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Evidence of meeting #36 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 industry.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Andrew Casey  Vice-President, Public Affairs and International Trade, Forest Products Association of Canada
Bob Kirke  Executive Director, Canadian Apparel Federation
David Worts  Executive Director, Japan Automobile Manufacturers Association of Canada
Kathleen Sullivan  Executive Director, Canadian Agri-Food Trade Alliance

11:40 a.m.

Conservative

The Chair Conservative Rob Merrifield

Okay.

Thank you very much for that.

And thank you for the questions. You were just about out of order again, attacking my burlap.

Go ahead, Mr. Keddy. The floor is yours.

May 10th, 2012 / 11:40 a.m.

Conservative

Gerald Keddy Conservative South Shore—St. Margaret's, NS

Thank you, Mr. Chair.

Welcome back to our witnesses. Both of you have appeared before this committee a number of times, and there's always good discussion.

You had some very informative points, Mr. Kirke, on the apparel business. When we look at agreements, sometimes the obvious is missed. I'm always a little bit shocked, how that happens, but obviously it does.

I want to start off with a couple of questions on forestry. It's an industry that's very much in my background. I'm very familiar with it in the east coast of Canada.

Your point's well taken on having one customer. I've mentioned it many times at this committee. Eastern Canadian mills used to depend very much on Europe as a marketplace. We got shut out of Europe for phytosanitary reasons, so $900-million worth of wood that came out of Nova Scotia alone to Europe suddenly turned south. By far the Americans are taking that portion, that billion dollars' worth of wood products coming out of Nova Scotia, and Europe is getting a few hundred thousand. We have an advantageous position, of course, because we don't fall under countervail. We do fall under anti-dumping, when it happens, but it's helpful to us.

I would take a moment to congratulate you and your industry on helping out after the tsunami. Good for you. That's what neighbours do for neighbours. That's nice to see.

The fact that we do have a mature marketplace in Japan, the fact that we do have a culture that's traditionally built with wood, as we do in North America, particularly in Canada, should help us to move this forward. I would ask, however, what role modern forestry practices, certification in particular, has played in bringing that product into Japan.

11:40 a.m.

Vice-President, Public Affairs and International Trade, Forest Products Association of Canada

Andrew Casey

Thank you for that. That was a point I neglected to mention in one of the earlier questions, I think from Mr. Easter, on how we improve our competitiveness in that marketplace and what we're doing.

The one thing I did leave out was certainly our environmental performance. Japan represents a market that values environmental performance. In fact it's one of the criteria, one of the table stakes: you can't get into the marketplace unless you can show that your environmental performance on the ground, your emissions and other things, are up to speed and what they would hope to see.

In that regard, our industry's record of environmental performance is second to none. We have the most certified forests in the world. We're a leader in that regard. We've gotten our emissions down considerably. Certainly our carbon dioxide emissions are down by 60% to 67% since 1992.

There are other elements to it. The Canadian Boreal Forest Agreement is another symbol or sign for that marketplace that our environmental performance is the best in the world. All of that very much helps us from a competitive standpoint in that marketplace, and we're encouraged by it.

Just to your earlier comment, hopefully the Canada-European deal helps us regain some of that market share. I think we talked about that the last time I appeared before this committee. That will be an important deal where we get rid of the tariffs and the quota on the plywood aspect, and then hopefully that'll open up market again for the east coast producers.

11:40 a.m.

Conservative

Gerald Keddy Conservative South Shore—St. Margaret's, NS

The other point on the Canada-EU, and I think it's worth mentioning, is that there's really no reason why we can't get into raw dimensional lumber going back into the European Union, as long as there's no bark or wane on that wood. It's just a matter of inspection. We used to have it, so there's no reason we shouldn't be able to get back to it.

Mr. Kirke, your comments, I think, were very apt and much appreciated. I realize that the rules of origin must be a nightmare in the fabric industry; I mean, I just can't imagine.

