International Trade Committee on Oct. 17th, 2006

[Dominic LeBlanc, Liberal, Beauséjour, NB]

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. LeBlanc.

We go now to the Bloc for seven minutes. Mr. André is next.

[Guy André, Bloc, Berthier—Maskinongé, QC]

Good morning.

I want to tell you about our major concerns.

First, we previously heard from the members of the Canadian Association of Labour Lawyers. They spoke to us about concerns regarding workers' rights in certain countries where bilateral agreements were reached, and even in the context of the WTO, on a broader scale.

I believe this is a relatively important issue. I think that, if capital moves to other countries just as certain businesses relocate, if people's working conditions and quality of life are lower, corporate profits increase temporarily, but that will have an impact on our quality of life and working conditions.

What are your concerns about the signing of these bilateral agreements? Do you actually have any concerns? Do you focus on that, or is it something very minor in your negotiations as a whole?

Second, as regards these bilateral agreements, some industrial sectors are undermined. That's the case of an agreement with Korea, which we think may affect our automotive industry, as well as of other WTO agreements. For example, there's the problem of the textile industry. Currently there's talk about the furniture industry and the impact that these free trade agreements are having on eventual business closures here at home.

However, in the furniture industry, for example, we realize that there are also export opportunities, whether it be to Taiwan, China or elsewhere. However, I realize that our businesses are concerned as to whether our products will come back. There are also costs, which are very high when we want to export our products, whether it be to China or elsewhere.

In the circumstances, are there any existing programs that could be improved in order to assist our businesses? Could larger investments be made in the sectors whose viability is threatened? Where there are export opportunities, could we put in place programs that would improve the ability of our industries to export to those countries and enhance the visibility of our products? These programs would support our industries in future efforts in that direction.

[Terry Collins-Williams]

Thank you for your question.

I'm going to answer in English.

On the first question about the issue of labour rights and labour competitiveness as it relates to trade agreements, yes, certainly labour cost factors are an element of global competitiveness and need to be taken into account in our trade and broader economic strategy, but whether labour rights can and should be negotiated directly into trade agreements is another question that in large part depends on the willingness of our trading partners to engage in such negotiations.

I can tell you from the multilateral perspective in the WTO that the vast majority of our trading partners have refused to negotiate labour rights, or even to discuss the issue of labour rights in the WTO. I don't think that's particularly surprising, because we do have a system of international economic organizations, each with a certain specialization, and the WTO specialization is trade.

Yes, many other trade-related factors go into the equation, but not all of them will be dealt with in one institution or in one set of agreements. We do have the International Labour Organization, of which Canada is a very active member and to which the issue of the application of labour standards is more directly relevant, so I think we have to take that into account.

I don't know if David wants to comment on the application of labour standards to bilateral agreements.

[David Plunkett]

I would just note that in the context of the various agreements that I have said are under way, we are seeking to negotiate labour cooperation side agreements with the partners. Now, as Terry said, this is sometimes easier said than done, but certainly the effort is to be made in this area.

So negotiations are continuing, but there is an effort under way to address this very issue.

[Guy André, Bloc, Berthier—Maskinongé, QC]

What is your answer to my second question, concerning programs?

[Terry Collins-Williams]

I'm very encouraged by your second question, that we can take the perspective that even for our most import-sensitive industries--the industries that face the largest challenges in the global marketplace--they themselves see that they have a place in international trade, that they may be able to create niche markets internationally. And we should assist them to do so; the department and the government do have programs to do so.

We're trade policy experts, not trade promotion, so I would refer you to the trade promotion experts of Foreign Affairs and International Trade and the associated agencies, such as the Export Development Corporation. I would caution, though, that there are international trade rules, particularly the WTO subsidy countervail agreement, that would prohibit us from having programs that are contingent on the export of Canadian goods.

So we need to be a little careful in how we fashion these programs, but certainly programs that are made generally available to Canadian industry and Canadian workers are workable. We do have many such programs, and we are in the business of encouraging--

[Guy André, Bloc, Berthier—Maskinongé, QC]

Are these programs sufficient?

