CIIT Committee Report
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Supplementary
Report Introduction The New Democratic Party (NDP) regards international trade as a cornerstone of Canada’s future economic growth and prosperity. From our historic development as a trading nation to the present day, trade policy has played a pivotal role in Canadians’ lives from coast to coast to coast. With over 60% of Canada’s Gross Domestic Product being trade-related, we believe that diversifying and deepening our trade relationships must be a priority for Canada. Accordingly, New Democrats support efforts to expand trade with the European Union (EU). Comprised of modern democracies, with generally high labour, human rights and environmental standards, and populated with some 500 million relatively high-income consumers, the EU offers the right conditions for Canada to pursue enhanced economic relations. The Comprehensive and Economic Trade Agreement (CETA) between Canada and the European Union presents an important opportunity for Canada to build stronger, sustainable trade linkages with some twenty-eight European countries. There are a number of sectors of the Canadian economy that would benefit from a well-structured agreement with the EU. Tariff reductions and improved regulatory processes in a variety of industries including grains, beef and pork, seafood, professional services, and information and communications technology will provide important economic opportunities for Canadian businesses. Canadian consumers also stand to reap significant gains. However, it is clear that a well-structured trade policy aimed at producing positive results for Canada requires a number of core underpinnings. New Democrats believe that these include the development of a strategy for supporting key and emerging sectors of industry, attentive national policies in related portfolios, a collaborative government-private sector-labour relationship and an effective trade commission service to assist Canadian importers and exporters to maximize trade opportunities. It also requires well-negotiated agreements that are strategically sound, enjoy broad public support and reflect important Canadian interests and values. Unfortunately, the current Conservative government has failed to meet these requirements. This is reflected in a serious and sustained record of poor performance across the spectrum of trade metrics:
Importantly, the Conservative Government has refused to release the text of CETA to Canadians even though it claims that an actual agreement has been reached. New Democrats have consistently maintained that a final text and broad-based consultations are required in order to evaluate the true impact of CETA upon Canadians and our economy. It is our view that the details of such a comprehensive agreement matter, and testimony received by the Committee was overwhelmingly consistent with this view. Accordingly, like the vast majority of witnesses who appeared before our Committee, although we are supportive of Canada pursuing an enhanced economic relationship with the EU, we are not in a position to conclusively evaluate CETA until we are able to study its actual terms closely and consult widely to determine its comprehensive impact. Notwithstanding, there were a number of very clear themes that emerged from this Study that we believe ought to be identified and emphasized in this Supplemental Report. Process The NDP considers broad and meaningful public consultations to be prerequisites to the development of a strong bargaining position for Canadian trade negotiators. New Democrats believe that the Government of Canada should aspire to transparency and accountability in trade negotiations. Regrettably, the Conservative government has failed to engage in meaningful consultations with many key actors in Canadian society throughout the CETA process. Accordingly, it is our view that the Canadian position in CETA has been under-informed and reflects a narrower consultative base than was both possible and desirable. Municipalities and other sub-provincial governments, First Nations, a wide variety of industrial sectors, organized labour and employee groups, public interest advocates, environmental organizations, academics and trade experts, and individual Canadians themselves are just some of the important stakeholders who have been ignored by the Conservative government during the CETA process. Instead, the evidence received by the Committee made it clear that only a very limited number of organizations had privileged access to both influence, and be briefed by, government negotiators. “We’ve been critical of the way this deal has been negotiated, without the full and meaningful participation of trade unions, environmental NGOs, and other groups in Canada’s civil society. The CETA is unlike any trade deal we’ve seen before, yet public concern raised by workers and others has been marginalized and largely dismissed.” -Jerry Dias, Unifor, November 19, 2013 “This agreement has been prepared without a meaningful public consultation process for municipalities...Lack of consultation