International Trade Committee on March 27th, 2014

[Jody Cox]

Thank you, Jim.

I had the opportunity to participate in two of the stakeholder sessions that Ms. Hillman had mentioned. One was in Brunei and one was in Kota Kinabalu—I think I said that correctly—in Malaysia. Maybe I can just give a little bit of information about how the stakeholder days are structured and the kind of experience I had going through those.

In the morning, typically there would be presentations from different stakeholders. If you wanted to make a presentation, you'd let the host country and the Canadians know. They were 10-minute presentations. I had the opportunity to make one at two different rounds. In the room—the chief negotiator was right—there were some stakeholders, of course, but there were probably 100 or 150 people from the different negotiating teams from all TPP member countries. After the presentations, they were full of questions and wanted to learn more about our industry's perspective and our proposals and that sort of thing.

Again, because you have all of those people together in one spot, it was really a wonderful experience to have the opportunity to meet with different chief negotiators and IP negotiators from all the different countries to hear their views and perspectives as well.

So, yes, stakeholder day certainly was a very interesting experience and it is a model that I hope will continue.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you for sharing that.

Ms. Campbell, could you give us your organization's perspective?

[Ailish Campbell]

Thanks.

I'll say two things. I think, first of all, that broad consultations are essential. The CCCE, for example, firmly supports the government's recent conclusion of the South Korea free trade agreement. Not all CCCE firm members are in agreement about that. Some of our auto sector CEO members have made their views clear about their concerns, for example, with that specific agreement. We have to be respectful and mindful of those views and work together with our U.S. and EU counterparts on non-tariff barriers in the South Korean market. Those are a legitimate concern.

I would say the general outreach is important, but it's also important that consultations be as broad as possible to allow individual firms, as well as associations like ours, to make representations.

Second, I would strongly recommend that in addition to having stakeholder days and showing the great openness that the government has shown in terms of consultations, that a ministerial advisory council be created, not just for the Minister of Trade but also for other ministers who are intimately involved with aspects of rural development, including the Minister of Finance and the Minister of Agriculture. Those kinds of ministerial-level tables have existed in the past, and the CCCE would encourage the re-creation of those councils that directly advise the minister for ongoing dialogue and discussion.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you.

The next question deals with the magnitude of this agreement.

As you alluded, Ms. Campbell, we're talking about approximately $20 trillion and close to 800 million people. We have CETA, which involves about $17.5 trillion and 500 million people. NAFTA is about $17 trillion and 450 million people. Canada, if we were able to secure this agreement, would have the most impressive free trade regime, rules-based trading partners, and opportunities around the world. I'm excited about that. I think it's a great opportunity.

The challenge is that as we move ahead, as was alluded to, we want to move with slow steps to make sure that it's in the best interests of all Canadians. When we had CETA, there were concerns from the generics manufacturers about the cost of pharmaceuticals. We had a report issued by the Conference Board that talked about how Canada's business expenditures and research and development in pharmaceuticals are less than half the average. We need to provide more attractive opportunities. I think that comes with a reasonable and balanced approach.

All these agreements are great, but we need to encourage and engage Canadian businesses and take advantage of these opportunities. The government can get out of the way and level the playing field and remove the red tape, per se. From your organizations' perspective, what can you do to help government and your organizations? What are you doing to encourage them to take advantage of these free trade agreements?

[Ailish Campbell]

First and foremost, our 150 members are responsible for the vast majority of Canada's exports and R and D, so they're already there. The key is getting more Canadian firms there. The key is getting Canadian small and medium-sized enterprises to be aware of those opportunities. In that respect, tools like the trade commissioner service, Export Development Canada, and BDC are essential. The government can't necessarily hope to cover all those regions that you covered with the existing resources. We think there's probably a case to be made for more resources, specifically for the Asian market, so that we don't sacrifice the excellent work that EDC, BDC and the trade commissioner service are already doing in Europe and North America.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Pacetti, the floor is yours.

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

Thank you, Mr. Chair.

Thank you to the witnesses for being with us today. We've had you both here for the EU, and with a little bit of a different perspective from the TPP.

