International Trade Committee on Nov. 26th, 2013

[Rick Clarke]

It's not new. I'll start off that way.

I come out of the shipbuilding and ship repair industry, and in our industry some of the more senior people have come from Europe. But they have come through immigration strategies. If we're going to be doing it and it's going to be a mobility issue such as we're seeing with the temporary foreign worker program right now, then our young people are really not going to be given the opportunities for the training or for the jobs.

As John has said as well—I hate to be reading in the dark side all the time—when you don't know what is in the document, it's hard to see what's being said about labour mobility. Right now, our experience has been that it's a dirty word.

[Don Davies, NDP, Vancouver Kingsway, BC]

Let me ask you both this question. Mr. Risley, you're a very prominent and successful businessman. Mr. Clarke, you've obviously dealt with a lot of labour agreements.

Would you agree with me that you need to see the actual text of the agreement and study that agreement to understand what the details are before you can fully evaluate whether or not it's of net benefit to Canada? Or are you prepared to go on the basis of a summary document?

[Rick Clarke]

To me, what you just described was what I see as consultation. If we want people to buy in—and I agree with the analogy John made previously that there were a lot of wrongs on both sides, because there wasn't a lot known on both sides—and we're going to do this and want to do it right, we should learn from our mistakes in other, previous trade agreements and have full consultation with the stakeholders.

We're the ones who are going to bear the brunt of it, both the employers—possibly some on the good end and some on the bad end.... We don't have a huge cheese industry, but we have one. We don't have a huge dairy industry, but we have one.

[Don Davies, NDP, Vancouver Kingsway, BC]

Mr. Risley, do details matter?

[John Risley]

Here is the practical problem. You can't have 10,000 people negotiate an agreement. You have to rely on those who are in a position to negotiate on your behalf to do the best job they can.

Will mistakes be made? Yes. We have not signed perfect agreements. Have we signed good agreements that have been good for the country? Yes. Is this a good agreement? I'm prepared to say that yes, on the basis of what I know now, this is a good agreement. Will it be a perfect agreement? No.

Will it upset some people and will it dislocate some industries? Yes. But on the whole, it is a good agreement and will be good for the country; I'm very confident about that.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We'll now move on to our second questioner.

Mr. O`Toole, the floor is yours for seven minutes.

[Erin O'Toole, Conservative, Durham, ON]

Thank you, Mr. Chair.

Thank you, gentlemen, for appearing today. As I've said to all of our witnesses, it's important for this committee and members of Parliament on all sides to get out of Ottawa and speak to folks creating jobs, creating economic activity, representing other Canadians, and to get their feedback. So thank you for making the time.

Mr. Risley, I like the way you outlined not only the spectacular opportunities that came with the free trade agreement and NAFTA—about four million jobs now are attributable to that agreement—but also the fact that it increased our dependence upon the U.S.

For many decades we were fortunate in being able to basically produce and sell most of our goods and services and products, seafood and agricultural products, to our largest trading partner, and we didn't diversify our trading relationships really over the last generation. With the U.S. potentially in slow to sluggish growth over the next decade, it has been a priority for our government to diversify those relationships.

From your perspective and from your company's perspective, how have you been tapping other markets beyond the U.S., into Europe and beyond? In your experience, is that increasingly critical to your success as a company?

[John Risley]

The real problem is not for companies of our scale. For instance, I'm guessing we would have probably 40 sales people who work directly for us in three offices in China. Your average small Canadian company is not going to be able to mount that kind of sales effort.

But here is my worry. My worry is how we support, both as a business community and as a government, the development of small businesses, not just in Atlantic Canada and not just in the fishing industry but in all industries right across the country.

It used to be, 30 years ago, that you could have a reasonably successful business that only did business in Canada.; it didn't have to compete with anyone else. Now virtually any successful business in Canada cannot be successful if it isn't globally competitive. This is not to say that it has to do business everywhere in the world; it's just that it has to withstand the competitive influence of people from elsewhere in the world. Look at companies such as Walmart, which now sources 30% of its products from China.

My point is that the regulatory environment has to be supportive. It has to provide for opportunities. We cannot, for instance, let the issues that almost derailed our entry into the Trans-Pacific trade talks, the issues that were thrown up by the supply side folks.... Think about the hypocrisy of a country taking the position that it is globally competitive in meat products and globally competitive in grains, but not in dairy, so we want you to let us trade freely in wheat and meat products and all the other things we're really competitive in, but we want a protected market in those uncompetitive products. That's an enormously hypocritical position for a country to take, and obviously it's not going to get us into trade agreements.

You need somebody to say that we need to do the right thing for the country. The right thing for the country is to move forward and tell the dairy industry, if it's a protected industry, that it needs to become competitive and that there will be some dislocation.

Now, do we need to be their partner and help them through that dislocation? Yes, that's the role of government. We need to figure out how we can help the dairy industry be competitive.

Do you know why? It's because the average Canadian should not be paying a premium for milk. Why should we be doing that? It's ridiculous, when you think about it. There is a cost.

