International Trade Committee on Feb. 13th, 2008

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Is that tariff illegal?

[C.J. Helie]

It is legal.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

It is a legal tariff?

[A voice]

Yes, very much so.

[A voice]

That's right.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Okay.

Because your organization is exporting, I guess the challenge I have is that there are certainly people around the room who think that if we don't strike any deals at all and we just become protectionist, the world will go on without us, and everything will be okay. Obviously you yourself or the companies you represent have had to go into a lot of markets. Talk to us a little bit about the need for free trade agreements and the fact that we live in an increasingly global world where we need these opportunities to make our businesses more profitable.

[Jan Westcott]

I would point out that we think Canada should be aggressive on negotiating these bilateral arrangements to the extent that it can. The WTO process has been disappointing, I think, to a lot of people.

I'm not going to get into it here, but the fact of the matter is that America, which is a competitor of ours in terms of bourbon, and quite aggressive, is going around the world cutting deals. They've just done an FTA with Korea, which gives U.S. bourbon a distinct advantage: there will be no 20% tariff. So we're going to go into Korea, absent an agreement, and now be competing with a 20%...hands tied behind our back.

The U.S. is pursuing and has pursued successfully free trade agreements with a number of trading areas that are, in our view, important to our business in Canada. For Canada not to participate, they're basically saying we're going to be shut out of those markets, because in every one of those cases the other countries that are negotiating trade agreements are getting advantages and opportunities that will not be provided to Canada if Canada isn't trying to do something similar.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

I understand the deal hasn't been ratified yet. Are they receiving the benefit of the tariff, then? Is that something they look forward to if it's ratified?

[C.J. Helie]

Immediately upon ratification.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Okay, great. Thanks.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Chairman, thanks to all the witnesses today.

Ms. Healy, you mentioned earlier that a free trade agreement would benefit food processers. I think I would agree with that, and that's one of the advantages of a free trade agreement. It should do that.

Does your organization also represent on-farm workers? Do you represent all labourers in the country, or do you have to belong to a union in order to get your support--

[Dr. Teresa Healy]

I don't know much about the farm sector. I know the UFCW has been working hard to work with migrant workers on farms in southern Ontario, so I'm uncertain about the representation across the country.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Okay, thanks. My point here is that besides the people who work in food processing plants, they would also benefit from it.

Mr. Moynahan, you said you'd like to see a free trade agreement that created a level playing field. I've heard some talk around here about getting rid of some tariffs and what have you. So it sounds like you approve of it, but with that condition, and if it could be in there....

You were asked whether you would expand or whether this would allow you...and it sounds like either you can't or don't want to expand your company. At the same time, it sounds like if we could address that level playing field, it would benefit companies like yours, and I think that's a good thing.

Mr. Westcott and Mr. Khan, there is a question I would like each one of you to answer. Again, we talk about tariffs and we've heard around the table over the last few weeks about diversifying our export markets, especially with the high Canadian dollar and the way that it's affected...because most of our trade is with the U.S.

First of all, would a Korean free trade agreement do something there as far as addressing diversification goes? And another thing beyond that, would getting access to Korea, for your individual companies and industries, open up other markets in Asia?

Could you both comment on that, if you wouldn't mind?

[Jan Westcott]

Should I go first?

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Certainly.

[Jan Westcott]

Absolutely. Clearly the United States continues to be our largest market. Canadian whiskey is the largest-selling whiskey in the United States. We outsell Scotch, Irish, bourbon combined, by a wide margin.

The dollar has had a significant impact on our ability to be successful in the United States, although we are working hard to continue to sell. Clearly it has eliminated for everybody the critical need to diversify your sales opportunities around the world.

Korea, as we've noted, is an important spirits market. Not every market in the world, not every country, is oriented to spirits. Some countries are beer-drinking countries; predominantly some countries are wine-drinking countries. We have to focus on the countries that have knowledge, appreciation, and a taste for spirits, and maximize and optimize those opportunities, and I think that does this. And clearly, with an FTA that reduces a tariff, that allows us to go into a country that has an appetite, if you will, for our goods, frankly, we'd be irresponsible if we didn't try to pursue that.

[Larry Miller, Conservative, Bruce—Grey—Owen Sound, ON]

Mr. Khan.

[Steve Khan]

With regard to Mr. Westcott's point of view, having been in Korea, in Seoul, ten days ago, celebrating with them the signing of our transaction, I got a chance to experience firsthand the spirits that were there. Certainly it would be great to see more Canadian spirits in use there.

From our perspective, the ability to go into Korea certainly does help us in other countries. When companies like ours, particularly small companies, are doing transactions in places like Korea, they get recognition.

Currently Korea does buy uranium from Canada. The United States certainly is one of the biggest markets for buying Canadian uranium. But when a small company like ours help to expand that marketplace into places like Korea, that gets us into the limelight, so to speak, and allows smaller companies to then be able to offer their product and services into a bigger marketplace.

So as to the opening of doors and the free trade aspect, anything that removes barriers will be significantly beneficial to us. China and these other countries are looking for other secure sources for the safe supply of uranium, for example, and they're moving into Australia in a big way. We've been to Kazakhstan. They are certainly interested in seeing what's happening in Canada.

So our company moving forward in places like Korea is something that is getting us noticed. In fact, the Japanese already know us in our sector, and are starting to expand that as well. Anything that bodes well for these Asian countries, Korea in particular, opens up a huge marketplace for us. We know that the potential for expansion is there, particularly in industries that in North America have been somewhat constrained by political and environmental issues. In the rest of the world, these technologies have been embraced as being safe and secure and as able to produce the energy that's needed.

For us this door-opening is a huge aspect. Other Canadian companies are going to benefit from this type of move as well as they move closer to production targets and as they are seen as being able to supply the additional sources being looked for.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Thank you, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Miller and Mr. Allison.

We will now proceed to round two. Beginning for the Liberal Party, we have Mr. Temelkovski.

[Lui Temelkovski, Liberal, Oak Ridges—Markham, ON]

Thank you very much, Mr. Chair, and thank you to all the witnesses.

Mr. Khan, are you aware of whether or not we have a FIPA agreement, a foreign investment protection agreement, with Korea?

[Steve Khan]

I'm not aware, no. I'd have to look into that.

[Lui Temelkovski, Liberal, Oak Ridges—Markham, ON]

Okay. Maybe I'll go to Professor Healy.

Canadian automakers and unions have suggested that non-tariff barriers are effectively blocking domestic vehicles from penetrating the Korean market. Do you believe that in the absence of those non-tariff barriers there would be a market in Korea for Canadian vehicles?

[Dr. Teresa Healy]

I've seen a debate on this question suggesting that the product mix in Canada is not the one that might find easy sales in Korea. To my mind, the question is not so much....

Certainly non-tariff barriers complicate the discussion; we should discuss them, but I think the whole arrangement where the trade is so unbalanced has to be contemplated. The fundamental structural questions have to be contemplated as well.

What we suggest is that, for us, the structural questions that are in place right now are also going to be reproduced within the context of a free trade agreement. One problem with this is that it's not an economic development strategy over the long term that is going to have beneficial results for the Canadian economy.

[Lui Temelkovski, Liberal, Oak Ridges—Markham, ON]

You're aware of the Canadian Auto Workers, Professor Healy. They have done a study on the potential losses of jobs. You're also aware that the Canadian government has similar studies that are a little bit different. I believe the Canadian Auto Workers study model shows a greater number of job losses than the Canadian government model shows. Which one do you think is closer to the truth?