International Trade Committee on Dec. 5th, 2013

[Mark Eyking, Liberal, Sydney—Victoria, NS]

—I don't want to interfere with you too much, because they are only going to give me one round here and I want Mr. Curtis to have a question, so....

[Jan Dyer]

Well, there are some things outstanding. The commodity supply chain review needs to be done still, as does the review of the grain industry that was committed to at the same time.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Mr. Curtis, we just returned our committee from Washington and this whole coal thing has got our beef industry all in a tizzy. It's not just us, it's the Mexicans because these agreements are great but they make a very integrated industry. When all of a sudden one partner decides to pull the pin then everything goes kind of squirrelly. With the WTO—because they are the only people who can help with these things—do you think the WTO needs to be revamped or changed, or have a bigger stick or a quicker mechanism?

[Dr. John Curtis]

The short answer is yes, but it does need political consensus worldwide. That hasn't been the case, as everyone knows, in the last decade, including the ministers when meeting the president at the WTO ministerial meeting in Bali, Indonesia, not coming up with very much. There really isn't the political will to advance the WTO, to give you a very short answer.

A lot of international trade is behaviour rather than law. I say this as an economist, not as a lawyer. With the Americans at times, both in defence procurement and in the example you mentioned in agriculture, the clerk on down in the hierarchy can do some very strange things at times, including what you've just reported on. To some extent, that's behaviour. As the other side, you have to keep at them and say, “You've got to play the game the way we understood it to be played and the way you like others to play it.” That's why I don't worry if the Chinese take on the Americans from time to time. It doesn't hurt for them to get their own medicine.

Getting back to the diversification question, that's why we need to have allies over and above the United States. The United States is number one in terms of us, but we have to work with others to keep pressure on them at every level of their government and their private sector to make it in their interest to behave properly, frankly.

[Mark Eyking, Liberal, Sydney—Victoria, NS]

Okay. Thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Holder, seven minutes.

[Ed Holder, Conservative, London West, ON]

Thank you, Chair.

I'd like to thank our guests for being here this morning.

I'm learning to love canola more every day.

[Voices]

Oh, oh!

[Ed Holder, Conservative, London West, ON]

We're certainly getting our fill of it in terms of information from various sources, Ms. Dyer, so I appreciate your testimony.

To Mr. Curtis, that was very interesting testimony today. Some of it was very general. You sound like a small-c conservative in some of your projections, and maybe where there's life, there's hope.

But my practical question to you—

[Dr. John Curtis]

I have to interrupt to say that I'm of the radical centre.

[Ed Holder, Conservative, London West, ON]

Perfect. Then you'll fit right into this group.

You said in your testimony, Mr. Curtis, that you thought ultimately this agreement was a good thing. Why do you say that? And please answer as concisely as that broad a question can be answered.

[Dr. John Curtis]

I would suggest it's a good thing for various levels. It's a good thing because it means that we Canadians can be part of a major trade agreement. We've had a number of smaller ones, both under the previous governments and currently, but we really haven't been part of a major trade agreement since 1995, the WTO and NAFTA.

This gives us credibility internationally as well as within Europe itself. I've spent a lot of time in Europe. Most Europeans were pretty surprised that there was any trade negotiation under way, but all of a sudden they're saying, “Holy cow, look what's happened.”

So it's important at that very general level. It's also important that it helps Europe and the United States deal with each other. We have to watch our preferences in the United States, but it's awfully important that we get economic growth restarted across the Atlantic as well as across the Pacific. The only way that can happen over time is if you build predictability and stability into your trade regimes so these things that Mr. Eyking was mentioning don't become the norm, that you don't have the rule of the jungle but you have a certain amount of stability.

[Ed Holder, Conservative, London West, ON]

With a rules-based system, of course.

[John Curtis]

Yes.