Again, it gets back to having to engage with the world and having to understand that change is just a part of the medicine when trying to improve and trying to grow the economy.

[Erin O'Toole, Conservative, Durham, ON]

Thank you.

One of the other points I'm glad you seized upon, because we've heard a little bit in this area in the last day, is the higher tariff rates for higher value-added products, in seafood in particular. You mentioned the difference between the 8% tariff rate for fresh lobster versus 20% for processed. It's the same with shrimp. Fresh shrimp is 12% and cooked shrimp is 20%.

You said that the elimination of those higher tariff rates for processed seafood would lead to better economic chances for the onshore processing industry. Could you elaborate a little more on that?

[John Risley]

Yes, sure.

My colleague here at the table raises a very legitimate point, and I want to address it. What is going to happen? Are these so-called opportunities in process jobs going to go to Europe? My answer to that is no, and the reason is that we're pretty good at what we do.

We have a shrimp industry of scale and a lobster industry of scale. They don't have a lobster industry of scale. We are very competitive in these products, and we can absolutely add value here in process and create jobs around reduced tariff barriers. That's the route to higher prices for our industry—adding value. Adding value has a labour component. It's not the only component, but it is an important one.

[Erin O'Toole, Conservative, Durham, ON]

Thank you.

Mr. Clarke, thank you for appearing. For my friends on the opposite side here, I've heard this concept of a “veil of secrecy”, and that sort of thing. But in fact, with the provinces and territories, the key industry associations and groups, there have actually been historic levels of consultation in getting to an agreement in principle. That's why there's been almost universal praise for the outreach our government has done with the provincial/territorial levels and key stakeholders from coast to coast to coast.

The response to the “veil of secrecy” comment would be to see the full agreement. When you were at the collective bargaining table, before your position now, you were charged by the union members you represented to negotiate a deal on essential terms—wage rates, time of agreement, job security, these sorts of things. Aren't these the essential terms you were entrusted to negotiate, in much the same way that the essential terms of this trade agreement have been shared and are being discussed? I wonder how many members of your union would read every page of the collective bargaining final agreement.

[The Chair, Conservative, Rob Merrifield]

I'll stop you there.

Give us a short answer, please. Go ahead.

[Rick Clarke]

I'm not suggesting you do what we do with the ratification of a collective agreement for the population of Canada. What we do with a collective agreement is we negotiate in secrecy until we get a tentative agreement. But before it is ratified, we have full disclosure to the membership. It's wide open for the membership to come to the meeting, get handed a copy of the collective agreement, and go through it page by page. Then a few days later, or a week later, we have a ratification vote on it. So there's full disclosure.

[The Chair, Conservative, Rob Merrifield]

Very good. I think the point being made is that it will be debated, the full text, in Parliament before it's ever voted on.

Go ahead, Mr. Cannan. The floor is yours.

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

Thank you, Mr. Chair.

To our witnesses, good morning, and thank you all for being here. Thanks for your perspectives.

I agree that a balanced approach is always best when trying to negotiate. It was kind of the philosophy of many Canadians. It was summed up by Preston Manning when he said “Why did the Canadian cross the road? To get to the middle.”

We're always trying to find that middle perspective in agreement so we can provide the best for Canadians across the country. Is that always possible? No.

Mr. Risley, you mentioned the 1998 free trade agreement. Just a couple of days ago there was a documentary on the 1988 election, and it brought back the scenario. It was interesting. Some of the advertisements were very strategic. They said the agreement would erase the 49th parallel, that we were going to become the 51st state, a colony of the U.S. There was a lot of fear-mongering out there.

Unfortunately, we hear some of that today. But it's always easier to stay positive and look to the future. We also need to learn from our past experiences. The free trade agreement, NAFTA, is definitely far from perfect.

Would you agree that this CETA agreement is a 21st-century agreement that's going to be a template for helping not only Canada in our future trade agreements but also other countries in the globalized trading world?

[John Risley]

Again, I think you'll find that the general consensus amongst economists around the world is that free trade is the single biggest contributor to global GDP growth.

So having said that, it's really up to constituent, if you like, parties to that agreement to take advantage of the opportunity. The problem with the free trade agreement with the United States is that Canadian business rallied and took advantage of that opportunity and generated jobs and economic growth, but it has made us more dependent on the United States. That's a concern, and it's a concern because if you look at global economic statistics, the emerging middle class and the growth in the middle class are not going to come in Europe or in the United States, they're going to come in Asia.

So Canada has to reposition itself. It needs to do two things. It needs to make sure that its industries, companies, and emerging companies—especially its small business community, which is so important to job growth—understand that their mandate is a global mandate. This is not about building a company in Nova Scotia to do business in Nova Scotia or to sell in Newfoundland. This is about building a company in Nova Scotia and Newfoundland that can do business around the world. That's a really important initiative, if you like, at the grassroots level.

Second, we have to encourage business to get out there and do what it can to export around the world. One of the things that the government can really be helpful with is this. If you look at the German model, if the German model stands out in Europe as being an export-led model that has done great things, one of the things that the German government does is that it really helps small business by investing heavily in trade development and support missions at its embassies and cities around the world. If you talk to German industry, especially small business—not the big guys, but the guys who can afford their staff—this is what we need to do.

