Canada--United Kingdom Trade Continuity Agreement Implementation Bill
Second Reading--Debate Adjourned
March 15, 2021
Moved second reading of Bill C-18, An Act to implement the Agreement on Trade Continuity between Canada and the United Kingdom of Great Britain and Northern Ireland.
He said: Honourable senators, it is my pleasure to speak today as the sponsor of Bill C-18, An Act to implement the Agreement on Trade Continuity between Canada and the United Kingdom of Great Britain and Northern Ireland, a bill that was first tabled in the House of Commons in December of last year and comes to us today.
This bill is good for Canada. It will work for Canadian businesses and workers, and it fully protects Canada’s supply-management industries.
The Trade Continuity Agreement is a replication of the Canada-European Union Comprehensive Economic and Trade Agreement, or CETA, so that trade relations between Canada and the United Kingdom can continue to benefit from the opportunities CETA has created, even as the U.K. has left the European Union. As such, the Trade Continuity Agreement is an agreement that Canadians are already familiar with and what stakeholders have asked for in terms of creating greater certainty.
As Canada seeks to recover from the economic effects of the COVID-19 pandemic, we can ill afford to lose preferential arrangements with our largest and most established trading partner in Europe. I need not remind you that the United Kingdom is one of Canada’s strategic allies, working closely with us in a number of arenas, such as NATO, the G7 and G20, just to name a few.
We are both open, democratic countries with advanced economies that share deep historical ties, values and have similar systems of government. We enjoy a robust trade and investment relationship. The two-way merchandise trade between us amounted to $29 billion in 2019, making the United Kingdom Canada’s fifth largest trading partner. It is also a key source of innovation, science and technology partnerships, and is Canada’s fourth largest source of direct foreign investment, valued at $62.3 billion in 2019.
The Canada-U.K. trade partnership has also grown rapidly under CETA, in just the past few years. In fact, since CETA was provisionally applied in 2017, Canada’s exports to the United Kingdom have increased by over $2 billion.
As I am sure you are aware, for a country like Canada, trade is absolutely critical to our economic success and prosperity, and trade will play a critical role in our economic recovery and future prosperity. As we look to the future, it will be even more important that we continue to provide Canadian businesses, exporters and the work force related to those activities with as many options and opportunities as possible.
That is why it is not only important for Canada to develop trading relationships with other countries, but also to maintain and build upon economic ties we already have.
When Prime Minister Trudeau and the then-U.K. Prime Minister May met to discuss ways to strengthen bilateral relations, following the United Kingdom’s decision to leave the European Union, both leaders agreed to make the transition as seamless as possible and sought to preserve CETA’s preferential trade terms.
Although the United Kingdom was still a party to CETA at that time and continued to be until December 31 of last year, and therefore not able to undertake new international trade negotiations, discussions began regarding converting or replicating the terms of CETA into a bilateral agreement, the outcome of which is Bill C-18.
While CETA will continue to govern Canada-EU trade, the Trade Continuity Agreement will provide continued predictability and remove uncertainty for Canadian companies doing business with, and in, the United Kingdom.
Bill C-18 ensures that Canada and the U.K. can sustain and build upon our important trading relationship by preserving the benefits of CETA on a bilateral basis in the Trade Continuity Agreement. This means the continuation of utterly unprecedented access to the United Kingdom’s 66 million consumers and a $3.68-trillion economy, which Canadian exporters have enjoyed under the CETA.
It also means the continuation of lower prices and more choices for Canadian consumers, and the reduction or elimination of customs duties. And because this agreement is based on CETA, an agreement Canadians already know well, it provides the predictability and stability that stakeholders have told us they need as they grapple with the economic effects of the global pandemic.
Indeed, Bill C-18 includes the same important benefits of CETA that have successfully helped Canadian businesses grow. Once it comes into force and is fully implemented, it will do the following: one, carry forward CETA’s tariff elimination on 99% of Canadian products exported to the United Kingdom; two, maintain priority market access for Canadian service suppliers, including access to the United Kingdom government’s procurement market, which alone is estimated to be worth $118 billion annually; and three, uphold and preserve CETA’s high standard provisions on labour, the protection of the environment and dispute settlement.
At the same time, while it is largely a replication of CETA, the Trade Continuity Agreement provides no new market access for cheese or any other supply-managed products. This outcome fulfills the commitment made by the Prime Minister and the Minister of Agriculture not to concede any additional market access for this sector in the trade agreements this government signs onto.
Critically, this agreement will also continue to give Canadian companies a leg up on competitors from other countries that do not have free-trade access to the United Kingdom. It is worth noting that Canada will continue to be the only G7 member that has free trade agreements with all other G7 countries, all of which are important economic partners for Canada.