on the details of the agreement will inevitably lead to inclusion of rules that will detrimentally affect local procurement policies.” -Mayor Derek Corrigan, City of Burnaby, February 3, 2014 In addition, we do not believe that the CETA negotiations have been conducted in a sufficiently open and transparent manner. As one witness put it: “The veil of secrecy on the whole CETA deal…is unacceptable.” -Gus Etchegary, Chair, Fisheries Community Alliance, Nov. 26, 2013 Other jurisdictions around the world are attempting to set the bar higher in relation to meaningful consultation and transparency in trade negotiations. For example, the United States Trade Representative has shared draft documents and provided the text in the Trans-Pacific Partnership (TPP) negotiations for all members of Congress to access. The European Commission has published details of the CETA investment chapter in the context of EU-US trade talks and invited open consultations with the European public to help guide the Commission’s policy decisions. Unlike our international allies, however, the Conservative government refused to regularly report progress or release any CETA negotiating text to parliamentarians or the public for information or input. The NDP is concerned that this secrecy could undermine the strength of the negotiating position of the Canadian government and ultimately result in a poorer deal for Canadians. Finally, it appears that the Conservative Government intends to keep CETA secret until its terms are concluded, and then present an unalterable deal to Parliament and Canadians as a fait accompli. New Democrats have serious concerns about this approach, as it effectively shuts out important stakeholders and Canadians themselves from any meaningful input into an agreement that will have major impacts on our nation. Jobs New Democrats believe that creating and maintaining quality, family-sustaining jobs for Canadians ought to be a priority of the CETA negotiations. We recognize that, by opening new market access opportunities in Europe and Canada for trade and investment flows, CETA offers significant potential to create good quality jobs for Canadians. It is our view that encouraging value-added production in Canada’s resource sectors and developing more sustainable goods and services are key components of building a modern, sustainable, industrial economy. Many witnesses shared their perspective that CETA would have a net positive impact on jobs in Canada. Conversely, others felt that CETA has the potential to cause adverse impacts on employment in certain sectors. Still others pointed out that there is no automatic correlation between trade deals and jobs, and much depends on the details of the agreement and nature of the economic policies of the nations involved. Instead of addressing this critical subject in a fact-based manner, however, the Conservative government has chosen to mount a propaganda campaign that does serious disservice to this important issue. The Conservatives have continuously relied on speculative, dated CETA job creation numbers from 2008 based on what has been revealed as flawed methodology and unrealistic economic assumptions. To try to determine with some precision what concrete job numbers were being contemplated by actual Canadian job creators, during the Committee hearings New Democrats consistently asked private-sector witnesses to provide specific estimates of the number of jobs that would be created in their organizations or sectors as a result of CETA. None could provide a specific number. Understandably, and consistent with the Official Opposition’s analysis, they repeatedly testified that without the final text, they were unable to provide the Committee with estimates of job growth resulting from the agreement. As stated, some witnesses expressed concerns about possible job losses in value-added and manufacturing sectors resulting from CETA. Witnesses identified job losses in industries ranging from auto-manufacturing in Ontario to steel-fabricating in Nova Scotia to fish processing in Newfoundland. “Our economist at Unifor, Jim Stanford, predicted that the CETA could cost Canada another 150,000 manufacturing jobs. This is a worst-case scenario he's presented based on many factors, but even in the best-case scenario, tens of thousands of jobs are on the chopping block.” -Jerry Dias, Unifor, November 19, 2013 “It will result in Canadians and foreign-owned factory vessels harvesting Canadian fish quotas and selling them in an unprocessed state directly to European Union plant operators, who will process them and sell directly into the EU market, thereby eliminating thousands of primary and secondary jobs in Newfoundland…” – Gus Etchegary, Fisheries Community Alliance, November 26, 2013 New Democrats will be analyzing any final CETA carefully to assess its overall impact on employment, both quantitatively and qualitatively. Health Care & Rising Costs Numerous witnesses warned the Committee about the high cost of CETA’s purported changes to Canada’s intellectual property regime. Chief among these are anticipated increases to patent