International Trade Committee on Nov. 26th, 2013

[Brian Masse, NDP, Windsor West, ON]

You've made a good argument about the dislocation of industries. The free trade agreement killed the Auto Pact and tens of thousands of jobs. It brought our country from number two in auto assembly in the world to number eight because the NAFTA agreement didn't calculate Japan challenging the Auto Pact.

I'm going to ask two quick questions because I have limited time.

You've noted in your testimony today about dislocated industries. I'd like your opinion on which industries are going to be dislocated.

Then, to Mr. Clarke, there has been overwhelming testimony and evidence that drug costs are going to rise with regard to this agreement. How will that affect negotiations related to benefits, pensions, and the industries having to actually incur that additional cost, or the challenges that will fall on the public purse if those aren't provided for in the labour agreements we currently have in the private and public sector?

[The Chair, Conservative, Rob Merrifield]

Very quickly.

[John Risley]

Thank you, Mr. Chair.

I'm a great believer in having robust social programs. I'm not one of these crazy capitalists who doesn't want to support a segment of society that needs support. I think it's tragic that we have senior people who were trained for an occupation and who have earned a good living who are then, through no fault of their own, no longer able to get a job in that occupation.

So what can we do in that respect? We need to have a wealthy country so that we can help these people, so that we can help them retrain if that's their inclination, so we can help out with social programs. That's the obligation of Canada if you like. I think we are reasonably good in that respect. Are we good enough? We learned a lot from the 1988 agreement. We learned a lot from the collapse of the fishery in terms of retraining people, but you know what, we survived. If you walk around rural Newfoundland today I can tell you that it is wealthier than it has ever been. Was the road a bumpy road? Yes, it was a bumpy road, but we got there and we're better off as a result.

[The Chair, Conservative, Rob Merrifield]

Mr. Clarke, very quickly.

[Rick Clarke]

I think—and I touched on it in the presentation—just by lengthening out the patent process for non-generic drugs it's going to potentially cost employers, workers, unions, and our provincial government between $29 million to $56 million a year starting in 2023. That's going to have a major negative impact on the ability of benefit plans and the ability of the provincial government to do other programs, if they're going to have to absorb those costs.

[The Chair, Conservative, Rob Merrifield]

Thank you.

Mr. Shory, five minutes and you'll close this off.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Thank you, Mr. Chair.

Thank you to the witnesses for appearing this morning.

Mr. Clarke, it was very shocking to hear that you have not supported a single free trade agreement in the past. We heard from the Halifax Gateway yesterday, who spoke of $100 billion in Atlantic Canada and an opportunity in a market of 500 million consumers. Do you not believe that the elimination of all kinds of tariffs will benefit your union members?

[Rick Clarke]

I'm glad the question came up again, because I was going to ask for a point of privilege on it anyway. If I seem cynical on it.... One of your colleagues said there's been a lot of very tight consultation with key stakeholders, but it's very unfortunate—and I'm not talking about Rick Clarke—that representatives of the workers in this country are not considered a key stakeholder, because if we had been involved in some of that tight consultation, you wouldn't be getting the negative spin from us based on the past trade deals that we've had. That's because we were left to clean up the mess of workers being displaced because programs weren't put in place.

This one may go down the right road. If it does you may come around again and I'd be one of the first ones to say “Yeah, you did it right”—but to get the accolades it has to be done right. We can't just sweep peoples' lives under the table and say it's okay because we got a few shining stars up here.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Mr. Clarke, I look forward to that day when I'll hear from you “Yeah, you did it right”.

Mr. Risley, just looking at the gaps the committee has heard about from witnesses since yesterday, it is clear to me that increasing exports of fish and other seafood is welcome news here in the Atlantic provinces. How do you view the Canada-EU trade deal from the perspective of a larger company such as Clearwater Fine Foods Inc.?

[John Risley]

The European white tablecloth restaurant industry is the largest in the world, and although the economic conditions in Europe are not as robust as they are in Asia and is not growing—we're seeing really good growth in Asia, particularly in China—it's nevertheless the single most important market.

The point is that we need to diversify as a nation, and the danger from the success of the free trade agreement, because it was an enormously successful agreement as we all know, is that it increased our dependence. It grew the economy but in a very focused way and we ended up becoming more dependent on the U.S., and we can't tolerate that situation. So we need to engage with Europe; we need a free trade agreement with Europe.

