Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue No. 62 - Evidence - Meeting of May 1, 2019
OTTAWA, Wednesday, May 1, 2019
The Standing Senate Committee on Foreign Affairs and International Trade, to which was referred Bill C-85, An Act to amend the Canada-Israel Free Trade Agreement Implementation Act and to make related amendments to other Acts, met this day at 4:15 p.m. to give consideration to the bill.
Senator A. Raynell Andreychuk (Chair) in the chair.
[English]
The Chair: Good afternoon and welcome to this meeting of the Standing Senate Committee on Foreign Affairs and International Trade. We are pleased to welcome the Minister of International Trade Diversification, Minister Carr.
Before I introduce him more appropriately and turn the floor to him, I’d like the senators to introduce themselves.
[Translation]
Senator Dawson: Dennis Dawson from Quebec. Welcome to the Senate of Canada, minister.
[English]
Senator Boehm: Peter Boehm, Ontario.
Senator Bovey: Patricia Bovey, Manitoba. Welcome.
[Translation]
Senator Saint-Germain: Raymonde Saint-Germain from Quebec, De la Vallière.
[English]
Senator Wetston: Howard Wetston, Ontario.
Senator Dean: Tony Dean, Ontario.
Senator Ngo: Thanh Hai Ngo, Ontario.
Senator Coyle: Mary Coyle, Nova Scotia.
[Translation]
Senator Massicotte: Paul J. Massicotte from the beautiful province of Quebec.
[English]
Senator Greene: Stephen Greene, Nova Scotia.
The Chair: I’m Raynell Andreychuk from Saskatchewan. We have a good complement of senators here.
Today, we are here to continue our examination of Bill C-85, An Act to amend the Canada-Israel Free Trade Agreement Implementation Act and to make related amendments to other Acts; and to answer questions that senators may have about your mandate in general. Thank you, minister, for responding to the bill. As you know, the Senate has a policy that has placed us in good stead: When there is a government bill, we require the minister. There was an arrangement that we were to complete this before our break. You were not available, but you made yourself available at the first opportunity thereafter. We appreciate that, so we can complete our study in a timely manner.
Minister, you’re known to the committee. We have followed your portfolio. We’re very eager. As you know, we’ve done a number of trade agreements per se, but we’ve also studied the impact of trade agreements in general through a recent report.
I would ask you to make your presentation on Bill C-85 and expand on whatever else you wish that is within your mandate. Then I will turn to senators to have the liberty to ask you about Bill C-85, after which we will turn to broader questions.
Welcome to the committee. Welcome to your officials.
Hon. Jim Carr, P.C., M.P., Minister of International Trade Diversification: Thank you, senator. Thank you all for the invitation. This is my first time in this magnificent building. My recollection of the building from many years ago is that this was the site of very important Constitutional conferences and the patriation of the Constitution itself. In a way, this is hallowed ground.
Whenever I meet with a Senate committee, I always think about my dear, dear friend the late Duff Roblin, with whom I had the pleasure of collaborating on his memoir. He, of course, had very strong opinions about the role of the Senate — many of which I share — and the importance the Senate has played and continues to play in the governance of the country.
I feel honoured to be with you and to also appreciate the importance of accountability and accountability of ministers to committees of the House of Commons and the Senate. Thank you for the opportunity.
I’m happy also to talk about Bill C-85 and to bring you up-to-date, as you may want to enquire about some of the other trade agreements that we’ve signed recently; namely, CETA and the CPTPP, for which you are very much responsible. The speed with which the Senate passed the ratification of the CPTPP has paid off in tangible and measurable ways for Canada. We may have a chance to talk about that during the question-ask-answer period.
As you know, senators, Canada and Israel have long been connected through the power of people-to-people ties, a shared commitment to democracy and a friendship that started 70 years ago when Israel became a nation. It continues to grow with each passing year.
Jewish people have been in Canada since 1759, and now our community of more than 350,000 continues to contribute impressively to our national mosaic.
My grandparents on all four sides came to Canada in 1906, escaping the pogroms of the czar for one reason and one reason only, because they were Jewish. That is why I’m in front of you, because of what Canada offered my family and continues to offer families who escape persecution. In my case, it was the persecution of the Jews in 1905 after the pogroms of the czar.
I have visited Israel many times, but made my first trip as Canada’s Minister of International Trade Diversification last August. What members of the committee certainly would have no reason to know is that I’m a founding member of the Arab Jewish Dialogue in Winnipeg, a group whose mission it is to foster better relations between Arabs and Jews in Canada through dialogue, respect and engagement. These are men and women who gather in each other’s homes once a month, and have for more than a decade, to talk about history, culture, racism, anti-Semitism, Islamophobia, the Arab-Israeli conflict and broader issues of the Middle East and indeed of the entire world.
During my last trip, I had the opportunity to visit Ramallah to officially launch the Palestinian-Canadian Business Council which will help build stronger trade ties between the communities. I was pleased to announce a financial contribution of $200,000 to the Palestinian Business Women’s Forum for female entrepreneurs.
The recent trip to Israel also reinforced to me that Canada and Israel have forged a partnership that continues to deepen and thrive with each passing year. Strengthening those bonds depends on constant renewal, which is why our government recently modernized the new Canada-Israel Free Trade Agreement. The new agreement creates opportunities for Canadians and Israelis to partner in the growing fields of science, technology, and innovation across our vibrant markets. The agreement has the potential for more people to work together creating more well-paying jobs for Canadians as a result.
