Proceedings of the Standing Senate Committee on
National Finance
Issue 22 - Evidence - November 26, 2014
OTTAWA, Wednesday, November 26, 2014
The Standing Senate Committee on National Finance met this day, at 6:45 p.m., to study the subject matter of Bill C-43, A second Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures.
Senator Joseph A. Day (Chair) in the chair.
[Translation]
The Chair: Honourable senators, this evening, we will continue our study on the subject matter of Bill C-43, A second Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures.
[English]
Honourable senators will know that six other committees besides Finance reviewed the subject matter of Bill C-43, A second Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures. It amounts to about 460 pages, and that's why the work was divided amongst various committees. Some committees received bigger workloads than others, as we will find out from Senator Andreychuk who is with us here.
Once Bill C-43 arrives at this committee as a bill, because we've been doing a pre-study of the bill before it arrives, we will be expected to conduct clause-by-clause consideration of the entire bill. That is the difficulty we have. We know the parts we studied, but now we're asking the other committees to study the other parts to come and help us understand the portions they studied so that we will be in a position to do clause-by-clause consideration of the entire bill once it arrives.
The first committee that we've asked to appear before us is in relation to foreign affairs and trade and development, or DFATD as I think the department is now called. We are very pleased to ask the Chair of the Standing Senate Committee on Foreign Affairs and International Trade to help us with the portions that their particular committee looked into. We will be discussing the subject matter of those elements contained in Part 4, clause 227, on page 371 of the English version entitled, ''Canada-Chile Free Trade Agreement Implementation Act.''
I would ask our honourable colleague now to help us with what they found and why this clause is important. Maybe you found out why it's in this budget implementation bill.
Hon. A. Raynell Andreychuk, Chair, Standing Senate Committee on Foreign Affairs and International Trade: No, I don't think I can help you there, Mr. Chair. I want to say that my deputy chair thought this issue was so complex that I could handle it myself, and he expresses that he will not be attending the committee here. He did not think it needed both the chair and the deputy chair. That is why the senator is not here. I think after you hear the presentation, you will understand why.
The Chair: I think it's important that all honourable senators know that both the government representative and the representative of the opposition were invited, and in this instance we're happy that one of you accepted the invitation.
Senator Andreychuk: Thank you. I'm here on behalf of the committee, so it is not a problem.
We were given Division 15 in Part 4 of Bill C-43, which deals with the Canada-Chile Free Trade Agreement. The Canada-Chile Free Trade Agreement was one of the first bilateral agreements, particularly in Latin America, and it came into effect in 1997. The Governments of Chile and Canada decided that a number of changes to modernize the free trade agreement were necessary. There is total agreement between both countries to do it and they came to a decision.
Most of the changes required in the free trade agreement do not require any legislative change, so they were not before us. It is things like covering services and many of the issues of modern treaties. They took the templates of more modern treaties, like our Jordan free trade agreement, the Honduras one, and applied them to the Chile agreement. So that was not before us.
The only issue that required legislative contemplation was the dispute-resolving mechanism. We were asked to agree with an amendment that the state-to-state dispute settlement chapter use the ad hoc panels. They went to ad hoc panels because the previous process was that you nominated two, and you nominated two from the other side, and you drew lots to come up with a chair. It meant that if two were not presented by one side, you could never get to the dispute- resolving mechanism.
In modern times, they have gone to this ad hoc tribunal system, and this appears to be in line with what free trade agreements are putting in for dispute resolving. It is not just Canada; it is others going to this ad hoc process. We were asked to see if we agreed with the change. We could not see any reason why not.
Second, the dispute-resolving mechanism has never been used in Chile. We have been able to resolve our differences in negotiations.
When we asked whether there would be any costs in it, the rate of remuneration for NAFTA panellists at $800 per full day that the panellist is devoted to their panel duties seems to be the one they could draw on because that dispute- resolving mechanism has utilized panels. We have never used it. Therefore, they would determine that there would be a similar cost should it ever be used. In fact, they said they cannot say what the rate of remuneration for these panellists would be. They did not believe it would be out of line or extraordinary in any way, so this is in line with our free trade agreements.
As you can see, I have probably given you much of the questions we asked and the replies we got. The committee indicated that we agreed with it, to the extent that they are consistent with the most recent free trade agreements implemented in Canada, and recommended that it be approved as an amendment.
The Chair: Thank you very much, Senator Andreychuk. You've summarized what was in the report that has been filed in the Senate Chamber, and that may be open for debate in the chamber, but it will certainly provide good background information for committee members.
As I understand it, in a nutshell, this is the portion that needs legislative change. Sometimes free trade agreements are executive documents that don't need legislative aspects, but this part was legislated previously and, therefore, the amendment has to be legislated.
Senator Andreychuk: As I understand the free trade agreements, dispute resolving has to have some legislative input to be able to have the recognition of the decisions. That is why they are embedded in legislation.
The Chair: That's a good reason.
Senator Andreychuk: This is common.
The Chair: There was previously a roster. That means they keep a list of people who could act as arbitrators or dispute resolution personnel. That roster is being done away with. What you mean by ''ad hoc'' is that when and if you need a panel, the panel will be created at that time.
