Minister of Small Business, Export Promotion and International Trade appearance before the Special Committee on the COVID-19 Pandemic

2020-05-05

India - India's export ban on N95 masks

Issue

What is Canada doing in response to India not releasing a shipment of N95 masks to a Canadian company?

Responsive Lines

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• On January 31, the Government of India put in place an export ban on medical masks and other medical products.
• The Government of Canada has been working with our international partners to ensure the continued flow of these essential goods across our borders.
• To date, we are not aware of any country having received approvals to import N95 masks from India.
• During a recent call with his Indian counterpart, PM Trudeau raised the need to keep supply chains open for medical equipment and the need for increased international cooperation to accelerate the development of diagnostics, treatments, and potential vaccines.

Releasable Background

On March 26, a Canadian company, contacted the Trade Commissioner Service (TCS) requesting assistance with a shipment of N95 masks that they had ordered from their Indian supplier. At the request of the company, the TCS worked with the Indian supplier to submit a request to Indian officials to allow the shipment to be exported on humanitarian grounds. This request was denied.

On January 31, India put in place export restrictions on medical supplies and banned the export of Personal Protective Equipment (PPE) including N95 masks.

The Indian government estimates that in order to meet its internal demand over the next two months, the country will need 27 million N95 masks, 15 million pieces of Personal Protective Equipment, 1.6 million diagnostic kits and 50,000 ventilators.

Canada sourced 1.4% of its total imports of N95 masks from India in 2019.

India - Pharmaceutical Imports

Issue

What is Canada doing in response to recent delays in the release of pharmaceutical products from India?

Responsive Lines

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• India is the largest global provider of generic medicines and plays a key role in contributing to the global pharmaceutical supply chain.
• There have been delays in the release of shipments of certain pharmaceutical products from India to Canada as a result of export restrictions that were put in place by India on March 3.
• The Government of Canada actively engaged Indian officials on this issue and, on April 6, India removed the majority of these export restrictions.
• While restrictions remain on a couple of pharmaceuticals products, India has been approving exports to Canada on a case-by-case basis.
• We do not expect these restrictions to significantly impede access to India's pharmaceuticals by Canadian companies. We will continue to monitor the situation to ensure that our long term pharmaceutical trade with India is not disrupted.

Releasable Background

In 2019, Canadian imports of pharmaceutical products from India amounted to $410 million, including $386 million of medicines destined to retail sale, $12.6 million of pharmaceutical goods and $6.3 million of other medicines.

On March 3, India restricted the export of 13 active pharmaceutical ingredients (APIs), and formulations made from these.

On March 25, India added hydroxychloroquine (HCQ) to the list of restricted exports; a drug used to treat lupus and rheumatoid arthritis, among other ailments.

On April 6, under mounting international pressure, India rescinded the export restrictions on 12 of the 13 APIs, leaving paracetamol (also known as acetaminophen), along with HCQ, as the only pharmaceutical products remaining on the restricted list.

Since then, India has permitted the export of 5 million HCQ tablets along with 3510 kg of HCQ API and, approximately, 31 million acetaminophen tablets to Canada.  The Government of Canada is working closely with the Government of India on other orders of these two products to ensure that Canada's critical medical needs are met.

International pledge for open supply chains

Issue

On Mar 25/20 Canada endorsed a joint statement with Australia, Brunei Darussalam, Chile, Myanmar, New Zealand & Singapore committing to ensuring supply chain connectivity amidst the COVID-19 situation

Responsive Lines

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• It is essential that the international community work together to facilitate the cross-border movement of critical goods, services and personnel by maintaining open and connected supply chains.
• Canada is working with likeminded countries to advocate for keeping global supply chains open during the COVID-19 crisis, especially for essential medical supplies, agriculture and other products.
• Canada has endorsed a number of statements at the G20, WTO, APEC and other configurations of likeminded countries committing to open supply chains and minimizing disruptions to trade during the pandemic.
• Canada is advocating that emergency measures, if necessary to address COVID-19, be targeted, proportionate, transparent, and temporary.
• Canada is also working with international partners to commit to open and predictable trade in agricultural and food products. This will help to protect and promote food security, nutrition and the health of people around the world.

