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.
Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
I believe so. We have our modelling expert in the gallery, and he can verify a few questions.
Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
The answer is yes.
NDP
Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
We did assume capital mobility.
NDP
Don Davies NDP Vancouver Kingsway, BC
Did you assume a state of balanced trade, neither deficit nor surplus?
Assistant Deputy Minister, Trade Policy and Negotiations Branch, Department of Foreign Affairs and International Trade
Would it be easier to call our modelling expert to the table?
NDP
Don Davies NDP Vancouver Kingsway, BC
My last question was did you assume a state of balanced trade, neither surplus nor deficit?
Shenjie Chen Head, Research Projects Unit, Department of Foreign Affairs and International Trade
No, we didn't make that assumption.
NDP
Head, Research Projects Unit, Department of Foreign Affairs and International Trade
No.
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?
Head, Research Projects Unit, Department of Foreign Affairs and International Trade
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.
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.
Head, Research Projects Unit, Department of Foreign Affairs and International Trade
We usually assume full employment to be something around 4% to 5% unemployment. That's the normal range of the unemployment rate.
NDP
Don Davies NDP Vancouver Kingsway, BC
Are you assuming full employment to be unemployment in the 4% to 5% range?
Head, Research Projects Unit, Department of Foreign Affairs and International Trade
The normal range is 4% to 5% in an economy, and that's the range we believe is full employment.
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?
Head, Research Projects Unit, Department of Foreign Affairs and International Trade
Full employment.
Head, Research Projects Unit, Department of Foreign Affairs and International Trade
Full employment means everybody is employed, all the labour.
NDP
Don Davies NDP Vancouver Kingsway, BC
Is it possible for you to provide to this committee the modelling that went behind this agreement?
Head, Research Projects Unit, Department of Foreign Affairs and International Trade
Yes.
