Minister of Small Business, Export Promotion and International Trade appearance before the Standing Committee on International Trade (CIIT) on Main Estimates and Investor State Dispute Settlement (ISDS)

2021-04-26

CIIT Committee Overview
- CIIT Scenario Note
- CIIT Committee Bios
Investor State Dispute Settlement (ISDS)
Other Issues - General
Other Issues - Asia
Other Issues - Europe
Other Issues - Latin America
- Pacific Alliance Negotiations
- Mercosur Negotiations
Other Issues - North America
Main Estimates

Appearance before the standing committee on international trade (CIIT) on main estimates and ISDS, April 26, 2021

Meeting scenario

Your virtual one-hour appearance before the Standing Committee on International Trade (CIIT) begins at 11:00 a.m. Your appearance will last one hour, and the committee has asked supporting officials to stay behind for a second hour. In addition to questions on Main Estimates and ISDS, committee members typically ask questions on a broad range of topics related to the international trade portfolio.
The following officials are accompanying you virtually during the appearance and may be called upon to respond to questions:

Global Affairs Canada

John Hannaford, Deputy Minister of International Trade
Steve Verheul, Assistant Deputy Minister, Trade Policy and Negotiations
Anick Ouellette, Assistant Deputy Minister and Chief Financial Officer, Corporate Planning, Finance and Information Technology
Sara Wilshaw, Chief Trade Commissioner
Bruce Christie, Associate Assistant Deputy Minister, Trade Policy and Negotiations
Shendra Melia, Director General, Intellectual Property and Services Trade
Annie Boyer, Director General and DCFO, Financial Planning and Management
Eric Walsh, Director General, North America Strategy Bureau Invest in Canada
Katie Curran, Chief Administrative Officer and CFO
Nathalie Béchamp, Chief Investor Services

Committee context

After your opening remarks of 10 minutes, the committee will move to rounds of questions. Time may allow for two complete rounds as follows:

First Round

Conservative (6 minutes)
Liberal (6 minutes)
Bloc Québécois (6 minutes)
NDP (6 minutes)
Conservative (5 minutes)

Second Round

Liberal (5 minutes)
Bloc Québécois (two and a half (2.5) minutes)
NDP (two and a half (2.5) minutes)
Conservative (5 minutes)
Liberal (5 minutes)
Subsequent rounds of questioning follow the order and timing of the second round.
For further information on committee membership, please see Tab A2.

Motion inviting you to appear

The committee did not pass a motion to invite Minister Ng. Parliamentary Secretary Bendayan informed the committee that Minister Ng would appear on the estimates, as is custom.

Of note, the Estimates referred to the committee are on the Invest in Canada hub.

Committee membership & interests

Committee membership includes some members you will recognize from the Special Committee on the Economic Relationship between Canada and the United States (CAAM): MP Savard-Tremblay, MP Blaikie, MP Hoback, MP Sarai, and MP Bendayan.
During the 43-2 Parliament, the committee has studied Canada’s International Trade after COVID-19, the Main Estimates 2020-2021, Trade between Canada and the United Kingdom, the Good Friday Accord, the impact on Canada of the E.U.’s mechanism for exports of COVID-19 vaccines, Bill C-18, Reform of the World Trade Organization, and Investor-State Dispute Settlement Mechanisms.
The committee is scheduled to study Trade and Vaccines in Canada, followed by studies on Bill C-216 and Canadian exportation of green, clean and low-carbon technologies.
Committee members’ questions during committee meetings have focused on the following related issues:
- Conservative Members – Supply chain security, the Softwood Lumber Agreement, support to the forestry sector, non-tariff barriers, WTO reform, importance of ISDS provisions, durum wheat, support for small and medium-sized exporters, sourcing vaccines from the U.S
- Liberal Members – Investor State Dispute Settlement, the Softwood Lumber Agreement, investment protection, trade with Indonesia, trade with India, support for small and medium-sized busineses.
- Bloc Quebecois Member – Investor State Dispute Settlement, TRIPS waiver, WTO reform, support for softwood lumber, aerospace sector, and aluminum sector, protection of supply management, and support for small and medium-sized businesses.
- NDP Member – TRIPS waiver, removal of Investor State Dispute Settlement mechanisms, transparency in trade negotiations, WTO reform, North American climate change strategies, and non-tariff trade barriers.

Committee work

You have appeared before CIIT four times during the 43-2^ndParliament,
- February 22, 2021 on Bill C-18
- February 1, 2021 on EU Vaccines
- November 20, 2020 on the Canada-UK TTA
- November 3, 2020 on Main Estimates 2020-21

Recent meetings at CIIT

On March 8, 2021, the committee heard from the Grain Growers of Canada, Réseau québécois sur l'intégration continentale, Trade Justice Network, and BC Lumber Trade Council on Reform of the World Trade Organization.
On March 12, 2021, the committee heard from Steve Verheul and Kendal Hembroff from Global Affairs Canada, as well as the Centre for International Governance Innovation, the Business Council of Canada, and Canadian Manufacturers & Exporters on Reform of the World Trade Organization.
On March 22, 2021, the committee heard from the Trade Justice Network, Lawrence L. Herman from Herman and Associates, Professor Gus Ban Harten, and Mike Warner of MAAW Law on Investor-State Dispute Settlement Mechanisms.
On March 26, 2021, Hon. Yves Fortier, Cabinet Yves Fortier, Professor Barry Appleton, Professor Armand de Mestra, Professor Charles-Emmanuel Côté, Associate Professor Patrick Leblond, appeared on Investor-State Dispute Settlement Mechanisms.
On April 12, 2021, the committee met to consider draft reports on Canada’s International Trade after COVID-19: Changes, Federal Supports for Exporters and Trade Agreement Priorities and Trade Between Canada and the United Kingdom: A Potential Transitional Trade Agreement.
On April 16, 2021, Professor Simon Evenett, the Center for Global Development, Innovative Medicines Canada, and the Intellectual Property Institute of Canada, appeared on Canada’s International Trade and Investment Policy: Selected Considerations Concerning COVID-19 Vaccines.
On April 19, 2021, Brian Daley of Norton Rose Fulbright Canada, Associate Professor Marc-André Gagnon, the Canadian Chamber of Commerce, and Providence Therapeutics appeared on Canada’s International Trade and Investment Policy: Selected Considerations Concerning COVID-19 Vaccines.

Standing Committee on International Trade (CIIT)

43^rd Parliament – Second Session

September 23, 2020 to Present

Chair

Hon. Judy Sgro (Liberal – Ontario)

Vice-Chair

Tracy Gray (Conservative – British Columbia)

Vice-Chair

Simon-Pierre Savard-Tremblay (Bloc Québécois – Québec)

Members

Daniel Blaikie (NDP – Manitoba)

Randy Hoback (Conservative – Saskatchewan)

Ben Lobb (Conservative – Ontario)

Sukh Dhaliwal (Liberal – British Columbia)

Ziad Aboultaif (Conservative –Alberta)

Randeep Sarai (Liberal – British Columbia)

Rachel Bendayan (Liberal – Québec) Parliamentary Secretary to the Minister for Small Business, Export Promotion and International Trade

Chandra Arya (Liberal – Ontario)

Terry Sheehan (Liberal – Ontario) Parliamentary Secretary to the Minister of Economic Development and Official Languages (fednor)

Order for Questioning:

The time allotted for the questioning of witnesses in the first round be as follows: Conservative Party – six (6) minutes, Liberal Party – six (6) minutes, Bloc Quebecois – six (6) minutes, New Democratic Party – six (6) minutes; that the order and time allotted for the questioning of witnesses in the second round be as follows: Conservative Party – five (5) minutes, Liberal Party – five (5) minutes, Bloc Quebecois – two and a half (2.5) minutes, New Democratic Party – two and a half (2.5) minutes, Conservative Party five (5) minutes, Liberal Party five (5) minutes. If time permits, further rounds shall repeat the pattern of the first two at the discretion of the Chair.

Witnesses typically have 10 minutes each for their opening remarks, but the Chair will often request witnesses to keep opening remarks to 5 minutes if appearing alongside other witnesses providing opening remarks.

Mandate:

The House of Commons Standing Committee on International Trade studies and reports on matters referred to it by the House of Commons. The Committee can also initiate studies of subjects falling within its mandate. As a permanent committee established by the Standing Orders of the House of Commons, the Committee may be asked to comment on legislation, departmental activities and spending, and other matters under its jurisdiction. The Compendium of the House of Commons Procedure contains additional information on the mandate and powers of standing committees.

The general subject area of the Committee includes the following:

International trade policy, including trade and investment liberalization, as well as Canada’s economic relationship with other countries;
Canadian international competitiveness, as well as the effects of global competition on Canadian firms and the Canadian economy; and
The global trade and investment environment, including the World Trade Organization, international markets and regional trade blocs.

The federal departments and agencies under the Committee’s direct scrutiny are:

Global Affairs Canada (international trade component)
Export Development Canada
Canadian Commercial Corporation
Invest in Canada

Hon. Judy Sgro Chair (LPC — Humber River-Black Creek, ON)

Key interests

CUSMA (during 2019 – 2020 parliament)
Human rights

Parliamentary roles

Sgro has served as a Member of Parliament since 1999. She served as Parliamentary Secretary to the Minister of Public Works and Government Services in 2003, and as Minister of Citizenship and Immigration from 2003 to 2005. She has served as Critic of many portfolios, including Industry, Status of Women, Veterans Affairs and National Revenue. In the previous parliament, Sgro served as Chair of the Standing Committee on Transport, Infrastructure and Communities.

Notable committee memberships

Chair, Standing Committee on International Trade (CIIT), January 2020-present
Chair, Liaison Committee, February 3, 2016 - present
Former Chair, Standing Committee on Transport, Infrastructure and Communities (TRAN), February 2016 – September 2019
Former Vice-Chair, Standing Committee on Industry, Science and Technology (INDU), October 2013 – August 2015

Background

Prior to entering federal politics, Sgro served in municipal politics as part of the North York City Council and the Toronto City Council, starting in 1987. At the municipal level, Sgro focused on poverty and crime reduction.

Tracy Gray  Vice-Chair (CPC — Kelowna-Lake Country , BC) Critic for export promotion and international trade 

Key interests

Softwood lumber agreement
Non-tariff barriers
Sunset clause for Canada-UK TTA
Support for small businesses

Parliamentary Roles 

Gray was named the Conservative Critic for Export Promotion and International Trade by Leader Erin O’Toole on September 8,  2020. She had previously served as the Critic for Interprovincial Trade.  

Notable committee membership 

Vice-Chair,  Standing Committee on International Trade (CIIT), October 6, 2020 – present  
Former member, COVID-19 Pandemic Committee, April 2020 –June 18, 2020
Former Member, Standing Committee on Industry, Science and Technology (INDU), February 5, 2020 – August 18, 2020

Background

Gray defeated the Liberal incumbent in the 2019 General Election, where she had been a Kelowna city councillor 2014-2018. Prior to entering politics, Gray had extensive experience in the BC Liquor industry. In 2003 she introduced a chain VQA wine stores to the BC interior and she has experience managing several wineries and breweries in the Okanagan Valley. 

Questions ask at CIIT

March 8, 2021

How have your organization and those you represent been affected since we last had a softwood lumber agreement with the United States?
In regard to finding solutions relating to the WTO asked: Have you seen any noticeable changes or reforms that have benefited the forestry industry since this group has formed?
In regard to binding dispute resolution settlements and their lengthy process asked: How has the forestry sector been affected by this? Have you seen decisions yourself that you felt could have been easily rectified, but which were extended over a long period of time?
Have you seen non-tariff barriers affect your industry? How do you see the WTO modernizing in order to be able to positively address these issues?

March 12, 2021

In regard to a written submission from the Canadian Canola Growers Association about the need to improve quality of notifications, asked if that is something TFM was aware of.
Would changes discussed at the Ottawa Group meeting in November of 2020 on trade flows of essential medical supplies prevent the EU from using export controls to stop the flow of COVID-19 vaccines to Canada?
In regard to a statement written in a document by the Ottawa Group, stating “Members will…exercise restraint in the imposition of any new export restrictions, including export taxes, on essential medical goods and on any prospective vaccine or vaccine materials” asked if TFM was aware which Ottawa Group member proposed it. Has Canada put forth any proposals that might prevent this? Are there any proposals that we can make within that mechanism?
What's interesting is that Australia and the EU are both Ottawa Group members, yet recently we saw Italy, an EU member, through its export control measures, block astrazeneca vaccines from being shipped to Australia. Would changes discussed at the Ottawa Group have prevented this from happening?
In regard to the Ottawa Group, asked: Has China made proposals to the group? If so, what are they, and is it something that could be tabled to the committee?

March 22, 2021

Would you say that Canadian businesses would be less inclined to invest in countries if ISDS measures were removed or did not exist?
Some worry that ISDS provisions would prevent Canada from enacting legislation, such as on the environment or maybe other factors, without facing challenges from corporations. Would you say this concern is valid?
What risks do you foresee for Canadian businesses abroad if Canada were to remove foreign investment protection agreements it has signed with countries across the world?
Would you recommend that Canada seek to negotiate some form of ISDS provisions in a potential Canada-Indonesia free trade agreement?

March 26, 2021

We heard testimony on Monday that Canada wins ISDS cases by about a one-to-three margin and when we lose it usually related to fair and equitable treatment or because of processes when municipal or provincial governments have acted arbitrarily. What are your thoughts on that three-to-one margin?
We know that Canada has started consultations on a potential free trade agreement with Indonesia, which as a significantly lower score in the Rule of Law index from the World Justice Project comparted to Canada. Would you recommend that Canada seek to negotiate some form of ISDS provisions as they’re negotiating this agreement?

Simon-Pierre Savard-Tremblay Vice-Chair (BQ — Saint-Hyacinthe-Bagot, QC) Critic for international trade

Key interests

Investor State Dispute Settlement
TRIPS provision waiver
Softwood lumber
Aluminum sector
Protection of supply management
Aerospace strategy
Support for Small to medium-sized businesses

Parliamentary roles

Savard-Tremblay currently serves as the Bloc Quebecois critic for International Trade and Industry.

Notable committee membership

Vice-Chair, Special Committee on the Economic Relationship between Canada and the United States(CAAM) – February 2021 - present
Vice-Chair, Standing Committee on International Trade (CIIT), January 2020-present

Background

Prior to entering politics, Savard-Tremblay worked as an academic, author and columnist. He has a bachelors degree in political science from the University of Montreal, a Masters in Sociology from the University of Quebec at Montreal, and a doctorate in the social economy of development from the École des hautes études en sciences sociales in Paris. He was heavily involved in the youth forum of the BQ and has been a frequent commentator in Quebec on economic and sovereignty-related issues. In his academic work, he is critical of neoliberalism and globalization.

Questions ask at CIIT

March 8, 2021

On paper, the idea of a dispute settlement body does not seem bad, particularly to ensure a kind of legal equality among states to avoid the fact that, in the balance of power, it is always the richest and most powerful countries that win in trade and other disputes. The small ones must be given a chance. On paper, that sounds like a good idea. What is wrong with that?
What elements do you suggest should be reformed or eliminated? Would it be the most favoured nation principle? If you had to target two or three elements of the WTO agenda, what would they be?
Should the WTO be subject to international environmental agreements, for example?
Mr. Vaillancourt, you mentioned intellectual property. Could you expand on that idea further? In the pandemic context, it is not a good idea at all to provide extended brand-name drug protection?

March 12, 2021

In regard to Softwood lumber, asked what the impact was for the three witnesses.
Do you feel that we absolutely need a real and permanent agreement between the two countries to settle the matter?
In regard to dispute settlement, asked if there could still be a problem with the approach, and if it should be reviewed.
Has the Ottawa group on WTO reform had a meeting after November 23, 2020? According to the information we have, that is the date of the most recent meeting. Have there been other meetings since? Are there any more details on the matter? You have just confirmed that subsequent meetings have been held. Have those actions become more specific?
On the one hand, we have this desire for medicines and medical supplies to flow freely and for supply chains to be strengthened. On the other hand, we have a political desire to depend less on external markets for medical products. How can it all be brought together?
In regard to Softwood lumber and the dispute settlement, asked: what is the effect of this judgment and how will it determine Canada's strategy?

March 22, 2021

[Concerning ISDS mechanism] To your knowledge, have any studies in a Canadian context been carried out to determine whether states have indeed suffered setbacks or been subject to pressure?
The protection provided to foreign investors enables multinationals to sue states. In contrast, those agreements contain no measures to protect citizens from abuse by those same foreign investors. Would you say there is a flagrant imbalance in those agreements?
Since CUSMA came into force, eight months ago, has the fact that the [ISDS] mechanism was not being used had a significant impact?

March 26, 2021

You provided an overview of the political and legal factors that led to the creation of the investor-state dispute settlement mechanism. However, it seems to me the ideological circumstances in which that mechanism was created can't be overlooked. When the concept began to spread and the mechanism was introduced under NAFTA, it was a time of neoliberalism and globalization. People talked about the end of states and nations. The purpose of that mechanism was to protect investors and multinationals from certain political decisions. That seems to me a return to the old idea of the invisible hand, according to which the more private interests are freely pursued, the better off a community will be. You can't disregard that now and wonder whether the idea is still relevant. Earlier you talked about the depoliticization of certain economic decisions and ways of doing things. I think instead that we should go back to politicization. Before NAFTA, we had the Canada-United States Free Trade Agreement, the FTA, under which a business seeking to sue a state had to go through its home state. Some time ago, I heard you say in the media that the fact this mechanism is no longer included in the CUSMA was good for Canada. I'd like you to comment on that.
You said you were prepared to speak at greater length about the mechanism's flaws during the period of questions. Here's an opportunity for you to do that.

Daniel Blaikie (NDP — Elmwood-Transcona, MB) Critic for international trade

Key interests

Investor State Dispute Settlement
TRIPS provision waiver
Transparency in trade negotiations
WTO reform
Labour Protections

Parliamentary roles

Blaikie was first elected in 2015. Blaikie is currently the NDP Critic for Democratic Reform, Employment, Workforce Development and Disability Inclusion, Export Promotion and International Trade and Western Economic Diversification, as well as the deputy critic for Finance. He has previously served as the Critic for Public Services and Procurement, Deputy Critic for Ethics, and as NDP Caucus Chair.

Notable committee membership

Member, Standing Committee on International Trade (CIIT) – January 2020-present
Vice-Chair, Special Committee on the Economic Relationship between Canada and the United States(CAAM) – February 2021 - present
Vice-Chair, Standing Committee on Government Operations and Estimates (OGGO) – May 2018-Sept 2019
Vice-Chair, Standing Committee on Access to Information, Privacy and Ethics (ETHI) – February 2016 – May 2017

Background

Prior to entering politics, Blaikie worked as an electrician and acted as an advisor to the Minister of Health in the Government of Alberta. He has served on the Manitoba Apprenticeship and Certification Board and the Winnipeg Labour Council.

Questions ask at CIIT

March 8, 2021

Not present. Questions asked by MP macgregor.

Given that climate change is very much going to be the defining issue of the 21st century, and putting this in the context of WTO reform, can you give the committee a sense of what's really at stake?
Why is it so important for us to put that into the context of WTO reform?
… are there any lessons you would like to see us really firmly commit to when we are looking at WTO reform, based on the experiences of the last year but also the challenges we will face over the next decade?
You, along with other groups, have joined together to form the agriculture carbon alliance in Canada. In the context of WTO reform, what does your participation in an organization like that do for Canada's efforts in leading this conversation about WTO reform?

March 12, 2021

Not present for first half, questions asked by MP Lindsay Mathyssen:

I was wondering if you could expand on that in terms of IP rights around vaccinations—especially as, obviously, we're dealing with a great deal of vaccination talk now—and the temporary waiver that Canada hasn't signed on to. What is the impact of that?
In regard to the domestic side of problems in terms of growing export, and domestic bodies involved, asked for further explanation.

MP Blaikie was present for the second half:

In regard to the change in administration in the United States, asked: … if you want to provide some reflections about what you think that means for the WTO generally, and also what you think it means for the work of the Ottawa Group.
In regard to the TRIPS provisions and intellectual property rights, asked: I'm just wondering, what are some of the concerns that Global Affairs has about such a waiver?
Also in regard to the TRIPS waiver, asked if TFM was aware of the 30 csos in Canada that wrote to the PM in support of the waiver.

March 22, 2021

Not present. Questions asked by MP Johns.

Can you explain to the committee more fully what the TRIPS waiver is and how it demonstrates exactly how dangerous the ISDS provisions are?
How many countries have signed the waiver, how many groups have been pushing the Canadian government to sign onto the waiver. When is the next opportunity for the Canadian government to sign onto that waiver at the WTO? Has the Canadian government responded to any of [Trade Justice Networks] concerns around signing onto the waiver? Maybe you could also speak to how there's a lot of public money going in right now to the crisis and how responsible this is right now.
Given that the trade continuity agreement includes ISDS provisions as well, as is the case with CETA, can you clarify how the ISDS could impact the government's abilities to fulfill its obligations to Canada's indigenous peoples?
I'm wondering if you could explain how ISDS has negatively impacted...or cost Canadian taxpayers money when making changes to our regulatory framework.
Given that the trade continuity agreement includes ISDS provisions as well, as is the case with CETA, can you clarify how the ISDS could impact the government's abilities to fulfill its obligations to Canada's indigenous peoples? Also asked for examples.

March 26, 2021

How do you maintain the appropriate space and authority to make those kinds of decisions when you’re signing onto quasi-constitutional documents that are narrowing the scope to a very limited conversation about the rights of investors, when those decisions have very clear and far-reaching implications on other issues?

Randy Hoback (CPC — Prince Albert , SK) Critic for international trade

Key interests

Trade of agricultural products (focus on canola)
Durum wheat and a potential challenge at the WTO
Critical of progressive trade objectives
Impact of CUSMA on Canadian ability to negotiate trade deals with non-market economy

Parliamentary Roles

Hoback currently chairs the Conservative Saskatchewan Caucus. He has served previously as the critic for International Trade and the critic for Canada-US Relations. He also served as President of the Canadian Section of parlamericas starting in 2010, and as President of parlamericas at the hemispheric level from 2011 to 2014.

Notable committee membership

Member, Special Committee on the Economic Relationship between Canada and the United States(CAAM) – February 2021 - present
Member, Standing Committee on International Trade (CIIT), January 2018 – present
Vice Chair, Standing Committee on International Trade (CIIT), February 2016 - September 2017
Chair, Standing Committee on International Trade (CIIT), September 2014 - August 2015
Member, Standing Committee on Agriculture and Agri-Food (AGRI), October 2013 - January 2015

Background

Hoback was first elected in 2008, and has been re-elected in his Prince Albert riding in each of the 2011, 2015 and 2019 elections. Prior to entering politics, Hoback worked in the farm equipment manufacturing industry before taking over his family farm. He has a business administration certificate from the University of Saskatchewan and a Chartered Director’s designation from mcmaster University.

Questions ask at CIIT

March 8, 2021

In regard to the forestry industry, asked: Is there any advice that you'd give the Canadian government as they go through the modifications in the appellate body that we should be looking at?
Can you explain to me why, in the Italian durum case, there hasn't been a challenge? Why haven't we taken this to the WTO? Also, do you think that this has brought on other tariff actions in other countries, because we haven't stood up in the Italian case?

March 12, 2021

In regard to the Appellate Body, asked what will happen if they rule in Canada’s favour. Do you see anything that should be done or should be part of Canada's stance in the redoing of the Appellate Body to address that?
In regard to other countries being vaccinated before Canada, asked how big of a threat this is to Canada’s economy and small businesses. How concerned should we be with regard to that? What signal does that send to our economy?

March 22, 2021

When you go to countries where you feel you really do need appropriate ISDS protections because of their court systems or because of their political systems, how do you negotiate that in that scenario?
Is it now more the concern that we protect Canadians who invest outside of Canada? How do we take that small company…[and] make sure that it has protection? … What other than ISDS do we put in place to protect those small businesses?
Who ends up paying the bill if it's EDC paying out that insurance premium or that policy? Is it actually not the Canadian taxpayer? Are there other companies that are buying risk insurance from EDC? If we were to see a massive payout, who, in the end, is on the hook? Is it the Canadian government, or is it the foreign government that actually went and nationalized the Canadian company or made decisions arbitrarily against the Canadian company?
[Concerning smes] Let's say that they do invest in, say, a warehouse distribution or something in another country. How do we protect their investments? What do we do for them?
In other words, then, in our trade agreements for these small and medium-sized enterprises, we actually have to look for a different mechanism to protect them. Is that fair to say?

