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Evidence of meeting #33 for International Trade in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was negotiations.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Ian Burney  Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
Denis Landreville  Lead Negotiator, Regional Agreements, Trade Negotiations Division, Trade Agreements and Negotiations Directorate, Department of Agriculture and Agri-Food
Shenjie Chen  Head, Research Projects Unit, Department of Foreign Affairs and International Trade
Phil Calvert  Director General, North Asia Bureau, Department of Foreign Affairs and International Trade

11:45 a.m.

Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade

Ian Burney

I believe so. We have our modelling expert in the gallery, and he can verify a few questions.

11:45 a.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

You think the answer would be yes.

11:45 a.m.

Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade

Ian Burney

The answer is yes.

11:45 a.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

Did you assume no international capital mobility?

11:45 a.m.

Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade

Ian Burney

We did assume capital mobility.

11:45 a.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

Did you assume a state of balanced trade, neither deficit nor surplus?

11:45 a.m.

Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade

Ian Burney

Would it be easier to call our modelling expert to the table?

11:45 a.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

Sure.

11:45 a.m.

Conservative

The Chair Conservative Rob Merrifield

You can come forward.

11:45 a.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

My last question was did you assume a state of balanced trade, neither surplus nor deficit?

May 1st, 2012 / 11:45 a.m.

Shenjie Chen Head, Research Projects Unit, Department of Foreign Affairs and International Trade

No, we didn't make that assumption.

11:45 a.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

Did you make any assumption about a trade deficit or surplus?

11:45 a.m.

Head, Research Projects Unit, Department of Foreign Affairs and International Trade

11:45 a.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

You assume full employment between the countries, but that's not the case. We have unemployment in Canada officially somewhere in the 7% to 7.5% range. I don't know what it is in Japan.

Can you explain that methodology? Why wouldn't you plug in the actual unemployment rates of the countries?

11:45 a.m.

Head, Research Projects Unit, Department of Foreign Affairs and International Trade

Shenjie Chen

The reason is that trade agreements take time to implement, usually about ten years' time. With negotiations plus implementation, maybe it's more than ten years. Over a ten-year period, it's very hard to make assumptions about employment. That's the international norm. We assume full employment in an economy. That's the assumption we make.

11:45 a.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

I'm not an economist, but it would seem to me that making an assumption of full employment, even in ten years, is pretty unrealistic. It's highly unlikely that there's going to be full employment in both countries in ten years.

11:45 a.m.

Head, Research Projects Unit, Department of Foreign Affairs and International Trade

Shenjie Chen

We usually assume full employment to be something around 4% to 5% unemployment. That's the normal range of the unemployment rate.

11:45 a.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

Are you assuming full employment to be unemployment in the 4% to 5% range?

11:45 a.m.

Head, Research Projects Unit, Department of Foreign Affairs and International Trade

Shenjie Chen

The normal range is 4% to 5% in an economy, and that's the range we believe is full employment.

11:45 a.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

I'm just interested in what you used in the modelling. Did you use a full employment assumption in the modelling, or an unemployment rate of 4% to 5% in the model?

11:50 a.m.

Head, Research Projects Unit, Department of Foreign Affairs and International Trade

Shenjie Chen

Full employment.

11:50 a.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

Full employment—that's 0%, isn't it?

11:50 a.m.

Head, Research Projects Unit, Department of Foreign Affairs and International Trade

Shenjie Chen

Full employment means everybody is employed, all the labour.

11:50 a.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

Is it possible for you to provide to this committee the modelling that went behind this agreement?

11:50 a.m.

Head, Research Projects Unit, Department of Foreign Affairs and International Trade