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.
12:30 p.m.
NDP
Annick Papillon NDP Québec, QC
Do companies succeed in standing out in those sectors of the Japanese industry?
12:30 p.m.
Vice-President, Global Business Policy, Canadian Manufacturers and Exporters
In Quebec, we often think of the furniture and textile industries. It is said that those are traditional industries on their way out. Of course, those sectors have experienced difficulties over the past few years. People often say that industries such as aeronautics are cutting-edge.
In all our sectors, if companies set themselves apart and build up their products based on quality, value added and innovation, I think there is some potential. So, for companies, in all industries in Canada—
12:30 p.m.
NDP
Annick Papillon NDP Québec, QC
Basically, as you were saying, what we need is a level playing field.
12:30 p.m.
Vice-President, Global Business Policy, Canadian Manufacturers and Exporters
Yes, exactly. As long as our companies have access to international markets.
12:35 p.m.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
Thank you, Mr. Chairman.
There's been a fair amount of discussion of the regulatory hurdles that we're having to leap over and through, I guess, in Japan. I know when we had the Canadian beef producers here, they talked about a 38.5% tariff on beef, and then the gate price.... Does that affect our grain sales as well? Do they have a gate price on grain that changes as you get that grain into the country?
12:35 p.m.
Executive Director, Grain Growers of Canada
No. For some of the crops a certain quota is allowed, and after that there are just prohibitive tariffs. Some of the other crops simply have a tariff up front, so it's not quite the same as what the beef people face.
12:35 p.m.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
That seemed to be a huge obstacle for them. They understand and recognize the potential to expand that market with high-quality product. It's a great market for beef, in particular, because we offer that high-end beef and chilled pork.
One of the challenges they saw—and I don't think it will affect us in other commodities—was the difficulty the industry would face in changing some of its techniques so it could actually supply high-end beef to Japan between January and March, when typically a lot of our farmers are calving.
Are we seeing that in other commodities? With the grain, as you described earlier, we can segregate our product; we can keep it dry; and we can literally hold it for years. There's no difficulty with any of that?
12:35 p.m.
Executive Director, Grain Growers of Canada
No. I think grain is different that way in that it's not a living, breathing animal. Just the fact that people calve in the spring and the product has to be there before it's 21 months old means farmers just can't grow their animals quickly enough to be there on a timely basis.
On the grain side I would say one of the challenges would be segregation. For example, if a Quebec soybean grower wants to grow non-genetically modified beans for a very specific Japanese market, or a European market for that matter, and non-GM pays a premium price, one thing we have to have when we're dealing with these markets—since it's impossible to be at zero, because there may be one bean somewhere in the farmer's combine that fell in—is a low-level presence policy. In case there's an accident and just a minute amount of a genetically modified grain gets into that shipment—it could be corn or it could be soybean, and I'll use Quebec as an example—and goes all the way to Japan, we have to have some low-level presence policy that would allow that trade to continue without actually insisting that they have acceptance of GM food. That's probably one of the challenges we have, and it has to be part of the trade agreement.
So wherever possible there has to be a low-level presence policy to allow trade to continue.
12:35 p.m.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
That's something like the residual level that we're negotiating with the EU.
Mr. Laurin, the manufacturing challenge for automobiles is one I don't think we're necessarily going to fix tomorrow. But the fact that we have significant Japanese automobile presence not just in Canada, but in North America, should be an asset to us. What is the duty going into Japan on North American vehicles?
12:35 p.m.
Vice-President, Global Business Policy, Canadian Manufacturers and Exporters
That's.... I was hoping you wouldn't ask that.
12:35 p.m.
Voices
Oh, oh!
12:35 p.m.
Vice-President, Global Business Policy, Canadian Manufacturers and Exporters
I think it's actually at zero, but I'll have to double-check. My sense is that the tariffs aren't an issue when it comes to exporting cars to Japan.
12:35 p.m.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
Exactly. But we're getting some squeeze from the auto sector that somehow we're going to be flooded with Japanese product. We have reciprocity, so our guys may have to simply do a better job at competing.
12:35 p.m.
Vice-President, Global Business Policy, Canadian Manufacturers and Exporters
Again, I'm not a spokesperson for the auto industry, but we have other members—
12:40 p.m.
Conservative
Gerald Keddy Conservative South Shore—St. Margaret's, NS
No, I'm asking you guys for your opinion about it.
12:40 p.m.
Vice-President, Global Business Policy, Canadian Manufacturers and Exporters
There is a tariff for Japanese cars coming into Canada. You're saying maybe they need to compete. I think that's exactly what they would welcome. They'd welcome an opportunity to effectively compete in the Japanese market. Let's face it, it's much larger than the Canadian market.
But as far as their ability goes, I think the import levels for non-Japanese cars on average is about 1%, and those tend to be vehicles in very niche markets, which they don't make domestically.
Whether it's autos or any other product, if you talk to Canadian businesses they'll say they're ready to compete against anybody, domestically and globally, but they want to make sure they have reciprocity in terms of our trade agreements. Whether it's with Japan or any other market, we're pushing for the same type of thing.
