International Trade Committee on May 6th, 2013

[Ed. Holder]

Here's what I'm trying to understand. I heard the talk about trade deficits and surpluses, and we've had some dialogue around the Pacific Alliance fairly recently. I was putting some attention toward the four countries—Mexico, Chile, Peru, Colombia—where we are engaged in that dialogue. There may be some deficit areas in some ways, but what I was particularly struck by was that over the years from, let's say several years ago to today, there has been significant growth. In terms of Canadian merchandise, trade exports, and service exports there has been an increase in some cases extremely dramatically with those countries. What I'm trying to understand regards the issue that we've heard on a constant basis from some, that in some of our agreements, or a number of them, there may be deficits. Is the issue one of surplus versus deficit, or is it an issue of net growth from a Canadian perspective in terms of its export scenarios?

I really would be grateful for an answer and clarity around this, because I think it's an important point.

[Ed Fast, Conservative, Abbotsford, BC]

That is a very good question. I'm glad you put that question to me.

The old math, the old belief, that exports are good and imports are bad is archaic. When you actually work within the multilateral trading system and you chat with economists, you understand that for Canada to be competitive in manufacturing, we have to also have access to competitively priced high-quality imports, because those become the inputs to the ultimate product that gets exported out of Canada.

There's some excellent work that has been done by the OECD and the World Trade Organization in partnership. They've looked at trade through a whole new lens in terms of the actual impact that imports have and the actual impact that services have. They've been able to parse out those different considerations. It puts a whole new colour on what trade is all about.

Trade is beyond just exports and imports. It's beyond the old math. It's about investments. It's about driving prosperity through high value. Where is much of that high value today? It's going to be in services. Fifteen per cent of Canada's exports are already represented by services. We would like to grow that because that's where much of the high value is.

I talked earlier about engineering expertise and Canada being the fourth largest exporter of engineering services. That adds value to our Canadian economy. We're dealing with this whole notion of trade surpluses and trade deficits. I would agree with those who say persistent long-term structural trade deficits should be avoided, but to look at it in terms of a short timeframe misleads the public and improperly informs it of the kinds of steps that should be taken to continue to drive economic growth within Canada.

[Ed Holder, Conservative, London West, ON]

Thank you.

I'm trying to make the connection between trade and economic prosperity. I noted that no one jumped on the news that some 900,000 jobs have been created, after the worst worldwide recession in our lifetime.

[The Chair, Conservative, Rob Merrifield]

Let's keep it brief.

[Ed Holder, Conservative, London West, ON]

The alternative that I'm hearing from the other side seems to be that we shouldn't trade for fear Canada might be in deficit versus surplus, in some scenarios.

Could you respond to the implications of not trading? I'm just trying to get a sense of that.

[The Chair, Conservative, Rob Merrifield]

We only have time for a brief answer, Minister.

[Ed Fast, Conservative, Abbotsford, BC]

Let me point to the North American Free Trade Agreement. Our trade levels have tripled since it came in. Our trade levels with Mexico have more than sextupled since that agreement was signed. Keep in mind that those growth rates were achieved over a longer period of time, 10 to 15 years. You have to allow these trade agreements to take root to really see the fruit that will be borne by those agreements.

By the way, it's not only about trade. It's also about investment, both foreign direct investment in Canada, which I'm responsible for attracting, as well as encouraging Canadian companies to look at investments all around the world. We have significant investment interests in places like Africa, where we're hoping to protect Canadian companies by putting in place bilateral investment treaties.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Minister, we started the meeting a little bit late. Do you have five minutes more?

[Ed Fast, Conservative, Abbotsford, BC]

Yes.

[The Chair, Conservative, Rob Merrifield]

Fine. We have two questioners left: Mr. Davies, for two and a half minutes, and then we'll go to Mr. Shory.

[Don Davies, NDP, Vancouver Kingsway, BC]

Thanks, Mr. Chairman.

As lawyers, when you don't have the facts, you argue the law, and when you don't have the law, you argue the facts. I think in trade if you don't have the numbers, you argue the policy. The numbers are a persistent problem, Mr. Minister. I'm a little concerned that I hear you writing off a $100-billion merchandise trade deficit, or a $67-billion trade deficit, which includes services, goods, and investment, as not much to worry about.