Senator Andreychuk: In fact, there was not really a legitimate roster. What happens when these come about, people who are interested in them and have the qualifications often signal to governments that they are interested. But because in this panel our free trade agreement did not seem to lead to any difficulties, I'm not sure that a full roster was there on both sides. The department might have had names that they could have utilized, but it never went that far.
The Chair: Did I characterize what ''ad hoc'' means clearly enough?
Senator Andreychuk: Yes.
The Chair: I have two senators who have expressed an interest in asking further questions. Senator Eaton from Toronto is first.
Senator Eaton: You very ably asked my question for me, Mr. Chair.
The Chair: Sorry. I was just trying to clarify the record for those watching.
Senator Eaton: Thank you.
The Chair: Thank you for the ''ably'' aspect there too.
Now we will go to Senator Hervieux-Payette from Quebec.
Senator Hervieux-Payette: In your committee's report, I see mention of the addition of a chapter on financial services and the updating of chapters on government procurement and customs. This doesn't mean anything to me because I don't know what was there. What was amended and what is the content of the financial services? Is there a reason why we were not given the rationale, what it was covering? ''Financial services'' is a very broad title or service. There are many services. I don't have the bill in front of me, but you studied the bill. Is the addition of financial services, procurement and customs procedures very important?
Senator Andreychuk: We did not believe that we were given the mandate to study the changes that were not part of the legislative change. What we did get from the department was the fact that in the free trade agreement between Canada and Chile, there was no chapter on financial services and modernizing the updating of the procurement and customs. We received general information about why were they getting involved in updating it, and we were told that they were expanding that free trade agreement to the modern free trade agreement.
It is not as comprehensive as we understand perhaps the Canada-Europe free trade agreement will be, but it is in line, as I said, with Jordan, et cetera. It is more modern and extensive. Because that wasn't part of the legislative change, we used that as background and zeroed in only on the subject matter of what we had to deal with, and that was the dispute-resolving mechanism.
Senator Hervieux-Payette: Who told you that, the technocrats or the minister?
Senator Andreychuk: That was our decision on our committee to handle it.
Senator Hervieux-Payette: No, about not giving you more explanation. If you understand where I come from, I just wondered why the financial services are not part of the law, first of all. Most of the time when you sign a free trade agreement, the law is very extensive and it covers all the sectors. Why is this not part of the legislation? That is my question.
Senator Andreychuk: Because I think it is not legislation. They are agreements at an executive level between two governments when they sign a free trade agreement. What come before the committee and before Parliament are those that are required for legislation.
As I recall, all the testimony before us was that this free trade agreement was concluded and put into practice in 1997. It was a very narrow agreement on what both sides could agree to, and so it wasn't as comprehensive as one would expect. It was a cautious agreement on both sides.
Senator Hervieux-Payette: Was it legislated?
Senator Andreychuk: I believe parts of it were at that time, yes, but it was signed by both governments and it would come. If it's of benefit, I can ask the department to follow up with you on that.
Senator Hervieux-Payette: We would want that when we have the bill because it is a big question. When you are talking about NAFTA, you are talking mostly about agreement in terms of specific services, procurement and custom. It is part of the bill. It has been passed by Parliament.
If you remember, we had the agreement between the United States and Canada the last time with regard to the banking of foreigners in Canada. It was a big annex to the last budget. So when you talk about executive agreement, I agree with you. In that case it was in the bill. That's why I find it a bit strange that it's not part of this bill.
Senator Andreychuk: As I understood, it was a narrow agreement in 1997. The parts they negotiated that expanded the agreement were not subject to the legislation. We did not feel it was our mandate to explore the free trade agreement because we were not given a study of the bill or a study of the changes — it wasn't initiated but it was coming through this bill. We were given that little part on dispute resolution by the Senate to look at. That is what we narrowed our mandate to, and a bit of that is the background.
Senator Hervieux-Payette: Okay.
Senator Andreychuk: If it is of benefit to anyone in this committee, I certainly can undertake to provide an answer directly from the Department of Foreign Affairs, Trade and Development about the broader question you have put.
The Chair: I appreciate you offering to do that, but we have the Library of Parliament. We will not need your undertaking at this stage, although we appreciate your offer. We will find that out.
Senator Andreychuk: Sure.
The Chair: It is an issue because they talk about, as you do in your report, certain other things like financial services and procurement that are being changed. We want to understand what is executive and what requires legislation. That would be helpful for us. As Senator Hervieux-Payette indicated, the bill will come to us again for consideration when it is finally before the Senate. We will have the answer before that.
Senator Andreychuk, thank you very much.
Senator Andreychuk: Thank you for making my job easier by saying that I don't have to provide you with that information.
The Chair: We appreciate you taking the time to appear, as you are busy with other matters. Your help is much appreciated. We didn't want to put any more load on you than was necessary.
Senator Andreychuk: Thank you.
The Chair: We will continue in camera with a draft report on Supplementary Estimates (B).
(The committee continued in camera.)