Releasable Background

Against the backdrop of a growing number of trade restrictions imposed globally in response to COVID-19 Canada has co-sponsored a number of international statements as a part of its advocacy efforts to ensure an undisrupted flow of medical supplies and essential goods and minimize the negative impacts on global supply chains. Canada has emphasized in these various statements that emergency trade measures be proportionate, transparent, temporary and consistent with WTO rules. This includes the following:

March 25 - Statement on supply chain connectivity for essential medical supplies and other products - supported by Australia, Brunei, Canada Chile, Myanmar, New Zealand and Singapore. Uruguay, Lao PDR and the UAE have since joined the statement;

March 26, 30 - G20 Leaders Trade Ministers statements;

April 22 - Canada and 24 WTO members issue a joint Ministerial statement on open and predictable trade in agricultural and agri-food products;

April 30 - Korea, Canada, Singapore, Australia and New Zealand, endorsed a joint ministerial statement that addresses global supply chains; the flow of goods, services and people;

May 5 - Canada and other APEC Ministers Responsible for Trade issue a statement.

May 5 - Canada and 42 other WTO members released a statement that reinforces support for the rules-based multilateral trading system and a role for the WTO in global economic recovery.

May 14 - G20 Trade Ministers statement and endorsement of action items to support world trade and investment responses to COVID-19.

As of June 1, approximately 191 export restrictions have been enacted by 93 countries. Many of these restrictions apply to medical products such as masks, pharmaceuticals, and disinfectants; however export controls on agricultural products are also beginning to emerge.

Canada has undertaken several domestic measures which are aimed at facilitating trade. Canada has temporarily waived tariffs and sales taxes on importation of goods required for an emergency. Canada has also provided flexibility to current regulatory requirements such as waiving labelling requirements on hand sanitizers.

Personal protection equipment (PPE) procurement from China and Canada-China trade relations

Issue

GAC continues to support procurement of medical supplies from China. Trade with China has been decreasing in 2020 due to COVID-19 but this decline is unrelated to failures in some procured PPE.

Responsive Lines

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• Global Affairs Canada is supporting Public Services and Procurement Canada (PSPC) in global procurement (pre-vetting, sourcing, issue management, shipping).
• PSPC is actively addressing quality issues.
• COVID-19 is partially to blame for the decrease in trade with China.

Releasable Background

PPE Procurement:

In addition to efforts to increase Canada's domestic capacity to manufacture medical supplies and personal protection equipment to combat COVID-19, the Government of Canada continues to source medical supplies internationally to meet the immediate needs of Canadians. Public Services and Procurement Canada (PSPC) is procuring medical supplies globally for the Government of Canada and is working closely with the Public Health Agency of Canada (PHAC) and Health Canada to ensure these purchase meet Canadian standards and requirements. Global Affairs Canada continues to work with PSPC and partners to identify and help resolve any international obstacles to Canada's required procurement.

Trade:

Jan-Feb 2020 year-on-year data indicates a 16.6% decrease of overall trade, with exports falling by 13.6% to $3.1B, and imports falling by 17.5% to $10.0B (Mar data available May 5). COVID-19 is at least partially to blame for the decrease as Canadian exports are impacted by the demand and supply chain disruptions, but the impact has been uneven.

The top 5 exporting Canadian provinces all suffered heavy decreases during this period: British Columbia's export volume fell by 16.0% to $903.7M; Alberta by 15.3% to $568.7M; Saskatchewan by 13.0% to $485.9M; Quebec by 15.5% to $475.0M; and Ontario by 23.5% to $319.2M. However, Newfoundland's exports increased by 169% due to $64M in exports of ores, while Manitoba's exports increased by 23% thanks to a $60M increase in pork exports.

In Jan-Feb 2020, Canadian pork exports totaled $242M, an increase of 166% from a year earlier; medication exports saw a 239% surge, reaching $26M; motor vehicles and lumber exports reduced by half. Canola seeds export dropped by 52% overall but Saskatchewan's canola oil increased by 60%. Soybeans increased by 576% to $11M but the volume remained low compared to the historical high of $1.7 billion in 2018; beef exports declined further with a 55% drop.

On tourism, Chinese tourists visiting Canada decreased by 35.1% in Jan-Feb 2020. On education, the number of study permits issued to Chinese citizens reduced by 53.4% compared to the same period in 2019.