Evidence of meeting #38 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

  • Sam Boutziouvis  Vice-President, Policy, International and Fiscal Issues, Canadian Council of Chief Executives
  • Paul Slomp  Representative, Youth Vice-President, National Farmers Union, Food Secure Canada
  • Diana Bronson  Executive Director, Food Secure Canada
  • Richard White  General Manager, Canadian Canola Growers Association
  • Julian Dierkes  Centre for Japanese Research, Institute of Asian Research, University of British Columbia, As an Individual

11 a.m.

Conservative

The Chair Rob Merrifield

We have our witnesses and enough members at their seats, so we will call the meeting to order and continue our study of a high-level economic partnership agreement between Japan and Canada.

We want to thank our witnesses for coming forward. We have from the Canadian Council of Chief Executives, Sam Boutziouvis. Thank you for coming.

We have from Food Secure Canada, Paul Slomp, youth vice-president of the National Farmers Union, and Diana Bronson, executive director. Thank you for being here as well.

We'll start with you, Sam. The floor is yours, and we welcome your presentation.

11 a.m.

Sam Boutziouvis Vice-President, Policy, International and Fiscal Issues, Canadian Council of Chief Executives

Thank you, Mr. Chairman.

Chairman, committee members, thanks for the invitation to appear before the committee on international trade.

The Canadian Council of Chief Executives has a long history of support for measures to strengthen Canada's economic relationship with Japan. The negotiations toward an ambitious economic partnership agreement with Japan will deepen the bilateral relationship and complement our long-standing cultural, political, and social linkages.

We were founded in 1976, as a not-for-profit, non-partisan organization including 150 CEOs of Canada's largest enterprises. Member companies collectively administer $4.5 trillion in assets, have annual revenues of about $850 billion, and are responsible for a lot of Canada's exports, investment, research and development, and training. The council is represented by almost every sector of the Canadian economy.

CCCE's strategy for international engagement includes developing a relationship with the business community in the priority country. The organization also does its best to get the perspective of senior government officials, political leaders, think-tank heads, and other key stakeholders in order to develop an understanding of both the challenges and the opportunities with the priority country as the Government of Canada considers an EPA, an FTA, or other important treaties.

The CCCE worked closely with Keizai Doyukai, which is essentially our sister organization in Japan, to support the launch of negotiations towards an ambitious EPA.

Chair Merrifield, I have provided copies of a joint statement between CCCE and Keizai Doyukai for submission into the record and for the benefit of this committee. I won't refer to it more directly than that. In addition CCCE has worked closely with Nippon Keidanren to advance the bilateral commercial relationship over the past three decades.

Last September, the Honourable John Manley, president and CEO of CCCE, visited Japan along with the CEO of Manulife, Donald Guloien, and a group of CEOs. I understand from testimony last week that the senior vice-president of Manulife appeared before your committee and provided some testimony in this regard. The purpose of the visit was to discuss the joint study and possible launch of EPA negotiations and to survey the incredible results of the tragic triple disaster that occurred last year in Japan. The CEOs had fantastic discussions with Japanese business and political leaders, and it's clear that business ties between Canada and Japan are strong.

On a more recent visit, we learned of the incredible perseverance and resolve of the Japanese people to overcome the challenges of the earthquake, tsunami, and nuclear disasters. The recovery efforts have been nothing short of miraculous. The rebuilding efforts are ambitious and comprehensive.

Canadian business leaders took note of the importance of energy and food security for the Japanese people and their government. They realized that Canada was pushing on an open door with respect to enhancing the relationship, and there is a lot of goodwill toward Canada, especially given the immediate assistance provided by the Government of Canada and by Canadian companies in the aftermath of the earthquake. The Government of Canada, particularly our team in Tokyo as well as here in Ottawa, deserve commendation for the incredible job they did to help Japanese and Canadians during this trying period and for the determination to enhance our ties with Japan.

All these observations suggest not only that we know each other well but that we have before us an important opportunity. That's why we believe that we have taken an important step to enhance our relationship with the launch of these negotiations.

Just to be clear, we have a 100-year commercial engagement history. We are linked through global value chains all over the world, and we have tremendous business-to-business relationships. As per testimony over the past two weeks before this committee, you know that Japan has a diverse and technologically advanced economy. It's ranked third in the world with a GDP of $5.8 trillion.

