CIIT Committee Report

LIBERAL PARTY

DISSENTING OPINION REPORT CETA NEGOTIATIONS

Introduction

The negotiations of the Canada – European Trade Agreement (CETA) are in their final phases and the precise issues which are on the table and specifically what issues have been settled upon in negotiations remains unclear.

The report of the committee made direct reference to the scale of the CETA agreement stating that the committee was “told of all trade negotiations entered into by Canada, including the NAFTA, the Canada-EU CETA negotiations are more likely to have a greater impact on Canada.”

That being said it is the concern of the Liberal Party that the committee has been deficient in conducting its hearings into the CETA. This conclusion has been reached on the basis that the committee examining the Canada – U.S. FTA in 1987 met with 147 witnesses and did so traveling the country. A similar course of action was taken by the committee in examining the NAFTA proposal in 1992-93 hearing from 124 witnesses and again traveling the country.  The committee on CETA heard from 28 witnesses and never left Ottawa.

Recommendation 1:

Given the scale of the agreement being negotiated with the European Union, the committee should:

A)   Re-title the report as an Interim Report;

B)   Commit to holding further hearings in the spring of 2012 on the negotiations with a commitment to travel across Canada to hear from Canadians and to invite provincial governments to make submissions and presentations to the committee.

Deficiency of the background analysis of the CETA:

The basis for the government’s case on CETA is a projection of possible benefits. In his testimony before the committee Don Stephenson, ADM Trade Policy and negotiations for DFAIT told the committee that with respect to the analysis prepared prior to the commencement of negotiations on a Canada – India trade agreement that, “I want to make the point these are theoretical econometric studies. They are projections… I’d like to say that these are absolutely accurate assessments and predictions, but they can’t be.” (September 29, 2011, p. 8). During the course of a later hearing of the committee, Mr. Stephenson repeated this observation, stating, “The joint study is just an economic modelling exercise.” (International Trade committee, December 1, 2011, p. 10)

The Minister of International Trade confirmed that sectoral analyses have been conducted by the federal government during the course of negotiations but refused to provide them to the committee.

Recommendation 2:

That the government must clearly indicate not only the “benefits” from the trade agreement being sought but the “costs” which could result from any agreement being sought and identify them by sector. The assessments referred to by the Minister of International Trade should be shared with the International Trade committee in order for the committee to have a far better assessment of the impacts of the negotiations.

Legal implications of an agreement with respect to provincial/municipal governments

The committee report states that “the federal government is fully responsible for the implementation and application of international treaties.”

However, what has become evident is that neither the provinces, nor municipalities can apparently be held responsible or challenged directly by the EU for reneging on elements of the agreement.

Recommendation 3:

Prior to the conclusion of the negotiations, the federal government should table with the committee a legal opinion clarifying the issue of responsibility under any agreement reached with the EU, outlining specifically the terms as to which level of government will bear responsibility for any dispute resolution finding against any province or municipality.

The issue of the consequences of the CETA on municipalities and the issue of procurement is important to note.

The committee has an obligation to call upon the government to clarify situation with respect to procurement which even the Federation of Canadian Municipalities told the committee is far from clear in terms of the impact the procurement provisions may have on municipalities and provinces in terms of any ability to tender contracts locally.

Intellectual property concerns – pharmaceutical costs:

In testimony before the committee the representatives of the generic pharmaceutical industry stated categorically that the impact on Canadians from the CETA as currently known will result in considerable cost increases in the range of an additional $2.8 billion annually in drug costs.

While representatives of the major pharmaceutical companies challenged this position, it was of concern that the federal government has provided no third party analysis with respect to the entire issue.

Recommendation 4:

Prior to the submission of any agreement the government of Canada table an analysis with respect to the impact on pharmaceutical drug costs due to any implications arising from intellectual property changes.

