Evidence of meeting #16 for International Trade in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was tpp.
Associate Professor, Health Sciences, Simon Fraser University, As an Individual
You seem to be implying that you can't believe in trade without a trade agreement.
February 4th, 2014 / 4:15 p.m.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
No, I'm just wondering if you have supported any trade agreements Canada—
Associate Professor, Health Sciences, Simon Fraser University, As an Individual
The old GATT had many good things in it, because in the post-war period the intention was to reduce tariffs globally, and that happened. I think by the time the WTO was established in 1995, the tariffs had been reduced absolutely dramatically from what they were in 1947 when GATT was put in place.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
What about bilaterals with either Israel or Chile or anything like those that have been around for a long time? There's been Jordan recently and the EFTA—
Associate Professor, Health Sciences, Simon Fraser University, As an Individual
My sense is to repeat what I said before, that the terms under which these agreements have been negotiated are not ones that are favourable.
If you want to go back to the NAFTA issue, I would ask what major new social programs or public programs we have initiated since NAFTA. I think the answer is none. I don't see anything. If you look at the fifties and sixties and into the seventies, you see a whole plethora of new programs that benefited Canadians. We don't see anything. We just see the systematic erosion of our social safety net since NAFTA went into place. That's the reality.
Conservative
Associate Professor, Health Sciences, Simon Fraser University, As an Individual
Well, there we are.
Conservative
The Chair Conservative Rob Merrifield
There you go. With that, we'll draw this session to a close. We want to thank both our witnesses for being here and for their testimony before the committee.
We will suspend as we set up the next panel.
Conservative
The Chair Conservative Rob Merrifield
I am pleased to introduce the final panel of the day.
You have a challenge ahead of you, as witnesses coming forward. We have had a long day, a long two days, but nonetheless we're here—alive, well, and keen.
We have an exciting guest with us from Port Metro Vancouver. That's Robin Silvester, president and CEO. Thank you for being here. We're excited to have your testimony.
The same goes for our guests from the British Columbia Chamber of Commerce, John Winter and Jon Garson.
We will start with you, Mr. Silvester. The floor is yours. We look forward to hearing from you.
Robin Silvester President and Chief Executive Officer, Port Metro Vancouver
Thank you.
Honourable members, it's a pleasure to be here. Welcome to Vancouver.
At Port Metro Vancouver, free and open trade is crucial to the delivery of our mission and to our ability to provide value to the community in which we operate—and, for that matter, to the nation as a whole. With that in mind, we appreciate the opportunity to present to you today, and commend the committee for undertaking this important study.
Simply put, we view the successful conclusion of a comprehensive trade agreement between Canada and the European Union and Canada’s ongoing participation in the Trans-Pacific Partnership negotiations as incredibly important initiatives.
As you may well already know, Port Metro Vancouver is Canada’s largest and busiest port, acting as a vital gateway for domestic and international trade and a significant economic force strengthening Canada's economy.
We are the most diversified port in the whole of North America, facilitating trade with more than 160 economies around the world and handling 124 million tonnes of cargo—in fact, I expect in 2013 probably approaching 130 million tonnes of cargo—worth more than $75 billion each year.
Putting those statistics another way, nearly 20%, or one-fifth, of everything Canada trades in goods moves through this port here in Vancouver.
In British Columbia’s Lower Mainland, the activity creates 57,000 jobs. Nationally the jobs created by the port supply chain alone rise to 98,800. It's worthy of note that jobs related to the port supply chain are at income or wage levels typically 53% above the national average wage for Canada.
Even from the west coast of our nation, Port Metro Vancouver has a long history of facilitating trade with European nations. In 2012 Canadian exports to the EU through our port exceeded 5 million metric tons, and included wheat, meat, wood chips, coal, metals, and minerals. At the same time, Port Metro Vancouver handled the import of 169,000 metric tons of household goods, construction materials, vehicles, machinery, and beverages from the EU.
Canada’s new comprehensive economic and trade agreement with the EU will strengthen ties to one of our most important markets while improving access for Canadian companies, and growing trade in general. An interesting example is the forestry sector, a crucial employer here in British Columbia. It's a perfect example of an industry that stands to benefit directly from a Canada-EU trade agreement.