You also spoke about the fears that these subsidies would be disguised in an international trade context. Are you afraid of that?

[Terry Collins-Williams]

Yes

[Guy André, Bloc, Berthier—Maskinongé, QC]

I talk to people in businesses who tell me that it's not always clear. You know, there are fears, and there is support for an industry that's already in jeopardy.

[Terry Collins-Williams]

I'm not an expert on trade promotion--I apologize--but certainly the department has such experts.

I would say that I am aware that one of our challenges is to bring small and medium-sized enterprises to export readiness and to the confidence to engage in export markets. There are specific programs designed to do that. I can't give you the details on them, but other officials certainly could.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. André.

Ms. Guergis, seven minutes.

[Helena Guergis, Conservative, Simcoe—Grey, ON]

Thank you, Mr. Chair.

Thanks very much for being here and for your presentation; I appreciate it.

I had an opportunity to read Minister Emerson's speech. He has laid out a very ambitious agenda for Canadian international trade policy, and I commend him for this. But even he recognized in his speech, and talked about, what we need to do to thrive and prosper down the road. He talked very much about a global commerce agenda where Canada is very aggressive in trying to find our place in the global marketplace and build Canadian competitiveness. As I said, I do commend him for this vision, but he also recognized that Canada in the past really hasn't done enough.

We talked a little bit about agreements--one, I guess, in five and a half years--but it's my understanding that it's been maybe two since NAFTA. Can you confirm that for me?

As well, is it possible for you to give us any indication of why Canada hasn't been keeping pace? Do you have some solid reasons? I'm not looking just for the political rhetoric of the previous government, I'm looking for some real answers as to why we haven't been ambitious on this agenda. And what are we doing to improve this?

China and India have to be factored into any global trade agenda, of course, with over one billion people and their economies growing so rapidly. I hear in my riding, much as my Bloc colleague does, from many industries that have great concern about job losses and such because of China and India. What specific action is Canada taking in order to compete better with the huge Chinese and Indian economies?

Canada, of course, is currently enjoying a commodities boom. As Asian countries' demand for our natural resources increases, should we be concerned? Are we relying too heavily on the boom in commodity exports?

I have a couple more questions, but I will stop there right now.

[The Chair, Conservative, Leon Benoit]

Gentlemen?

[David Plunkett]

I'm thankful that my staff has given me a list of all these agreements, because it's proven to be very helpful.

In addition to the NAFTA, which we signed with the U.S. and Mexico and which came into effect in 1994, we have subsequently concluded agreements with Israel and the Palestine Authority in 1997, Chile in 1997, and Costa Rica in 2002.

Over that time, as I said, there have been some other activities on the free trade front. For example, I mentioned the EFTA and the Singapore talks, which have been stalled or suspended—I'm not quite sure what the proper phrase is—at this stage.

There can be a variety of reasons for that. As I said earlier, these issues that we are pushing forward may be problematic for our trading partners. Every country has its own sensitivities in trade and investment issues. It's difficult to point to one particular item to say why a particular issue may not be advancing. You almost have to go through item by item, agreement by agreement, to see where the potential problem is in the various agreements.

The net effect is that we just have not concluded an agreement since the Costa Rica one in 2002.

[Terry Collins-Williams]

On your question about the competitiveness of China and India and other Asian economies and how we meet that challenge, I would go back to my introductory remarks and say the first thing we need to do is have sound domestic economic fundamentals and make sure that our businesses are operating in the healthiest economic environment possible.

That, of course, involves a whole range of domestic economic policies—fiscal, regulatory, labour market, infrastructure—and I know that the government has programs in all of those areas, well outside of my domain, so I don't need to go into them. That's where we start.

Within the international trade regime, I believe the best thing we can do is bring these countries, and China particularly, which until very recently had more or less been outside the international regime, into the regime. They are now a member of the WTO; they now have to respect all of the WTO's obligations as well as receive its benefits. They are engaging in international commerce. We clearly see that; they've become our second largest trading partner very quickly. They've become the third largest trader in the world very quickly, having surpassed Canada and Japan since they joined the WTO less than five years ago. They are a very dynamic economy.