Bill C-85 before you today stands as testimony to Canada’s and Israel’s shared commitment to maintain openness, celebrating our friendship and expand our links so that more of our people and businesses can benefit from them.
Since CIFTA first came into force amazingly over two decades ago, two-way merchandise trade between Canada and Israel has tripled totalling more than $1.9 billion last year. This is a testament to how our free-trade agreements help to advance trade and how they also create jobs for Canadians.
Until now, CIFTA has been a goods-only trade agreement. The modernized CIFTA updates four of the original chapters including dispute settlement to bring CIFTA up to the standard of our more recent free-trade agreements. It also adds nine new chapters, including intellectual property and e-commerce.
We have negotiated rules that are designed to help address non-tariff barriers, contribute to facilitating trade and reduce some of the costs to companies for doing business. We have also improved the terms of market access for Canadian companies. Once in force, close to 100 per cent of all Canadian agriculture, agri-food, and seafood exports to Israel will benefit from some form of preferential tariff treatment up from the current level of 90 per cent.
Important tariff outcomes for the agriculture and agri-food sector place Canada on a more even playing field with exporters from the United States and the European Union, key competitors in the sector. They also give Canadian companies a leg up on competitors in other countries that do not have a free-trade agreement with Israel. In exchange, Canada agreed to eliminate tariffs on certain targeted Israeli agriculture and agri-food imports, such as certain fish and nuts, some tropical fruits and oils.
We pushed the envelope by writing new international law putting an end to inequality of access to job-creating trade and investment. The modernized agreement is a new forward-thinking partnership that reflects who we are as vibrant, diverse, open and democratic societies. The new chapters on gender, the environment and labour are explicitly about growing our trading relationship while expanding access for those who do not necessarily see themselves or their values reflected in the agreements of the past.
The Gender chapter is one of only three such chapters, senators, ever in a trade agreement, which is a remarkable statement. It is the first of its kind for Israel and the second for Canada. There is enormous untapped economic potential, but for too long we have focused on the few and not on the many. We are changing that. We are encouraging more would-be exporters to get in the game and these chapters are about showing workers and their families that trade can work for them.
The new chapter on small and medium enterprise provides both a framework for parties to work together to help small and medium enterprises fully benefit by the opportunities created by the modernized CIFTA. The new corporate social responsibility article affirms Canada’s and Israel’s commitment to encourage the use of volunteers CSR standards by enterprises with specific reference to the government-backed OECD guidelines for multinational enterprise to which Israel and Canada are both parties.
I encourage honourable senators to support this agreement which will bolster and enhance an existing commercial relationship that has greatly benefited both countries.
I am also very pleased today to speak to the implementation of both CETA and the CPTPP agreements. Since CETA’s implementation in 2017, Canadian companies have already started benefiting. In the first year of the agreement, Canadian merchandise exports to the EU increased by 4.5 per cent. If you exclude precious stones and metals, exports rose by 12.9 per cent over this period.
For example PBSC Urban Solutions, a Montreal company that delivers bike-sharing systems to cities around the world has already benefited. I had the pleasure of touring this factory with Cecilia Malmström, who is the European Union Trade Commissioner. We were told the story about how this Montreal factory won a bid to send 7,000 bicycles to Barcelona in a bike-sharing commercial venture. The only way they could have won that contract was to have seen the tariffs reduced through CETA from 15 per cent to zero and the capacity to compete because of the chapter that enabled them to do so. You can only imagine, senators, the international market in shared bicycles. Now a manufacturing operation in Montreal has a leg up and access because of the free-trade agreement. It’s one example. Sometimes the narrative of individual stories and examples is the best way to convince people why these trade agreements are so important.
While it’s still relatively early, these initial successes are encouraging. CPTPP’s coming into force is even more recent, December 30 of last year. I want to thank you for the speed at which you passed CPTPP. I’m told by people who have been around much longer than I that this broke a land speed record for getting through both the House of Commons and the Senate. It was important that it do so because, by being a part of the first tranche of six ratifying nations, we were eligible for two tariff cuts, one on December 30 and one three days later, which gave us a significant competitive advantage. It was only because of the cooperation — may I say this is heresy — of the Conservative Party in the House of Commons, and honourable senators that we were able to do this, which is so important for our position as a trading nation.
Do you know now, senators, that we are the only G7 nation to have a free-trade agreement with the other six, which puts Canada in a very powerful position internationally?
It will take some time to understand what benefits we are already seeing from the agreement. But I can share we know already Canada’s exports of dutiable products to Japan in January and February increase by 17 per cent over the same period in 2018.
Beef exports to Japan have doubled over the same period.
Senator, as a Western Canadian, a Manitoban, and you being from Saskatchewan, I believe, will take special pleasure in how these markets have been open to our producers. We can talk about canola later, but there is also going to be a very important opportunity for our wheat and canola producers in the Asia-Pacific region. It’s very, very encouraging, and that’s thanks in part to the work of this committee.
