CIIT Committee Report

SUPPLEMENTARY OPINION BY THE OFFICIAL OPPOSITION CONSERVATIVE PARTY OF CANADA

THE TRANS-PACIFIC PARTNERSHIP AGREEMENT

INTRODUCTION

The Conservative Party of Canada (CPC) greatly appreciates the work of the Committee, its Chair and Members, the Clerk and his staff, including the dedicated analysts, as well as the translation and technical teams. We would also like to thank the hundreds of witnesses who participated and submitted briefs as part of the Committee’s study of the Trans-Pacific Partnership (TPP) agreement during this session as well as in previous sessions of Parliament.

As our history has shown, the CPC strongly supports international trade initiatives that generate increased economic activity, jobs and a greater understanding and collaborative relationship between emerging economies and our democratic, streamlined and free enterprise approach to governance.

We emphasize the importance of secure access to international markets through a rules-based trading system and the reduction of international trade barriers and tariffs.

We believe that Canada should strive to maximize the benefits we have as a free trading nation, and underscore the need to establish trading relationships beyond North America.

Accordingly, that is why the previous Conservative government negotiated and concluded the TPP, signing the agreement in principle on October 5, 2015. It is an ambitious and comprehensive 21^st century agreement that will promote economic growth; support higher paying jobs; enhance innovation, productivity and competitiveness; raise standards of living; reduce poverty; and promote transparency, good governance, and strong protections for labour and the environment.

The CPC believes that this study should have taken into consideration statements of record made by key witnesses during previous Committee studies of the TPP, such as those made by Canada’s Chief Negotiator for the TPP. We hope to clarify and emphasize certain points in this Supplemental Opinion.

BACKGROUND

The TPP was concluded 28 years after negotiators completed the Canada-US Free Trade Agreement. We have seen incredible technological advances since then and in light of new realities, the TPP aims to set a new standard of global trade while taking up next-generation issues.

The TPP captures a diverse group of countries in that they greatly vary in geography, language, history, size, and levels of development. This uniting agreement is inclusive by nature and has the propensity to attract other countries to join as it would set a high level standard for trade in the Asia-Pacific region.

“The Trans-Pacific Partnership is also an historic opportunity for Canada to set an ambitious trade agenda with the fastest-growing economies on the planet. It is a chance for Canada’s small businesses to integrate themselves into key supply chains and markets in the Asia-Pacific. TPP provides an excellent stepping stone towards even more free and open trade agreements in the Asia-Pacific. TPP was always conceived of as a living agreement that will continue to evolve over time, both in substance and in membership.”

-H.E. Daniel John Mellsop, High Commissioner of New Zealand to Canada, October 25, 2016

“[I] think the more that countries trade with each other and understand each other, in that regard, it can only benefit the wider group.”

-H.E. Tony Negus, High Commissioner of Australia to Canada, October 27, 2016

“[T]he TPP is an unprecedented free trade agreement for its scale and level of standards.”

-H.E. Kenjiro Monji, Ambassador of Japan to Canada, October 27, 2016

The TPP eliminates or reduces tariff and non-tariff barriers across virtually all trade, including goods and services trade and investment. It will create new opportunities and benefits for Canadian businesses, workers and consumers. The agreement will facilitate the development of production and supply chains, enhance efficiency, create and sustain well-paying jobs, raise living standards, enhance conservation efforts, enforce labour and environmental standards and foster greater foreign investments.

“[The TPP] also affords us the opportunity to increase protections for workers and the environment and promote human rights, including strong prohibitions against human trafficking and child labour.”

-President Barack Obama, Joint Address, House of Commons, June 29, 2016

The TPP also promotes innovation, productivity, and competitiveness by addressing new issues, including the development of the digital economy and the role of state-owned enterprises in the global economy. New elements are included in the agreement which seek to ensure that economies at all levels of development, and businesses of all sizes, can benefit from trade. Canada made commitments to help small and medium-sized enterprises understand the TPP and take advantage of its opportunities, including those in development and trade capacity building.

FAILURE TO LEAD

Since signing the TPP on February 4, 2016, the current Liberal Government has not treated trade liberalization as a priority, thereby jeopardizing the Canadian economy, well-paying jobs and our country’s overall competitiveness on the world stage. This deficiency in judgement is reflected in the government’s lack of leadership among the TPP signatories and constant indecision and delay in advancing the TPP through Parliament.  The Prime Minister promised Canadians a full and open debate in the House of Commons on the TPP, which has yet come to pass after over a year in government.

In addition, as the Liberal Government focuses on policies that harm Canada’s export competitiveness – including the imposition of a carbon tax, expanded payroll taxes, and the delay of small business tax cuts – other TPP countries have gained an advantage by repealing carbon taxes, lowering corporate tax rates and pursuing parallel trade agreements like the Regional Comprehensive Economic Partnership (RCEP). Though not as ambitious as the TPP, the China-led RCEP is viewed by some as an alternative to the TPP.

