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

11:30 a.m.

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

Andrew Casey

I think the Trans-Pacific Partnership is a very important initiative, and obviously the Canadian government has signalled it would like to be at that table, as has the Japanese government. There is some pushback, obviously, and some are trying to prevent us from being at the table. I think strategically this presents a very important initiative in terms of putting some pressure on those who are trying to keep us from the table, by our saying that if they don't let us come to the table, we'll just do it bilaterally.

The Japanese market, as important as it is for our industry, is extremely important for the U.S. industry as well, and so that puts a lot of pressure on the U.S. to understand that having us at the table might be to their benefit. If we're at the TPP table, the Japanese market is obviously part of that, as well as some of the other key marketplaces in Vietnam and other Asian countries. Certainly it gives us a leg up on some of the competition we're facing now from Australia and New Zealand.

11:30 a.m.

Conservative

Ron Cannan Kelowna—Lake Country, BC

May I have just a quick response from Mr. Kirke? Would you share similar sentiments, from your perspective?

11:30 a.m.

Executive Director, Canadian Apparel Federation

Bob Kirke

We have no opposition to being involved in TPP. Our only problem is that U.S. policy is still driven by, as the economists once called it, the world's oldest infant industry, that being the textile industry. Their rules are so absurd in this century that there's no basis for trade.

We support going ahead with TPP. We support going ahead with Japan, because within a bilateral deal with Japan, you can set rules that actually make sense. And I think the Japanese government would support—

11:30 a.m.

Conservative

Ron Cannan Kelowna—Lake Country, BC

Thank you very much.

11:30 a.m.

Conservative

The Chair Rob Merrifield

Thank you very much.

For a minute there, I thought I was going to have to call you out of order on the oldest profession.

11:30 a.m.

Voices

Oh, oh!

11:30 a.m.

Conservative

The Chair Rob Merrifield

Go ahead.

May 10th, 2012 / 11:30 a.m.

Liberal

Wayne Easter Malpeque, PE

Thank you, Mr. Chair, and thank you, folks, for your presentations.

First, to the forestry industry, I think you said that our major competitors in the forestry industry in Japan were the United States and the Scandinavian countries. Do they face the same or similar tariffs as we do? I know where the U.S. is at in terms of negotiations with Japan. What about the Scandinavian countries?

11:30 a.m.

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

Andrew Casey

Yes, they do. The MFN, or most favoured nations, are all in that zero to 7.5% range. It's pretty much equal for all of us across the board. What this will do is drop it down to zero for us and obviously put us at a competitive advantage compared to those who still have their tariffs in place.

11:30 a.m.

Liberal

Wayne Easter Malpeque, PE

In terms of some of the other countries, do they do anything else within their industry to make their industries more competitive in the Japanese and other markets?

I know the agriculture industry best. It's really interesting. The United States claims to be pure, but they find many, many ways to subsidize, whether it's through their transportation system or other means.

What's happening in the forestry area?

11:30 a.m.

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

Andrew Casey

I'm very wary of talking about subsidies in the forest products industry when the U.S. is involved. I can't speak to that. I don't know what the other industries are doing.

I certainly know what our industry is doing to make itself more competitive in that marketplace. We're building on the long history of already being there. There's clearly an appetite for our wood. They like the J-grade lumber. They're buying a lot of it. It constitutes about one-third of what they're bringing in, in total. They certainly like other key products, such as cedar, and the more visible types of woods they're bringing in.

I think, for us, it's just continuing to grow the marketplace, grow the tradition of building with our wood, and proving that our quality is superior to that other countries that might be sending their product there.

11:30 a.m.

Liberal

Wayne Easter Malpeque, PE

You may or may not be able to answer this question.

In terms of a comparison to the U.S. market, one thing we find, certainly in all kinds of discussions, is that in some of their markets, we're actually falling down. In our secure, long-term markets, we're going backwards while new deals are negotiated.

I'm wondering where the forestry industry is at. Are we expanding substantially in the United States market? Are we back to where we once were? What is happening there at the moment?

11:35 a.m.

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

Andrew Casey

Two things are happening in the U.S. market. They've stopped building houses. That's the biggest problem for us. The problem when they stop building houses hits you on the wood side, because that's what they build the houses out of. But that's also usually the first indicator of a downturn in their economy more broadly. When that happens, what you tend to see is that they advertise less, and that impacts our paper side. A newspaper is essentially always the same size, from a news standpoint. It only grows in size when people start to advertise more. So that part of the market gets hit. You get a double whack from that.

We know that the U.S. market is going to come back. We've seen a slight uptick in their building. They have significant inventory to get rid of, but they will start to build homes again. Will they reach the $1.5 million levels again? Probably not, but even if they get up to $1 million or $1.1 million, that will be massively helpful. It would represent about a $400,000 or $500,000 increase over what we're at now.

That said, I think one of the important strategies for the industry is to diversify away from its dependence on the U.S. market. If you become very dependent on one particular marketplace, as we have over our history—we've traditionally sent about 70% of our products there—we're very vulnerable to whatever happens in their economy. So we're very encouraged by the aggressive trade agenda being pursued right now, because it's opening up all sorts of new markets.

We're also re-establishing ourselves in existing markets, such as Japan, where we have been for a long time. Equally, when you look at India, China, and all those very important marketplaces where we hope to grow, we can get ourselves away from our dependence on the U.S. marketplace and its vagaries.

11:35 a.m.

Liberal

Wayne Easter Malpeque, PE

Okay.

Turning to the garment industry, you talked a fair bit about the original rules of origin that basically still exist. What's the reason behind that?

11:35 a.m.

Executive Director, Canadian Apparel Federation

Bob Kirke

NAFTA was created when there were high or restrictive import quotas against countries like India and China. There was a goal, especially voiced by the U.S. textile industry, that they wanted to have the entire garment from North American raw materials.

The fact of the matter is that with liberalized trade, you recognize that there are certain places in the world that can product textiles and apparel very well, and they are not all in North America, despite a number of incentives here, which you've mentioned. I think the most heavily subsidized product in the world is U.S. cotton.

Despite all of that, North American industry is not competitive in all categories of textiles and apparel. Essentially what you're doing is you're forcing the use of U.S. yarn. To trade freely between Canada and the U.S., you have to use U.S. yarn. Well, there's no yarn production left in Canada, and the stuff in the United States is highly commoditized. So it's just a few different items, and nothing fancy or appealing to the consumer.

As long as you want to all dress in burlap, you're doing well. That's really the result of that trade policy.