Mr. Chair, in the interest of time I won't go over the statistics, which have already been presented before this committee. I will only say, moving to page 4 of my brief, that there is nothing like a global crisis to focus the mind. Canadians, however, as well as Japanese, are now experiencing a third wave of global economic uncertainty, this time centred around rising political and fiscal risk associated with the recent elections in Greece, France, and even a couple of länder in Germany. As Canadian workers and private sector employers of all sizes face slower growth in the United States and in parts of Europe, the time is ripe for a re-intensification of our work with Japan.

Canada and Japan should not delay the negotiation of an ambitious and comprehensive agreement. Ensuring effective and equitable market access for businesses from both countries will revitalize the existing economic relationship and yield mutual economic gains.

To ensure an ambitious and meaningful agreement, CCCE respectfully suggests that a Canada-Japan EPA should result in the elimination, either immediately or over the short term, of substantially all remaining tariffs as well as the removal, in so far as it's possible, of substantially all non-tariff barriers; liberalization of services trade; simplified rules of origin that facilitate the use of preferences; clear rules to settle future commercial disputes; regulatory coherence and cooperation, including a framework to promote transparency and mutual recognition; improvements to each of our principles regarding competition policy and alignment therein; enhanced labour mobility using a negative-list approach for enhanced movement of business professionals; high levels of protection for intellectual property; more transparent and simplified customs procedures; lower barriers and lower risks for investors with comprehensive provisions in the EPA; alignment of policies on government procurement; cooperation on safety standards regarding food and other products; and, importantly, greater cooperation in the areas of energy and food security, in the promotion of investment in third countries, and in support of an equitable two-way flow of manufactured goods; and, finally, institutional cooperation in security and trade matters, including cyber security, an important matter of increasing concern.

The U.S. remains Canada's largest trading partner, and Canada is highly integrated into the North American economy. We all know that. However, Canada does need to diversify its trade relationships and build stronger partnerships in Asia and elsewhere. As the U.S. looks to enhance access to the Asian markets, Canada must do so as well to ensure Canada's future prosperity. Asia's rise—and this is a pretty bold statement—is the single most important force transforming the world economy. As a Pacific nation, Canada must look towards Asia—China, Japan, and other priority countries. Successful conclusion of an ambitious EPA will give Canada a presence in Asia and could be the first in a series of economic partnerships in the region.

The CCCE has been active in promoting engagement with priority Asian countries. Most recently, we launched an initiative called Canada in the Pacific century. It seeks to identify and promote key policy solutions to enhance Canada's ability to succeed in a transforming global economy, to raise awareness, and to improve Canadians' understanding of the resulting challenges and opportunities for Canada. A key conference will take place on September 24 and 25 here in Ottawa. It will address several key matters including the issue of food security.

The rise of Asia is changing the global economic landscape. The time has come to diversify our trade relationships. Both Canada and Japan are also seeking to join the regional Trans-Pacific Partnership negotiations, and both of our governments are engaged in consultations with TPP members.

Mr. Chairman, Canada should not wait for an answer to its request for entrance into the TPP to enhance its trading relationship with Japan. Japan has the largest market of current and prospective TPP participants with whom Canada does not have an FTA.

Securing an agreement with Japan will give Canada a first-mover advantage in a significant market like Japan, especially in the area of agriculture. I understand that previous testimony has attested to that notion as well. We totally agree with the issue of first-mover advantage. We brought it up within the context of the FTA that this government negotiated with Colombia. Canadian exporters of agricultural food products and other products benefited immensely because we successfully negotiated the Colombia FTA first. We're going to be at a similar disadvantage given that the United States has negotiated and finalized its FTA with Korea. Our agricultural producers who are export oriented are quite worried about losing market share in a country as large as Korea.

We should maintain a high degree of ambition and agree to conclude these bilateral negotiations hopefully within two years so that Canadians can benefit as soon as possible from this enhanced and very important relationship.

Thanks.

11:10 a.m.

Conservative

The Chair Rob Merrifield

Thank you very much.