I can't think of any worse scenario than the Americans going out now and negotiating a free trade agreement with Europe—as you know, they're now so engaged—and Canada not having a free trade agreement with Europe, because I can promise you that we would never get a free trade agreement with Europe if the Americans signed one. We would be forgotten. This is my point about being a small economy. We need to be very proactive. The world is doing bilateral deals, and this is a bilateral deal and we need to be out there doing bilateral deals.

[Devinder Shory, Conservative, Calgary Northeast, AB]

I also want to thank you for clarifying one more thing. We heard from another witness about the processing industry in the Atlantic. He said that this trade agreement would kill the industry, but I believe you clarified that. With the elimination of the 20% tariff on the processing industry, it will actually boost the industry, so thank you for clarifying that.

What steps has Clearwater taken to lay down the groundwork for entering into European markets that were previously unavailable for your exports?

[John Risley]

We're lucky because we're the country's largest seafood company so we can invest in sales and marketing efforts on a global basis when others can't. In many ways we use that to pave the way, if you like, for our smaller competitors in the industry, although we don't see them as competitors.

We now have two sales offices in Europe. We continue to grow our sales and marketing effort, not just in Europe, but around the world. We do business in countries such as Romania and Poland and we see eastern Europe as an emerging market for us because traditionally it wasn't a market in which we did business.

Anything that helps us on the regulatory front, anything that removes an impediment to trade, is a positive.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

That takes us to the end of this panel.

In talking trade deals, I'll just make a comment. I was speaking in front of Massachusetts—sorry, I believe it was Maine—congressmen and state legislators. They were explaining to me how NAFTA was the worst deal America had ever signed, and asked me one reason why they should support it. I said I'd give them 28,000. That's how many jobs were created because of trade with Canada, so it comes down to perspective a lot of times on trade deals.

I appreciate your testimony before the committee. We will suspend now for 15 minutes as we set up the next panel.

[The Chair, Conservative, Rob Merrifield]

We'll call the meeting back to order.

We want to thank our last panellists of the morning for being with us. They come to us both as individuals.

We have with us John Cody, as well as Winston Fiander, is it?

[Winston Fiander, Advocate, Community Fisheries, As an Individual]

“Fi-ander”. Yes.

[The Chair, Conservative, Rob Merrifield]

Very good. We look forward to your presentations.

We will start with you, Mr. Fiander.

[Winston Fiander]

Thank you very much, Mr. Chairman

In my presentation, I want to focus on the potential impact of CETA on the rural fishing communities in Newfoundland and Labrador. That's an aspect of our commercial fishery that receives little attention from fishery managers, policy-makers, and, I might say, trade negotiators in Ottawa and in St. John's.

Newfoundland and Labrador is blessed with some 40,000 kilometres of coastline that has hundreds of communities situated adjacent to some of the richest fishing grounds. Or they were the richest. They've been somewhat depleted in recent years, but they're very rich fishing grounds.

Now I want to give you some idea of the scope of what these communities contribute to the economies of Canada, Atlantic Canada, and Newfoundland in particular. In 2012 we had nearly 5,000 fishing enterprises operating in the inshore fleet, which comprises vessels of less than 65 feet. The inshore fish harvesters are self-employed fishing enterprise owners that employ some 10,000 skippers and crew members in the communities in which they live. This does not include processing jobs and the spinoff jobs created indirectly by the entrepreneurs.

In 2012 this fleet landed $370 million worth of fish, which was 60% of the landings for the Province of Newfoundland and Labrador. Now, to show you that this was not just a one-off, between 2000 and 2012, over that 12-year period, the Department of Fisheries and Oceans recorded that the average annual landings of this fleet were $360 million and accounted for 60% of the total landings.

This fleet has proven to be the foundation of a way of life in Newfoundland and Labrador for 500 years. Not only that, this fishery makes a much-needed contribution to the food security of our coastal communities and the province as a whole. If we extend this to the whole Atlantic region, plus Quebec, there are some 10,000 enterprises in eastern Canada that in 2011 produced landed value worth $1.8 billion. This fishery was probably the biggest employer in the whole of Atlantic Canada.

