International Trade Committee on Nov. 17th, 2011

[Milos Barutciski]

Thank you.

Let me start with a couple of things. You actually kind of answered the first part of your question yourself when you said that there was, in the two industries that I identified, an initial very important benefit to them from NAFTA. Then you said that afterward they both faced some very serious challenges. Those challenges, at the end of the day, had nothing to do with NAFTA.

Then you made the point about our manufacturing industries being decimated. It's something that Americans will say. It's something that Europeans will say. That has nothing to do with NAFTA or free trade with the Europeans. That has to do with a situation with our dependence on certain kinds of low-technology, lower value-added manufacturing, which we've had for many years. Under the national policy that governed Canadian trade until the late eighties, which was high tariff barriers and protection for low-scale Canadian manufacturing, basically, every auto plant in Canada was a miniature of its comparable company plant across the border. Every brewery in Canada.... And beer is even worse, because in beer we actually had interprovincial barriers, so while American breweries, Brazilian breweries, and Belgian breweries were doing, I don't know, 10 million, 20 million, or 30 million hectolitres apiece, ours were tiny by comparison. Why? Because we had prohibitions and restrictions even on interprovincial trade.

What has happened over the years is that certain sectors of our economy, which were geared to a much smaller market and traded at a much smaller scale, really did take a huge hit. But that had nothing to do with the trade. That had to do with the way the world economy has evolved.

[Brian Masse, NDP, Windsor West, ON]

It did. We got a short-term benefit for two smaller industries and we sacrificed a much larger one in which we predominated in the world, that being the auto sector. That was a net result of the actual decision we went through with NAFTA. We lost that element and we had short-term victories for that. I guess that's what I'm worried about: what other casualties could be out there.

You mentioned transition periods for industries in your comments. What are those industries, specifically, where we need to look at those things?

I'm just suggesting we have to look at this with eyes wide open. Once again, we negotiated those access markets and we had a surprise. By your own words, you were surprised by the furniture industry and the suit industry. It wasn't something we expected as we negotiated. We actually left the door open to destroying one of the most successful manufacturing agreements that we had with our largest trading partner, that being the Auto Pact.

I'm interested in those industries you're saying need that transition, because we need to ameliorate those expenses. I think there is a responsibility. If you build a successful company in Canada and the government changes the rules, then you need to have at least some transition or at least some support to be able to meet the new market demands and the challenges the government has now introduced to your business plan, which you didn't have prior to that.

[Milos Barutciski]

Let me deal with the transition issue. You're absolutely right, there will be certain sectors that are going to face a more difficult transition than others.

I'm not trying to duck the question, but it's the responsibility of specific business sectors to identify what transition measures are important for their sectors. Believe me, the auto guys have not been quiet and have been talking to the negotiators on a pretty regular basis, as has the agricultural sector, as have individual sectors. That's something that really is up to the industries—and for that matter, the employees—to bring to government. It's not something for a general organization like the chamber.

What I flagged, which I think is really all the chamber can flag, is the need to make sure the transition is considered and appropriate measures are adopted where necessary. But it's really specific sectors. Whether it's the grain growers or whether it's the auto manufacturers association that will give you the details they think are important for them, I'm sure you've heard from them and will hear from them.

[Brian Masse, NDP, Windsor West, ON]

So the chamber does not know which members you represent are at risk under this deal--is that what you're saying?

[Mathias Hartpence]

No, that's not.... May I just quickly interject?

We've been consulted time and time again, as have other sectors, and our members have been very happy with the degree to which we've been consulted over the past two-plus years. Even before this agreement was being negotiated, we had been actively consulted. In that respect, what we expect to see from the final agreement when we get there is a good, balanced agreement that reflects that very large panoply of different views on this agreement.

Again, I want to re-emphasize—I want to be emphatic about this—that the balance across the sectors and within the sectors is that this agreement is a good one. There are things that will need to be, obviously, adjusted with the agreement. That's the reason we're having these negotiations. There are barriers that have to be dismantled, and a lot of them are those so-called behind-the-border barriers that multiplied over the past decade and a half, and especially over the past decade.

But again, I just want to re-emphasize that we see that what's going to come out of this is a good deal. This is the case for, again, the whole country. The provincial chambers that are part of our network have said this, and you've seen the open letter we signed along with all the provincial and territorial chambers of this country that is supportive of this agreement.

[The Chair, Conservative, Rob Merrifield]

Mr. Keddy.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you, Mr. Chairman.

Welcome to our witnesses.

I'm going to be sharing my time with Bev.

This is an interesting discussion. This has caused a fair amount of discussion in the newspapers and the reports that we're reading every day across the country.