March 26, 2021

Ben Lobb (CPC — Huron-Bruce, Ontario)

Key Interests

Agriculture exports (focus on grains and beef)
Durum wheat
Manufacturing

Parliamentary roles

Lobb was a member of multiple Parliamentary Associations and Interparliamentary Groups between 2009 and 2016. Some of these groups included the Canada-China Legislative Association (CACN), the Canadian NATO Parliamentary Association (CANA), the Canada-United States Interparliamentary Group (CEUS), and the Canadian Branch of the Commonwealth Parliamentary Association (CCOM).

Notable committee memberships

Former Member, Scrutiny of Regulations (REGS), February 2020-August 2020
Former Member, Health (HESA), January 2018-September 2019; Chair 2014-15
Former Member, Transport, Infrastructure and Communities (TRAN), September 2017-January 2018
Former Member, Industry, Science and Technology (INDU),
Former Member, Public Safety and National Security (SECU), 2010-2011
Former Member, Veterans Affairs (ACVA), 2013-2014; 2012-2013; 2011-2012; 2010-2011; 2009

Background

Lobb was first elected to the House of Commons in 2008. He was re-elected in 2011, 2015, and 2019. Lobb attended Lee University in Cleveland, Tennessee where he earned a bsc in Business Administration.

Ziad Aboultaif (CPC — Edmonton Manning, Alberta)

Key Interests

Trade in Agricultural Products
Western Alienation
Investor State Dispute Settlement

Parliamentary Roles

MP Aboultaif was the Conservative Critic for digital government from November 2019 to September 2020. He had previously served as the Critic for International Development and the Critic for National Revenue.

Notable committee membership

Member, Standing Committee on International Trade, October 2020-present
Former Member, Standing Committee on Foreign Affairs and International Development (FAAE) September 2017 – September 2019

Background

Aboultaif was first elected in 2015 and campaigned on a pledge to support small businesses and to support pipeline development. Prior to entering politics, Ziad was a self-employed business owner working in logistics and distribution.

Rachel Bendayan (LPC — Outremont, QC) Parliamentary secretary to the minister of small business, export promotion and international trade

Key interests

Investor State Dispute Settlement
Support for women entrepreneurs
Support for small and medium-sized businesses

Parliamentary roles

Bendayan was first elected in a by-election in February 2019. She is currently the Parliamentary Secretary to the Minister of Small Business, Export Promotion and International Trade.

Notable committee membership

Member, Special Committee on the Economic Relationship between Canada and the United States(CAAM) – February 2021 - present

Member, Standing Committee on International Trade (CIIT), January 2020-present
Former Member, Standing Committee on Finance (FINA), May 2019 - September 2019
Former Member, Standing Committee on Status of Women (FEWO), April 2019 - September 2019

Background

Before entering politics, Bendayan was a lawyer with Norton Rose Canada in Montreal. She ran for the Liberal Party in Montreal in 2015, losing to Thomas Mulcair. After the election, she was hired as the chief of staff to the former Minister of Small Business and Tourism Bardish Chagger.

Recent Questions asked at CIIT

March 12, 2021

To go back to the quick resolution of disputes just for a moment, can you help enlighten the committee on what you're hearing on the ground from your manufacturers and exporters? Is this something that you hear as a concern from them before disputes even arise? Is it something you hear more after disputes have commenced? How does it impact Canadian businesses?
In regard to WTO changes, asked witnesses how the business community was feeling.

March 22, 2021

If you could comment generally on your feeling about taking a case-by-case approach. Perhaps in some situations dealing with certain trading partners, ISDS could be used, whereas in other circumstances, for example, when dealing with partners whose judicial system we have great confidence in, it could be unnecessary in those cases.

March 26, 2021

I was wondering if we could get your comments on…what you think the government’s role should be, particularly as we are dealing with…it is an alternative dispute mechanism process, but it is a dispute resolution process nonetheless, and we need to respect that.
Could you comment on the idea that ISDS is in fact being used by developing countries, is in fact a tool that we should be looking at in order to level the playing field, and also of course, I’m interested in any other comments you may have with respect to the importance of ISDS internationally.
Do you have any statistics on small and medium Canadian enterprises that use our ISDS system? We often sense that multinationals use the system, but it would be interesting for the committee to see your research on the subject.
We've discussed the fact that these disputes often concern highly specialized matters, a fact that requires the parties to ask experts to act as judges or arbitrators. In many cases, the parties may appoint their own arbitrator. Do you think that's an important element of the system? Could we lose it without ISDS?

Sukh Dhaliwal (LPC — Surrey – Newton, BC)

Key interests

Canada-India Trade Agreement
Support for Small to medium-sized businesses
Benefits of trade deal for British Columbia
Forestry sector

Parliamentary roles

Dhaliwal has served in Parliament twice, first representing the riding of Newton-North Delta from 2006-2011, then for the riding of Surrey-Newton from 2015 to present. During his previous tenure as a Member of Parliament, he served as critic for the Asia Pacific Gateway, Sport and Western Economic Diversification Canada.

Notable committee membership

Member, Standing Committee on International Trade (CIIT), January 2016 - present
Member, Standing Committee on Transport, Infrastructure and Communities (TRAN), January 2009-March 2011

Background

Dhaliwal was born in India, coming to Canada in 1984. Prior to entering politics, Dhaliwal founded a successful land-survey company in Surrey. He has been very involved in the business community and in municipal affairs in Surrey, serving on many local boards and fundraising campaigns.

Chandra Arya(LPC — Nepean, ON)

Key interests

Knowledge-based economy
Trade with India
Foreign direct investment
Investment protection

Parliamentary roles

Arya was first elected in 2015. He is a member of virtually all of the interparliamentary associations.

Notable committee membership

Member, Standing Committee on International Trade (CIIT), January 2020 - present
Member, Standing Committee on Public Accounts (PACP), January 2016 – September 2019
Member, Standing Committee on Industry, Science and Technology (INDU), January 2016 – September 2019

Background

Arya spent his career prior to entering politics as an executive in the high-technology sector. He has a Bachelor degree in Engineering and a Masters in Business Administration. Arya was active in the Ottawa business community, serving on the board of Invest Ottawa and as Chair of the Indo-Canada Ottawa Business Chamber. He was also active in social causes, serving on the board of the Unity Non-Profit Housing Corporation Ottawa and as Vice President of the Ottawa Community Immigrants Services Organization.

Recent Questions asked at CIIT

March 12, 2021

In regard to CAFTA, asked: doesn't it look good to have region-based, multilateral agreements rather than unilateral free trade agreements?

March 22, 2021

We don't have any foreign investment protection agreements with India. What is the mechanism available for Canadian capital exporters to protect our investments? What is the mechanism available when they invest in Asia and South America, or for example, in India, where we don't have any protection agreements?
When we [Canadians] make investments in countries in South America or Asia, does that emphasize the need for having these investment protection agreements?

March 26, 2021

Randeep Sarai (LPC — Surrey Centre, BC)

Key interests

·Labour mobility

Parliamentary roles

Sarai was first elected in 2015. In the previous parliament, he served as the chair of the Liberal Pacific and Northern Caucus. He has also been a member of many interparliamentary associations.

Notable committee membership

Member, Special Committee on the Economic Relationship between Canada and the United States(CAAM) – February 2021 - present

Member, Standing Committee on International Trade (CIIT) – January 2020 – present
Member, Standing Committee on Public Accounts (PACP) – September 2018-September 2019
Member, Standing Committee on Citizenship and Immigration (CIMM) – January 2016-September 2019

Background

Sarai is a lawyer by training, with experience in real estate development and urban planning. He has a Bachelors degree from the University of British Columbia, majoring in political science, and a Bachelor of Laws degree from Queen’s University. He has served on the boards of a number of community organizations dedicated to combatting youth violence in Surrey.

Terry Sheehan (LPC — Sault Ste. Marie, ON) Parliamentary secretary to the minister of economic development

Key interests

Employment and economic growth
Steel (particularly focused on Southern Ontario)

Parliamentary roles

Sheehan was first elected in 2015. He was elected co-chair of the All Party Steel Caucus in the previous Parliament. He has been the Parliamentary Secretary to the Minister of Economic Development since November 2019.

Notable committee membership

Member, Standing Committee on International Trade (CIIT), January 2020-present
Member, Standing Committee on International Trade (CIIT), September 2018-September 2019
Member, Standing Committee on Industry, Science and Technology (INDU), September 2016 – September 2019
Member, Special Committee on Pay Equity (ESPE), February 2016 – June 2016

Background

Prior to entering politics, Sheehan had a career in the private and public sectors in business, community and economic development. His last position prior to being elected as a Member of Parliament was as an employment and training consultant for the Ontario Minister of Training, Colleges and Universities. His riding is home to Algoma Steel and Tenaris

Private Members’ Motion

In the 42^nd Parliament Sheehan submitted a Private Members Motion concerning the importance of the Canadian steel industry and the creation of a National Steel Procurement Strategy.

Investor-state dispute settlement (ISDS)

Clear and balanced investment rules backed by an effective dispute settlement mechanism are key to a stable investment environment.
Investor State Dispute Settlement (ISDS) provides an impartial and timely mechanism to manage investment disputes between foreign investors and a host State.
Canada’s inclusion of ISDS in treaties carefully balances foreign investor protections with a country’s right to regulate in the public interest.
Building on the modern and inclusive outcomes achieved in recent FTA negotiations, such as CETA and CPTPP, Canada will maintain a flexible approach with respect to the inclusion of ISDS in new treaties.

Supplementary messages

Right to Regulate/Regulatory chill

Canada’s treaties protect the Government of Canada’s right to regulate in the pursuit of legitimate policy objectives, such as health, safety, the environment, labour and cultural diversity.
Nothing in Canada’s treaties exempt foreign investors from having to comply with Canadian laws or regulations.
ISDS tribunals can only award monetary damages; they cannot impose the repeal of regulations.

FIPA Model Review

A new modernized and inclusive FIPA model has been developed that includes updated core investment protections that are reinforced by innovations to the ISDS system (e.g. A consent-based expedited arbitration mechanism that significantly reduces the cost of dispute resolution).

CUSMA

The non-applicability of ISDS to Canada under CUSMA, following a three-year phase-out period, is an outcome that reflects the unique North American context.

Keystone XL/Enbridge Line 5; other potential claims by CAD investors

If a Canadian investor believes that a foreign government is in breach of its investment obligations and that it has incurred loss or damage as a result of that breach, it may decide to initiate ISDS procedures.
The Government of Canada is not involved in an investor’s decision to launch an ISDS case and would not be a party to the dispute.

CETA

CETA’s permanent investment Tribunal system demonstrates that Canada is a leader in exploring improvements to the ISDS process.
While it is not yet in force, CETA’s innovative ISDS system replaces traditional ad hoc arbitration by a permanent investment Tribunal and an Appellate Tribunal.
The tribunal Members will be appointed by Canada and the EU for a fixed term, and will have to abide by rigorous ethical standards.
CETA includes other improvements, such as a mandatory consultation step, and more time for investors to pursue domestic remedies.
The CETA approach may not be well suited to all agreements, especially with smaller partners.
However, Canada is actively participating in discussions at UNCITRAL, where member states are considering the possible creation of a permanent multilateral investment tribunal and appellate tribunal.

COVID-19

Existing treaties have reservations and exceptions in place that would provide safeguards in the event of a dispute. To date, no such dispute has been filed.
In relation to vaccines, Canada’s treaties contain exceptions from investment obligations for the issuance of compulsory licenses.

Supporting facts and figures

In 2019, Canadian Direct Investment Abroad (CDIA) was approximately $1.4 trillion, and assets of Canadian foreign affiliates abroad in 2018 totaled over $4.2 trillion. In 2019, Foreign Direct Investment in Canada (FDIC) was just under $1 trillion.
Canada ranks 7th in the list of states having ISDS cases brought against them after Argentina, Venezuela, Spain, Czech Republic, Egypt and Mexico.
31 ISDS cases have been brought against Canada (30 under NAFTA, 1 under Egypt FIPA).
9 cases were won by Canada, 5* cases lost, 4 cases settled, 8* cases ongoing, 6 inactive, terminated or withdrawn. (*one case was lost but is still ongoing so counted twice, the investor is seeking a set aside of the damages decision. A first that a winning party seeks to do so.)
Canada has paid approximately $215 million in settlements and awards, which is around 8% of total damages originally claimed by these investors in the 5 cases lost and 2% of damages originally claimed in all cases against Canada.
Defending against ISDS has cost Canadians approximately $65 million, but this is an estimate, as in-house lawyers represent Canada.
Canadian investors are the 6th most frequent users of ISDS, after investors from the United States, Netherlands, United Kingdom, Germany and Spain.
According to publically available information, Canadian investors have initiated 55 cases (25 under fipas, 26 under ftas and 4 under other agreements).
Of these 55 cases, Canadian investors won in at least 8 cases, and were awarded approximately $4 billion (20% of amounts originally claimed in these cases).

Background

Investment agreements ensure fair treatment for foreign investors and equal chance for them to compete for business. The investor-state dispute settlement (ISDS) mechanism provides foreign investors an impartial and timely process for the resolution of private disputes.

Canada includes an ISDS mechanism in Foreign Investment Promotion and Protection Agreements (fipas) and in investment chapters of Free Trade Agreements (ftas). CUSMA is the first such treaty in which Canada has not included an ISDS mechanism. Under CUSMA, apart from the three-year transition period (i.e., until June 30, 2023), investment disputes can only be brought under the State-to-State dispute settlement mechanism.

Canada’s model FIPA review is nearly complete and a public announcement is expected to be made soon. The model FIPA includes an ISDS mechanism, reproduces innovations from CETA and CPTPP, and is in line with the Government’s inclusive trade agenda. It also addresses criticisms of the ISDS mechanism and will be more accessible to smes.

Canada’s International Investment Agreements

Canada’s investment agreements create a transparent, rules-based investment environment that ensures certainty and predictability for Canadian investors abroad.
Canada’s investment agreements protect our ability to regulate in the public interest through carefully drafted obligations and exceptions.
The Government is ensuring that investment by foreign State-Owned Enterprises (soes) does not introduce new risks to Canada's economy or national security.

Background

Rules-based Investment Environment

Canada’s international investment agreements create certainty and predictability for Canadian investors abroad by depoliticizing investment disputes and establishing transparent and enforceable rules surrounding foreign investment. The rules governing the administration of Investor-State dispute settlement were established through transparent, multilateral processes, including at the United Nations Commission on International Trade Law (UNCITRAL), and the International Centre for the Settlement of Investment Disputes (ICSID), part of the World Bank.

Right to Regulate

Canada’s international investment agreements are carefully drafted to protect governments’ rights to regulate in the public interest, including with respect to health and the environment. Canada’s agreements include provisions, which ensure that governments do not relax or fail to enforce such measures as an incentive for investment. Canada’s agreements also include many important exceptions, such as for measures in the cultural industries or for the Investment Canada Act. Canada’s investment agreements always include reservations, exempting sensitive areas from certain obligations, including social services as well as rights and preferences provided to Indigenous peoples and disadvantaged minorities.

Treatment of State-Owned-Enterprises in Canada’s International Investment Agreements

Canada’s international investment agreements treat state-owned enterprises and private investors equally. Nonetheless, Canada is mindful that the presence of foreign state-owned enterprises in Canada may have adverse effects on the competitiveness of Canadian companies. The Investment Canada Act (the Act) provides for the assessment of whether significant foreign investments above a certain threshold are of economic benefit to Canada. The Act specifies a lower threshold for state-owned enterprises than for other investors. Separately, the Act also provides that any foreign investment can be subject to a national security review. All of Canada’s international investment agreements guarantee Canada’s discretion to screen foreign investment, and decisions following such a review are not subject to challenge under the agreements. Finally, there is no known case of a state-owned enterprise using a Canadian treaty to launch an Investor-State claim.

Canada’s Mining Sector and ISDS

Canada is home to half of the world’s publicly listed mining and mineral exploration companies.
These companies have major investments abroad, which benefit from the protections of Canada’s investment agreements, where they are in place.
The investor-State dispute settlement mechanism allows Canadian companies to resolve investment disputes in an impartial and timely manner.

Supplementary messages

Responsible Business Conduct

The Government of Canada expects Canadian companies active abroad to respect human rights, to operate transparently and in consultation with host governments, Indigenous peoples and local communities, and to work in a socially and environmentally responsible manner, while respecting applicable laws.
Companies are also expected to adopt best practices and internationally respected guidelines on responsible business conduct such as the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises and take measures to meet anti-corruption objectives.

Supporting facts and figures

In 2019, Canadian mining assets located abroad totaled $177.8 billion.
According to UNCTAD Investment Policy Hub, Canadian investors have brought 55 ISDS cases.
Of those 55 cases, 23 cases involve the mining sector.^{Footnote 1}
Of those 23 mining-related disputes, 9 are pending, 7 have been won by the Canadian company, 6 have been lost by the Canadian company and 1 has an unknown status.
There has been 1 case brought against Canada related to mining^{Footnote 2} and 2 cases related to quarries.^{Footnote 3}

Background

Mining companies often operate in a complex and risky environments and their investments require significant capital outlay. Canada’s investment agreements help mitigate the risk for these companies by establishing standards of protection for their investments (e.g. Non-discrimination, expropriation, etc.). When a dispute arises with the host state, investor-State dispute settlement is a helpful avenue for these companies, particularly where the independence of the domestic courts is not guaranteed. Moreover, obligations found in investment agreements may not always have equivalents in the host state domestic law. Therefore, breaches of the treaty protections cannot always be addressed in domestic courts.

There are important limitations to the issues that companies can resolve through investor-State dispute settlement under Canada’s investment agreements. The mechanism can only be used to challenge an alleged breach of obligations found in an investment agreement. Absent such a breach, the mechanism cannot be used to resolve a private commercial dispute or other challenges, such as labour and community-relations issues.

Key innovations in Canada’s approach to investor-State dispute settlement

Supplementary messages

Canada’s Approach:

Canada’s approach has been to ensure that any negotiated substantive provisions and investor-state dispute settlement (ISDS) mechanism establish high-standard protection for investors while upholding a government’s right to regulate to achieve legitimate public policy objectives.
Canada is a leader in exploring improvements to the ISDS mechanism.

Comprehensive Economic and Trade Agreement (CETA):

CETA replaces the traditional system of ad hocarbitration by a permanent investment Tribunal with members appointed by Canada and the EU for a fixed term and on the basis of strict ethical requirements.
CETA also establishes an Appellate Tribunal, which will promote coherence in the interpretation of the agreement and consistency of outcomes in investment disputes.

Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP):

CPTPP Parties have adopted a code of conduct for arbitrators to prevent conflict of interest and ensure that they have appropriate qualifications.
Should any multilateral appellate mechanism be developed in the future, CPTPP also provides a path for Parties to consider whether ISDS awards rendered under the Agreement should be subject to that mechanism.

Canada–United States–Mexico Agreement (CUSMA):

The non-applicability of ISDS to Canada under CUSMA, following a three-year phase-out period, is an outcome that reflects the unique North American context.
For investment disputes under CUSMA, Canada will have recourse to the state-to-state dispute settlement mechanism.
Canada will also continue to have access to ISDS with Mexico via the CPTPP.

Background

**Comparison Table: ISDS in Canadian ftas**
	CETA	CPTPP	NAFTA	CUSMA
Traditional ISDS mechanism		🗸	🗸	ISDS is not applicable to Canada in CUSMA. (Potential disputes concerning Mexico measures or by Mexican investors would be addressed by CPTPP.)
Permanent Investment Tribunal	🗸
Appellate Tribunal	🗸
Binding Code of Conduct for Arbitrators/Members of Tribunal	🗸	🗸
Flexibilities for smes to reduce cost of proceedings	🗸
Public Access to Hearings and Documents	🗸	🗸	🗸
Third Party Submissions	🗸	🗸	🗸
Mandatory Consultations	🗸	🗸
Specialised Mediation Rules	🗸
Suspension of Timelines for Mediation	🗸
Express provision on early dismissal of frivolous claims	🗸	🗸
Disclosure of Third Party Funding	🗸
Stay of proceedings for overlapping claims	🗸
Exclusion from ISDS for decisions under Investment Canada Act	🗸	🗸	🗸

Stakeholder Interactions on ISDS

In the summer of 2018, the Department launched a review of Canada’s model Foreign Investment Promotion and Protection Agreement (FIPA). A variety of approaches were used to consult stakeholders over the course of the FIPA review process. This included:

A public consultation process (from August 14, 2018 to October 28, 2018) using an online tool (“placespeak”) which gathered views from over 255 individuals from across Canada. These public consultations focused on six themes, including Investor-State Dispute Settlement (ISDS). As a result of this process the Department received 80 comments specific to ISDS from a wide range of stakeholders (e.g., scholars, civil society and labour organizations, business associations, pension funds and legal practitioners), Provinces and Territories and Indigenous partners.
In October 2018, a FIPA roundtable discussion co-chaired by the Honorable Jim Carr, Minister of International Trade Diversification, and Sean Fraser, MP Central Nova. The event provided an opportunity for a diverse range of stakeholders to express their views on the modernization of Canada’s FIPA program.
Officials also met with a diverse range of stakeholders including, Canadian businesses and associations, investor groups (e.g., pension funds), ngos and legal practitioners and academics, as well as with Canadian smes and Indigenous partners.

This consultations process was governed by the Department’s privacy policy and the Privacy Act. As such, any personal identifying information cannot be disclosed for individuals and/or groups that provided a submission or participated in this process.

WTO reform

Our people, businesses and the economy benefit from the stability, predictability, and access to international markets provided by Canada’s membership in the World Trade Organization (WTO).
Canada is committed to safeguarding the rules-based multilateral trading system – with the WTO at its core – and is at the forefront in providing global leadership on the urgent need to reform the WTO, including through the Ottawa Group.
Canada’s priorities include maintaining a binding and enforceable two-tier dispute settlement system, and achieving progress in ongoing negotiations to ensure that WTO rules address 21^st century realities.

Supporting facts and figures

Current Ottawa Group members (14) are Australia, Brazil, Canada, Chile, the EU, Japan, Kenya, Korea, Mexico, New Zealand, Norway, Switzerland, Singapore and United Kingdom.
Current MPIA participants (25) are Australia; Benin; Brazil; Canada; China; Chile; Colombia; Costa Rica; Ecuador; the EU; Guatemala; Hong Kong, China; Iceland; Macau, China; Mexico; Montenegro; New Zealand; Nicaragua; Norway; Pakistan; Peru; Singapore; Switzerland; Ukraine and Uruguay. (Ottawa Group members in bold).

Background

As a strong proponent of the multilateral trading system, Canada is exercising global leadership on WTO reform. This includes ongoing leadership of the Ottawa Group – a group of 14 likeminded WTO members created in 2018 with the objective of supporting WTO reform efforts, such as to improve the efficiency and effectiveness of the WTO; safeguarding and strengthening the dispute settlement system; and reinvigorating the WTO’s negotiating function.

Canada is actively engaged in work to preserve the WTO dispute settlement system – which is key to Canadian interests – in the face of the United States blocking appointments to the Appellate Body, which has rendered the appeal mechanism for WTO dispute resolution inoperable since December 2019. On July 31, 2020, Canada and a group of WTO Members established a Multi-Party Interim Appeal-Arbitration Arrangement (MPIA) to hear disputes between its 25 participants.

Canada is also committed to concluding fisheries subsidies negotiations by December 2020 and progressing work in other areas in the lead up to the 12^th WTO Ministerial Conference in late 2021, including on services domestic regulation; e-commerce; Micro, Small and Medium-sized enterprises; investment facilitation; and agriculture.

On November 23, 2020, Ottawa Group Ministers endorsed a Communication calling on WTO Members to avoid further disruptions in the supply chains of essential goods and proposing a WTO Trade and Health Initiative. This stems from the June 15 Ottawa Group Joint Statement Focussing Action on COVID-19, where members committed to a work plan to address the trade-related impacts of COVID-19, foster global economic recovery, and be prepared to respond to similar crises in the future.