I guess my first question, Mr. Keon, would be to you. Which country or countries in the group of countries in the TPP would probably have the most generous patent protection rights or rules? I don't want to put words in your mouth, but who would be causing you the problem? Which country is maintaining their right to have these generous patent rules?

[Jim Keon]

I think the rules vary tremendously by country, and the rules are different in different aspects.

For example, the United States is typically seen as the aggressor on intellectual property, if you will, and as the country that's trying to promote higher levels of protection. If we compare, in the pharmaceutical space, the United States and Canada, Canada has now, or will have after CETA, patent term extensions. The U.S. has patent term extensions. Canada has a very restrictive patent linkage system that is very costly and that we're hoping to improve.

My point is that the U.S. is the aggressor that had been seen to be promoting strong IP, but in terms of Canada I think we already have strong IP, so we're not as targeted as some countries.

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

That's what I thought you were going to say about the United States, but don't we already have an agreement with the United States when it comes to free trade?

[Jim Keon]

Well, we have a North American Free Trade Agreement, yes.

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

Right, so why would that jeopardize your industry?

[Jim Keon]

Well, the North American Free Trade Agreement has an intellectual property chapter and has obligations that Canada of course meets. The Trans-Pacific Partnership could in theory, if some elements are there, go beyond that and require greater levels of intellectual property protection based on proposals that have been made in the past by some countries.

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

So the “some countries” are the United States...?

[Jim Keon]

In particular, the United States has promoted—

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

So why would the United States ask for more generous patent protection when they don't already have it...?

[Jim Keon]

Well, they have.... They're picking and choosing. I would say they're cherry-picking. I don't believe the United States is ready to change its intellectual property laws significantly as a result of the TPP. I don't think that will happen. But issues like the biologics industry and the pharmaceutical industry are very powerful and have a lot of influence with the U.S. trade representatives, so they're taking their position—

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

Okay. I have one more quick question before I go to Ms. Campbell. You were talking about the intellectual property having nothing to do with tariffs. In your industry, what is more important? The tariffs or the intellectual property aspect?

[Jim Keon]

Tariffs generally for pharmaceuticals are not major impediments to trade. Our industry needs access to products to export on a timely basis. That's what we're concerned about, maintaining timely access.

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

Thanks.

Ms. Campbell, that was an interesting presentation, but in terms of your membership, what would be most important? Tariffs? Regulation? I think you also talked about investment rules. Of all these intangibles or all these items, which one would be most important to your membership?

[Ailish Campbell]

I think that's a great question. Our members cover all sectors of the economy, so it depends on the sector.

For our agrifood exporters and energy producers that have resources they can't move to the region, other than through traditional forms of export, tariffs and non-tariff barriers for standards would be the most important.

For our services companies, we're finding that many of them have their head offices here in Toronto and in Vancouver, Calgary, and elsewhere, and then they're locating sales offices, often through joint ventures or other initiatives, in regions. That's when you get at the mobility of people being important and various forms of services liberalization.

It really depends on the sector.

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

So you need this agreement to be comprehensive and not just about tariffs?

[Ailish Campbell]

Exactly.

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

Okay.

In terms of benefits, when we were out in Vancouver, it looked like the TPP was more important to the west coast than the CETA. When we were in Halifax, it looked like the CETA was more important than the TPP. Is that your feeling as well in terms of your membership?

[Ailish Campbell]

My feeling is that provinces are most concerned with the agreements that correspond to the composition of their exports.

British Columbia, for example, has more than 50% of its exports.... Again, we're dealing with merchandise trade, and I think these are outdated numbers not reflecting the true economic footprint of Canada globally, but at any rate, 50% of B.C.'s merchandise exports go to Asia, so of course they would be more concerned. But if you go to the east coast, you'll see that Clearwater, Canada's largest seafood producer, is very interested in selling more products to Asia. So I don't think it's a simple story at the macro level.

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

Is there a complaint of transferring goods from one end of the country to the other end of the country to get them out on each coast? I don't know if you're ever hearing that from your members.