Has the advent of synthetics imposed anything on that?

11:45 a.m.

Executive Director, Canadian Apparel Federation

11:45 a.m.

Conservative

Gerald Keddy Conservative South Shore—St. Margaret's, NS

Okay: simple question, simple answer.

11:45 a.m.

Executive Director, Canadian Apparel Federation

Bob Kirke

We have an 18-year agreement under NAFTA, and no one wants to change it. The world has passed NAFTA by in terms of a trade arrangement.

A small provision allows you to access a certain quota of fabric that isn't from the trading region; it's called a TPL, tariff preference level. So you can use some imported fabrics in certain quantities to construct a garment here and ship it to the States. There's one for wool fabrics and one for cotton and man-made fibre.

Along comes hemp, which doesn't fall into either. If anyone exerted even the slightest amount of common sense they'd say that we should amend this, that we should change it so that we can qualify. No. It's a tiny but inflexible thing. It doesn't matter what new fibres come along, because it's as if they're put into a basket or they're not. I'm not sure anyone wants to open up NAFTA, but the reality is that if some common sense prevailed we could sit down with the Americans tomorrow and change provisions in NAFTA. No one would oppose that, but it doesn't happen. Again, when you set the bar so high, as they did in creating this rule, it's impossible to meet.

11:45 a.m.

Conservative

Gerald Keddy Conservative South Shore—St. Margaret's, NS

It really wouldn't pertain to our ability to sign a bilateral agreement with Japan, but in the Trans-Pacific Partnership would you expect the Americans will be looking for the same type of NAFTA-based rules on fibre?

11:45 a.m.

Executive Director, Canadian Apparel Federation

Bob Kirke

There's quite a debate in the States because the U.S. textile industry is dead set against it. Vietnam is on their brain, if you will; they just go crazy about Vietnam. So, absolutely, I don't see their having a lot of flexibility in the negotiations. They are captive to that industry.

11:45 a.m.

Conservative

The Chair Conservative Rob Merrifield

Thank you very much.

We're going to have two more questioners and will split the time. We'll try to get our next panel a little ahead of 12 because we have some committee business near the end of the next hour's session.

Mr. Davies, you have a couple questions.

11:45 a.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

We will have one each.

11:45 a.m.

Conservative

The Chair Conservative Rob Merrifield

Okay, that's fine, and then we'll go to Mr. Hiebert.

11:45 a.m.

NDP

Don Davies NDP Vancouver Kingsway, BC

Thank you, Mr. Chairman.

I think the current policy on hemp is that you're okay growing five plants of hemp without, as it were, getting into too much trouble. I'm teasing: It's under six.

Mr. Kirke, when we think about textiles and the production of clothing and free trade allowing garments made all over the world to come into our country, it is a fact that many clothes and products are made in countries where people are being paid cents an hour as opposed to dollars an hour, and in appalling conditions, with child labour and those kinds of things.

Besides the impact that has on our domestic companies' ability to compete with that—I don't know how they compete in making products when they have to pay workers' compensation and EI premiums and minimum wages, etc.—I'd like you to comment on how that may factor into this. Also, does your organization have any ethical concerns about the free flow of goods into our country, in this case garments, made in what everybody would agree are appalling conditions. That's not Japan, of course.

11:45 a.m.

Executive Director, Canadian Apparel Federation

Bob Kirke

Understood.

You play the cards you're dealt sometimes. We didn't ask in 2003 for the Canadian government to eliminate duties on least developed countries. In fact we came to this committee and to those in the Senate and said, don't do that. But they did. You have to think about what was prevailing in 2003: We had high and quite restrictive import quotas on many countries, and we had at that time an 18% duty on those garments.

So it was done pretty much overnight. I'm the guy who got the call from a DG in Industry who literally said that everything was going ahead on December 22, 2002, and that effective nine days later the duties were going to zero and there would be no quotas.