WTO trips Agreement Waiver Proposal

Canada is committed to a comprehensive, global response to COVID-19 that leverages the entire multilateral system.
Canada has not rejected the proposal for a COVID-19-related waiver from the WTO TRIPS Agreement, but is seeking consensus-based solutions and continues to work closely with all WTO Members on this matter.
Canada is also working with many international partners, including the ACT-Accelerator, the COVAX Facility, and vaccine producers, to ensure timely and equitable distribution of vaccines.

Supplementary messages

Canada supports the ability of WTO Members to make use of the public health flexibilities already available under TRIPS and as affirmed by the Doha Declaration on the TRIPS Agreement and Public Health.
Canada and other members are seeking clarification from TRIPS waiver proponents about specific problems the proposal would seek to address that cannot already be addressed through existing TRIPS flexibilities.
Canada also supports the WTO Director General’s “third way” proposal to engage with vaccine developers and manufacturers to accelerate production and distribution of COVID-19 vaccines, as well as other medical products.
In March Canada submitted a WTO communication with Australia, Chile, Colombia, Ecuador, New Zealand, Norway, and Turkey encouraging WTO engagement in this area.

Supporting facts and figures / background

The India/South Africa proposal for a COVID-19-related TRIPS waiver was tabled in October 2020 under document IP/C/W/669, and has since been co-sponsored by Bolivia, Egypt, Eswatini, Kenya, Mozambique, Mongolia, Pakistan, Venezuela, and Zimbabwe, as well as other members of the LDC Group and African Group.
Discussions on the proposal at the TRIPS Council have continued with meetings on November 20, December 3, January 19, February 4, February 23, and March 10-11.
Canada’s recent TRIPS Council interventions on the waiver can be found online, including a communication along with Australia, Chile, and Mexico, inviting concrete examples of IP related barriers, as well as taking note of recent indications by waiver proponents of unused or under-utilized vaccine production capacity.
Separately from the TRIPS waiver proposal, in March, 2021, further to the WTO Director General’s (DG’s) proposal for a “third way” approach on COVID-19 vaccines and other medical products, Canada, with Australia, Chile, Colombia, Ecuador, New Zealand, Norway, and Turkey submitted a general WTO communication encouraging the WTO DG to engage vaccine developers and manufacturers to facilitate the licensing, production, and distribution of COVID-19 vaccines and other medical products (GC/WT/230). Minister Ng reiterated Canada’s support for the “third way” approach in a bilateral meeting with the WTO DG on March 19, 2021.
Canada also notes that, as the Doha Declaration emphasizes, IP rights are one part of a broad discussion informing the availability and accessibility of medicines. Canada is actively engaged in the work of the WTO Ottawa Group on the Trade and Health Initiative, which aims to strengthen global supply chains and support the delivery of essential medicines and medical supplies, including vaccines, around the world. Canada is also a leading donor to the Access to COVID-19 Tools (ACT) Accelerator, and the COVAX Facility, the ACT Accelerator’s vaccines pillar. To date, Canada has announced a total of $940 million to support low- and middle-income countries to access COVID-19 vaccines, tests, and treatments through the ACT-Accelerator, which includes $325 million to the COVAX Advance Market Commitment to purchase vaccine doses for low- and middle-income countries.

Canada commercial consular service

The Canada Commercial Consular Service is a Mandate letter commitment that aims “to better support small- and medium-sized Canadian companies facing commercial or trade disputes”.
By launching this enhanced problem-solving service through the Trade Commissioner Service, Canada will provide enhanced support to new and existing SME exporters in an increasingly unpredictable international trading environment.

Supplementary messages

To re-establish trade patterns disrupted by the pandemic, and find new ones, companies of all sizes, especially smes, must be confident that potential commercial problems can be identified and resolved.
By showing how problems can be avoided, and helping to resolve those that emerge, this enhanced TCS service will help firms to manage risk, save time and reduce costs, maintain relationships with clients, and continue to export.
The TCS will also ensure businesses find “no wrong door” to the federal and provincial services that they may require. We will continue to provide seamless referrals to help exporters get the right help.

Update

TCS has informed O/MINT that the website can be live after mid-April and is awaiting feedback.

Background

Through its approximately 1,500 employees worldwide, the TCS provides a range of services to support the international business activities of its clients:

We provide key market insights and practical business advice.
We identify qualified business contacts.
We open the door to new business opportunities with referrals to our clients.
We resolve complex business problems in foreign markets.

As a consequence of the COVID-19 pandemic, demand from clients for problem-solving support services by the TCS increased by 40% between April 2020 and February 2021 compared with the same period in 2019-20. During that period, support provided by the TCS centered around business travel restrictions, shipping delays, and inspection assistance.

While the TCS is actively helping Canadian businesses faced with export challenges, the CCCS mandate letter commitment will provide a new tool to ensure exporters are aware of and have quick and easy access to an array of resources.

A dedicated website operated by the TCS will provide Canadian companies – both existing clients of the TCS and other Canadian companies – with information to avoid problems, and access to personalized support within one business day to help resolve those that emerge.

It will also maintain a "no wrong door" approach to the federal and provincial services Canadian businesses may require, referring them quickly to the right place to get the right help.

This enhanced TCS service will help firms to manage risk, save time and reduce costs, maintain relationships with clients, and continue to export.

Export diversification strategy

Diversified export growth will play key role in Canada’s economic recovery and long-term prosperity.
The Export Diversification Strategy has enhanced the tools and opportunities available to help businesses renew and expand their international sales.
Continuing to diversify where and what we export, as well as who exports, will remain critical as we work to build a more resilient and inclusive economy.

Supplementary messages

We are mobilizing the entire trade portfolio – Trade Commissioner Service, Export Development Canada, and Canadian Commercial Corporation – to deliver innovative and well-coordinated solutions businesses need to thrive on the global stage.

Update

Canadian businesses are likely to experience continued uncertainty and disruption in international markets in coming months. At the same time, exporters will face renewed opportunity as foreign economies reopen and global demand rebounds. Investments made under the Export Diversification Strategy mean that exporters will be able to draw on enhanced trade development services and resources to help them re-engage with global markets.

Supporting facts and figures

Trade represents nearly two thirds of Canadian GDP.
More than one-in-six jobs in Canada, or nearly 3.3 million jobs, are related to international trade.
In total, Global Affairs Canada has been allocated $340.3 million (excluding PWGSC Accommodations and SSC Information Technology costs) over six years (from 2019-20 to 2024-25) and $68.3 million ongoing for the Export Diversification Strategy.

Background

The 2018 Fall Economic Statement established the target of increasing by 50% Canada’s overseas exports by 2025 and announced Canada’s Export Diversification Strategy, which included transformative investments to enhance services and programs available to Canadian businesses from the Trade Commissioner Service. Enhancements have included:

An expanded CanExport program
More Trade Commissioners to serve businesses both in foreign markets and at home
Innovative programing to support the international growth of Canadian tech firms (expansion of Canadian Technology Accelerators)
Initiatives to help a broader and more inclusive range of Canadian entrepreneurs share in the benefits of trade.

The Trade Commissioner Service has leveraged these resources to adapt and maintain robust services for Canadian businesses throughout the pandemic. They will remain a source of support for exporters as Canadians look to return to growth through trade.

The Office of the Chief Economist at GAC regularly produces a report, “Growing Canada’s exports to overseas markets by 50 percent” which is publically available on the Department’s website, that tracks progress towards achieving that goal.

The next update of that report will be released in coming weeks.
That report will indicate that the global pandemic significantly curtailed progress towards achieving the trade diversification target.

By the end of the 2020, goods exports had roughly returned to the level at which they started the year (on a monthly basis). While this can be seen as a strong rebound considering the severity of the economic shock to the global economy over the past year, it still leaves export growth for the year in negative territory and well below the growth that would be required to achieve the trade diversification target.
From 2019 to 2020, Canadian exports of goods and services to overseas markets decreased 9.2% compared to an average annual growth rate of 5.2% for the previous five years.

Goods exports were down only 2.6% in 2020 compared to annual growth of 4.4% in the five years prior. Services were down 24.5% in 2020, but had grown at an annual rate of 7.2% in the five years prior (i.e. Services growth to overseas markets had been exceeding goods priori to the pandemic).

Even more notable, services exports are still well below pre-pandemic levels, driven by steep declines in travel and transportation services. With international travel still curtailed and people hesitant to travel, these figures will likely remain depressed for some time.
Forecasts for economic growth in Canada’s trading partners in coming years has a substantial degree of uncertainty. However, forecasts are pointing to an uneven global recovery. Most notably, forecasts are suggesting very mixed performance in emerging economies and a relatively moderate rebound in economic growth in the EU, Canada’s single most important overseas market. On the other hand, a very strong forecasted rebound in the U.S. could be beneficial for Canadian exporters and thus draw their attention away from more distant markets.

Recovery in exports

Goods exports were hit hard early in the pandemic with a fall in Canadian exports comparable to that seen with the global financial crisis.
However, goods exports rebounded quickly and have largely returned to pre-pandemic levels. According to the latest data, as of February, goods exports were 4.1% above levels from a year earlier.
There is, however, a great deal of variation by product and by market. It is notable that our analysis finds that Canadian export performance during the past year was less impacted by how hard a partner economy was hit by the pandemic but rather dominated by what we trade. Tastes have changed rapidly during the past year and some products saw increased demand such as Canada’s agriculture and food exports, wood and lumber, etc., while other products faced lower demand and/or prices.
Services exports, on the other hand, witnessed an unprecedented downturn during the pandemic and have seen little recovery.
Most hard hit, unsurprisingly, was travel and transportation. Forecasts are predicting a slow recovery as travel restrictions remain in place and people may be hesitant to travel internationally even after restrictions are removed.

FTA utilization rates

Canadian companies are increasingly making use of Canada’s many trade agreements, but more work needs to be done if they are to get the most from the agreements.
- CETA: 57% of Canadian merchandise exports to the EU that were eligible for lower tariff rates under CETA actually claimed those preferences in 2020. This is a notable improvement from 52 % in 2018, but there remains significant room to improve.
- CKFTA: For Canada’s FTA with Korea, the utilization rate was 69% in 2019 for Canadian exports.
- CUSMA: The utilization rate was 69% for Canadian exports for the first six months of the agreement up from 67% for the first half of the year under NAFTA.

Trade commissioner service COVID-19 response

During these unprecedented times, the Trade Commissioner Service (TCS) continues to help Canadian businesses grow globally by connecting them with its funding and support programs, international opportunities, and its network of Trade Commissioners in more than 160 cities worldwide.
The TCS has been active in Canada’s COVID-19 response by:
- Helping to source critical personal protective equipment, medical supplies, tests and vaccines to meet Canada’s needs;
- Facilitating global supply chains on behalf of Canadian businesses; and,
- Retooling and re-examining export support programs to assist Canadian business in building long-term resilience.

Supplementary messages

In the early days of the pandemic, the extensive TCS network contributed to sourcing critical personal protective equipment, ventilators and testing devices to help meet Canada’s immediate needs, and is now assisting with tracking vaccine development internationally.
As Canada built capacity, the TCS coordinated the development of a Canadian capabilities directory of Canadian companies active in the fight against COVID-19 to share their products and services with the world.
By retooling and re-examining programs and services, like the CanExport program, e-commerce support and virtual market entry services; the TCS is adapting to better assist Canadians companies looking to re-establish trade relationships or find new ones amidst COVID-19 challenges.
The TCS and Invest in Canada work closely with other federal partners on the Government’s priorities for pandemic preparedness, economic recovery from COVID-19, and a long-term approach to promoting sustainable growth and resiliency in the life sciences sector.

Supporting facts and figures

More than 500 COVID-19-related enquiries from FDI contacts, Canadian smes, ogds and abroad were received.
181 Canadian companies with COVID-19 response capabilities promoted to international markets.
Vetted more than 4,500 international suppliers for Public Services and Procurement Canada, and identified over 200 gold-standard foreign suppliers from 15 countries.
28 markets being tracked for international vaccine procurement and biomanufacturing developments.

Facts about the TCS

Created in 1894, the TCS has over 125 years of experience helping Canadian companies succeed in foreign markets by promoting the economic interests of Canada in the global marketplace.
Since Canada's first Trade Commissioner was posted to Australia in 1895, its geographic expansion has made it increasingly important to the competitiveness of Canadian exporters, of high value within an ever evolving global economy.
The TCS helps companies that are looking to export, attract investment from abroad or develop innovation and R&D partnerships. It provides advice on marketing strategies and up-to-date market and sector information to help smooth a Canadian company's path to doing business abroad.
TCS client-facing points of service (Regional Offices and missions abroad) meet with clients individually to determine which specific services would best meet their needs, and ensure their businesses have made the appropriate preparations for their planned international activities (e.g. Exporting to new markets, commercializing a new product/technology).
The TCS, comprised of more than 1,000 employees abroad, 150 across Canada and over 400 at HQ in Ottawa, advises clients on opportunities in foreign markets and provides on-the-ground intelligence to guide their international business decisions.
Between 2019 and 2020, the TCS supported 16,942 clients around the globe.
The TCS offers four Key Services to all its clients free of charge. The four key services are:
- Preparing Canadian companies for international markets;
- Providing an assessment of the company's potential in a target market through the use of market intelligence and providing advice on market strategies;
- Finding qualified contacts; and
- Resolving problems and business challenges.
The TCS has recently added several High Intensity Services for our fastest growing, innovation oriented clients (e.g. Canadian Technology Accelerators, Key Account Management, Global Mentorship Program).

Support to Women-owned smes

In FY19-20, the Trade Commissioner Service global network served 37% more companies that self-identify as women-owned businesses from FY18-19.
In FY19-20, the Trade Commissioner Service global network supported 25 initiatives in 22 international markets. This led to a 175% increase of recorded successes from the last fiscal year.

Virtual Trade Missions:

Due to travel restrictions and local COVID protocols, the TCS has pivoted to virtual trade missions to help Canadian companies survive and recover from the economic effects of the pandemic.
Minister Ng, led a Virtual Trade Mission to France between March 29-April 1 with 310 participants, including many from underrepresented groups.
Minister Ng had earlier led a successful Virtual Trade Mission to South Korea in late October-early November 2020, with 250 participants which have already led to 8 commercial successes.
Global Affairs Canada also assisted the Asia Pacific Foundation of Canada with Virtual Trade Missions of Canadian women entrepreneurs to South Korea with 25 participants in November 2020 and Taiwan with 18 participants in March 2021.

Investment in Canada

Foreign Direct Investment (FDI) is vital to Canada’s economic recovery.
Over the past year, the Trade Commissioner Service (TCS) has adapted its service-delivery methods due to COVID-19 and continues to assist current and potential investors.
FDI plays an important role in strengthening Canada’s domestic supply chains and in supporting our smes.

Supplementary messages

As COVID-19 has destabilized the international investment landscape and created gaps in global supply chains, the TCS, along with Invest in Canada (IIC) and other partners across government, are working to attract investments to fill these gaps.
FDI will play an important role in supporting Canada's economic recovery, including creating opportunities for Canada’s smes and entrepreneurs to accelerate technology and scale-up.
Global investors clearly still view Canada as an attractive investment destination, despite the pandemic. For a second year in a row, Canada held the No. 2 spot on consulting firm Kearney's Foreign Direct Investment Confidence Index.

Update

Since March 2020, COVID-19 has halted the steady growth of FDI into Canada, and globally. Ongoing interactions with existing and potential investors, however, confirm that Canada continues to be a premier investment destination. The TCS and IIC effectively pivoted their service-delivery methods to reach foreign investors by moving to virtual events where possible, organizing sector-specific webinars, organizing virtual site visits or meetings with investors and working with partners to identify innovative ideas on how to promote Canada.

Supporting facts and figures

While COVID-19 has caused a global decline in FDI over the last year, in 2019 Canada secured investments at twice the OECD average, and triple the G7 average, as measured by GDP. While Canada has seen FDI inflows decline by 50%, other developed economies around the world have seen an overall decline of 69%. And when compared against previous years, 2020 FDI results for Canada are higher than in 2009, 2010, and 2017.
In 2019-20, the TCS facilitated 118 wins generating $630 million and creating 4,250 jobs. The TCS supported 233 visits to Canada.
Since April 1, 2020, preliminary results indicate that the TCS has facilitated 77 FDI wins, representing a value of $1.5 billion and creating approximately 4,771 new jobs.
In 2019 and 2020, Invest in Canada facilitated 18 investment wins, which created over 2,000 jobs and represented capital expenditures of $1.25 billion.
Invest in Canada is currently working with global companies to facilitate 162 potential investment projects and has supported 8 new investments in 2021 creating at least 600 new jobs, with additional projects nearing investment decisions in the months to come.
While the number of wins is down from previous years, the value and job numbers have actually increased from last fiscal year.

Background

Global Affairs Canada and IIC share the mandate to increase FDI into Canada and work closely together to exchange information, support investors and coordinate with other partners to attract FDI. The TCS manages a network of 44 investment officers abroad, which identifies and advances FDI opportunities in key markets and sectors and is often the first point of contact for potential investors.

2021-22 Main Estimates for Invest in Canada

IIC’s Main Estimates for 2021-22 reflect a budget of $34,271,556. This remains consistent with 2020-21 with only a slight decrease of $20,000 comparatively.

The majority of IIC’s expenditures (80%) are related to achieving its core responsibility which is to lead the Government of Canada’s FDI attraction efforts by making Canada top-of-mind for foreign investors and providing services in support of investor decisions to expand in Canada.

The remaining 20% is related to internal services (Financial Management Services, Human Resource Management Services, Information Technology Services etc.).

IIC is at full capacity in terms of staffing (67 ftes) which makes up 25% of its total budget - including all employee benefits and pension contributions.

Fdi success stories

Sanofi

March 31, 2021, the Hon. François-Philippe Champagne, Minister of Innovation, Science and Industry, together with the Hon. Patty Hajdu, Minister of Health, announced an investment of up to $415 million to support Sanofi Pasteur Limited in building an end-to-end influenza vaccine manufacturing facility in Toronto, Ontario.
As part of this project, Sanofi will invest more than $455 million as well as create and maintain 1,225 highly skilled jobs in Canada.
The Government of Ontario will also invest $55 million, making this a $925-million project. In addition, the company will invest at least $79 million per year to fund Canadian research and development.
In the event of a future flu outbreak, Sanofi will be able to manufacture pandemic influenza vaccine at population scale at its new Toronto facility. It will have the capacity to produce enough vaccine doses to support the entire Canadian population within approximately six months of the World Health Organization (WHO) identifying a pandemic influenza strain.
The Trade Commissioner Service, spearheaded by our Embassy in Paris, with strong collaboration from Invest in Canada, has been instrumental to the success of this investment – bringing the lead to Canada; leading a deal team to secure the investment; and providing ongoing support to the company.

HCL Technologies

On March 26, 2021, HCL, an Indian multinational technology firm specialized in ICT services and consulting, held a launch event to announce the opening of its new Global Delivery Centre (GDC) in Mississauga, Ontario and will create 2000 jobs over the next three years as part of its overall Canadian expansion plan. Participation by all levels of government included an address by Minister Mary Ng, remarks by Ontario Premier Doug Ford as well as comments from Toronto Global CEO Stephen Lund.
HCL’s Canadian investment was a direct result of the continued engagement by the Trade Commissioner Service network with the company since 2018, including high level engagements between High Commissioner Patel and the company’s Chairman Mr. Shiv Nadar. Strong collaboration with partners, including Invest in Canada, the Ontario Minister of Economic Development, Job Creation and Trade, and Toronto Global, ensured continued engagement at the highest levels.
This investment continues HCL’s 12 years of successful growth in Canada, which includes the first office launched in Toronto in 2009, the first GDC launched in New Brunswick in 2019 and the planned expansion of 100 seat offices in British Columbia and Alberta.

Invest in canada succession planning

Since its creation in March 2018, IIC’s inaugural CEO, leadership team and Board of Directors have established a solid foundation for the organization to deliver on its mandate, and demonstrated solid results.
A successor CEO will be identified through a governor-in-council appointment, which is an open, transparent, and merit-based selection process.
Invest in Canada’s CAO will act as CEO in the interim period, with continued support and guidance from the Board of Directors

Export development Canada (EDC) current issues

As Canada’s Export Credit Agency, EDC plays a critical role in supporting Canadian exporters through the provision of innovative financial solutions.
During COVID-19, EDC has provided emergency support and liquidity solutions to companies of all sizes and in all sectors of the Canadian economy through the Canada Emergency Business Account and Business Credit Availability Programs.
EDC, as core member of Canada’s trade portfolio, will continue to support Canadian businesses through the pandemic and ensure they are poised for a dynamic recovery.

Supplementary messages

Recognizing the ongoing economic impacts of the pandemic, the Government expanded the level of credit available under the CEBA program and extended the eligibility criteria to serve more Canadian companies.

Update

The Canada Emergency Business Account (CEBA) has delivered over $45.15 billion in emergency credit to over 852,000 Canadian businesses since April 2020. The Government has expanded the level of credit available to individual businesses from $40,000 to $60,000, of which $20,000 is forgivable upon timely repayment. CEBA will continue to ensure Canadian businesses receive the support they need to endure the pandemic and be well positioned for a dynamic recovery.

Supporting facts and figures

EDC is administering the Government’s Canada Emergency Business Account (CEBA) under the Canada Account and the Business Credit Availability Program (BCAP) under its corporate account.
As at March 24, 2021, more than 852,000 small and medium-sized companies have been approved for CEBA support, totalling over $45.15 billion through more than 220 Canadian financial institutions].
As at March 22, 2021, EDC’s Business Credit Availability Program (BCAP) Guarantee has been provided in support of 1,083 Canadian companies for a total support of $983.1 million].
Total obligations under Canada Account shall not exceed $115 billion.

Background

EDC is Canada's export credit agency with a mandate to support and develop, directly or indirectly, Canada's export trade. In 2019, EDC facilitated over $102 billion in Canadian business through serving over 9,000 financial clients. The day-to-day operations of EDC are at arm's length from the Government. In order to meet the needs of the Canadian economy resulting from the impacts of COVID-19, the Minister of Small Business, Export Promotion and International Trade provided EDC with an increased capital limit, expanded domestic authorities, and increased the Canada Account statutory limit. With this additional financial flexibility, EDC has implemented the BCAP program, temporarily broadened its risk profile, and administered CEBA. EDC is working to ensure that Canadian businesses impacted by COVID-19 continue to receive the support they need across the economic spectrum.

EDC dividend payments

EDC is subject to the Government’s Capital Adequacy and Dividend Policy. EDC’s internal capital management and dividend policy is a board-approved guidance informed by this framework.
To ensure that EDC was able to fully respond to the needs of Canadians during the COVID crisis, the Minister of Finance and I instructed EDC to defer its 2020 annual dividend payment.

If Pressed:

The planned 2020 dividend was $886 million.
In 2020, an additional $10.97 billion was provided in share capital to EDC to address capital needs during the pandemic.
In 2021, EDC intends to return $6.7 billion no longer required for COVID programming as a special dividend to the Government, in addition to its annual dividend of $580 million.

Supplementary messages

EDC manages its capital in relation to risk and returns a dividend to the Government when capital is in excess of what is required to deliver its mandate.
From 2011 to 2020, EDC returned $6.684 billion to the Government via its annual dividend.
Information related to EDC’s 2020 dividend will be made public through its 2020 Annual Report. This report will be tabled in Parliament this Spring.

Supporting facts and figures

EDC returned a dividend of $1.01 billion to the Government in 2019.
EDC’s dividend is made public via its Annual Report, which is tabled in Parliament.
The Minister of Finance is responsible for the dividend policies of financial Crown corporations, in consultation with the President of the Treasury Board and Minister responsible for the Crown corporation.

Background

As outlined in the Financial Administration Act, the Minister of Finance is responsible for the Capital Adequacy and Dividend Policy of all financial Crown corporations. Consistent with this responsibility, the Minister of Finance, in consultation with the President of the Treasury Board and the responsible Minister of the Crown corporation, provides the Crown corporation with the policy framework that governs its capital management and ensures adequate capitalization to deliver on its mandate. The Government’s Capital Adequacy and Dividend Policy does not require that a financial Crown corporation return a dividend annually unless it retains capital in excess of its requirements.

As a financial Crown corporation, EDC is subject to this policy and has returned an annual dividend in eight of the past ten years based on this policy, totalling $6.684 billion. EDC manages its capital through a Board of Directors-approved Capital Management and Dividend Policy, which is consulted with Finance Canada and Global Affairs Canada as required.