Just to talk a little bit about Europe, there is a situation with Europe. On the auto side it looks as though Europe might gain more than Canada would, but I think people are willing to live with the principle that as long as we have reciprocal market access and we have a level playing field, we're willing and ready to compete with anybody. Sometimes it happens in trade deals that one side wins more than the other.
With Japan the barrier is pretty clear. It's a tariff barrier and it's very transparent. With Japan the barriers are non-tariff barriers and they're not transparent, they are opaque. So how do you actually deal with them in a trade agreement? That's actually interesting. That's probably why trade negotiators earn their money, but that's where we're looking for solutions.
12:40 p.m.
Conservative
12:40 p.m.
NDP
Jasbir Sandhu NDP Surrey North, BC
Thank you.
Richard, I just want to follow up on earlier questions. It's clear that you have to have a good infrastructure in place for our goods to be able to get to market, and having good trade deals is another factor. You've brought these concerns to the government with regard to having some difficulties with rail shipments. Somebody is looking into this matter.
What would your industry like to see the government do to facilitate a faster way of getting your products to consumers?
12:40 p.m.
Executive Director, Grain Growers of Canada
That's a good question.
There are probably a couple of things. One is that on rail service review, I think it's key that members of Parliament on all sides continue to reinforce to the railways that, you know, you guys have a virtual monopoly, you're taking excess profits, you're not providing good service: this will change. And then, if the political will is there for this to change, give the shippers more balance and more ability for redress when the service is poor. That's a really big piece for a lot of our shippers.
Even if you're in Quebec, a lot of stuff for this market is going to have to go across the country. Some of it will go by boat but a lot of it will go by rail. So it's really key to have that rail service.
Number two, I'll give the government some credit; they started up a market access secretariat. It deals, as you said, with a lot of the non-tariff barriers. So what we see is we'll be exporting canola into Japan or into China and those domestics will say, oh, there's a trace of a disease here: stop all the trade.
So we need the expertise from the government. It has to be fully funded. We need veterinarians, plant scientists, biologists. We need those sorts of people to come over there, work with the Canola Council of Canada and with the wheat growers to say, no, this is not a health risk to anyone. So we need that sort of support on the non-tariff barrier side, because as industry groups, we simply don't have the resources or the expertise to do that all the time.
Third, I think we need to finish off some of these trade deals. We've started Canada-EU. It's a great market. We have Canada-India, Canada-Japan, Canada-South Korea. We've got some pretty big markets out there. I think we need to actually close and sign off some of these, and have the resources and the time focused on them to get them done before we take on too many more.
I know they're all important. All markets are important. Even a small market like Morocco takes one-third of all our durum wheat every year. That's important too. But we have to start closing off some of these deals.
12:40 p.m.
NDP
Jasbir Sandhu NDP Surrey North, BC
Mr. Laurin, I've heard from your testimony that we are very competitive with regard to our manufacturing base, and we're able to compete with anybody in the world. The evidence we've seen in the last five or six years is that our trade deficit, especially in the manufacturing sector, has ballooned from $18 billion to almost $75 billion, I believe.
So there has been a huge change in the products that we import and export. It's clear in a lot of the manufacturing jobs that have been lost over the last number of years that this deficit has been widening. The trade deficit in manufactured goods has been ballooning over the last five years.
How can the government assist the manufacturers in narrowing that deficit so we can have well-paying jobs here in Canada?
12:45 p.m.
Vice-President, Global Business Policy, Canadian Manufacturers and Exporters
That's a very good question. We have an eight-point plan that outlines our overall priorities for manufacturing competitiveness in Canada.
In terms of the situation you outlined, I think manufacturers have gone through a perfect storm. They've seen the dollar appreciate rapidly over the last 10 years and continue to be very strong over the last few years. Because of the strength of our economy our currency has been strongly valued, not just against the U.S. dollar but against most other major currencies, so that's an issue for any company that is exporting and pricing its sales in U.S. currency, as is the case for most of our members.
We also have seen greater competition from other parts of the world. Over a three-month period in 2008 we lost 30% of our main market in the United States. So we've gone through a lot of changes. I think what we're expecting from the government is some targeted incentives to support manufacturers investing in new technologies, innovation, and skills. We've got several recommendations in terms of how we can negotiate trade agreements that work for Canadian industries.
So yes, our members have been facing some pretty big challenges, but we're looking forward and seeing how we can compete more effectively, both domestically and globally in the future, and I think our members are used to competing against companies from all over the world, right here in Canada. We have a fairly open market, by and large.
Now the issue is how we can grow some of that market share in other countries around the world, and that's where FTAs play a very important role.
12:45 p.m.
Conservative
Ed Holder Conservative London West, ON
Thank you, Chair.
It’s interesting, Mr. Phillips; just a few moments ago, you mentioned that you need the government to be closing off some of these deals.
I presume what you meant, just to be clear, was to sign these deals, get them in place, get all the....
Is that what you intended to say?