Now, these fishing enterprises are embedded in the economic, social, and cultural life of these rural communities. This fact was acknowledged with the introduction of two policies: the fleet separation policy, which was introduced in 1979, and the owner-operator policy, which was introduced in 1996.

Combined, these two policies restrain the purchase of quotas and licences by corporate entities and others who have the financial power to buy them up, consolidate them, and remove them from communities. So as you can see, they constitute a considerable barrier to loss of those enterprises, the jobs, and so on in communities. The policies, in other words, have acted as a bulwark. They've prevented the shutdown of enterprises. They've saved jobs. They've enabled owner-operator fishers to remain the economic engine in our coastal communities.

Now in addition to these two policies, we need new and innovative fishery legislation, policies, and programs to address other serious threats to the viability of our communities. One such serious threat is our demographics. They are arguably our greatest threat. Most fishermen are nearing retirement age and want to sell and convert their quotas and licences into retirement funds, but the problem with this is that aspiring young fishermen can't afford to buy their enterprises to enter the industry. So creative policies and initiatives are needed to ensure that these jobs and incomes stay in our communities.

Some of these are already in place, and I'll give you some examples.

St. Anthony Basin Resources Inc. allocates quota to the community and allows the community to use that quota for development purposes. The Labrador Fishermen's Union Shrimp Company has retained thousands and thousands of jobs along the shores of Labrador, on the south coast in particular. The Fogo Island Co-operative Society is another one. In Nova Scotia there's a program called Off the Hook, which allows the fisherman to contract with consumers to supply them with food for their households at a pre-arranged price. Cooperative ownership arrangements that allow fishermen or communities to pool licences and quotas and lease them back to members at reduced fair-trade costs is another. Even lending institutions such as the South Coast Community Development Corporation on the south coast of Newfoundland have recognized the importance of offering affordable lending options to young fish harvesters in order to support the continuance of inshore fishing in their region.

Now you're wondering why I'm raising all these things. I'm concerned that CETA may become a barrier to implementing, to in fact retaining, some of these policies, particularly the fee separation and the owner-operator policies, and it may become a barrier to implementing new policies that are sorely needed to maintain our communities.

[The Chair, Conservative, Rob Merrifield]

I'll interrupt you for a second. You have about two minutes left, and I'm looking through your presentation. You might want to hit the high points, because I don't think you'll get through it.

Go ahead.

[Winston Fiander]

I'll go quickly.

The main point I want to make here is that Scott Sinclair, who authored a study called Globalization, Trade Treaties and the Future of the Atlantic Canadian Fisheries, cautions that the two policies I talked about, the owner-operator and so on, have been listed in Annex II—though we've not seen the agreement, so I don't know if this is right or wrong. Scott Sinclair maintains this may mean that they are safe for now, but that they can, and he says will, become a target for attack later on. Once they come under attack, they will be referred to the World Trade Organization for judgment, and that means we would have lost control of two policies that are very, very important to rural Newfoundland and rural Atlantic Canada.

Currently there's an initiative under way by the Food and Agriculture Organization of the United Nations calling on nations—Canada is a part of this process, I might add—to recognize and protect our small-scale fisheries by adopting the “Voluntary Guidelines for Securing Sustainable Small-scale Fisheries in the Context of Food Security and Poverty Eradication”, a typical UN-titled paper.

The objectives of the guidelines are “to provide advice and recommendations, establish principles and criteria, and information to assist States and stakeholders to achieve secure and sustainable small-scale fisheries and related livelihoods.” So I call on the drafters of CETA to consult those guidelines and let us remind European countries that they're involved in this process that CETA should be consistent with those guidelines.

In closing, I want to thank you for the opportunity to speak to you, but I have to say that it would have been more enlightening to you, and more in line with democratic principles of Parliament, if you had held your ninth meeting—this is your eighth meeting—in Newfoundland.

Thank you very much.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

We'll now move to Mr. Cody. The floor is yours.

[Colonel, Retired) John Cody (As an Individual]

Good morning. Thanks for the invitation to be here today.

My name is John Cody, as you know, and I reside across the pond in Dartmouth.

I joined the RCN in 1963 as a pilot, and I retired 32 years later as an air force colonel and a wing commander at Shearwater. I was in charge of a two-ocean fleet of Sea King helicopters. I have roughly 4,000 hours flying them.