Export development Canada (EDC) support for carbon intensive industries

EDC has set ambitious targets for climate action. It was the first export credit agency to become a supporter of the Task Force on Climate-related Financial Disclosures.
EDC has reduced exposure to carbon intensive sectors by 15 per cent since 2018 and is now the largest clean technology financier in Canada, facilitating over $4.55 billion in business in 2020.
I have asked EDC to do even more, including by aligning its portfolio with Canada’s Paris Agreement commitment to net-zero emissions by 2050.

Supplementary messages

I expect EDC to continue scaling up its support to the clean technology sector.
EDC also has a robust Climate Change Policy, which guides its activities and support of transactions.

Update

In 2020, EDC facilitated $8.1 billion in oil and gas sector business via 544 transactions.

Supporting facts and figures

In 2019, EDC committed to a Climate Change policy that commits the Crown corporation to: 1) not support new coal projects; 2) measuring the carbon intensity of its lending portfolio and setting targets for reduction of exposure to carbon intensive sectors; 3) increasing transparency around EDC’s climate-related risks; and, 4) integrating climate-related considerations, such as carbon intensity, into EDC’s risk assessment processes for transactions. EDC has also established a mandatory internal review process for this policy every two years.
EDC’s first carbon intensity target, established in 2019, was to reach a reduction target for carbon intensive sectors of $19.1 billion by 2023. EDC reached that goal in 2020 and will look to establish more ambitious targets moving forward.

Background

Export Development Canada (EDC) is a Crown corporation and Canada’s export credit agency. The Export Development Act provides EDC with the mandate to support and develop, directly or indirectly, Canada’s export trade, and Canadian capacity to engage in that trade, and to respond to international business opportunities. EDC provides a range of trade finance and risk management services, including short-term credit insurance, direct loans, loan guarantees, bonding support, and political risk insurance. The day-to-day operations of EDC are at arm’s length from the Government. EDC is governed by a Chair and Board of Directors responsible for implementing the direction provided by the Minister of Small Business, Export Promotion and International Trade.

Canada commercial corporation (CCC) current issues

The CCC is an important member of the international trade portfolio responsible for government-to-government contracting, including sales to the United States Department of Defense under the Defence Production Sharing Agreement.
CCC has put in place a robust Responsible Business Conduct Framework to ensure that its due diligence assessments reflect Canada’s international human rights obligations.

Supplementary messages

In line with the Governor in Council appointment process, eight director vacancies on the CCC board were filled by July 2019, with a further vacancy filled in December 2020, and a new President and CEO was appointed March 8, 2021.

Supporting facts and figures

In 2019-20, CCC signed $1.25 billion worth of contracts with foreign buyers and Canadian exporters, including $928 million under the Defence Production Sharing Agreement.
CCC directly served 157 customer, including 63 smes, in 2019-21, indirectly benefiting an additional 1400 companies through their supply chains.

Background

CCC is Canada’s government-to-government contracting agency. The Corporation acts as the prime contractor for foreign governments to supply Canadian goods and services, and sub-contracts with a Canadian exporter, passing on all contractual obligations.

Among CCC’s primary functions is the administered Defence Production Sharing Agreement (DPSA) on behalf of the Government of Canada. The DPSA is a bilateral defence trade agreement with the U.S., first signed in 1956, that allows Canadian companies to compete for U.S. Department of Defense (dod) contracts on the same terms as domestic suppliers, as part of the integrated North American Defence Industrial Base. CCC’s role as prime contractor helps maintain this bilateral framework, and ensure that Canadian exporters continue to enjoy a level playing field with U.S. companies.

In September 2020, Senator Don Plett drew attention to delays in filling Governor in Council appointments at CCC through a Senate written question. The 2019 Report of the Auditor General of Canada to the Board of Directors of the Canadian Commercial Corporation—Special Examination noted that in January 2018, the terms of all nine directors had expired. However, by November 2018, five directors had been appointed, including three who were reappointed to their positions. Three more directors were appointed in July 2018, and an additional director was appointed in December 2021.

Robert Kwon, who had served as a member of the Board of Directors since 2018, was appointed as President and CEO effective March 8, 2021, for a five-year term.

CanExport funding program

CanExport provides grants and contributions to Canadian smes, innovators, associations and communities to help them diversify exports and expand their international footprint.
While travel-based support has been suspended since the onset of the pandemic, CanExport recently updated its guidelines to provide more flexible funding, particularly for virtual activities.
Since the start of the pandemic, CanExport has provided over $33 million to more than 1,000 Canadian companies looking to diversify their export markets.

Supplementary messages

In recent conversations, CanExport recipients have shared with me how the program has enabled them to pivot away from traditional in-person sales strategies to digital platforms, with several companies successfully growing exports as a result.
For example, I recently spoke with 3F Waste Recovery, a Newfoundland and Labrador cleantech company, which recently used CanExport funding to obtain intellectual property protection and launch on several Asian e-commerce platforms.

Update

COVID-19 and the resulting travel restrictions have had a significant impact on the ability of CanExport clients to explore new markets. In response to these challenges, on November 3, 2020, the program updated its guidelines to provide more flexible funding, particularly for virtual activities. Main changes include:

Tools to expand smes’ e-commerce presence and their ability to do market exploration virtually, including participation in online events;
Eligibility of online marketing expenses, such as Search Engine Optimization (SEO) and social media advertising;
Support for COVID-19 related market-specific trade regulations and barriers;
Eligibility for trading houses and export brokers of Canadian agri-food products;
Concierge Service to help Indigenous- and women-led smes access the program.

Supporting facts and figures (since program inception in January 2016)

CanExport - SMES

Approved $125 million in funding for over 3,890 projects in 148 markets.
44% of clients report exporting to their market within a year of project completion.
Helped companies generate more than $600 million in new export revenue.

CanExport - Innovation

Approved $5.5 million in funding for over 460 projects.
Helped companies sign contracts and arrangements valued at over $44 million.

CanExport - Associations

Approved $18.8 million in funding for 84 Canadian national organisations, benefitting the export activities of 165,087 companies in 80 markets.
Two-thirds of projects have resulted in foreign sales or contracts.

CanExport - Community Investments

Approved $21.1 million in funding for over 820 projects in 161 Canadian communities.

Background

Established in 2016, the Trade Commissioner Service’s CanExport Program is composed of four sub-programs: CanExport smes, CanExport Associations, CanExport Innovation, and CanExport Community Investments. Funding for the program was increased by $100 million over six years in June 2018, as a response to US tariffs on Canadian steel and aluminum. The 2018 Fall Economic Statement provided an additional $26 million on an ongoing basis.

Responsible business conduct

We expect Canadian companies abroad to abide by all relevant laws, to respect human rights, and to adopt best practices and internationally respected guidelines on responsible business conduct (RBC).
Global Affairs Canada uses a balanced approach to RBC, focusing on raising awareness, preventing and identifying problems before they escalate, and offering effective dispute resolution through the Canadian Ombudsperson for Responsible Enterprise (CORE) and the National Contact Point for RBC.

Supplementary messages

In establishing CORE, a full range of options was considered and a non-judicial mechanism was used because it is generally considered to be more accessible, faster and cost-effective. If a Canadian company does not act in good faith during a review, recommendations can be made to implement trade measures.

Update

Ms. Sheri Meyerhoffer was appointed as the CORE in April 2019. The office of the CORE opened on March 15, 2021 to accept cases. In January 2019, MINT - Minister Carr at the time - instructed the Department to provide funding for a total of six positions and approximately $1 million per year. This was in addition to the funding provided for CORE through Budget 2018.

Supporting facts and figures

The below chart outlines the funding of the total amount received through the budget for the office of the CORE.

		Y1: 2019-20	Y2: 2020-21	Y3: 2021-22	Y4: 2022 – 23 & ongoing
CSR TB Sub	CSR TB Sub - Salary (4ftes)	381,119	476,466	476,466	476,466
CSR TB Sub	CSR TB Sub - Operating	165,000	165,000	165,000	165,000
CSR TB Sub - subtotal		546,119	641,466	641,466	641,466
Department-Funded	Salary (2ftes)	227,119	231,907	231,907	231,907
	Operating	135,000	135,000	135,000	135,000
	Office Fit-up	500,000	0	0	0
Department Funded - subtotal		862,119	366,907	366,907	366,907
Additional Funding	FY2019-20 Surplus Carry-over to FY2020-21	0	650,000	0	0
	In-Year Allocation (MINT Approved) - Salary	0	490,000	0	0
	In-Year Allocation (MINT Approved) - Operating	0	280,000	0	0
Additional Funding – subtotal		*3,722	*1,437,013	*17,013	*17,249
Total		1,411,960	2,445,386	1,025,386	1,025,622

*Total amounts adjusted to reflect collective bargaining funding

Background

Canada is committed to RBC and we expect Canadian companies active abroad to operate at the highest of standards: respecting human rights, operating lawfully and conducting activities in a manner consistent with international standards and Canadian values. Canada’s balanced approach to RBC includes both preventive measures and access to dispute resolution mechanisms through the CORE and the National Contact Point (NCP) for RBC. A company that chooses not to engage meaningfully with either the CORE or NCP could face the withdrawal of enhanced trade advocacy support and future Export Development Canada financial support.

COVID-19 supply chains

International supply chains have held-up reasonably well during the global pandemic.
There is little evidence of large-scale reshoring of supply chains, and doing so would be expected to reduce competitiveness and raise costs with uncertain benefits.
Canada’s preferred approach is to increase the resiliency of supply chains through international cooperation and improved transparency.

Supplementary messages

Global Affairs Canada has developed an International Supply Chain Vulnerability Index. This index examines the potential vulnerability of supply as well as demand for more than 200 Canadian industries. An early version of this index was published as the special feature in the Department’s annual State of Trade report.

Background

The global pandemic has placed a new spotlight on global supply chains. From the outset, there were concerns about the continued functioning of supply chains and the ability of Canadians to get essential foods and medicines. Shortages of Personal Protective Equipment (PPE) were mistakenly attributed to supply chain issues rather than the large and globally coordinated demand shock that it was. Although there were some tense moments that required intervention by Ministers and senior officials; as well as quick policy adaptations, by and large international supply chains held up rather well during the global pandemic.

There has been talk of re-shoring of supply chains to increase the resilience of the domestic economy. Supply chains allow countries, regions within countries, and companies to specialize in what they do best, while gaining inputs from and selling to global markets. Because of this, supply chains have been found to raise competitiveness and productivity, improve wages and lower prices for consumers. Given these benefits of supply chains, companies will only take action to reconfigure supply chains if there is sufficient incentive to do so.

There is also doubt about the added resiliency of reshoring supply chains. While reshoring supply chains would shorten the chains and remove some foreign policy, transport and border risks, there is no guarantee of increased resiliency. The geographical dispersion of supply chains itself provides a form of resiliency. It is notable that some of the most important supply chain disruptions during the global pandemic were in meat packing which is largely domestic.

If there is questionable benefit from reshoring supply chains but likely significant cost, alternative approaches to increasing supply chain resilience may be more effective. For an open economy like Canada, this means increasing the resiliency of the international environment and diversification. Updating trade infrastructure, not only physical but also trade facilitation infrastructure, and supporting the digitization of companies - including those that facilitate trade would also promote resiliency.

Increasing visibility into supply chains is also an important contributor to resiliency. Many companies are also not aware of the risks in their supply chains and even sophisticated multinationals may not know their second or third tier suppliers.

CPTPP implementation

The CPTPP demonstrates Canada’s leadership and commitment to open, inclusive, and rules-based trade.
Canada encourages ratification by remaining signatories, and supports expansion of the Agreement to include new members; public consultations with Canadians on the U.K.’s accession request will wrap up April 27.
The CPTPP is a key part of Canada’s trade diversification strategy and a tool for post-COVID-19 economic recovery.

Supplementary messages

China: Appears to have interest in seeking accession; should China apply to accede, would make a decision in the best interest of Canadians.
U.S.: Has not applied to join, but indications are they will not seek to accede in near term; will work with U.S. in areas of common interest.
Taiwan: Has serious interest in joining, but has not applied to do so.
Other: Thailand, South Korea, and the Philippines are reported to be considering CPTPP accession but have not applied to join.

Responsive: Taiwan CPTPP accession

Canada welcomes the interest of any economy that wishes to join the CPTPP.
Taiwan is a key Canadian trading partner and has expressed an interest in potentially acceding to the CPTPP.
As we have done with other economies like Thailand and South Korea, Canadian officials have informally responded to questions from Taiwan about the accession process.
Taiwan has not yet applied to accede to the agreement.

Responsive: China’s interest in CPTPP accession

Canada welcomes the interest of any economy that wishes to join the CPTPP.
China is a key Canadian trading partner and has expressed an interest in potentially acceding to the CPTPP.
China has not yet applied to accede to the agreement

Update

The U.K. submitted its formal accession application on February 1, kicking off the first CPTPP accession process. Parties are completing domestic procedures to decide whether to establish an Accessions Working Group (AWG) to oversee accession negotiations. For Canada, this includes public consultations and a GBA+ analysis.

Public consultations on future negotiations with the U.K., both on the anticipated bilateral FTA and possible CPTPP accession, will wrap up on April 27. The results will inform Canada’s position on the creation of the AWG. All decisions on CPTPP accessions require the consensus of CPTPP Parties.

Supporting facts and figures

We are in the process of exchanging data with CPTPP Parties to fully evaluate the economic impacts since entry into force.
After being up in 2019, trade with CPTPP partners was down in 2020, likely due to the pandemic.
But exports have increased for a number of key products that benefitted from tariff cuts:
- Canadian exports to Japan from January to December 2020 decreased by -2.1% compared to the same period last year, but Canadian exports of copper ores increased by 28.9%, barley by 48.3%, wheat by 15.1%, and petroleum gas by 43.7%.
- Canadian exports to Vietnam from January to December 2020 decreased -26.0% compared to the same period last year, but Canadian exports of pork increased by 153.8%, and frozen beef by 408.0%.
- Canadian exports to Australia from January to December 2020 decreased by -5.7% compared to the same period last year, but Canadian exports such as agricultural machinery increased by 38.7%, and aircraft parts by 102.2%.

Background

Ratification: The COVID-19 pandemic has further delayed ratification of CPTPP by Chile, Peru, Brunei and Malaysia. Chile’s Senate returned from summer break at the start of March, but it is unknown if or when CPTPP legislation will be voted upon. Peru has faced ongoing political challenges, the timeline for ratification is unknown. Brunei continues to advance its domestic work on technical issues necessary for ratification. Malaysia’s timeline for ratification remains unknown.

Canada-Asean FTA negotiations

Southeast Asia is a dynamic and growing region presenting vast opportunities for Canadians to diversify trade relationships and supply chains.
I will meet with ASEAN trade ministers later this year, likely in September, to discuss next steps for a possible FTA.
A Canada-ASEAN FTA could deliver significant opportunities to Canadians across a broad range of sectors, including agriculture, manufacturing and services, especially in markets such as Indonesia, Philippines and Thailand.

Supplementary messages

Actively working with ASEAN to advance a possible Canada-ASEAN FTA that would benefit both sides and support post-COVID-19 economic recovery.
Exploratory discussions with ASEAN were concluded in 2019.
Public consultations held in 2018 revealed that Canadians support a Canada-ASEAN FTA that addresses existing tariffs and non-tariff barriers.
In parallel, we are examining options to deepen our relationships with individual ASEAN member states with Indonesia at the top of the list.

Supporting facts and figures

As a group, ASEAN represents the 5^th largest economy in the world, with a combined GDP of $3.8 trillion.
Canada and ASEAN completed a Canada-ASEAN Joint Feasibility Study in 2017. According to this study, a potential agreement could increase Canadian exports to ASEAN by as much as $3.54 billion; ASEAN exports to Canada could increase by $6.38 billion.
The study estimates an increase in Canadian exports of pork and other meat products, chemical, rubber and plastic products, wood products, metal products and other machinery.

Background

Canada and ASEAN have been discussing a possible FTA since 2017. At the ASEAN Economic Ministers (AEM)-Canada Consultations in August 2020, Ministers agreed to a timeline in support of a launch in 2021, which includes developing a reference paper to outline the scope of a possible agreement. Canadian officials are working with ASEAN on this paper, which is expected to be finalized in advance of the next AEM-Canada Consultations, scheduled for September 2021.

According to the Canada-ASEAN Joint Feasibility Study on a possible Canada-ASEAN FTA, a comprehensive FTA would deliver significant trade and economic benefits for all ASEAN member states and Canada. As part of this Study, Canadian modelling predicted a possible comprehensive agreement would increase Canada’s GDP by $3.37 billion and ASEAN’s GDP by $7.97 billion. Canada’s exports to ASEAN could increase by 13.3% ($3.54 billion) and ASEAN’s exports to Canada could increase by 15.5% ($6.38 billion).

In 2018, the Government conducted public consultations to seek the views of Canadians on a possible FTA with ASEAN. Overall, stakeholders expressed support for a Canada-ASEAN FTA and highlighted significant opportunities to Canadians in the ASEAN market, notably with non-CPTPP economies (Indonesia, Philippines and Thailand), across a broad range of sectors, including agriculture, manufacturing and services. A small number of stakeholders, especially from the supply-managed agriculture sectors, were skeptical of the benefits of a possible Canada-ASEAN FTA.

Possible Canada-Indonesia comprehensive economic partnership agreement (CEPA)

A CEPA with Indonesia could help Canadian businesses tap into new supply chains and support post-COVID-19 economic recovery.
Public consultations conducted over the winter revealed broad support for a Canada-Indonesia CEPA.
Negotiation of a Canada-Indonesia CEPA could proceed in parallel with the negotiation of a Canada-ASEAN FTA, and together, these agreements would open fast growing markets in Southeast Asia.

Supplementary messages

A Canada-Indonesia CEPA could create meaningful market access for Canadian business through the elimination of tariffs and non-tariff barriers for our exports, including agriculture and agri-food, industrial and advanced manufacturing, minerals, and professional services.
The views expressed by Canadians during public consultations, together with the outcomes of technical discussions and internal analysis, will inform a decision on whether to launch negotiations.
If a decision to launch negotiations is taken, we will notify Parliament and table Canadian negotiating objectives.

Update

From January 9 to February 23, 2021, the Government conducted public consultations to seek the views of Canadians on a possible Canada-Indonesia CEPA. To date, the Government has received 79 written submissions. Overall, stakeholders and partners expressed broad support for a CEPA with Canada, citing the significant market potential that could be facilitated by reducing tariff and non-tariff barriers (e.g. Those related to transparency and regulatory predictability). A What We Heard report summarizing the views of Canadians will be published on Global Affairs Canada’s website later this spring.

In parallel with public consultations, Canada and Indonesia held technical discussions to assess the potential for negotiating a comprehensive trade agreement, which took place in February and March 2021. These technical discussions revealed that there is scope to negotiate a comprehensive trade agreement that would result in meaningful market access for Canadians.

Supporting facts and figures

Indonesia is Canada’s largest export market in Southeast Asia, with two-way bilateral merchandise trade of $3.4 billion in 2020. Canadian merchandise exports and imports were valued at $1.8 billion and $1.6 billion respectively.
Canadian services exports to Indonesia totalled $188 million in 2020, while Canadian services imports from Indonesia reached $170 million in the same year.
Indonesia is the 2^ndlargest destination for Canadian direct investment in the region, with Canadian direct investment valued at $3.8 billion at the end of 2019. Indonesian direct investment in Canada totalled $116 million at the end of 2019.

Background

Indonesia is Canada’s 24^th largest merchandise trading partner and a key market for Canadian exports of agricultural, machinery products, and natural resources. Recently, Canada and Indonesia have begun to explore the possibility of negotiating a comprehensive bilateral trade agreement which is being considered in parallel with a possible Canada-ASEAN FTA.

China – trade relations and market access issues

Our Trade Commissioners in Canada and in China are providing advice to Canadian businesses about the evolving risks of China’s use of coercive economic and non-economic measures, as well Hong Kong and risks related to human rights abuses in Xinjiang.
We see signs of resiliency in the commercial relationship. Our merchandise exports to China increased by 8.1% in 2020 compared to the drop during the previous year (2019). Exports of iron ore, pork, canola seed and wheat increased by double digits compared to 2019.
China will continue to be an important market for Canadian businesses but Canadian businesses need to be mindful of the risks and ensure they diversify markets and supply chains.

Supplementary messages

China/Xinjiang

The Government of Canada is committed to ensuring that Canadian businesses at home and abroad are not unknowingly involved in any supply chains involving forced labour. We remain steadfast in our commitment to increasing supply chain transparency, promoting responsible business conduct, and ensuring that Canadian companies are upholding Canadian values, wherever they may operate.
Together with likeminded countries, a collective approach to mitigating supply chain risks will help us to achieve our overarching human rights objectives – in Xinjiang as well as other jurisdictions requiring enhanced due diligence.

China/Hong Kong

The National Security Law (NSL) undermined confidence in the integrity of the One Country, Two Systems framework, Hong Kong’s open economy and judicial system and its role as a global trade and financial hub.
Canada has taken a number of steps in response to the NSL, including suspending the Canada-Hong Kong extradition agreement; treating export permit applications destined to Hong Kong in the same way as those destined for China; updating our travel advice and advisories for Hong Kong; and launching a new immigration initiative to encourage Hong Kong youth to choose Canada as a place to study, work, and settle. This last point creates a talent pool with China competencies that Canadian firms should draw from.

China/Canola

Canada is working to restore market access for Canadian canola seed.

China/COVID-19 import measures on food products

Responding to China’s COVID-19-related measures imposed on imported food products is one of the Government’s top market access priorities. Bilateral and multilateral efforts are underway to address the issue.

Responsive: U.S.-China trade dispute and Phase One agreement

Canada is monitoring interactions between the U.S. and China and the implementation of the U.S.-China Phase One agreement, but there are no indications that a Phase Two is in the works.

Update

In response to China’s use of coercive diplomacy, including economic coercion, Canada is advising companies to take on a strong suite of policy and operational measures to support diversification and mitigation of vulnerabilities. The Trade Commissioner Service is proactively providing clients and stakeholders information on the risks of doing business in China, including the importance of Responsible Business Conduct and international best practices for Canadian companies operating abroad, as well as new risks related to human rights violations in Xinjiang and Hong Kong’s NSL.

To safeguard Canadian supply chains and prevent Canadian businesses from becoming unknowingly complicit, on January 12, 2021 Canada announced a suite of measures to address extensive human rights violations against Uyghurs and other ethnic minorities in China. On March 22, Canada announced sanctions on four Chinese officials and one entity involved in human rights violations in Xinjiang.

Canada has been working with like-minded countries in calling upon trading partners to ensure that trade measures are transparent, rules-based and non-trade disruptive to global supply chains. It will require a critical mass of like-minded countries to agree to mechanisms to deter such coercive actions, share business risks, and hold China to account. In this regard, officials are currently developing options.

Supporting facts and figures

In 2020, merchandise trade with China increased 3.4% from 2019. Exports rose strongly by 8.1%, and imports rose by 2.0%. China is Canada’s second-largest trading partner overall and third largest merchandise export market, after the U.S. and the EU-27.
The strong performance was driven by increases in exports of iron ore, pork, canola seed and wheat to China. Merchandise imports from China also increased with top imports being machinery (laptops), electronics (cell phones), car and truck parts and furniture.
While Canada experienced record years of pork exports to China in 2019 and 2020, this year, they may be affected because of the suspension of 10 meat “establishments” (i.e. Slaughterhouses, plants) due to COVID-19 outbreaks (8 pork, 2 beef).

