International Trade Committee on Nov. 22nd, 2011

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

Thank you, Mr. Chair.

Thanks to our witnesses.

Mr. Trew, I'm glad you're here today.

I'd like first of all to clarify some of the comments. We've been critical of the negotiations and of free trade agreements in general for Canada's economy. One in five jobs is linked to exports, and trade represents over 60% of our overall GDP. The reality is that if Canada had to survive only on what was sold within Canada, it would be nowhere near as successful and prosperous as it is today. It's important to realize what free trade agreements do. They open up opportunities for businesses of all sizes and help our economy be stronger and more successful.

You also made some comments and expressed concerns with regard to the negotiations and the ability of Canadians to buy locally produced products. I want to assure you that within our trade agreement with the European Union, as with other trade agreements, negotiations will not limit Canadian consumers' access to safe and healthy food, nor will it limit their choice between locally produced or imported products. Coming from an agricultural community within the Okanagan Valley, I know it's very important to build to support our local and our national agricultural community.

Specifically with regard to the negotiations, one of the concerns I hear from my constituents once in a while.... I get letters from your national chairperson in a fear-mongering style looking to raise funds. Maude Barlow sends out a letter saying to fight CETA at all three levels of government and to lobby the Harper government to hold proper parliamentary debates. She asks people to send her money now so they can continue their crusade. My concern is that we want to work together. Why do we always have to do things in a controversial way? Why can't we look at what's best for Canada and move forward? I haven't seen one free trade agreement you've ever supported.

Coming from a local government background--I spent nine years working for the municipal government, and I'm going on six years as the federal member of Parliament for my community--I am concerned by the aspect of some of your comments. You talked about the Federation of Canadian Municipalities. Why you are so critical of FCM's position? What consultation have you had with them? We've heard from President Berry Vrbanovic that FCM welcomes the federal government's commitment to a CETA deal that creates new jobs and opportunities for Canadians while protecting the local decision-making that is the lifeblood of strong, healthy Canadian communities.

I know you commented in your opening statement that the MUSH sector is not worth the sacrifice, yet we hear from FCM, the Federation of Canadian Municipalities.... And the Association of Municipalities of Ontario sent out a letter to their members about how the Canadian-European Union relationship holds great potential for growing Canada's trade and collective prosperity. Minister Fast met with FCM in B.C. and with their executive, and he has reassured them through a letter.

What consultation have you had from FCM, and why don't you support local government?

[The Chair, Conservative, Rob Merrifield]

Let's get an answer there.

[Stuart Trew]

We absolutely do support local government, and we do speak to the FCM when we can. They know very well what our position is and how it differs from their own. I would also say that the FCM position is not unconditional support for CETA. It is conditional on seven principles they've laid out, which I think you've heard in previous testimony from the FCM. It's conditional, for example—in some sectors—on the ability to favour local industry and local jobs and keep those conditions, which would disappear under CETA, depending on what's committed or not.

The FCM position is conditional, but it's also not unanimous among municipalities. For example, the Union of British Columbia Municipalities' official position is that the MUSH sector should be carved out and completely excluded. In fact, there are other municipalities across Ontario and Canada that are taking that same position and passing resolutions that are different from the FCM position.

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

I have a question for Mr. Lee.

You commented in your opening remarks that you had some discussions and debates with the Council of Canadians during the NAFTA discussions. I just wanted to know your feelings. It's quite clear that the Council of Canadians teamed up with the NDP to oppose the CETA agreement. What's your perspective on protectionist policies that would impose trade barriers and raise taxes? How do you feel about this?

[Prof. Ian Lee]

The point I didn't make clear in my opening remarks is I have a very utilitarian view of this. We have roughly a third of our population—the baby boomers—who are going to be retiring in the next ten years. Everyone knows this. Our costs forf health care and pensions are going to skyrocket through the sky. Anybody who supports—and I think most Canadians do support—generous social programs of pensions, public health care, and so forth should be supporting the maximization of economic growth to generate the taxes to pay for the social programs.

To me, it's a contradiction to support a high level of social programs while simultaneously putting the brakes on economic growth. My late mother, who I adored enormously, would drive down the road in her late eighties with one foot on the gas and one on the brake. That's not the way to drive a car. This is why I disagree with the Council of Canadians' position. They and the NDP support high levels of social programs. By the way, this is the problem of southern Europe: they want the programs, but they won't generate the growth to pay for the programs.

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

I have one final comment to Mr. Trew.

We've heard from various witnesses through our committee talking about consultation. We listened to Maude Barlow's anti-trade campaign in Guelph, and she said it's absolutely deliberate that they are keeping it quiet. Within our committee, we've heard from various witnesses from the Chamber of Commerce and Andrew Casey from the Forest Products Association. Regarding this particular CETA deal, we've been working very closely with the officials and the government in structuring the deal and there are two components of it they're very supportive of.

Jacques Pomerleau, the president of Canada Pork International, said “We really appreciate having been consulted since the very beginning of the negotiations and being kept appraised of all the latest developments pertaining to our products.... We do, and we're very pleased with the way it's going. We are consulted on even the small details.”

As I mentioned, FCM has been consulted. How can you say we are not paying attention to what Canadians and our constituents want within this agreement?

[Stuart Trew]

Thanks very much.

Very briefly, the Council of Canadians is not anti-trade. We are critical of the elements.

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

Which trade agreement have you supported?

