Evidence of meeting #36 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 japan.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

  • Andrew Casey  Vice-President, Public Affairs and International Trade, Forest Products Association of Canada
  • Bob Kirke  Executive Director, Canadian Apparel Federation
  • David Worts  Executive Director, Japan Automobile Manufacturers Association of Canada
  • Kathleen Sullivan  Executive Director, Canadian Agri-Food Trade Alliance

12:15 p.m.

NDP

Don Davies Vancouver Kingsway, BC

As you know, the Canadian Vehicle Manufacturers' Association has publicly opposed a trade deal with Japan. One thing I'm interested in learning more about is how Japanese-built cars are selling great in Canada, but for some reason cars built in Canada and North America have had a very difficult time penetrating the Japanese market.

Do you have any comment on that or can you explain to us why that might be the case?

12:15 p.m.

Executive Director, Japan Automobile Manufacturers Association of Canada

David Worts

Well, let me say first of all that I think it's often related to the effort that's put into it. I know that American companies have obviously been disappointed by their performance in Japan, but the fact of the matter is that they seem to have been diminishing their operations in Japan over the past number of years.

The reduced number of vehicles they're actually selling in the market and the reduced number of dealerships in the market...all critical to doing well, I think, in a very competitive market. They have not shown up at the Tokyo motor show for the last couple of events, since about 2005. They may have been attracted by the opportunities in China because, after all, Japan is a tough market. We do have over 40 different foreign brands that compete in the market.

They tend to compete in the larger engine or larger segment portion of the market and, of course, that makes sense, because that's where the profits are. The European experience I think has been quite different. While the Americans have been reducing the dealerships and the models they sell in Japan, the Europeans have been increasing them significantly and the results have paid off for them.

12:15 p.m.

Conservative

The Chair Rob Merrifield

Thank you very much.

We'll now go to Mr. Shipley.

May 10th, 2012 / 12:15 p.m.

Conservative

Bev Shipley Lambton—Kent—Middlesex, ON

Thank you, Mr. Chair.

Thanks very much to both of you for being here. This is actually another one of those pretty significant trade agreements for Canadians. Today we're talking to the agriculture and auto industries in this segment.

Ms. Sullivan, I was a little curious about your being over in Japan prior to the time you were in Tokyo with Minister Ritz and the Prime Minister. You've been there before. We had Mr. Phillips and Mr. Masswohl in here just the other day, when we were not able to accommodate you.

Can you give us a little bit of sense from when you were there about what kind of reception you are getting as a group of agriculture producers and processors on this particular agreement and on the talks?

12:20 p.m.

Executive Director, Canadian Agri-Food Trade Alliance

Kathleen Sullivan

The meetings we're having are primarily with our buyers, and they're quite enthusiastic about the possibility of a trade deal. The relationship between Canada and Japan, when it comes to agriculture and food exports, has been around for a long time. It's quite a stable relationship and, as I think a few people have pointed out, stability of relationship is very important to our Japanese buyers.

In fact, we did a round table with Minister Ritz and the grain purchasers, and their biggest concern was with the Wheat Board and what would happen with stability of supply. Fortunately, Minister Ritz and Ian White from the Wheat Board were there and were able to provide the reassurances that our Japanese clients wanted.

I think that in terms of the buyers in Japan there's quite a bit of enthusiasm for a trade deal with Canada.

12:20 p.m.

Conservative

Bev Shipley Lambton—Kent—Middlesex, ON

So then, when you're meeting with these folks.... Something that has come up in just about every presentation we've had—and I think it's actually something that bodes so well for our Canadian reputation—is that they require a premium product. That's what these folks strive to be able to buy when they're dealing with a particular country. I think Canada is known around the world as a quality product country, and the Canadian flag means a lot on some of those things.

So now, when you get that fairly large opportunity for growth, sometimes when growth happens, quality drops. I'm interested in your perspective, Ms. Sullivan, on how you're going to be able to maintain that, because Canada is unique in being able to separate and to keep our separation, whether it's in the meat industry or whether it's the grains. Are you confident as we move forward that your producers and processors are going to be able to maintain and to still value that premium product?

12:20 p.m.

Executive Director, Canadian Agri-Food Trade Alliance

Kathleen Sullivan

You know, I am, and I think you raise an important point. From an agriculture perspective, we are quite thrilled with the trade agenda right now. If you take a look at a few of the TPP countries, Canada is negotiating or trying to negotiate with 80% of the markets that we export to. So it's pretty important for us.

In terms of Canadian agriculture and food groups, I'll take the Canada-EU CETA as an example. For the past three years we haven't been working on that just here in Canada; we also go to Europe regularly. We know it's important for us to understand what the implications of a deal are so that we can then back everything right down to the farm level, take a look at processing capacity, and start to ensure that structurally the industry is ready.

I think in terms of our food safety systems, our inspections systems, we have the infrastructure we need there. It's really a question of ensuring that we have both the production and the processing capacity. That is a challenge that the industry has, but it's one that I can assure you we've taken on and are starting to look at in terms of the Japanese deal but also a European deal and all of the other deals in the queue.