All three agreements, CETA, CPTPP and CIFTA, are part of a larger trade-diversification strategy. Our government is working diligently and actively to help Canadian business access new markets, new customers and to create new jobs. Trade is in the Canadian DNA. We represent roughly 0.5 per cent of world population, but we account for 2.3 per cent of world merchandise exports and 2 per cent of world GDP. One in six jobs is tied to exports. Trade is essential to our economic prosperity and to our standard of living. While our neighbours to the south will be our first and most important trading partner, there has never been a better time to diversify.
Canada’s new trade agreements provide unparalleled access to some of the world’s largest markets. Our trade agreements cover 63 per cent of global GDP. We have preferential market access through 14 trade agreements to 51 countries, with roughly 1.5 billion consumers and a combined GDP of more than $50 trillion U.S.
However, while CIFTA, CETA, CPTPP and other trade agreements build economic bridges, they only reach their potential benefit for Canadians if we can convince our businesses to use these bridges. That’s why our government announced an investment of $290 million over five years to help Canadian businesses export and grow, to strengthen the Trade Commissioner Service and enhance the support it provides to Canadian exporters. This investment includes $100 million in new funding to the CanExport program, which will help businesses develop and access new export opportunities, especially high-growth emerging markets and markets benefiting from free-trade agreements.
My department has also mobilized a free-trade agreement promotion task force that is undertaking a comprehensive outreach and training program for the business community. These efforts, agreements and investments will help generate wealth, grow our economy and build jobs for Canadians.
I want to thank you, Madam Chair, for the opportunity to address the committee. I now look forward to a conversation and to answer your questions.
The Chair: Thank you, minister, for your overview and rationale for the Canada-Israel Free Trade Agreement by putting it in the perspective of other free-trade agreements.
Before I turn to my list of questioners, I want to put it on the record that we had a very fruitful discussion with the officials who were able to come to commence our study on Bill C-85. Some of the questions we may have had for you they’ve already answered, so that will make your task a bit easier.
Second, I want to assure the audience, if not you, minister, that we did very efficiently handle CPTPP. That is because we had studied many aspects of trade in a more global look, as I was pointing out in our report in 2017, I believe. We were already prepped and ready to receive the final product. We had looked at CPTPP, and many of the witnesses, even though we wanted to get general concepts, went very quickly to CPTPP. I think we understood it and therefore we moved. I assure you it wasn’t that we did it quickly; we did it quickly and efficiently, because we had the background and had prestudied so many of the issues. We continue to study trade. I will assure you we will continue to do so on these matters.
[Translation]
Senator Saint-Germain: Thank you for your presentation, minister. I must apologize in advance, as I will have to leave before the end of the meeting because of another Senate obligation. It’s not for lack of interest. I wanted to tell you that.
My question is about the territory covered by the free trade agreement and Bill C-85, more specifically the territories occupied since 1967. I have noted that, in order to comply with the UN Security Council resolution — Resolution 2334, signed in December 2016, which calls on States to distinguish, in trade and transactions, between the territory of Israel and territories occupied since 1967 — the European Union has required that all products from territories occupied since 1967 be identified as such. I also note that Global Affairs Canada does not recognize Israel’s permanent control over those territories. However, in negotiating this free trade agreement, Canada chose not to impose a measure similar to that of the European Union. There must be a reason for that choice, and I would like to understand it.
My question is this: Why did we choose not to impose a measure similar to that of the European Union when it comes to the territories occupied since 1967?
[English]
Mr. Carr: Thank you, senator. I appreciate the question.
CIFTA defines Israel’s territory, for the purposes of this agreement, as the territory where its custom laws are applied, which includes the West Bank and Gaza Strip. That’s the reason.
As part of the Oslo peace process in 1994, a customs arrangement was established between Israel and the Palestinian National Authority regarding goods going into and out of the West Bank and the Gaza Strip. Canada and the Palestinian National Authority, through the Joint Canadian-Palestinian Framework for Economic Cooperation and Trade between Canada and the Palestinian Liberation Organization, referred to the customs arrangement between Israel and the Palestinian National Authority and recognize CIFTA’s application to goods originating from or destined to the West Bank and the Gaza Strip.
Senator Saint-Germain: Thank you for the explanation.
Senator Greene: I have two vastly different questions. First, at the beginning of your presentation, you said that trade was in our DNA. I think it probably is. I can remember when it wasn’t. Every Canadian government since the 1988 election, which was a free-trade election in which Canadians voted for the first time for free trade. Our government wasn’t afraid to call an election on the issue. Since then, all Canadian governments have been supporters of free trade, without exception.
Is there anything in the future, do you think, that could knock us off that path?
Mr. Carr: If I could predict the future, senator, I would probably be in a different line of work, but I can examine the past. I’ve just finished reading some fabulous stuff, including mini-biographies of all the prime ministers. I focused particularly on the earlier leaders. I recall reference to the federal election of 1911, the reciprocity election, that Sir Wilfrid Laurier lost because he was proposing a customs union and reciprocity with the United States. Throughout Canadian history, there has been the ebb and flow of protectionism. The national policy of Macdonald was rooted in tariffs. Since then we’ve evolved.
You are quite right. Since the election of 1988, the major political parties in Canada have believed that liberalized trade is in the interests of Canada. We can demonstrate that through economic growth, particularly in the wake of the United States agreement and NAFTA.
