Evidence of meeting #35 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 japanese.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Jean-Michel Laurin  Vice-President, Global Business Policy, Canadian Manufacturers and Exporters
Richard Phillips  Executive Director, Grain Growers of Canada
Janice Hilchie  Vice-President, Government and International Relations, Canadian Life and Health Insurance Association Inc.
Peter Wilkinson  Senior Vice-President, Government Relations, Manulife Financial, Canadian Life and Health Insurance Association Inc.

12:05 p.m.

Executive Director, Grain Growers of Canada

Richard Phillips

One area I'm talking about is the tariff escalation where they allow the raw products into Japan at one tariff rate, then a much higher tariff rate if you want to send any value-added products.

Canola is a good one. You can ship raw canola seed, but you pay a much higher penalty if you want to ship canola oil. That canola oil, when you're adding that value, means manufacturing jobs back here in Canada.

So we see a free trade agreement as the opportunity to actually tackle those tariff lines and bring them down, whereas simply negotiating outside of a free trade agreement the answer is always a very respectful no. No matter how many times you ask, it's still no.

12:05 p.m.

Conservative

Bev Shipley Conservative Lambton—Kent—Middlesex, ON

Do you have any idea what that value-added would actually add in value to our producers if we were able to bring those in closer perspective?

12:05 p.m.

Executive Director, Grain Growers of Canada

Richard Phillips

I would have to make a commitment to come back with some numbers, through the chair.

12:05 p.m.

Conservative

Bev Shipley Conservative Lambton—Kent—Middlesex, ON

Okay. Perhaps you could help us with that, because I think it's important to the industry.

Mr. Wilkinson, you mentioned something that hasn't been brought up; you were talking about the need to work on a better or a more effective dispute resolution mechanism.

Can you tell us what you mean by that in terms of “what now” in some areas that are seen to be an issue and what you would see as an effective mechanism to talk about?

12:05 p.m.

Senior Vice-President, Government Relations, Manulife Financial, Canadian Life and Health Insurance Association Inc.

Peter Wilkinson

I'll make one or two comments, then give it to Janice.

I think we'd be in favour of an investor-state dispute settlement mechanism to be worked into this agreement. If we had an issue, it would allow an insurer like Manulife to go directly to the Japanese government to say that we had a problem to deal with.

12:05 p.m.

Vice-President, Government and International Relations, Canadian Life and Health Insurance Association Inc.

Janice Hilchie

Yes, I agree with what Peter has said, that the existence of an investor-state dispute settlement mechanism would give a greater level of security to Canadian insurers investing in Japan. Its existence helps to keep governments in line with their obligations under the agreements. The ability to go straight to a government, rather than go through our national governments, would provide an extra level of comeback.

12:10 p.m.

Conservative

Bev Shipley Conservative Lambton—Kent—Middlesex, ON

Is it in place in other areas that you're trying to refer to?

12:10 p.m.

Senior Vice-President, Government Relations, Manulife Financial, Canadian Life and Health Insurance Association Inc.

Peter Wilkinson

We have something similar to that in NAFTA and so on. It's trying to replicate that. Under a WTO sort of arrangement, a private company would have to go to its own national government first, convince its national government first that they want to take on the issue, then they go to the government where you're having the problem. It slows it down quite a bit and drags it out.

12:10 p.m.

Conservative

Bev Shipley Conservative Lambton—Kent—Middlesex, ON

I think my time is up. Thank you very much.

12:10 p.m.

NDP

The Vice-Chair NDP Don Davies

We're now going to go to Mr. Sandhu for five minutes.

Before we do, I'm going to take a minute of that and pursue that line of questioning, if I could.

Investor-state provisions, I'm informed, generally had their origins in us having trade agreements or FIPAs with countries that have immature judicial systems. I think one of the reasons chapter 11 was provided in NAFTA was because of our concern over the Mexican judicial system.

I also know Australia and India now do not put investor-state provisions in their agreements. Because Japan obviously is a mature democracy with an established rule of law legal system, I'm wondering whether or not we really need an investor-state provision in an agreement with Japan.

I'll throw that out and get your comments on that before I turn it over to Mr. Sandhu.

12:10 p.m.

Vice-President, Government and International Relations, Canadian Life and Health Insurance Association Inc.

Janice Hilchie

We're actually not aware of that provision ever being used in the case of Canadian insurers under the NAFTA arrangements or anywhere else. It just, on the face of it, appears to be an extra level of security, and given the situation with Japan Post, for example, would give more latitude to our companies operating there to directly address the issue with the Japanese government.

That being said, we are getting very good support from our own Canadian government on this issue, and there is an understanding that Japan is offline with its obligations under the GATS and on the Japan Post issue. We're certainly working with our own government as well on that issue.

12:10 p.m.

NDP

The Vice-Chair NDP Don Davies

Thank you.

Mr. Wilkinson.

12:10 p.m.

Senior Vice-President, Government Relations, Manulife Financial, Canadian Life and Health Insurance Association Inc.

Peter Wilkinson

I have nothing to add. Thank you.

12:10 p.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

Thank you.

Mr. Sandhu.

12:10 p.m.

NDP

Jasbir Sandhu NDP Surrey North, BC

I'm going to follow up with one more question to Mr. Laurin.

I want to focus on the large manufacturing automobile industry in the southern Ontario region. I think that's one of the concerns that has come up repeatedly in this committee.

Historically we know Japan has been very protective of its automobile industry and we've had trouble getting access to that market, whether it's through trade barriers or non-trade barriers.

Would you see, in the agreement that's being negotiated, this being a key part of it, that we have access to the Japanese market in regard to automobile sales and parts sales? Would you see this as a key element of this EPA?

12:10 p.m.