12:20 p.m.

Conservative

Bev Shipley Lambton—Kent—Middlesex, ON

Thank you.

Just as a follow-up, there's been an economic model done on Canada-Japan, a bit of a joint study. I always struggle with these, because this one indicated that there will be a GDP benefit of $4 billion to $9 billion. You get a 100% jump.

I suspect that some of it—as we heard from the forestry products folks, for example—has to do with how we'll market the whole product that we have to a country. We don't know the answers to that yet. It likely has a lot to do, I think, with the quality and the premium products that we'll be able to provide for a price that they're willing to pay.

That's basically just by developing a trade agreement and taking away some of those trade barriers. In agriculture some of them are at 38%, so we have significant ones.

I'm just wondering, Kathleen, in terms of your organization, are there particular commodities that you see as gaining the most potential or benefit out of an agreement?

12:20 p.m.

Executive Director, Canadian Agri-Food Trade Alliance

Kathleen Sullivan

Yes. I think we have benefits pretty much across the board, but certainly for beef and pork we see a lot of opportunity, and also in the canola sector.

I mean, right now, just because of the tariff structure, we can get canola seed into Japan with no tariffs, but our oils have pretty significant tariffs, and that supports the domestic processing sector. If we could change that arrangement and start to export our oils to Japan, first of all it's a higher-value product; secondly, the processing jobs stay in Canada, so it provides an even better economic benefit here.

Right now beef, pork, and canola would be our top agriculture exports. If we could open the markets for those or expand them, that would be tremendous.

That really is where the benefit could be concentrated.

12:25 p.m.

Conservative

Bev Shipley Lambton—Kent—Middlesex, ON

Thank you.

In your opening statement you said that you're encouraged by Japan's basic policy on comprehensive economic partnerships. That was brought in about a year and a half ago.

Can you expand a little bit on that, just to help us understand what that actually means to you and to the agriculture producers, and likely to the processors also?

12:25 p.m.

Executive Director, Canadian Agri-Food Trade Alliance

Kathleen Sullivan

Japan does seem to have a protectionist approach to its agriculture sectors. I think the fact that the Japanese government indicated that they need to focus on trade markets, and that they'll have to take a look at some domestic reforms in order to do that, is an incredibly positive signal not just to us but I think to a lot of economies here in Canada.

Agriculture, fisheries, and forestry are quite protected in Japan. Those are probably the sectors that could benefit the most from the trade deal, so it's quite positive for us that we're seeing those signals.

12:25 p.m.

Conservative

The Chair Rob Merrifield

Thank you very much.

We'll now move to Mr. Easter.

12:25 p.m.

Liberal

Wayne Easter Malpeque, PE

Thank you, Mr. Chair.

Thank you to both witnesses for their presentations.

Turning first to the Japan Automobile Manufacturers Association, I guess especially in the Ontario economy—and I don't think we often see or understand this from the rest of the country—the automobile industry is the number one generator of economic growth, or has been. It's been bouncing back and forth between agriculture and the auto industry in the last number of years.

How do you see this proposed trade agreement growing that auto industry even more in Canada? You went through the job numbers. I think there were some concerns in the beginning about displacing Canadian jobs with Japanese cars, but we are a staging ground for export to other countries, as I understand it, on Japanese models.

How do you see this trade agreement in fact building and growing on that?

12:25 p.m.

Executive Director, Japan Automobile Manufacturers Association of Canada

David Worts

As I mentioned, I think we will have the ability to bring in vehicles that would attract a 6.1% tariff, particularly higher-cost advanced technology vehicles, which are typically sourced at this point in Japan. The usual process, I think, is to establish a market for the vehicles and at some point build a business case for local production. I'm encouraged by the fact that more sophisticated platforms are now appearing in Canada with the RAV4 EV going to be manufactured in Woodstock. I think that would help the process. That would certainly be one of them.

Obviously, the value of the yen is a big issue for a lot of Japanese manufacturers and certainly for the automakers in Japan. There's a lot of pressure on them to co-locate production in export markets and to reduce their exposure to the currency. When you get assembly plants, as we've seen historically with the plants that have come here, you get a knock-on effect with supplier investment as well.

12:25 p.m.

Liberal

Wayne Easter Malpeque, PE

Thank you.

I'll turn now to CAFTA.

Kathleen, I know pretty well where you stand on trade agreements, but there are some other obstacles, especially in the export of agricultural goods from this country, whether value-added or raw materials but to a great extent raw materials, putting Canada at an extreme disadvantage. There's one in particular that the government has been failing dismally on, and that is the service review related to the railways. I'm wondering if CAFTA has a position on the service review and why the government has not acted on that.

I'll be blunt. My own view on Transport Canada is that it should be called the department of railways because it's always coming down on the railways' side. The government, for whatever reason, has failed to act on that service review, so I'm wondering where you're at on that and whether it puts us at a disadvantage.