International Trade Committee on May 8th, 2012

Janice Hilchie

Well, it still is an outstanding issue that hasn't been resolved yet.

Janice Hilchie

The domestic insurers in Japan are similarly disadvantaged by these provisions, and they are also seeking a level playing field.

Jean-Michel Laurin

Well, for starters, as I indicated earlier, the analysis we have access to shows that a little less than a third of our natural resources produced in this country end up being processed by the manufacturing sector in this country. So the resource boom, if you want to call it that, I think has benefited the manufacturing sector.

In fact if you look at the industrial sectors that have experienced the fastest growth levels since the recession, you'll see that sectors connected to the natural resource supply chain have tended to do better. Those are things like machinery and equipment, fabricated metal products, and so on and so forth.

We often talk about the oil and gas sector, but to us it's the forestry sector that is growing very strongly in northern British Columbia. It's the oil and gas sector in Alberta and parts of Saskatchewan. It's uranium in Saskatchewan. It's Richard's members, and all the agrifood producers who are taking advantages of higher prices and growing demand in international markets. It's the mining sector in northern Quebec, with the Plan Nord.

In northern Ontario we're seeing the same types of investments taking place, and in parts of Atlantic Canada as well. We've got that going for us, and I think the issue for manufacturers is how we can connect with those supply chains, how we can benefit from those investments.

For example, if you talk to the mining equipment sector, we're one of the best countries. We have some really good companies that were able to start 20 to 30 years ago supplying the oil sands and projects in northern Ontario. They now do business all over the world. In fact the best place for me to get information in terms of market access issues tends to be those companies because they operate in markets all over the world.

To see this as an either-or proposition, that what's good for the resource sector is not necessarily good for the manufacturing sector.... We see the two sectors as being very strongly connected.

Now, in the context of these trade negotiations with Japan, I think it's been great that our natural resource sector has been able to take advantage of opportunities in that market. The opportunity and the potential we have now is to diversify our trade with Japan and let other sectors of the economy take advantage of that market.

Richard Phillips

When we grow grains in Canada, there are two major areas: one for human consumption, another for animal feed. If our beef and pork industries gain more access to the Japanese market, then that's a good place for our feed grains to go, because our feed grains are worth less money and the freight to get them to port position takes a huge chunk of their value.

So if we can feed that domestically here, it creates jobs. Somebody takes it down to the feed mill to be ground up into feed. Then somebody has a cattle feed lot—there are some cow-calf operators. Then the cattle go to slaughter plants to be slaughtered and cut up, put into containers, and moved out to port position. Every step in that value chain adds jobs and wealth here in Canada. So if we can add those value-added meat cuts and get access to these markets, then everybody benefits all the way down to the grain farmers.

Peter Wilkinson

Yes, Japan is a good place for access to the Asian region, because it is a well-developed democracy with a good legal system. So it would be perfect for that.

Jean-Michel Laurin

I think Japan has some potential. To the extent that they're negotiating trade agreements with other countries in the Asia-Pacific region, they might become more of a platform for companies that want to establish a presence in the region. Traditionally, though, companies have looked more at Singapore and Hong Kong as gateways to all of Asia. The legal system, the tax structure, our agreements, access to infrastructure that can easily serve markets throughout the region—these are all critical elements. To the extent that Japan could replicate that, I think it could serve more as a gateway for Canadian companies that want to access all of Asia. But up till now, people have looked to Hong Kong and Singapore as places to set up operations to serve the region.