[Stuart Trew]

Which trade agreement has been about trade over the past five years? These are about much more than trade, as I said.

[The Chair, Conservative, Rob Merrifield]

Answer the question and then we will go on.

[Stuart Trew]

Sure.

Absolutely, business sectors were asked up front to provide examples--for example, which health and safety measures in the European Union they would like to see removed through these negotiations. Obviously the business sector has been consulted much more closely than other groups.

Just to reiterate something from my presentation, we did ask to meet with consecutive trade ministers, and were turned down on the basis that we could speak with the negotiators. Those discussions are not being recorded.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Easter.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

Thank you to the witnesses.

I would say in beginning that in terms of her fund-raising tactics, Maude must have taken her fund-raising style from the Conservatives. They used the same tactic during the gun control debate and in many other issues. So you don't need to feel bad about that, because they set the pattern for how to raise money that way.

I would as well like to put on the record that I congratulate the Council of Canadians. I may not always agree with you on everything, for sure, but I congratulate you on going out and raising that money and doing some very important research, because we need research institutions from a different political perspective from those of the C.D. Howe Institute and the Fraser Institute. So I congratulate you on that.

I am pleased to hear the position you outlined in the beginning, that the Council of Canadians is not basically saying “full stop” to the discussion. Scott Sinclair, when he was here the other day, talked about the whole area of investment as well.

You're basically telling us to have a serious look at investment protection, and you're right. There are a few corporations out there around the world that have greater wealth than countries, and they can use the investment protection under a trade agreement to basically break a country's sovereignty, and especially local governments'. How do we, in an agreement, protect against that?

[Stuart Trew]

In an agreement, ideally you would just remove the ability of corporations to directly invoke their own protections. You could take out the investor state dispute process, as Australia has done—and other countries, such as Ecuador.

I'm not an expert on this, but there would be, for example, somebody like Gus Van Harten or David Schneiderman and others from York University who might have a better idea of the kinds of reforms you could propose.

The first was to exhaust local legal remedies. You could also have a set roster of arbitrators so that you'd know who you were going to get looking at your case; you could have a right of appeal; you could have more transparency and ability for third parties to make depositions and affect the results of the case.

So there are things you can do to make it less corporate-friendly, to basically balance out the process.

[Wayne Easter, Liberal, Malpeque, PE]

You mentioned Australia. They ran into some trouble on investment protection, I believe, and we certainly have in Canada, under the free trade agreement—or with NAFTA, I'm not sure which it was—with Exxon, to whom I think the country had to pay out $1.8 billion or thereabouts for future lost profits.

What has Australia done to protect themselves?

[Stuart Trew]

They put out a new trade policy this morning, and I referenced it. I have a hyperlink I can share with committee members, if they're interested.

Basically, they're not going to include investor-state dispute procedures within their bilateral or regional trade agreements anymore, which creates an interesting question around the Trans-Pacific Partnership talks, because Australia is involved, and other countries are seeking those kinds of protections in that trade deal.

Basically, their position was that it's an Australian company's own responsibility to absorb the risk of investing in other countries, and that when it comes to home territory in Australia, foreign companies should have the same treatment as local companies. That would mean requiring them to go through the courts when they have investment disputes with government measures.

In countries such as Canada and in the EU, that's completely conceivable, because we have highly developed legal systems. You don't need this added protection for investment.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you.

I would suggest, Mr. Chair, that we need to follow up with further witnesses in that investment area, whether the people Mr. Trew has suggested or others. I seriously think that we need to look into that area.

Just turning to you for a moment, Mr. Lee, we're seeing lots of attacks recently on the supply management system from people such as you.

Could you explain to me the formula under which milk prices are established?

[Prof. Ian Lee]

I have it in my papers at home. It's based, if you want a generic, high-level explanation, partly on cost. They estimate the costs of the producers. They meet and they consult with producers and wholesalers.

But if you mean do I have the algorithm with me today, the answer is no, I do not.

[Wayne Easter, Liberal, Malpeque, PE]

Based on your research, would it be fair to say that under the supply management system at any given time, because the formula is based on the most efficient producers, yes, there are people making reasonably good money but there are also producers at the low end who are in fact losing money, the way the formula exists? Is that fair to say?

[Prof. Ian Lee]

It probably is.

[Wayne Easter, Liberal, Malpeque, PE]

Would you—

[Prof. Ian Lee]

I say “probably” because I don't have the financial statements. I'm a former banker. If I had the financial statements...and those are private, of course.

[Wayne Easter, Liberal, Malpeque, PE]

I know for a fact that there are people losing money in dairy at the current prices level. How do you overcome—because our major competitor, the European Union.... CETA is one thing, in terms of cheeses, etc., coming in here. But the concern would be with the United States, to a great extent.

Do you see the fact—and I've been in some of these operations—that 8,000 or 12,000 cows are milked with cheap Mexican labour, poor little immigrants who are scared they'll be shipped out of the country, getting paid next to nothing a day? And every three or four years we have a cull cow program in the United States that is to assist the industry in the States, because it's a poorly run system.

Do you expect us to compete against that in the dairy industry?

[The Chair, Conservative, Rob Merrifield]

I'm going to remind you as a questioner, Mr. Easter, that when your time is that tight, if you have not given your question, you will not get an answer.

[Wayne Easter, Liberal, Malpeque, PE]

That's fine. I'm just wondering whether that's the system Mr. Lee is advocating.