Background

China/Trade relations:On September 18, 2020, Canada’s Minister of Foreign Affairs stated that conditions were no longer right for Canada and China to negotiate a free trade agreement. In October 2020, Prime Minister Trudeau said publicly that Canada will continue to stand up against China’s coercive diplomacy and human rights abuses in Hong Kong and Xinjiang. As part of the Canada-U.S. Roadmap, Canada and the U.S. agreed to more closely align our approaches to China.
China/Canola: Since March 2019, alleging discovery of pests, China Customs suspended canola seed shipments from two major Canadian exporters, Richardson and Viterra, and increased inspection of all Canadian canola seed exports to China. Canada’s investigation concluded that the shipments met China’s import requirements. Beginning April 1, 2020, China Customs implemented a dockage level of less than 1% (down from 2.5%) for Canadian canola seed shipments. WTO consultations were held on October 28, 2019, and bilateral technical meetings in December 2019. While trade continues, market access remains unpredictable and exporters continue to receive notices of non-compliance, most recently on February 1, 2021.
China/COVID-19 import measures on food products: Since mid-June, 2020, China has imposed a series of COVID-19 related import measures on food products (affecting mainly meat, fish and seafood) from trading partners based on alleged concerns that food or food packaging may be a source or route of transmission of the virus. China’s measures have included testing of imported food products and suspension of imports from establishments where there have been outbreaks of COVID-19 among workers. Canada’s position, shared by most other trading partners, is that there is currently no evidence that food or food packaging is a likely source or route of transmission or route of transmission of COVID-19.
U.S.–China trade dispute and Phase One deal: The U.S.-China Phase One agreement requires China to purchase an additional $200 billion of U.S. goods and services in 2020 and 2021 over 2017 levels. Chinese purchases under the agreement have been insufficient to meet the first year’s target, however, the U.S. has not penalized China for not meeting its purchasing commitments at this time. There is no indication that the U.S. will cancel the Phase One agreement, move to negotiate a Phase Two agreement or remove tariffs on Chinese imports in the short- to medium-term. Given the current wide-ranging impact of the COVID-19 pandemic, the impact of the Phase One agreement on Canadian industry is unclear.

India – market access and investment

We are working to expand our trade and investment relationship with India to its full potential.
We are prioritizing a Foreign Investment Promotion and Protection Agreement and a Comprehensive Economic Partnership Agreement to create opportunities for Canadians.
Restoring unimpeded access for Canadian pulses is a high priority; I’m working with Minister Bibeau to make this happen.

Supplementary messages

India is our 10^th largest trading partner, with two-way trade totalling $8.6 billion in 2020.
India’s Commerce and Industry Minister and I are on the same page about the desirability of advancing the bilateral trade and investment relationship.
Officials are meeting regularly to consider how to advance negotiations on the FIPA and CEPA.
I raised the pulses issue with India’s Commerce and Industry Minister on March 11; and the government will continue considering all options, bilaterally and at the WTO, to restore unimpeded access for pulses to India.

Supporting facts and figures

Two-way merchandise trade totalled $8.6 billion in 2020.
Two-way services trade totalled to $4.8 billion in 2020.
Two-way foreign direct investment (FDI) totalled $3.5 billion in 2019. Indian FDI in Canada totaled $1.0 billion and Canadian FDI in India totaled $2.5 billion.

Background

Pulses: India is the world’s largest pulse import market and, until September 2017, had been Canada’s largest pulse export market. However, responding to domestic pressures, India made commitments to self-sufficiency and increased domestic production. India continues to apply a number of measures on imported pulses including mandatory fumigation requirements, increases in import tariffs, quantitative restrictions on dry peas (de-facto banning imports of yellow peas) and, most recently, increased scrutiny for the presence of weed seeds, including a number of previously untested pests. Pulse exports to India from Canada have decreased significantly as a result of India’s restrictive measures, from $930 million in 2017 to $158 million in 2018 (an 83% decrease). Exports in 2020 rose to $708 million but are still well below 2017 levels. In the case of peas, additional trade restrictions (quota) has made the impact more significant: exports have fallen from $526 million in 2017 to $21 million in 2020 (a 96% decrease). On March 11, 2021, you raised the issue with India’s Minister of Commerce and Industry, who indicated that pulse market access may not be resolved independently from other issues of interest to India.

Foreign Investment Promotion and Protection Agreement: Canada and India launched negotiations toward a FIPA in 2004. The most recent round of negotiations took place in 2017. Ministers and officials have been in regular contact over the last year with a view to reengaging discussions.

Comprehensive Economic Partnership Agreement: CEPA negotiations launched in November 2010. The tenth round of negotiations took place in 2017. Several meetings have taken place between Chief Negotiators since then, including most recently on November 19, 2020. The next meetings are planned for April.

Canadian Investment in India: Priority sectors for investment attraction from India include ICT, automotive, aerospace, infrastructure, financial services, and the oil & gas and extractive sectors. Canadian portfolio investments in India have grown substantially over the past five years and are estimated to exceed $60 billion. Canadian investors are active in India’s real estate, infrastructure, logistics, information technology, private equity, renewable energy sectors, and credit financing.

CETA implementation and trade irritants

CETA will support Canada’s sustainable and inclusive post COVID-19 economic recovery. CETA offer a competitive advantage for Canadian businesses seeking to expand to new markets.
Canada is committed to resolving CETA implementation issues that are of concern to Canadians.
Canada continues to engage the EU to address non-tariff barriers affecting Canadian agriculture products and to fully implement its Temporary Entry obligations, among other issues.

Supplementary messages

CETA’s governance structure exists to raise market access concerns and to collaborate with the EU on areas of joint co-operation.
On March 25, 2021, I co-chaired the second CETA Joint Committee with my EU counterpart, Valdis Dombrovskis - I used this opportunity to highlight successes, as well as to push for EU action on Canada’s top implementation issues and non-tariff barriers, such as transparency requirements for temporary entry of business persons and agricultural issues.
I also emphasized the strength of the Canada-EU relationship in addressing the COVID-19 pandemic and the importance of ensuring that critical supply chains remain open and resilient—particularly, to ensure that there is equitable access to essential food, medicine and vaccines.
A significant outcome under CETA was the EU’s recognition of the Standards Council of Canada (SCC) as competent to accredit conformity assessment body. This is a stepping stone for Canada in securing the greatest benefits of CETA for Canadians.

Update

CETA’s implementation continues with many Committee meetings and dialogues taking place each year. These meetings allow the Parties to raise: concerns relevant to stakeholders; to work for a resolution of such issues; and in some cases to develop decisions or recommendations to implement or address new issues under the Agreement. For example, in January 2021, four decisions related to CETA’s Investment Chapter were adopted by the CETA Joint Committee, marking an important step toward ensuring the full functioning of CETA once it is ratified by all EU Member States. The decisions established clear and rigorous ethical rules and transparency in the resolution of investment disputes. The EU also recently implemented their Protocol on Conformity Assessment obligations under CETA after a three-year delay.

Supporting facts and figures

Canada-EU bilateral merchandise trade, based in Canadian dollars, in 2020 was 19.8% higher than in 2016, 1 year before CETA came into force. The utilization of CETA preferences continues to improve in both directions.

Background

CETA is one of the most comprehensive and ambitious free-trade agreements that Canada and the EU have ever implemented. The EU is Canada’s second largest trading partner after the U.S., offering tremendous opportunities for Canadian businesses. A few irritants persist in the Canada-EU trade relationship, such as the EU’s delay in publishing Temporary Entry information, the difference of opinion vis à vis “effective enforceability” of CETA’s Trade and Sustainable Development Chapters and [REDACTED]. In addition, Canadian agricultural stakeholders have raised complaints with the EU’s non-tariff barriers (e.g. Italy’s COOL law, access for Canadian beef and pork, hazard based approach towards pesticides, long approval process for biotech products).

Canada – U.K. trade continuity agreement

The Government is proud to have ratified and implemented the Canada-U.K. Trade Continuity Agreement (TCA), which entered in to force on April 1, 2021.
The TCA provides predictability and continuity of CETA benefits for Canadian businesses at this time.
Canada looks forward to launching new FTA negotiations with the U.K. toward a modern and comprehensive agreement that best reflects our bilateral interests going forward.

Supplementary messages

The Government has launched public consultations with Canadian stakeholders and interested parties seeking their views on future trade negotiations with the U.K.
Ahead of the expected launch of subsequent bilateral negotiations, the Government will notify Parliament and publish negotiating objectives pursuant to the revised Policy of the Tabling of Treaties in Parliament.

Update

After making its way through the House of Commons without amendments, Bill C-18, An Act to Implement the Agreement on Trade Continuity between Canada and the United Kingdom of Great Britain and Northern Ireland, passed quickly through the Senate and received Royal Assent on March 17, 2021. Following approval of the necessary regulatory changes and an exchange of diplomatic notes with the U.K., the TCA entered into force on April 1, 2021. Public consultations on future trade negotiations with the U.K. were launched on March 12 and will run through April 27, 2021.

Background

The Canada-U.K. Trade Continuity Agreement (TCA) entered into force on April 1, 2021. The agreement ensures a seamless transition of our trade relations with the United Kingdom following its departure from the EU at the end of 2020. The TCA replicates the outcomes of the Canada-EU Comprehensive Economic and Trade Agreement (CETA), which ceased to apply to the U.K. as of January 1, 2021 (while remaining otherwise unchanged and still governing trade between Canada and the EU). Modifications were required in areas where it was not appropriate to transpose the CETA outcome directly, such as tariff-rate quotas (trqs), TRQ administration, rules of origin, and investment.

The TCA addresses the unique situation brought about by the U.K. leaving the EU in the medium term. For the longer term, however, Canada is interested in negotiating an agreement that can best reflect the nature of Canada-U.K. trade relations going forward and take into account any post-Brexit developments. Canada and the U.K. have committed to enter into subsequent negotiations within one year of the TCA’s entry into force, and to make best efforts to reach a new agreement within three years. Public consultations were launched on March 12, 2021, to seek the views of Canadian stakeholders and interested parties on future bilateral trade negotiations with the U.K., as well as the prospect of the U.K. acceding to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).

Canada-Ukraine free trade agreement (CUFTA) modernization

In 2019, PM Trudeau and Ukrainian President Zelenskyy announced their mutual commitment to expand and modernize the 2017 CUFTA.
The CUFTA reinforces Canada’s longstanding support for political and economic stability in Ukraine by promoting a transparent and rules-based business environment.
Modernization of CUFTA would demonstrate the Government’s commitment to increasing and diversifying rules-based international trade, and would support Canada’s overall commitment to Ukraine and its domestic reform efforts.

Supplementary messages

CUFTA is a comprehensive FTA but does not include obligations on services or investment. The CUFTA review clause commits the Parties to review the Agreement within two years of its entry into force with a view to expanding the FTA.
The Government of Canada conducted broad-based public consultations on CUFTA modernization. Overall, Canadians are supportive.

Supporting facts and figures

In 2020, Canada-Ukraine bilateral merchandise trade stood at over $304 million.
Upon entry-into-force of the CUFTA, Canada eliminated duties on 99.9% of imports from Ukraine. Similarly, Ukraine eliminated tariffs on 86% of Canada’s exports, with the balance of tariff concessions to be implemented over seven years (by 2024).
In 2020, top merchandise exports to Ukraine were fish and seafood ($50.1M), vehicles ($23.1M) and machinery ($17.1M).
In addition to ensuring preferential access for Canadian exporters, the CUFTA reinforces Canada’s broader engagement in support of political and economic stability in Ukraine through its domestic reform efforts.
Canadian investors also benefit from the 1995 Canada-Ukraine Foreign Investment Protection and Promotion Agreement (FIPA).

Update

On March 20, 2021 Global Affairs Canada launched public consultations in the Canada Gazette towards an Initial Environmental Assessment (IEA), and Gender Based Analysis+ (GBA+) of the modernization of CUFTA for a 45-day period.

Background

The CUFTA is a comprehensive FTA, but does not include chapters on services and investment. The CUFTA contains a review clause (Article 19.2) that commits the Parties to review the Agreement within two years of its entry into force with a view to expanding the agreement to include trade in services and investment, as well as other areas as agreed by the Parties. In July 2019, PM Trudeau and Ukrainian President Zelenskyy announced a mutual commitment to expand and modernize the 2017 CUFTA. Public consultations to seek the views of Canadians were held in winter 2020 through a Canada Gazette notice, and an official report of the consultations was published on GAC’s website in May 2020. The majority of submissions were positive or neutral. At this time, Canada is ready to proceed and is waiting for Ukraine to finalize its preparations, anticipated in spring 2021, prior to launching negotiations. Modernization of CUFTA would demonstrate the Government of Canada’s commitment to increasing and diversifying rules-based international trade, and would support Canada’s overall commitment to Ukraine and its domestic reform efforts. CUFTA modernization would help improve the business environment in Ukraine by strengthening trade rules and increasing transparency and certainty for Canadian stakeholders, including building on the existing obligations of the 1995 FIPA.

Canada-Pacific alliance FTA negotiations

Canada remains committed to obtaining Associated State status to the Pacific Alliance (PA), which requires the negotiation of a free trade agreement (FTA) with the four countries as a bloc.
FTA negotiations were initiated in 2017, and eight rounds of negotiations have taken place to date.
Achieving Associated State status would allow Canada to enhance its relationship with these key partners in the region and deepen cooperation on issues of mutual interest.

Supplementary messages

Canada was the first non-Latin American country to become an Observer State in 2012 and the first Observer State to sign a Joint Declaration on a Partnership with the PA in 2016.
Canada has existing ftas with each of the PA countries and all except Colombia are Parties to the CPTPP, though Chile and Peru have yet to ratify the agreement.
Achieving Associated State status would build on this relationship by strengthening commercial and political linkages with like-minded partners in Latin America.

Update

Eight rounds of negotiations have taken place to date, with the most recent held Nov. 21-23, 2019 in Lima, Peru. Good progress has been made in the negotiations. Following a pause in negotiations, discussions are ongoing regarding next steps towards Canada achieving Associated State status.

Supporting facts and figures

The PA is a regional integration initiative created in 2011 by Chile, Colombia, Mexico, and Peru, that seeks to establish the free movement of goods, services, capital and people between these countries.
The PA counts 59 Observers countries, including Canada.
The PA created the Associated State (member-minus) category in 2017.
Canada's total merchandise trade with these countries was more than $52 billion in 2019, accounting for more than 75% of Canada’s trade with Latin America.
Since 2016, Canada has funded more than $23 million in cooperation projects under the Canada-Pacific Alliance Joint Declaration on a Partnership.
Colombia currently holds the pro tempore presidency of the PA.

Background

In June 2017, the PA invited Canada, Australia, New Zealand, and Singapore to become Associated States. Canada launched FTA negotiations with the PA in October 2017. Canada already benefits from a high level of market access from its existing ftas. Achieving Associate State status would allow Canada to strengthen its commercial and political linkages with like-minded countries in Latin America, and to continue to promote Canada’s inclusive approach to trade.

Domestic consultations to seek the views of Canadians on a potential Canada-PA FTA were held in 2017. The CIIT also undertook a study on the potential FTA in 2018-19; a government response was presented to the House in July 2019.

Canada-Mercosur FTA negotiations

Canada remains committed to negotiating an ambitious, comprehensive, and inclusive free trade agreement with Mercosur, with an environment chapter that is subject to an enforceable dispute settlement process.
Canada is firmly committed to the principle that trade liberalization and environmental protection should be mutually supportive.
Due to ongoing travel restrictions as a result of the global pandemic, no new rounds have been scheduled. Advancing trade negotiations with Mercosur is part of Canada’s trade diversification strategy.

Update

Since launching FTA negotiations with Mercosur in March 2018, seven rounds of negotiations have been held. Round 8, which was originally targeted for mid-September 2019 and then subsequently March 2020, was postponed on two occasions: first due to general elections in Canada, Uruguay and Argentina in late 2019 and second, due to concerns related to COVID-19 in mid-March 2020. Given the international travel restrictions in place, no new rounds are scheduled. Leads are engaging virtually to advance technical discussions.

Supporting facts and figures

Mercosur is a South American trade bloc composed of Brazil, Argentina, Uruguay, and Paraguay with a combined GDP of over $3T and a population of over 260M.
In 2020, Canada’s merchandise trade with Mercosur totalled $9.9 billion, with Canada’s exports valued at $2.5 billion and imports valued at $6.6 billion.
An FTA with Mercosur could enhance market access of Canadian exporters in several industrial sectors facing high tariffs, such as chemicals and plastics (35%), aluminum (20%), and information and telecommunications technology (35%).

Background

These negotiations provide an opportunity for Canada to promote an inclusive approach to trade and to advance broader social, labour and environmental priorities both at home and abroad while reinforcing the importance of a rules-based trading system at a time of growing protectionism. Environmental concerns stemming from the forest fires in Brazil’s Amazon region, coupled with human rights concerns related to Brazil’s treatment of Indigenous peoples and potential links to increased agricultural trade, have triggered greater public scrutiny of trade liberalization efforts with Brazil. Several EU member states have also expressed concern about these issues in the context of the ongoing ratification process for the EU-Mercosur FTA, and these concerns have been echoed by Canadian stakeholders, led by Greenpeace, as well as Indigenous groups.

Buy american and buy America

Canada is exempt from Buy American requirements.
Long-standing concerns with Buy America requirements as Canada does not have an exemption.
Federal government engaging the U.S. Administration, members of Congress, allies at the sub-national level and U.S. business and labour communities, to advocate for a Canada-U.S. approach to the U.S. infrastructure package.

Supplementary messages

Canada's engagement with U.S. stakeholders is most effective with targeted information that makes clear – and real – the negative impact that applying Buy America on Canada-U.S. supply chains may have on U.S. interests.
As we have seen in the past, applying Buy America against Canada can have negative impacts on U.S. manufacturers and workers, increase costs, delay projects, and result in negative environmental or safety impacts.
Canada must continue to demonstrate the value that our suppliers bring to the U.S. marketplace and we must use all the tools we have at our disposal to protect the security and resilience of our cross-border supply chains.

Background

Buy American requirements were first established during the U.S. Great Depression and are set out in the Buy American Act of 1933, which mandates that all federal government departments purchase only U.S. goods. Canada is exempt from Buy American requirements as a result of our respective obligations under the revised WTO Agreement on Government Procurement (GPA).

However, Canada is not exempt from Buy America requirements. Since 1982, Buy America requirements have applied to the purchase of iron, steel and manufactured goods used in state/local infrastructure projects funded – in whole or in part – by certain U.S. federal departments and agencies (mainly the Department of Transportation and the Environmental Protection Agency). In addition, procurement of rolling stock (e.g. Buses, subway cars, vehicles) requires 70% U.S. domestic content and final assembly in the U.S. to be considered Buy America compliant. As federal transfers or grants to lower levels of government are not covered by the U.S. under the GPA, imposing Buy America requirements is consistent with U.S. trade obligations.

There is broad bipartisan support for Buy America policies in the U.S. and President Biden has pledged to attach existing, or potentially expanded, Buy America requirements to the upcoming U.S. infrastructure package, which is expected to be in the range of US$1-2 trillion. This initiative, which would be the subject of new legislation, could particularly impact Canadian companies supplying products for:

Transportation infrastructure projects (e.g. Roads and highways, bridges, rail, charging stations for electric vehicles, port facilities, and airports);
Transportation goods (e.g. Trains, subway cars, buses, vehicles, including electric vehicles);
Water and wastewater infrastructure;
Power sector infrastructure; and
Social infrastructure projects (e.g. School upgrades).

The federal government is engaging the U.S. Administration, members of Congress, allies at the sub-national level and in the U.S. business and labour communities, to advocate for a Canada-U.S. approach to the U.S. infrastructure package. A strong Team Canada approach will be required to advance Canada’s interests.

Canada-U.S. relations

Canada is a key U.S. ally. No two nations depend more on each other for their prosperity and security.
The Biden administration presents us with renewed opportunities for collaboration. On February 23, PM Trudeau and President Biden launched a Roadmap for a Renewed U.S.-Canada Partnership to revitalize and expand our historic relationship and realize its full potential.
This roadmap will be the cornerstone of a whole-of-government approach to Canada-U.S. relations and includes the creation of a High-level Ministerial Dialogue on Climate, the revival of the North American Leader`s Summit, and expansion of the U.S.-Canada Arctic Dialogue, among other initiatives.
We continue to work with the U.S. including on border issues, trade, and the ongoing implementation of the Canada-United States-Mexico Agreement, as well as addressing important foreign policy and global issues.

Supplementary messages

Trade

Millions of U.S. jobs are supported by trade and investment with Canada. The U.S. sells more goods to Canada than to any other country - more than it sells to China, Japan and the UK combined.
Canada is committed to working with the U.S. and Mexico to implement the USMCA, which is particularly important for post-pandemic economic recovery. Economic recovery and growth will require greater coordination, innovation and strong partnerships across North America.
Buy America-style proposals negatively affect our cross-border trade. Let’s build on the USMCA by using government procurement to further strengthen North American supply chains and competitiveness.

Climate and energy

Canada committed to Paris Agreement, net-zero targets and mobilizing on climate action.
We welcome the new Canada-U.S. High-level Ministerial Dialogue on Climate, which will provide a valuable platform to discuss efforts to limit global temperature increase to 1.5 degrees C. We will work in tandem with the U.S. to encourage others to achieve net zero emissions by no later than 2050.
Canada is the United States’ #1 energy supplier and #1 partner in energy security.
We are disappointed but acknowledgethe President’s decision to fulfil his election campaign promise to cancel the Keystone XL permit.
Canada supports the continued safe operation of Enbridge Line 5, which is a critical economic and energy security link between Canada and the United States. The people of northern Michigan rely on Line 5 to heat their homes and businesses, and to deliver the oil that the state’s refineries need to produce transportation fuel.
Integrated energy grids will expand renewable energy supplies from Canada to New England and New York.

Border and pandemic

Evidence and science have informed Canada’s approach to the pandemic.
The temporary border arrangement between Canada and the United States is working well, reflecting the open and effective communications between our two governments.
As vaccination is rolled out and the pandemic becomes better controlled, we are working to find a consensus for a gradual reopening of the Canada-U.S. border.

Arctic

The U.S. is Canada’s premier partner in the Arctic and we look forward to continuing to work together on Arctic issues, including safety, security, and sustainable development.
There is strong alignment between Canada’s Arctic and Northern Policy Framework and President Biden’s vision for the Arctic, which is evidenced by the expansion of the Canada-U.S. Arctic Dialogue as part of the Roadmap for a Renewed Canada-U.S. Partnership.

International security and foreign policy

Canada is the U.S. most important ally and defence/national security partner: NORAD, NATO, Five Eyes. We look forward to closer collaboration with the U.S. on our responses to global security challenges.
There is a recognition from the Biden administration that the U.S. will have more of a lasting and consequential impact on regional and global challenges when it works in concert with partners. The challenges identified include building back from COVID, global migration, democracy vs. Authoritarianism, China, Russia and Iran.
Canada is strongly committed to constructive engagement in a rules-based multilateral system and institutions. Global challenges require global solutions: addressing climate change, threats to rules-based trade, mass migration, and the difficulties facing the middle class.
We should ensure multilateral institutions address today’s realities. Canada is strongly committed to constructive engagement in a rules-based multilateral system.
We look forward to working with the U.S. on the Biden administration proposed Summit for Democracies.Secretary Blinken indicated the U.S. could host at the end of this year.
We share many of the U.S. concerns about China (human rights, security, economic). We deplore China’s arbitrary detention of Canadians Michael Kovrig and Michael Spavor. We thank the U.S. for its continued support on this issue.

Inclusion and respect for diversity

Canada and the U.S. share a commitment to greater equality. Canada works to advance inclusion and respect for diversity, to help us become a more just and prosperous society.

Supporting facts and figures

In 2020, bilateral trade in goods and services was $612.3 billion. While overall bilateral flows were down significantly for the year as a whole (84% of 2019 levels), trade had recovered to 95% of 2019 levels by the fourth quarter of 2020.
7.8 million U.S. jobs are related to trade with Canada, which works out to 3.9% of U.S. employment or roughly one in 25 jobs—more than from any other single trading partner.
Canada is the largest, most secure, foreign source of energy for the U.S. supplying 56% of its crude oil imports, 98% of natural gas imports, 88% of electricity imports, and 24% of uranium imports in 2019. In 2019, the Canada-U.S. bilateral energy trade totaled $151.7 billion, including a $86.3 billion surplus for Canada. Canada exported 91% (by value) of its global energy exports to the United States.

Background

On February 26, Secretary Blinken undertook a virtual visit to Canada during which he had a bilateral meeting with MINA and a courtesy call with PM Trudeau. MINA and Sec. Blinken discussed issues in the Americas (Venezuela, Cuba, Nicaragua, Haiti), China, Iran, Saudi Arabia, as well as multilateralism, democracy and migration.

Political context: Joe Biden was inaugurated U.S. President on January 20, 2021. He has nominated all Cabinet members, and their Senate confirmation processes are almost completed. Biden’s cabinet is the most diverse in U.S. history with almost as many women as men, a non-white majority, and multiple historic nominations, including Deb Haaland, the first Native American in a president's Cabinet.

