International Trade Committee on Dec. 12th, 2006

[Elliot Lifson]

The Apparel Human Resources Council mentioned earlier is comprised of three management representatives and three union members. I sit on the council along with Ms. Lina Aristeo.

[Lina Aristeo]

Mr. Lifson has provided a partial response to your question.

I found the first part of your question rather interesting. When Mr. Lifson indicated to you that the federation had 700 members, you asked if this number had declined. You then went on to talk about a company in the Beauce region.

I can name several companies in the Beauce that have ceased operations: Cardinal Clothes inc; Corporation de vêtements S.F.I.; Jeno Neuman et Fils Inc,; J.A. Besner et Fils (Canada) ltée; and Les Vêtements Chambly 1982 Inc. These are a few of the names that come to mind. I've been the union director for two years and I have a long list -- two full pages -- of names of businesses that have closed their doors, not counting those that have had to cutback their workforce. Many companies like Algo remain in business with perhaps one worker on the payroll, when in the past they had a workforce of over 100 employees.

We need to remember that the apparel industry in Canada is completely different. On the one hand, we have clothing manufacturers and on the other, we have the importers. Some companies, of course, are both manufacturers and importers. However, companies that import clothing are not a true reflection of the reality that Canadian manufacturers face. Many such Canadian manufacturers are at their wit's end. They don't know whether to shut down, to stay in business or to operate at a deficit.

One Beauce company is still in operation solely because of a union-supplied contract. Without the union, the company would not have a contract. The owner claims that this contract is beneficial. This is another example of a band-aid measure, such as safeguards. Such measures won't save this company. At the time the union helped the company secure this contract, the company broke into US markets and it is now trying to expand its client base. The owner is buying time, much like safeguards would help companies on the brink of closing to buy more time.

Although they may not pose a threat to Vêtements Peerless Inc., imports from China do pose a major threat to many other local manufacturers.

I should mention that Teamsters Canada represents Peerless employees, and not Vêtements Peerless Inc. workers.

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

I'd like to stay on this subject.

Ms. Aristeo, we're seeing two trends at this point in time. This morning, we heard that there is trend toward full market liberalization, without safeguards or industry support programs. The other trend is toward protecting important markets such as the textile, furniture and other soft sectors, to ensure a competitive position on international markets.

Of course, I tend to lean toward protecting this market. I believe it's important to protect our industries from competition of this nature. We have the ability to compete, as we have seen in other areas of activity. We just need to convince people of that.

Again, I'd like to hear your comments on the steps we need to take to convince this government and other stakeholders. Perhaps it would truly be to our advantage to bring in safeguards and to support our industry because these jobs are important to our community. Not all Canadians and Quebeckers are engineers. We need to maintain this major industry sector.

[Lina Aristeo]

Thank you.

[The Chair, Conservative, Leon Benoit]

We'll have to have a very short answer, 30 seconds.

[Lina Aristeo]

Obviously, not everyone is an engineer. My grandparents who worked in this industry are the reason why I'm a lawyer today.

Everything we do in life has a ripple effect. My testimony here today will have a positive as well as a negative effect. There's no question that safeguards will have an impact of some kind, but in the long term, this impact will be more positive. Notwithstanding the negative points mentioned by my colleagues here today, since safeguards were first introduced in the United States, the apparel industry has witnessed employment growth for the first time in nearly two decades. Therefore, safeguards can have an impact.

We're not simply concerned about corporate survival. We're trying to sustain our economy and our society. Every person who loses his job must be taken care of in some way. It's best not to have 30,000 people relying on social assistance.

[The Chair, Conservative, Leon Benoit]

Thank you.

Mr. Menzies, for seven minutes.

[Ted Menzies, Conservative, Macleod, AB]

Thank you, Mr. Chair.

Thank you to our witnesses here today.

Probably over a year ago, we saw some of you here at this same committee discussing the same issues. I find it surprising—and please correct me if I'm wrong—that the CITT still has not had sufficiently strong requests or demands from the industry to seek a ruling on this, or to sit down and make a recommendation to the government.

Am I understanding this correctly?

[Bob Kirke]

The union has had a certain initiative in front of the CITT, but contrary to what you found in the United States where the industries came forward, made those cases, made the petitions, and did it, that has not happened in Canada.

[Ted Menzies, Conservative, Macleod, AB]

Maybe this is a hypothetical question, but I have to go back to Mr. Lifson's comment that it's not just an issue of China; it's a moving target. If it's not China it'll be Vietnam. China is now outsourcing production to Vietnam because labour is cheaper there. Will we just continue chasing this? If we decide that China is our target for today, will we miss the next target that sneaks up and hits us from behind?