What we don't want to do is shut ourselves off from the opportunity to trade with them. What we do want to do is trade with them on reasonable terms, and as I say, the best way to do that is to bring them into the international system and make sure they respect their obligations. In those instances, which do arise, where a Canadian industry is faced with overwhelming competition from a competitor abroad, we have import policies to provide transitional relief or assistance to them.

Your third question was about whether we should be concerned about an over-dependence on the trade performance of our natural resources. Personally, I've always been one who believed you play from your strength. If our strength is--and it clearly is--our resource wealth, then we should take advantage of it. We should build our economy from it, but of course we need to be sure that we're getting value added in extraction and production in Canada, especially in our exports.

We also need to be able to diversify our economy and move into higher value-added and knowledge-intensive areas of the economy and be sure that we export from those areas as well. If you look at our trade data and the performance of Canadian business, you'll see that this is happening and that we have some very competitive industries in the high end and the knowledge-intensive end of our economy. I think that's encouraging.

But we shouldn't deny the resource wealth we have and we should be prepared to build from it.

[Paul Robertson]

Perhaps I could just add to your question concerning how better to compete with new international markets that were not there ten years ago. You cited, quite correctly, India and China.

That gets back to the focus that is increasingly being put on the North American platform to make more efficient the supply chains, etc., in North America, where companies feed into. It might not be a totally made-in-Canada product, for example, but if you make more efficient the ability to produce something at a lesser cost and use the technology, that is a positive step towards increasing competitiveness. That is why, for example, in the context of NAFTA, there's a new emphasis on the work to focus on sectors to identify what obstacles are in those sectors that can be removed by government to increase--

Sorry, perhaps I'm....

[Helena Guergis, Conservative, Simcoe—Grey, ON]

Oh, the chair is giving me the look that says I can't get my last question in.

[Paul Robertson]

Okay, I'll leave it there. I'll refer you to my earlier statement on that.

[Helena Guergis, Conservative, Simcoe—Grey, ON]

It's more around the Persian Gulf states. I know there are some opportunities starting to develop there. Is Canada doing anything?

[David Plunkett]

In the short time that I have been on the job, I can say it is an area that we know is there. I think it is on our to-do list to look at it more carefully. Obviously, there are resource issues in terms of trying to clear through what we already have on the table and to address some of the very labour-intensive negotiations, such as the one with Korea, for example. You would be amazed at how many people get drawn into these because of the complexity of them.

But it is an area we will be looking at more carefully. Obviously, we have to look at the package, and then we will go forward with recommendations and seek some guidance as to where we should be putting our attention in the coming months.

[The Chair, Conservative, Leon Benoit]

Thank you, Ms. Guergis.

To Mr. Julian, for seven minutes.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you, Mr. Chair.

Thanks for your presentation. You raised the issue of the SPP. I'm interested in knowing how those discussions are organized within the department right now. How many consultative groups exist, and what areas are they are currently discussing?

[Paul Robertson]

Perhaps we can provide more information to you concerning the structure, because it's quite elaborate. It involves most departments of government.

There are two basic foci, as you know. One is with respect to prosperity, the other to security. We do have, as the prosperity minister, the Minister of Industry, Mr. Bernier, to deal with that whole activity centre. The second is with respect to security, and that, of course, falls squarely with respect to the CBSA and those on the border elements of security.

You have the lead in Industry Canada to organize many activities that are supporting the work program of the SPP in terms of the prosperity side. The department plays in a number of those. For example, in the manufacturing groups there is a lot of work being done with respect to regulatory cooperation between the three governments, particularly with respect to establishing a framework within which further regulatory development can be looked at from an overall north American perspective. There's work in that area that the department is involved in.

There are many other areas that we play on. For example, there's a steel focus in the prosperity element, in terms of the steel initiative. That is interdepartmental with industry and finance and others.

It's very difficult to outline all the areas, given that the prosperity agenda...if you've seen the agenda.... We can certainly provide a copy to you in the next day or so.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

We do have a copy of the agenda, but I think we'd be very interested in having identified who is responsible for the discussions in each of those areas. Is that something you could make available to this committee?