We'll now move to Paul Slomp, who is doing the presentation on behalf of Food Secure Canada, and we have Ms. Bronson for questions and answers as well.

Go ahead, Mr. Slomp.

11:10 a.m.

Paul Slomp Representative, Youth Vice-President, National Farmers Union, Food Secure Canada

Thank you very much for giving us the opportunity to make our presentation here today.

My name is Paul Slomp, and I'm the youth vice-president of the National Farmers Union. I'm also a beef producer. I farm beef cattle just south of Ottawa.

The National Farmers Union is a non-partisan nationwide democratic organization made up of thousands of farm families from across Canada, who produce a wide variety of commodities, including grains, livestock, fruits, and vegetables. The NFU was founded in 1969 and chartered in 1970 under a special act of Parliament.

The NFU is a member of Food Secure Canada, the national network that works for zero hunger and for healthy and sustainably produced food in Canada. Recently Food Secure Canada produced Resetting the Table: A People's Food Policy for Canada. That has been shared with this committee.

The NFU supports trade in agriculture as long as it is fair trade, it supports the livelihoods of family farmers in Canada and those of our trading partners around the world, and it ensures each country has the capacity to feed itself.

The National Farmers Union has monitored the impacts of Canada's increasingly trade-dependent agricultural policy for over 20 years. We have observed that while trade has increased dramatically, so too has farm debt. At the same time, realized net farm income has remained stagnant at a very low level, in some years even dropping below zero. Furthermore, the number of farms and farmers in Canada has steadily dropped, most dramatically those farmers under the age of 35. In the last 20 years, Canada has lost 69% of its farmers under the age of 35.

The expansion of trade in Canada's agricultural sector has not benefited farmers. Furthermore, yesterday the United Nations special rapporteur on the right to food reported that Canada's food and agricultural policies are not even adequate to feed our own people properly.

In our presentation today, we would like to point out some key areas of the proposed economic partnership agreement with Japan that will result in further losses of farmers and a reduction in Canada's ability to realize the right to food for all of our people.

The comprehensive and high-level economic partnership agreement with Japan, like NAFTA, and the comprehensive economic and trade agreement go far beyond matters of trade between countries. They set up rules that on the one hand limit the ability of elected governments to make laws and regulations in the public interest, and on the other hand provide for protection and privilege of global businesses, which are not citizens of any country, even if they claim the legal rights of persons under the law. The advantages gained by these companies are matched by the losses imposed on individuals, small businesses, and local or regional companies in countries on both sides of the trade agreement.

If the trend of comprehensive economic partnership continues, national governments will be rendered virtually impotent, unable to protect their voters, their public sector, or their independent businesses. It is stated in the report of the joint study that if this EPA is expected to build momentum towards the realization of a free trade agreement with Asia Pacific, the intermediate step would be the Trans-Pacific Partnership, or the TPP, which could cause Canada to abandon our supply-managed system in order to acquiesce to New Zealand demands.

The NFU strongly supports supply management. These sectors of Canada's agricultural system represent one area in which farmers are making a decent livelihood and do not require support payments, and one where consumers can be confident that the products they are buying are produced in Canada, to Canadian standards.

The joint study suggests that an EPA will result in dramatic economic growth for both Canada and Japan. When we review the impact of Canadian trade expansion policies to date on farmers, we see a clear pattern of loss in the number of farmers and a concentration of production in fewer, larger units. We also note that these largest farms are also the ones that have benefited the most from our safety net programs.

The joint study indicates that the proposed EPA would guarantee considerable freedom to capital, by allowing capital to go where it wants, to stay as long as it wants, and to sue governments that attempt to regulate it in the public interest. Global corporations are becoming extremely wealthy and powerful. The imbalance between these companies and farmers is severe.

The investor-state dispute resolution mechanism allows a company to sue a government if it passes a law or implements a regulation that effects that company's profit-making ability. This curtails the ability of duly elected legislators to carry out their duty to the public.

We are also concerned that because Japan has adopted the UPOV 91, the plant breeders' rights regime, there might be pressure on Canada to adopt UPOV 91 as a harmonization process. This would severely restrict farm-saved seed practices and dramatically increase seed costs for farmers. Currently, patents are being used in Canada to allow global seed corporations to charge high prices. As a result, patented canola seed costs have increased dramatically. Farmers are now paying $600 per bushel for seed, yet that same farmer sells his or her crop for only $13 a bushel. Under UPOV 91, such lopsided pricing situations would also occur with non-patented seed varieties covered by plant breeders' rights.