The new administration inherited significant domestic challenges – including tense partisan and racial relations, the impact of the COVID-19 pandemic, immigration pressures and a fragile economic recovery – which are expected to focus the Biden administration and Congress on domestic matters rather than foreign affairs. Nevertheless, President Biden has consistently expressed an intention to rebuild alliances with foreign partners and renew U.S. leadership internationally.

Canada-U.S. Roadmap: PM Trudeau and President Biden had their first virtual meeting on February 23. The two leaders committed to a Roadmap for a Renewed U.S.-Canada Partnership, which is intended to be the cornerstone of a whole-of-government approach to Canada-U.S. relations. It includes the creation of a High-Level Ministerial Dialogue on Climate, the revival of the North American Leaders’ Summit, and expansion of the U.S.-Canada Arctic Dialogue, among other initiatives. In particular, the Roadmap prioritizes:

Combating COVID-19, including support for relevant multilateral organizations such as the WHO and the UN;
Building back better with our shared vision for a sustainable economic recovery;
Accelerating our climate ambitions, including through a new High-Level Ministerial Dialogue on Climate;
Advancing diversity and inclusion through combatting systemic racism and gender-based discrimination;
Bolstering security and defense by modernizing NORAD and supporting our shared commitment to transatlantic security; and,
Building global alliances by reviving the North American Leaders’ Summit and working through multilateral organizations, including the UN, the G7, G20, WTO, NATO, and FVEY.

PM Trudeau and President Biden also discussed a wide range of bilateral issues, including an inclusive and sustainable economic recovery, fighting against all form of discrimination, and protecting energy infrastructure. The leaders also considered ways to address key global challenges, such as climate change, NATO, China, digital economy and cybersecurity, and priorities in multilateral forums.

The U.S. administration signalled its interest in hosting the North American Leaders’ Summit (NALS) around April 22, 2021.

Trade: Canada and the U.S. enjoy the largest trading relationship in the world. Canada’s efforts are focused on ensuring the effective implementation of the CUSMA and defending Canadian trade interests in the U.S., and collaborating closely to address global trade challenges, including with respect to China and the WTO.

The CUSMA entered into force on July 1, 2020, reinforcing the strong economic ties between the three parties and enhancing North American competitiveness. More recently, the parties have focused on the implementation of the rules of origin for automotive trade and standing-up CUSMA committees, including those on Small and Medium-Sized Enterprises and North American Competitiveness.

While implementation is proceeding well overall, certain bilateral irritants exist. For example, the U.S. has pursued dispute settlement consultations with Canada regarding tariff rate quota administration policies for dairy, and Canada has requested consultations with the U.S. regarding its continued illegal global safeguards on imports of Canadian solar products. U.S. trade policy continues to be closely linked to domestic priorities and a tendency towards protectionism will remain.

President Biden is moving forward on his campaign promise to expand Buy America and Buy American requirements. On January 25, President Biden signed an Executive Order (EO) on ‘Ensuring the Future Is Made in All of America by All of America’s Workers’, which is largely focused on streamlining process, increasing transparency and oversight, and re-enforcing existing commitments for Buy American requirements. As such, it will have limited impact for Canada.

Climate and energy: New U.S. policies and overall approach on climate change and environmental protection are aligned with Canada’s views. As part of the Roadmap, PM Trudeau and President Biden pledged to explore opportunities to align policies and approaches to create jobs, while tackling climate change and inequality, and enhancing adaptation and resilience to climate impacts. They also agreed to protect businesses, workers and communities in both countries from unfair trade by countries failing to take strong climate action, and to reduce oil and gas methane emissions to protect public health and the environment.

There is also local and national opposition in the U.S., including court actions, against Enbridge Line 5 and Line 3 pipelines. The Biden administration has not pronounced on these two projects yet. The renegotiation of the 1964 Columbia River Treaty, a bilateral flood control and hydropower Canada-U.S. agreement, is currently underway and remain a priority.

Border management: On March 17, the temporary border arrangement between Canada and the U.S. was extended through April 21, 2021. In the Roadmap for a Renewed U.S.-Canada Partnership, Prime Minister Trudeau and President Biden recognized that coordinated border policies remain central to controlling COVID-19 and new variants while promoting economic growth and recovery. Both leaders agreed to take a coordinated approach based on science and public health criteria when considering measures to ease Canada-U.S. border restrictions in the future.

International security and foreign policy: As part of the U.S.-Canada Roadmap, PM Trudeau and President Biden reaffirmed the importance of investment in modern, ready, and capable forces in line with their commitments to NATO, and agreed to expand cooperation with respect to the promotion of democracy, human rights, and media freedom in our hemisphere and around the world. President Biden also condemned the arbitrary detention of Michael Kovrig and Michael Spavor and his commitment to work for their release.

The Biden administration has expressed its commitment to a rules-based international system and multilateral co-operation, notably by cancelling plans to withdraw from the World Health Organization and rejoining the Paris Climate Agreement. There is a recognition from the Biden administration that the U.S. will have more of a lasting and consequential impact on regional and global challenges when it works in concert with partners. The foreign policy challenges identified by the U.S. include building back from COVID, global migration, democracy vs. Authoritarianism, China, Russia and Iran.

COVID-19: As of March 18, there have been more than 29.4 million cases and over 530,000 deaths in the United States. About 113 million people have received at least one dose of a COVID-19 vaccine, including about 40 million people who have been fully vaccinated. On March 11, President Biden signed a new COVID economic relief package totaling US $1.9 trillion into law.

Representation: Canadian Ambassador to the U.S., Kirsten Hillman. U.S. Chargé d’affaires to Canada, Katherine Brucker.

Canada-U.S. Trade Promotion

The United States remains a priority trade promotion market, where the Trade Commissioner Service (TCS) delivers a range of client-facing trade promotion programs to secure market access and reinforce integrated supply chains.
In keeping with the Government’s policies on Diversity, Equality and Inclusion and Responsible Business Conduct (RBC), TCS trade promotion programs focus support on smes, under-represented exporters (women, Indigenous, racialized peoples, LGBTQ2, youth) and RBC clients in resource extraction and manufacturing industries.
Investment attraction and innovation partnerships are supported by investment outreach and retention efforts, as well as innovation programs, including Canadian Technology Accelerator initiatives.

Supplementary messages

Utilizing a network of the Embassy in Washington, D.C., 13 Consulates General and 3 trade offices, the TCS in the U.S. delivers High-touch Accelerated Growth Service support to key clients. Program funding for exporters comes from CanExport for smes and CanExport Innovation for technology partnerships and associations.
A network of Investment officers works with the wider TCS trade promotion team on FDI retention and attraction, focusing on Fortune 500 global entities, as well as targeting Venture Capital investment in support of our technology start-up ecosystem through the Canadian Technology Accelerator (CTA) program.
Ensuring our companies conduct business in a responsible manner, and respect human rights, is a shared priority between our countries, in particular as it relates to the prohibition of goods mined, manufactured or produced by forced or compulsory labour, including child labour.

Supporting facts and figures

Canada and the U.S. have the largest trading relationship in the world. In 2019, bilateral trade in goods and services totalled $1 trillion, more than $2.7 billion in trade every single day. In 2020, bilateral trade in goods and services was $612.3 billion. While overall bilateral flows were down significantly for the year as a whole (84% of 2019 levels), trade had recovered to 95% of 2019 levels by the fourth quarter of 2020.
Our level of economic integration is unique: approximately 77% of Canadian exports to the U.S. are inputs used to make goods in the U.S.; in addition, what we sell to the U.S. contains on average roughly 21% American content. We make things together and add value together.
Canada is the number one export market for most U.S. states (32 in 2019). Over 74% of Canada’s goods exports go to the U.S. The U.S. is the single greatest investor in Canada with $455 billion stock investment in 2019, nearly half of all investment in Canada.
CanExport smes has approved more than $62.8 million in funding for 859 projects targeting the U.S. since 2016 (over $26.7 million in funding for 815 projects in 2020-21).

Background

Approximately 80% of new exporters are smes that export to a single market and almost 70% of new exporters choose the U.S. as their first export destination. The U.S. is a proven testing ground both for new exporters, and for established ones piloting a new product or service. Canada is the United States’ largest customer and buys more goods from the United States than do China, Japan and the United Kingdom combined.

Solar tariffs and other trade remedy issues

Solar Tariffs

We will work with the Biden administration to remove the solar safeguard tariff on Canadian products.
Canada is ready to launch CUSMA panel proceedings if necessary; consultations were held in January.

Fact-Finding Investigations on Seasonal Produce

Canada has actively defended Canadian farmers in the U.S. fact–finding investigations into bell peppers, strawberries, cucumbers and squash and is closely following developments.

Supplementary messages

Resolving the solar tariff presents an additional opportunity for Canada and the United States to closely collaborate on approaches that both strengthen North America competiveness and support broader international work to combat climate change.

Supporting facts and figures

Since early 2018, the U.S. solar safeguard tariffs have caused Canada’s exports of solar products to the United States to decline by as much as 82%
Canada now accounts for less than 1 percent of U.S. imports.

Background

Solar Tariffs

In 2018, the Trump administration purposely ignored NAFTA global safeguard rules and imposed a 30% safeguard tariff on solar modules from Canada. The U.S. also blocked Canada’s attempt to launch NAFTA dispute settlement proceedings. Despite a high level of engagement with the Trump Administration since the tariff was illegally imposed in 2018, the tariff has remained in place. On December 22, 2020, Canada launched CUSMA dispute settlement proceedings and held consultations on January 28, 2021, with the goal of convincing the Biden Administration to respect NAFTA and CUSMA rules and exempt Canada from the solar tariff.

Fact-Finding Investigations on Seasonal Produce

The Trump Administration also launched various investigations on seasonal produce. Although Canada was successful in preventing the imposition of a safeguard duty on blueberries, the threat of new safeguard investigations on bell peppers and strawberries remain, and any resulting tariffs could disrupt Canadian exports of these products (fact-finding investigations can lead to safeguard investigations). It will be important to ensure that the Biden Administration adheres to CUSMA safeguard rules, which require the United States to exempt Canada from the application of these tariffs, subject to certain conditions.

Section 232 Investigations on Transformers and Vanadium

The U.S. 232 National Security investigations on Vanadium and Transformers and parts that were launched by the Department of Commerce in 2020 remain without final decision or closure by the President. In both cases, there is no indication that the Commerce Secretary submitted a final report to the President. Although the tariff threat appears to have diminished greatly with the new Administration, the Embassy in Washington continues to seek clarity on the status of these investigations.

Canada-U.S. border

Canada and the United States have extended the temporary border arrangement until April 21, 2021.
We will continue to base our decisions on the best public health advice available to keep Canadians safe from COVID-19.
Our Embassy in Washington, D.C. continues its close contact with American interlocutors about the future of these measures.

Supplementary messages

On March 18, 2021, Minister Blair issued a tweet to announce the extension of the Canada-U.S temporary border arrangement until April 21, 2021. The United States Department of Homeland Security (DHS) released a tweet the same day to confirm the extension and also noted the coordination with Canadian (and Mexican) partners.

Update

Discussions continue within the Government of Canada as to options to move forward on the future of the temporary border arrangement, and an eventual border reopening. Canadian officials have developed productive working relationships with incoming members of the Biden Administration.

Stakeholder interest in the future of the temporary border arrangement and options for re-opening the border to normal flows is expected to continue to rise. Next month, the Wilson Center Task Force on Public Health and the U.S.-Canadian Border, co-chaired by Anne mclellan, Jean Charest, as well as U.S. co-chairs Christine Gregoire and James Douglas, former governors of Washington State and Vermont, respectively, plans to release a report with recommendations as to next steps to re-open the border.

Supporting facts and figures

According to a Statistics Canada report released in February 2021, while the numbers of non-residents and returning Canadian travellers has declined sharply since April 2020 and is still far below levels of previous years, “other arrivals” to Canada recovered more quickly after an initial drop.
These “other arrivals” primarily include Canadian and American truck drivers as well as crew members travelling internationally on different modes of transport. This “other” group, mostly essential travellers, have a proportionately larger share of the total after March 2020.
For example, in December 2019, international arrivals at Canadian borders were composed of the following (in thousands): 4,377 (Canadian residents); 2,192 (non-residents); and 573 (other travellers). By December 2020, the last month of data in the report, the respective figures, also in thousands, were 379, 154, and 513.

Background

The one-year anniversary of the Canada-U.S. temporary border arrangement recently passed; on March 18, 2020, Prime Minister Trudeau announced that the two countries had agreed to temporarily restrict all non-essential travel across the Canada-U.S. border, taking effect on March 21, 2020, and ending on April 21, 2020. The arrangement has since been extended 12 times.

Canada-U.S. cooperation on china

Canada shares U.S. concerns about China’s actions, particularly with respect to human rights, trade, intellectual property, rule of law, security issues and industrial policies.
Canada is working with the U.S. and other like-minded partners to address our joint concerns, including in multilateral organizations.
Appreciate the close coordination with the U.S. and others on economic sanctions of Chinese officials in the Xinjiang Uyghur Autonomous Region. Welcome further coordination to continue to respond to the human rights situation in China.
We also recognize the need to work with China (and the U.S.) to address global issues such as climate change, health, non-proliferation, and finance.
We deplore China’s arbitrary detention of Canadians Michael Kovrig and Michael Spavor. We thank the U.S. for its continued support on this issue.

Supporting facts and figures

As part of the Roadmap for a Renewed Canada-U.S. Partnership, Canada and the U.S. agreed to more closely align their positions and actions with respect to China.
Michael Kovrig and Michael Spavor have been arbitrarily detained in China since December 2018.

Background

Whereas in the past the U.S. has seen China as a developing country (with nuclear weapons), its unprecedented economic growth over the last 20 years, technological advances, large military expenditures, and more assertive foreign policy under President Xi have led to the realization that American pre-eminence cannot be guaranteed. Also, the hope that U.S. support for economic liberalization, especially following China’s accession to the World Trade Organization in 2001, would lead to greater democratization has been unrealized.

In light of these conclusions, a new narrative has emerged in Washington, partly reflected in and influenced by President Trump’s “America First” agenda, that China will not engage as a constructive, cooperative partner with the U.S. and that a new era of great power competition has begun. As stated in his January 2021 Senate confirmation hearing, U.S. Secretary of State Antony Blinken believes that China poses the most significant challenge of any state to the U.S. Supported by a bipartisan consensus in Congress, counter-balancing China’s growing global influence and safeguarding U.S. national and economic security is a high priority for the U.S. administration, which is expected to adopt a whole-of-government approach to China. That said, President Biden and his top national security officials have also stated that the U.S. must find ways to coexist with China, noting that competition and cooperation are not mutually exclusive. Canada also recognizes that we need to work with China to address global issues such as climate change, health, non-proliferation, and finance.

In these circumstances, the Biden administration is seeking to act in concert with like-minded democratic partners to address shared concerns about Chinese domestic issues such as repression of human rights (including in Xinjiang and Hong Kong), media freedom, rule of law, growing military expenditures, conditions for foreign investors, market access, and technological competition. The U.S. is also seeking to work with allies to counter other Chinese activities it sees as problematic, such as assertions of its maritime/territorial claims in the South China Sea, foreign direct investment/financial assistance under the Belt and Road Initiative, coercive diplomacy, state-sponsored cyber program (including 5G network concerns) and foreign interference. Long-standing concerns about Taiwan and growing Chinese interest in the Arctic, Latin America, and elsewhere will also preoccupy the United States.

Canada shares many of the U.S. concerns with respect to China’s assertive behaviour both internationally and domestically, notably with respect to trade, intellectual property, human rights, rule of law, security issues and industrial policies. For example, as part of the CUSMA Canada and the U.S. jointly signed on to new obligations that prohibit each country from importing goods made in whole or in part by forced labour. Canada has made use of this provision in order to bring attention to and minimize risk exposure for Canadian companies to the on-going human rights situation in Xinjiang as part of its measures announced on January 12. On March 22, in coordination with the U.S. and U.K., and in solidarity with the E.U., Canada announced new sanctions against 4 officials and 1 entity under the Special Economic Measures (Peoples Republic of China) Regulations, based on their participation in gross and systematic human rights violations in the Xinjiang Uyghur Autonomous Region. Secretary Blinken and the U.S. administration have also commended Canada’s leadership on the Arbitrary Detention Initiative, supported Canada in advocacy around the world, and joined Canada and 60 other parties in endorsing the Declaration against Arbitrary Detention in State-to-State Relations. The U.S. has also pledged to raise the arbitrary detention of Michael Kovrig and Michael Spavor systematically with China at every level and treating it as though they were American citizen.

Some specific policies of the Biden administration are already apparent. Domestically, Trump-era restrictions, such as the requirement for China-based media to register as foreign missions in the U.S., limits on the network of Chinese-language Confucius Institutes, and attempts to ban Chinese technology companies from critical sectors (e.g. Semiconductors, 5G) will likely remain in place. Plans to strengthen domestic U.S. manufacturing and increase supply-chain resiliency, particularly for medical supplies, are partly intended to reduce dependence on Chinese sources. The Biden campaign pledge to increase government spending on green technology explicitly refers to the advantage that state subsidies and industrial strategies have given China’s own industry. Canada is also moving forward on investment in green technologies and is considering options with respect to supply chains resiliency in critical sectors, particularly telecommunication technologies (i.e. 5G), critical minerals, and medical supplies.

To counter China’s aggressive foreign policies, the Biden administration has argued that the U.S. should focus on ad hoc coalitions or issue-specific groups to increase pressure on China such as a “D-10 coalition” (G7 + Australia, South Korea and India) proposed by the UK to address issues related to trade, technology, supply chains, and standards. Increased U.S. engagement in multilateral organizations such as the U.N. as well as regional groupings such as Quads, ASEAN and APEC are also expected to be instrumental in a Biden strategy to counter-balance China. Secretary of State Blinken has stressed the importance of taking a lead role in international institutions instead of, through disengagement or absence, effectively ceding leadership to China. Biden has advocated greater consideration at NATO of the risks stemming from China’s growing military capabilities and assertiveness (e.g. Taiwan, South China Sea) and in favour of increased military capacity to address potential Chinese security threats in the Euro-Atlantic and Indo-Pacific regions. As a member of the G7, NATO, ASEAN, and other multilateral organizations, Canada will be a key partner for the United States. A number of bilateral priorities will also feature prominently in the U.S. strategy to counter China, such as modernizing NORAD, the Arctic, cybersecurity, and strengthening democracy.

On trade and economic issues, President Biden made campaign promises to address structural issues such as steel overcapacity, industrial subsidies, and support for state-owned enterprises, as well as forced technology transfer, cyber threats, intellectual property theft faced by U.S. companies in China. Canada is already well aligned with the U.S. on these issues.

While Canada did work with the Trump Administration on some China-related issues, it’s clear that the Biden administration policies toward China will provide many opportunities for collaboration and cooperation, including a much greater focus on some of Canada’s top priorities, including human rights. Early signs from Washington are encouraging and there is a clear recognition from the U.S. that working in tandem with like-minded partners, including Canada, will be likely to achieve results when it comes to China.

CUSMA implementation and reinforcing the Canada-U.S. economic partnership

The effective implementation of the CUSMA is crucial to the success of the North American partnership and post-pandemic economic recovery.
Canada is committed to working with the U.S. and Mexico to effectively implement the Agreement, including by advocating for Canadian business interests and supporting labour reform efforts in Mexico.
At the same time, we are looking to leverage this renewed partnership to identify ways that we can collaborate more to address global trade challenges, including with respect to climate change, China, and the WTO.

Supplementary messages

CUSMA preserves key elements of NAFTA, modernizes provisions to address 21st century trade challenges, reduces red tape at the border, and provides enhanced predictability and stability for workers and businesses across the integrated North American market.
The new Agreement reinforces the strong economic ties between the three countries and enhances North American competitiveness.
The parties are currently focused on standing-up CUSMA committees, including those on Small and Medium-Sized Enterprises and North American Competitiveness, and preparing for a Free Trade Commission meeting in the near term.
The new Agreement advances Canada’s inclusive trade agenda:
- Ensures high levels of labour and environmental protection;
- Includes an innovative labour rapid response mechanism to ensure national labour laws related to collective bargaining and freedom of association are respected and violations are addressed in a timely manner;
- Includes an obligation to ban imports produced by forced labour;
- Contains provisions that will increase and enhance opportunities for smes, women and Indigenous peoples to engage in and benefit from North American trade;
- Advances Canada’s interests towards inclusive trade, including through greater integration of the gender perspective and the interests of Indigenous peoples and includes labour obligations regarding the elimination of employment discrimination based on gender;
- Incorporates a general exception that clearly confirms that the government can adopt or maintain measures it deems necessary to fulfill its legal obligations to Indigenous peoples.

Responsive – Mexico Labour Reform

The effective implementation of Mexico`s labour reforms is crucial for levelling the playing field for workers in North America.
Canada will allocate $27.5 million over four years to support Mexico’s labour reform efforts, including through support for capacity building projects and the establishment of an effective monitoring and compliance regime.

Responsive – U.S. Concerns on Canada’s Dairy Tariff Rate Quotas (TRQS)

Canada is disappointed that the U.S. requested consultations on Canada’s administration of its CUSMA dairy trqs.
Canada is confident that it is fully compliant with its CUSMA TRQ obligations and will vigorously defend our position if this goes further.
The government will continue to preserve, protect and defend our supply management system.

Supporting facts and figures (Statistics in canadian dollars unless otherwise noted)

The CUSMA economic region is the biggest in the world, encompassing a US$22 trillion regional market of more than 480 million consumers.
In 2019, trilateral merchandise trade exceeded US$1.2 trillion - a four-fold increase since 1993.
Canada and the United States enjoy the largest trading relationship in the world. Canada-U.S. bilateral trade in goods and services in 2019 was over $1 trillion.
Canada is the largest single-country market for U.S. exports, 33 of the U.S. states count Canada as their most important export destination.
The Business Roundtable notes that 7.8 million jobs in the U.S. are supported by trade with Canada – more than from any other single trading partner.
The United States is the most important source of foreign direct investment (FDI) in Canada. In 2019, its share of FDI in Canada was $455 billion, representing 47 per cent of total FDI in Canada.
The United States is the most important destination for Canadian direct investment abroad. In 2019, $632 billion was destined to the United States, representing 45.4% of Canadian direct investment abroad.
The top 3 most important Canadian merchandise exports to the United States are mineral fuels and oils, motor vehicles and parts, and machinery.
Mexico is Canada’s third largest trading partner (following the United States and China), while Canada is Mexico’s sixth largest trading partner (following the U.S., China, Japan, Germany, and South Korea).
Canada-Mexico two-way merchandise trade amounted to more than $44 billion in 2019, with top sectors including motor vehicles, machinery, electronics, and agricultural goods.

Background

CUSMA Implementation: Following entry into force on July 1, 2020, the Parties have focused on the implementation of the autos rules of origin and standing-up CUSMA committees, including those on Small and Medium-Sized Enterprises and North American Competitiveness. More recently, work is underway to support a Free Trade Commission meeting, which could take place as early as mid-April. While implementation is proceeding well overall, certain bilateral irritants exist including with respect to U.S. concerns on Canada’s dairy tariff rate quota practices and Canada’s concerns with continued U.S. safeguard tariffs on Canadian solar products.

Mexico Labour Reform Support: Canada has devoted $27.5 million over 4 years, starting in April 2021, to support Mexican labour reform programming and establish a monitoring and compliance regime. The U.S. has appropriated US$180 million for programming to support similar efforts in Mexico. Canadian and U.S. officials are engaged in regular discussions to coordinate efforts.

Dairy Tariff Rate Quota Administration: On December 9, 2020, the U.S. requested consultations under CUSMA regarding the administration of Canada’s dairy tariff rate quotas (trqs), specifically Canada’s practice of allocating a high proportion of its trqs to processors. Consultations took place on December 21, 2020, between officials from Canada and the U.S. At the end of the meeting, the U.S. indicated that it remained dissatisfied with Canada’s administration of its CUSMA dairy trqs. The U.S. has been in a position to request the establishment of a panel since January 8, 2021.

