Evidence of meeting #35 for International Trade in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was japanese.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

  • Jean-Michel Laurin  Vice-President, Global Business Policy, Canadian Manufacturers and Exporters
  • Richard Phillips  Executive Director, Grain Growers of Canada
  • Janice Hilchie  Vice-President, Government and International Relations, Canadian Life and Health Insurance Association Inc.
  • Peter Wilkinson  Senior Vice-President, Government Relations, Manulife Financial, Canadian Life and Health Insurance Association Inc.

11:30 a.m.

NDP

Jasbir Sandhu Surrey North, BC

We've heard in this study, and also from you, that when you look at the trade coming our way, you see that it's mostly manufactured goods that come to Canada. Yet most of our trade that goes the other way is not manufactured goods. It's raw materials or farm goods. Do you see that balance shifting or would you say that it's going to further widen the gap?

11:30 a.m.

Vice-President, Global Business Policy, Canadian Manufacturers and Exporters

Jean-Michel Laurin

Well, you want to do an FTA with a country where there are trade barriers, right? I mean, the whole idea of negotiating a free trade agreement is to reduce trade barriers and allow companies to do business more easily. If we try to do FTAs with countries where there are no barriers, it would make a good announcement, but it doesn't necessarily do much for business.

I think there's potential with Japan in the context of how this is a country where we've had persistent problems getting access to that market. So to the extent that we can resolve those issues through bilateral negotiation, we're certainly seeing that in a way that's very positive. But the goal here shouldn't be to negotiate an FTA at all costs. I think it should be to negotiate an agreement that is of benefit to the Canadian manufacturing sector. Also, I would assume that Japan wants to get a similar outcome for their own sectors.

I don't think the fact that we export mostly raw materials and processed raw materials and they export to us manufactured goods.... I mean, I would like an FTA to help us achieve more of a balance. I think there's potential. Canadian manufacturers are used to competing globally. I think I made that pretty explicit in my comments. Our members feel they can compete against anybody around the world, as long as they have a fair chance to compete on a level playing field.

So I think that when it comes to Japan, that's the issue our members keep raising: we want reciprocity. It's okay for Japanese companies to come here and compete with us, but only to the extent that we can actually go to their market and compete on the same basis. To the extent that we can accomplish that through these trade negotiations, we'd certainly be in support.

11:30 a.m.

NDP

Jasbir Sandhu Surrey North, BC

You represent manufacturing sectors across this country. What areas would benefit the most? What sectors would benefit the most?

11:30 a.m.

Vice-President, Global Business Policy, Canadian Manufacturers and Exporters

Jean-Michel Laurin

That's a good question.

I mean, it depends on what the outcome of the agreement is. I'm sure you'll hear from sectors such as the auto sector. Both the Canadian and U.S. auto sectors have been raising market access issues with Japan for a very long time.

So would this be a sector that...? It's a hypothetical question. It depends on what the actual outcome of the trade agreement is. But I think for manufacturers in pretty much all industrial sectors, Japan is a very large, very mature industrial market. We have solutions in every sector, from textiles to forestry, to aerospace to defence, to automotive. Pretty much all sectors in manufacturing would stand to gain from an FTA with Japan to the extent that it provides that level playing field and that reciprocal market access.

It's easier said than done, but we're looking at these negotiations in good faith, and we're hopeful that we should put our name down on the agreement. Canada should sign this agreement to the extent that it really does address those issues.

11:35 a.m.

NDP

The Vice-Chair Don Davies

Thank you.

Now we'll turn to Mr. Keddy from the governing Conservative Party, for seven minutes.

May 8th, 2012 / 11:35 a.m.

Conservative

Gerald Keddy South Shore—St. Margaret's, NS

Thank you, Mr. Chairman.

Welcome to our witnesses. Most of you have been to the committee before, so welcome back.

To Monsieur Laurin, just listening to your testimony, I have one slight difficulty with it. I agree with what you're saying, so don't misunderstand me. The challenge here on negotiating this economic partnership agreement with Japan is probably that we have to do it in parallel, and not necessarily with the Americans.

The Americans already have an agreement, number one. Number two, they are in an election cycle, and it's very, very doubtful.... I mean, we certainly are ambitious in our trans-Pacific partnership, but in an election cycle, it makes it even more difficult. Therefore, we have an I think even greater urgency to negotiate a bilateral. And the opportunity.... The doors are open.

I go to Mr. Wilkinson's statement of his high-level delegation to Japan. We've seen a willingness that has never been there in the past to negotiate and discuss difficult issues.

I understand what you're saying about our rules of origin. That's a great obstacle for Canada, without question, with an integrated marketplace with Mexico and United States. But whether or not the trans-Pacific partnership gets off the ground, this is the third-largest economy in the world, our fourth-largest trading partner. We need to do this without attaching any strings to it, and I just want to be clear on that. An agreement with Japan, even if the TPP doesn't work, is still important.

11:35 a.m.

