International Trade Committee on Sept. 29th, 2011

[Kirsten Hillman]

Under those agreements, the obligations apply to the laws of the countries involved and to everything that happens in those countries. This does not affect Canadian businesses only; it is much broader. Panamanian and Jordanian companies must meet those obligations. That is being ensured through verification and regulatory systems, as well as the monitoring mechanisms in those countries.

[The Chair, Conservative, Rob Merrifield]

Thank you.

Mr. Shipley.

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

Thank you, Mr. Chairman, and my thanks to the witnesses for coming. I look forward to continuing the discussions, to ensure that these significant trade documents are to the benefit of Canada.

I believe that we engage in these discussions for a win-win. That's how an agreement should work and be sustained. We need to work within the framework so that it will continue to be a win-win for whatever country we've signed the agreements with.

Ms. Martin, in respect of your presentation on the government's privatization efforts in telecommunications, transport, and other sectors, this has been an ongoing initiative since 1999. There continue to be concerns about poverty and unemployment and the limiting factor of oil as well as water. How has privatization helped us to move ahead in the discussions with Jordan?

[Barbara Martin]

You're touching on the reform agenda that the Government of Jordan, under King Abdullah, has been putting in place. Clearly, a reform agenda of that sort is complementary to any free trade agreement, because it creates a better economic and political environment for doing business. It's still a constitutional monarchy in Jordan. It's not a democracy as we experience it here in Canada. The king has explicitly asked the new prime minister he appointed in February to undertake a series of recommendations, including establishing a constitutional court, limiting the power of the government to create temporary laws, and lowering the age limit for elected officials.

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

We're thinking about the effects that it has in being able to negotiate on a trade agreement because of the privatization, now that you have the privatization of them in terms of industries, the employment opportunities that are there in terms of for-profit. Now it would seem to me that it would relate to a very good scenario for the steps forward with an agreement.

Ms. Hillman, I'll just go to your comments. You said that upon entry into the agreement, it will eliminate tariffs on over 99% of recent Canadian exports. Key Canadian sectors such as pulses, frozen potato products, and beef will benefit from duty-free access. It's here on page three.

How do you predict that type of a benefit? This is strictly talking about agriculture right now. In Canada agriculture is one of the main industries we rely on, and its sustainability throughout, other than the supply management. We require markets. How do we predict a benefit in that comment?

[Kirsten Hillman]

What we do in leading up to and then during the course of negotiations is that we have a lot of fairly detailed consultations with the sectors of the Canadian economy that are interested in that market and are interested in expanding into or entering into it. So in that situation it would be the Department of Agriculture through its consultation mechanisms that would be talking to the agricultural constituents in Canada specifically about those products that they export, that market, and projecting into the future where they might be interested.

Usually these industry associations do have marketing plans and they do work with their members to decide where they would like to focus their efforts for export trade. Often, as I understand it, with the Department of Agriculture they work a bit hand in hand in saying we're interested in, for example, pulses in the Middle East, which are obviously a very important export. So they will say that Canada is really becoming much more productive in that area. Where are the markets? Where are the lucrative markets? Where are the markets where we're going to have the best access? And our free trade agenda and these market development objectives can work hand in hand.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Reeder, very quickly.

[Neil Reeder]

It's just a follow up, sir.

In relation to the exports, if you looked at our agricultural trade with Panama, the exports from Canada are about $100 million in value. So you're looking at tariff reductions that would affect that sector.

What are we exporting to Panama? Pork, lentils, peas, potatoes, fats, and vegetable oil, probably canola. So in that respect we're going to have an automatic advantage for Canadian exporters if they're going to have tariff reductions, because in fact half the trade with Panama is agrifoods. That's an important market, as is all of Central America.

[The Chair, Conservative, Rob Merrifield]

Thank you very much for that clarification.

Now we'll go to Mr. Côté.

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

Thank you, Mr. Chair.

Thank you for making yourselves available to answer our questions.

Questions are rushing through my head, but I am going to try and make the most of my five minutes. I am more concerned with two questions at the moment.

Based on the consultations I had in the spring coupled with my responsibility for small businesses, I have drawn some conclusions. When it comes to free trade mechanisms, small businesses are often at a disadvantage compared to larger businesses, especially in terms of infrastructure, services and processes. Larger businesses have the resources to overcome those challenges. That is one of the things I understood on Monday, as I listened to the testimony of representatives from four small Canadian businesses.

I would like to know whether the free trade projects currently being negotiated include mechanisms specifically designed to help small businesses to overcome those challenges. Things can be tough for a business owner who has only a few employees, no experts and no one to take care of the paperwork and get things rolling. Those constraints can most definitely be an obstacle to entering any particular market.

[Don Stephenson]

That is a broad question. I will try to answer it and my colleagues can then add to it.

It is absolutely true that small and medium enterprises need more support because they are less able to have people on the ground in all the markets around the world.

In terms of our market expansion—I am specifically referring to the diversification of our markets, including into Asia, into Latin America and even into Europe—it is interesting to note that small and medium enterprises actually make up a larger percentage of our market expansion than large enterprises. That shows how important it is to help small and medium enterprises.

