International Trade Committee on Dec. 11th, 2007

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

Mr. Stanford.

[Dr. Jim Stanford]

Similarly, our union recognizes that our auto industry today wouldn't exist as it does without trade. We need trade. We need to position ourselves globally. We need to have exports and then, of course, we need imports as well. So we're all in favour of expanding trade. We're also very much in favour of diversifying our exports away from the U.S. market, where we've put so many of our eggs in the past.

We need to be exporting to those high-growth markets, but with respect to the proposals we've put forward to the government for a way to expand trade, the volume of trade, but in a two-way direction, the government people threw up their hands and said, well, you want quantitative targets and that's not free trade. The things we're proposing the government is ruling out of bounds, and if they're all out of bounds, then what they want for a free trade agreement means more access to our market, no strings attached, and we will not support that. It has to be two-way and it has to be fair.

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

As a last point, you're not so concerned by the fact that Korea is out negotiating other deals. That doesn't concern you as much as making sure, in your opinion, you have the right deal that will create this fairness going back and forth.

You just mentioned there are some concerns about how we have all our eggs in one basket with North America, or with the U.S. I say it again. Is this not a way, as we start looking at other agreements, that we could start chipping away at those non-tariff barriers, all these kinds of things? I would hope that's what our government is trying to work towards, so that we could start moving some of our goods in there.

[Dr. Jim Stanford]

I'd say Korea is the wrong place to start, if that's our strategy. Korea is a country that's a demonstrated export powerhouse. They have a complete imbalance already in automotive trade with Canada, and putting down the tariffs on both sides with no other strings attached is clearly going to hurt us more than it's going to help us.

If we want to use trade agreements to try to diversify our exports away from the U.S., it would be important to start with countries that don't have a strong auto industry, to begin with. For example, there are lots of countries in the Middle East that are significant importers of vehicles. We could negotiate more bilateral trade with those countries with less risk to our own industries. The fact that we're starting this strategy with Korea suggests we didn't think it through before we went down that road.

[Mark Nantais]

We have to ask ourselves, with regard to the net gains we're going to get from this, what are they worth against the net losses, which are much greater here, as far as we can see. We really do have to ask ourselves whether we are dancing with the right partner here.

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

That's fine.

[The Chair, Conservative, Lee Richardson]

Okay, c'est tout?

I think we can probably do another quick round. I'm sorry to take the time of the witnesses with this, but just for clarification, I have two points. One, we have gone past 5:15 in any event, so I think we have presumed that we'll deal with the motion that was on the floor at a future meeting. We can carry on for another quick round.

Also for clarification, there seems to be some question as to whether the House will be sitting or not on Thursday. We have arranged for witnesses to come. I think there is general consensus among the committee that regardless of whether the House adjourns, we will meet on Thursday.

[John Maloney, Liberal, Welland, ON]

Would we be able to meet at an hour other than 3:30?

[The Chair, Conservative, Lee Richardson]

If the House doesn't adjourn till Thursday afternoon, then we'll meet here. If it adjourns tonight or Wednesday, we might have to rethink that.

[Sukh Dhaliwal, Liberal, Newton—North Delta, BC]

We still will meet on Thursday, right?

[The Chair, Conservative, Lee Richardson]

Yes, we're going to meet on Thursday.

Okay, we have time for another quick round.

Mr. Bains, do you have some questions for these witnesses?

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Absolutely, Chair. Thank you very much.

I want to thank the witnesses again, because you've done, in my opinion, a justice to come here and answer some of these questions. You've heard a difference of opinion, and I think that's a healthy debate and an important one.

I just want to reiterate the fact that was mentioned, that there seems to be this misconception that, specifically, people who raise questions about this potential free trade agreement are anti-trade. That's not the case. The Liberal Party historically has signed many free trade agreements and represents free and fair trade. I think all of you have demonstrated that as well in your comments, that you support free trade and it's actually important for our Canadian manufacturers and workers. So I'm glad you put that on the record.

I do have a question. Today Mr. Cannan, earlier in his remarks, talked about some of the assumptions and some of the concerns that were alluded to with respect to some of the analysis done. I want your feedback on this. Would you have any suggestion or would you support the possibility of selecting someone we can all agree on, someone arm's-length, someone the government and some of the key stakeholders can agree on, who could conduct this analysis and put to rest some of these assumptions that are being raised, because they're deemed to be biased or one way? Do you have any recommendations of organizations or people that you would like to put forward, that you deem to be arm's-length, that could conduct a proper economic analysis and really look at it impartially and look at some of the nuts and bolts, specifically around job losses?

I think that's something that's being debated fairly intensely today, and I would like to hear your thoughts on that.

[Gerald Fedchun]

We don't have anyone right off the top of our heads, but I'm sure if we all got together we could come up with one. There is the Canadian Automotive Partnership Council, of which we are all members. The whole industry is a member, and the whole industry right now is not in favour of an agreement without the non-tariffs barriers removed. So we would work very hard and very quickly to come up with a couple of recommendations. We'll work through Christmas.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Jim, have you ever proposed any names for an arm's-length, impartial person or organization that could conduct an analysis?

