International Trade Committee on March 3rd, 2009

[Terry Pugh]

We're tremendously concerned.

I think it's important to point out that a trade agreement is no substitute for a food policy agreement. Canada can't rely completely on trade as a way of trying to increase prosperity. It just doesn't work. Food sovereignty for nations is of critical importance. I think the WTO has serious structural problems. We need to ensure the ability of nations to be able to feed people. That is still important.

I think lip service is paid to this concept in the WTO, but all of these clauses are basically trumped by the interests of large corporations who want to increase their market access. We see this continual pressure. On the one hand, you have these little pieces set aside for protection of certain sensitive products. There are endless negotiations about what products they are and how much of this or that import line will be restricted, but in the end there is just continual pressure.

I think we need to recognize that countries should have the right and the ability to be able to feed their own populations as well as have trade. No one is saying that trade is a bad thing or that it shouldn't happen. Canada, particularly western Canada, where I live, has always been dependent on trade. We're not making the argument that there should be no trade. What we're saying is that there should be fair trade, and recognize that within certain limits people have the right to ensure that a food policy that benefits the people of that country is able to take shape.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Pugh.

Mr. Julian.

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

Thank you, Mr. Chair, and thank you to our witnesses for appearing here today. This is very important testimony. I hope all members are paying close attention.

As a committee, we dealt with the former softwood lumber agreement, which many characterize as the softwood sellout. Thousands of jobs were lost as a result of that agreement. We now have EFTA, and you've given us very strong warnings that this agreement, if there are no other changes made in shipbuilding and no carve-out, is in a very real sense going to have a very negative impact on the shipbuilding industry. Would it be fair to characterize the EFTA agreement as the shipbuilding sellout?

[Andrew McArthur]

If it's not a sellout, it's getting close to it. It certainly doesn't enhance the survivability of the industry. It jeopardizes it. It would be pretty hard to say it's an absolute sellout, although it's getting close. It's not only EFTA that concerns us. The ground rules may be set. We're negotiating with Singapore. We're negotiating with South Korea. Once we've set the ground rules, if we then get the same with all these other countries, the industry will be in very tough conditions and it will be able to survive only with government contracts.

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

Mr. MacPherson.

[George MacPherson]

I echo Andrew's words. I think the industry is at a critical stage. These talks are critical to where our future lies. If we don't fix this problem today, I believe that in a very short period of time you'll see major yards close their doors and they'll go away. And that is the end of the industry.

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

Would you characterize it as a shipbuilding sellout?

[George MacPherson]

Yes, I would. I would use those words.

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

Thank you.

[Andrew McArthur]

Mr. Julian, can I add one thing? It's not only the shipbuilding industry that's jeopardized. It's the ship owners. On the east coast you have owners who operate offshore supply vessels. Norway operates one of the biggest fleets in the world. They have something like over 50% of the total world supply of offshore supply vessels. The North Sea is in a downtrend. They're looking for places to send these ships that were built with subsidies that have been written off. They could come in here and undercut any Canadian operator on the east coast for charter rates. It's not only the shipyards; it's the ship owners.

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

Thank you.

You both referenced a carve-out, and the committee will be coming back to the implementation bill and the amendments that would carve out shipbuilding. Is it your recommendation that the committee carve shipbuilding out of the agreement at the very least to put pressure on the government to take action on some of the other issues that have been raised by my colleagues like Mr. Cannis and Mr. Brison, to push the government to finally respond on the SFF and the ACCA, and to put in place a “buy Canada” program that actually is a real procurement program and not a fake one? Would you support us as a committee carving out shipbuilding from the implementation legislation?

[Andrew McArthur]

The association absolutely would.

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

Okay.

[George MacPherson]

Our organization would as well. We believe that's the right way to go at this point.

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

Thank you. That's very clear and unambiguous that you are both supporting a carve-out of the implementation legislation. Thank you for that.

I'd like to come back to the issue that you raised, Mr. McArthur, about repair facilities. In a sense, if we're killing the shipbuilding sellout and we're having an impact on our shipyards regarding the construction of new vessels, and in the long term that also impacts on repair facilities, could you give us a little more detail about what that means with regard to our capacity to repair existing ships?

[Andrew McArthur]

It's basically the ongoing technology. If you go and try to recruit engineers and naval architects from the universities and you're running a repair facility, you're not too attractive to good top-quality engineers and naval architects. The technology comes from new construction and design, and without the ongoing technology and education, our total workforce, the industry is just going to die. You need new construction to attract top people, technical people, engineers, flowing all the way down to the tradesmen. Most of the tradesmen--George could answer better than I would. Repair is a tough business. I think most of the people prefer to work in new construction. The Japanese call repair KKK: dirty, difficult, and dangerous. You need the new construction to sustain the ongoing technical capability. So repair would suffer.

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

Mr. MacPherson.

[George MacPherson]

I agree with Andrew. It's the engineers from the top level all the way down to the bottom. It doesn't matter what level you look at in the shipbuilding industry, as far as it goes, with technical skills that people are going to pick up.

On the repair side, you cannot get that. You need the new construction in order to hone those skills and to draw the people into the industry. What would happen over a very short period of time is that...with these new people coming in, the industry is getting very old. The average age used to be around 47, and I believe it's a little higher than that now.

We've seen it on the west coast in recent years, probably last year, with the construction of a mid-sized ferry for BC Ferries. The difficulty they had in putting that project together was horrendous. It was horrendous because there was virtually no new construction happening on the west coast for a large number of years and a lot of those skills had walked away. You're trying to ramp up to do one job and it's virtually impossible.

You really need an ongoing correlation of work and new construction to keep those people in the industry and to keep them going. Also, it brings in your apprentices and trains your workforce.

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

So what we're talking about is a real brain drain. If we lose other facilities, and if we're losing our capacity for new ships and certainly for repairs, then over the short to medium term what we're talking about is losing all of the skills in Canada. That would mean any revival of the shipbuilding industry would take even more effort in order to recreate an industry that we're essentially losing.

[George MacPherson]

That's absolutely correct.

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

I have a couple of questions for Mr. Pugh.

[The Chair, Conservative, Lee Richardson]

You have to be very brief. I'll give you one minute. It's seven minutes now.

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

Mr. Pugh, could you come back to the issue of how you feel this agreement would impact on supply management and single desk?

[Terry Pugh]

This agreement itself I don't think would have a tremendously huge impact on either of those things. The point I want to make is that it defers to the World Trade Organization in all of its major components. In the long run the real danger lies at the WTO. You could see that showdown come as early as this summer.

As I said, if you look in terms of wheat and durum, a small increase in durum to Norway, for example, could put some money in farmers' pockets, but again, that's because of the Wheat Board's efforts. On supply management, there's the issue of tariff quotas at the WTO, which I think is the big issue.

Under this agreement, of course, there was that cut of tariffs that fell within the quotas, which I thought set a precedent, but in the long run you can't really say that's a huge impact. I think looking at tariff rate cuts in the WTO will, in the long term, be much more of an impact.

This is actually more of a symbolic agreement in many ways. It shows that Canada is moving towards a free trade agenda by continually negotiating these bilaterals. By chipping away at our own food policy through these bilaterals it undermines our position at the WTO, and that's the real issue.

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

Thank you.