That is why we started the Canadian Trade Commissioner Service around the world that helps small and medium enterprises in particular. That is why we are trying to expand and develop our network of offices in the markets where we are seeing the most significant developments, such as India, China and so on.

[Neil Reeder]

I just want to say that there are also regional offices to assist the private sector in Canadian provinces.

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

Okay, thank you very much.

My second question has more to do with agricultural commodities, which are affected by various factors.

Over the past few years, we have often seen massive speculation in commodities, such as wheat and other agricultural products. I am thinking of pulses, among other things, that are an open market for Canada especially with Jordan, India and I assume Panama.

Is there anything in place? I am concerned about the social consequences for those countries. Our country can be a cause of destabilization. Of course, Canada will remain a major agricultural player, but it is not the only player and we cannot solve the problem alone. Are there at least mechanisms in place to monitor, measure and try to counteract this type of destabilization? Aren’t you afraid that, with increasingly more free-trade agreements, speculation in agricultural commodities will intensify?

[Don Stephenson]

I will try once more to answer your question. Hopefully, someone will come to my rescue.

In the multilateral negotiations at the WTO in Geneva, Canada, like most countries in the world, places the highest priority on the reduction of agricultural subsidies because of the major implications they have on everyone. They distort markets. They also have very negative consequences on the poorest member countries of the WTO. In that sense, Canada is aware of the matter in its negotiating positions.

In bilateral negotiations, I don't think the implications for speculation are as significant, for one thing. For another, certainly no mechanism exists, at least to my knowledge, for tackling the matter directly.

[Kirsten Hillman]

There is a procedure in the agreements that is followed if the reduction in tariffs causes a country an internal problem. Normally, we use it at the beginning or as market conditions require. So there is a mechanism to analyze the difficulty, a safeguard mechanism as it is called, that tries to protect internal markets for a limited period and under certain conditions. It was specifically created for this transition period so that internal markets can evolve appropriately or adapt to the new import reality.

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

Excuse me, is the mechanism…

[The Chair, Conservative, Rob Merrifield]

Mr. Côté, your time has gone.

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

Fine, Mr. Chair.

[The Chair, Conservative, Rob Merrifield]

Mr. Shory.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Thank you, Mr. Chair.

Thanks to the witnesses as well.

We on this side of the table, the government, are very clear: Canadians understand that trade is fundamentally a kitchen-table issue, preserving jobs and helping people put food on their tables and provide for their families. The benefits of international trade for Canadian workers and families are very clear. One in five jobs is directly or indirectly related to trade activities. We also understand that, with trade, prices for goods and services go down and salaries, wages, and the standard of living go up.

Now, Canada is a trading nation that benefits from open and rules-based trading, and considering that, of course, and with that in mind, our government has finalized free trade agreements with nine countries in less than six years, more than any previous government in this country.

My question is twofold, as a matter of fact. One, with the global recession and the continuing downturn in the United States, how important is diversification of our markets and what are the risks if we do not pursue that? As the second part of my question, I would like you to expand on what our government has been doing to send the right signals to the world about the importance of free trade and open markets.

Please give me some time to talk about India as well.

[Don Stephenson]

With respect to the recession and the contraction of the U.S. market, I referred to it earlier, to the fact that our share...at least “share” is not the only way or perhaps the best way to measure your market.... But our competitiveness in the U.S. market is certainly under some pressure.

Given Canada's heavy dependence on trade, the way I like to express it is that Canada represents 0.05% of world population and 2.6% of world trade, and the difference between those two numbers is our high standard of living. So clearly, diversification is still job two, but it is increasingly important. The risk is our heavy reliance in this economy, a developed country with only 34 million consumers.... If you're only producing for the Canadian market, you're probably finished for the year at some time in March. We need world markets.

With respect to the signals we have sent to the world, first of all, the world has noticed that Canada has taken a very aggressive approach in trade, particularly in bilateral trade negotiations. The minister has commented that we are now negotiating with over 50 countries, and there has never been such an active trade negotiation agenda in Canada.

As well, other signals to world markets have also been noticed and commented on in the World Trade Organization report on the activities of members: Canada's unilateral elimination of tariffs on inputs. We've established a tariff-free zone on industrial inputs, reducing the cost for our businesses and making their exports more competitive. That's what I would point to.

[The Chair, Conservative, Rob Merrifield]

Very quickly, Mr. Shory. You have one minute.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Thank you, Mr. Chair.

I was born and raised in India, and this question will be for Mr. Macartney because he has been working in that region. Even though India has on record a population of 1.2 billion or so, which is the second-highest population in that region, I believe that is not the current census, that it was done some time ago. It seems that very shortly, if not as of today, India will be the most populated country in that region.

Considering that and also the diaspora of 1.2 million Canadians who are here from the Indian region.... First of all, I thank you very much for working so hard in that region and bringing about good results that will benefit not only India but Canadian people here as well. Quickly, the question is--

[The Chair, Conservative, Rob Merrifield]

You had a minute. You had a chance for a question but you gobbled it up.

Just before I let Mr. Cannan on the floor, we wanted to say thank goodness he's here. He had an accident with a bike on the way home last evening and injured himself quite badly but he's still here fighting it out.

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

I got hit by a car, and the good news is the car is okay.