[Dr. Jim Stanford]

I haven't, Mr. Bains. I think that's a very intriguing possibility. Likewise, I'm sure there are a number of economists who have practical, hands-on experience, not just with the auto industry but the other affected industries, who we could recommend. So I'll start thinking about that immediately.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

I think the average Canadian, specifically people who are paying attention to this debate, will find it very confusing. They want to believe the government, but I believe, at the same time, some of the analysis conducted by the department and the U of T professor has been put into question because the data used is a bit old—2005 data. Some of the assumptions, as mentioned by Jim earlier, about full employment, wages, and loyalty to domestic product are all fair questions and concerns, and if we can have somebody arm's-length to look into it, I think that's something this committee might recommend.

Our committee has been working very hard on this report, which should be submitted to the House very shortly, on our experiences in the Middle East with respect to free trade potential, and I'd ask you to look into that as well and give us your comments, if you can, going forward.

Thank you very much.

[The Chair, Conservative, Lee Richardson]

I appreciate Mr. Bains' suggestion. It seems to have been well received. If that is possible, could I ask that any comments or suggestions you have be directed to the committee, and we'll distribute them on behalf of Mr. Bains to the committee?

Thank you.

We have time, I think, for one brief question.

Monsieur André.

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

My two questions are for Mr. Stanford.

Last week, Minister Emerson indicated that it wasn't necessarily important in a bilateral agreement to have a trade surplus or deficit, and that an agreement was not evaluated according to those criteria.

What do you think of that?

In addition, negotiations with Korea began under the Liberal reign and are now continuing under the reign of the Conservatives. In your opinion, has there been a change of attitude or philosophy in these negotiations?

[Dr. Jim Stanford]

On the first, on whether there is a trade surplus or a trade deficit, I think that's a very important question. In the rarefied world of the computable general equilibrium models, Mr. Emerson is correct: if you assume that all factors will eventually be fully employed and that your country is inherently competitive at producing whatever it is you do relatively best, then he's quite right, you'll have surpluses with some countries, deficits with others, and on the whole you'll be more productive and better off.

The problem is that isn't the world that we inhabit. Not all factors are produced. Competitiveness matters. You have to be competitive on actual cost grounds in order to successfully produce something and export it. In that world, trade surpluses and deficits do matter, and we see that in the auto industry today incredibly.

In the late 1990s we had a trade surplus in automotive products of $15 billion, we were an incredible success story. Suddenly that has evaporated, and this year we will have an aggregate trade deficit in automotive products of $8 billion, and that directly corresponds to the loss of 20,000 to 25,000 well-paid auto jobs because of that trade deficit. A deal with Korea, even according to the government's own studies, will exaggerate and make worse that automotive trade deficit.

In the real world, surpluses and deficits do matter, and how you perform in total is based on how you perform with each one of your trading partners.

In terms of the difference in approach between the two governments--between the Liberals, where it started, and the Conservatives today--I have sensed, if you like, a greater determination, or I'd almost call it bull-headedness, under the current government to try to reach an agreement at all costs so that they can hold it up and say, “Look, we have a foreign policy achievement here.”

That's what concerns me, that this is being driven by political motives rather than what's actually best for our economy.

[Gerald Fedchun]

I haven't noticed any difference in the two governments, and this is one of the few times I'd disagree with you, Jim.

We've had difficulty, everyone seemed to want to move forward, and only the auto industry has really been screaming that this is not a good deal until non-tariff barriers have been eliminated. That's been consistent.

[Mark Nantais]

If I may too, the reality around the world with essentially the collapse of the Doha Round has meant that many countries are now seeking more bilateral agreements. That is part of the reality. The question becomes how intent is this government on getting the deal signed for the right reasons, and we would submit that so far we haven't seen the right reasons or the right approach.

[The Chair, Conservative, Lee Richardson]

Okay. We do have Mr. Epp.

I'm sorry, I went out of line. He was on the list ahead of Mr. André, so we'll let Mr. Epp wrap it up.

We'll have a quick round of questions.

[Ken Epp, Conservative, Edmonton—Sherwood Park, AB]

Thank you very much.

I have a fairly quick question that has to do with the negotiations that Korea has engaged in with other countries. According to my notes, they have completed an agreement with the United States. I wonder if there are any consequences of the fact that Korea has a deal with the U.S. but does not yet have an agreement with Canada.

Are there any consequences to that with respect to our trade balance?

[Gerald Fedchun]

All of our political cohorts say that deal will not be ratified in the U.S.; it's simply not going to happen. And I'll live and die by my cohorts in the U.S.

[Ken Epp, Conservative, Edmonton—Sherwood Park, AB]

Okay.

Dr. Stanford, do you have any comment on that as well?