That’s why we continue to argue as a government that the trade deals we have signed with the Europeans now the new NAFTA, which we call CUSMA — because in Canadian trade agreements Canada has to come first — and the CPTPP. We believe that not only is freer trade in the interests of Canada, we also have to argue it’s in the interest of our trading partners. If we cannot be compelling, we will never be able to sign deals. Now if we have more time, we can talk about the Canada initiative to reform the WTO, which was also rooted in our belief in a rules-based international trading order that has, as its very foundation, a belief that liberalized trade is good for Canada and for our partners.
Senator Greene: Thank you very much.
That’s a wonderful answer. I’m in favour of this treaty with Israel. I’m in favour of all free trade. I think it’s not only to our benefit and our trading partners’ benefit but to the global economy in general. One of the things I like about the Israeli treaty is that it extends free trade to an ally who shares values that we hold dear.
That particular ally is in a region which is not friendly. We should do whatever we probably can to ensure it continues to exist. In the South China Sea, there is another place somewhat like Israel and that’s Taiwan.
They aren’t part of any international trade agreement at the moment, although they want to be part of the CPTPP. I would like your views on what Canada’s position would be with regard to Taiwan joining the TPP.
Mr. Carr: Taiwan is a member of the WTO. To that extent Canada has a relationship with Taiwan.
We have discussed the accession process to the CPTPP, ministers had their first meeting in Tokyo in January after the ratification of the first tranche of six plus one. There have been no decisions made yet. The only principle that will underlie any conversation about ascension is that any nation that aspires to be a part of the CPTPP will have to absorb, adopt and embrace these very high standards. That’s the first door they have to enter.
After that, the member states will meet and decide whether they agree with accession. There had been some expressions of interest, by the way, but there have been no formal meetings to discuss possible accession. We will see which nations are interested enough to apply and then see if they are prepared to meet the high standards of the agreement. If they are, then member states will have decisions to make.
Senator Housakos: Minister, welcome to the committee. We’re all very supportive of this agreement and in general, we have been supportive of all trade agreements and they have all paid dividends for Canada. It’s good for Canada economically. It binds Canada closer to a very vibrant economy and a great democracy in the Middle East. We are pleased the government has continued this initiative started by the previous government. The reason why CETA and this bill will have quick passage in this chamber is because they are both great bills.
We are pleased the government has embraced it. This deal is a symbol I believe of a close political and strategic relationship we have with Israel. What is the current government doing to strengthen the portion of our strategic and political relationship with them? What signals are we sending that we recognize Israel’s legitimate political and security interests? Is the current government prepared to recognize Jerusalem as the united capital of Israel? And minister, do you believe personally and does the government believe that the city of Jerusalem cannot be divided again?
Mr. Carr: I’m not the Minister of Foreign Affairs. I do not speak for the Government of Canada on issues of foreign policy. But I am very well aware of the position the Canadian government has taken on these matters and I am glad to discuss them with you.
On the issue of Jerusalem, we believe this is an issue that should be determined by a negotiation as part of a broader peace discussion between Palestinian people and the Israelis. It’s not for Canadians to make that decision. That has been the position of governments of Canada for a very long time. I don’t believe there will be a change in our position until the parties themselves sit down at the negotiating table and determine what they believe, through negotiation, is the just settlement for Jerusalem.
On the question of political, strategic and diplomatic support for Israel, we have been unequivocal both in our voting pattern at the United Nations and in bilateral meetings between our Prime Minister and the Prime Minister of Israel. I had the pleasure, even within the last number of weeks, of welcoming the Prime Minister of Israel to Canada. The trip was very warm. There was a bilateral meeting with the Prime Minister during which the Prime Minister reiterated Canada’s support for the State of Israel, the security of the State of Israel, for a two-state solution which has been the policy of succeeding Canadian governments for a very long time.
We are absolutely committed to the security of the state. We are absolutely committed to doing our part to enable the parties to sit down at the negotiating table for what we believe can be a lasting solution to the issue.
Senator Massicotte: Thank you, minister, for being with us. It is much appreciated. If I can follow up a little bit on the question of illegally occupied territories, you gave an answer why we do what we do relative to the customs. That avoids a more important decision; it’s more of a political decision or respective rights decision, like Europe. In other words, irrespective of that technical answer you gave, we could say we should treat the occupied territories differently, given the fact that they are occupied illegally and therefore achieve the same trade purpose but also pass the message as to what we think is right and wrong in that territory.
Could you give me a bit more explanation of why we don’t venture into that kind of process as Europe has done?
Mr. Carr: I’m not entirely certain about the question, senator. You said we should get into further detail about the nature of the occupied territories and their —
Senator Massicotte: Yes, but you are not the Minister of Foreign Affairs. I am basically talking about trade.
Mr. Carr: I think the answer I gave to the first question is an answer to why the customs regulations and the geographic description of the territories, particularly the West Bank and Gaza, explains why the treaty was negotiated the way it was. I can’t go beyond that.
If you are asking more questions about the nature of that relationship and Canada’s foreign policy vis-à-vis the West Bank and Gaza Strip and our position on how we think there could be a negotiated settlement, that’s another matter within the sphere of foreign affairs. My narrow answer is to the narrow question on how we define the geography vis-à-vis the customs union.
Senator Massicotte: Why wouldn’t we go as far as Europe and adopt their perspective of defining where the products come from and treat the products differently?
