International Trade Committee on Nov. 22nd, 2011

[The Chair, Conservative, Rob Merrifield]

You might want to slow down just a little bit so the interpretation can keep up.

[Prof. Ian Lee]

Sorry. I was just worried about running out of time. If I have your assurance that I'm not going to get truncated, I will slow down.

It is also argued that supply management is needed, as farmers, it is argued, are heavily indebted. Yet the StatsCan data of 2010 shows that the ratio of farm debt to assets is 17.7%, radically lower than households with a mortgage debt of 80%, 85%, or 90%--some households, not all households. We all know that Canadians are heavily indebted, to about $1.5 trillion.

It's argued as well that supply management is necessary for farmers to survive. Yet 80% of our farmers do not function under supply management. Our western farmers, our grain framers, our beef farmers have demonstrated that they are very dynamic, very successful, and very competitive.

Most importantly, our European allies and countries in the Pacific Rim are strongly opposed and may yet prevent a trade deal that will benefit all Canadians and not just a tiny number of Canadians--i.e., 20,000 or fewer farmers.

Australia and New Zealand--and I'll be more than pleased to talk about this, because I've done research on this--showed that supply management can be abolished and farmers will not fail. The Australian and New Zealand farmers have prospered far more in the post-supply-management world than they did under the protectionist world of supply management.

Now I will turn very quickly to a second major irritant, and that is Canada's poor record regarding intellectual property.

There is no question that Canada has weaker IP laws than the U.S. and the EU, our two major trading partners, and the totality of liberal democratic nations in the world. Canada is the outlier. Canada is the rogue violator country of the norms and rules of the international community of nations.

The generic drug industry, the Council of Canadians, and others argue that laws benefit big drug companies, and that we need to ensure weak IP laws to control health care costs.

Allow me to be as direct as possible. The argument is that because we--Canada, one of the wealthiest countries in the world--do not like paying the prices of those that funded the R and D, we have a right to pirate their R and D and engage in knowledge management theft.

Like those who engaged in illegal downloading to pirate music and rip off artists, or China's systematic pirating of IP, these groups are advocating the legalized theft of IP.

Note that cars are expensive as well, but we don't legalize auto theft. And, yes, pharmas, as with many industries today, are large and concentrated because R and D costs billions of dollars.

To close, and to speak perhaps very provocatively, we have to stop acting--like the small number of my weak students--as corner-cutters looking for free lunches instead of becoming successful the old-fashioned way, by earning it. So I urge this committee to recommend that we terminate supply management, which I have characterized as based or grounded in Soviet economics, and to join the international community of nations on IP. In short, we have to stop cheating.

[The Chair, Conservative, Rob Merrifield]

Thank you very much for those two rather controversial presentations, I would say. We'll just leave it there.

Mr. Masse, go ahead.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Mr. Trew, I think it's important that you flesh out a little bit the difference the process has taken here in Canada versus that of the European Parliament. I think in your presentation you touched on it, including referencing documents that they have. I think it's important that we have a little bit of light brought on that.

[Stuart Trew]

Thank you very much.

I wish I had more details on it than I do, but I don't. In some ways Canadian civil society groups are being better briefed on the negotiations from Canada's lead negotiator, and that's appreciated. We appreciate the briefings. However, on the flip side is that European parliamentarians have much more information on the services and investment offers that were exchanged in October, which include the reservations, for example, that Canada has taken to protect certain areas, and the provinces as well. The MEPs at the trade committee have seen those, and possibly the procurement offers, so they will be able to have a fuller understanding than this committee of where the EU stands to benefit and perhaps where some of the risks are.

[Brian Masse, NDP, Windsor West, ON]

And then they're getting some input in terms of directing the negotiations on top of that. I think that's what you referred to as well, that it's a two-way street with them and their trading.

[Stuart Trew]

Yes. European parliamentarians, as I understand it, have been pushing for a greater role in the negotiation and passing of trade deals. Right now it's very similar to Canada, where they can say yes or no at the end of the day, but because they have been pushing for a bit more say prior to that process, prior to a deal being signed, I think this is why you're seeing more information coming out into their hands at this stage.

[Brian Masse, NDP, Windsor West, ON]

When you were getting your briefings with our trade negotiators you mentioned there's not going to be a report issued. We've seen a little bit of this in the past with regard to the perimeter security thing happening now.

My concern about the perimeter security process is that it's one direction. It's not a conversation. So different groups and organizations aren't able to see how it affects other groups. Then they get a more sophisticated understanding about where there could be some issues, where there may not be issues, but it's more of a moving entity.

What's happening with yours? There's just no consultation now at this point and no engagement?

[Stuart Trew]

At this point, since the formal negotiating rounds have ended, we're not sure exactly what the consultation or briefing will look like from now on in because there will be smaller negotiating sessions until a deal is signed.

