International Trade Committee on Feb. 3rd, 2014

[Marianne Alto]

Within those thresholds, yes. Of course, it's always good to be able to say below a certain amount you've given us the ability to make local decisions. But I guess our position would be: why is it that you set a threshold without consulting us?

When I go back to the Victoria bridge example, we have one of the largest infrastructure projects in our history. Had this been in place at the time that we began the project 18 months or two years ago, we would have had, we believe, less ability to manoeuvre than we had at the time. When you look at $7.8 million, that's 10% of our bridge project. We have a number of projects coming down the pike that are around infrastructure. They're going to be much larger than that.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Fair enough, but the trade-off would also be, you know, if you can select an equivalent provider of a service or a construction infrastructure at a lower cost for your tax base, they would probably very much appreciate not having to pay more in taxes for the same product. Would that not go well with your constituents?

[Marianne Alto]

Absolutely, but I guess I'm a bit confused about why we wouldn't also have the ability to do that if the thresholds were either very much higher or if we'd had input as to where the thresholds make sense. Obviously, we're in a position where we're looking to decrease the burden on our taxpayers and try to resist any downloading that continues to happen. But at the same time, the position that we had would be that we could have made better decisions together if we'd been in the tent with you.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

I have some questions for Mr. Jeffery as well, so I just want to go through these very quickly.

On the topic of consultation, I just looked up the FCM's comments on the trade agreement when it was announced, and this is the statement of the president of the FCM. He said:

This morning's announcement shows that the voice of Canada's local governments has been heard and respected in trade negotiations with Europe, and opens the door to a much stronger economic partnership between the federal government and Canada's cities and communities.

He goes on to say:

Today we are seeing the positive results of FCM's two-year collaboration with International Trade Minister Ed Fast, who has worked hard to answer serious questions about potential impacts on small businesses, strategic industries, and local decision-making.

Clearly, somebody at the FCM seems to believe that they were well consulted. Do you have a difference of opinion with—

[Marianne Alto]

Yes, I actually do. I think you're referring to a really important part that the FCM did manage to achieve in its conversations with the federal government, and that's the inclusion of I believe seven really fundamental principles in the agreement, which I didn't have time to reference in my remarks.

Those are great. It's a great place to start. They adhere to values, and to the principles of collaboration and a collective approach to making decisions. Those are all really excellent, but they don't have enough detail in them, I would argue, to provide the comfort that certainly the City of Victoria would like to have around knowing exactly the rules of the playing field before we start embarking on large infrastructure projects.

As an aside, the co-sponsor of our resolution in Victoria, councillor Christopher Coleman, actually was a board director of FCM at the time.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Okay. There might be a difference of opinion within the organization, and that's sometimes understandable.

Mr. Jeffery, you talked about how important this agreement is to coastal forest companies. You're currently exporting to the European Union. Do you have any prospects or predictions as to how much this might increase in terms of exports?

[Rick Jeffery]

Certainly for our plywood producers this will be very, very good news, because right now they pay I think a 10% tariff, which prices them out of the market. We have one full-blown plywood producer on the coast as well as a couple of veneer producers who produce the veneer for plywood. So there will be a very tangible and immediate benefit for that sector.

As you know, global market conditions are improving. The EU is starting to come out of its protracted problems. We will see over the next three to four years very much positive, improving marketplaces at the same time that this agreement kicks into place. We expect that the combination of those two things will allow the industry to continue to grow the market share in the EU that we lost in the eighties. We had a very strong market there, we lost it, and now we're trying to recapture some of it.

So I can't give you a quantitative answer to that, but our expectation is that we will be able to capitalize.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

That's great news.

At the end of your remarks, you made some comments about the Trans-Pacific Partnership. We will be addressing that topic tomorrow, so I'm wondering if you could elaborate on that now, for the benefit of our researchers, to get your comments on the record.

[Rick Jeffery]

Yes, sure.

The TPP is in full swing. There are three issues in TPP that are of concern to the forest products industry. The first one is that we want to ensure that the provisions in NAFTA, especially around chapter 19, continue to be enforced—i.e., they don't get negotiated away. Chapter 19 is the dispute resolution chapter in NAFTA, which is tied into the softwood lumber 2006 treaty between the U.S. and Canada, where ultimately we have access to those dispute resolutions at the end of the day.