Mr. Carr: The EU-Israel Association Agreement, in force since 2000, does not contain provisions regarding the labelling of goods from Israeli settlement. In 2015 the EU issued an interpretive notice on indication of origin of goods from the territories occupied by Israel since June of 1967.
This notice was not new legislation, but sought to clarify elements of interpretation and implementation of existing EU legislation, which provides for mandatory indication of origin where applicable.
It sounds like it was written by somebody who is trained to write things that way, but that is the reason. The interpretive notice provides guidance on how products from the occupied territories should be labelled so as not to be misleading. Enforcement of origin of labelling requirements is a competency of EU member states which have not been implemented. That’s as good as I can do, senator.
Senator Massicotte: Let me jump to the treaty with Europe.
We’ve seen some increase in trade, 4 per cent, and if you include the other sectors I think it’s 7 or 8 per cent, which is good. There are articles written more recently, I’m not sure they’re accurate. If you look, their increase of trade has gone up more than ours and some people are saying the explanation for that is some non-tariff barriers are always very difficult to identify and resolve. Is there any truth to that article, or that argument saying we are doing as well we could because they have complicated hurdles to increase our trade?
Mr. Carr: If we were to make an arithmetical assessment of the impact of CETA on exports and imports it will not be perfectly balanced.
There are a couple of reasons for that. One is that it’s going to take Canadian companies some time to become acquainted with the European model and requirements. This will be true with beef and other exports. I think it would be a mistake to judge the success of the agreement strictly on a comparison of imports and exports in the first year of its implementation. Let me give a particular example. Tell me if I’m wrong, but I think I’m right. Because of the agreement there has been a new Belgian chocolate factory opened in Ontario. Well, that’s European investment, making chocolates in Canada, creating Canadian jobs because of the CETA trade agreement. That’s going to count on the European export to Canada figures, isn’t it? But it’s creating Canadian jobs. Sure, it’s European investment in Canada. It’s moving goods.
Senator Massicotte: It’s become a Canadian company, you said. It’s going to be established in Canada.
Mr. Carr: I don’t know it’s become a Canadian company, but it’s using investment, because of the trade agreement in Canada, to create jobs for Canadians in Canada. That’s positive. We have to assess the impact of the agreement on more than strictly a comparison of exports and imports.
Having said that, the numbers are good, 12.9 per cent over this period, which is equivalent to the rise in EU exports over the same period in some areas. This is if we take out precious stones and metals. If we exclude them, we are on par using your own definition of the balance and therefore a qualitative assessment of how it’s doing.
It’s also true that the traffic through our ports has grown considerably. The container traffic through the Port of Montreal since this agreement was signed has gone up by 9 per cent. There are other figures that show this kind of enhanced commercial activity both ways is creating economic activity which we wouldn’t have without the agreement.
Depending on what measurements you want to use, senator, you could make the argument that the Europeans were better prepared to pounce more quickly than Canadians. I think there is probably another reason. This could dovetail into our conversation about the trade commissioner service and the comfort zone Canadian companies have had when doing business with the United States. When export markets are open, Canadian small- and medium-sized enterprises ask themselves what this means for them. We are making the services of the trade commissioner available to them. We are considerably enhancing our investment of the trade commissioner service, which is now present in 160 cities internationally. I had the pleasure, by the way, Senator Bovey, of reopening the trade commissioner office in Winnipeg, which had been closed by a previous government. That’s symbolic of the kind of service we want to make available to those exporters who see that the European market is available to them but have never been there before and are a bit nervous. Between CanExport, the trade services and these investments we think that, over time — and not a lot of time — that Canadians will take full advantage. We believe the first year numbers were pretty good.
Senator Bovey: Welcome back, minister. I’m going to change the course of discussion. I think the work you’re doing on the Canada-Israel Free Trade Agreement follows up on the work you have done over the years with business councils, the role you played in the Jewish community in Winnipeg and the interreligious understandings across this country. I thank you for that and this is, to me, the next step.
My question is going to be about canola. As fellow Manitobans, we both understand the implications of this dispute for Manitoba’s and Saskatchewan’s growers. We know from reports that Manitoba farmers are planning to plant less canola this year due to the impasse and that was a quick change in step for them.
I appreciate the efforts that have been under way to mitigate the effects of the dispute. The working group, the diplomatic efforts and your announcement today in support for farmers. The truth is, we’re all hearing calls for some retaliatory actions against the Chinese from some, and others looking to stay the course as far as maintaining dialogue and pursuing the scientific resolution. At what point do you think we need to harden our position and use retaliatory measures, and would that kind of action be effective?
Mr. Carr: What I said at the news briefing this morning before I began to read the well-crafted, prepared script was that this is an important day for Canada for two reasons: One is that in this vast diverse nation, one sector, one industry, one region, is in pain — the rest of the country understands and comes to help. As a Canadian, as a Western Canadian, as a Manitoban, to witness throughout our government and with my colleagues the understanding of how we as a national government have a responsibility to respond to the needs of Western producers, for reasons that are entirely beyond their control, is the best example of Canadian federalism at work, augmented by the cooperation we have received from the governments of Manitoba and Saskatchewan.
