International Trade Committee on Feb. 6th, 2008

[Brian Pallister, Conservative, Portage—Lisgar, MB]

Hello to both our witnesses.

It's nice to see you again, Ms. George.

Before I direct a couple of questions to you both, I want to personally, and on behalf of all my colleagues here, Ms. George, pass on our sincere and heartfelt condolences to your president and CEO. This is a tragedy beyond comprehension. So please give your president our best wishes.

[Shirley-Ann George]

I will.

[Brian Pallister, Conservative, Portage—Lisgar, MB]

You spoke rather openly about the reality of trade deals. There are winners and losers, and that is inevitable. This is the difficulty that always faces political representatives when we are put in a forum to discuss such trade deals.

We want our nation to win, but we should know that within the context of our victory, in signing a trade deal and conducting the negotiations that lead to the resolution of issues such as the non-tariff barriers that Mr. Crow has emphasized today, not all of our industries can possibly win. It is not feasible that every commodity producer in our country will benefit. It is not realistic to assume that every single person in our country will benefit in the short term from deals being concluded. This is a reality that all too often the opponents of said trade deals do not grasp in their pursuit of short-term gain.

That being said, there's a very real and legitimate concern that you've addressed today about the use of non-tariff barriers by Korea and other potential trading partners. I have to ask, in as straightforward a manner as I can, what better way would there be to resolve outstanding issues in our trade relationship with Korea, other than through negotiation? In what other way could we hope to address the issue of non-tariff barriers than by negotiating a trade deal with Korea at this time?

Ms. George, would you like to respond to that?

[Shirley-Ann George]

I think you're absolutely right. Undertaking these negotiations has provided us with the opportunity to put some non-tariff barriers on the table and try to deal with them if we can. In the auto industry, for example, boatloads of cars are coming over from Korea. There's no reason we shouldn't be loading up cars on our side and shipping them back. So there are opportunities there.

The U.S. auto industry is a good example of how companies have been attempting to deal with these non-tariff barriers for a good long time and have not been successful. It's through these types of negotiations that there is an opportunity to try to move the yardsticks. I would agree with you.

[Brian Pallister, Conservative, Portage—Lisgar, MB]

Ms. George commented—I'll misquote you, Ms. George, but I hope not too badly—that Canada's reputation has been damaged by years of negotiations that have led to nothing. We are given an opportunity at this juncture, because of the U.S.-Korea negotiations, to perhaps piggyback on the relative success of those negotiations in our own agreement.

What would be the consequences for your company if Canada failed to negotiate an agreement with Korea?

[Robert Crow]

I guess we would be in the situation we are in today, where the application of Korean policy and regulation is not governed by some kind of mutually negotiated agreement. We would be entirely dependent upon their own interpretation of their laws and regulations. Of course, that is precisely the benefit Shirley-Ann spoke to and I agreed to in the opening comments.

We are far better off to be having negotiations, but at the end of the day we want to look one another in the eye and ask, “Will you be fair and rigorous in the application of the principles we've ascribed?”

[Brian Pallister, Conservative, Portage—Lisgar, MB]

Thank you.

Ms. George, the issue of impacts is one that we've been consumed with to a large extent. We've been hearing from groups concerned about the impact on their sectors of an agreement being reached. Of course, we've heard less from those who may benefit from the establishment of an agreement but whose positions currently, whether within their industry or their very jobs, are not impacted because those jobs have not yet been created.

What do you see as being the undiscovered potential of an agreement being reached with Korea? For example, in the service sector, what kinds of potential benefits do you see accruing to the Canadian economy, and Canadians specifically, by an agreement being concluded with Korea?

[Shirley-Ann George]

Regarding services, the example that first pops to mind is that we have world-class exporters in services in the insurance industry. The two that are best known are Sun Life and Manulife. They have been extremely successful in a number of Asian countries, and one would believe that if they had access to the proper licences, there would be a real opportunity for them in such countries.

While I am not in a position to comment on what the intentions of either of them might be, you only have to look at the statistics from Manulife to understand what the potential benefit might be here in Canada. In the case of Manulife, 75% of their operations are outside Canada, but 50% of their jobs are inside Canada. So there are some real opportunities just in that one example in services.

