Thank you, Mr. Chair.
Good afternoon, everyone.
Good afternoon. Thank you for inviting me to appear before the committee today on behalf of the Canadian Manufacturers and Exporters to discuss Bill C-2, the Canada-Colombia free trade agreement bill.
I believe this is the third time, and I have to admit I also hope it's the last time, that I'm appearing before the committee on this issue. Our position on this important trade agreement hasn't changed, but I'll try to be as original as possible in my opening remarks.
Before I start, I'd like to say a few words about the association and the members I have the privilege to represent. Canadian Manufacturers and Exporters is Canada's leading trade and industry association and the voice of manufacturing and global business in Canada. We represent businesses in all sectors of manufacturing and exporting activity across the country. Our mandate is to promote the competitiveness of Canadian manufacturers and the success of Canada's goods and services exporters in markets around the world. Small- and medium-sized manufacturers constitute the bulk of our membership.
Our work is focused on the issues that are most critical to our members, such as manufacturing competitiveness, U.S. business opportunities, international markets, people and skills, energy, and the environment. We're particularly interested in Bill C-2 because manufacturing is an export-intensive business, as my colleague just explained. Overall, manufacturing accounts for two-thirds of Canada's exports. In fact, the majority of Canada's industrial production is exported, so access to export markets is a priority for our organization.
As you know, the recession has hit manufacturers and exporters more harshly than any other sector of the Canadian economy. For our members, the recession was mostly felt between August 2008 and August 2009. During that 12-month period, our export sales fell by 32%, our manufacturing sales fell by 20%, and manufacturing production overall declined by 17%. Overall, more than 180,000 jobs were lost in Canada's manufacturing sector last year alone. Since 2005, manufacturing employment has fallen by 420,000, or approximately 20% of the manufacturing workforce in Canada.
As we head into recovery, we are realizing that there are significant structural changes that are reshaping market conditions here in Canada, but also in global markets. As a result, new strategies are required on the part of business leaders and public policy-makers alike to ensure business success and to enhance productivity and economic growth. We all need to focus on what it takes for businesses to maximize the value of global supply chains, improve manufacturing competitiveness, encourage investment and innovation, and take advantage of new opportunities in domestic and international markets.
One of the most significant changes we are witnessing right now is a shift in market power and economic growth potential away from the developed markets of North America, Europe, and Japan and towards the emerging markets of China, India, Southeast Asia, and Latin America. In fact, for all countries, but especially for those with an open economy, such as Canada, economic recovery depends on developing new business opportunities in emerging markets. In turn, that rides on the ability of businesses to effectively sell their goods and services in these growing markets. We therefore need to continue to negotiate meaningful market access, investment protection, and tax agreements with other countries, such as Colombia, and this is why our association supports Bill C-2.
Trade between Canada and Colombia is actually complementary. Two-thirds of our exports to Colombia are manufactured goods, such as trucks, auto parts, fabricated metal products, turbo propellers, newsprint, and other paper and cardboard products. On the other hand, most of our imports from Colombia are energy products, such as oil and coal, or food products, such as coffee, bananas, and flowers.
However, Canada's exports to Colombia continue to face somewhat high tariffs that hinder competitiveness in that market. For example, Canadian exporters face tariffs averaging 12% on industrial goods and 17% on agricultural products when selling to Colombia. While Colombia enjoys almost completely open and duty-free access to Canada, with approximately 85% of their products entering our market duty-free, our ability to export to their market remains limited.
In fact, in many cases tariff rates are a real barrier to entering that market. Passage of the Canada-Colombia free trade agreement would get rid of those tariff barriers and provide Canadian manufacturers and exporters with preferential treatment over competitors around the world.
Moreover, on top of immediately eliminating nearly all of Colombia's tariffs on manufactured goods, the free trade agreement would help reduce non-tariff barriers and strengthen investment rules. Despite those trade barriers currently in place, Canadian businesses exported $600 million worth of goods to Colombia last year. From 2005 to 2008—so, right up to the beginning of the recession—Canada's exports to Colombia jumped by more than 58% over the four-year period.
The Canada-Colombia free trade agreement has the potential to have a significant positive effect on Canada's exports to Colombia, for mainly two reasons. First, as I mentioned, exports of Canadian products would grow as a result of the reduction and elimination of tariff and non-tariff barriers; second, the free trade agreement would help preserve existing Canadian exports that would otherwise be lost if Colombia maintained its expansion of free trade agreements with other nations or groups of countries that compete with Canada in manufactured goods, such as the United States and the European Union.
Colombia offers excellent opportunities for Canadian exporters. Colombia and other trading partners recognize this, and Colombia has embarked on a very aggressive bilateral trade agenda involving the United States, as I mentioned, the European Union, the European Free Trade Association, and some of their other trading partners. These countries, especially the United States and those in the European Union, are some of our main competitors.
Implementing this agreement quickly would help us secure a position in this market and give us a competitive advantage over other countries, because we would be an early mover.
On the other hand, or on the defensive side, implementing the Canada-Colombia agreement is unlikely to result in significant new increases in Canada's imports from Colombia beyond those that can be expected to occur anyway, so it doesn't really put our industries at risk. In the case of many trade negotiations, there are obviously concerns about increased competition for Canadian industry, but in this case, because our trade is very complementary, those defensive concerns are not necessarily present.
We expect that Canadian imports from Colombia will continue to increase, but the principal drivers of that increase will be the expansion of Colombia's oil production and the continuation of the duty-free treatment that most Colombian exports already enjoy in Canada.
In conclusion, we believe that this agreement is good for Canada and good for Colombia. It's time that Parliament passed the legislation for the agreement to come into force so that Canadian exporters can benefit from improved market access and improve their presence in Colombia.
Thank you very much. I'll be happy to answer any questions.