Vice-President, Global Business Policy, Canadian Manufacturers and Exporters

Jean-Michel Laurin

Just quickly, I agree with you; I think we need to keep all of our options open. In fact, negotiating bilaterally with Japan actually gives us more leverage as we're seeking to enter TPP.

I guess my point was just that if we had a preference between either, we'd rather see negotiations multilaterally through TPP. But I think you're right; we can't sort of sit on the sidelines and just wait for others. The U.S. has its own thing. Mexico has its own free trade agreement with Japan. I'm not too familiar with the terms of that and the impact it has had, but I think it's interesting to know that one of the NAFTA partners does have an FTA with Japan.

11:35 a.m.

Conservative

Gerald Keddy South Shore—St. Margaret's, NS

I think we all agree that the multilateral forum is a better forum, but we tried that with Doha for a number of years, right, without a whole lot of success.

I would just go over to Mr. Wilkinson for a moment. I'd like to have a little more in-depth discussion of your delegation and your Japanese reception.

I'm thinking of a comment, actually, that Marc-André Morin made this morning at another meeting about the whole Japanese psyche. If we negotiate too hard.... You can't jam them into a corner.

So they have actually come to us. They are willing to put certain things on the table. I'd like you to just expand on that a little bit and on the importance of not just what can come out of this but the importance of negotiating in a relationship and building on the relationships we already have—being aggressive, but not so aggressive that we force them away from the table.

11:35 a.m.

Senior Vice-President, Government Relations, Manulife Financial, Canadian Life and Health Insurance Association Inc.

Peter Wilkinson

Yes, at the end of the day, negotiations are about discussions between people. I think you have to be concerned about the concept of face for everyone; that everyone comes away from negotiations feeling that they have won something. They've also given up something, but they've won something to their benefit.

As I was saying, Manulife first went into Japan in 1901. We were asked to leave in 1939 for awhile, and then we came back in the 1990s again. Our discussions and interactions with the Japanese government and Japanese business people have always been very fruitful. They were at times longer than we liked, but I think that's a difference in business culture more than anything else. At the end of the day it is about relationships and having frank discussions with people about what's important to us, what's important to them, and coming to a conclusion that works for everybody.

I suspect that the conversations will actually be tough on both sides at the negotiations table. I believe that the folks from the Department of Foreign Affairs and International Trade and our professional negotiators from the Government of Canada have long experience in doing this with many people around the world, and they will do a very good job for us on it. It will be beneficial to everyone.

As you were saying, we saw an opening back in September 2011 that none of the CEOs who have been going to Japan for a number of years had ever seen before on this issue. There was a willingness—a more dynamic sort of feeling in the country in the business, political, and bureaucratic circles—for handling this issue. That's why we came back very enthused about it.

11:40 a.m.

Conservative

Gerald Keddy South Shore—St. Margaret's, NS

Excellent.

Do I have time for another quick question?

11:40 a.m.

NDP

The Vice-Chair Don Davies

You have 30 seconds.

11:40 a.m.

Conservative

Gerald Keddy South Shore—St. Margaret's, NS

To Mr. Phillips, when you were discussing grains you kind of trailed off about there being room to improve our market for quality wheat. I'm assuming it's outside of durum and other wheats, but just good hard wheat.

Can you expand on that a little?

11:40 a.m.

Executive Director, Grain Growers of Canada

Richard Phillips

Sure.

We have a very long history of exporting wheat to Japan, but they're very, very specific with their quality parameters. If you can meet those, then there's a premium price attached to that.

In Canada we're very good at that, whether it was through the Wheat Board or whether the private sector was selling via the Wheat Board. We've always met the specs they're looking for. We will continue to do that.

Canada has a grain-handling system that makes it easy for us to segregate our grains virtually by field in western Canada. That's what they're looking for. So when we were over there they were looking for assurances that we will continue to manage our systems such that they will get access to those—providing, of course, they're prepared to pay the price. So they were looking for that assurance.

I can tell you that some of our competitors have been over there spreading stories that we will not be able to provide them with quality wheat, and that they therefore should be buying from the United States or Australia. We went over there directly to meet with the flour millers to reassure them that Canada is here to do business.

11:40 a.m.

NDP

The Vice-Chair Don Davies

Thank you, Mr. Phillips.

From the Liberal Party, Mr. Easter, for seven minutes.

11:40 a.m.

Liberal

Wayne Easter Malpeque, PE

Thank you, Mr. Chair.

Welcome, folks. Thank you for the presentations.

Mr. Laurin, you talked about an area that I think is extremely worrisome in this country as a whole: the deficit on the manufacturing side and the surplus on the natural resources and commodities side.

In this country, it's great to see the oil, natural gas, and commodities industries doing well, but that masks to a great extent what's happening in the rest of the economy. The economy's here because of how well the oil industry is doing. The manufacturing sector is extremely important to wealth generation and jobs.

You mentioned that barriers to trade and investment are structural in nature. How do you see this potential agreement overcoming that, and what needs to be done to overcome it in a way that will benefit the manufacturing sector?