International Trade Committee on April 18th, 2016

[Scott Kemp]

Thank you. We're kind of blessed with living in one of the best parts of the world, but it does have its challenges with earthquakes and tsunamis. It's forced us to actually develop those skill sets.

[The Chair, Liberal, Mark Eyking]

I'd like to thank the panellists for coming for the second round and for your good submissions and all the good questions we had today.

We're going to break for fifteen minutes and we're going to come back with our third set of panellists.

I suspend for fifteen minutes.

[The Chair, Liberal, Mark Eyking]

Welcome, everybody, again. This is our third panel out of four panels here in Vancouver, British Columbia.

We have some more witnesses here. I've been giving some latitude here. I don't mind the odd hoot if you like somebody saying something, but we will not tolerate any heckling with the witnesses. It's not fair to them.

Anyway, we'll continue on with our meeting. On this panel, we have the British Columbia Cattlemen's Association, we have the Greater Vancouver Board of Trade, and we have the Union of British Columbia Indian Chiefs. So welcome, and I think we're going to start off with Mr. Boon, from the B.C. Cattlemen's Association. Five minutes, please, sir.

[Kevin Boon, General Manager, British Columbia Cattlemen's Association]

Thank you very much for the opportunity to come and present on behalf of the cattlemen here in B.C., and really of the cattlemen in Canada, as we are very much a national industry.

B.C. Cattlemen's Association represent nearly 1,200 producers, which raise more than 75% of the cattle here in B.C. and make up about 5% of the Canadian cow herd. The cattle industry in Canada exports nearly half of what we produce. Since BSE was discovered in Canada in 2003, the government and the cattle producers have worked very hard not only to re-establish trade with the partners we enjoyed prior to its discovery, but also to open new markets around the world.

For the past several years, of course, our main focus has been on resolving the country of origin dispute with the United States. We greatly appreciate the hard work of the government in sticking to our guns on this. We feel that this really exemplifies what trade agreements are about. If we don't stick to our guns, then they're not worthy of being done. We really do congratulate you on sticking to it and bringing resolution to this.

With COOL resolved, it's important for our industry that we now focus on the priority trading partners and agreements. The two most immediate opportunities are with Europe, with the CETA, and the Trans-Pacific Partnership.

British Columbia's cattle industry is very supportive of ratification of the TPP trade deal. We see value not only in the markets that it will allow increased access to, while keeping us on a level playing field with the players from other partner countries; we also anticipate through this better cut-out values for our cattle.

Our industry benefits greatly when we are able to match the right product with the right market. We see preferences for certain cuts of meat and by-products with every trading partner. This increase in demand sees us with greater returns for virtually every cut of beef, thus making each individual animal have a higher cut-out value, allowing greater opportunity to profit for the entire supply chain.

The primary goal for the TPP negotiations was achieved for us with the re-levelling of the playing field for access to Japan for Canadian beef. We are seeing the effects of slipping into competitive disadvantage already, as Australia has already gotten a free trade agreement with Japan. Canadian beef is still subject to a 38.5% tariff, and Australia is already down to 27.5% and dropping.

To illustrate the difference between 2014 and 2015, we saw Canada export nearly 19,000 tonnes of Canadian beef to Japan in 2014. In 2015 that figure dropped to 14,000 tonnes, a 24% drop in tonnage. We went from $103 million in sales to $93 million, a 9.3% drop. The reason for this change was in the dollar valuation: we were able to see more return of dollars, but a huge drop in tonnage, and a lot of it we can attribute to other countries' having FTAs, whereas we do not.

With the implementation of the TPP, the Japanese tariff on Canadian beef will immediately match the rate for Australia and then decrease to 9% over 15 years. It is anticipated that the amount of Canadian beef going to Japan would double or even triple, and we could see the value increase to $300 million. Without the TPP or a bilateral agreement with Japan, Canada will likely lose around 80% of the value of our beef exports to Japan.

Our only concern about TPP is that it might not be implemented. While it is not certain what the U.S. will do, we know that according to the implementation formula, the TPP cannot come into effect without the U.S. Because of this, we believe there need to be strategies for Canada, should this happen. It is unfair to Canadian exporters to try to compete with other countries that already have achieved FTAs.

While a great deal of the value is with Japan, it is not the only benefit. While we cannot quantify the amount at this time, we feel that Vietnam will be a market of growing importance for beef. Vietnam has tariffs of 15% to 20% on beef cuts, which will be fully eliminated under TPP in three years. Vietnam's 10% tariff on beef offals will be eliminated in five years.

There is no question that our beef industry in Canada being part of the deal involved with Japan is imperative. We do appreciate that there are many considerations involved in this in Canada. To remain competitive in the global markets, we must be one of the founders in the TPP.

[The Chair, Liberal, Mark Eyking]

Thank you very much, Mr. Boon. You came in on time.

Mr. Crawford, from the Vancouver Board of Trade, you have five minutes.