Bill C-18 will allow us to continue to serve as an example of how trade in a rules-based system can bring prosperity and protect government’s ability to regulate in the public interest. These are crucial advantages we can look forward to preserving once this agreement is in place.
Indeed, the trade continuity agreement responds to the need to ensure near-term certainty in our trade relationships. For the longer term, Canada and the United Kingdom have also committed to launching subsequent negotiations within a year of its entry into force toward a new bilateral agreement that can reflect specific Canada-United Kingdom interests. Both Canada and the U.K. have committed to this in public statements.
Furthermore, the United Kingdom also recently made a formal application to seek accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership, the so‑called CPTPP. Progress in our future bilateral negotiations will be important to Canada’s ongoing support for the U.K. joining the CPTPP, which will also require the U.K. to meet the high standards of rules and ambitious market access commitments of that agreement.
I’ve been advised that Canada and the United Kingdom will be negotiating a new trade partnership in the near future and that, as always, it will be informed by extensive consultations with Canadians.
Colleagues, Brexit posed a unique challenge for partners like Canada that already had trade agreements in place with the EU. Canada has shown adaptability and resilience to this unique challenge in achieving an agreement that mitigates potential disruptions for stakeholders due to the United Kingdom’s decision to leave the European Union and, thereby, the protections of the CETA.
And so it was important for the government to remain engaged with Canadians prior to and throughout the negotiations to understand and address specific interests.
Negotiations on the Trade Continuity Agreement have been part of these regular exchanges with provincial and territorial representatives who also wanted to see continuity in the Canada-U.K. trade relationship.
Canadian business stakeholders understand the unique circumstances of the Brexit and the CETA replication exercise, as well as the fact that an entirely new negotiation was not an option while the U.K. was a member of the European Union and a party to CETA, and therefore unable to negotiate.
Stakeholders are overwhelmingly satisfied with the fact that this Trade Continuity Agreement provides them with the continuity they are seeking. At a time of significant economic uncertainty, we need to leave no stone unturned for Canadian businesses to find stability and grow our economy. Trade agreements are a way for governments to support growth at a minimal cost to the public purse.
Colleagues, this bill has strong support amongst Canadian businesses, exporters and industry. The Business Council of Canada, the Canadian Agri-Food Trade Alliance, the Canadian Chamber of Commerce, the Canadian Federation of Independent Business, Canadian Manufacturers & Exporters, and the Canadian Association of Importers and Exporters issued a statement calling for swift passage of this bill. I’d like to quote the shared statement from these businesses directly:
. . . we ask all parties to support the ratification of the Trade Continuity Agreement by quickly passing Bill C-18. Doing so would protect thousands of Canadian jobs and provide stability and certainty for workers, employers and investors. Without an agreement, $2 billion worth of bilateral trade will be at risk.
Mark Agnew, Senior Director of International Policy at the Canadian Chamber of Commerce and a former trade official in the British High Commission in Ottawa said:
Bill C-18 is fundamentally about preserving market access that we already have. Now is not the time to rock the boat on that. From a forward-looking perspective, drawing a line under Bill C-18 will enable us to devote our efforts to focusing on the issues that will allow us to actually expand and improve our market access. This includes such issues as digital trade, regulatory co-operation, trade facilitation, labour mobility and others.
In fact, since the conclusion of this important agreement, the Canadian Chamber of Commerce has said the Trade Continuity Agreement is a “bright spot in the midst of COVID-19 and Brexit-related uncertainty for business.”
Uncertainty remains about the long-term effects of the change in the U.K.-EU trade relationship as a result of Brexit, as well as with regard to changes in the United Kingdom as it works toward its domestic trade frameworks in the coming months.
Subsequent bilateral negotiations, as provided for in this agreement, are an important opportunity to take into account the most recent developments of interest to Canada at the time.
The government has heard over and over from Canadian stakeholders about the importance of maintaining a preferential trading relationship with the United Kingdom. The successful conclusion of the agreement before you goes a long way to minimizing the disruptions that Canadian businesses are worried about and will maintain crucial ties and preferential trade terms with one of Canada’s leading trade partners. It will also ensure that Canadian businesses do not face yet another disruption or challenge at this time.
Indeed, if this agreement were not in place, this would be another setback that Canadians could ill afford.
To close, I would like to quote from the preamble of a question posed by our colleague Senator Doug Black to the Government Representative in the Senate in December:
The government of the U.K. is calling on our government to act. Businesses across the country are calling on us to act.
Colleagues, I couldn’t agree more, which makes it imperative that we move this bill forward as quickly as possible.
Honourable senators, to preserve Canada’s important trade relationship with the United Kingdom and the flourishing of its capacity, I hope you will join me in supporting this bill for second reading so that it might reach Royal Assent as expeditiously as possible. Thank you.
