's not the case that they are trying to proactively agitate the system by appealing into the void, knowing they're blocking appellate body members and knowing they're not parties to the MPIA. That's a good thing, and it speaks to the continued usability of the system.
One hundred per cent, if the United States appeals a case before 2024 and is blocking members to the appellate body and is not part of the MPIA, I'm not going to pretend that this situation does not make it more difficult to resolve the appeal, but nothing prevents—and this has happened as well in a couple of cases here in Geneva—members from looking to find a solution entre eux, between or among themselves, to a dispute when they don't agree with the ruling.
I think I said this in my previous answer. Is it 100% ideal? Absolutely not. That's why we're working to find a solution, but at least it is something.
I found the case. It's the Colombia french fry case, which I should have remembered. It's the Colombia french fry case with the EU.
Thank you, Madam Chair.
Thank you, Madam Ambassador, for spending a few minutes with us today.
You talked about the three pillars that work at the WTO. They are the deliberative pillar, the negotiating pillar and the dispute settlement pillar.
Instead of your three pillars, I want to take you back to the three pillars proposed by the in her speech a couple of weeks ago in Washington. I'm sure you must have heard it or read about it.
In my opinion, our Deputy Prime Minister said that globalization and the global trade system as we know them are almost done. She was specifically referring to the rules-based system of global free trade as we have practised it over the last several decades. It was quite successful, as far as trading went. However, the fundamentals changed during the pandemic and in what is currently happening in the world today.
The three pillars she mentioned are as follows, and I'm paraphrasing here. First, she said that the western liberal democracies—western Europe, North America, Australia, Japan and Korea—should have their own economic co-operation.
Then the second pillar she suggested—which I think she also acknowledged is the hardest—is what we do with the countries in the middle. These are the countries in Asia, Africa and Latin America that are not as liberal a democracy as we are and that do not follow the global orders-based system as we do. What do we do with them when it comes to, say, “friend-shoring”, the term that was used by U.S. Secretary Janet Yellen?
The third pillar our mentioned was that we have to deal with adversaries like China and Russia, although she did not name them directly. We have to work with them to tackle climate change and to deal with arms security. She said that we should go back to the way we used to deal with things during the Cold War, when we learned to contain them and engage with them at the same time.
These are the three pillars.
To start, I would like your opinion on her entire speech.
Thank you again to the ambassador.
I'm going to build off the questions I was asking you before. I'm going to be heading right to my fisheries committee and we're going to be doing a study coming up about illegal, unreported and unregulated fishing.
I appreciate much of what you talked about around the importance of sustainability within our fisheries and around the prohibitions in place on WTO members against providing fisheries subsidies in the areas as we discussed before.
Can you clarify what was in place prior to these agreements being put into place? How will these prohibitions be enforced? How do indigenous rights play into these discussions?
I realize it's a big question, but do your best.
Before the agreement there were not comprehensive disciplines on subsidies. With the fisheries subsidies agreement, we actually have enforceable rules that regulate this area, and I won't go through the three pillars that we already talked about before on the agreement.
Before, we had no predictability and no enforceability. Now we have actually put fences around the subsidies in those three areas that we've already discussed.
The question of indigenous rights for Canada is an interesting question, and I'm going to take too long and I'm happy to come back to it. The question of indigenous rights in an organization like the WTO is quite complex, because what the term “indigenous peoples” means in countries around the world is different from what it means in Canada or even in North America.
For Canada, when we were negotiating the fisheries subsidies agreement, we were, as I said, very intentional about making sure that we negotiated something that would allow us to balance this need to protect the ability of our fishers to fish and to export on the one hand, and on the other hand to protect our environment.
Thank you, Madam Chair.
Thank you, Madam Ambassador, for coming to testify today.
I'll ask you my two questions together because I don't have much time.
First, could the committee hear your views on the importance of the WTO's role and the function of dispute settlement mechanisms?
Second, could you give us an overview of the timeline for having a fully operational dispute resolution system by 2024?
I'll answer your second question first.
In terms of timing, by the end of the year, members will be working on concepts and ideas that, by January, will form the basis for concrete proposals to address the dispute resolution system by 2024.
So by the end of the year, we'll be looking at the concepts and, in January, members will come up with proposals and solutions. We'll work on this until the 13th WTO ministerial conference, scheduled before March 2024.
If I understand correctly, your other question is about the link between the WTO as an organization and the dispute settlement system. Is that correct?
As I said earlier, the dispute settlement system is one of the major pillars of the WTO. Being able to resolve issues and disputes between members remains very important to the organization. There's no doubt about that. All but one of the WTO members—and I'm talking about the United States, of course—recognize that the system, in its current form, works. It works well enough to satisfy members.
Could it work better? Yes, it certainly could. Could it be improved? Yes, definitely.
However, I'm really comforted by the fact that all members except the U.S. recognize that the system, with the Appellate Body, is working as it is. In January, we'll be discussing how to ensure that the system is fully operational by 2024. However, all members agree that the system, as it is now, can work, and that will be good for us. We'll then be able to work on very specific solutions to the problems identified by the U.S. That will allow us to move forward.
I must admit that it's mainly because of the political situation in the United States that it's sometimes difficult to get them to participate. As I was said earlier, the United States isn't just a participant. The fact that they are the initiators of the process we're using now really increases the possibility that the situation will be resolved at the next ministerial conference.
I'll stop there.