Furthermore, the Liberal Government has been consistently silent on the world stage when it comes to promoting trade liberalization. At the G7 Summit in Japan in May 2016, the Liberal government left Canada voiceless on the TPP. The following month at the North American Leader’s Summit on home soil in Ottawa the Liberal government was again silent, while hosting our closest TPP partners.  This trend was continued by the Liberals at the G20 Summit in China in September 2016and the Asia-Pacific Economic Cooperation Leaders’ Meeting in Peru in November 2016.

It has been clear to all observers that the Liberal government chose to allow the political environment in the United States to dictate Canada’s policy on the TPP and our Asia-Pacific trade agenda.

Now with the United States having formally withdrawn from the TPP and over a year after signing the agreement, the Liberal government has still refused to take a position on an agreement that they know is in the best interest of Canadians. Japan has ratified the TPP and other remaining signatories like Australia, New Zealand and Vietnam have pledged to continue to pursue the TPP without the involvement of the United States.

Accordingly, and in consideration of recent events surrounding the TPP, the CPC maintains our support for the agreement and we urge the Government of Canada to pursue a trade pact with the remaining signatories. Failure to do so will come at great cost to the Canadian economy.

GOVERNMENT CONSULTATIONS

The topic of government consultations on the TPP was raised by certain witnesses appearing before the Committee. This testimony referring to a lack of consultation, engagement and transparency by the government prior to November 2015 is based on conjecture and lacks evidentiary support.  Conversely, there were also many witnesses who stated that they were satisfied with the amount of consultation that had taken place prior to November 2015.  In fact, those groups who have a stake in international trade agreements and are proactive on these files had no concerns with the process. 

In a statement before the Committee, Canada’s Chief Negotiator for the TPP, Kirsten Hillman, was asked about the appropriate balance of transparency and confidentiality during negotiations:

“The way in which we approach, and have historically always approached, trade negotiations is to balance the requirement [for transparency and confidentiality]... and a trade negotiation is no different from any other negotiation that one might have in any other business context or labour context. There's a certain amount of confidentiality that's required in order to maintain our negotiating partner's trust. People have to take steps to be able to test the waters with certain ideas, get reactions, and see if those ideas are worthwhile in an environment where they feel comfortable that this will not become public, or they won't take those chances.

Like any negotiation—I'm not telling any of you anything you don't already know—in that context there has to be a certain amount of negotiating confidentiality or it just won't work. Nobody can negotiate in the public eye.

That being said, this is a government initiative for the benefit of Canadians, for the benefit of our businesses, our citizens, our workforce. Therefore, the positions that we as public servants are asked to take at the table are informed 100% by the consultations we have within the government and in Canadian society at large.

We have a very robust consultation mechanism or series of tools in this negotiation, similar to everything we've had in other negotiations as well. We have our Canada Gazette process that we launched before the negotiations were initiated in December 2011. We received 79 submissions from companies, associations, civil society, provinces, individuals, and a variety of sources. We have a consultation mechanism whereby we have regular information briefings to hundreds of Canadian businesses in civil society, stakeholders, on a regular basis as the negotiations progress. We do this through webinars. We have an online tool and mailbox. We receive written submissions, we answer back, and we also meet with specific groups, either in the business community or others, who ask us to meet and discuss what's going on in their specific areas of interest.

Within the confines of the trust we have with our negotiating partners, we reach out in a multitude of ways to inform our negotiating positions. That is the mechanism we use to make sure that the information is getting out to those who are most interested in it in relation to the TPP.

The other thing that I think is really interesting about this negotiation, and that I've never seen before in my career in this area, is that the TPP itself, during all of the formal negotiating rounds, had what was called a “stakeholder day”. Negotiations were suspended for a day and stakeholders from any TPP country were invited to come and make presentations to not only negotiators from their own country but to negotiators from all TPP countries. Then we had a question and answer period.

I've never seen anything quite like it before. Many Canadian stakeholders participated in that. It also gave us an opportunity to provide them with a forum to talk to negotiators from every other TPP country should they so desire. I think really the openness of this negotiation is unlike anything I've ever seen before.”

-Kirsten Hillman, Canada’s Chief Negotiator, Trans-Pacific Partnership, March 25, 2014

Indeed, some claims about a lack of involvement and accessibility of negotiators and government may have been based on an organization’s awareness or willingness to participate, rather than the availability or proactive outreach of Canada’s negotiators and government. Mr. John Masswohl, Director for the Canadian Cattlemen’s Association, spoke about his association’s involvement during TPP negotiations when asked by the Committee:

“[W]e don't sit around and wait for the phone to ring. When we have a view on something, we find out who is working on it and we get engaged.

I was trying to make myself a little note of how many of the TPP negotiating sessions we went to. Certainly we've had lots of meetings with the negotiators here in Ottawa, but we were at the first meeting Canada was at in Auckland. We were in Singapore three times.

