International Trade Committee on Feb. 4th, 2014

[John Winter]

I'm not sure I understand your 80% number.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

We already have trade agreements with the U.S., Mexico, Chile, and Peru, well, 80% of the total GDP of all of the countries involved. Those are numbers that have come up. We can call it 70%, call it—

[John Winter]

Are you suggesting that those countries amount to 80% in deference to the other countries such as China, Korea, and Japan?

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

China is not part of TPP.

[John Winter]

Well, Japan, Korea, Vietnam, Australia, New Zealand....

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Korea is not part of it. These are the countries: U.S., Mexico, Peru, Chile, Australia, New Zealand, Japan, Brunei, Vietnam, Malaysia, and Singapore. China is not part of it. Korea is not part of it. Were China and Korea included in those calculations?

[John Winter]

No, they wouldn't be, because—

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

I guess the point I'm getting at is that a lot of numbers are thrown around, but it's never really clear what's been discounted based on trade agreements that are already in place. It's based on emerging markets, but we know there are some challenges around the world with what's happening with economic growth. We heard from somebody this morning who was talking about a decline in percentage of GDP for China, which isn't part of this. I think it's easy to throw numbers around, but we need to have them substantiated. If you have that background, I'm sure the committee would welcome seeing it.

I only have a few minutes so I'd like to go on to another question. Did you actually come up with numbers of jobs that you anticipated would be created as a result of TPP? Were you able to predict the number of jobs that would be created in British Columbia as a result of TPP?

[John Winter]

No, we didn't. We're not in the economic development business. As an organization we're able to look at the bigger picture of trade agreements and the history of trade agreements and understand the impact they would have on the Canadian economy. That said, we looked at the nature of our economy and the resource sector, and the growth of these emerging markets, and we were able to say that this will be the impact of those. Those numbers would come from other sources that would be considered experts.

[Jean Crowder, NDP, Nanaimo—Cowichan, BC]

Thanks.

Mr. Silvester, it again points to the difficulties of coming up with numbers, but in your presentation you talked about the B.C. lumber industry, for example, and you cited other numbers. We had Mr. Newman before us today from the Canada Wood Group. Again, because the elements of the TPP aren't known, he was much more equivocal than you were around the numbers of jobs that would be created in the forestry sector. He said that the TPP may or may not provide new benefits because agreements like softwood lumber already existed. He went on to talk about the fact that there are a whole bunch of caveats on whether or not there would be increased markets. Those would include things like tariffs, standards, environmental credentials, and preferential purchasing policies by some countries.

Again, I wonder where you came up with your projections on where some of these economies would be created.

[Robin Silvester]

Sure. The numbers I was giving in terms of employment for the forestry industry are for the industry as a whole as it stands today, so I haven't tried to extrapolate what might happen under TPP, other than to observe clearly that an increase in the trade in lumber would correlate with an increase in jobs.

What we've observed with, for example, China, which is not in the TPP but which has been a major focus provincially, is that at the time the U.S. economy faltered and lumber exports to the U.S. almost stalled completely, those were progressively, over the last five years, replaced with softwood lumber exports to China in containers, with the volume now I think reaching around six million tonnes of lumber. So even in the current environment, with challenges and trade barriers in place, the industry has been successful in accessing markets in Asia.

If we look at Japan, for example, I have the headlines statistics that Japan is currently importing around 1.2 million tonnes of lumber a year through the port. So if we take the hypothesis that reducing trade barriers will increase trade, and trade is already very significant in a number of B.C.-manufactured products with a number of potential signatories to the TPP, I would say that I think the TPP will have a beneficial effect.

[The Chair, Conservative, Rob Merrifield]

Thank you. Time is gone.

Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Thank you, Mr. Chair.

I'd like to thank our guests for being here this afternoon. You are the final part of the show. We are very grateful that you would be here at this hour.

When I listen to my colleague opposite, I almost think that the opposition may not be supportive of the TPP. However, it's our hope that they will be as more information and wisdom come to bear.

Mr. Silvester, thank you for your statement. I was actually a bit surprised when I was listening to your comments about the relationship between Canada and the EU in terms of the amount of business that you do. I guess I was under the impression, even though you mentioned that your focus was Asia-based, obviously from geography...and I was surprised too that even the EU component was as significant as it was. While we're not here for the purpose of discussing CETA today, I did appreciate your comments on that, because I think that will add to our sense of how the port authority of Metro Vancouver feels.

My feeling, gentlemen, is that Canada trades with every country in the world. Regardless of whether we have an agreement or not, we trade with every country in the world. What's clear to me is that if we can establish rules-based systems that reduce tariff barriers, that reduce some of the non-tariff barriers, that put in the labour and environmental situations that we've put into every agreement we've done so far, there are going to be a number of positive outcomes that come from that.

The obvious question, Mr. Silvester, is this. Does the fact that you don't have an actual physical text—though you have some indication as to where they're going—in any way inhibit your support of TPP?

[Robin Silvester]

Fundamentally, we support TPP because we see the economic benefit trade brings locally, regionally, and nationally. We would really follow the same logical inference line that you follow such that if trade barriers are reduced within appropriate parameters and trade is increased, then the nation benefits, as do the communities local to the port.

