International Trade Committee on Feb. 12th, 2009

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

Thank you, Mr. Chairman.

In my nine-minute question period, I will be starting off with Mr. Risser. Then I have a couple of questions for the departmental representatives.

Mr. Risser, thank you for being here today. You add a real dose of reality, a sobering dose of reality, I think, to our deliberations around the EFTA agreement.

I'd like to ask you three questions to start, and I'll ask them one after the other. The first is that you're a third-generation shipyard worker, and you talk amongst your family. Can you give us a brief description of how things have evolved over those three generations? Canada used to be renowned for its shipbuilding industry, its shipyards. We have, by far, the longest coastline in the world. The disturbing testimony you're providing today is sobering to all of us.

Secondly, you mentioned 40% capacity on your shipyard. We've heard from the shipping industry that it's about 50% capacity across the country. When you testified before us on April 2, 2008, you said that EFTA was a bad deal for Canada and that we would destroy our shipbuilding industry. Do you have specific recommendations around EFTA? Do you believe we should be amending any legislation to carve out the shipbuilding industry so that the shipbuilding industry isn't destroyed by this agreement?

Third, you mentioned the Jones Act. Most industrialized countries around the world protect their own strategic industries. Canada doesn't. Are you pressing for “buy Canada” measures, a “buy Canada” act that would effectively make sure that Canada is investing in its shipbuilding industry?

[Karl Risser Jr.]

On your question about the three generations, it's kind of amazing how fast things can turn. If you go back to my grandfather's days, they were coming out of the war, they were in a boom time, and there was so much work they didn't know what to do with it. Then when you step into my father's era, during the eighties and nineties, they were doing procurement for the government. There was quite a bit of work there. Then when you come into our era, the policies don't fit for government or industry. Everybody's kind of holding back on the work they need to do. Everybody knows the work's out there, but they're not actually moving forward.

That's kind of the overall view, that the work is there now but the environment isn't right to do it.

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

The next question was on EFTA.

[Karl Risser Jr.]

With regard to the 40% or 50% capacity, yes, I still believe EFTA is a bad deal for Canada. I think it will destroy our industry. I do believe it should be amended to carve out shipbuilding.

As I said, it should be obvious to everyone that Canada is a marine nation. I think it's the only marine nation that in the last 50 years hasn't put a policy in place like this. I really don't understand why we don't see that. I think it's because it's on the water. I think the people of Canada don't see it. If we regulated our highways the way we regulated the inland seaway, the St. Lawrence, people would go crazy, because there'd be no one regulating anything. You just run on with your 80-year-old car, the tires falling off, and you just keep driving.

I think it's something that's hidden. People don't actually see and don't actually know what's going on in our industry in Canada.

On the Jones Act, when we went into negotiations on the U.S. deal, when they brought the Jones Act forward for the U.S. and Chile, we should have said, “You know what? That makes a lot of sense, so let's do the same thing here in Canada.”

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

Thank you, Mr. Risser.

I hope the Conservative members of the committee are listening to that, because they seem to take an ideological opposition to any “buy Canada” mechanisms.

I'd like to go on to the department representatives. We had absolutely and phenomenally disastrous trade figures yesterday.

Through you, Mr. Chair, I'll ask the departmental representatives about it.

There is a half-billion-dollar trade deficit, a structural trade deficit that's going to continue on for as long as we continue the current course of action. The biggest disaster, of course, is the decline in all manufactured value-added products. What we're exporting now, basically, is crude petroleum, raw iron ore, and raw logs. The forestry exports have collapsed. Automotive exports have collapsed.

The trade strategy of this government is an absolute disaster. Pertaining to the departments, is there any sort of interdepartmental crisis team in place to deal with these absolutely disastrous figures?

My final question to the finance department is around the import tariffs that should be levied on the ferries purchased by BC Ferries. They could have been built in British Columbia, but because the Gordon Campbell government doesn't seem to be too inclined towards job creation, they were built overseas and brought into Canada. Could you clarify that this tariff is a bill that has to be paid?

[Dean Beyea]

With respect to the ships brought in by BC Ferries, the duty was paid on them, so I'm not sure exactly what your question is.

In summer 2007, there was a case where a particular ferry sank. It was a ferry that provided service to the north coast of B.C. There was work done on looking to see if a ship could be built in Canada in the very near term to replace this important service to northern B.C. It was determined that it couldn't, so a ship was brought in by BC Ferries. On that particular ship, the duty was remitted.

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

On the status of that, of course, as you know, shipyards in British Columbia have been asking that this money be allocated to support shipbuilding in British Columbia. From what I hear, none of that allocation has taken place. The tariff was paid, but it just went into general coffers.

[Dean Beyea]

Tariff revenue goes into the general revenue fund.

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

Okay. Thank you.

