moved that Bill C-30, An Act to implement the Comprehensive Economic and Trade Agreement between Canada and the European Union and its Member States and to provide for certain other measures, be read the third time and passed.
He said: Mr. Speaker, I am very pleased to rise today. There has never been a more important time in our history to talk about trade. Therefore, I am going to talk about Bill C-30. I would invite all my colleagues on both sides to really take this opportunity to rise to the challenge that we are facing.
Twenty years from now we will remember the moment that we seized as parliamentarians to really move forward on trade. The world is waiting for us to ratify this agreement. This is going to be great for Canada. This is going to be great for Europe. This is the gold standard of international agreements.
Obviously, I am delighted to rise in the House today to speak to a very important bill, Bill C-30, an act to implement the comprehensive economic and trade agreement between Canada and the European Union, or CETA.
As Minister of International Trade, CETA is one of my top priorities. Many ministers have worked on this free trade agreement in recent years and, thanks to their efforts, the Prime Minister was able to sign this agreement in Brussels at the end of October 2016.
CETA negotiations began in 2008. It took many years of hard work to reach an agreement that addresses issues that have never been covered in Canada's other trade agreements, including NAFTA.
It is now up to us, as parliamentarians, to complete the legislative process and bring CETA into force so that all Canadians can finally benefit from it. This agreement is the result of a historic initiative to promote the prosperity of our country, and I would venture to say that Canadians in each of the 338 ridings represented in the House of Commons will benefit from it.
By signing this agreement we are gaining market access and improved trade conditions that go beyond the NAFTA provisions. What is more, we achieved this in a progressive and responsible way. This agreement will provide Canada with the growth and jobs its needs, while fully upholding Canadian and European standards in areas such as food safety, environmental protection, and workers' rights.
CETA will open opportunities for Canadian businesses in the EU's estimated $3.3-trillion government procurement market. Once CETA enters into force, Canadian firms will be able to supply goods and select services to all levels of EU government, including the EU's 28 member states and thousands of regional and local government entities. Imagine the opportunities for all the SMEs here at home.
Under CETA, consumers will benefit from lower prices and a wider range of choices. This agreement will also be beneficial for workers, since it will create more high-quality jobs associated with exports. It will also be beneficial for our businesses, no matter their size, as they will see lower costs resulting from the elimination of tariff and non-tariff trade barriers.
This is a progressive trade agreement that prioritizes the middle class, opens new markets to Canadian producers, and means greater prosperity for Canadians from one end of our great country to the other.
I would like to talk about the importance of trade. Canada's participation in international trade is vital to the entire nation's prosperity. Canada has always been a trading nation. Exports are key to our economy. They contribute to growth, productivity, and, of course, employment. Taken together, they represent about 30% of Canada's GDP. One in six Canadian jobs depends directly or indirectly on our export activities.
The small and medium-sized businesses in all of our ridings play a leading role in our economy. Employing some 10 million Canadians, they account for nearly 90% of private-sector employment in Canada.
Small businesses alone make up 90% of Canadian exporters and, in 2011, were responsible for $68 billion, or 25%, of the total value of exports. Creating new commercial opportunities for SMEs is therefore essential to growing our economy, because job growth and opportunities for the middle class depend on those businesses.
In 2015, Innovation, Science and Economic Development Canada released a report profiling SMEs and their characteristics as Canadian exporters. The report found that 10% of Canadian SMEs exported goods and services in 2011, with export sales accounting for about 4% of total company revenues.
The report also points to superior financial performance by exporters compared with non-exporters. Specifically, exporters generated higher sales, pre-tax profit margins, and returns on assets, on average, compared with non-exporters.
In addition, the report indicated that exporters are more research and development intensive than non-exporters, spending 8% of annual revenues on R and D, on average, compared with 6% for non-exporters.
Lastly, exporters are also more growth oriented than non-exporters. Indeed, the sales of 10% of exporters grew by 20% or more per year between 2009 and 2011 compared to only 8% of non-exporters.
