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 industry.

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

11:35 a.m.

Voices

Oh, oh!

11:35 a.m.

Liberal

Wayne Easter Malpeque, PE

That suited the chair.

11:35 a.m.

Executive Director, Canadian Apparel Federation

Bob Kirke

The reason I want to mention this is that we've used that as the template for our trade agreements with every other country we've signed an FTA with. In the first instance, we went to Costa Rica and said, “NAFTA rules: done”. Colombia, Peru.... We don't make fabric here. They don't make fabric. Yet we're requiring this onerous rule of origin.

11:35 a.m.

Liberal

Wayne Easter Malpeque, PE

Are there ongoing discussions with the government, from their industry perspective, to move away from that? And are they moving in the right direction?

11:35 a.m.

Executive Director, Canadian Apparel Federation

Bob Kirke

Yes. Look, with a country like Japan, you go to single transformation—cut and sew the garment, and then trade it. With some of the other developing countries, you might want to do a fabric-forward, because they will have a fabric capacity. India has tons of fabric capacity. They have no problem meeting that rule. That's what we'll say when we come before you on that agreement. But for god's sake, don't do NAFTA.

As an illustration, NAFTA has been in 18 years. We went up and down. We were exporting $3 billion of apparel at the height, and it's closer to $1 billion now. When U.S. customs comes to verify a NAFTA certificate of origin today, they disqualify 90% of them in textiles and apparel for a very simple reason. No one figures out where the yarn is from. They don't have a paper trail or anything like that.

The U.S. customs can walk in and ask you, where you did you buy the fabric? Oh, I bought it from him. Okay, so where did he get it from? From this mill: go there. So they go and ask the mill, where is the yarn from? I got it from here. Then can you show us the invoice for that yarn? And this could be a small producer in Toronto who's been asked to meet that kind of scrutiny regarding a piece of denim.

It's unworkable. It's unworkable in the U.S., it's unworkable in trade agreements, and it's unworkable, frankly, within the LDC tariff, which is another plank of our trade policy.

So without belabouring it: don't do it.

11:40 a.m.

Conservative

The Chair Rob Merrifield

Okay.

Thank you very much for that.

And thank you for the questions. You were just about out of order again, attacking my burlap.

Go ahead, Mr. Keddy. The floor is yours.

May 10th, 2012 / 11:40 a.m.

Conservative

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

Thank you, Mr. Chair.

Welcome back to our witnesses. Both of you have appeared before this committee a number of times, and there's always good discussion.

You had some very informative points, Mr. Kirke, on the apparel business. When we look at agreements, sometimes the obvious is missed. I'm always a little bit shocked, how that happens, but obviously it does.

I want to start off with a couple of questions on forestry. It's an industry that's very much in my background. I'm very familiar with it in the east coast of Canada.

Your point's well taken on having one customer. I've mentioned it many times at this committee. Eastern Canadian mills used to depend very much on Europe as a marketplace. We got shut out of Europe for phytosanitary reasons, so $900-million worth of wood that came out of Nova Scotia alone to Europe suddenly turned south. By far the Americans are taking that portion, that billion dollars' worth of wood products coming out of Nova Scotia, and Europe is getting a few hundred thousand. We have an advantageous position, of course, because we don't fall under countervail. We do fall under anti-dumping, when it happens, but it's helpful to us.

I would take a moment to congratulate you and your industry on helping out after the tsunami. Good for you. That's what neighbours do for neighbours. That's nice to see.

The fact that we do have a mature marketplace in Japan, the fact that we do have a culture that's traditionally built with wood, as we do in North America, particularly in Canada, should help us to move this forward. I would ask, however, what role modern forestry practices, certification in particular, has played in bringing that product into Japan.

11:40 a.m.

Vice-President, Public Affairs and International Trade, Forest Products Association of Canada

Andrew Casey

Thank you for that. That was a point I neglected to mention in one of the earlier questions, I think from Mr. Easter, on how we improve our competitiveness in that marketplace and what we're doing.

The one thing I did leave out was certainly our environmental performance. Japan represents a market that values environmental performance. In fact it's one of the criteria, one of the table stakes: you can't get into the marketplace unless you can show that your environmental performance on the ground, your emissions and other things, are up to speed and what they would hope to see.

In that regard, our industry's record of environmental performance is second to none. We have the most certified forests in the world. We're a leader in that regard. We've gotten our emissions down considerably. Certainly our carbon dioxide emissions are down by 60% to 67% since 1992.

There are other elements to it. The Canadian Boreal Forest Agreement is another symbol or sign for that marketplace that our environmental performance is the best in the world. All of that very much helps us from a competitive standpoint in that marketplace, and we're encouraged by it.

Just to your earlier comment, hopefully the Canada-European deal helps us regain some of that market share. I think we talked about that the last time I appeared before this committee. That will be an important deal where we get rid of the tariffs and the quota on the plywood aspect, and then hopefully that'll open up market again for the east coast producers.

11:40 a.m.

Conservative

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

The other point on the Canada-EU, and I think it's worth mentioning, is that there's really no reason why we can't get into raw dimensional lumber going back into the European Union, as long as there's no bark or wane on that wood. It's just a matter of inspection. We used to have it, so there's no reason we shouldn't be able to get back to it.

Mr. Kirke, your comments, I think, were very apt and much appreciated. I realize that the rules of origin must be a nightmare in the fabric industry; I mean, I just can't imagine.

Has the advent of synthetics imposed anything on that?

11:45 a.m.

Executive Director, Canadian Apparel Federation

11:45 a.m.

Conservative

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

Okay: simple question, simple answer.

11:45 a.m.

Executive Director, Canadian Apparel Federation

Bob Kirke

We have an 18-year agreement under NAFTA, and no one wants to change it. The world has passed NAFTA by in terms of a trade arrangement.

A small provision allows you to access a certain quota of fabric that isn't from the trading region; it's called a TPL, tariff preference level. So you can use some imported fabrics in certain quantities to construct a garment here and ship it to the States. There's one for wool fabrics and one for cotton and man-made fibre.

Along comes hemp, which doesn't fall into either. If anyone exerted even the slightest amount of common sense they'd say that we should amend this, that we should change it so that we can qualify. No. It's a tiny but inflexible thing. It doesn't matter what new fibres come along, because it's as if they're put into a basket or they're not. I'm not sure anyone wants to open up NAFTA, but the reality is that if some common sense prevailed we could sit down with the Americans tomorrow and change provisions in NAFTA. No one would oppose that, but it doesn't happen. Again, when you set the bar so high, as they did in creating this rule, it's impossible to meet.

11:45 a.m.

Conservative

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

It really wouldn't pertain to our ability to sign a bilateral agreement with Japan, but in the Trans-Pacific Partnership would you expect the Americans will be looking for the same type of NAFTA-based rules on fibre?

11:45 a.m.

Executive Director, Canadian Apparel Federation

Bob Kirke

There's quite a debate in the States because the U.S. textile industry is dead set against it. Vietnam is on their brain, if you will; they just go crazy about Vietnam. So, absolutely, I don't see their having a lot of flexibility in the negotiations. They are captive to that industry.

11:45 a.m.

Conservative

The Chair Rob Merrifield

Thank you very much.

We're going to have two more questioners and will split the time. We'll try to get our next panel a little ahead of 12 because we have some committee business near the end of the next hour's session.

Mr. Davies, you have a couple questions.