[Bob Kirke]

The China safeguard was put in at a very late date in China's WTO accession. It was a small measure. It has taken on great significance recently, but it was a really last-minute thing.

But in the Canadian context, what made the China safeguard basically irrelevant was the least-developed countries' initiative that was instituted January 1, 2003. We created a virtually limitless flow of goods into our market through least-developed countries like Cambodia and Bangladesh, duty-free and quota-free, as Mr. Lifson has said. You cannot have a quota system against one country; it would not work. This is essentially what our argument has been.

We recommend that you focus on things that can work. The China safeguard won't work. Vietnam is not an LDC, but Cambodia and Bangladesh are. So it creates a situation where we might like to see a circumstance or mechanism that would maintain greater stability in the market, but the China safeguard isn't that.

[Lina Aristeo]

If I can answer to the CITT since we put in the request, at the time the workers brought the request to the Canadian International Trade Tribunal, the trade tribunal asked us to get production numbers from employers, from manufacturers, and I think that's what you're referring to.

Although this question was asked last week, I'd like to give the answer again, because I have first-hand knowledge of why no information was brought forth. I did not relay the information to these manufacturers because we were in negotiations for a master collective agreement for almost all the apparel workers in Montreal. For the union to be asking for trade data and production data when were negotiating the most important contract in four years did not seem appropriate.

Second, as I addressed earlier, it's because many of them are just not organized enough to do this and their heads are underwater right now. I'm not saying their necks are above water; their heads are underwater right now, and they need this. Let's not make this a late measure, as Mr. Kirke said. In the States it was a late measure, so let's not do that.

I agree with all the things we should focus on to help the industry, in addition to safeguards. I don't want to hurt the industry. Let's put the safeguards in and continue to work together to help this industry thrive.

[Ted Menzies, Conservative, Macleod, AB]

I'll go back to another comment Mr. Lifson and a couple of people made, that the $4.5 million announced on Friday was not enough. What is going to be enough? I forget how much the former government invested in a transition. This $4.5 million is supposed to help with the safeguards or the transition. We've been transitioning since 1999. When do we graduate?

[Elliot Lifson]

Yes. Let me tell you, you would get a grade of 100% if the $70 million we ask for would be eliminated. Obviously it's going to come in levels. I have been coming to Ottawa for many years; I know it doesn't happen all at one time and I understand that. But keep in mind what we are up against. And that answers the question of China safeguards also.

Again, nobody raised the issue of Bangladesh. You can bring in a product from Bangladesh, never mind quota free, but tariff free. I can make a man's suit in Bangladesh and bring it into Canada tariff free, but if I want to make the same suit in Canada, I have to pay 14% tariff on the fabrics not made one centimetre in this country. That is the issue.

So as long as we can level the playing field, we might not have to sit around the table on questions of safeguards and other issues, because it was the government that opened up Bangladesh. There you had a 300% increase the first year, and nobody really listened to either management or labour on that issue.

So the band-aid of a safeguard from China when worldwide capacity is twice worldwide demand.... And you're not talking about the car industry, where it is heavily capital intensive. You're talking clothing, which is so easy to move from one country to another. If we do talk about the car industry, Toyota just won car of the year, and their two manufacturing plants are one in the United States and one in Canada. How can they survive? If you move up the value and give the right product. It's a management issue.

Unfortunately, the people who should be really yelling here are those dealing with the management issue among these people who are sitting at the side of the table. It is not a worker issue. Think, and provide management with the tools so that we keep these jobs in the country. That is the issue we have. Safeguards are not the answer.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Menzies.

Mr. Julian for seven minutes.

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

Thank you very much. I would particularly like to thank the workers who are here today, because your presence is extremely important.

We tend, I think, here in Ottawa to hear from corporate lawyers and economists. It's extremely important that ordinary working families be heard here in Ottawa. So thank you very much for coming here and sacrificing a day's pay to make your point.

I listened attentively, Mr. Lifson, and generally your objections seem to be more theoretical than anything else, though certainly people can't eat theories; they can't put a roof over their heads with theories, and since the Canada-U.S. Free Trade Agreement was signed, we've seen that 80% of Canadian families have actually seen their real income go down, not up. The only people who have profited are the top 20% of Canadian income earners. So as for that theoretical base that somehow free trade, with no measures to protect Canadian jobs, is going to work, it hasn't worked. It's failed on the bottom line.