terms, locked-in data exclusivity, and new appeal rights for drug patent holders to challenge generic competition at the Federal Court. Witnesses from the pharmaceutical industry and experts in public health policy testified these changes will dramatically raise the costs of prescription medicines in Canada by delaying the introduction of cheaper generic versions to market. Witnesses estimated the increased costs to Canadians in the range of $850 million to $2.8 billion every year. “Concessions by the federal government to cement the deal will delay the arrival of cheaper generics. This delay will add between $850 million and $1.65 billion annually, an increase of 13% to the total drug bill paid annually by Canadians, who will be paying either directly or through insurance plans.” -Michael McBane, Canadian Health Coalition, January 28, 2014 “A study prepared for the CGPA by two leading Canadian health economists in early 2011 estimated that, if adopted, the proposals would delay the introduction of new generic medicines in Canada by an average of three and a half years. The cost to pharmaceutical payers of this delay was estimated at $2.8 billion annually, based on generic prices in 2010…” -Jim Keon, Canadian Generic Pharmaceutical Association, December 3, 2013 The fiscal pressure these changes would put on individuals, employers and provincial health insurance plans is of particular concern for New Democrats, as prescription drug costs comprise the fastest growing portion of total public health care costs. Reliance on more expensive brand name drugs will impact the pocketbooks of millions of Canadians, particularly seniors who rely disproportionately on prescription medicines, individuals who either pay or share the costs of their prescription medicines and private sector employers who fund extended health insurance plans. It is regrettable that while the Conservative government has expressly acknowledged these impacts by promising to compensate provinces and territories, it has refused to release internal information quantifying the amount or provide compensation to individual Canadians and employers who will face higher drug costs. In addition, witnesses pointed out that it will be individual Canadian taxpayers who will bear the cost-burden in any event, as it is their tax dollars that are transferred from the federal government to provincial and territorial ones. Investor-State Dispute Settlement (ISDS) New Democrats have long expressed concerns about ISDS chapters and their potentially adverse effect on the ability of governments to legislate in the public interest. These concerns are shared by many in the international community and robust conversations are currently ongoing in jurisdictions as diverse as Australia, Brazil, India and the European Union about the desirability of ISDS provisions in trade agreements. France and Germany have recently indicated that they will not support ISDS provisions in any EU-US trade agreement. Numerous witnesses raised serious misgivings during CETA hearings about the repercussions of increasing investor rights vis-à-vis Canadian taxpayers and our democratically-elected governments. Witnesses warned that the ISDS model would subject governments at all levels in Canada to investor lawsuits simply for enacting legislation in the public interest. Areas of concern included legislation targeted at health, social and environmental objectives, and several witnesses pointed to real examples, both in Canada and abroad, of precisely this type of litigation that has already exposed, and would further expose, Canadian taxpayers to liabilities in the billions of dollars. It was also noted that the mere presence of potential liability may create a “chilling” effect on governments who might decline to enact such public interest legislation for fear of liability and/or the legal costs of simply defending such actions. As Howard Mann (Senior International Law Advisor, International Institute for Sustainable Development) testified, ISDS provisions “will inevitably lead to increases in the number of arbitrations against Canada, for both federal and provincial measures, and resulting pressures not to regulate in key areas such as the environment, human health, anti-tobacco practices, and so on.” Moreover, witnesses expressed concerns about structural deficiencies typical of arbitration tribunals established under ISDS provisions. These include conflicts of interest among adjudicators, the lack of security of tenure of adjudicators and the absence of an effective appeal mechanism. Concerns were also raised about insufficient transparency in proceedings before ISDS panels and the over-riding issue of transferring ultimate judicial power from national courts, with their attendant safeguards and structures, to unaccountable international tribunals. I’d say that investor-state provisions trouble me, not only in this agreement but in general… It’s not clear to me that it is in the Canadian national interest to have these provisions.” -John Curtis, C.D. Howe (appeared as an individual), December 5, 2013 We note that Canada has significant