In softwood, as you may know, there is an arbitration panel—the London court of arbitration—but we don't want to lose our ability to go through the NAFTA process and be able to use those dispute resolutions.

There is noise from Japan around log exports and around our tenure system in British Columbia. That intrudes into TPP as well as in the Japan free trade discussions. The noise has been that in the TPP there's a view that the U.S. or Japan might want to see elimination of our log export restrictions. Whilst we all need to work towards some rational construct there, it's a very, very complicated issue that has far-reaching impacts for the coastal industry. We want to ensure that as those discussions go on, we're fully informed and are providing input.

On the tenure piece, there's a view that because B.C. has 95% crown ownership, somehow that constitutes a subsidy. We're not going to be changing our tenure system any time soon, so we have to make sure that any kinds of trade agreements there respect the tenure system, respect our access to the NAFTA chapter 19 piece, and respect the fact that people have invested a whole bunch of capital in this business on the basis that they know there's a log supply there.

So changes to the log export policy have to be very thoughtful and measured.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Pacetti, the floor is yours.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you, Mr. Chair.

Thank you to the witnesses for coming today.

I will begin with Ms. Alto.

Victoria is a major city in Canada, is it not?

[Marianne Alto]

We think so.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Yes, so do I, and you weren't engaged in this process at all. I find it hard to believe that the city would not have been engaged in the discussions on the free trade agreement.

[Marianne Alto]

We were surprised as well.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Are you not part of FCM? I understand you are. What was the linkage there?

[Marianne Alto]

Yes, absolutely, and as I mentioned, one of my colleagues was on the board of FCM earlier when this process began. I need to speak specifically to that.

Our understanding, as it was explained to us by FCM, was that their degree of comfort with how the progress of CETA was going was based on the agreement the federal government came to with them around the inclusion of basic principles. They continued to communicate with us their frustration on their lack of ability to see the details, and the fact that, although it's a good thing for me to negotiate with you the fact that we have certain values and certain principles together on which we'll build things, if we can't start to talk about how this is going to affect your organization and my organization, then we're really leaving it at a very general level.

FCM has communicated very clearly with us that they went a little distance and they did get some agreements—and it is important to acknowledge that—but not nearly enough for its member cities to be able to say, “Great, we're as comfortable as you've expressed for your industry.”

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

How about on the provincial side?

[Marianne Alto]

UBCM, the Union of British Columbia Municipalities, took—I don't know if it's a very different—a significantly different position in that their analysis of the process was there wasn't nearly enough detail. In fact, there was so little detail upon which to base their decisions that they actually passed a resolution that they put forward to the province asking the province to exempt all of UBCM's member municipalities from CETA. It communicated that to the provincial government, I believe in 2010, as the City of Victoria did last year.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

What was the reply to that resolution?

[Marianne Alto]

I believe it was no.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Okay, thank you.

Mr. Jeffery, we had a witness this morning who stated that with CETA most of the benefits are going to be to multinationals, but in turn, if you look at some of the multinationals that had a harder time with the North American Free Trade Agreement, or just with the Free Trade Agreement with the United States, they were from the forestry sector in particular, and the automobile sector.

Do you have a comment on that?

[Rick Jeffery]

I wouldn't share that assessment. I'm not sure who you were talking with, but the forest products industry on the coast of British Columbia is very integrated—

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Is it integrated with the United States?

[Rick Jeffery]

No, internally. On the question on whether the value-added guys or the multinationals are going to be the people who win or lose in this deal, on the coast we have a very integrated industry. We start with large companies, most or all of which are Canadian owned or privately owned by Canadian interests. They are the larger guys. The smaller guys are all privately owned.

The supply chain is very integrated. You start with logging. You end up converting logs into lumber. Then the lumber goes to the smaller value-added guys. One can't exist without the other, so we all kind of benefit from the agreement.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

When does value added start? Is it after the logs? Is lumber considered part of that?