My first comment is for Mr. Phillips. With the exception of a few of my colleagues, most of my colleagues wouldn't know a grain from an oilseed, but they do know malt. Malted barley is something that I think everybody at the table understands.

[The Chair, Conservative, Rob Merrifield]

I take offence to that. I know the difference.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Well, I did say that a few of my colleagues know the difference.

I would say this to all of our witnesses, and then I'll hand this over. This is more of a statement than a question. I think that as a government we've tried to have a very extensive consultative agenda on the comprehensive economic trading agreement with the European Union.

All of our witnesses have stated that, and it's certainly not just in your areas, but across the country, with every individual sector, whether that be agriculture, forestry, fisheries, manufacturing, or the Federation of Canadian Municipalities. There have been very extensive consultations and I think there's a very good awareness of this trade agreement.

I think it's important to simply put that on the table, because obviously negotiations are in private, as they need to be and have to be, but every single sector that's affected has certainly been consulted during these negotiations.

Now I'm going to turn it over to my colleague.

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

Thank you.

I know time is short, so I'll skip the preliminaries. I just want to get right to it if I can.

Mr. Phillips, I appreciate, quite honestly, and I understand. You said right at the start that “we do not believe the government owes farmers a living”, but what struck me more was what you followed up with. And I share these values and beliefs in agriculture: that regulations, market access, a developing market, and research and innovation are the success in sustainable agriculture.

You talked about the export of value added and you mentioned $40 billion in exports in total. But on beef and pork, can you talk to me a bit about that? Maybe if I'm wrong and you want me to divert to when we had the livestock here...I know you're more about the grains. Maybe I'll skip that and ask you if you are talking about value added also. Is it strictly boxed meat, sort of...? Because we're likely not going to ship a live hog to the other side of the ocean, unless it's genetics.

The other part I would have, then, is that no access is really not trade. That's a good statement. Everybody should understand that. I'm concerned about the low-level presence, which you talked about. When I was on the agriculture committee, that became an issue in terms of markets, in terms of having shiploads go over and maybe get turned around because of.... How do you see those low level of presence talks going, from your perspective?

[Richard Phillips]

First I'll respond to the value-added piece. Feed grains are what go into pork, poultry, dairy cows, and beef, so when we say “value added” it is the processing as well, like the boxed meat cuts.

But for us, having that local market there, whether it's Quebec farmers feeding beef or Ontario farmers feeding pork, and having the ability to move feed grains directly to our neighbour.... And he adds value to it. He has veterinarians. He has a feed mill grinding feed. He's buying supplements. He has people working in his feedlot. That alone is value added for us, rather than shipping raw, low-value feed grains overseas and trying to find markets. We view our domestic feed industry as one of the most important markets we have here in Canada for those products.

On the low-level presence policy, Canada is not clean on this issue either. I think it was quite a surprise when we found that out early in the EU negotiations, when we were pushing for low-level presence and they asked, “Well, what's Canada's policy?” Lo and behold, we didn't have one either.

So within the industry we have pulled together almost everybody in the grains sector, along with the Canadian Food Inspection Agency, PMRA, Health Canada, and everyone else, and we have been moving at relatively lightning speeds, in government terms, to pull together a Canadian policy. We're just in the final stages of that right now. In fact, there are public consultations going on as to whether the draft policy is the appropriate policy for Canada.

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

Will that have some American or international standard developed with it, so that when we develop a low-level presence standard here it's one that's accepted? As we've been developing free trade agreements around the world--and we are going to continue to do that--are we looking at international standards for low-level presence?

[Richard Phillips]

The international standard out there is called Codex, which is an arm of the United Nations, and it's what we would like to see referenced. We'd like to see something like that out there so there's one standard, whether it's Canada doing the research on the food health and safety or the U.S. or the European Union. Countries with credible regulatory systems should be able to do the testing and put this up there in an international standard and then we can start looking at one another's testing data rather than replicating everything.

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

I'd like to go for a minute to Mr. Gowland. It will reflect back in terms of the low-level presence in agriculture, because you talked about being able to grow non-GM. You're growing non-GM and IP soybeans, which are, by the sounds of it, a major part of your production.

Do you also grow any GM crops?

[Jim Gowland]

Yes, we do.

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

So if we can come with the Codex or the international standard on it, are you as a producer concerned about being a victim of a low-level presence that you can't control because you're actually growing non-GM and GM crops? The GM may not get exported to the EU, but your non-GM very well could be.

Is that a concern? And how do you deal with that, for assurances to the agriculture industry?

[Jim Gowland]

Good question, Bev.