The joint study mentions intellectual property rights enforcement as one of the areas to be included. We are concerned that such measures would unfairly affect farmers, in light of the 2004 Supreme Court Schmeiser decision that declared a farmer to be infringing on patent rights no matter how the patented genes were introduced into the crop. Genes are transferred by wind and insect pollination, and weeds are often spilled from trucks and railcars along roads and railways. Pedigreed non-GMO seed stocks have been documented to contain GMO seed contamination.

This EPA would include public procurement measures that, like CETA, reach into sub-national governments. This would impinge on the ability of provincial and local governments and schools and hospitals to adopt a local food procurement policy.

With the destruction of the Canadian Wheat Board as our farmer controlled marketing agency for wheat and barley exports, access to Canadian grains supplies is something that Japanese companies are interested in as they seek to expand and consolidate their control over Asian food markets. I can expand on this in the discussion.

Currently Canada's top agricultural exports into Japan are beef, pork, canola, and soy. Under the proposed EPA, it appears that sellers of these commodities would seek even more access to the Japanese market. The bulk of Canada's canola and soy crops are genetically modified, yet Japanese consumers are very averse to GMOs. Japan has strict labelling regulations, and there is virtually no consumer demand for food made from genetically modified crops.

Canada's beef and pork processing sectors are highly concentrated, with about 80% of beef being packed by Cargill and Excel Foods, and about 70% of pork being packed by Olymel and Maple Leaf Foods. I would like to point out that these interests are being represented by my fellow witness here today.

An NFU study shows that beef prices for farmers are kept artificially low because the packers own vast feedlot herds, allowing them to manipulate prices. In pork, Canada has lost thousands of farmers since NAFTA was signed. Many of those remaining must contract their production to one of the two big packers and take the price that is offered. The beneficiaries of increased exports of beef and pork are the four big meat-packing companies, not farmers.

Japan has very strict rules around food safety regarding mad cow disease in beef. Canada's record in dealing with mad cow is poor. As long as the current system is in place, Japan is unlikely to change its age-specific rules.

We would also like to emphasize that trade between Canada and Japan will continue, regardless of whether or not a proposed bilateral agreement is made. Both countries are members of the World Trade Organization, which can also be used to resolve international trade disputes if they arise.

The ultimate goal of this EPA is the complete penetration of global corporations into every facet of economic life. In the process, the culture of farming and food will be transformed by the imperatives of corporate efficiency and profitability. We believe that international relations must be based on mutual respect for the whole of each society, that trade can be conducted fairly, without destroying the cultural and economic institutions people have built, and that democracy means that people have a real say in the economic choices that affect their lives.

We also suggest that Canada needs a national food policy and that international trade should be a component of that policy.

Thank you very much.

11:20 a.m.

Conservative

The Chair Rob Merrifield

Okay, thank you very much. It sounds as if we have varying views in the testimony this morning. It should add to a very interesting question and answer period.

We'll start with Mr. Davies. The floor is yours.

May 17th, 2012 / 11:20 a.m.

NDP

Don Davies Vancouver Kingsway, BC

Thank you, Mr. Chairman.

I'd like to thank all of the witnesses for being here today.

Yesterday I met with representatives of the canola industry, the pork industry, and agribusiness generally in Canada. They gave me a very clear indication that they're speaking on behalf of a wide diversity of agricultural interests. They said that pursuing multilateral negotiations through GATT, and I realize that those are stalled right now, is far and away a preferable way to be dealing with issues.

I'd like both witnesses to give a brief comment, if you could, on what your position on that would be. Do you think that we should be trying to get multilateral negotiations back on track? If so, is this process of pursuing bilateral agreements, instead of focusing on multilateral negotiations, harmful towards that end, or is it not?

11:20 a.m.

Vice-President, Policy, International and Fiscal Issues, Canadian Council of Chief Executives

Sam Boutziouvis

The Canadian Council of Chief Executives has always supported the Doha development agenda and multilateral trade liberalization. We have been front and centre in several of the rounds in the 35-year existence of the organization.