I’ve met personally with the ministers of trade and agriculture in Manitoba and Saskatchewan, and with the Premier of Saskatchewan. The only reason we didn’t meet with politicians in Alberta was because they were in the midst of an election campaign. You may have seen the response from Premier Moe today. We worked with Viterra, the Richardson company, canola growers and the Canola Council of Canada. There was a consensus that the best way to approach this problem now is on the scientific evidence that can be presented to us by the Chinese.
There have been two inspections by the Canadian Food Inspection Agency, once before this crop left Canada and once after the Chinese alleged that it contained impurities, and it has come up clean. We have invited the Chinese to show us evidence to the contrary. There have been a number of teleconference calls. We’ve asked for the Chinese to invite us to travel to China to inspect the crop with them so they can prove that there is evidence that there is something wrong with it.
Remember two things, senators: The first year that the Richardson company signed a deal with the Chinese for the sale of wheat was 1910. They have been doing business with the Chinese ever since. I venture to say they will be doing business with the Chinese for a while longer. This is not the first time we’ve had a canola dispute with the Chinese. You may remember the blackleg issue of 2016. You may remember that during the Harper government there was a problem with Chinese accusations of impurities with canola in 2009. We were able to work through these problems and resolve them, which is what we seek to do this time.
Our strategy, senator, is based on three pillars: number one, engagement with the Chinese, which I have described; number two, a support mechanism for producers, which we announced this morning — I’d be glad to talk about the details if it’s of interest to the senators — and the third is market diversification.
We think it’s in our interest, although I must say that when the Prime Minister appointed me Minister of International Trade Diversification, I was nearly certain I would be spending most of my time diversifying from the United States. Here we are diversifying slightly differently. That’s why we have been spending an awful lot of time on the phone with my counterparts in countries that are importing Canadian canola. We’re going to make the argument that they should be importing more. I can name them: Pakistan, Mexico, the UAE, Malaysia, et cetera. This is why we also announced this morning that we will lead trade missions to Japan and Korea. I will use my international travel this spring — a meeting of APEC ministers in Valparaiso, Chile, and then to the OECD in Paris — to promote the sale of Canadian canola internationally through these possibilities. We will put delegations together, including provincial representatives, to the Japanese and South Korea portion.
The answer is that we think the wisest course of action now is to follow those three pillars. We’re mindful of other options and we’ll continue to assess them.
Senator Bovey: Thank you. You answered my second question before I asked it.
Senator Coyle: Welcome to our committee, minister.
Mr. Carr: Thank you, senator.
Senator Coyle: I have a quick question just to wrap up the questions asked by Senators Massicotte and Saint-Germain, back to CIFTA and the Palestinian territories.
You mentioned your trip to Ramallah and the Palestinian-Canada Business Council and the Palestinian Forum for Women Entrepreneurs. I know those are good bodies and we’re cooperating well there.
When you were with them, did you hear any concerns from them at all about CIFTA?
Mr. Carr: No, but I certainly heard lots of concerns from them about their situation. It’s something I had heard before. It was not the first time I was in the territories. As a journalist, I covered the first Palestinian elections on the West Bank in Gaza and travelled widely throughout the territories. I’m very familiar with the facts on the ground and the situation.
The focus of my trip to the West Bank and to Ramallah was to help create the council, which we have done, and to offer support for women entrepreneurs, which we have done. There will be more, and more follow-up.
Yes, I heard an awful lot about the Palestinian perspective of the situation, but CIFTA was not raised.
Senator Coyle: Okay. I’m just curious. I’m also aware of the structural barriers, even geographically within the country, which are impediments to trade, having to get out of your vehicle. It’s a difficult situation for them economically and for trade, movement of people and goods; we know that.
My other question is a broader one. I’m fascinated by having a Minister of Trade Diversification. I think it’s wonderful. I’m a supporter of the agreements you’ve mentioned. You’ve mentioned new agreements that we’re now benefiting from, some very early stages, and also renewed agreements, such as CIFTA. You’ve also mentioned the supports to Canadian businesses so that they are better prepared to develop their capacity to understand those markets and better interact and grow their export businesses. I think that’s all great. We’ve talked a little bit about the U.S. being the priority country — of course, that’s not going to go away — our main trading partner, and about the difficulties with China and also with the U.S.
I’d like to hear about the grand scheme of the trade diversification strategy for Canada. You’ve talked about individual agreements. I’d love to hear if there is a grand strategy and what are the key components?
Mr. Carr: There could be a grand strategy that would have to change tomorrow morning because of unforeseen geopolitical events.
Senator Coyle: I realize that.
Mr. Carr: Senator, you referred to the mandate letter. You’ll notice that in the mandate letter the Prime Minister singled out the Asia-Pacific region as the one that is most fruitful for Canadian diversification. Indeed, that is so. That’s why we are spending so much time nurturing the relationship with Japan. As recently as this weekend, we hosted Prime Minister Abe, which was a very successful meeting.
I was in Tokyo for the meeting of ministers after the ratification in January. I will be returning to Japan for the G20 trade ministerial meeting in June. We will also take a delegation to talk about canola in Japan.
Because of the rising middle class in these nations, hundreds of millions of people are now — and will be even more so in the next generation, very interested in what we produce. What we produce is not confined to natural resources — though they are interested in our natural resources. I’m going to give you an example — but also in intellectual property, in our brain power and in innovative R&D brilliance internationally.