Through the elimination of tariffs on B.C. wood and wood products, which currently average 2.2% but peak as high as 10%, our exports will now be able to price-compete on an equal footing, and as a result will gain better access to the roughly 500 million consumers in the EU. The 15,000 British Columbians employed in this sector will benefit directly. It's inevitable that employment and economic activity in the sector will increase accordingly.
Other sectors that Port Metro Vancouver believes will benefit include B.C.'s fish and seafood industry, which employs nearly 5,500 British Columbians; British Columbia’s investment environment, through the facilitation of two-way investment in the assurance of equal market access; and our service sector, through the rationalization of citizenship and residency requirements, the introduction of temporary entry rules, and the elimination of ownership and investment restrictions.
All in all, we would support the assertion that the EU trade agreement provides the opportunity for a 20% boost in bilateral trade and a $12-billion increase in Canada’s GDP.
We are, of course, on the west coast also very optimistic about the potential benefits associated with the successful completion of the ongoing negotiations as part of the Trans-Pacific Partnership. A successful TPP agreement would be particularly good news for British Columbia, given our geographic position relative to the participant countries and our deep existing relationships with the markets in question.
Currently three of the nations taking part in TPP talks can be found amongst the list of the top ten trading economies for exports leaving Port Metro Vancouver in 2012. Trade to and from TPP economies via Port Metro Vancouver amounted to over 30 million metric tons in 2012.
While a significant number—going back to my opening—this represents just over 24% of goods traded through the port in that year. The opportunity to increase access to these markets is upon us. As it stands today, Asian countries represent a relatively small percentage of total Canadian exports. A successfully completed comprehensive agreement we believe has the potential to dramatically improve Canada’s access to key Pacific Rim markets.
The benefits of the TPP would include increased exports to these markets and the development of stronger commercial ties and person-to-person connections between our province and the fast-growing Asian economies.
Again taking the B.C. lumber industry as an example, our current exports of wood and wood-related products face tariffs of up to 10% in Japan, 31% in Vietnam, and 40% in Malaysia. Paper and paperboard products face tariffs of up to 27% in Vietnam and 25% in Malaysia. Eliminating these complicated and costly tariff barriers on B.C. wood and wood-related products will help open a lucrative market of 792 million consumers through the TPP nations and generate direct benefits in B.C. in exactly the same manner, we believe, as the European customers we will shortly be able to access better through CETA.
Port Metro Vancouver has been a strong supporter—and in terms of infrastructure development, an enabler—of the Government of Canada's ongoing efforts to diversify Canada's trade partnerships and expand our international market access. In fact, as I speak, we are delivering more than $200 million of infrastructure to connect the ports to the country and allow easier movement of trade through the port.
We firmly believe that the benefits of both a Canada-EU trade agreement and a future agreement with the Trans-Pacific Partnership are important to the long-term health of the Canadian and British Columbian economies.
On behalf of Port Metro Vancouver, I thank you for the opportunity to present today. We'll be very happy to take any questions you may have.
Thank you.
Conservative
The Chair Conservative Rob Merrifield
Thank you very much.
That's very optimistic from the perspective of both CETA and the TPP. Thank you for that.
We'll now move to you, Mr. Winter. The floor is yours.
Then we'll go to questions and answers.
John Winter President and Chief Executive Officer, British Columbia Chamber of Commerce
Thank you, Mr. Chair and committee members, for the opportunity to present to the Standing Committee on International Trade regarding the Trans-Pacific Partnership.
The British Columbia Chamber of Commerce is a volunteer, not-for-profit business association that serves its members as the provincial federation of autonomous community chambers of commerce or boards of trade and corporate members. The B.C. chamber represents the views of about 125 chambers of commerce and boards of trade, and they in turn have about 36,000 businesses as their members, businesses of all sizes from all sectors in all regions of the province. That being the case, the chamber truly is the voice of business in B.C.
Let me start by simply posing a question about the TPP. Why not? British Columbia is a trading province just as Canada is a trading nation. Across the country, trade drives one in five jobs and somewhere in the order of 60% of Canada's GDP. For B.C. and Canada to succeed, we need to continue to open new markets for our businesses to compete in.
Further free trade agreements provide the foundation for our businesses to access the world. When Prime Minister Harper announced an agreement in principle with the European Union, this signalled to the business community—and I'd even say to the world—that Canada is looking to lead again. It highlighted our commitment to sign comprehensive 21st-century trade agreements, and while the Canada-EU CETA will bring economic opportunity to businesses across Canada, including many of the B.C. chamber members right here in this province, the chamber is looking ahead to the opportunities in Asia.