Importance of the U.S. market – the need to keep new trade agreements in perspective:

During the course of the committee hearings, the extent of our reliance upon the US market was emphasized. “The trade department’s own analysis shows that where the United States market accounted for 74.9% of Canadian merchandise exports in 2010, by 2040 the U.S. share of Canadian exports is expected to be 75.5%.” (October 6, 2011, p.5).  Thus, according to the government’s own estimates only 25% of our merchandise trade will be dedicated to the rest of the world.

Given this fact, it is critical that the Conservative government keep this reality at the forefront of its trade policy agenda, something which unfortunately, it is failing to do.

Recommendation 5:

That the committee conduct a series of hearings and table a report to Parliament on the status of current Canada – US trade issues with a focus on the future relationship with that market in the context of agreements such as the Canada – EU trade agreement.

Status of supply management in negotiations

The fate of our supply management system remains very much in question as a consequence of the CETA negotiations.

In testimony by Mr. Steve Verhuel, Canada’s chief negotiator at the talks on October 6^th he confirmed in response to a direct question related to supply management that all issues were on the table and that as of that date, in so far as dairy specifically was concerned, there had not been any “in-depth” discussions to that point. (International Trade committee, October 6, 2011, p. 12)

What neither the Minister of International Trade, nor our chief negotiator would confirm was whether the issues of tariff reductions or increased access were being negotiated:

Recommendation 6:

That the committee call upon the government to specifically state the position taken at the negotiations with respect to supply management – not only whether the entire system is on the negotiating table but is the government prepared to concede on issues related to increased access by the EU, and whether specific tariff issues have been discussed with a view to reducing those tariffs on any or all supply managed commodities.

Regulatory implications

When Minister Fast appeared before the committee he stated:

“We’ve committed to preserving government powers and abilities to regulate. Canadian products, services and commercial expertise are not for sale. Our government’s powers and ability to regulate are not. October 6, 2011, p. 2)

Although the document was only referenced in testimony, the March 2011 Sustainability Impact Assessment prepared for the European Commission stated that the agreement, “will clearly reduce regulatory flexibility in Canada, some of which will also constitute reductions in economic and social, and potentially environmental policy space of the type relevant to this sustainability impact assessment.”

Recommendation 7:

(A) That the committee call for a full analysis be provided on the extent and impact of the procurement elements contained in the CETA prior to any submission by the government of the agreement for ratification by Parliament.

(B) That the Minister report to the committee on the foregoing.

The matter of investor protection and the implications on government policy must be carefully considered

In response to questions raised regarding the issue of investment protection, Canada’s chief negotiator stated, “We actually haven’t made a lot progress in that particular area because on the EU side they only recently gained a mandate from member states to negotiate in this area of investment protection…. The EU does come from a different perspective than we do—in some ways—on investment protection…” (October 6, 2011, p. 7)

What should be of concern is the evidence provided to the committee by Scott Sinclair:

“Investor rights agreements, such as the NAFTA chapter 11, go well beyond fair treatment. They grant special rights to foreign investors that enable them to bypass domestic court systems. Early in the CETA negotiations, Canada put the NAFTA chapter 11 template on the table. The EU has now responded, quite recently in fact, and under pressure from some of the member states has been demanding an agreement with even stronger investment protections than the NAFTA in certain respects. It is also insisting that provinces and municipalities fully comply. Under the NAFTA's most-favoured-nation rules, any concessions made to European investors in the CETA are automatically extended to U.S. and Mexican investors.” (November 17, 2011, p. 10)

Recommendation 8:

That the committee call upon the government to provide clarification to the committee regarding the status of negotiations or any final agreement concerning investor protection issues prior to submission of any final agreement to Parliament for ratification.

Conclusion

The Minister of International Trade told the committee that the CETA negotiations were the “most significant trade talks since NAFTA.” (October 6, 2011, p. 1)

The brevity with which this committee has dealt with this agreement should be of concern to anyone interested in let alone concerned about the CETA.

The strategic agenda which propels this government’s trade agenda remains unclear which has resulted in the apparent willingness to negotiate and reach Free Trade Agreements for the sake of achieving an agreement. This is a matter of serious concern.