experience in ISDS through existing trade agreements, and has seen the costs and threats ISDS provisions pose to public interest regulation. New Democrats believe that existing safeguards should not be weakened and that any ISDS provision in CETA must not undermine the rights of democratically-elected Canadian governments to legislate and regulate in the public interest. Government Procurement & Public Markets Several witnesses expressed concern about CETA’s impact on the flexibility of sub-federal government procurement and service delivery. Witnesses representing several municipalities highlighted the important role of government procurement policies in local economic development initiatives. They testified that CETA’s provisions could undermine local development plans by according new rights to European firms bidding on procurement contracts and limiting their ability to support local goods and service providers. They expressed concern that policies directed at environmental enhancement or local food sourcing might be negatively impacted. Witnesses warned the Committee that CETA would increase the administrative, legal and financial burdens on municipal governments every time they tendered procurement contracts. Witnesses also worried that CETA might place restrictions on the ability of governments to re-assert public delivery of services that have been privatized. “CETA will also make re-municipalization very difficult. Once privatized, a service will have to stay open to private sector providers. If a municipality decides to bring those services back into the public sector, EU corporations will be able to bring suits against this move.” -Graham Cox, CUPE, March 4, 2014 “We asked Canadians how they felt about that: Should municipalities retain the right to prefer bids from local or Canadian companies? In fact, an impressive 77% of people said they should hold on to that right.” -Stuart Trew, Council of Canadians, January 28, 2014 It was noted that some 50 municipal, rural and local government bodies have passed motions expressing their opposition to these effects and requesting the ability to opt out of CETA provisions affecting their jurisdiction. New Democrats believe thresholds in the procurement chapters of CETA should not significantly impair the flexibility of sub-provincial procurement policies to pursue local economic development objectives. We believe that governments in Canada should have the freedom to de-privatize service delivery if they decide this is necessary for public objectives. Finally, sensitive areas including, but not limited to, social services, public interest programs, municipal drinking water and water treatment, utilities, health, culture and education must be effectively protected through permanent reservations for all levels of government. Dairy Sector New Democrats are firmly committed to maintaining the Canadian supply management system and its three pillars. This structure has allowed supply-managed industries, including the Canadian dairy sector, to flourish and sustain thousands of quality jobs, farms and rural communities across Canada. It has served the Canadian public well, providing safe, healthy, local and competitively priced food to Canadians for decades. New Democrats stand resolutely behind the supply management system and believe it must be firmly defended in all trade negotiations. It is disappointing that the integrity of this system has been compromised at the CETA negotiation table by the Conservative government. As witnesses from the dairy sector expressed, CETA will create serious challenges to the industry with the increase in Tariff Rate Quotas for European cheese imports. Yves Leduc (Director, International Trade, Dairy Farmers of Canada) estimated that new EU access of 17,700 tonnes of cheese will cost Canadian farmers some $150 million annually, and cumulative losses of $300 million industry-wide. He maintained that the fine cheese market will be the most affected. Most dairy witnesses rejected the claim that increased EU access would provide meaningful profits for Canadian producers, nor would increased domestic cheese consumption make up for the losses in market share to EU producers. Mr. Leduc noted that it was Canadian dairy producers themselves who invested their own money to build up the Canadian market, and it was unfair for the Conservative government to give market share away to EU producers. “We are losing future growth in which we have heavily invested over the past 15, 20, 30 years. That growth did not occur just like that; it’s the result of the investment that farmers have put into growing that market. This is what we’re losing. We are estimating, depending on whether the agreement is implemented over a five or seven-year period, losses of income at the farm level between $600 million and $750 million.” -Yves Leduc, Dairy Farmers of Canada, November 21, 2013 New Democrats are concerned by testimony suggesting that high European agricultural subsidies that create an uneven playing field for the Canadian dairy and cheese sector have not been addressed in CETA. It was noted