Canada-U.S. Cooperation on Global Trade Issues: Early engagement with the U.S. on global trade issues is crucial to demonstrate the role that Canada can play in advancing shared objectives. In particular, there is an opportunity to collaborate to support resilient supply chains and North American competitiveness; advance the global response to climate change; and, demonstrate the benefits of our essential security relationship and make progress on global trade issues (e.g. China and the Indo-Pacific, WTO reform, forced labour).

Softwood lumber

Any U.S. duties imposed on Canadian softwood lumber are unwarranted and unfair.
Vigorously defending the interests of Canadian industry, including through litigation under Chapter 19 of NAFTA, Chapter 10 of CUSMA and before the WTO.
Continue to believe that an agreement is in both countries’ best interests; remain ready and willing to negotiate a mutually acceptable agreement.

Supplementary messages

Softwood lumber is being raised at all levels with the new U.S. administration.

Background

Currently, most Canadian companies are subject to a combined 8.99% duty rate when exporting certain softwood lumber products to the United States.

Softwood lumber continues to be a priority for the Government of Canada, and it is being raised at all levels with the new U.S. Administration. In addition, Canada continues to work with long-time allies in the United States, such as homebuilder associations, to stress that U.S. duties are not only causing undue harm to Canadian producers, but also to U.S. homebuilders and consumers. The current record-high lumber prices are hampering the role that the U.S. housing sector may play in the economic recovery. U.S. homebuilders have been vocal about the need to find solutions to the high prices and to ensure stability of supply. Canada’s position remains that a new softwood lumber agreement is in the best interests of both countries, and Canada is prepared to re-engage in negotiations when the United States is ready to discuss realistic proposals that would be acceptable to Canadian industry. In the meantime, Canada is continuing to vigorously pursue legal challenges against U.S. duties at the WTO and through NAFTA/CUSMA dispute settlement panels.

Under NAFTA Chapter 19, Canada is challenging the U.S. Department of Commerce’s (Commerce) initial countervailing (CVD) and anti-dumping (AD) determinations. Canada and the United States continue to be engaged in protracted discussions regarding panel composition for these cases. Canada is also challenging Commerce’s determinations before the WTO. While the WTO AD panel found that the U.S. improperly calculated dumping margins, Canada appealed in June 2019 certain findings from the Panel that were unfavorable. The Panel’s report on Canada’s CVD challenge was released in August 2020. The WTO CVD Panel found overwhelmingly in Canada’s favour and that U.S. CVD duties on Canadian softwood lumber are inconsistent with the United States’ WTO obligations. However, the United States appealed the Panel’s report in September 2020. Timelines for both appeal proceedings are unclear due to the WTO Appellate Body’s current lack of quorum.

Finally, Canada is pursuing challenges of the final results of Commerce’s first Administrative Reviews under Chapter 10 of CUSMA. Administrative reviews are annual reviews Commerce conducts of its AD and CVD orders. The Administrative Review process establishes duty assessment rates for shipments entered during the period of review, as well as the new duty deposit rates going forward until the next annual Administrative Review is completed. On November 23, 2020, Commerce issued the final results for its first AD and CVD Administrative Reviews. The final duty rates are, for most companies, significantly lower than those from the initial investigation (8.99% compared to 20.23% “all-others” rate). The second and third Administrative Reviews are underway and final results are, respectively, expected in November 2021 and August 2022.

Canada-U.S. oil and gas pipelines

The energy that Canada provides to the U.S. benefits U.S. energy security, economic competitiveness and environmental objectives.
The U.S. will need fossil fuels for the next three decades even as it transitions to a goal of a net zero emission economy, and Canada is the best source as its #1 foreign supplier.
Pipelines are the safest, cleanest form of transport for oil and gas.

Supplementary messages

Canada strongly supports the continued operation of Line 5 as a critical asset in Canada’s energy infrastructure, and continues to engage U.S. officials, lawmakers and stakeholders at all levels to keep Line 5 open.
We are disappointed with, but acknowledge, the President’s decision to fulfil his election campaign promise to cancel the Keystone XL permit.
Line 3 is an important piece of infrastructure that will strengthen the integrated energy relationship between the United States and Canada, and we are pleased that construction is underway in Minnesota, the final link in the project.
Canada will continue to promote the security, economic and environmental benefits of our energy supplies with the U.S. Government, alongside our engagement on fighting climate change and other environmental issues.

Supporting facts and figures

Canada is the #1 source of imported energy to the United States.
In 2019, from $151.7 billion in two-way energy trade, Canada enjoyed a bilateral trade surplus in energy of $86.3 billion.
Over 70 oil and gas pipelines and over 30 transmission lines carry energy back and forth across the Canada-U.S. border.
Crude oil dominated our overall energy exports - 56% of U.S. foreign supply - and pipelines dominate this trade.

Background

Keystone XL (KXL)

For more than a decade, successive Canadian governments, including the present one, have strongly and consistently supported the KXL project through engagement with the U.S. federal and state governments, and other American stakeholders.

Canada was disappointed with President Biden’s decision to cancel KXL’s Presidential permit, but acknowledges this decision to fulfil his election campaign promise made in public in May 2020. We believed there was a strong case to be made for KXL. To that end, following the U.S. elections last November, Canada made every effort, and reached out to make the strongest possible case for KXL with the incoming Biden team, the transition team and their advisors. In his first telephone call with then President-elect Biden, the Prime Minister raised KXL.

Enbridge Line 3

Enbridge’s Line 3 replacement project has been completed in Canada, and is also complete for the portions in North Dakota and Wisconsin. For the incomplete section in Minnesota, Canada has strongly supported the project through formal, detailed, written submissions to U.S. federal and state regulatory and environmental assessments. Construction is now underway in Minnesota, with approximately 25% of that leg of the project complete. As the project is still subject to some litigation, we are continuing to monitor the situation closely.

Enbridge Line 5

Line 5 is a 645-mile pipeline, running from the terminal hub of Superior, Wisconsin, to Sarnia, Ontario. It has operated safely since 1953, and carries light crude oil and natural gas liquids (ngls) from Alberta and Saskatchewan to Michigan and Ontario. Connecting pipelines transport these resources further to Quebec, Ohio and Pennsylvania. A shutdown of the pipeline would cause significant economic disruption.

On November 13, 2020, Michigan announced that the it was revoking Enbridge’s 1953 authorization (‘easement’) to operate its Line 5 pipeline through the Straits of Mackinac, which connects Lakes Michigan and Huron. The State is citing alleged violations of the easement agreement by Enbridge, which Michigan sees as an unacceptable oil spill risk, and has given the company until May 12, 2021, to cease operations. In making this announcement, Michigan Governor Gretchen Whitmer also filed a legal claim seeking a state court decision to validate her proposed action. Enbridge filed a suit against Michigan in federal U.S. District Court, seeking to remove the case from Michigan state to U.S. federal jurisdiction. The state court case is held in abeyance, waiting for a decision from the federal court. The federal court has set aside all consideration and motions, with the exception of a motion from Michigan to remand the case back to state court.

On February 17, the judge in the federal court set down a briefing schedule on only one procedural motion, whether to remand the case to state court, where all action is suspended until the federal court determines jurisdiction. Filings of pleadings may run until June 2, 2021, i.e. After Michigan’s stipulated shutdown date of May 12, 2021. The federal court judge ordered Enbridge and Michigan to enter into mediation to see if, in the meantime, they might reach a settlement that would render the court proceedings unnecessary. On March 16, a mediator was announced, with the first meeting scheduled to take place on April 16 after which they will report out a meeting schedule to the judge. The mediation outcome would be non-binding.

Line 5

Canada strongly supports the continued safe operation of Line 5. We are also committed to protecting the Great Lakes.
We recognize the serious economic impacts that shutting down Line 5 would have on Alberta, Saskatchewan, Ontario and Quebec.
Canada has been continuously advocating in support of Line 5 since 2017. This has included engagement by the Embassy, and our consulates in Detroit and New York.

Supplementary messages

Canada is on the record with written, official comments in support of both the existing Line 5 and the proposed Tunnel Project to replace it, as part of state and federal-level permitting processes and public comment periods.
The Prime Minister and Minister Garneau have raised Line 5 with President Biden and Secretary of State Blinken.
Our Ambassador has raised Canada’s concerns with Michigan’s Governor.
We continue to engage with U.S. officials, legislators and other stakeholders on the importance of Line 5 and the negative consequences to both countries of shutting it down.

Supporting facts and figures

Line 5 runs 1,038 km from the terminal hub of Superior, Wisconsin, through Michigan, crossing the border at Sarnia, Ontario.
Line 5 carries up to 540,000 barrels/day of Canadian light crude oil and natural gas liquids through the U.S., delivering feedstock to Canadian refineries in Ontario and Quebec, and to U.S. refineries in Michigan, Ohio and Pennsylvania

Background

Line 5 is a pipeline operating safely since 1953, carrying light crude oil and natural gas liquids (ngls) from Alberta and Saskatchewan to Michigan and Ontario. Connecting pipelines transport these resources further to Quebec, Ohio and Pennsylvania. A shutdown of the Line 5 would cause significant economic disruption.

On November 13, 2020, Michigan announced that it was revoking Enbridge’s 1953 authorization (‘easement’) to operate its Line 5 pipeline through the Straits of Mackinac, which connect Lakes Michigan and Huron. Citing alleged violations of the easement agreement by Enbridge, which Michigan sees as an unacceptable oil spill risk, the company was given until May 12 to cease operations. The Governor has filed a legal claim seeking a state court decision to validate the action. Enbridge has filed a suit against Michigan in federal U.S. District Court, seeking to remove the case from state to federal jurisdiction. The state court case is in abeyance, waiting for a decision from federal court.

The federal court has set aside all consideration and motions, with the exception of deciding on Michigan’s procedural motion to remand the case to state court.

On February 17, the federal court judge set down a briefing schedule on the procedural motion Filings of pleadings may run until June 2, 2021, after Michigan’s stipulated shutdown date of May 12. The federal court judge ordered Enbridge and Michigan to enter into mediation to see if they might reach a settlement, rendering court proceedings unnecessary. The first meeting with mediator took place on April 16. They will report out a meeting schedule to the judge on April 23. The mediation outcome will not be binding.

Canada’s advocacy in support of Line 5 has been ongoing for several years, led by our Embassy in Washington, and our consulates general in Detroit and New York.

Commitment to a green economic recovery

Canada and the U.S. are prioritizing public climate-resilient and green infrastructure spending to spur economic recovery.
Exports are driving economic growth in Canada’s clean technology sector, and there are abundant opportunities for these companies in the increasingly green global economy.
The U.S. Administration’s ambitious plan for clean energy and infrastructure initiatives is expected to enhance opportunities for Canadian products in those sectors.

Supplementary messages

The Roadmap, announced by the PM and President on February 23, 2020, strengthens Canada-U.S. supply chain security, including in areas such as critical minerals, zero-emission vehicles and other clean technologies.
Canadian companies are leaders in renewable energy and power distribution, and these strengths align with the U.S.’ need for clean power to propel its economy.
Canada and the U.S. will build back better together by reinstating North America as a global leader by fostering clean economic growth and advancing climate action.

Supporting facts and figures

Global Canadian exports of environmental and clean technology products totaled over $12 billion – the U.S. accounted for over 70% of exports (2018, latest stats).
The clean technology sector is comprised overwhelmingly of smes and is responsible for approximately 219,000 Canadian jobs (2019 statistics).
Canada’s infrastructure sector is a key contributor to our economy, accounting for 10% of national GDP ($199B) and employing over 1 million Canadians (2019).

Background

Canada and the U.S. are increasing public climate-resilient and green infrastructure spending as a means to spur economic recovery after COVID-19. Climate change is a “cornerstone” of the Government’s plan to create one million jobs and is included in one of the four pillars of the Speech from the Throne. The Government of Canada committed to making investments in clean energy and helping sectors transition to a net-zero future. Canada’s Task Force for a Resilient Recovery recognized green recovery as essential for Canada’s competitiveness in climate action – through buildings, zero-emission vehicles, clean energy, nature, and clean competitiveness.

President Biden’s US$2 trillion green infrastructure and clean energy plan calls for investments in clean energy technologies and infrastructure, new electric vehicle charging stations, battery manufacturing incentives, and foreign investment. Part of that plan has been incorporated into draft legislation that is currently before Congress. The Roadmap for a Renewed U.S.-Canada Partnership, announced by the PM and the U.S. President on February 23, 2020, embraces the opportunity for clean growth by strengthening the Canada-U.S. Critical Minerals Action Plan for a net-zero industrial transformation, essential to zero-emissions vehicle batteries and renewable energy storage. These technologies require specific mineral and metal inputs, the demand for which is projected to grow exponentially in some cases. Under the Joint Action Plan, the United States and Canada are working collaboratively in building a resilient global critical mineral supply chains that will benefit both nations.

Increased demand for clean growth products and services equally leverages Canadian technological strengths – energy storage, renewables, electrification and power distribution via smart grids, and global Canadian infrastructure company expertise in services – project management, engineering, and consulting. Efforts to facilitate recovery after COVID-19 present a transformative opportunity to stimulate economic growth through climate resilient and green infrastructure investments. Canadian firms have significant experience building and operating some of the largest renewable energy plants in the world, through developers, engineering firms, equipment manufacturers and suppliers.

Climate change and border carbon adjustment

The renewed U.S. prioritization of climate change provides an opportunity to advance Canada-U.S. collaboration on climate initiatives.
In the 2020 Fall Economic Statement, Canada committed to exploring the potential of border carbon adjustments.
The U.S. has welcomed continued dialogue with Canada on border carbon adjustments. In that regard, the new Canada-U.S. roadmap provides opportunities for detailed discussions on areas where we can collaborate on climate action, including on border carbon adjustments.

Supplementary messages

Border carbon adjustments can help mitigate carbon leakage while also encouraging other countries to step up and take effective action to reduce emissions.
The government is committed to ensuring that Canada’s transition to a low-carbon economy is achieved in a way that is fair and predictable for our businesses.
As work progresses in Canada, we will be working with international partners to consider how this approach could fit into a broader strategy to meet climate targets while ensuring a fair and predictable environment for businesses.
It is important to note, however, that the U.S. does not have a national carbon pricing system in place and we expect it will take some time for the U.S. to decide whether it will move forward on a border carbon adjustment.

Background

Canada’s approach to carbon pricing

Canada has had a carbon pricing system in place since 2019, known as Pan-Canadian Approach to Pricing Carbon Pollution. The Pan-Canadian Approach to Pricing Carbon Pollution gives provinces and territories the flexibility to develop their own carbon pricing system so long as the system meets the established criteria designed to ensure all systems are stringent, fair and efficient (known as the federal benchmark).

On December 11, 2020, Canada introduced A Healthy Environment and a Healthy Economy – Canada’s strengthened climate plan. The plan includes $15 billion in investments to build a stronger, cleaner, more resilient and inclusive economy. As part of Canada’s strengthened climate plan, the Government of Canada proposes to continue putting a price on carbon pollution post 2022, by $15 per year to 2030. The Government will engage with provinces and territories, as well as with Indigenous organizations, on the proposal to increase carbon pricing from $50/tonne in 2022 (the current policy target) in $15/tonne annual increments to $170/tonne in 2030.

Current status of U.S. initiatives to tackle climate

President Biden has identified action on climate change as a key priority of its build back better agenda. In addition to commitments to rejoin the Paris Agreement and achieve net zero emissions by 2050, the Biden Administration’s trade policy agenda for 2021 prioritizes using trade to advance environmental sustainability. This includes inter alia: negotiating and implementing strong environmental standards; exploring and developing market and regulatory approaches to address greenhouse gas emissions in the global trading system, including considering border carbon adjustments (bcas); working with trading partners as they develop their own approaches; taking action against trading partners who fail to meet their environmental obligations; and promoting resilient renewable energy supply chains. President Biden has also committed to condition future trade agreements on partners’ commitments to meet their enhanced Paris climate targets. Early engagement with the U.S. is essential to protect Canadian interests and to position Canada to be part of these discussions on bcas.

Clean energy (hydro) exports

In the Canada-U.S. Roadmap, PM Trudeau and President Biden encouraged more cross-border clean electricity transmission, as part of the fight against climate change, supporting clean energy and reducing emissions.
Canada’s existing exports of clean, renewable, affordable hydroelectricity already support these goals.
New cross-border hydro projects will help U.S. states meet ambitious net-zero emission targets and fight climate change.

Supplementary messages

Canada is a major exporter of clean hydro energy to the U.S.
These exports are providing a firm, 24/7 clean baseload that help states meet clean energy and emission reduction goals.
Cross-border hydro transmission infrastructure projects align with the Government of Canada’s commitments on clean energy and climate change.

Supporting facts and figures

In 2019, Canada exported 60 Terawatt hours (1 Terawatt hour = 1 trillion watts/hr) to the U.S. of clean renewable hydro worth nearly $3 billion, contributing to states and regions meeting clean energy and emission reduction goals.
The most important export markets are the six New England states, New York State, Minnesota, California, Oregon and Washington State.

Background

At the PM/President meeting on February 23, the leaders: …agreed to take a coordinated approach to accelerating progress towards sustainable, resilient, and clean energy infrastructure, including encouraging the development of cross-border clean electricity transmission.

On February 24, 2021, the U.S. International Trade Commission (ITC) issued a report examining the economic effects of increased renewable energy commitments in New England and Massachusetts, and the role of renewable electricity imports. Canada and some of the provinces testified at the ITC’s hearings. The main finding is that Massachusetts can meet its increased renewable and clean energy commitments with a relatively small increase in retail electricity rates. Positive for Canada, the report states that increased imports of hydroelectric energy from Canada will likely support Massachusetts’s carbon emissions reduction goals.

Over 30 cross-border transmission lines move electricity back and forth across the Canada-U.S. border. These operate both under long-term contracts (e.g. Hydro Quebec supplies Vermont with 25% of its electricity) and on the spot market as supply, demand and price dictate.

From this existing electricity trade, Canada’s hydro exports are expanding with the Hydro Quebec New England Clean Energy Connect (NECEC) supplying Massachusetts and the New England grid under a 20-year contract, running through Maine. The project has obtained all federal and state permits, and pre-construction work has started. Local opposition to the project remains, and litigation is ongoing, but there is no expectation of federal intervention. Hydro Quebec’s Champlain-Hudson Power Express (CHPE) would provide clean power to the New York City government. The project is fully permitted at U.S. state and federal level, so construction could begin if a supply agreement is reached that includes financing the project. Manitoba Hydro, on July 1, 2020, brought into service a new export/import project the Great Northern Transmission Line (GNTL) between the province and Minnesota.

Vaccines (defence production act / executive orders, canada-u.s. Vaccine cooperation)

Canada continues to be in regular contact with various U.S. Government departments and agencies to coordinate our response to the COVID-19 pandemic.
Public Service and Procurement Canada has negotiated the delivery of 1.5 million doses of the astrazeneca vaccine from the U.S., expected to arrive in Canada on March 30^th.
Early in the pandemic, the U.S. exempted Canada from export restrictions placed on certain Personal Protective Equipment – a clear recognition of the special role we play in their economic and national security.

Supplementary messages

My understanding is that U.S.-based vaccine suppliers have indicated to Public Services and Procurement Canada (PSPC) officials that the Defence Production Act has not changed their existing arrangements with countries like Canada and that they continue to work towards target delivery dates.

Supporting facts and figures

Canada has negotiated eight agreements with vaccine manufacturers, four of which are with U.S. based pharmaceutical companies (Pfizer, Moderna, Johnson & Johnson and Novavax). Thus far, Health Canada has approved vaccines from three of the four U.S. companies for emergency use (Pfizer, Moderna, Johnson & Johnson).
The Government of Canada commenced vaccinations on December 13, 2020 after Pfizer and Moderna were first approved, and has since authorized astrazeneca and Johnson & Johnson for emergency use.
Canada is a top-5 supplier to the U.S. for 69 of the 203 imported COVID-response products, or 6^th largest foreign source overall. This includes disinfectants, medical sterilizers, electrocardiographs, and inputs into the production of Personal Protective Equipment, such as the pulp used for N95 masks.
The U.S. remains Canada’s top supplier of medical goods, particularly for more sophisticated medical products such as diagnostic instruments and medications.

Background

On January 21, 2021, President Biden signed an Executive Order titled “Sustainable Public Health Supply Chain” to direct authorities to secure supplies necessary to respond to domestic needs related to COVID-19, including through the authorities of the Defense Production Act (DPA).

Since the issuance of this Order, the Biden Administration has invoked the DPA to increase production of vaccines by U.S. manufacturers. U.S. Government priority-rated orders do not explicitly prohibit exports. However, once a U.S. company has been issued a DPA-rated order from the U.S. government, it is legally bound to comply in fulfilling that order on a priority basis. A supplier can continue to fill other orders while working on a priority-rated order, if its supplies are sufficient, in accordance with the details of the order.

Canada has an exemption to export restrictions of certain related medical products under the Federal Emergency Management Agency (“FEMA“), valid until June 30, 2021. These restrictions do not cover COVID vaccines.

The White House announced on March 19, 2021, that the U.S. will allow exports of 1.5 million astrazeneca-Oxford vaccine doses to Canada. This will count as part of Canada’s 20 million doses secured through a bilateral agreement with astrazeneca. Canada will receive 1.5 million doses in late March and, in return, an equal number of doses will be provided to the U.S. at a later date by astrazeneca.

Mexico new electricial utility law

Canada is concerned about recent measures taken by the Mexican government in the energy sector, including steps to weaken private-sector investment in favour of benefitting state-owned enterprises.
Operating within a stable and predictable business environment is important for Canadian investors. Unfortunately, the new Electrical Utility Law damages investor confidence in the energy sector and beyond.
We remain committed to working with the Mexican government to ensure legal stability and a level playing field, which are key to maintaining and attracting Canadian investment across all sectors.

Supplementary messages

Canadian investors and companies make positive contributions to economic growth, job creation and sustainable local development in various sectors in Mexico, including close to US$9 billion in the energy sector, over US$4.1 billion of which has been invested in renewables.
Not only do Canadian renewable energy companies contribute to Mexico’s goal of lowering the cost of electricity for end users, but they also support Mexico’s commitments under the Paris Agreement.

Background

Approximately US$4.1B of Canadian investment in Mexico is at risk, including from companies such as ATCO, JCM, Northland Power, Canadian Solar. On March 3, Mexico’s Senate passed into law a bill that aims to undo many elements of Mexico’s energy reform that opened the country to international investment, including from Canada. President López Obrador had submitted the bill to Congress on February 1 with priority status.

The law essentially codifies many of the regulatory changes that have been attempted and been subject to injunctions over the past year. This includes providing clear preference to the national utility, CFE, to dispatch onto the grid, relegating clean energy producers (who are largely foreign owned) to a lower position limiting guarantees to sell onto the grid; centralizing permitting processes in the Energy Secretary; as well as disbanding the wholesale energy market.

The implementation of the law has been suspended by the Mexican courts following numerous injunctions. The Supreme Court will likely rule on the constitutionality of the law in Fall 2021.

Year-Over-Year Changes – Explanation of Items

The Department’s total funding requested in the 2021-22 Main Estimates is $6,723.2 million, which represents a net decrease of $761.0 million over the 2020-21 Main Estimates of $7,484.2 million.
Funding decreases include:
- $363.0 million related to funding received in previous years to help developing countries address the impact of climate change;
- $249.7 million related to the sunset of funding received for Renewing Canada’s Middle East Strategy;
- $124.5 million related to funding received in previous years to implement the Feminist International Assistance Agenda;
- $57.0 million in the current funding for the Peace and Stabilization Operations Program; and
- $31.6 million in the current funding for the Duty of Care Special Purpose Allotment to support mission security abroad.
Funding increases include:
- $18.7 million related to the cost of assessed contributions due to changes in the international organizations' budgets and the impact of currency fluctuations resulting from the payment in the prescribed foreign currency of these contributions which represent Canada’s treaty obligations and legal commitments to international organizations;
- $17.9 million for compensation related to collective agreements;
- $15.5 million relating to the impact of foreign currency fluctuations incurred on expenditures at missions abroad; and
- $14.4 million for payments, in respect of pension, insurance and social security programs or other arrangements for employees locally engaged outside of Canada.