So it's not just enough to sign a trade agreement. That's just the start. It's about what follows through on the trade agreement. What are we going to do to help those industries that are going to go through dislocation? And what, more importantly, are we going do to support those industries for which there is now a new opportunity as a consequence of the agreement?

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

That's one of the reasons why we're today, and it's a privilege to be able to be in this and other parts of this country, to find out how this agreement could benefit Canadians across the country.

Mr. Clarke, there's a picture of this gentleman, the chair of the trade committee. Other than that, the article is pretty good: “Nova Scotia will benefit from EU trade deal, Commons committee told”, in today's Chronicle Herald.

I just wanted to talk a little bit about the reason for the importance of trade agreements. It's rules-based trading. Mr. Risley indicated that industry likes stability and confidence. From the union's perspective, do you feel that Nova Scotia businesses can compete globally?

[Rick Clarke]

If the safeguards are in place. That's why I said at the onset that we're not opposed to this. It's just that there are a lot of unanswered questions. I like what John said, that there are going to be dislocations. We didn't do what he said under previous agreements. We've lost many of our manufacturing processes in this province. We've lost a lot of our forestry. We lost a lot of other industries, and there was nothing there to help those people, nothing for those industries or small business. If it's done right, if the whole puzzle was put together, then it may work in the best interest, but if we just sign the deal and then say “let nature takes the course”, then I think, and again I'm not a fearmonger, but if we look at our past experiences, we could live the same problems.

I have great confidence. Maybe we should have had some key stakeholders. You can't have 10 times those people at a table, but you could have key stakeholders involved in some actual consultation, or even at the table, because they have a lot of experience in negotiations.

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

You reiterated several times that you're not opposed to free trade agreements. So which trade agreement has your federation of labour supported?

[Rick Clarke]

None of them yet, because we look at fair trade as well. As I just noted, we lost industries. We weren't consulted on those, and hopefully we're going to be able to look at this one. When I reference the labour standards, if you go to the lowest common denominator, that will help no one. It may help industry, it may help profitability, but it's not helping local economies. So we don't know if that's in there. You may be dealing with that. You may be looking at labour standards, wages, health benefits, health and safety issues; I don't know. If we're dealing with all those things, then this could be a good deal.

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

One in five jobs is created from trade; it's 75% of our trade with the U.S.

We have multiple bilateral trade agreements, and your labour association has not supported one?

[Rick Clarke]

No, I shouldn't say not one of them.

With one of the other committees, the advisory council that I'm on, I know we have a growing and vibrant IT industry in this province that is trading and working worldwide. Through those processes, we're supporting them.

[The Chair, Conservative, Rob Merrifield]

Mr. Masse, for five minutes.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thank you to our witnesses for being here.

Forgive my use of the auto industry as an example, but that's where I come from. When I see a car commercial on TV, I don't just go and buy that car. I go down to the dealership and I ride the car, open up the hood, take a look at the engine, kick the tires, go through the agreement, decide on how I want to actually finance the car, and then finally read the material in front of me and make a decision before I put my signature on it.

Right now, we just have a brochure of what could be possible. That has to be ratified by over 20 European nations. It could be modified, so I think the presentations you've had today are important. It shows that we still... You know, we're not travelling across the country. We've been in Ottawa and we've come to Halifax for a couple of days. We haven't really consulted with Canadians, and we still don't have anything more than a brochure.

Having said that, Mr. Risley, have you done an assessment in terms of what's been presented, in the context that we have right now? Have you done an assessment with regard to the competition you will face in Europe?

[John Risley]

Yes, I have.

But that's an easy answer, and it's an easy answer because we're a protein provider, if you like. Nobody in the world is going to starve to death tomorrow if we don't export any of our seafood protein from Atlantic Canada. That's not to say that the European market isn't a hugely important market for us. It's a white-tablecloth restaurant market. Much of what we produce in the seafood sector in Atlantic Canada is destined for a white-tablecloth restaurant market, and probably the most developed in the world is the European white-tablecloth restaurant industry.

Our competition is not another lobster company in France or Scotland or Norway; it's other proteins. It's providing an attractive product, if you like, for the restaurant community. It's not just about tariffs. When we first went to Europe in the mid-1970s, we were subject to tariffs and we were able to build a successful business. The issue in those days was about figuring out logistics.

My point is that it's not any single barrier or any single point that is going to all of a sudden be the difference between having a market and not having a market. It's a component. That's why I'm not here saying this is the greatest thing since sliced bread and we're all celebrating in the streets.

Will it be helpful to our industry? Yes. Will it create some more jobs? Yes, it will. Is this good for Nova Scotia and Atlantic Canada, and is it good for the country? I happen to believe it is.

I have a fair degree of intimacy with the agreement. I have not read the whole document, but I remember that the free trade agreement in 1988 turned out to be 900-and-some-odd pages, and I'm not sure that many folks actually read it.