For the B.C. chamber, the Canada-EU CETA agreement is an appetizer to the main course, the TPP. As we all know, B.C. is Canada's gateway to the Asia-Pacific. Of all the provinces, British Columbia is the least dependent on trade relations with the United States. That is not to say it isn't still an important market, but the fact that only 44% of our provincial trade is with the U.S. shows there is a growing interest in opportunities across the Pacific in the many emerging markets of Asia.
The TPP brings together 12 nations with a total population of 792 million people and a combined GDP of $27.5 trillion. Put another way, as highlighted by the TPP trade ministers in their October report to their leaders, the current TPP participants represent nearly 40% of global GDP and approximately one-third of all the world's trade. With economic numbers like these, Canada needs to be at that table. For us as a Pacific nation, this agreement provides an opportunity to start to pivot the Canadian economy to some of the fastest-emerging markets of the Asia-Pacific.
As Canada's only Pacific province, B.C., along with B.C. businesses, stand to benefit from this shifting focus, and we already have much of the infrastructure in place. The TPP could provide annual income gains of $9.9 billion and increase exports by an additional $15.7 billion. Those numbers translate into jobs here in B.C. and across the country. We will have an agreement with several dynamic, emerging Southeast Asian markets, with GDP growth two to three times that of our established trading partners in the United States and Europe. Singapore, Malaysia, and Vietnam have growing middle classes that will only keep growing and that will be looking for the goods and services Canada offers long into the future.
Don't we want to get in on the ground floor of this opportunity?
The TPP will be a landmark agreement. Like CETA, this agreement will set the standard for future trade agreements in terms of market access for goods, services, investments, financial services, government procurement, temporary entry, and labour. The TPP appears to meet the standard of a 21st-century comprehensive, and dare I say, transformative agreement.
The B.C. chamber understands that comprehensive market access is a key objective for the TPP. A comprehensive agreement that provides duty-free access to goods and markets across TPP members while looking to remove restrictions on services, investments, financial services, temporary entry, and government procurement is potentially beneficial to many sectors of this economy.
B.C. is home to an abundance of natural resources. From the communities that bring these resources out of the ground or off the land to the service sector that does the value-add to the resources that are eventually exported around the world, many well-paying jobs depend on access to new markets.
Whether it's forestry, mining, oil and gas, agriculture and agrifood, or seafood and shellfish, B.C. has many businesses that stand to benefit from having their products gain access to TPP markets duty free. Beyond goods movement, B.C.'s engineering services, mining services, forestry services, and financial services are all world class and just need that last element of certainty that business looks for when looking to invest abroad.
Certainty is a key element in the potential of any business to succeed. Certainty for business can be found in more than just knowing that their products can access new markets duty free. Today, the global economy is more interconnected, with fewer and fewer tariff barriers. A lot of countries find creative ways to protect their industries through regulation and non-tariff barriers. The B.C. chamber believes that the TPP will benefit not only Canadian businesses but all businesses by improving regulatory practices, promoting transparency, and establishing processes that facilitate trade and investment.
The B.C. chamber hears from many businesses that regulatory burdens and the lack of understanding of international processes make entering the international market not worth it. Just as the B.C. chamber advocates for certainty and cutting red tape to doing business here in Canada, we encourage any initiative by which the government can provide certainty for B.C. businesses and streamline processes in those international markets.
The benefit of the TPP extends beyond the tangible benefits that such an agreement will bring to businesses. As the Fraser Institute has pointed out in their analysis, Canada stands to gain “not only by expanding its economic partnerships but also by shaping the rules that will govern trade...in the twenty-first century”. In other words, being at the table in these negotiations is a benefit in its own right.
It is important that Canada be out in front of potential multilateral trade discussions, especially those involving the emerging markets of Asia. The TPP is the vehicle that allows Canada to shape the rules around investment, rules of origin, and other regulatory barriers to doing business.
Earlier in this presentation, the point was made that B.C. has slowly lowered its dependence on the American market. Again, this is not to minimize the importance of the U.S. and its economic benefit to Canadian and, for that matter, B.C. businesses. The U.S. market and the $670 billion-plus of annual economic activity between our two countries will continue to be the standard of trade that we want to achieve with others around the world.