So my first comment is that government policy directs the industry. All of our major retail customers in Canada were following just as closely as we were, and so they would say to their suppliers, “Well, it's done. Go to Bangladesh. We have a factory for you. Go do the product there”.

That's certainly not what I would consider reasonable industrial policy, but that's exactly what happened in 2003. And yes, we are well aware that there are different sets of circumstances there, and again, the companies that remain in Canada don't directly compete with that product. That's gone forever. They produce better goods at higher prices.

I would also say that those companies are aware of what's going on there and they are trying to deal with that. Bangladesh has recently had some very serious problems and we're working with the Retail Council of Canada, the National Retail Federation in the States, and various industry associations in Europe to try to bring more standards to that.

11:50 a.m.

Conservative

The Chair Conservative Rob Merrifield

Very good. Thank you very much.

Actually, the time has gone over here. I'll allow a very quick question and a very quick answer.

11:50 a.m.

NDP

Jasbir Sandhu NDP Surrey North, BC

Thank you, Mr. Chair.

I am from British Columbia where I've had family work in the lumber industry. So I'm very familiar with the types of job losses in the last number of years. In fact, the mills that my cousin and my brother worked in closed down. So I'm very concerned.

What would you like to see in a trade agreement that would enhance our value-added industry, and foster and enhance the value-added products that we export to Japan?

11:50 a.m.

Vice-President, Public Affairs and International Trade, Forest Products Association of Canada

Andrew Casey

I think the elimination of the tariffs is essential. That would make all of the products that we're sending there more competitive. Those are the wood panels, the engineered lumbers, and those types of things. So any movement on those tariffs—and this deal will result in a zero essentially—is really all we can ask for in terms of the added value, moving up the value-chain concept.

11:50 a.m.

Conservative

The Chair Conservative Rob Merrifield

Thank you very much.

Mr. Hiebert, go ahead very quickly.

11:50 a.m.

Conservative

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

I'm one of the four British Columbia MPs. It's good to have good representation on this committee to serve our constituents there. Since the others have asked great questions about forestry, I'm going to ask one about the apparel industry.

Mr. Kirke, you said that we are hindered or constrained by NAFTA and the rules of origin that we have in that agreement. I'm wondering whether Japan has similar rules of origin with any free trade agreements they have and whether they would be hindered by those as they come to the table on this issue.

11:50 a.m.

Executive Director, Canadian Apparel Federation

Bob Kirke

In general, no, I think anything they have signed recently might involve single transformations, so cut and sew. I would also say that at one stage Japan was subject to the quota system. They were a low-cost provider in the sixties and so on. They have been very open and committed to open trade, because they were subject to the other side. So I would say in general terms they're very straightforward in what they sign, and I don't think they have any sort of similar problems in their past, if you will.

11:50 a.m.

Conservative

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

I have one last question for both of you. We haven't talked much about non-tariff barriers. Are they of concern? Do we need to incorporate them into this agreement?

11:50 a.m.

Vice-President, Public Affairs and International Trade, Forest Products Association of Canada

Andrew Casey

There are none, really. There are some minor ones, but we're able to negotiate. The pine beetle was a bit of an issue with the lumber that was going there with the blue stain. That was an issue but we've managed to get rid of that.

I would just quickly add that you may have seen all the best questions asked about our industry, but one of the interesting things about our industry is that we may soon be members of Mr. Kirke's organization. We're producing something called dissolving pulp, which is part of where the industry is going. Dissolving pulp is being turned into fabric—rayon, essentially—and we're becoming big competitors in that area.

So once we move beyond all the traditional lumbers and pulps and stuff, that's where we're going, in the bio-economy. So look for other questions in other parts of where we're going.

11:55 a.m.

Conservative

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

There are also biofuels.

11:55 a.m.

Vice-President, Public Affairs and International Trade, Forest Products Association of Canada

Andrew Casey

Biofuels, absolutely.

11:55 a.m.

Conservative

The Chair Conservative Rob Merrifield

Make it a very quick answer, please.