Good morning, Mr. Chair, members of the committee.
Unifor represents more than 300,000 workers in nearly every sector of the Canadian economy. Unifor is also Canada's largest union in the private sector. With me is Angelo DiCaro, a national representative in our research department.
Let me first thank you for inviting us to share our thoughts on the proposed comprehensive economic and trade agreement.
Our union has been following these trade negotiations, to the best of our ability, since talks began in 2009. We've been critical of the deal on a number of fronts. Specifically, we've been critical of the way this deal has been negotiated, without the full and meaningful participation of trade unions, environmental NGOs, and other groups in Canada's civil society. The CETA is unlike any trade deal we've seen before, yet public concern raised by workers and others has been marginalized and largely dismissed. This has created a climate of unhealthy debate on a deal that touches so many areas of public life.
The CETA goes far beyond border tariffs. In fact, it impacts areas of public policy, procurement policy, foreign ownership policy, and local governance that have been off-limits in foreign trade deals we've signed in the past. It grants extraordinary rights to European corporations and it's the first bilateral trade agreement that binds our provinces, territories, and municipalities. That means local governments face new limits on purchasing services, setting regional development policies, building schools, hospitals, transit systems, and other matters.
For those reasons, and others I'll touch on, the CETA raises significant concern. I want to be clear. We believe that enhanced trade with Europe can be a good thing for Canada. We've said that all along. We also believe that in free trade deals like this, there will be positive outcomes for some industries and there will be cause for concern in others. The key issue in our view is to figure out how the CETA balances the two, then determine if that balance is in the best interests of Canadians.
I'll be frank. We haven't seen the full negotiating text of the deal. No one has. Because of that it's impossible to fully assess the impact this deal could have on Unifor members, and on Canadian workers more generally.
We appreciate the information that the government has circulated so far, but it doesn't provide an objective look at the deal. It is a slanted look at all of the supposed benefits of the deal. It's more like an advertising campaign than a genuine policy discussion, and that's simply not sufficient. It is irresponsible for any government to overstate the positives and downplay the negatives. Canadians don't automatically benefit simply because we've signed a trade deal, so I hope a full text of the deal will be made available to review as soon as possible.
Unifor represents workers in many sectors of the economy that are in the crosshairs of this deal. Not surprisingly, our members have important questions and concerns, as I do. I want to first say a few words about how this proposed trade deal could impact Canada's auto industry, which is an important sector both for our union and for Canada's whole economy. On auto trade Canada starts from, let's say, an unfavourable position with the EU. In 2012, we imported $5.6 billion worth of automotive products from the EU, the highest ever. Most of that was in finished vehicles.
EU auto imports have more than doubled since 1999. European automakers have increased their market share in Canada faster than any other group of producers over this period. The same year we exported only $269 million worth of auto products, mostly auto parts. Our exports to the EU have declined by half since 1999. If we add up all the damage, that's an enormous trade deficit of over $5 billion. The auto trade deficit alone accounts for close to half of our overall merchandise trade deficit with the EU. And so far this year that imbalance has gotten even worse. Auto exports to the EU are down by 16% compared to the year prior. We've imported 22 times as many auto products from Europe as we have exported there. That's the biggest imbalance of our bilateral auto trade ever.
Let's be honest about a few things related to the Canadian and European auto sectors. First, European car companies sell mostly high-end luxury vehicles here. These are produced at plants in Europe that service the global market. The cars we send to Europe are built for a North American market. They are bigger cars. They are muscle cars. They will never be more than a niche product for a European consumer.
If you understand those dynamics you'll then understand that tariffs have very little to do with the current trade imbalance. The imbalance reflects deeper structural factors in our industry. It also reflects a 15% run-up in the Canadian dollar against the Euro. The fragile European market is also a cause for concern.
The more we import, and the less we export, the weaker our industry becomes. The CETA will not change that. In fact, we think the CETA will make this bad trade situation with Europe even worse. Again, I haven't seen the deal, but I understand negotiators eased the rules that define a “Canadian-made” car.
The move makes sense, given how integrated the North American market is. It also makes sense because Canada is one auto-producing nation negotiating with a large block of auto-producing nations. Under these terms we'll be able to sell cars to Europe tariff-free that are 20% Canadian-made, but the sales limit is capped at 100,000 vehicles. Some have misunderstood this to mean Canada is going to sell 100,000 vehicles to Europe under the CETA. That is completely untrue. Currently, we sell a few thousand cars each year to Europe. If we are lucky, under the CETA, we'll sell 10,000. Our negotiators could have put that number at one million cars, it wouldn't have made a difference.
Will the CETA spell the end of the world for our auto industry? Of course not. But it will mean more lost sales and ultimately more lost jobs. No one I speak with in the industry thinks Canada's auto industry will be a net winner from this deal. The only question is how bad the damage will be.
It's not just the auto sector that concerns us. We've got a trade imbalance on wood products with the European Union; we import ten times the amount of furniture from Europe as we sell there. It's not to our advantage to simply sell Europe barely processed wood and ship back expensive furniture. The expected jump in drug prices will put additional strain on our health care sector. This is a sector already faced with chronic understaffing. Stripping governments of their ability to set buy-local purchasing policies limits the growth potential for our important mass transit sector. The list goes on. I encourage you to read our submission for a fuller brief on our various sector concerns.
Our economist at Unifor, Jim Stanford, predicted that the CETA could cost Canada another 150,000 manufacturing jobs. This is a worst-case scenario he's presented based on many factors, but even in the best-case scenario, tens of thousands of jobs are on the chopping block. Why such a hit on manufacturing? It's because we mostly sell Europe raw materials and they mostly sell us high-value manufactured goods. We have a nearly $30 billion manufacturing trade deficit with Europe and that deficit will likely expand, not shrink, under a free trade pact. Our union doesn't believe this is an attractive or strategic position for Canada's economy. We don't believe that a heavier reliance on resource extraction and resource export is how strong economies are built. Canadians must have the ability to balance our industrial development to enhance our capacity to manufacture value-added goods.
Instead it appears in the CETA we're negotiating away our ability to strike that balance. We're granting private European investors and corporations the right to challenge democratic policy decisions made by our national and sub-national governments if they feel these decisions infringe on their rights to profit. What about the rights of workers to decent jobs? What about the rights of citizens to democratic decision-making? As we see it, the CETA and the process in which it was negotiated doesn't seem to account for the interests of all civil society. It accounts only for a select few. I am encouraged that this committee is taking the opportunity to discuss the proposed trade deal, and once again I thank the committee for the opportunity to share our views.
In closing, I urge the committee to recommend that the federal government release the full text of the deal as soon as possible. I urge the committee to recommend that the CETA can only be ratified should the House of Commons and each provincial and territorial parliament vote in favour of it. Finally, I recommend that the CETA agreement remove the provisions for investor-state dispute settlement courts, and strengthening drug patent laws. These provisions have nothing to do with freer trade. They arbitrarily strengthen corporate powers in a way that will cost Canadians and their governments billions of dollars in the future.
I put these three recommendations to you for further consideration.
I want to thank you again for the opportunity to speak and we are free to answer any questions you have.
