International Trade Committee on Nov. 19th, 2013

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Thank you, Mr. Myers, for joining us today.

My questions are largely drawn from your statement this morning. During your testimony you mentioned that governments, both provincial and territorial, have been part of the negotiations in support of the agreement. For the benefit of people listening to the testimony or reading the transcripts, can you explain to us why provincial governments would have been supportive of this agreement, keeping in mind that these representatives from provincial governments cross party lines. We have Conservatives, NDP, Liberals in leadership across the country. What does this mean for them, and why would they get behind it?

[Jayson Myers]

I think there are two very important reasons to explain why provincial and territorial governments have supported this. One is that they have been part of the negotiations throughout. The impetus behind the whole process was launched by provincial governments; I think Premier Charest played an exceptionally important role there. But throughout, the negotiating team has involved industry and has involved provincial and territorial governments as part of the process. I remember about five years ago at a meeting of European ambassadors here in Ottawa, when people starting talking about whether we could do a free trade agreement with Europe, people shook their heads, saying that we'd never get provincial governments on board—and that was, to a large extent, one of the big interests of the Europeans.

Things changed dramatically in 2009 with Buy American procurement restrictions in the United States. In one year, provincial governments, for the first time ever, came together and agreed three times on a negotiating position around Buy American. That was crucial, I think, in bringing the provinces to the table and showing that there was some agreement. What it showed the Europeans was that if there is value on the table, then the provinces would be a part of it.

As I say, one of the reasons we're so positive about this agreement is that we have been part of the negotiations. We've been part of at least consultation as the negotiations have proceeded. We've been there as the positions have developed, and so have the provinces and territories.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Are you saying that they see benefits for themselves as governments, or for the industries that are represented in their communities?

[Jayson Myers]

I think it's benefits for the industries represented in their communities. Europe especially has created a win-win situation for many industry sectors right across the country. I think most provincial and territorial governments would talk about the economic benefits that they would expect in their provinces. I know there has been a lot of discussion across the provinces, but I think there's also a sense in this agreement that the premiers and territorial leaders have come together and have said that this is not only good for their province but also good for the entire country.

In a sense, it reflects the nature of international business today, that if industry in one part of this country benefits, the supply chain effects really extend across the country. That's particularly true in the resource and manufacturing sectors.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Pacetti.

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

Thank you, Mr. Chairman.

I thank the witnesses for being here.

Mr. Vincent, in the seventh paragraph of your brief we can read the following: "Our industry has faced serious challenges in terms of our ability to compete in the world market [...]".

What will change? Will the fact that tariffs will fall ensure that Canadian hog producers will be competitive?

[Jean-Guy Vincent]

First of all, the tariffs imposed prevent our slaughterhouses from having access to the European market. You have to realize that it is also important for our producers that our slaughterhouses have access to countries where pork is consumed and in demand, that is to say our products. As far as competition is concerned, yes, we are now in a position to face it.

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

Does the European market not have rather more aggressive or demanding requirements for the kinds of products that it will be importing?

[Jean-Guy Vincent]

It is possible that for certain sectors or products the European Union has different standards, but there are also many producers in Canada. In the different provinces, the producers and processors have niche markets. They therefore adapt to the markets for which they must, can or are in a position to provide products to. We have that ability in Canada because we are diversified. We can have access to these different markets, in all of the provinces. There are niche markets that producers and processors are in a position to supply.

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

I have very limited time and I would like to raise another subject.

Towards the end of your presentation, you said that processing plants in Canada must make investments. Do they have the ability to do so?

[Jean-Guy Vincent]

I will let Martin answer that question more precisely.

It is clear that in order to get access to these markets, some slaughterhouses will need assistance in order to be able to adapt. There are rules and things that have to be complied with, that's normal. We are aware of this. The transformers and producers, all together, have already made a request with a view to preparing and being ready to join these markets.

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

All right, that is good. Thank you.

That's my question for you, Mr. Myers. We understand that the Canadian markets are going to open up to Europe, but the European markets are also going to open up to Canada, so there'll be competition both ways. Canada's productivity level has not been the best and continues not to be one of the best. Europe has been able to survive based on...we were talking about the car industry because they have niche-type vehicles that are sold here in Canada. There are other sectors where they have niches. Obviously, Canada has some but less so. We're more known for our capacity to sell our resources.

Where are we going to be able to benefit from this in the manufacturing sense? I look in my area, my industrial park is simply decreasing in terms of being productive and actually keeping open and running at full employment. There are a lot of “for rent” signs and “for sale” signs, and it's not the only place in Canada where it's happening. It's happening across Canada and across North America, and Europe is suffering from the same thing.

