International Trade Committee on May 12th, 2016

[Matt Marchand]

Before I do that, I just want to read something else into the record, too, from our policy and solutions forum that we had yesterday. I just want to read this, as I didn't get a chance to read it earlier:

The gathering heard that Canada is not only losing new auto investment to Mexico and American jurisdictions offering better incentives but also to a growing number of new countries around the world entering the lucrative industrial sector, including Indonesia, Turkey and Thailand. Tanguay said it was troubling to hear at an industry gathering he attended in Michigan that, among automotive decision-makers, Canada didn’t even make the list of potential investment sites for new product.

I just wanted to put that on the record.

[Tracey Ramsey, NDP, Essex, ON]

If you don't have the resolution now, that's okay, but if you can read into record, I think we would like to hear what the Ontario Chamber has to say.

When we look at the tariffs and we talk about the tariff portion—and out of 30 chapters in this agreement, 6 actually have to do with tariffs—97% of our trade with the TPP countries is already tariff-free. We're talking about 3% of the trade that we're focusing on. We'd like to see businesses succeed in Canada. We know there's a definite relationship between the amount of jobs we would see proportionate to that. I wonder if you could speak—

Did you find it, Matt?

[Matt Marchand]

I can speak from memory because I wrote it, or helped write it.

The resolution from the Ontario Chambers is basically on the content issue. The fact of the 62.5% going down to 30% to 35%—or to 40%, depending on how you read it—is something we need to equalize. We need to equalize the tariffs. For the reduction rate, the U.S. has 25 years; we have less than five. Also, in addition to what you were saying earlier, they asked that the Government of Canada not take a decision on TPP until after the U.S. federal election.

Also, there was currency manipulation. That was one of the big issues, and I want to speak to this. This is important. Currency manipulation is something that is of grave concern to many of my members across Windsor-Essex and also to the Ontario Chamber network. If we're going to be entering into trade deals with countries, they're going to be in a position—and they have done so in the past—to adjust their currencies to get competitive advantage. That's something we certainly find very concerning.

In the TPP agreement there's no mechanism by which to enforce currency devaluation. Caroline Hughes talked at great length in her testimony on March 8 about the IMF rules that are in place but at the moment are not able to be enforced. Under the TPP, as it sits right now, there's just no opportunity to enforce currency devaluation. Those are the concerns across the board from our Chamber network across Ontario.

[Tracey Ramsey, NDP, Essex, ON]

These are certainly the concerns that were brought forward by the Ford Motor Company.

[The Chair, Liberal, Mark Eyking]

Ms. Ramsey, you have only 10 or 15 seconds.

[Tracey Ramsey, NDP, Essex, ON]

Ms. Hasenfratz, how many jobs do you think will be created in Canada under the TPP?

[Linda Hasenfratz]

I haven't done a thorough study so that's a very difficult question for me to answer, but I will say that just because nobody's added up and calculated what that job creation would be, doesn't mean that they won't come. Somebody's gone to the trouble of calculating that there are going to be 60,000 losses. Nobody has done the work—and it's a shame that they haven't—to identify the number for job creation. That doesn't mean that it's not going to happen, and—

[Tracey Ramsey, NDP, Essex, ON]

I think all the economic models show that there's no job creation—

[Linda Hasenfratz]

I do believe strongly that if we don't ratify the TPP, Canada will become irrelevant on a global stage. We don't want to be there. We want to be relevant. We want to be on the global stage. We want to be part of what's going on in terms of global trade and the global economy, and to not ratify the TPP would leave us out of that. I think that would be a huge mistake.

[The Chair, Liberal, Mark Eyking]

We'll have to move on to the Liberals and Mr. Peterson for five minutes.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

I want to thank Professor Anderson for basically comparing what we have to compare, a world without Canada being at the table if the U.S. ratifies it. This is not an analysis between the status quo and the TPP, which I think is something that I think we all need to keep in mind here.

As far as the economic assessments and economic impact studies go, most of those assessments were based on comparing the status quo to a world in which 12 members would be in the TPP. I don't think that's worth as much as the analysis that needs to be done if the Americans and the Japanese are in the TPP, and Canada is not? That, I think, is the analysis that needs to be done.