I want to turn to CETA. In its negotiations with India, the EU has announced that it is abandoning its demands for changes to intellectual property rights. The changes demanded by the EU could increase drug costs in Canada. Some estimates are as high as $3 billion a year, and some are lower. Your own department, I believe, has estimated costs of up to $2 billion a year, I believe. Will your government commit to holding firm on intellectual property rights as the Indian government has done and insist on a CETA deal that won't increase drug costs for seniors?

[Ed Fast, Conservative, Abbotsford, BC]

First of all, I would caution you against comparing the CETA negotiations with India to the negotiations the EU has with Canada. Those are very different trade relationships, very different investment relationships.

What I will say is that when it comes to intellectual property, our government is looking to find a balanced outcome. I think there is general agreement that protecting our innovators, our knowledge, is absolutely critical to driving high value in our Canadian economy. We're among the very best educated in the world. We are innovators, but if we don't protect innovation, we're going to lose that innovation elsewhere.

[Don Davies, NDP, Vancouver Kingsway, BC]

Can I move on to Africa now? I only have 30 seconds.

[Ed Fast, Conservative, Abbotsford, BC]

Let me just follow up. I'm talking about the balance. I talked about protecting innovators.

On the other side, we want to make sure that Canadians continue to have full access to affordable medicines, and we are committed to that. That is why we're seeking a balanced outcome, and I believe Canadians will recognize that once negotiations are completed.

[Don Davies, NDP, Vancouver Kingsway, BC]

On agriculture, is the government going to defend the long-held position of supply-managed sectors, zero change in tariffs and zero change in quotas? Will the government defend that position at the CETA table, Mr. Minister?

[Ed Fast, Conservative, Abbotsford, BC]

What we have made very clear is that we are prepared to discuss all issues at the negotiating table. But as all of our negotiating partners do in all of our trade agreement negotiations, we vigorously defend and promote Canadian interests. We've made it very clear that we will continue to support supply management in Canada.

[The Chair, Conservative, Rob Merrifield]

Okay, thank you very much.

Mr. Shory, you have two and a half minutes.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Thank you, Mr. Chair, and Minister, and all the team. Thank you very much for being available today.

Mr. Chair will cut me off so I have a short question, Minister.

I noticed specifically on the India file in the last couple of years we have increased our trade commissioner services there, the numbers specifically. You talked about the.... You are very fond of saying all the time that trade is at the kitchen table, and I definitely agree with you on that.

How do you tie all this trade increase globally with your global commerce strategy?

[Ed Fast, Conservative, Abbotsford, BC]

How do we tie them all together? How many hours do you have?

[The Chair, Conservative, Rob Merrifield]

It's minutes, and not many of them.

[Voices]

Oh, oh!

[Wayne Easter, Liberal, Malpeque, PE]

If you have all night, we have all night.

[Ed Fast, Conservative, Abbotsford, BC]

What I will say is that India will soon be the most populous country in the world. We have to explore ways of deepening our trade with India.

Our current bilateral trade is somewhere in the order of $5.2 billion a year. That is modest compared to the potential that is there, which is why we're continuing to negotiate with India. We've completed seven rounds of negotiations.

Thank you for mentioning some of the work we're doing in placing trade commissioner services in the key emerging markets of the world. You're absolutely right. We've placed more resources in India. We've also placed more resources in Brazil. We've also placed more trade commissioner service resources in China. We've done that because those are rapidly growing economies.

They've also been impacted by the global economic crisis. Growth rates have moderated in those countries. But going forward, with the growth in their populations and the growth in the size of their middle class, we'd be crazy not to pay attention to them and look to put in place the kinds of tools that are going to allow Canadian investors and exporters to do business with those regions of the world.

[The Chair, Conservative, Rob Merrifield]

Thank you very much, Minister Fast. Thank you for coming to our committee and for being so informative on the entire trade agenda, which is actually very broad and very important to our country.

With that, we will suspend for a few moments as you leave, but I understand your department officials will stay behind and we will continue some of the questioning.

We'll call the meeting back to order.

We have the department officials continuing with us here to answer the technical questions on vote 20.

We'll continue in order with the questioning.

Mr. Davies, you have a quick question.

[Don Davies, NDP, Vancouver Kingsway, BC]

Yes, Mr. Chairman, I would like to move my motion. It reads:

That the Standing Committee on International Trade invite the Minister of International Trade to provide a comprehensive briefing on the outcome of the 16th round of negotiations of the Trans-Pacific Partnership which took place from March 4-13, 2013 in Singapore.