Of course, we strongly supported the Canada-U.S. FTA because there were severe competitiveness concerns back in the 1980s.

The hard reality, as you have articulated, is that the Doha Development Agenda is stalled. Our very able team in Geneva is trying very hard to come up with alternatives, such as plural lateral agreements in certain sectors to try to unstick what's going on in Geneva. They're even thinking about making progress in very limited, narrow, specific areas to ensure that we don't fall off the bicycle of the global trade agenda.

In the meantime, as you know, trade agreements have proliferated bilaterally and regionally, but they are of varying quality, especially on the regional front.

Irrespective of what I think previous testimony has suggested, Canada has benefited enormously from some of those bilateral deals we have done over the past several years.

This is my last comment. Japan, after being a staunch defender of the multilateral agenda, along with Canada, has embarked on a series of EPAs and FTAs, especially in the Asia-Pacific theatre. It is currently negotiating with Australia. So we view it as essential to try to advance the trade agenda for small, medium, and large enterprises, and not just for large enterprises, contrary to what my colleague has said.

We want to advance Canadian prosperity. We want to do it in the most effective, efficient way possible. We are—

11:25 a.m.

NDP

Don Davies Vancouver Kingsway, BC

I'm sorry, Mr. Boutziouvis. I'm going to cut you off, because I have limited time and I want to give the other witnesses a chance to answer, and I have a few other questions. Thank you.

Mr. Slomp, or Ms. Bronson.

11:25 a.m.

Representative, Youth Vice-President, National Farmers Union, Food Secure Canada

Paul Slomp

I'm also going to speak to part of this.

I think what's important to acknowledge is what we are trying to accomplish with these trade agreements. Multilateral trade can be beneficial, but it cannot come at the cost of a nation state being able to meet the demands and meet the needs of the people within its own nation state.

If negotiating a multilateral agreement prohibits Canada from implementing policy to make sure that certain types of investment are going towards policy objectives that put Canada first, such as feeding our people, such as making sure that people in Canada can make decent incomes working in decent jobs, then I don't think those multilateral agreements are actually of benefit.

11:25 a.m.

Diana Bronson Executive Director, Food Secure Canada

Simply to add to that, I think there is a preference for multilateral trade rules over bilateral deals. One of the reasons for this is that a more level playing field results from the former versus a bilateral situation in which poor countries are obviously tremendously disadvantaged in bilateral negotiations with a large economy. It also contributes to a proliferation of different deals.

Most of the bilateral treaties that have been negotiated recently have been bilateral investment treaties in fact; they are not primarily about trade but about investment, with all the investment dispute problems we know about.

I guess those are the main points I have to make.

11:25 a.m.

NDP

Don Davies Vancouver Kingsway, BC

I'll turn to investor-state provisions, too. I think you touched on these, Mr. Boutziouvis, in your presentation.

First, you suggest that an EPA with Japan would lower barriers and risks for investors with comprehensive provisions. What risks for Canadian investors does Japan presently present?

11:25 a.m.

Vice-President, Policy, International and Fiscal Issues, Canadian Council of Chief Executives

Sam Boutziouvis

Japan and Canada have pretty extensive investment provisions that they negotiate with other countries, and Japan has negotiated several investment treaties with other countries. There's a high degree of congruence between principles associated with investment treaties between our two countries. The issue is to ensure that there's alignment between each of our respective sets of provisions regarding our bilateral investment treaties and theirs.

As an example, we have several companies that would very much like to be able to sell more services into Japan. They view the recent changes with respect to Japan's postal service to be tremendous progress, but they would obviously like to see more. I suspect that issues regarding non-discrimination and reciprocity would be very clear.

11:30 a.m.

NDP

Don Davies Vancouver Kingsway, BC

In terms of investor-state provisions, would you suggest that we have an investor-state provision in our agreement with Japan, Mr. Boutziouvis?

11:30 a.m.

Vice-President, Policy, International and Fiscal Issues, Canadian Council of Chief Executives

11:30 a.m.

NDP

Don Davies Vancouver Kingsway, BC

You also say in your brief that you'd like regulatory coherence in a framework to promote transparency.