Honourable senators, I am honoured to join the debate at second reading of Bill C-18, An Act to implement the Agreement on Trade Continuity between Canada and the United Kingdom of Great Britain and Northern Ireland. I thank the sponsor of the bill, Senator Harder, for providing us with a detailed account of what this bill seeks to achieve.
This bill will implement a trade continuity agreement, or TCA, between Canada and the United Kingdom in light of the U.K.’s departure from the European Union in January 2020. Since January 1, 2021, the U.K. is no longer covered under the Canada-European Union Comprehensive Economic and Trade Agreement, CETA, that we signed in October 2016. Therefore, to prevent instability for exporters on both sides of the pond, our two governments reached an agreement in late 2020.
The TCA, which is before us today in the form of Bill C-18, replicates nearly all the provisions in CETA. It is meant to be a temporary measure that maintains preferential treatment and access to the markets and ensures Canada’s competitive advantage in that country, in the U.K. For example, the elimination of tariffs on 98% of products exported to the U.K. will be maintained. It is also worth pointing out that there are no new obligations for Canada under the TCA. In other words, Canada has not made any new commitments with the U.K. for greater access to cheese or other supply-managed products. These discussions will likely take place when we formally begin negotiating a new bilateral agreement.
In fact, I want to emphasize that the TCA commits both parties to enter into negotiations for a new free trade agreement, or FTA, within one year of the TCA coming into force. They have also committed to signing an agreement within three years.
This, in my view, shows that both countries are making this a priority.
Because the TCA was not adopted and ratified before the December 31 deadline, a memorandum of undertaking was signed, an MOU. This was signed in December between both countries. The MOU continues certain benefits of CETA pending the entry into force of the TCA. Like the TCA, the MOU offers stability and predictability for businesses that trade with the U.K., but the MOU is temporary and expires in two weeks, which is why I think it is important that we adopt Bill C-18 before the end of the month and allow businesses in both countries to breathe a sigh of relief.
I would like to say a few words about Canada’s economy and the importance of trade for our nation. Canada is a trading nation and the United Kingdom has always been one of our most important trading partners. Naturally, the U.K. was our biggest trading partner when Canada was founded in 1867. Over 150 years later, our two nations have enjoyed mutually beneficial trade relations, characterized by strong ties, shared values and common goals.
Case in point: just three years ago Prime Minister Trudeau and former British prime minister Theresa May announced numerous initiatives aimed at expanding and enhancing Canada-U.K. relations on such matters as gender equality, clean growth and climate change and innovation. Today, the U.K. is our fifth‑largest commercial partner. For obvious reasons, the United States is our biggest trading ally, but no modern-day economy should rely exclusively on one partner. That is why diversifying our export market is so important.
Thankfully, current and past governments have made it a priority to access foreign markets in order to ensure our continued and sustained prosperity. Canada’s population represents just 0.5% of the world’s population, and yet Canada accounts for approximately 2.5% of global merchandise exports. In fact, two-way goods and services trade represents roughly 65% of Canada’s GDP.
With a small domestic market, it is only natural for Canada to make trade a priority. According to Global Affairs, Canada currently has 14 bilateral and regional free trade agreements in force, covering 51 countries. As Senator Harder said, we are the only G7 nation with free trade agreements with all other six countries, putting us in a unique position at the centre of global trading networks.
As the World Trade Organization submits:
. . . liberal trade policies — policies that allow the unrestricted flow of goods and services — sharpen competition, motivate innovation and breed success.
Canada is fortunate to have preferential access to global markets representing nearly two thirds of the world’s GDP.
It goes without saying that Canada and the U.K. trade relationship is essential for our economy. Among all countries in Europe, the U.K. is our largest trade market. The most recent data shows us that our two-way trade was just under $30 billion in 2020, with Canadian exports to the U.K. representing about $20 billion and Canadian imports from the U.K. around $8 billion. Additionally, Canadian direct investment in the U.K. was just under $110 million, while foreign investment in Canada from the U.K. was about $62 million, which puts us fourth in terms of British foreign direct investment abroad.
With Brexit, the United Kingdom has a lot of work ahead as it begins bilateral negotiations with other nations. However, our trade and investment relationship is mutually beneficial, which is why I hope Canada and the U.K. will make it a priority to negotiate and ratify a new bilateral free trade agreement in less than the three years stipulated in the TCA.
Before I wrap up, and since the Senate will not send this bill to committee, I want to put on the record that many stakeholders want this bill passed as soon as possible. The Canadian Federation of Independent Business said:
We want to ask that you ratify Bill C-18 and then move quickly to negotiate a comprehensive trade agreement with the U.K.
The Canadian Manufacturers & Exporters declared:
We therefore fully support the Canada-United Kingdom Trade Continuity Agreement and we urge swift passage of Bill C-18. This interim measure is required while our negotiators hammer out a more permanent Canada-UK agreement.
I urge that it happen as soon as possible as well.
