International Trade Committee on Feb. 12th, 2009

[Dean Beyea]

Again, I don't want to speak for the Department of Foreign Affairs and International Trade, who actually negotiated the agreement and are putting forward the bill. But I can speak in general terms about the benefits of free trade writ large.

The EFTA countries as a group are a large, wealthy nation, and this agreement will eliminate barriers to trade on processed food products and all the--

[The Chair, Conservative, Lee Richardson]

Excuse me.

Go ahead, Peter.

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

On a point of order, Mr. Chair, you did say very clearly at the beginning that they were here for technical questions and not for political questions. I'm not sure Mr. Cannan's question is in order.

[The Chair, Conservative, Lee Richardson]

I found it in order. He's asking for general information, and we're getting a general response. I think it's entirely in order, but thanks for your comment.

Go ahead, Mr. Beyea.

[Dean Beyea]

So on most processed food products and all industrial goods, I think including fish products as well, this agreement will eliminate all tariff barriers into the EFTA countries. There is a significant amount of trade between Canada and the EFTA countries already, and certainly eliminating tariff barriers will allow for that trade to develop further and will enhance trade between nations.

I think it's an important agreement as it is the first transatlantic agreement for Canada.

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

Thank you. I will pass the floor to my honourable colleague Mr. Harris.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Thank you very much. I'm kind of a newcomer to this panel, and certainly I'm not by any means an expert on shipbuilding in Canada. I have a couple of questions about trade in general.

First of all, I have one question about the shipbuilding industry. Subsidies and all of the good things that governments around the world tend to do for specific industries aside, how does the cost of building a ship in Canada compare with the cost of building a ship in, say, Norway--let's forget Asia--or other countries within the EFTA agreement? Forget the subsidies. Forget any type of tax incentives and things like that. I'm talking about just actually building the vessel. Is the cost of a ship we build in Canada competitive compared to that built by other countries?

I throw that question out to whoever wants to answer it.

[Gary McGee]

The simple answer to that is that given the volume of vessels that have been built in, let's say, a country like Norway over a period of time, one finds that the actual cost of constructing a vessel will decrease as the number of vessels produced increases. It's what we call the learning curve. So in terms of decreased costs, there are certainly instances in which a country like Norway will have lower costs of production than will Canada. That being said, as far as levels of productivity go, the current owner of Davie Yards--and the current owner is a Norwegian company--has gone on record and identified that Davie Yards itself is as productive a shipyard as any Norwegian yard. But again, in terms of volumes of vessels and the learning curve, there would be a delta in terms of cost.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

So talking about productivity, we're pretty much on par in those specific--

[Gary McGee]

From all indications, we are.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

All right. Talking about subsidies, I noticed some concern about possible subsidies that may or may not continue. Under a free trade agreement such as EFTA, there are, I imagine, dispute resolution mechanisms that can be triggered in the event that one country that is part of a free trade agreement wants to challenge or make a complaint. There's a mechanism within EFTA to do that, just as there is in the softwood lumber agreement, with which I'm very familiar. There's a dispute mechanism in there that can be triggered at any time by either country.

So that's the disincentive to trying to fudge on the agreement through subsidies or any direct monetary assistance to the industry.

I guess what Mr. Risser was talking about was that in the same way Canada, from a technology point of view and an efficiency point of view, in, say, softwood lumber, leads the world, in your opinion in technology and efficiency we're somewhat lagging behind . So if we were able to update that technology to become more competitive in that particular respect, probably some of the other issues, like the taxation issues, might not loom as important. Is that what you're saying?

[Karl Risser Jr.]

I don't think it works with any one thing. I don't think we can write off any piece of that. It's a broad-based thing that you have to do, and you have to do it through all the different points. I don't think you can focus just on the one issue.

But, yes, it definitely can't hurt. I agree with you there.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Thank you.

[The Chair, Conservative, Lee Richardson]

Thank you.

We will now move to round two. These are five-minute rounds. We're going to try to keep to five minutes in these rounds.

We'll begin with Mr. Cannis.

[John Cannis, Liberal, Scarborough Centre, ON]

Thank you, Mr. Chair.

Let me also welcome the witnesses.

I believe in 2001 or 2002...mind you, the NDP beat us to the punch and there was a motion passed, supported by the then Liberal government, to do a review on shipbuilding, because we had concerns. I don't know, Mr. Risser, if you remember that. Anyway, it was under John Manley, and I served as his parliamentary secretary.

I start off with that because you mentioned in your presentation that we must recognize that the shipbuilding industry is important to Canada. I agree with you.

I think you agree with me that all other industries, whether it be aerospace or auto, for example, are just as important; it's just a matter of how we place them. I don't have shipbuilding in Scarborough, where I come from, but I do have an automotive industry. I think it's important to my constituents, as shipbuilding is important to the people who live in your neighbourhood. That's why we supported that review.

Now, you mentioned a couple of things. First of all, what impressed me is third generation, and I tip my hat to you for this. But you will agree with me that the way your grandfather and father approached work or the way they performed post-Second World War and the way your generation works are two different things completely. The way ships are financed, the way they're built--the whole gamut. Do you agree with that?

[Karl Risser Jr.]

Yes, we've come a long way. We've come a long way from beating rivets. We do modular construction and--

[John Cannis, Liberal, Scarborough Centre, ON]

And we know that. As a PS some years ago, I got to understand a little bit about shipbuilding, as best as I could.

You discussed two programs, for example, the SFF, and I'm really quite impressed. It's a program that goes to 2011, if I am correct, and half of it is already taken up. So what's going to happen between now and 2011? Obviously, we need more support.

You talked about the two programs and you said, Mr. Risser, if they could be combined, the accelerated capital cost allowance, I assume, and the SFF together.... Is that what you're referring to?

[Karl Risser Jr.]

Yes.

[John Cannis, Liberal, Scarborough Centre, ON]

I ask you, then, leading up to these agreements, leading up to EFTA being signed, and the review that was initiated by government, have you made that recommendation? Was that recommendation made, or are you just making that recommendation--

[Karl Risser Jr.]

No, you're 100% right.

I go back to your point. Yes, the review was done and it did come back that we do have the capacity. I think the review was positive.

Yes, SFF...and this concept is not new. I am reading from a 2001 framework that was submitted to Industry Canada. It's nothing new, what I'm saying here today. This is old--

[John Cannis, Liberal, Scarborough Centre, ON]

But it was recommended.

[Karl Risser Jr.]

It was recommended--

[John Cannis, Liberal, Scarborough Centre, ON]

Because of time constraints.... It was recommended when the report was initially done, and leading up to the EFTA agreement it was recommended by your association.

[Karl Risser Jr.]

The Shipbuilding Association has recommended this since 2001, to my knowledge.

Just to touch on your point about the importance of shipbuilding and the importance of all industries, while I recognize that all industries are important, especially the auto industry, to the economy, there is a special issue around shipbuilding to our sovereignty, to our ability to be a country that stands alone. That's the one thing that takes us away from aerospace, auto, whatever it is; we have to be able to stand alone as a country. And with the waterlines we have, I think it's--

[John Cannis, Liberal, Scarborough Centre, ON]

This makes us stand alone, as an example. The Canadarm makes us stand alone

I respect what you're saying, and I agree with you. But I don't believe it's one industry that makes us stand alone.

I understand there are foreign buyers that bought in the shipyards. Is that correct?