I'm sure Mr. Marchand can agree that any economic analysis is only as good as the presumptions made within it. That needs to be done, and it hasn't been done yet. That's the comparison that needs to be made. So thank you for basing your analysis on the reality of the situation. I do appreciate that.

I have a question for Ms. Hasenfratz. Professor Anderson talked a little about how we'd have to have separate production lines as one of the options if we're not in the TPP and the Americans are. You know the industry probably better than anyone at this table. How viable is it for suppliers to run separate production lines?

[Linda Hasenfratz]

There's no chance of that happening. You achieve efficiency by scale. The bigger the line, the higher the volume; the more efficient that you are, the lower you can drive your costs and the more that you can drive improvement. The concept of somebody setting up something to serve 80% or 90% of the volume in one place, and literally just 10% or 20% to serve Canada, is not going to happen.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

I wanted you to bring that up because Professor Anderson did dismiss the separate production line theory academically, as he should, but I wanted to have the practical reality. It's not feasible and never could be. The whole industry is based on efficiencies and productions and volumes, and most certainly they won't be met with separate production lines. I want to make sure we're aware of that as a committee. You can't have some NAFTA-approved product coming up, and then some TPP-produced product coming up. It's just not viable in the industry. Thank you for clarifying that.

Can you tell us a little more about your footprint here? How many facilities do you have in Ontario?

[Linda Hasenfratz]

We have 23 plants in Ontario.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Are your 9,000 employees Ontario employees or Canada-wide? I would imagine most of them are in Ontario—

[Linda Hasenfratz]

All of our facilities in Canada are in Ontario.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

That's good, and I appreciate your success story. I've spent some years of my career at Magna International, so I understand the industry somewhat. Don't hold that against me. It's great to see your growth in the industry. I was there in 2007, 2008, 2009, a tough time for the industry, as you no doubt are abundantly aware, but a lot of that was driven by decreasing auto sales because of the financial crisis and the reasons that applied then.

Right now we see auto sales growing in Ontario and Canada, but it seems that some of the GMs, the Chryslers, the Fords, aren't necessarily here in Canada and able to tap into that growing market. They're not capitalizing on it. They don't seem to be benefiting as much as some of the other OEMs. Do you have any theory why that might be?

[Linda Hasenfratz]

You are asking why the Canadian plants are not seeing increased production?

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Yes.

[Linda Hasenfratz]

Yes, it depends a little on the product that you're making, obviously. Products that are gaining market share are going to be growing in volume, so it's a bit about that as well.

That said, certainly we haven't seen major additional investment coming into Ontario over the last several years, although there have been examples of it. Look at Toyota, Honda. They have both put major investments in place in Ontario. I do believe they are seeing the value that we have here in Canada, in some of those things that I talked about.

I actually think Ray Tanguay is doing a great job of getting out and busting some of the myths around why we shouldn't be operating here, and becoming more proactive at going out and trying to bring new players here, and to enhance the ones that are already here. I think people are starting to listen to him. We haven't had a very good external push, a “let's bring them in” strategy. Having one now, I think, is going to be very helpful.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

I'm presuming that you think these studies should be undertaken whether the TPP is signed or not?

[The Chair, Liberal, Mark Eyking]

You'll have to wrap it up.

[Linda Hasenfratz]

Absolutely, we absolutely should be continuing to try to bring automotive volume here to Canada and continue what is a thriving industry.

[The Chair, Liberal, Mark Eyking]

That wraps up the first round.

We're going to go to the second round of five minutes. The Liberals start off with Madam Lapointe.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Good morning and welcome.

My riding is in Rivière-des-Mille-Îles. We used to have the General Motors plant in Sainte-Thérèse. That's the plant that used to build the Camaros and Firebirds. It was in my riding.

Ms. Hasenfratz, you said earlier that you are investing and you were going to have other plants. I invite you to consider my riding. We have a great deal of skilled labour and the cost of electricity is very low.

I have a question for you.

You said that Canadian content was not the reason for the success of companies. You said that we had to be competitive, efficient and innovative. Could you elaborate on that?