Thank you very much, Mr. Chair.
On behalf of my organization, I want to thank the committee for the invitation to appear before you today.
I should just say by way of background that the Business Council of British Columbia is a cross-sectoral business organization that represents about 260 enterprises that are active in all parts of the provincial economy—resources, manufacturing, construction, high tech, utilities, transportation, hospitality, retail, wholesale, trade, health care, education, and the professions. Our member companies and affiliated industry organizations account for about a quarter of all private sector jobs in B.C.
I should say that we have looked at the technical summary of the proposed Canada-EU economic and trade agreement in principle, which was unveiled last year. We have also looked at some of the academic and policy literature that has been published on this topic. As well, we have consulted with our members who happen to have an interest in trade and investment relationships with the EU. Based on all of that, we are supportive of Canada bringing this agreement over the finish line.
Our judgment is that CETA will be positive for the Canadian economy, particularly over the medium and longer term. We expect it will boost gross domestic product, stimulate the creation of more jobs, reduce costs for taxpayers in Canada, promote two-way investment flows, and, importantly, help more Canadian enterprises, including enterprises based here in British Columbia, gain a stronger foothold in the EU marketplace. I would just emphasize that, notwithstanding some of the challenges that a number of European countries have been having, the EU is collectively the largest marketplace and economy in the world.
Specifically, we think that being part of a broadly based modern economic and trade agreement like CETA with the European Union is going to benefit our country in a few key areas.
First, the agreement will give Canadian firms improved and to some extent preferential access to the world's largest market, consisting of 28 countries that are home to more than 500 million relatively affluent consumers. The EU accounts for about a fifth of global economic output, consumption, and production. Once it is fully implemented, we believe CETA will result in the elimination of tariffs on a wide range of products of interest to export-oriented firms in Canada—including those in B.C.—and reduce a lot of non-tariff barriers to trade that tend to operate at the border. Very importantly, it will expand and promote trade in services between Canada and the EU. These will include engineering, professional, computer and information, and scientific and technical services, all of which are an important part of the economic base here in British Columbia.
Of interest, Canadian trade with the EU has actually been growing in a period when trade with the United States has been stagnating. So even though the EU is not a fast-growth market, it is actually a market that is looming a bit larger for Canada and Canadian exporters.
The Conference Board of Canada, in a recent study, projected that Canada's exports of goods and services to the EU are poised to increase significantly particularly if market access is in fact improved.
Second, we think CETA will open up government procurement markets both in the EU and here in Canada. This situation should be advantageous to our businesses because the EU procurement market is worth almost $3 trillion a year. Under the terms of this agreement, Canadian companies will be better able to bid on most types of procurement contracts issued by public bodies in the EU collectively as well as by the national, regional, and local governments of the 28 EU member states.
At the same time, we have to recognize that EU suppliers will have a greater ability to bid for public sector procurement contracts here in Canada subject to a list of exceptions. Since the EU public procurement market is vastly larger than that in Canada, it stands to reason that Canada should gain more from reciprocal access to public sector procurement. In addition, taxpayers in Canada should welcome the prospect of greater competition in the whole domain of public sector procurement as this will tend to reduce prices, improve quality, and increase transparency.
Third, CETA will support and advance the strategic goal of diversifying Canada's international trade and commercial relations so that over time we will become less dependent on the United States.
Here I would note that increased diversification has been a strategic goal set by federal governments over recent decades. It's a goal that's also endorsed by most of the provincial governments and supported within the business community, so it's something I think most Canadians would like to see.
Fourth, and importantly, CETA will encourage greater direct foreign investment between Canada and the EU, and strengthen the protection afforded to investors from each party in the other's market.
The EU globally is an enormous source of outbound foreign direct investment. It is also the second-largest source of the stock of FDI here in Canada, at about $175 million in 2013. Canadian companies, for their part, are increasingly our direct investors in the EU as well, and will benefit from the greater protections of foreign investor rights afforded by CETA.
CETA will also help to set the stage for Canada to participate in a credible way in another set of international trade negotiations that are also of interest to this committee. I'm referring here to the proposed Trans-Pacific Partnership. A Canada-EU agreement that addresses such topics as agricultural protectionism, intellectual property, foreign investment, and services trade will better position Canada to negotiate effectively as part of the TPP discussions.
Finally, I would just remind committee members, and you no doubt are aware, that the United States and the EU had signalled quite clearly that they intend to pursue negotiations aimed at reaching a far-reaching transatlantic trade and investment partnership arrangement. These are early days yet, but the EU-U.S. agreement if it comes to fruition is expected to go well beyond the elimination of tariffs and other border restrictions to trading goods by encompassing intellectual property, foreign direct investment, and the alignment of regulations concerning manufacturing and services.
In other words, the EU-U.S. agreement will probably be similar in scope to what we see in the proposed CETA. With CETA, Canada becomes the first western developed economy to hammer out a comprehensive agreement with the EU. Should CETA not proceed, Canada will be on the sidelines and Canadian business will be placed at a competitive disadvantage in the EU market if the Americans and the Europeans in fact move ahead to conclude their own agreement.
In summary the Business Council of B.C. believes CETA will provide a number of benefits to Canada. It will enhance our access to the world's largest market for both goods and services, enable Canadian companies to bid for EU government procurement contracts on a non-discriminatory basis, promote two-way investment flows, and enhance competition and transparency in the domestic public procurement marketplace.
We also hope that the final terms of CETA will entail a gradual reduction in the agricultural trade barriers currently embedded in Canadian supply management regimes governing the production and sale of eggs, poultry, and dairy products. These regimes not only lead to higher prices for Canadian consumers, but they actually make Canada a less attractive place for value-added food-processing industrial activity. Based on the technical summary document released by the federal government last year, it's not clear to me to what extent CETA will actually affect agricultural supply management, but we'd like the committee to know that my own organization would strongly support reform of supply management regimes in Canada if this turns out to be part of the outcome of the CETA deliberations.
Thank you, Mr. Chairman.