I know that my colleagues in the House already appreciate the fact that trade and, in particular, the role of small businesses within all our ridings, is important to Canada's economic growth.
SMEs clearly play a major role in fostering the future prosperity of the country, and Canada firmly believes in the importance of helping our SMEs to be successful because this will create jobs and strengthen the middle class across the country. Concrete tools such as CETA are important as they motivate businesses and encourage them to seize opportunities in major foreign markets such as the European Union.
I will now turn to the government's role and the impact of the positive trade policy on Canada's businesses. The findings of Innovation, Science and Economic Development Canada's report support our government's continuing commitment to stimulating growth of SMEs and advancing an export agenda by entering into new trade agreements. These agreements help our SMEs because they ensure access to export markets abroad and they create conditions conducive to the competitive participation in these markets.
This is especially true in the context of current global value chains because international production requires goods to cross many borders. It is especially important to facilitate the flow of goods across borders to ensure the success of our businesses today and tomorrow.
The European Union is a key market for global value chains. It has more Fortune 500 companies than any other place in the world, including the United States. Broader access to these value chains provides a large number of Canadian SMEs a major opportunity to realize their goals and aspirations on an international scale.
I know that every member of the House would like to help the SMEs in their ridings conquer those markets, and CETA is another tool in the toolbox for our SMEs. Canada's SME exporters continue to focus predominantly on the U.S., with 89% of exporters selling to the United States and 74% of the value of exports generated by U.S. sales.
With CETA, we will see SMEs diversify their exports and pursue opportunities in the European Union, the world's second-largest market for goods. The EU's annual imports alone are worth more than Canada's entire GDP.
In this period of slower economic growth and of growing protectionist and even anti-trade tendencies in many areas of the world, it is particularly important to implement agreements such as CETA.
I will give an overview of CETA for all of my colleagues in the House. CETA represents many firsts for free trade in Canada and the European Union. CETA sets new standards in trade in goods and services, non-tariff barriers, investments, and government procurement, as well as in other areas such as labour and environment.
It offers preferential access to the large, dynamic European market.
It creates tremendous opportunities and gives Canadian businesses a real competitive edge.
It gives Canadian businesses a first-mover advantage compared to their competitors from other markets, such as the United States, which do not have trade agreements with the European Union.
CETA is a comprehensive trade agreement. Once it comes into force, it will cover almost every sector and aspect related to trade between Canada and the European Union. Of the EU's some 9,000 tariff lines, approximately 98% will be duty free for Canadian goods as soon as the agreement comes into force, as compared to the current 25%. An additional 1% will be cut over a seven-year phase-out period.
This agreement is vital to create growth in Canada and, as we know, growth means jobs for the middle class.
The elimination of tariffs under CETA creates immense opportunities for many of Canada's exports to the EU, where tariffs remain high. Let me give members a few examples: fish and seafood, which secures an EU tariff of up to 25%; wood, with an EU tariff of up to 8%; information and communications technology products, with EU tariffs of up to 14%; and machinery equipment, with EU tariffs of up to 8%.
Canadian services providers will also benefit from the best-quality market access the EU, the world's largest importer of services, has ever provided in a trade agreement, as well as the most ambitious commitments on temporary entry the EU has ever been granted.
Beyond increased market access, CETA includes many other significant achievements.
A protocol of conformity assessment will allow Canadian manufacturers in certain sectors to have their products tested and certified in Canada for sale in the EU. This is a significant innovation that will save companies time and money and will be particularly useful to small and medium-sized businesses.
This is also the first bilateral trade agreement in which Canada has included a stand-alone chapter on regulatory co-operation, which is forward looking and promotes early engagement as measures are being developed.
As well, CETA includes a detailed framework for the mutual recognition of professional qualifications, a key aspect of labour mobility.
