International Trade Committee on Nov. 15th, 2011

[Jacques Pomerleau]

Oh, we produce two million tonnes per year--

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

That's on average, though.

[Jacques Pomerleau]

--so that's not an issue.

The point is that the EU is by far the best market in the world for legs. They give a premium, especially for the quality of product we produce in Canada. They are aware of it, so it's to get that access. It would really help to lift the overall carcass price in Canada if we could get that access.

As I said, the legs are in surplus, and very few markets, outside of Australia, give a premium for legs.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Ravignat.

[Mathieu Ravignat, NDP, Pontiac, QC]

I would like to come back to the forestry sector, if I may.

What I'm a little more concerned about is that opening new markets is considered a panacea for the sector. I don't think this is the case. It may be true for large companies that want access to these markets, but it isn't the only part of the solution to help this sector.

With respect to competitiveness, what do you think this government can do to ensure that the sector—a sector in crisis—is transformed and becomes more competitive?

[Andrew Casey]

You are completely right. Just having free trade with all the other countries is not the only solution. But these are really big markets, and we need the markets to sell our products, that's for sure.

The other point you mentioned is true. We are looking to become a leading sector in bioeconomy and bioproducts, and that is where we need a little help. We want to be the first sector to…

getting the technology, getting there first. It's important to be the first out of the gate.

That is where we need a little help from the government.

The government has given us a lot of help so far in this respect.

through a number of programs, such as the pulp and paper green transformation program and the investments in forest industry technology programs. They have been very helpful.

But we still need more assistance to move forward.

[Mathieu Ravignat, NDP, Pontiac, QC]

So the loss of jobs and the weakness in this sector are related in large part to the manufacturing side of things. Perhaps we can agree on that.

I'm also concerned about the notion that Canadian production focuses more on the export of raw materials than on value-added products. But I think it's the value-added market that creates good-quality jobs in this country.

How can we make sure, in a free trade agreement, that both sides of the sector are stimulated?

[Andrew Casey]

The industry needs the markets to sell the primary products to.

You are exactly right that moving up the value chain would be very welcome. It would bring more jobs. The problem is that you have to decide what value chain you want to move up on. It's unlikely that Canadians are going to start to work for $1 an hour to make cabinets, guitars, and violins. That's probably not a value chain we want to go up. The value chain we do want to go up is where we extract the maximum amount of value out of the tree and turn it into value-added products in the form of bioenergy, bioproducts, biochemicals.

That's something we can do here in Canada. We can add enormous amounts of value. There are many jobs here. If we go strictly to taking down a tree and burning it for energy, there are very few jobs in that. If you integrate that into the making of lumber, pulp, and paper--the traditional products--then you have an industry that will create more jobs than what already exist.

As I say, we already have 240,000 people directly employed in the industry. If we move into the bioeconomy a little more forcefully, we will grow that number fairly significantly, I would think.

[Mathieu Ravignat, NDP, Pontiac, QC]

Okay, thank you.

If I have any time left, I'd like to share it with Mr. Côté.

[The Chair, Conservative, Rob Merrifield]

Okay.

You have one minute.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

My question is also for you, Mr. Casey. I really enjoyed your presentation and your comments.

I agree with my colleague. Obviously, free-trade agreements are often presented to us in a very simplistic way. I found information from Statistics Canada indicating that, from 2008 to 2010, more than 40,000 jobs were lost in the forestry sector, while from 2009 to 2010, the sector's contribution to the GDP increased by $1.6 billion.

When we talk about $1,000 in benefits per family, it's simply a distraction. If this doesn't materialize for these families, it means little because it can very well be exported in the form of profits for these companies.

Do you have an idea about what we can concretely hope for, in terms of jobs, from the future free-trade agreement with Europe for the forestry sector?

[Andrew Casey]

As I was saying to Mr. Holder, it's a significant market, but it is not the largest one for us. First comes the United States, and then China, and Asia in general. Europe assures us a market of $1.4 billion. It's a significant market, but our industry represents $56 billion a year. So it isn't the largest market. The most important thing right now is to have a market in China and Asia. There are jobs in those markets.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Cannan, you can finish this off with the few minutes remaining in this session.

I want to remind the committee that I have some information for which I'd like to go in camera for the last five minutes of the next hour.

Mr. Cannan.

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

Thank you, Mr. Chair.

Thanks to our witnesses.