[W]e want to be there because the negotiation goes through a life cycle. In the early days, they're trying to figure out the priorities and what they are trying to achieve. They can only achieve things if people tell them what they are. Then the middle of the negotiation gets into how to achieve that. What are the objections from other countries?

[T]he government is willing, and in fact eager, to consult with people who have views, who can make these agreements better. My view is, if you weren't consulted, you really didn't try very hard.”

-John Masswohl, Director for the Canadian Cattlemen’s Association, June 16, 2016

In contrast, the Committee heard from witnesses like Mr. Phil Benson, a lobbyist for Teamsters Canada, who claimed to have not been consulted about the allotment of quota for dairy products. When asked whether or not he was “[o]ffered the ability to sign a non-disclosure agreement,” Mr. Benson would not confirm that his organization was denied an opportunity, nor were they unaware of ongoing negotiations, but that they chose not to sign a non-disclosure agreement to consult “[a]s a matter of policy.”

Indeed, in her testimony to the Committee in October 2016, Ms. Hillman stated for the record that no one was prevented from participating in the consultation and negotiation process for the TPP who was willing to sign a non-disclosure agreement, something which is standard practice in international trade negotiations.

Lastly, in addition to this Committee’s current study of the TPP, two additional studies were completed by the Committee in previous sessions of parliament, one in 2013 followed by another in 2014. The studies were completed in parallel with ongoing consultations during negotiations of the TPP.

“On the TPP, Minister, I just want to maybe get the record straight. The reality is that there was a prestudy done in the last session, and that prestudy you did not attend. Your colleague Mr. Pacetti attended on your behalf.

I also want to get the record straight that Don Davies—Mr. Merrifield was the chair at the time—held receptions after every meeting. To those receptions Mr. Davies invited organized labour, the Chamber of Commerce, and other groups. Not only did they have the formal presentations, where they actually had witnesses like we do in a normal hearing, they actually had the informal consultations. I think if you had been there, you would have realized there were extensive consultations.”

-Randy Hoback, MP (Prince Albert), May 19, 2016

U.S. WITHDRAWAL AND RATIFICATION OF THE TRANS-PACIFIC PARTNERSHIP

With the withdrawal of the United States from the TPP, maintaining access to their market must be Canada’s number one international trade priority and any steps forward in the Asia-Pacific region must align with this in mind. It is imperative that future free trade agreements that Canada signs must not undermine our relationship with the United States, especially with NAFTA renegotiations on the horizon.

On ratifying the TPP, it is within the capacity of the remaining signatories, including Canada, to modify entry into force provisions given the new reality, life post U.S. withdrawal.

Japan has already ratified the TPP, with Australia and New Zealand having publicly stated their intentions to pursue the agreement without the United States. The CPC has been consistent in saying that the political climate in other countries should not dictate Canada’s position when it comes to our country’s foreign trade policy. We have stated since the beginning of 2016 that if the U.S. is no longer a part of the TPP, that Canada must be ready to forge a new agreement with the 10 remaining signatories.

We agree with the witnesses who have come forward stating the importance of the Japanese market to Canada. Some witnesses have proposed that the Government of Canada should pursue a bilateral agreement with Japan. While in government and in parallel with the TPP, the Conservative Party was able to conclude 7 rounds of negotiations with Japan, as part of the Canada-Japan Economic Partnership Agreement. We would encourage the Liberal government to explore a similar approach going forward.

While the CPC feels that the Government of Canada’s main trade priority in the Asia-Pacific should be Japan, we must not lose focus or abandon the principles that brought together such diverse countries in an effort to raise the standards of global trade in the region. Pursuing the TPP can take on many forms, including bilateral agreements with the remaining signatories, which is something that the government can also evaluate.

Although Canada may ultimately have to pursue bilateral agreements with our TPP partners, we believe a multilateral deal involving these countries would better advance our strategic and economic interest, particularly in light of efforts by China to dominate the trade agenda in the Asia-Pacific.

A TPP-like approach to the Asia-Pacific is advantageous in that it involves like-minded countries with high standards. Pursuing such a platform, to which China can later accede, is preferable to negotiating a bilateral agreement where we would have limited bargaining power and could risk upsetting our trade relations with the United States. Canada should therefore abstain from initiating formal bilateral negotiations with China until we have exhausted the potential for an agreement modeled on the TPP.

“[T]he TPP is an unprecedented free trade agreement in its scale and its level of standards. [T]he TPP is an open agreement, meaning that any country or custom territory able to meet the high standards are welcomed to join. [T]he TPP is not only a gigantic free trade agreement, but also a strategic deal among countries sharing the same fundamental values such as democracy, human rights, and rule of law.”

-H.E. Kenjiro Monji, Ambassador of Japan to Canada, February 23, 2017

A pact with our allies in the Asia-Pacific region would make Canada the gateway to North America and it would lead to a more ambitious and beneficial trade relationship between Canada and China in the long run.