Canada is one of the largest exporters of services in the world. It exported $16 billion in services to the EU in 2015 alone. CETA gives Canadian service suppliers the best market access the EU has ever granted to any of its free trade agreement partners. CETA will ensure that Canadian service suppliers compete on an equal footing with domestic providers, in certain sectors, and receive better treatment than most competitors from non-EU countries.
Provisions set out in the chapter on cross-border trade in services will provide for better market access assurances in many sectors of interest to Canada's economy, including professional services, environmental services, technical testing and analysis services, and research and development services. This is great news for all Canadian entrepreneurs.
CETA's labour mobility provisions will also enhance the ability of Canadians and EU business persons to move across borders. CETA provisions will make it easier for short-term business visitors, intra-company transferees, investors, contract service suppliers, and independent professionals to conduct business in the EU.
Investment also forms a substantial portion of the Canada-EU economic relationship. In 2015, the known stock of direct investment by Canadian companies in the EU totalled $210 billion, representing 21% of known Canadian direct investment abroad. In the same year, the known stock of direct investment from European companies in Canada totalled $242 billion, representing over 31% of known total foreign investment in Canada.
These numbers are significant. Canada needs more investment. More investment means more jobs for Canadian workers and more growth for our economy and a stronger middle class, something that each and every member in this House would be able to support. CETA provides greater incentive for EU companies to choose Canada as the attractive destination in this world for their investments.
CETA includes provisions to facilitate the establishment of investment, to protect investors against such practices as discriminatory treatment, uncompensated expropriation, arbitrary or abusive conduct, and to ensure that capital may be freely transferred. CETA's obligations are backed by a mechanism for the resolution of investment disputes, which includes both a first instance tribunal and an appellate tribunal.
Let me tell the House about the progressive nature of CETA, and that should make every member of this House very proud. Investment and dispute resolution are some of the themes that have been discussed at length here in Canada and across the EU. Canadian and EU citizens have voiced views and concerns on these important issues, and others, such as environmental protection, workers' rights, consumer health and safety, and a government's right to regulate.
One of the most important things that our government did right after taking office was to listen to the critics of CETA, critics who were gaining steam both in Canada and in Europe, and to understand some of the legitimate concerns people had. We worked with Canadians, including industry and civil society alike and, I would say, members and critics on the other side as well. Together with the EU, we responded to ensure that the economic gains from implementing this agreement would not come at the expense of these vital elements.
This includes making changes during the legal review of the agreement, as well as publishing a joint interpretative instrument with the EU at the time of the signature of CETA. It provided a clear and non-ambiguous statement of what Canada and the EU and its member states agreed with respect to a number of CETA provisions, including those in areas of public concern. CETA cements the paramount right of democratic governments to regulate in the interests of citizens on the environment, on labour standards, and in defence of the public sector. This is even more important in today's world, where we are faced with increasingly challenging times for trade and the global economy.
Let me tell the House about CETA in the world, the context we are living in today, in conclusion. We are seeing many nations now turning more inward and pursuing more protectionist measures following decades of ever-increasing openness. Many people are feeling that globalization has left them behind. People are faced with income inequality. They are suffering from economic hardships. They are worried about their jobs and future prospects. These are real and legitimate concerns.
That is why, at my first WTO meeting, I said to all the ministers, “Let us have a WTO for the people. Let us always make the people first in whatever decision we are taking.” It is all about people.
However, closing borders is not a solution. Doing so will decimate economic growth and make us all poorer as a result, especially for a trading nation like Canada, for which participation in global commerce is key to our prosperity. This path is clearly a perilous direction.
In conclusion, that is why it is important that Canada stands up to this protectionist trend and continues moving toward an open society for free and open trade. We must do so in a way that puts the middle class at the centre of our ambitions and at the heart of any deal. Not only is this the right thing to do, it is in our national economic interest to do it. I urge every member to speak in favour of CETA, vote in favour of CETA and for decades to come, people will remember what we did, a historic agreement.