Mr. Casey, I represent the riding of Kelowna--Lake Country in the Okanagan. Forestry is important to the interior of British Columbia specifically. I thank you for your industry and for working closely with our B.C. government. Mr. Thomson, our MLA and Minister of Forests, has been in China with Minister Oliver. We continue to diversify in Asia, as you mentioned.

Specifically with regard to the EU, you are saying that the upside is getting rid of the 7% tariff. Which sectors in Canada would benefit the most? You said plywood and OSB.

[Andrew Casey]

Yes, the building side of things would--OSB and plywood. That's where the tariff is, and they would benefit the most. As I say, we're selling somewhere in the $300 million area into the EU right now. It's a marketplace of $23 billion in forest products in general, and we are facing that 7% tariff against our competitors. So getting rid of that would certainly put us at an advantage vis-à-vis those competitors.

If I were to break it down, and if I understand the underlying question there, you'd find that most of the wood products would be coming out of British Columbia. The pulp and paper products would be coming out of Quebec and Nova Scotia.

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

Thanks for that.

A couple of years ago I had the honour of representing the government in Finland. They're actually very similar to British Columbia and very innovative in the northern portion of their country with the forest sector. Is there some potential for collaboration with the EU, from an innovation perspective, to work on becoming more efficient all together as an industry through knowledge sharing and through an agreement such as this as well?

[Andrew Casey]

I'm not so sure there's any benefit from the agreement itself in that regard. You're exactly right that the Finnish government sort of undertook a forest industry strategy many years ago, whereby they decided they were going to devote significant resources to the industry to make sure it was strong and healthy.

I think the second part of my answer would be that we would hope there was none, because we'd like to get there first on a lot of these things. There's a huge value in getting these products first, getting the technologies developed first. For that reason, and to the earlier question from across the table, we certainly welcome government support in getting us there first. We think we have enormous potential to do it. As I demonstrated with the three-dimensional pulp, there are other sorts of products like that out there.

It does require enormous amounts of investment, and it is fairly risky. In that regard, government help to sort of jump-start it right now, particularly given where the economy lies, would be hugely welcome.

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

I have one quick question for Mr. Pomerleau. With the pork industry and the consultation, one of the concerns always is making sure that you're involved in the process. To date, do you feel that as an industry you have been kept apprised, and is it fair to say you have a good working relationship with the trade negotiator to date?

[Jacques Pomerleau]

We do and we're very pleased with the way it's going. We are consulted on even the small details.

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

Thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Thank you very much for coming in. The Forest Products Association is a big player in Canada, as you've described, as is the pork industry. It is great to hear that the negotiations are going well from your perspective, despite some of our members not discerning that the minister has given us that information. It's great to be reassured by you as witnesses.

We hope that the next two weeks are very fruitful in the negotiations with the pork industry.

We'll suspend now for a minute or two to reset for our next hour of witnesses.

[The Chair, Conservative, Rob Merrifield]

We'll call the meeting to order. I know that some of you are still getting a quick bite, and that's fine, but we have our witnesses prepared to go and we have enough members sitting at the table. We want to use our time valuably.

We have two witnesses.

We have with us Mr. David Skinner, from the Consumer Health Products Association of Canada.

Thank you for coming in.

We also have, from the Alzheimer Society of Canada, Debbie Benczkowski.

Is my pronunciation close...?

[Debbie Benczkowski, Interim Chief Executive Officer, Alzheimer Society of Canada]

It's very good.

[The Chair, Conservative, Rob Merrifield]

Thank you.

Mr. Skinner, the floor is yours.

[David Skinner, President, Consumer Health Products Canada]

Thank you very much.

Mr. Chairman and members of the committee, I'd like to start by thanking you for inviting Consumer Health Products Canada to provide our industry's perspective during the committee's review of a prospective comprehensive economic and trade agreement between Canada and the European Union.

Consumer Health Products Canada is a national industry association representing manufacturers, marketers, and distributors of consumer health products. The association members, which range from small businesses to large corporations, account for the vast majority of over-the-counter natural health products sold in the Canadian market.

The consumer health products industry is a mature but growing segment of Canada's health care system, currently generating approximately $5 billion in sales per year and contributing to the growth of the Canadian economy by providing high-quality employment for over 6,000 well-paid, highly skilled people involved in production, importation, and marketing of consumer health products in Canada. We further estimate that an additional 25,000 retail and distribution positions are supported directly by the sale of consumer health products.