As far as the low-level presence goes, you can look at it two ways. You can look at it very negatively and say this isn't a very good thing, but we can also have it so that you can enhance that and look at it as a competitive type of situation as well. We talked about the Codex thing here, about having more international standards to approve events that are out there. Situations of dust in shipments were alluded to, and more particularly a couple of years ago corn dust was found in a soybean shipment out of the U.S. and it was pretty hard on the market for a few months. We weren't sure where that was going to go.

If we can get these new events that are being developed genetically approved--and it's not that we're asking for a wide-open high level to be there--and if it can be accommodating for even a minuscule amount, then that can give us a competitive advantage too. I think that's been the success of the grains and oilseeds industry in Canada, particularly in soybeans and particularly in our own farm operation. The fact is, we can get down to that number that is put in place and we can do a good job because there are a lot of competitors around the world that can't. That's the one thing we have to make sure of: that we don't knock ourselves out of the market as well.

So when we do a low-level presence thing, we don't want the number too high. We just want to make sure those events are approved, that there is accommodation there, and that the low-level presence can be tolerated for a bit. We can work within those parameters. I see it as a benefit.

[The Chair, Conservative, Rob Merrifield]

Thank you.

Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

To the chamber, I do think it's interesting that both Canada and the EU have very much favoured the multinational, multilateral talks and certainly that's where we'd like to be. But the situation is such that Doha looks like it's not going to complete and here we are.

The chamber is a fairly substantial organization and I know you've favoured this agreement for a long time, as we do, as long as it's a net benefit to Canada. Being such a substantial organization, have you been informed on the results of the ninth round?

[Mathias Hartpence]

We've been consulted and there are mechanisms to consult with all stakeholders in these negotiations. Certainly with the business community it's been very extensive, but we understand that it's been done also with civil society and with all these negotiations our members obviously follow. So we are looking at this agreement as it evolves, not in terms of the high, very technical nitty-gritty of it but certainly the contours. Our sense, again, is that this is shaping up to be a very good agreement.

For example, because the membership is so large, we have an AGM every year and it involves hundreds of delegates from across the country, local chambers, SMEs for the most part, and they come and vote on policy resolutions. We like to call it the parliament of business because it operates as such. On the resolution dealing with trade and with this Canada-EU CETA, year after year the response, the pro vote, has been overwhelming.

[Wayne Easter, Liberal, Malpeque, PE]

Have you seen any net benefit analysis? There is the analysis that was done at the beginning of this. I said many times at the beginning of the discussions that this is a dream list. But have you seen any net benefit analysis from the Government of Canada on any of the recent rounds that specifies where the winners and losers will be? Don't worry, there are going to be winners and losers.

[Mathias Hartpence]

The study that was done was rigorous. It had to be done to begin these negotiations. Some of the results have moved just because a lot of economic parameters in the world have changed. There has been an economic crisis and things have changed somewhat. Yet we found within our membership, with whom we have regular discussions, that precisely as a result of that crisis four years ago now, Canadian business is more ready than ever to pursue the opportunities.

[Wayne Easter, Liberal, Malpeque, PE]

We understand that. But have you seen a net benefit analysis? This is what bothers us. We're not seeing a net benefit analysis.

[Milos Barutciski]

Let me answer the question very simply. We have not seen, from the government, a detailed analysis of the economic winners and losers that are anticipated and what the ultimate effect is projected to be. As a business community, we don't expect to see one at this stage.

This is the ninth round. It is still a negotiation. We have seen from individual members--essentially from individual companies and industries--their reactions and their estimates of what they expect, and those have been overwhelmingly positive.

[Wayne Easter, Liberal, Malpeque, PE]

I hope you'll have time to get to the IP and the patent rights.

I want to come back to what Mr. Masse talked about earlier. You said that to adapt, transition periods are necessary. One of the things I'm concerned about is the supply management industries and where they might end up after these negotiations. I'm probably going to have a little disagreement with Mr. Keddy. But at a meeting a number of us were at this week, Ambassador Brinkmann of the EU said they needed something on dairy, implying that they need it for all of their 27 member states. To his credit, he said that they don't need supply management to be abolished. But he also said that they needed bigger access, that the quota access into Canada has remained low for many years. The government continues to say that it's zero-zero. We know it's not going to be zero-zero, but I'd like them to be at least honest with the industry, which we don't seem to be able to get.

On your position on transition periods, we know that the government, in the Conservative Party policy statement of February 4, 2004, said that a Conservative government “will ensure that any agreement which impacts supply management gives our producers guaranteed access to foreign markets and that there will be a significant transition period in any move towards a market-driven environment”.

I know the chamber is not always a friend of supply management, but is that what you're talking about with the transition period? Just what do you mean?