With the scale of trade through the port, as I was emphasizing in my address, there are 57,000 jobs in the Lower Mainland alone involved purely in the supply chain, before we even start to consider those involved further up in the primary production activities. So without the ability to do a detailed economic analysis, we would still fundamentally support the logic that reducing barriers to trade will lead to improvements in the economy.

[Ed Holder, Conservative, London West, ON]

Earlier today, we heard testimony from Yuen Pau Woo, who is the president and CEO of the Asia Pacific Foundation of Canada. He threw an interesting twist into it, and I'd appreciate comments on it from both of you and your organizations.

He talked a lot about China. Clearly, as you both know, China and Korea are not currently part of this deal, but it was his view that China is kind of that sleeping dog out there that you cannot ignore. He said that we might want to even consider engaging in a bilateral with China ahead of others and/or trying to encourage and take a leadership role as Canadians to get China at the table now, as opposed to waiting until that deal is done.

Do you have any opinions or thoughts as it relates to China being part of this agreement or going it alone with Canada?

I'll start with you, Mr. Silvester.

[Robin Silvester]

Thank you.

Clearly, I think the question of whether or not China is brought into the process is a complex one, but again, going back to the base that I'm qualified to observe on, trade with China through the port in 2012 was 28 million tonnes of cargo, ranging across metallurgical coal mined in B.C., to canola produced throughout the Prairies, to lumber predominantly produced in B.C., and of course, to household goods, which are sold and distributed all across Canada and are imported from China.

So we already have a very substantial trading relationship with China, and it's a fundamental part of the Canadian economy. I think that if there is an opportunity through TPP or direct negotiations to further improve and put structure around that trade relationship, that could have very positive benefits.

[Ed Holder, Conservative, London West, ON]

Thank you for that.

Mr. Winter.

[John Winter]

Yes, I would endorse that thought. As an example, B.C. is a small, open, trading economy. It's been suggested that it's of a size similar to the GDP of Houston, Texas, as an example, so that puts it in perspective.

We need trade to prosper and to create jobs in this province. The ability of our forest sector to meet the needs of China and to compete internationally for China's business has been amply demonstrated.

Whether it's captured in the TPP or it's a bilateral between Canada and China, I think it can only benefit in the longer term the economic viability of this part of Canada and I think of Canada in general in the longer term.

[Ed Holder, Conservative, London West, ON]

For both of you, it's one thing to have a deal like this—by the way, whether that be CETA or TPP—and it's another thing for businesses to have the capability to take advantage of them. I'm not thinking so much of the large businesses that seem to know how to do that and have the resources, but of the SMEs, the small and medium-sized enterprises, and how they can take advantage of it.

We have a natural north-south flow across the whole Canadian 49th parallel with our great friends and neighbours in the United States, and I'm not saying that just because that gentleman over there is part of the U.S. trading group. But whose responsibility is it or what do we have to do to help small and medium-sized enterprises take advantage of these very critical opportunities that are there?

Perhaps both of you have a perspective on it, but can I get your views on that, or through the chamber, perhaps?

[John Winter]

In regard to the small business sector, British Columbia's business profile is about 97% businesses with 10 or fewer employees. About 40% of those are participating in some form or other of export-import, primarily with the United States. For us to succeed with trade beyond those borders would take a significant investment in development costs, training, and preparation, and also in removing some of the aura, or the scare factor, if you like, that people don't seem to want to tackle.

But I think the reality is that as we become more and more global in our approach to doing business, the inevitability of this is very real. I think the ability of the Canadian business sector and the British Columbia business sector to compete and to grow has to be based on exports. We are concerned here in B.C. that we don't have enough small businesses in a growth mode. Many businesses are looking at themselves as surviving, as opposed to growing, and a lot of this has to do, I think, with attitude and somewhat with a reluctance to engage in international trade beyond maybe the U.S.-Canada situation, perhaps driven by language and perhaps driven by reasonably common currency and those sorts of things.

We need to do something, I think, to better educate our business community. The opportunities and the trade agreements like this are as good a tool as there is.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Do you have a quick comment?

[Robin Silvester]

Yes, I might very quickly follow on here and shamelessly plug our Facebook page. I'd encourage you to have a look at it. We addressed this question from the point of view of community engagement, and we went out to look for port stories about small businesses that depend on the port. We were overwhelmed by the responses we got.

We now have a series of videos we've been using in our public engagement work about, for example, a fruit importer, a blackberry farmer who's exporting, a cheese shop, an Italian deli in the local community—those who have businesses because of the port. The infrastructure and the ability to trade have allowed them to create small businesses in the local community.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Pacetti.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Thank you, Mr. Chair.

Thank you to the witnesses.

First to Mr. Winter, I'm just trying to see if I should follow up on what Mr. Holder was saying or what you were saying. I mean, the problem with small businesses, in trying to grow their businesses, is not just in B.C. It's also across Canada, especially in Ontario and Quebec, where the small manufacturing sector is suffering. Whether it's the high dollar now, or the low dollar, or competition with China, I think we're all feeling that effect.

We all support.... I'm not going to speak for the Conservatives or the NDP, but we Liberals support free trade, obviously. Is there any industry that can benefit from this immediately, or is it just of general benefit to all businesses?

[John Winter]

In the British Columbia context?