that European cheese makers pay a lower price for their milk, and European farmers receive state subsidies as high as 40% to 50% of their income. Several witnesses expressed their concern that CETA may be the “thin edge of the wedge”, opening the door to further expansion of foreign imports of supply-managed products into Canada via future trade pacts (eg., Trans-Pacific Partnership). In the event that CETA is signed with an increased foreign import quota of cheese products, New Democrats believe that CETA ought to provide the Canadian dairy sector with adequate adjustment time by ensuring the longest possible implementation period. Fair, reasonable and transparent compensation and adjustment measures acceptable to the dairy producers must also be granted to farmers affected by the agreement. Infrastructure A trade agreement is only successful if importers and exporters effectively realize new market access opportunities. New Democrats are therefore concerned by the testimony of many industry representatives regarding inadequate transportation infrastructure in Canada. Business leaders repeatedly told the Committee that Canada’s dated transportation infrastructure presents an impediment to expeditiously shipping their goods to market. The rail backlog in the prairies during the winter of 2014 starkly exemplified this reality. New Democrats believe the Canadian government must improve investment in comprehensive transportation infrastructure, from rail to port, in order to support Canadian importers and exporters in their efforts to meet new market access potential created in CETA. NDP Recommendations: 1. That the Government of Canada provide access to all Parliamentarians to the latest draft text of CETA between Canada and the European Union, and agree to release a finalized agreement, if reached, for public comment before Canada is formally bound. 2. That the Government of Canada promptly disclose all costing estimates relating to potential increases to prescription drug costs to all provinces and territories, individual Canadians and employers, resulting from CETA’s proposed changes to patent laws, as well as details of financial compensation that may be paid to Canadian provinces, territories, individuals and employers. 3. That the Government of Canada implement strategies to encourage investment in research and development by pharmaceutical companies in Canada. 4. That the Government of Canada ensure that CETA contain a binding provision clearly permitting each jurisdiction the continued right to legislate and regulate in the public interest. 5. That the Government of Canada engage in public consultations to examine the impacts of ISDS provisions and the implications of including them in trade deals, including CETA. 6. That the Government of Canada ensure that the broadest possible range of public interest areas, including health, social services, public interest programs, utilities (eg. drinking water and waste water services), education, environment and culture are explicitly protected through effective reservations. 7. That the Government of Canada ensure that any provisions or thresholds concerning local procurement be broad enough to permit sufficient local economic development, social and environmental considerations. 8. That the Government of Canada seek a clear and broad exclusion for public services including protection for future policy flexibility at all levels of government to expand public services or return privatized services to the public sector. 9. That the Government of Canada ensure that the integrity of Canada’s supply management system is protected in CETA. 10. That the Government of Canada ensure that a sufficient phase-in period for any increased EU cheese access be established and sufficient, transparent compensation and adjustment measures acceptable to Canadian dairy producers be delivered. 11. That the Government of Canada promptly disclose all costing estimates resulting from CETA’s proposed elimination of minimum processing requirements for fish/seafood, as well as details of financial compensation that may be paid to any Canadian province and territory involved. 12. That the Government of Canada develop strategies and programs to assist Canadian fishing communities adjust to CETA and take full advantage of its provisions. 13. That the Government of Canada ensure that CETA offer sufficient market access to the EU for Canadian beef and pork producers to make required domestic sectoral transition cost-effective. 14. That the Government of Canada invest in necessary transportation infrastructure to efficiently handle increased imports and exports. 15. That the Government of Canada make the protection and promotion of standards in environment, labour and human rights core elements of CETA, establish the highest standards currently in effect as base standards, and create effective monitoring and enforcement mechanisms to ensure compliance. 16. That the Government of Canada encourage the development of sustainable and value-added goods and services, and make them a priority focus of trade negotiations, including CETA. |