Senators will be familiar with the $40-billion investment of LNG Canada, which is a consortium led by Shell Canada but includes investors from Japan, through Mitsubishi; from China; and from Malaysia, through PETRONAS, which I think has a 25 per cent share in LNG Canada.
We’re going to take natural gas from northeastern British Columbia, move it by pipeline to Kitimat, liquefy it through clean processes, and send it across to Asia to displace coal-fired power. That’s a big deal — for which Canada, by the way, and tangentially, should be given credit. That’s another issue.
I think the Asia-Pacific region has potential because of demography and access. That’s not the only region where there’s lots of potential. We considered the Mercosur negotiations as moving at a good pace. These are the nations of Argentina, Brazil, Uruguay and Paraguay. We continue to negotiate with the Pacific Alliance and with ASEAN, the Southeast Asian states. Also, personally I have an interest in Africa and the potential that is untapped in our relationship with Africa. I’m sure that also implicit in your question, senator, is that you can’t be everywhere at once.
Senator Coyle: That’s right.
Mr. Carr: What is the focus strategically?
Senator Coyle: Exactly.
Mr. Carr: If you force me to pick a region now, I’m on safe ground. Because it’s in the Prime Minister’s mandate letter to me, I would say it’s Asia-Pacific.
Senator Boehm: Thank you, minister, for joining us. I have two questions. I’ll ask them together, in the interest of brevity.
Over the years, Canada has entered into many free trade agreements. Sometimes the follow-up is easy and sometimes it’s not. You’ve provided some good statistics with respect to CETA and CPTPP.
We have another one called CUFTA, the Canada-Ukraine Free Trade Agreement. Increasingly, it is getting difficult for Canadian business to get financing and political risk insurance, or a combination of the two, because you have to borrow money to make money and to export. We have a great Ukrainian-Canadian diaspora. The government will be hosting a Ukraine Reform Conference in July.
Is activity under way to ensure that EDC could stand forward a bit more on potential financing and handling the risk factor?
My second question you’ve partially answered. I would be interested, having been involved in the Free Trade Area of the Americas negotiating initiative about 20 years ago, which went nowhere, just how well the Mercosur negotiations are going.
Mr. Carr: We’ve got the chief negotiator here, so we could get a very good answer, better than the one I could give you. May I speak personally for a moment, senator?
Senator Boehm: Of course.
Mr. Carr: I have a Ukrainian granddaughter who is the light of my life. She is the daughter of a woman born in Western Ukraine who came to Canada with her family with nothing. It’s a great Canadian story. There’s an awful lot of talk around our dinner table about Ukraine and the position of Ukraine. I have met with the trade minister from Ukraine, who came to Canada I believe last summer. We know they are interested in broadening the trade agreement with Canada to include services. We are interested in having that conversation and we will have that conversation.
EDC, as you know, is independent of government. We look at their mandate every number of years. The last look at their mandate has been quite recent. Once we have instructed — and that’s a fair word — EDC on its purview, role and mandate for the next short term, then they are independent operators, and it would be inappropriate for the Minister of International Trade to instruct them on individual files.
We continuously provide development assistance to Ukraine. Interestingly enough, I’ll drop a name that would be well known to you, Lloyd Axworthy, who was in charge of the Canadian group that oversaw the Ukrainian elections over the last number of weeks.
I think there is potential to do more. It’s important because of the geopolitical and strategic importance of Ukraine in the region, because of the very close person-to-person ties in the diaspora, including in my own family. Yes, that is definitely on our radar screen.
Mercosur negotiations are going well. Bruce Christie is our chief negotiator, advised by Kendall. I have had some conversations. As you know, the government changed in Brazil. We were very keen to know what the new government’s attitude was towards Mercosur. It turns out to be very positive. As a matter of fact, I think they’re in a bit of a hurry.
Now, there is only so much we can do with the time remaining, but we know how important the South American market is, particularly those four countries. We are moving as aggressively as we can.
Kendall, do you want to add anything else as to the state of the negotiation of Mercosur?
Kendall Hembroff, Director General, Trade Policy and Negotiations, Global Affairs Canada: We’ve had five rounds of negotiations so far. The negotiations seem to be progressing well. We are looking for a comprehensive agreement, which obviously has challenging issues that at some point will need to be tackled before we will be able to conclude that initiative. There are definitely some key benefits that we have identified for Canadian companies in a number of different areas in terms of industrial and agricultural goods.
At this point, market access negotiations are still at a fairly early stage. We’ve only had one exchange of market access offers. There’s a lot more work that has to be done. There is another round that’s upcoming in Montevideo in June.
Senator Boehm: Before the elections in Argentina, which might go in another direction?
Mr. Carr: Sorry, we have a vote, but we have a little bit of time.
The Chair: Yes, and that’s why I was asking for shorter questions and shorter answers. Could you put your questions perhaps, and then if you could answer them or follow up with the answers if you have to leave?
Mr. Carr: Sure.
Senator Wetston: Thank you, minister. I was the sponsor of the bill in the Senate. I was proud to do it and to work with your officials.
Mr. Carr: Thank you, senator.
Senator Wetston: I was able to achieve and understand the merits of the amending bill. I ask a very simple question. As I recall — and I might be incorrect — we continue to have a trade deficit with Israel. I think that’s correct, is it not?
Mr. Carr: We’ll get the numbers.