Vice-President, Global Business Policy, Canadian Manufacturers and Exporters

Jean-Michel Laurin

I can't speak on behalf of the auto sector—I assume you'll be inviting them—but I can tell you that we have members in the automotive sector, including their supply chain partners, and it's a key issue in these negotiations.

Obviously we have an auto tariff, and despite that we still see motor vehicles as a number one export from Japan to Canada.

You're right; I think my sense when we talk to our auto members is they're willing to compete around the world as much as they have an open and reciprocal market access. With Japan I think there have been some persistent attempts by Canadian and U.S. automakers to penetrate that market throughout the years, but they've been facing some pretty steep barriers in terms of getting their products certified for sale to that market, changing requirements, and difficulties setting up their own distribution and service networks.

I'd rather let them speak on those specific issues. All I can tell you is that this is a critical aspect of these negotiations. We can expect Japan to want to put this issue on the table, and we should definitely put the issue on the table as well.

That being said, for us to be able to support the agreement once it's finalized, I think it needs to be something that provides a net benefit to the manufacturing sector, and the auto sector is really one of the key sectors in the Canadian manufacturing sector. To the extent that it addresses their issues, we'll be able to support these negotiations and the conclusion of an agreement.

I hope that answers your question.

12:10 p.m.

NDP

Jasbir Sandhu NDP Surrey North, BC

Thanks.

Mr. Phillips, we met earlier this morning. It's good to see you again. We talked about net benefits to the agriculture industry in Canada. We also talked about some trade barriers, not only the Japan side or other countries, but there are also some trade barriers in regard to our ability to get our products to destinations. Increasingly we're moving towards just-in-time processing.

Can you expand on that and let the committee know what those barriers or issues are here in Canada?

12:15 p.m.

Executive Director, Grain Growers of Canada

Richard Phillips

Thank you very much for the question.

In our discussions we were talking about how it's one thing to open up the markets and get access, but can we actually get the grain from the prairies to that marketplace in time? Can we get identity-preserved soybeans from Mr. Easter's island to the Japanese or European market on time?

One of the challenges we have there, probably one of the most significant challenges, is our rail system. We pay a lot of money for the freight, and we can afford to pay the money but only if we're going to get good service with that freight.

One of the challenges, and we intend to keep the government's feet to the fire on this one, is to ensure that we see a rail service review go through that has meaningful and real pieces to it that shippers can use to ensure that we get the freight on time for what we need, and that would go far beyond just the agriculture sector. That would go for many of our manufactured goods and our lumber and our forestry and everyone else. That's one of the key pieces we need to see, or we're not going to be able to....

The free trade agreement gives us the opportunity to be successful, but if we can't move our goods and services there in a timely manner, we will not be able to take advantage of those opportunities.

12:15 p.m.

NDP

Jasbir Sandhu NDP Surrey North, BC

Any successful industry would need an infrastructure in place to be able to get their goods to the market.

We talked about this earlier, and I take it that you have approached the government in regard to some of the difficulties that you're having getting your product out to the market. Has the government offered any solutions?

12:15 p.m.

Executive Director, Grain Growers of Canada

Richard Phillips

There's a rail service review under way. Mr. Dinning is chairing that, and it's one of those things where you start off with a high level of ambition but the longer the railways lobby against you the weaker the ambition seems to get. We are working; we have a coalition that represents approximately 90% of the freight revenue of CN and CP. It's a huge coalition. We're continuing to pressure the government and Mr. Dinning to ensure that it's real, that those provisions are real, that it doesn't get watered down and give the power back to the railways.

This opportunity may not come again for another 20 years.

12:15 p.m.

NDP

The Vice-Chair NDP Don Davies

Thank you, Mr. Phillips.

Next is Mr. Hiebert from the government for five minutes.

12:15 p.m.

Conservative

Russ Hiebert Conservative South Surrey—White Rock—Cloverdale, BC

Thank you.

I'm going to turn back to Ms. Hilchie and Mr. Wilkinson and discuss the Japan Post Insurance situation just so that members of the committee can further appreciate, and I can further understand, what's happening there.

What you've told us so far is that this is a publicly owned company with four groups, and effectively then the Japanese people own this insurance company as they do the postal service and banking and so on.

What's the downside to having the public own this insurance company? Is it akin to putting their national interest at risk if there was a catastrophe like we saw?

12:15 p.m.

Senior Vice-President, Government Relations, Manulife Financial, Canadian Life and Health Insurance Association Inc.

Peter Wilkinson

Mr. Hiebert, I would say the issue for us is not so much who owns it as much as how it's allowed to operate in the marketplace in that it has special privileges that we don't have.

Under the new act, they'll be allowed—this is a simple one, and I'll go back to it again—to offer product by notification where we will all have to, in the private sector, get approval from the regulator. We actually...that's a good idea.

12:15 p.m.

Conservative

Russ Hiebert Conservative South Surrey—White Rock—Cloverdale, BC

Let's take that a little bit further. You did mention in your remarks that you would like them to be required to offer universal and public services in perpetuity. Basically, they're not providing the whole spectrum of insurance products that Manulife or maybe other competitors provide.

Can you help us understand why that's necessary? How can you force a company or expect a company to provide products that they choose not to provide?

12:15 p.m.

Vice-President, Government and International Relations, Canadian Life and Health Insurance Association Inc.

Janice Hilchie

In the context of the legislation that was just passed, that legislation, if enacted, would impose upon Japan the obligation to provide those products. It's state owned and the government wants to apply that requirement to it, and we are saying that private insurers, including foreign insurers, should also have access to those distribution networks provided by Japan Post.

Our issue is really that there needs to be national treatment for all insurers operating in Japan, and currently Japan Post has several very strong advantages over other competitors.