I served in Washington for three years in charge of procurement of the Canadian-made helicopter hauldown and rapid securing device for the United States Navy. My job was to oversee the modification of Canada's beartrap system to meet USN specs for their LAMPS Mk III helicopter program, and then I sold it off to the USN for about $350 million in 1983.

At NDHQ I was the class desk officer for the Sea King fleet. After retirement in 1995 I worked for 10 years as the general manager for General Dynamics Canada's software support centre in Dartmouth in support of the maritime helicopter project.

During this time I served on the Aerospace and Defence Industries Association—who I understand are meeting down the road this morning—as executive vice-president for five years, and chair of their HR partnership, a subcommittee of ADN, and I retired from GDC at the end of September 2013. That's about seven weeks ago.

My perspective is interesting, to me anyway. This is a very large package. What I found amazing was that the officials who have worked on the agreement have achieved approval in principle from 13 different levels of government in Canada, the European Parliament, and 28 nations, and that is a remarkable feat, in my view, and I have worked on some big projects before.

It's nothing less than Canada and the EU promoting bilateral trade by eliminating tariffs and reducing non-technical barriers to support the flow of goods, services, investment, and labour, an important area.

The negotiations so far have and will continue to examine the following areas: trade in goods and services, investment, government procurement, regulatory cooperation, intellectual property, temporary entry of businesspersons, competition policy, labour, and for good measure, the environment.

It's thought the impact of the agreement in Canada will vary within and across various sectors and industries. This will depend on how firms adapt to the changing trade environment. I understand the mechanism proposed in the draft agreement calls for 99% elimination of non-agricultural tariffs upon signing, rising to 100%, more or less, over the next seven years.

A sectoral analysis indicates that industries that benefit from protective barriers today will suffer a negative hit as imports will now enter Canada at lower prices. A preliminary review suggests minimal impacts to most commodity exports, with a positive boost likely for processed goods.

In agriculture there is currently a 13.9% average tariff on Canadian goods entering the EU, which will lower to 0% over time. This should support increased access to European markets in the longer run, which as Mr. Risley pointed out, has to be good for Canada.

The proposed elimination of 95.5% of tariffs has to benefit the exporters of seafood.

In wine and spirits some Canadian product areas will receive special recognition for distinct products with special character or particular quality. I can think of Glen Breton scotch in Cape Breton, for instance. Foreign wines are therefore expected to be more competitive in Canada.

Government procurement is a large and extremely complex area. It's expected that Canada is likely to be a net beneficiary of this segment, as its exclusions apparently are much broader in scope than those proposed by the EU. The EU government procurement market is $2.7 trillion, all of which Canada will have access to under the terms of CETA. If someone wants to argue with the term “all of which”, I would say “most of which“.

Similar advantages are there for European firms to bid on Canadian contracts, with the exception of the following: defence contracts, R and D, aboriginal business, education, and social and health care services.

Investment thresholds requiring formal review will rise from $344 million today to $1.5 billion for EU investments in Canada. As an aside, investment thresholds will also rise for countries who already have free trade agreements with Canada, like the U.S. and Mexico.

The phasing out over seven years of a 6.1% tariff on autos from the EU is expected to result in lower prices in Canada for European cars. It's thought that the slow phase-out of tariffs on cars from the EU will allow Canadian auto manufacturers to adapt over time to the changes, as they are luxury models and hold a small share of the Canadian market. The preferential tariffs on cars shipped from Canada to the EU will be based on how much Canadian content they possess. Fifty per cent or more Canadian content will be duty free in the EU, which will lead to an increase of Canadian exports to Europe.

Temporary foreign workers are a big issue. Canada will protect health care, public education, and social services sectors. Preliminary documents suggest unimpeded access to Canada in all European sectors. Temporary entrance provisions for highly skilled workers in both Canada and the EU have been described as extensive. This will make it easier for temporary workers to work in both Canada and the EU. From my experience as chair of the HR partnership, I think it will be difficult for the aerospace and defence sectors to get trained workers. I'll welcome a couple of questions about that a little bit later.

The EU will allow for greater transparency in licensing. They'll also streamline the recognition of Canadian professional qualifications. Canada, meanwhile, will continue to struggle with the recognition of professional qualifications, as has been the case for years. I personally think that Canada has to get over itself.

