International Trade Committee on Feb. 6th, 2008

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you very much.

[The Chair, Conservative, Lee Richardson]

I think we all do, Mr. Crow. I think you're batting a thousand around this table.

[Robert Crow]

Thank you.

[The Chair, Conservative, Lee Richardson]

We'll go next to Mr. Temelkovski.

[Lui Temelkovski, Liberal, Oak Ridges—Markham, ON]

Thank you very much, Mr. Chair.

Thank you to both presenters.

Ms. George, in your recommendation number five you mention that we should ensure Canada is not put at a disadvantage vis-a-vis the U.S. if the U.S.-Korea FTA is ratified. Should we have a plan B?

[Shirley-Ann George]

I'm not sure if I understand your question. Do you mean if they ratify it and we don't have an agreement?

[Lui Temelkovski, Liberal, Oak Ridges—Markham, ON]

Yes.

[Shirley-Ann George]

I'm not sure what the plan B would be. If the U.S. ratifies, and it becomes easier to manufacture and ship out of the U.S. than out of Canada, that will have an impact on where some companies put their resources and where they put their jobs. So that's part of what we need to weigh in the equation.

[Lui Temelkovski, Liberal, Oak Ridges—Markham, ON]

You also mentioned that we shouldn't just sign any agreement. At the same time, you mentioned that we haven't done anything on this agreement for a long time. Those are two very obviously contrasting statements. I guess there's some middle somewhere, and that's where we have to meet and where everybody wins.

Have your companies been consulted by the government on this agreement? In your fourth recommendation, you're asking for that consultation.

[Shirley-Ann George]

It's important to note that this was from 2006, so it was more at the beginning of the negotiations that this resolution was debated and passed. We believe that the government has reached out in consultations. There have been notices in the Canada Gazette. They've definitely reached out and talked to us many times. We have let our members know that these negotiations are ongoing and that the government is seeking input. So yes, there definitely has been consultation.

On your point that everybody wins, I'm afraid it's not possible to get a deal whereby everybody wins. You can say very clearly that NAFTA, for example, has been beneficial to Canada, without a doubt. But when the deal was signed, there were some people who benefited from having trade barriers in place, and when those barriers were removed, they had to adapt. That's the nature of a trade agreement.

[Lui Temelkovski, Liberal, Oak Ridges—Markham, ON]

I'm saying it in the sense that if one party feels it's not winning, they're not going to sign an agreement, so there won't be an agreement.

[Shirley-Ann George]

Yes, both parties win, absolutely.

[Lui Temelkovski, Liberal, Oak Ridges—Markham, ON]

Both parties have to win in that sense. If it's not a win-win situation...I wouldn't sign an agreement, any agreement, if I didn't feel it was in my favour. I think Mr. Crow would agree with that. I'm seeing him nod.

Mr. Crow, do you see any avenue by which we can nudge and jolt the Koreans into looking at this technology we have here that is widely used throughout the world? Many of us have travelled to many places in the world, and they see us playing with these toys, and some of them know what they are, all over the world. Do you think Koreans will see the light? Or how can we get them to see the light?

[Robert Crow]

Yes, I absolutely do. Some of the recent political developments are a little more open and more pro-free trade, as we understand it. There has been an announcement that the telecommunications regulator will be reorganized and split up in a number of different ways. So some of the institutional barriers, perhaps, as a new government takes hold, will not be there.

What's most important is that there are tremendously strong advocates in the Korean business community who want BlackBerry service in Korea. These are people who travel the world, like we do, and who ask how it is possible that a nation as technologically advanced as Korea cannot have the BlackBerry, which has become standard equipment, if you will, for people in the world of business.

I see, frankly, great hope. This is not a monolithic stance. This is clearly an evolving situation. With this kind of continued work by us, our partners, and the mission in Seoul, and frankly, with some added discussion around the table on the FTA, perhaps we can push this one over the goal line quite soon.

[Lui Temelkovski, Liberal, Oak Ridges—Markham, ON]

Am I right in assuming that you have also been consulted by the Government of Canada?

[Robert Crow]

Very much so, particularly with respect to our own needs in Korea. We have been very well looked after in that sense.

[Lui Temelkovski, Liberal, Oak Ridges—Markham, ON]

Would you say that non-tariff barriers are playing a role in their acceptance of your products?