The Business Council of Canada expressed the following:
The U.K., as part of the EU, has been a critical component of Canada’s fast-growing transatlantic trade relationship. Before the pandemic, it accounted for 40% of Canada’s merchandise exports and 36% of service exports to the EU. . . . Canadian exporters had momentum in the U.K. before the pandemic, and it’s important that we continue to grow our trade.
Finally, the Canadian Chamber of Commerce couldn’t have been any clearer:
. . . if CETA matters, then transitioning it to a bilateral agreement with our largest trading partner in Europe also matters. As we approach March 31, we hope the TCA can be implemented rather than the two governments needing to roll over their current MOU.
Bill C-18 is fundamentally about preserving the market access we already have. Now is not the time to rock the boat on that.
I want to balance these statements by putting on the record that some industry leaders have raised concerns or reservations about the passage of Bill C-18, arguing that Canada should not replicate CETA provisions with the U.K. right now. To those who might suggest we delay passage of this bill, or not implement the TCA at all, I want to say two things. First, now is not the time to make changes to our trade agreement with the United Kingdom. Businesses need stability and continuity. As the WTO points out, the global trading system should be principle-based and include trade predictability as one of its tenets. The TCA offers businesses, manufacturers and exporters in both countries just that.
Second, negotiations for a new bilateral agreement are expected to begin within the first year of the TCA’s implementation. Canada is lucky to have stellar negotiators at Global Affairs Canada. With the backing of our government, I am confident they will do their very best to work out a first-rate deal for Canadian businesses and exporters that will also include meaningful provisions that address labour rights, the environment and sustainable development.
If some sectors of our economy or grassroots organizations have grievances with the current provisions in the TCA, Canada will have an opportunity to bring them up during these forthcoming negotiations.
What we have before us is a good deal. As you know, CETA negotiations began under a Conservative government and the deal was implemented under a Liberal one. There is widespread support for the deal that the TCA replicates. I had the honour of travelling with a Canadian delegation to Italy in 2017 — it seems like yesterday — to celebrate the ratification of CETA. I can tell you from firsthand experience that this deal was well received on both continents. I would also argue that CETA is a great stepping stone for a future free trade agreement between our two nations.
Honourable colleagues, we have an opportunity before us to pass this bill this week and send a strong signal to businesses on both sides of the pond that we value their contributions to our economy and that we do not want to harm, delay or prevent any future business deals or transactions. In early February, the British Parliament completed its parliamentary review of the TCA. The ball is now in our court.
Like many of you, I am also unhappy that the government is putting pressure on us without extensive debate and committee review. I hope this will not become a trend. Nevertheless, businesses expect us to pass this bill without further delay. They’ve suffered enough in the last year. During these unprecedented times, I think parliamentarians have a duty to offer businesses some stability as they continue to navigate these troubling waters.
Let us throw them a lifeline and pass Bill C-18. Thank you. Meegwetch.
Will Senator Loffreda take a question?
Senator Loffreda, the senator wishes to ask a question. Are you prepared to take a question?
Yes.
Thank you, Senator Loffreda. I want to expand a little bit. Maybe you can share your comments that you made at the end of your speech.
I, too, as a Canadian parliamentarian, am very concerned about the habit that the current government has fallen into, which is to take important and complicated trade deals and rush them through Parliament around five minutes to midnight, before the deadline. As you appropriately pointed out, the United Kingdom’s Parliament endorsed this deal and passed it through their house in early February, well over a month and a half before the MOU deadline of the end of March.
With our current government, we’ve seen that in the last deal — the United States-Mexico-Canada Agreement — they rushed it through the Senate, without consultation, and now we’re experiencing the same thing.
As you highlighted in your speech, given the importance of this deal to Canadians and to industry, what is your reasoning that the government continues to pay little attention to such important trade deals? Furthermore, what steps do you think Parliament needs to take in order to ensure that the role of scrutiny and consultation by Parliament is taken seriously by the current government?
Thank you for your question, Senator Housakos. We all know the importance of sober second thought. In this situation, there’s a strong message to be sent to our businesses, and the government is well aware of that. We are under a tight deadline. As I mentioned in my speech, the March 31 deadline is essential in terms of telling businesses, the business community and the U.K. that we value the relationship, that we’re there to give them a lifeline and to extend this agreement as soon as possible.
I think it is important, and I respect your comments. It is a valid point that we should take the necessary time. As I said, I hope it does not become a habit and a trend. However, in this situation, I fully support the timeline that has been given to us because of the importance of this bill; the importance of trade for Canada, as I mentioned, without repeating the numbers; and the importance of trade with the U.K., which in 1867 was our largest trading partner. Over the years we’ve had a great relationship with the U.K.
It is a strong message we’re sending out, doing so in the time we have, and hopefully it won’t become a trend. Thank you for your question.