We're aware that the negotiations between Canada and the EU thus far, as well as the discussions of the committee during these deliberations, have touched on various elements of intellectual property for prescription pharmaceuticals, including data protection, patent term restoration, and rights of appeal. We would note that these aspects of intellectual property do not currently exist, nor do they apply in the same manner for consumer health products. Our sector is in dire need of some data protection to ensure that we are attracting research investment to Canada and creating jobs for Canadians in domestic manufacturing and distribution of innovative products.

We believe that government and industry must work together so that Canadians can benefit from new scientific and technological breakthroughs in the area of consumer health products. But with that said, there are currently impediments to innovation in the regulation of consumer health products, which cause multinational corporations to negatively view the Canadian environment and its adverse effect on their ability to gain a return on investment when introducing innovative products.

One of the ways in which our industry innovates is by conducting research on established prescription drugs to find novel uses for them in the consumer market. When safety and patient benefits are demonstrated, this research is then used by Health Canada to process regulations for making a prescription drug available for self-care use.

Canadians benefit in several ways when medicines are switched to non-prescription availability, either for consumer self-selection or through the supervision of a pharmacist. They can treat common ailments and troublesome conditions more effectively without having to make a doctor's appointment. The prescription-OTC switch of antifungals for yeast infections, benzoyl peroxide for acne, and H2 blockers for heartburn are all great examples of this. For industry, switching from a prescription to a consumer market provides the opportunity for innovation.

However, there are also enormous benefits to the Canadian health care system and to the broader economy in switching products appropriate for self-care from prescription to consumer status. Research conducted for our association this year showed that visits to the doctor for colds, headaches, and heartburn cost the health care system $1 billion annually for adults alone. Once children and the associated costs of prescription drugs and lab tests are included, the figure exceeds $2 billion for just three of the hundreds of minor ailments that can be self-treated with consumer health products.

Prescription-to-OTC switching can reduce these costs in multiple ways. In some instances, just making incremental improvements to the self-care options available in the existing categories can generate substantial savings. For example, a Queen's University study showed that switching non-drowsy allergy medications to self-care status produced $65 million in net annual savings on doctor visits, dispensing fees, and drug costs in Ontario alone.

In other instances, by providing an entirely new self-care option, the impact on health care can be more dramatic. For example, in the switch of nicotine replacement therapy for smoking cessation to self-care status, not only were unnecessary doctor visits reduced, but overall quitting attempts rose significantly, contributing to the sharp drop in smoking rates in Canada since the 1997 switch of these products.

For the majority of Consumer Health Products Canada's multinational member companies, innovation happens on a global scale. After investing in the rigorous research to support the safe use of a new product for the consumer population, companies decide within which global markets to file registrations. Jurisdictions that offer data protection or market exclusivity for switched products are the most attractive to industry because they offer the opportunity to recuperate the exorbitant costs of research.

The lack of a data protection period currently being offered to our industry in Canada is causing us to lag many years behind companies in the European Union. As an example of this, in a recent comparative review of the switch landscape in Canada versus the United Kingdom, it was found that between 1984 and 2009, 96% of the switches occurred first in the United Kingdom before Canadians had access to them. Of those products switched first in the United Kingdom, the average period of time before Canadians had access to them was 7.3 years.

A great example of the detrimental effect on the health of Canadians and our economy by the lack of data protection for the consumer health products industry can be seen in the prescription to over-the-counter switch of cholesterol-lowering medications in the European Union. In Canada, competitors are able to get to market within a few short months of the innovator by using the efforts of the innovator to gain regulatory approval.

It is unlikely that any Canadian manufacturer will view this environment as worthwhile to invest in this kind of innovation. Therefore, Canadians will wait many years before accessing a product that citizens of the European Union currently have access to. This switch alone is projected to bring billions of dollars' worth of cost-effective health care savings through reduced coronary heart disease, morbidity, and mortality. With that said, we must also consider the trade opportunity lost for improving the Canadian economy during those lag years by creating thousands of jobs in domestic research and manufacturing and sales.

It's for this reason and many others--outlined for the committee in our written brief--that we propose that Canada align with the European Union's Article 74a data protection period for one year for prescriptions to OTC or prescriptions to natural health product switches when the government relies on proprietary clinical trials of an innovator to approve this change in classification.

Thank you for your time today. Given the complexity of these issues, I would be more than happy to answer any questions you may have.