The rise of the Asia-Pacific, however, can't be underestimated. Canada can't afford to be sitting on the sidelines as others build the economic bridges throughout Asia-Pacific. The U.S. is looking to other markets, whether it's a deal with South Korea, a deal that we're looking to close ourselves, and other countries are looking to gain access to that U.S. market. When we look at other developed economies, such as the U.S., for example, and the EU, Australia, and New Zealand, we see that they are working hard to build economic ties across Asia. Canada can't afford not to be part of the TPP and future agreements like it.
Again, as the Fraser Institute points out, the TPP negotiations give Canada the ability to maintain its preferential trading relationship with the U.S. while providing the opportunity to formalize new trading partnerships with emerging markets. In other words, it gets our foot in the door for future agreements in the Asia-Pacific without shutting the window on the U.S.
In closing, the B.C. chamber sees potential benefits to several sectors that drive the B.C. economy, but there is little illusion that negotiations won't be challenging. As Canada continues to negotiate with 11 other countries, it's only fair and realistic to expect that everything is on the table for discussion. There are no sacred cows. This doesn't mean that the chamber doesn't expect the Canadian government to apply the same test that it has to other agreements it has signed, namely, that any final agreement is to the net benefit of Canada.
The B.C. chamber is realistic that negotiations are about give-and-take. Finding the right balance is the science, or perhaps better yet, the art of negotiation. Overall, the B.C.chamber supports the opportunity of being at the TPP table and the potential economic benefit and jobs that a final agreement would bring to our members in B.C. and to businesses across Canada.
Using a slightly tweaked version of the famous John Lewis quote, let me conclude by saying that if not this agreement, then which one? If not now, then when? Let's not let this opportunity slip through our fingers. Let's get this deal done.
Thank you.
Conservative
The Chair Conservative Rob Merrifield
Thank you very much
We'll now move to questions and answers. We will start with Ms. Crowder. The floor is yours.
NDP
Jean Crowder NDP Nanaimo—Cowichan, BC
I want to thank the witnesses for coming before the committee today.
Mr. Winter, as you spoke, I was welcoming language that refers to promoting transparency and certainty around key elements. I think the challenge facing many of us with regard to TPP is that the details of the agreement are not known. A lot of what we are seeing and hearing is merely speculation based on leaked documents, many of which have moved on since they were leaked.
One of the points is that 80% of Canada's GDP is already covered by agreements that we have with U.S., Mexico, Chile, and Peru. I'm interested in how you came up with your numbers, given that it really is only 20% additional GDP. How did you come up with those numbers? You were talking about 9.9 billion and a number of other numbers. How did you come up with those numbers?
President and Chief Executive Officer, British Columbia Chamber of Commerce
I will defer to my supplier.
Jon Garson Vice-President, Policy Development Branch, British Columbia Chamber of Commerce
Most of the figures and data that we used were taken from other publications. We used the government's own numbers that had been produced, and numbers that had come from the Fraser Institute as well.
NDP
Jean Crowder NDP Nanaimo—Cowichan, BC
Did you discount them based on the fact that we already have free trade agreements that cover 80% of those countries' GDP?
Vice-President, Policy Development Branch, British Columbia Chamber of Commerce
No, because we were looking at what the conclusion of TPP would be, including those countries with the other countries that are parties to the agreement. We were looking at the complete picture of all those countries participating in the TPP negotiations.
NDP
Jean Crowder NDP Nanaimo—Cowichan, BC
So in fact 80% of your numbers would exist whether there was TPP or not, because we already have those agreements in place with the U.S., Chile, Peru.
Vice-President, Policy Development Branch, British Columbia Chamber of Commerce
There are trade agreements with those countries, yes.
President and Chief Executive Officer, British Columbia Chamber of Commerce
Not really. That assumes this is standing still. That assumes nothing will change over time. What we're talking about are significantly emerging growth markets in Asia.
NDP
Jean Crowder NDP Nanaimo—Cowichan, BC
How did you calculate that? How did you calculate the percentages of those emerging markets then?
President and Chief Executive Officer, British Columbia Chamber of Commerce
Again it was based on the numbers supplied to us from a number of different sources. It really talks about the emerging markets and their growth. We're not going to get beyond 100% of GDP obviously, so it's going to be redistributed among those countries.
NDP
Jean Crowder NDP Nanaimo—Cowichan, BC
Given that we don't have the details for the TPP and that you have 80% of the trade agreements already covered, I'm having trouble with those numbers, on being able to backtrack those numbers.