Senator Wetston: The only reason I’m mentioning it is because I believe that’s the case. I’m very supportive of the bill, otherwise I wouldn’t have sponsored it. Where do you see the most significant economic opportunities for Canada as a result of CIFTA?
Mr. Carr: Let me just get you the numbers.
The Chair: Perhaps we can get the numbers and —
Mr. Carr: We’ll get those to you.
The Chair: Yes, and we have some numbers, I’m being told by Senator Cordy, quite rightly, in our briefing book.
Mr. Carr: If we can facilitate updating them, we would be glad to do that. That’s something we can get to you as quickly as possible.
Senator Wetston: Thank you.
Senator Dean: Minister, thank you for all the work you do. Thank you to the officials.
I have a question about mandate letters, not the content necessarily of your mandate letter but the importance of mandate letters generally. We know that these letters are important from a transparency point of view so that everybody in the department knows what the priorities are and they’re not something that sits in the minister’s head. The other important aspect of mandate letters goes to accountability.
Mr. Carr: Exactly.
Senator Dean: In a world in which very few files stay inside the boundaries of one department these days, transparency where files cross two or more departments, have you found the accountability features of your mandate letter to be helpful in terms of who does what where files cross boundaries?
The Chair: Two questions, and I’ve got Senator Cordy, and then as much time as you have to answer all three.
Mr. Carr: I’m in the hands of the people who know how long it takes to get from here to the West Block.
The Chair: I’m mindful that logistics are now difficult for us compared to the good old days.
Senator Cordy: Thank you, minister, for being here again before our committee. Being a Nova Scotian, I’m pleased to see that seafood is one of the largest exports that we have to Israel. I know 90 per cent of our exports are duty-free. I wonder if you could let me know if seafood is among the duty-free exports that we have to Israel.
As Senator Massicotte and others have said, we import three times more than we export. I wonder if you could talk about that. I was also surprised when I was looking at the kinds of things that we import and export, such as diamonds. I was just wondering how that works.
Following up on Senator Wetston’s comments about what we are doing to promote trade — and I know this committee did a study on cultural diplomacy, as you might have guessed from Senator Bovey — are we using cultural diplomacy as an aid to increasing trade and relationships overall with some of our embassies around the world?
Mr. Carr: Okay.
The Chair: As much time as you have to answer.
Mr. Carr: Thank you. I wish I had unlimited time. Seafood exports will enter 98 per cent tariff-free from 90 per cent. The trade numbers for 2017 Canadian exports were $450 million and imports were $1.29 billion. In services in 2016, it’s a wash; Canadian exports were $381 million and imports were $312 million. Those are the figures.
The mandate letter is a very good question. It’s not only or even primarily a question of accountability within the departments that know what the minister’s mandate is. It’s that every person in the world who has a computer can know my mandate and can hold me accountable in a variety of ways. People quote the mandate letter to me. I’m travelling internationally and someone will say in the back of the room, “Yes, but your mandate letter says so and so. What have you done?” I’m a huge believer in accountability. I come from the private sector. I like to measure things. I like to know what happens if I’m not up to snuff.
We also have stock-taking meetings with the boss. The mandate letters are an excellent feature. You may have noticed, senator, that many provincial governments have adopted the same thing. I think it’s a very good idea.
To answer another one of your questions, explicit in many of these mandate letters is the mention of other departments with whom the minister must work to achieve the goal in the letter. I’m certain that’s true in ours, that I’m mandated to work with the Minister of Foreign Affairs, the Minister of Finance, and the Minister of Small Business and Export Promotion in particular.
Yes, accountability has been enhanced. Relationships amongst ministers have been bolstered and made more explicit, but as always, to quote the Prime Minister, “Better is always possible.”
Cultural diplomacy. Senator Bovey, I will play my oboe anywhere to enhance Canadian trade. I don’t want to be particularly glib about it, because it’s true that we in this business tend to be so focused on hard issues, issues of dollars and cents, of trade, of steel and aluminum, that we sometimes lose sight of the importance and the value of cultural industry, of creation, not only in diplomacy but in our own lives and in the freedoms we enjoy as Canadians.
I have a friend who happens to be the president of a university, who uses poetry in every one of his speeches. We’re all enriched by that.
I use musical metaphors whenever I can. Sometimes I even use the intonation of my voice to imply a rhythm or a cadence.
We don’t pay enough attention to culture.
The Chair: Thank you. Minister, you’ll hear from us on cultural diplomacy.
Mr. Carr: Good.
The Chair: Which would bridge the soft, as you’re talking about cultural diplomacy, as opposed to hard issues. I think they’re one and the same. This committee will give you a lot to think about in that, as well as the Minister of Foreign Affairs and, broadly, the government.
I have a whole bunch of questions that I have to put to you, minister, which means at some later date we will have to do it. I thank you for coming. I signal that we are tracking EDC because it is a significant matter. We know the 10-year review was up already and that you are going to, we are told, perhaps be receiving the review of EDC, the report, in June. I think you and the Minister of Finance.
We are very interested because when we made our report on tools for trade, we pointed out how it’s not signing the trade agreements that’s important. It’s how they’re implemented and facilitating in the business community.
We look forward to your report as you look forward to our report.
Minister, thank you for coming. It is a little farther that you have to go, so I understand you have to leave now. I appreciate your attendance here. On behalf of the committee, thank you.
(The committee adjourned.)