[Ed Holder, Conservative, London West, ON]

You made reference to Canada-U.S., and of course it was the great Prime Minister Brian Mulroney who negotiated Canada-U.S. It's rather interesting; going back to 1988, Canadian exports to the U.S.—to be fair, I have the statistics in front of me—totalled just in excess of $81 billion. That was our trade to the United States. In 2012 our exports are now $324 billion—not shabby.

As my Cape Breton mom used to always say, it's really hard to connect the dots going forward, but it's really easy to connect them going backwards. When I look at that kind of growth over 25 years, and I look at what that has meant for Canada, I need to ask you this question...which is not off track, because it's consistent with CETA. Do you believe our agreement with the United States and also with Mexico, with the NAFTA deal, was ultimately good for Canada?

[Dr. John Curtis]

Yes, on balance, it was good for Canada.

Where it's difficult, and it's difficult being small, as we are, in general, is that it's not about trade—and the numbers you report on are absolutely true—the real issue is where investment will go, over time. To some extent, we, and the government of the day—and that includes Mr. Mulroney and his government, and subsequent administrations, governments—we underestimated the importance of being big when it comes to investment.

The practice of investment is who you know, is there confidence where you're going to invest, who has the knowledge, who has the innovation, and who has the entrepreneurship. In the NAFTA context, we, and the Mexicans as well, have found that, on balance, most of the investment has gone to the United States in the last 15 to 20 years. That's the issue.

[Ed Holder, Conservative, London West, ON]

It's interesting, because obviously, with the deal we've now struck with the EU, that's a market—and Ms. Dyer made that comment as well—of 500 million people, 800 million between the two most affluent trading blocs in the world, again in the EU, of some $17 trillion of economic activity.

To be tied in to those two major markets, for Canada's sake…I would imagine, when we now have preferential access to the two most mature economies in the world, how that bodes for Canada in the future.

Do you have a sense of that? Are you an optimist or a pessimist in that?

[Dr. John Curtis]

I’m an optimist.

[Ed Holder, Conservative, London West, ON]

Could you answer a question that I'm dying to get an answer for?

Chair, this is really important to me. Everyone talks about, and as you said, this is the new-generation trade agreement. What does that mean to you?

[Dr. John Curtis]

Electronic commerce, primarily, and services, and working towards regulatory alignment with respect to services, in every single field. Most of our economies are now service-related. Agriculture and manufacturing are important of course, but it's services where most of the long-term growth will be. That's with this agreement. That's the new generation, that and Internet commerce, and knowledge, and research, and developing new products. Because we have to keep up, not only with the Europeans and the Americans, we've got to keep up with the Chinese and the Japanese. The Chinese are moving up the technology ladder very quickly.

[Ed Holder, Conservative, London West, ON]

How important was it that Canada engaged the provinces and the territories? You said it was unprecedented. How critical was that for Canada's sake, going forward?

[Dr. John Curtis]

Mr. Chair, given the matters that are subject to negotiations but are clearly in the new areas, services and others—these are largely provincial jurisdiction. The way we’re organized in this country, they've got to be there.

[Ed Holder, Conservative, London West, ON]

Ms. Dyer, we heard from Mr. Everson in our last meeting, with respect to canola. As I look at it, in terms of agriculture, I see every aspect of agriculture, beef, pork, all the grains, pulses, and canola obviously, being strong winners. I would argue dairy as well because of that opportunity to go to the U.S. market.

How do you take it from here? How do you take advantage of it? It really feeds off Mr. O'Toole's question, how do you feed off where you are right now, from the standpoint of growing capacity, to be able to satisfy the European market?

[Jan Dyer]

A couple of things, which actually goes to some of the issues Mr. Curtis was just talking about. Modern agriculture, and certainly canola, has been a growing presence in what I would call research development and innovation. I mean, the whole GMO move to technology present in the canola industry is what we're talking about.

We have the capacity to increase our yields. We've increased yields by 30% to 40% over last year, the year before, largely because of the technology. It's much better environmental technology. It's much more cost-effective. It's very high-tech if I can put it that way. That is what really matters to us.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We'll now move to Ms. Hughes. The floor is yours.