So is there a crisis team managing these disastrous trade figures? Is there any sort of interdepartmental coordination taking place?

[Gary McGee]

With all due respect, Industry Canada's presence here today was to speak to issues related to EFTA and the shipbuilding. I'm not at liberty, nor do I have the knowledge base, to answer that type of question.

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

Thank you.

Do I have any extra time or have I used up my nine minutes?

[The Chair, Conservative, Lee Richardson]

No, you can have an extra minute.

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

Thank you very much.

My final question, then, goes back to you, Mr. Risser. We've talked a bit about the structured financing facility and the ACCA. Do you believe that improving and increasing the amounts allocated to both of those facilities, and at the same time carving out the shipbuilding from EFTA, would be an adequate combination to start putting our shipbuilding industry back in good health?

[Karl Risser Jr.]

Yes. I think those are measures that should be taken, but there's a list of a whole bunch of different measures that need to be taken. I don't think those alone can do it. On SFF, I think 15% is low. On ACCA, as she said, there's not a whole lot of owner-operator companies out there, so that's another one that's tough to access. But I think a combination of ACCA, supportive tax policies, a 25-year financing plan, and continued government procurement could allow us to keep going.

As for tariff remission, this deal talks about a 15-year layover. It sounds very long and they talk about it being the longest one ever negotiated, but you have to realize that the point we got back to is that these countries have been getting a 50-year lead on us. They're 50 years out the door. We've been struggling to keep our heads above water for that 50 years while they've been supported and taken to levels that we can't get to yet.

There's one other issue, too. Another ferry from Marine Atlantic just came in from Germany, under the same sorts of terms, to replace a vessel as well.

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

Was the import tariff paid on that?

[Dean Beyea]

I can check on that one. I'm not sure of the particulars.

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

Thank you.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Julian and Mr. Risser.

Perhaps I could take a moment to ask a quick question. It follows up on what Mr. Julian was just saying, and the answer. This is for our industry people and perhaps the tax people.

Would this treaty as negotiated be affected by an extension of SFF? Are these considered non-tariff barriers, or have we included an additional support to industry, such as accelerated capital cost allowance? Do these affect the treaty?

[Dean Beyea]

I can speak in general terms....

[The Chair, Conservative, Lee Richardson]

Well, that's all we can do at this point, I think.

[Dean Beyea]

Sure.

Generally the subsidies issue is dealt with multilaterally under the agreement on subsidies and countervail at the WTO, and not specifically in free trade agreements. Tax policy always remains the purview of Canada, and there are virtually no provisions relating to tax policy in a free trade agreement.

[The Chair, Conservative, Lee Richardson]

Okay.

Go ahead, Mr. Brison.

[Scott Brison, Liberal, Kings—Hants, NS]

In answer to the question, just to be constructive here--since the other parties had more time than mine, but I'm not bitter--yesterday we did ask the trade officials the same question. They said that these measures would not violate any of the agreements, including NAFTA.

[The Chair, Conservative, Lee Richardson]

Thank you. I just wanted to get that verification so that we're all on the same wavelength here.

Who's going to start on this side?

Mr. Cannan.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair. I'll split my time with my honourable colleague Mr. Harris.

Thank you to our witnesses.

I think it is important to be constructive and to work together. Just to clarify the record, my honourable colleague from British Columbia talked about B.C.'s fast ferries. Coming from British Columbia, I can tell you that it was one of the biggest disasters of the NDP government. Talking about disasters, then, we need to make sure that governments are working together and moving forward.

This committee discussed this agreement at great length in the 39th Parliament. I know there are some new committee members here. For the sake of those new members and just to refresh the minds of those members who are returning, there was a mention of carving out the shipbuilding industry. The U.S. does not carve out shipbuilding from its trade agreements, but what Canada has been able to do is carve out a “buy Canada” privilege.

In the 2009 budget, which is just being moved through Parliament right now, there's $175 million in there for coast guard procurements. Even more exciting is the fact that over the next 30 years, there's extensive fleet renewal for both the coast guard and the Canadian navy fleet, estimated to be--I believe the officials could verify this--about $43 billion over the next 30 years.

So it looks like there's a renaissance happening in the shipbuilding industry. There might be opportunities for your children and grandchildren, so we have to make sure that we have properly trained shipyard tradespeople and officials who can have the human resources to carry through that work as we transition through that period.

I know we just heard the trading numbers yesterday, released from Stats Canada, and concerns of where we're at as a trading nation. Canada is known as a trading country, a fair and free trading nation. We've had a good relationship with the United States, but we've fallen behind with our trade agreements with other countries, and we need to level the playing field for our industries.

My question is for the officials. Can they explain to us how they feel the European free trade agreement would maybe provide more opportunities for Canadian businesses, industries, the provinces, and Canadians in general to deepen our economic relationship with the European Union?

That's for whoever would like to answer that.