Canadian banks with investments in the EU will benefit from enhanced investment protection, plus increased access to EU marketplace. The largest import, at 11.6% market share, into Canada from the EU is pharmaceuticals and medicine manufactured in Europe. CETA will ensure this remains for the first eight years of the agreement, and they've promised market exclusivity for a time for the Europeans.

From a Nova Scotia point of view, there should be very significant benefits for the Port of Halifax. The autoport is expected to grow. Halifax's two container terminals should see new business, possibly even a third terminal. The trade of goods could increase by $29 billion. Exports could increase from Canada by 23%, or $10 billion, and EU exports to Canada could increase by 36%, or $19 billion.

There are risks, however. The value of the Canadian dollar relative to the Euro has increased 19% since negotiations started. So some of the impacts that people are talking about today will change. There are many unknowns, and the impacts of the agreement are not well-understood. We've heard this time and again this morning.

But there are also opportunities. We could have an increase in GDP for both Canada and the EU, which translates to jobs. There will be increases in trade opportunities for both Canada and the EU. Market access for domestic firms will increase. EU government procurement will be made available to Canada, with a few exceptions. We will have increased access to innovations that can help Canadian firms become more productive. Canada will be more open to EU investment, and increased labour mobility will allow Canada to access talent, assuming that we have more foreign credential recognition and enter into mutual recognition agreements.

There are some challenges. Communications with the general public have been minimal during these the initial negotiations, which has caused suspicion and a lack of support among Canadians in general. I'm led to believe that numerous groups are opposed—CUPE, the Canadian Auto Workers Union, and the Council of Canadians.

In conclusion, the agreement is so comprehensive that it may scare some people when they first try to mull through it. The negotiators have done an excellent job to date in my view. As we found out with the Canada-U.S.A. Free Trade Agreement, it has been by and large welcomed by Canadian business. That is a successful model, and I have a very strongly held opinion that this agreement will be successful as well.

The maritime provinces, in particular, absolutely need to be on board with this initiative. And as new business in the U.S.A. grows more difficult by the day, even with the free trade agreement in place, Canada will absolutely require this new initiative in place to have trusted partners they can work with.

Thank you.

[The Chair, Conservative, Rob Merrifield]

Well, thank you very much.

We'll now move to question and answer.

We'll start with Mr. Morin. The floor is yours.

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

Mr. Fiander, do you think that.... It's not a matter of being in favour of the deal or against it. It's bound to happen because of....

Isn't the problem how we are going to take care of people, because there will be disruptions? Newfoundland is a good example. People have been living in fishing communities on beautiful coasts and they now live in ATCO trailers by the river. It's not a choice they should have to make. If they decide they want to save money for establishing their kids and have a decent retirement, they can make that choice and I commend them for doing it. But they shouldn't be forced to do that.

When we think of a trade deal, do you think we should look at how the different groups might suffer inconvenience, and that we should not back off on small elements in the deal? Sometimes it could only be the wording. The softwood lumber dispute between Canada and the U.S. was built on one word. Instead of saying “in comparison to the U.S. market“, it said “in relation to the U.S. market“. That cost us 450,000 jobs and nearly a billion dollars. In my riding the five biggest employers have shut down their mills, and that's years after the dispute. We have to look at the details and take care of the people affected.

Can you speak to that?

[Winston Fiander]

Certainly, I agree with you. The point I made at the beginning of my testimony is a fact that is largely ignored, that the in-shore, small-scale fishery is a huge contributor to our economy. I have to say that Fisheries and Oceans thinks economic efficiency is the answer to all the woes of the fishery. And if you go down that road, we will end up with factory freezer trawlers that employ a fraction of the people employed now.

And of course, there's always the economic efficiency of in-shore fishery. It doesn't fit because it is too narrowly defined. There are so many benefits that flow from that small-scale in-shore fishery. I gave you the numbers. In Atlantic Canada there's $1.8 billion worth of product.... That puts a lot of money in a lot of people's pockets. We can shrink the industry—and that's the tendency of government, to rationalize, rationalize, rationalize and shrink the industry—until Mr. Risley and three or four others are going to own and harvest that resource, and pocket the benefits. We have to think how the benefits are distributed.

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

What I gather is that it's much simpler to deal with one big corporation than 5,000 angry fishermen.