But you did raise one point that I think is a practical matter, and I would like to put that point to Ms. Aristeo. You were saying that you didn't believe the measures would be effective because essentially the Chinese portion of imports would be taken up by imports from other countries. I did want to come back to Ms. Aristeo on that and ask her whether she felt this was a legitimate argument or whether she did not think it was.

[Lina Aristeo]

As Mr. Lifson says, before the WTO, when we were talking about other countries, such as Bangladesh and the LDCs, and they became a threat to our market for the first time, our market share of Canadian domestic production was still larger than it is today with China. Although we all fought against this, it was not as big a threat as China has become today.

I'm not saying that China is the only problem, but today it is the biggest problem. Therefore, I believe that if we have a measure at our disposal for China, we should use that measure.

As someone mentioned, we should begin a talk with China, because China will continue to produce. And yes, there is probably more supply than demand, or more ability to produce than we can consume. But let's not forget that there are other ways by which we can keep production local. How many people working in the buildings in Ottawa are wearing uniforms? These are things that should be made in Canadian places, as much as we can.

I know it's sometimes a stupid example—it's not scientific, rather—but look at American Apparel. Have you all seen those little American Apparel shops that sell a T-shirt for $40, while it probably costs less than 25 cents to make it in China? People are paying $40 for that T-shirt nonetheless, rather than going to Wal-Mart or someplace where they can buy it for five dollars, because they believe—and I'm saying “believe”, because we're not of that same opinion—that they're not made in sweatshops, that the people who made those T-shirts did so in good working conditions. So if American Apparel is growing like wild grass, then there are people in Canada who are ready to pay a bit more, knowing that the working conditions in which the products they're buying are made are good.

I know I kind of turned your question around a bit. I answered it briefly but brought in another issue. We are in the new global economy. We are in a new market, but we need to adapt and live with it.

So now we have a safeguard measure at our disposal. Let's use it and begin talks with China. Let's try to control this bleeding that we currently are living with.

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

So you don't buy the argument that it would simply have no effect? You believe that it would have an impact, and we would be able to save Canadian jobs, if there was a—

[Lina Aristeo]

Definitely. American jobs were saved when safeguards were put in place, and right now there are so many people losing their jobs. So when we say it's just a management issue, I can't agree. Thousands and thousands of people are losing their jobs annually because of what's going on in this industry, and unfortunately some management don't wish to react and other management can't react.

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

Thank you.

Now to Mr. Lifson and Mr. Kirke, essentially you were saying similar things to Ms. Aristeo, in the sense that there is an understanding that the industry has to make adjustments and look at new marketing, new approaches. But what I can't understand is why you would object to having a protection in place, a safeguard for those couple of years, in order to achieve that readjustment, because the fallout in terms of lost jobs is—

[Elliot Lifson]

With all due respect, I don't know whether you complimented me or not on theory, but I don't think it was a compliment. I'm a practical man, because I live it every day. You might be theoretical, but I'm practical. I'm in the trenches, so let's remember that, okay? And I'm not running for office.

[Some hon. members]

Oh, oh!

[Elliot Lifson]

Maybe I should, but anyway, in spite of that, what I want to say is that I'm going to go back to what you said. I could see where your thinking is, so if I sat across from you all day, I'd have a hard time changing your thinking. But if worldwide capacity is twice worldwide demand, and if it's easy to move from one country to another, then if you put a fence up, you're going to get it in the other door, especially if the other door allows you to bring it in tariff-free from Bangladesh.

That's a practical issue, because I'm living it every day. It could be done. The reason other countries had an industry, sir, was because the Chinese quota was utilized before. So all these other countries developed. It all went back to China because it's easier to deal there. It has a better infrastructure; I'll agree with that. But when it comes to cost and you're fighting on price only, then you have to go to the lowest-cost producer, so you're going to run to Bangladesh. China is not going to be an answer for this country. That's the reality.

The question of American Apparel is a great example. In other words, I agree, move up the value chain. These are the companies that are going to survive: the ones that have a price-value relationship. We will never be the lowest-cost producer. We just won't. It hasn't worked in the United States, so it's not going to work here.

That's the practical answer. Theory I'll discuss with you all day, and I have no animosity.

[The Chair, Conservative, Leon Benoit]

You have thirty seconds.

[Lina Aristeo]

If we look at one of the employers that wants the safeguards, which is one of the largest employers in Canada after Peerless, they have already said, “I will never import from China. I want to remain a 100% Montreal company, but he brings in suits from China and says these are as good as my stuff, and I really don't know what I'm going to do”.