Supplementary messages

The 2021-22 Main Estimates include:

Decrease of $363.0 million in the 2021-22 Main Estimates when compared to the 2020-21 Main Estimates related to help developing countries address the impact of climate change. In November 2015, in the lead up to the Paris Climate Conference, the Prime Minister announced an investment of $2.65 billion to Global Climate Change Action by 2020-21.
Decrease of $249.7 million in the 2021-22 Main Estimates when compared to the 2020-21 Main Estimates related funding received for Renewing Canada’s Middle East Strategy. Budget 2019 included funding up to an additional $1.39 billion over two years (2019-20 and 2020-21) to renew Canada’s engagement in the Middle East, with a greater focus on building stability, governance and long-term resilience.
Decrease of $124.5 million in the 2021-22 Main Estimates when compared to the 2020-21 Main Estimates related funding received to implement the Feminist International Assistance Agenda. Budget 2018 decisions provided $2.0 billion in new resources over five years, starting in 2018-19, from the International Assistance Envelope to accelerate the impact of Canada’s new Feminist International Assistance Policy. Budget 2018 decisions also provided $1.5 billion over five years, starting in 2018-19, and $492.7 million per year thereafter from existing unallocated International Assistance Envelope resources, to support innovation in Canada’s international assistance through the International Assistance Innovation Program and the Sovereign Loans Program.
Decrease of $57.0 million in the 2021-22 Main Estimates when compared to the 2020-21 Main Estimates related the current funding for the Peace and Stabilization Operations Program.
Decrease of $31.6 million in the 2021-22 Main Estimates when compared to the 2020-21 Main Estimates related to the current funding for the Duty of Care Special Purpose Allotment to support mission security abroad [Planned to access from the fiscal framework previously approved funding].
$18.7 million related to the cost of assessed contributions, due to changes in the international organizations' budgets and the impact of currency fluctuations resulting from the payment in the prescribed foreign currency of these contributions, which represent Canada’s treaty obligations and legal commitments to international organizations.
$17.9 million for compensation related to collective agreements. Global Affairs Canada is receiving incremental funding for the impact of signed collective agreements.
$15.5 million relating to the impact of foreign currency fluctuations incurred on expenditures at missions abroad. To ensure that Global Affairs Canada maintains its purchasing power on overseas operations, and is not positively or negatively impacted by currency fluctuations, Global Affairs Canada’s budget is adjusted for currency fluctuations on an annual basis.
$14.4 million for payments, in respect of pension, insurance and social security programs or other arrangements for employees locally engaged outside of Canada. Incremental funding was requested to allow Global Affairs Canada to meet the expenditure requirements of the current Program on behalf of Treasury Board as the Employer and the Government of Canada as the sponsor of the plans

Supporting facts and figures

Other items that contributed to year-over-year changes, but not highlighted in these Main Estimates, are shown below:

PICTURE OF TABLE

By Core Responsibility

Following the requirements of the Policy on Results, the 2021-22 Main Estimates for Global Affairs Canada are reported by Core Responsibility:
- $929.0 million - International Advocacy and Diplomacy;
- $376.7 million - Trade and Investment;
- $4,015.5 million - Development, Peace and Security Programming;
- $53.9 million - Help for Canadians Abroad;
- $1,071.3 million - Support for Canada's Presence Abroad; and
- $276.8 million - Internal Services.

Supporting facts and figures

Allocation by Core Responsibility:

PICTURE OF TABLE

Background

As per the TBS Policy on Results, each department is required to have a Departmental Results Framework (DRF) and Program Inventory established and validated yearly.
The DRF outlines what Global Affairs Canada does, what high-level results the department is seeking to achieve and how progress will be assessed.
It is the basis for the department’s reporting to Parliament and Canadians on performance and expenditures in the Main Estimates and Public Accounts.
The Core Responsibilities outlined in the DRF stem from Global Affairs Canada’s legislative framework and describe high-level domains in which Global Affairs Canada acts or has authority to operate on behalf of Canadians.
- International Advocacy and Diplomacy: Global Affairs Canada promotes Canada’s interests and values through policy development, diplomacy, advocacy, and effective engagement.
- Trade and Investment: Global Affairs Canada supports increased and more diverse trade and investment to raise the standard of living for all Canadians and to enable Canadian businesses to grow internationally and to create economic opportunities.
- Development, Peace and Security Programming: Global Affairs Canada programming contributes to reducing poverty, increasing opportunity for people around the world, alleviating suffering in humanitarian crises, and fostering peace and security, and in so doing, advances the Sustainable Development Goals.
- Help for Canadians Abroad: Global Affairs Canada provides timely and appropriate consular services for Canadians abroad, contributing to their safety and security.
- Support for Canada's Presence Abroad: Global Affairs Canada manages and delivers resources, infrastructure and services enabling Canada’s presence abroad, including at embassies, high commissions, and consulates.
- Internal Services: Internal Services are those groups of related activities and resources that the federal government considers to be services in support of programs and/or required to meet corporate obligations of an organization. Internal Services refers to the activities and resources of the 10 distinct service categories that support Program delivery in the organization, regardless of the Internal Services delivery model in a department.

Trade and investment

Through the Trade and Investment core responsibility, Global Affairs Canada aims to increase and diversify trade and investment to raise the standard of living for all Canadians and to enable Canadian businesses to grow internationally and to create economic opportunities.
The 2021-22 Main Estimates includes funding of $376.7 million within the Trade and Investment core responsibility.

Supporting facts and figures

PICTURE OF TABLE

The revenues and other reductions of $2.0 million is related to the authority to collect revenues. The department has a net voting authority for revenues received from services that are not funded by appropriations. The amount of $2.0 million includes $1.0 million for Edu-Canada and $1.0 million for trade fairs and missions.

Background

Global Affairs Canada seeks to advance three high level results through this area of departmental spending: 1) Building and safeguarding an open and inclusive rules-based global trading system; 2) Supporting Canadian exporters and innovators internationally; and, 3) Ensuring Canada is a top destination for global investment.
Highlights from this year’s Departmental Plan for this area include:
- Addressing restrictions on Canada’s ability to import and access critical goods and services, and helping smes facing export challenges and trade barriers in the context of COVID-19.
- Advancing comprehensive free trade agreement discussions with Mercosur and the Pacific Alliance, as well as a trade agreement with the Association of Southeast Asian Nations (ASEAN).
- Recognizing that the United States is the gateway to other markets, strengthen Canada’s relationship with the United States and ensure that Canada’s trade promotion and diversification efforts are maximized.
- Improving the ability to connect Arctic and northern businesses with export opportunities, and supporting business-to-business activities including through the Arctic Economic Council.
- Advancing inclusive approaches to trade, with a special focus on women and women-owned businesses, Indigenous peoples, small and medium-sized enterprises, newcomers and LGBTQ2I persons; and offering a CanExport concierge service to help Indigenous people, visible minorities and women-owned businesses seek growth opportunities during the pandemic.
- Working with Invest in Canada to increase foreign investment to Canada and assist Canadian communities to attract, retain and expand foreign investment. Implement the Foreign Direct Investment Attraction Strategy to support Canada’s economic growth objectives, including sustainable and inclusive economic recovery.
The department will report on results against the 2021-22 Departmental Plan in fall 2022.

Briefing note on departmental plan 2021-22

The Global Affairs Canada 2021-22 Departmental Plan was tabled in Parliament on February 25, 2021.
The Departmental Plan presents the department’s policy priorities, planned results and associated resources requirements for the coming fiscal year, as well as the performance targets against which the department will report its final results through its 2021-22 Departmental Results Report (in fall 2022).
Global Affairs Canada is implementing Canada’s Feminist Foreign Policy across its commitments in diplomacy, trade, security, development and consular services. In 2021-22, the department’s efforts will focus on the four following priorities: contributing to a rules-based international system that advances Canadian interests; supporting Canadian exporters and economic recovery, building economic resilience, and working toward the renewal of the rules-based multilateral trading system; deepening Canada’s engagement in the world; and, eradicating poverty.

Background

The annual Departmental Plan is a legislative requirement as part of the Government’s annual planning and resource management process.
The Departmental Plan provides Parliament and Canadians with a strategic overview of the department’s priorities and planned results for the coming fiscal year by outlining its expenditures grouped by core responsibilities under the 2021-22 Departmental Results Framework.
The format of the 2021-22 Departmental Plan remains very similar to that of last year. The first section presents the Ministers’ Message, which reflects our ministers’ shared vision of the results that the department will achieve for Canadians in 2021-22.
The Planned Results section provides an overview of the department’s key planned activities to deliver on its priorities for the coming fiscal year. Planning highlights in this section are outlined by each core responsibility, and presented alongside the associated departmental results indicators. The planned results tables demonstrate how results, including performance targets, will be measured at the end of the fiscal year in the Departmental Results Report. The actual results for the past three years are also included in these tables, where applicable.
For ease of reference, the Spending and Human Resources section consolidates the financial and human resource information provided for each core responsibility and internal services, including explanations of any significant variances in expenditure plans over the next three fiscal years. Planned spending is also compared with the current and previous years’ actual spending.
The Additional Information section includes corporate information about the department, including the organizational profile and the results reporting framework. This section also presents a listing of supplementary information made available online, including the department’s raison d’être, mandate and role, gender-based analysis plus, and tables outlining its grants and contributions programs.
Further details on the Departmental Results Framework and core responsibilities, as well as highlights can be found as individual notes in this binder.

Briefing note on departmental results report 2019-20

In 2019-20, Global Affairs Canada advanced Canada’s foreign policy, trade and development interests in an evolving international landscape marked by heightened international instability. The department worked to reinforce ties with traditional allies while actively pursuing new collaborations with emerging partners. It also worked to strengthen multilateral institutions that are crucial to the global commons and rallied partners around common causes, such as the response to the instability in Venezuela and the need for a coordinated global response to the COVID-19 crisis.
Global Affairs Canada enhanced market access and increased opportunities flowing from trade agreements. It advanced Canada’s efforts on World Trade Organization (WTO) reform, including through its leadership of the Ottawa Group and successful efforts to preserve Canada’s rights to effective dispute settlement.
At the outset of the pandemic, the department created the COVID-19 Emergency Loan Program for Canadians Abroad to help ensure Canadians could get home safely. Within the first few weeks, more than 7,586 Canadians and permanent residents of Canada had returned on 47 facilitation flights organized in 31 countries. The department also supported the fight against COVID-19 by vetting international suppliers to facilitate procurement of critical medical supplies and helping to identify Canadian companies capable of supplying domestic needs.
Through the Ministerial Coordination Group on COVID-19 and the Alliance for Multilateralism, Canada took a leadership role in ensuring that responses to the pandemic protect and advance gender equality and human rights. The department also effectively deployed international assistance to reduce poverty and increase opportunities for people around the world, this includes improving the lives of more than 97.1 million people through humanitarian assistance support to United Nations partners, non-governmental organizations and the International Red Cross and Red Crescent Movement.
The department supported the families of the 85 Canadian and permanent resident victims of the downing of Ukraine International Airlines Flight PS752, establishing a dedicated consular case management unit, sending Standing Rapid Deployment Team members to Iran, Turkey and locations across Canada, and launching the PS752 Emergency Family Assistance Fund.

Supplementary messages

Global Affairs Canada’s results highlights include:

Developing and launching Empowerment and Progression of Women’s Economic Representation, or EMPOWER—an alliance of private sector champions to support women’s economic empowerment and private sector leadership.
Hosting the Canada-EU Leaders’ Summit in Montréal, Quebec, where leaders committed to enhancing cooperation for inclusive growth, the environment, peace and security, gender equality and innovation.
Releasing the Arctic and Northern Policy Framework, helping to empower northern communities, deepen international Arctic cooperation, and protect the fragile Arctic environment.
Effectively leading Canada’s efforts on key free trade agreements, including ratifying and implementing the Canada-United States-Mexico Agreement (CUSMA).
Facilitating 128 new or expanded foreign investments and 235 investor visits to Canada, and providing Trade Commissioner Services to 16,942 active Canadian business clients, with a satisfaction rate of 91%.
Launching a new five-year international education strategy and welcoming a record 829,405 international students who contributed an estimated $24 billion to the Canadian economy.
Hosting the Women Deliver global conference in Vancouver, British Columbia, the world’s largest gathering on gender equality and the health, rights and well-being of women and girls, resulting in innovative partnerships and resource mobilization to drive transformative change.
Cementing Canada’s role as a global leader on financing for development, including through co-facilitating the first High-level Dialogue on Financing for Development, and establishing new approaches for the deployment of innovative financing.
Advancing efforts to achieve peace and stability in fragile and conflict-affected states by disbursing $152 million via the Peace and Stabilization Operations Program.
Undertaking complex repatriation efforts to help 343 Canadians evacuate from Wuhan, China, and 357 from the Princess cruise ships in Japan and California early in the pandemic.
Providing more than 170,241 new and routine consular cases, including more than 12,489 cases concerning Canadians who required urgent consular assistance.
Launching a renewed innovative and evidence-based consular strategy that delivers enhanced assistance for Canadians requiring help abroad.
Strengthening security measures at missions abroad through 22 projects that upgraded security elements such as closed-circuit television systems, perimeter walls, safe haven rooms, and consular booths.
Ensuring the safety and security of staff in missions abroad by evacuating approximately 1,300 employees and their dependents while ensuring continuity of services for Canadians.

Background

The Departmental Results Report describes the department’s achievements for the fiscal year against the priorities and expected results established in the corresponding Departmental Plan. It highlights a number of significant accomplishments achieved by the department over fiscal year 2019-20.
The Departmental Results Report was tabled on December 7, 2020, and is available online. More information on departmental results can be found in the supplementary information tables available on the department’s website and on the Government of Canada’s infobase website.

Explanation of Variances

Global Affairs Canada’s total actual spending in 2019-20 of $7,176 million was within its total authorities of $7,654 million. The department’s total expenses increased by $178.1 million (+3 percent) during 2019-20 compared to 2018-19. This increase in actual spending is attributable to additional funding for:
- Supporting Canada’s Feminist International Assistance Policy;
- Initiatives to help developing countries address the impact of climate change;
- Pandemic responses related to COVID-19;
- The Export Diversification Strategy;
- Development assistance and security sector support to Afghanistan;
- Canada’s future participation in the postponed Expo 2020 Dubai in the United Arab Emirates; and
- Transfers from other government departments to provide support to departmental staff located at missions abroad.

Canada’s network abroad

In 2020-21, Canada’s Network Abroad consisted of 178* missions in 110* countries, including 8,382 positions. This comprises 2,518 Canada-based staff and 5,864 Locally-engaged staff as of March 31^st, 2020.
Canada’s Network Abroad includes 27 partners (other government departments, Global Affairs Canada’s programs) and 14 co-locators (crown corporations, provincial governments, foreign governments and International Organization).
Global Affairs Canada continues to work with other Foreign Ministries to identify opportunities for co-location in order to maximize the reach of our diplomatic network abroad at a minimum cost to taxpayers.

*Does not include Taiwan or the West Bank/ *Ne comprend pas Taiwan ni la Cisjordanie.

Supporting facts and figures

Recent openings and closures of missions:
- 2020- PM Trudeau authorized the opening of a mission in Suva, Fiji.
- 2020- Minister Champagne authorized the opening of a Consulate in Milan, Italy. Expected opening date with fiscal year 2021-22.
- 2018 – the mission opening in Fukuoka as a trade office (relocated from Kitakyushu).
- 2017- the mission in Oaxaca, Mexico was closed, while a mission in Cotonou, Benin opened.
- 2015 - ASEAN (Indonesia), Phnom Penh (Cambodia) and Vientiane (Laos) mission openings.
- 2015 - ASEAN (Indonesia), Phnom Penh (Cambodia) and Vientiane (Laos) mission openings.
- 2014 - the Chancery in Yangon, Burma opened in August 2014, signaling the end of Canada’s co-location with the United Kingdom.
- 2013 - addition of an Embassy in Baghdad, Iraq (co-located with the United Kingdom) and interim operations for the Embassy in Juba, South Sudan (co-location with the Netherlands).
Partners and Co-locators in our missions:
- Canada’s Network Abroad includes 27 partners and 14 co-locators.
- The partners comprise federal departments, agencies and sub-agencies that sponsor programs involving diplomatic activities abroad.
- The co-locators comprise crown corporations, provincial governments, foreign governments and an International Organization (NATO) for which Global Affairs Canada provides common services on a cost-recovery basis.
Other offices:
- Across Canada, Global Affairs Canada operates a total of six regional trade offices located in Vancouver, Winnipeg, Calgary, Toronto, Montreal and Halifax.
- Ten trade offices abroad headed by the Canadian Commercial Corporation also operate in emerging business centres in China.
- Canada is also represented by more than 100 consulates headed by honorary consuls. Honorary consuls are not employees of the Government of Canada. They are private individuals appointed by Order in Council who provide consular and other services on behalf of Canada.
- Canadians can also receive consular services from a limited number of Australian, Swedish and Italian missions under agreements with those countries.

Background

Services to the Network include management of financial and human resources, benefits for locally-engaged staff (including pension, social security programs and insurance), mission and staff related accommodations (including work facilities and living quarters), physical and property security, transportation, contracting and procurement, information and technology management, and diplomatic mail. These services support Canada-based staff from Global Affairs Canada and other federal government departments, agencies and co-locators, as well as locally-engaged staff.

Overview of 2020-21 Main Estimates (Previous Year)

The 2020-21 Main Estimates were tabled in Parliament the week of February 24, 2020, and the related Appropriation Act received Royal Assent in June 2020 with an Interim Supply bill approved by March 31, 2020.
The Department’s total funding requested in the 2020-21 Main Estimates is $7,484.2 million, which represents a net increase of $764.5 million over the 2019-20 Main Estimates of $6,719.7 million.
Significant funding increases include funding to implement the Feminist International Assistance Agenda, funding to help developing countries address the impact of climate change, and funding for the new Export Diversification Strategy. Notable funding decreases include a decrease in funding related to the 2015-2020 strategy for maternal, newborn and child health (however, this funding has since been renewed), as well as a decrease related to Ensuring Rules-Based and Responsible Trade.

Supplementary messages

The Main Estimates present Global Affairs Canada’s reference levels which are broken down by the nature of the funding (Vote) and according to the Departmental Results Framework (DRF).

Supporting Facts And Figures

PICTURE OF TABLE

Funding increasesinclude:

$456.9 million to implement the Feminist International Assistance Agenda;
$297.3 million to help developing countries address the impact of climate change;
$57.7 million for the new Export Diversification Strategy;
$20.0 million related to a transfer from Shared Services Canada for the cost of providing core information technology services to missions abroad;
$19.2 million for locally engaged staff salaries and related benefits incurred at missions abroad;
$19.1 million for compensation related to collective agreements; and
$19.0 million for transfers from other government departments to provide support to departmental staff located at missions abroad.

Funding decreases include:

$107.5 million related to the 2015-2020 strategy for maternal, newborn and child health (this funding has since been renewed); and
$15.2 million for Ensuring Rules-Based and Responsible Trade (Softwood Lumber).

Background

As part of a two-year pilot project (2018-19/2019-20), there has been a change in the timing of the Expenditure Management Cycle whereby departments were required to prepare both Interim and Main Estimates. This enabled the inclusion of Budget items in the Main Estimates.
With the end of this two-year pilot project, departments were informed that the Treasury Board Secretariat will revert to tabling the Main Estimates on or before March 1, 2020 with an Interim Supply bill approved by March 31, 2020. Consequently, it is anticipated that Budget 2020 announcements would be sought through the Supplementary Estimates process in 2020-21.
Supplementary Estimates are part of the normal Parliamentary approval process to ensure that previously planned government initiatives receive the necessary funding to move them forward. They present information to Parliament on the Government of Canada’s spending requirements that were not sufficiently developed in time for inclusion in the Main Estimates.

Public accounts 2019-20 – Travel and conferences

Travel information is disclosed as part of the Public Accounts of Canada, including Travel of Ministers’ Offices (Volume III-Section 10).
These expenditures are incurred by ministers, Parliamentary Secretaries, and Ministers’ staff in the course of their duties on behalf of Global Affairs Canada.
Expenditures, including travel, for Canadian representation at International Conferences and Meetings are also reported in Volume III-Section 11 of the Public Accounts of Canada.

Supplementary messages

Expenditures for Canadian Representation at International Conferences and Meetings are also included in the Public Accounts (Vol III - Section 11). This includes expenditures such as travel, hospitality and conference fees that are covered under the department’s International Conference Allotment (ICA) that is approved by Cabinet to fund the protocol activities of the Governor General and the Prime Minister of Canada during official visits abroad. The allotment also supports the participation of Global Affairs Canada portfolio ministers and their official delegations in major multilateral international conferences defined as a congress, convention, briefing seminar or other formal gathering in one location outside Canada, that deals with topics related to government of Canada objectives and priorities.
This statement also contains travel costs incurred during each visit or conference that appear separately on the “Travel Expenditures for Canadian Representation at International Conferences and Meetings” statement which lists the travelling delegates.

Supporting facts and figures

The most significant costs reported for Canadian representation at international conferences and meetings are those related to the following conferences:
- Prime Minister's Visit to Addis Ababa (Ethiopia)—African Union Summit, Kuwait City (Kuwait), Dakar (Senegal), Munich (Germany)—Munich Security Conference ($873,357)
- Canadian Delegation to New York (USA) - 74th Session of the United Nations General Assembly ($592,262)
- Prime Minister's Visit to Portsmouth and London (UK), Juno Beach and Paris (France)—D-Day 75th Anniversary ($467,745)
The most significant travel costs reported for Canadian representation at international conferences and meetings include those related to the following conferences:
- Prime Minister's Visit to Addis Ababa (Ethiopia)—African Union Summit, Kuwait City (Kuwait), Dakar (Senegal), Munich (Germany)— Munich Security Conference ($612,771)
- Canadian Delegation to New York (USA)—74th Session of the United Nations General Assembly ($504,244)
- Governor General's Visit to the Republic of Lithuania and the Republic of Estonia ($279,365)

Date Modified:: 2022-01-05

Minister of Small Business, Export Promotion and International Trade appearance before the Standing Committee on International Trade (CIIT) on Main Estimates and Investor State Dispute Settlement (ISDS)

Table of contents

Appearance before the standing committee on international trade (CIIT) on main estimates and ISDS, April 26, 2021

Meeting scenario

Global Affairs Canada

Committee context

First Round

Second Round

Motion inviting you to appear

Committee membership & interests

Committee work

Recent meetings at CIIT

Standing Committee on International Trade (CIIT)

Chair

Vice-Chair

Vice-Chair

Members

Order for Questioning:

Mandate:

Hon. Judy Sgro Chair (LPC — Humber River-Black Creek, ON)

Key interests

Parliamentary roles

Notable committee memberships

Background

Tracy Gray Vice-Chair (CPC — Kelowna-Lake Country , BC) Critic for export promotion and international trade

Key interests

Parliamentary Roles

Notable committee membership

Background

Questions ask at CIIT

Simon-Pierre Savard-Tremblay Vice-Chair (BQ — Saint-Hyacinthe-Bagot, QC) Critic for international trade

Key interests

Parliamentary roles

Notable committee membership

Background

Questions ask at CIIT

Daniel Blaikie (NDP — Elmwood-Transcona, MB) Critic for international trade

Key interests

Parliamentary roles

Notable committee membership

Background

Questions ask at CIIT

Randy Hoback (CPC — Prince Albert , SK) Critic for international trade

Key interests

Parliamentary Roles

Notable committee membership

Background

Questions ask at CIIT

Ben Lobb (CPC — Huron-Bruce, Ontario)

Key Interests

Parliamentary roles

Notable committee memberships

Background

Recent Questions asked at CIIT

Ziad Aboultaif (CPC — Edmonton Manning, Alberta)

Key Interests

Parliamentary Roles

Notable committee membership

Background

Recent Questions asked at CIIT

Rachel Bendayan (LPC — Outremont, QC) Parliamentary secretary to the minister of small business, export promotion and international trade

Key interests

Parliamentary roles

Notable committee membership

Background

Recent Questions asked at CIIT

Sukh Dhaliwal (LPC — Surrey – Newton, BC)

Key interests

Parliamentary roles

Background

Recent Questions asked at CIIT

Chandra Arya(LPC — Nepean, ON)

Key interests

Parliamentary roles

Notable committee membership

Background

Recent Questions asked at CIIT

Randeep Sarai (LPC — Surrey Centre, BC)

Key interests

Parliamentary roles

Tracy Gray  Vice-Chair (CPC — Kelowna-Lake Country , BC) Critic for export promotion and international trade 

Parliamentary Roles 

Notable committee membership 