[Robert Crow]

Yes. On its surface, the WIPI standard and its enforcement would be considered by most economists to be a non-tariff barrier.

[Lui Temelkovski, Liberal, Oak Ridges—Markham, ON]

Thank you.

Mr. Maloney.

[The Chair, Conservative, Lee Richardson]

I'll come to Mr. Maloney in the next round.

We'll move to Monsieur André.

[Guy André, Bloc, Berthier—Maskinongé, QC]

Welcome to the committee, Mr. Crow and Ms. George.

I listened to what you said and found your words full of wisdom and insight. We, members of the Bloc Québécois, agree with you because we think we need more analysis before signing an agreement. This is what our committee is presently doing.

We are concerned about this. Your brief is entitled “A Fair and Equitable Canada-Korea Free Trade Agreement” but you know that present day free trade agreements, international relations and trade are not always fair and equitable. We know that some industries in Quebec and Canada -- I will not name them -- suffered many job losses because the terms of trade are not always fair and equitable.

I think we have to be careful. I absolutely agree with you on this.

For 2006, the trade deficit was about $2 billion. This being the case, do you think it would be important that free trade agreements provide for a relatively balanced trade so as to prevent such huge deficits?

You also talked about non-tariff barriers. The auto industry told us that non-tariff barriers prevent the sale of Canadian automobiles on the Korean market. These elements are therefore important.

I would like to hear your comments about this. How can an agreement deal with these situations?

[Shirley-Ann George]

Thank you.

I hope I've written down all the points you've made. You state that it's important to have a fair agreement, and we would agree with that. How you measure “fair” tends to be very different if you are on the winning side of the equation from when you're on the losing side of the equation. So perhaps another word that might be used is a “balanced” trade agreement, one that understands that there will be participants in your country who will have a negative impact. We definitely wouldn't support something that subsidizes those who are negatively impacted. It keeps them doing the same thing that can't compete on an international market. There is value in looking at what can be done to help companies transition to what they can do and compete with in an international marketplace.

You mentioned that many jobs have been lost in Quebec because of free trade agreements. I would suggest to you that many more have been created. You only have to look at some of the amazing Canadian success stories that reside in Quebec to see what real opportunities come from good free trade agreements. Look at Bombardier, as an example. We could all list many more. So Quebeckers have definitely also benefited from free trade agreements.

Regarding the balance of trade with Korea, that is one of the prime objectives of this free trade agreement, to try to readjust that balance of trade and get more Canadian goods and services into Korea.

On your point on non-tariff barriers for the automotive sector, yes, they definitely exist. The U.S. has been working on trying to move some of these non-tariff barriers for a significant amount of time, and the North American automobile industry remains very frustrated that they have not been able to achieve significant success.

If you look at the percentage of automobiles that are sold in Korea that are made by a company that has a foreign parent, it's minuscule. There's no logical reason why Koreans wouldn't want to buy more cars if they had more selection. So this is something that's important. I know it was something that was of primary interest in the U.S. negotiations. It's also very much of interest to the Europeans. Where we have a 6% tariff that is helping to limit the number of Korean automobiles that come into Canada, in Europe it's over 10%, so they have an even bigger challenge. They're definitely going to be pushing for and looking for real measures that can show tangible ways in which non-tariff barriers will be removed, and real measures that will allow them to measure that and bring in some sort of dispute settlement mechanism when they feel the non-tariff barriers have not been removed properly.

[Guy André, Bloc, Berthier—Maskinongé, QC]

We have already lost about 150,000 jobs in manufacturing in the past few years. I would like to hear Mr. Crow's comments on this issue.

[Robert Crow]

I have very little to add to what Shirley-Ann has said, but I would say that from the standpoint of balance of trade, I believe we are attempting in any negotiation of this not to immediately redress the balance of trade, but to redress the rules by which an uneven balance of trade has come to pass. So we are trying to reset the conditions in such a way that as long as our companies and our farmers and others can compete and produce products, goods, and services that Korean consumers want, then with a good agreement we will have an opportunity to redress any balance-of-trade issue. We certainly feel that way in our case.

Finally, with respect to non-tariff barriers to trade, I think in the auto sector, in our sector, and so forth, having transparency as to what they are and having a means to address non-tariff barriers to trade--such as the standard that faces RIM right now--are essential components of a good agreement.

[The Chair, Conservative, Lee Richardson]

Thank you, Monsieur André, for those answers.

Mr. Pallister.