You mentioned that you represent half a million workers. Is that right?

[Jayson Myers]

Probably about one and a half million.

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

Do you now represent the employers and the workers?

[Jayson Myers]

There are about one and a half million people employed in the companies that we represent.

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

But you represent the companies, not the employees.

[Jayson Myers]

Well, to the extent that they have jobs, I guess we represent their economic opportunity.

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

I wanted to be clear on that. I thought something had changed in the mandate, but to get back on the productivity level.

[Jayson Myers]

The opportunity for any Canadian company that is either exporting or doing business in Europe is set by the degree to which they are specialized, have an innovative product or innovative service. I think one of the problems that we've seen over the past decade—this didn't start with the recession, it also started with the rapid appreciation of the Canadian dollar against the U.S. dollar and more because the U.S. dollar has fallen—is that the traditional markets that Canadian companies have had in the United States have become much more difficult to access. That's only been aggravated by American import restrictions in our major market.

Companies are looking at new opportunities and they'll find those opportunities in two ways. One is if they have a product or service that is a niche product or service. Our experience with the United States is that Canadian companies can compete very well in a larger market. The other thing is the extent to which they'll now be able to connect into larger supply chains. I think that's extremely important. Companies like Siemens, for example, are going to open up a supply network that is not just a European supply network but really a global one.

[The Chair, Conservative, Rob Merrifield]

Mr. Cannon and Mr. Shory, I believe you're splitting your time.

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

Thank you, Mr. Chair.

Supplemental to that question to Mr. Myers, those are my thoughts too. I think it's time we started to proactively promote Canada. Our government is a party that believes that Canadian business is the Canadian economy, not the party that lacks confidence in the ability of Canadian business to grow the economy. I think we need to look forward rather than backwards. If we continue...as you mentioned, if we look at the Auto Pact where we've come from, the future opportunities are, I believe, really numerous. I think it's the fear of failure that colleagues across the way have that is holding Canada back from achieving success. Would that be your perspective as to where we are with the globalized world?

[Jayson Myers]

There's no sure thing in business, and it's going to be the ability of businesses themselves to really take full advantage of the opportunity that lies ahead. What I see is that new customers, new business opportunities are going to drive investment in product innovation, new technology, and skills training there. I think that is very important.

I have to tell you we were surprised. We thought there was some opportunity to facilitate technology partnerships, but to have 26 joint ventures under way already in a period of four months shows that even with a slow economy in Europe and here in North America, there's a tremendous amount of opportunity, especially for smaller companies that see some opportunity to work together in the development of new technology. I think that's essential. We really can't assess the benefits of this trade agreement just on a business-as-usual basis. We really have to look at the opportunities that are out there.

Again, it's up to the businesses to take advantage of that. They have to make the investments, they have to make sure that their employees come along with them.

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

The chair for the trade committee, the chair of the agriculture committee, and I were in Washington last week, and there was lots of talk about the incredible agreement that's come together. As you said, it took 45 years for the EU to accomplish it, and we've been able to do this in four and a half, five years. So it's definitely something the world is looking at, and we've opened the world up.

Mr. Dias was our guest witness in the last hour, and he commented on the Canadian auto manufacturing industry, that the product we produce is not competitive with the EU's. My question is, why can't we be innovative and competitive and produce a product in Canada that we can export to the EU? Is that a possibility, from your perspective and that of your members?

[Jayson Myers]

It is. I mean, we're exporting cars to China. If we can export cars to China, surely we can export cars into the European Union. It's been difficult because of some of the inspections, the product standards. And the tariff sure doesn't help either. I'm confident that we will be able to export cars. I know that some of the larger assemblers already have plans—45,000 cars on the part of one company—to take advantage of the quota increase.

There's another thing that we haven't really discussed very much, which I think is an important part of this agreement, and it goes to your meetings in the United States. I would be very doubtful that the United States and the European Union will be able to conclude an agreement that is as comprehensive as this one. I think this really puts Canada in a very favourable position for businesses that are looking to grow in both Europe and North America. To the extent that drives new investment.... If I were a company and looking at Canada.... This is a high-cost jurisdiction, and that's one reason we've lost a lot of investments. Now this is an economy that's open to both Europe and North America, and that's a significant advantage. So I don't think we should underestimate the impact this is going to have in driving new investment, and as I say, opening up some new supply channels for smaller Canadian companies.

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

Thank you very much.

I'll pass the floor to my colleague, Mr. Shory.