Another opportunity, obviously, is Research In Motion, the Canadian flagship that would be creating more jobs, both in Canada and, frankly, in Korea, if they were able to access that market.

The banking industry is another one.

So there's a list you can go down to see that Canada has some significant competitive advantage, which a free trade agreement would be very beneficial towards.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Pallister.

[Brian Pallister, Conservative, Portage—Lisgar, MB]

Thank you.

If there is any time left, I'd like to give it to Mr. Miller.

[The Chair, Conservative, Lee Richardson]

No. We'll get him in, though.

Mr. Maloney.

[John Maloney, Liberal, Welland, ON]

Thank you, Mr. Chair.

Mr. Crow, how long have you been trying to break into the Korean market, with RIM specifically?

[Robert Crow]

It's just under two years, sir. Korea went, again, its own way and advanced what is known as 3G standards, and it's taken a while for the global standard and the Korean standard to converge. That convergence has happened within the last couple of years.

[John Maloney, Liberal, Welland, ON]

So it's a technology problem that has prohibited you from getting into that market?

[Robert Crow]

Previously, yes, it was. Previously, the Korean overall wireless standard was not widely accessible, but that has changed within the last couple of years.

[John Maloney, Liberal, Welland, ON]

So what are the prohibitions now?

[Robert Crow]

The prohibition now is the application of the regulation regarding the domestic standard, WIPI, which again is a domestic standard unique to Korea.

[John Maloney, Liberal, Welland, ON]

Are you assured that if we sign this Korea free trade agreement this regulatory regime that has prohibited you previously will be set aside and they will allow you to come into their markets?

[Robert Crow]

No, there's no guarantee of that, but we would expect that there would be a mechanism under which unfair treatment or discriminatory treatment of a Canadian company vis-à-vis other countries' companies could be addressed. We believe that, by and large, there is a very strong case within Korea that technologies like BlackBerry should be broadly embraced. We've seen evidence of movement in that direction recently.

[John Maloney, Liberal, Welland, ON]

Should this agreement address your sector-specific industry?

[Robert Crow]

I don't believe that is required at this point. Again, what we really have here is a situation in which a good set of principles and good dispute resolution will help. As Shirley-Ann has mentioned, the very process of negotiating brings both light to some of these issues and pressure to bear on the Koreans to be more forthcoming.

[John Maloney, Liberal, Welland, ON]

Ms. George, you've indicated that you feel it's too early to sign this agreement, but you've also stated that you felt the negotiators were getting very close to having an agreement. Is there a message that you want to give this committee and our negotiators?

[Shirley-Ann George]

No, I was saying that it's too early for the Canadian Chamber of Commerce or, I would suggest, this committee to make a determination on whether or not it was a good agreement.

Our understanding is that it's relatively close to the end of the negotiations. There will be a determination of what can be in the deal, and the Canadian government and Canadian Parliament will have to make a decision on whether or not that is enough.

It is only when we come to the final conclusion and understand these final points that are so difficult, and on which we're not making as much progress as we'd like to, that the Canadian Chamber will be able to determine whether or not it's a good deal.

[John Maloney, Liberal, Welland, ON]

You've referenced the auto sector, where we have heard from labour as well as the manufacturers, who are strongly opposed to this agreement, unless there are assurances of equal access to the Korean market. Their concern is that they won't have this access. Perhaps non-tariff barriers will address that, but others may soon pop up.

Is that the type of situation you're concerned about? Do you think we shouldn't be signing an agreement until we have assurances, perhaps airtight assurances, that it won't have a negative effect on our auto sector?

[Shirley-Ann George]

I'm not sure what type of airtight assurances you could get, beyond two governments standing up and signing an agreement. All of these agreements have a dispute-settlement mechanism. So I would suggest that if an agreement comes to this committee for review, you look carefully at the dispute settlement mechanism.

But I don't think there is a next better thing that you would get. We negotiate inside the agreement. We try to get as many most favoured nation clauses as possible. This way, if the U.S. or Europe or other large markets are able to get more, we're able to piggyback.