Our experience at the briefings was that, well, they were briefings. They weren't really consultations. There was a 10-minute blurb on what's happening, the latest status. I imagine it's very similar to what the business sector and other groups were getting and then an opportunity to ask questions.

We were told from the beginning they were briefings. I think part way through, maybe around negotiating round five, we were told that that was actually a consultation by the former trade minister, which was news to us, because there is no real formal process for this.

[Brian Masse, NDP, Windsor West, ON]

I'm going to be giving the rest of my time over to Mr. Ravignat.

Thank you, Mr. Chair.

[Mathieu Ravignat, NDP, Pontiac, QC]

Thank you, Mr. Chair.

We're approaching the first anniversary of the UN Declaration on the Rights of Indigenous Peoples. You did mention very briefly indigenous peoples in your presentation, Mr. Trew. I'm of the opinion that morally a government has a responsibility to ensure at least consultation with aboriginal people and transparency.

With regard to the UN Declaration on the Rights of Indigenous Peoples, have you heard from various aboriginal organizations across the country regarding their concerns with CETA, and are you aware of any consultation being had in the European Union with some of the indigenous people there? I'm thinking about the Lapps and the Sami, for example.

[Stuart Trew]

Very briefly, the indigenous member of the Trade Justice Network, which kind of pulls together some of the groups working on CETA, is the Indigenous Environmental Network. They have specific concerns related to how the agreement might affect the production of tar sands, for example, or the regulation of tar sands and attempts in the EU to regulate tar sands.

[An hon. member]

Oil sands.

[The Chair, Conservative, Rob Merrifield]

It's oil sands. There's no tar in them.

[Stuart Trew]

It used to be tar sands. Anyway--

[Mathieu Ravignat, NDP, Pontiac, QC]

Could my witness answer my question?

[The Chair, Conservative, Rob Merrifield]

Yes. I'm just correcting the comments made by the witness.

Go ahead.

[Stuart Trew]

Aboriginal groups we have spoken to subsequently, including the AFN, have expressed surprise that the negotiations are so far on the CETA without having heard about them necessarily or being consulted. That's all I know. I can't speak for them on behalf of their concerns and I can't speak on behalf of any negotiations or consultations with European indigenous groups.

[Mathieu Ravignat, NDP, Pontiac, QC]

How much time do I have?

[The Chair, Conservative, Rob Merrifield]

You have another minute.

[Mathieu Ravignat, NDP, Pontiac, QC]

I'd like to turn to perhaps another issue, and that is with regard to patents for pharmaceuticals. There has been a lot of discussion in this committee. Generic producers have been here as well as some of the larger pharmaceutical companies, and there seems to be a difference of opinion with regard to IP and pharmaceuticals.

I'd like to hear from both of the witnesses on this.

It's clear the European Union has in place stronger measures to protect intellectual property. These could be advantageous or disadvantageous to the generic companies and to the larger pharmaceutical companies. I'm talking about, for example, the right to appeal, the protection of research, etc.

Even if we were to take the perspective of either of them, we would have to deal with an unequal negotiating stance on the basis of IP protection. What is the impact going to be, from your perspective, on the Canadian economy?

[Stuart Trew]

Briefly, it's not an area in which I have a lot of expertise. The Council of Canadians has read the studies from the generics association about increased drug costs, for example, and that would be based, as I understand it, on the amount of time it would require a new drug to get to market following the implementation of these intellectual property reforms, which are, as you said, entirely one-sided. There have been European requests, and Canada has been asked to take it or leave it. It sounds as though Canada's been asked to take it, with no option to leave it in these negotiations, because it's that important for European negotiators.

As I understand it, Canada's IP regime is based on a balance, recognizing the importance of both sectors--generics and the brand-name industry. If you have one sector saying this is actually going to benefit only the brand-name sector, then I think Canadians and this committee should consider the balance and the necessity of really dealing with this in the legislative, domestic way and not having a trade agreement impose changes to Canada's IP regime.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Lee, did you want to add a very quick response?

[Prof. Ian Lee]

I'll be very quick in response.

I think if we adopt the European standard, there's no question--I'm not going to fudge it--our drug prices will go up. Of course they will, because they're getting protection for a longer period of time. That's only because, in my view, we were cheating before. We are outside of the norm of the world standard. When I say the world standard, I mean the EU and the U.S. We should be going to the world standard and joining this standard.

To answer your question on what the impact would be, we don't know. I don't know, but I think that we could expect to see more research and development investment in Canada. There's probably a reluctance to put more into Canada simply because they know they don't have the same regime. Why would they put it here when they can put it in the U.S. or Europe and get better protection of their investment?

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Cannan, the floor is yours.