[David Crawford, Vice President, Greater Vancouver Board of Trade]

I am happy to be here today to represent our board of directors and over 5,000 members from across the Greater Vancouver region.

For those of you who don't know, on the makeup of the business community in British Columbia, 98% of all businesses in British Columbia are small businesses. That's reflected in the base of our membership.

The Greater Vancouver Board of Trade has worked on behalf of our region's business community to promote prosperity through commerce, trade, and free enterprise for 129 years. Our mission is to work in the enlightened interest of our members to promote, enhance, and facilitate the development of the region as a Pacific centre for trade, commerce, and travel.

Our organization strives to enable and empower its members to succeed, grow, and prosper in the global economy. As Canada's gateway to the Pacific, we know first-hand the economic benefits of diversified trade in the Pacific region. British Columbia is projected to lead economic growth in Canada, and this would not be possible without other free trade agreements like the Canada-Korea Free Trade Agreement and the Softwood Lumber Agreement.

The Trans-Pacific Partnership provides an opportunity to expand trade relations for both British Columbia and the country as a whole, and my concluding comments will come back to that.

With 65% of British Columbia exports already destined for TPP member countries, the agreement is expected to increase our exports by $320 million per year and create approximately 2,500 jobs across the province. This is particularly true in rural and coastal British Columbia.

Our geography and diversified economic base positions B.C. to uniquely benefit from reduced tariffs and increased access. Other panellists today are better qualified to bring their own industry experience to that. But clearly, should Canada not ratify the TPP, the economic impact to British Columba is estimated to be a half a billion dollars.

The agreement will eliminate tariffs on B.C. forestry and value-added wood products allowing them to reach higher growth markets, including in Vietnam and Malaysia. B.C.'s coastal food industry will benefit from greater access to Japanese consumers, where high tariffs currently limit Canada's access to one of the world's largest consumers of seafood. Numerous examples can also be found in clean tech, agriculture, and mining, to name a few.

Furthermore, our domestic industry and consumers will benefit from a more competitive market for goods. Our ports, airports, and transportation industry will also benefit form the growth in the volume of goods and people moving across the country in and out of untapped markets.

The Trans-Pacific Partnership ability to align environmental and economic priorities cannot be overlooked. British Columbia has long been an international leader in environmental protection and conservation. If the TPP is implemented, it will bring into force, among our trading partners, environmental standards to ensure our industry remains competitive while we safeguard the environment.

One of the things that I'd like to draw your attention to, should the Government of Canada choose not to enter TPP or bring it into effect, is that small businesses in Canada are paying attention. To the positive, should the Government of Canada bring into effect the TPP, one of the things I'd like to draw to your attention is how to think forward, and what does that mean to maximize the potential.

I'd like to, as a point of reference, explain briefly a program that the Toronto Region Board of Trade has developed and is implementing right now. It's called the trade accelerator program. It's to serve as a one-stop shop for companies that don't export, but want to export. Specifically, in the Greater Toronto area, its focus and objectives are to create a culture of international trade, grow the export capacity of the region, consolidate resources, and leverage the private sector's expertise and sponsorship of its most export-viable client companies, while remaining focused on targeted trade clusters.

Effectively what's happening in Toronto is that within three months, export advisers will help businesses develop a market entry plan, begin its activation, support and nurture smaller companies that can one day become large companies. This involves a combination of workshops, clinics, and one-on-one coaching.

I'd like to quote specifically from a Toronto Region Board of Trade export report dated May 2015. It says, “Firms engaged in global markets have a remarkable economic effect.” They are more innovative, more productive, and generate more jobs and higher wages. As The Conference Board of Canada specifies, every $100-million increase in exports creates approximately 1,000 new jobs here in Canada.

With only 5% percent of export-viable companies in Canada trading globally, the opportunity in front of us is enormous. And yes, I did say 5%. If we are able to simply move that with small and medium-sized businesses, should the TPP come into effect, it will only amplify the economic impact.

The Greater Vancouver Board of Trade believes that market diversity and global connectivity are vital to growing a strong economy. The TPP is therefore necessary to further the prosperity of both our province and country alike. The Greater Vancouver Board of Trade processes trade documents. We know first-hand that there are companies that are prepared to make investments today should the Government of Canada say yes.

Thank you.

[The Chair, Liberal, Mark Eyking]

Thanks very much, sir, for your presentation.

Before I give the floor to Ms. Sayers, I would first like to thank you for letting us be on the first nation Salish territory. It's good to be here, and it's good to be in your beautiful part of our country.

You have the floor for five minutes. Go ahead.

[Brenda Sayers, Union of British Columbia Indian Chiefs]

Good morning. My name is Brenda Sayers, and I am from the Hupacasath first nation on Vancouver Island. I am here with a unique perspective on trade agreements.

I was a portfolio holder for my nation on the Canada-China FIPA and spent nearly two years in court with the former Government of Canada in an attempt to have our people heard. As it turned out, it was a rather futile exercise, as Prime Minister Harper chose to ratify the agreement without waiting for the court's decision in the case.

Today, I am representing UBCIC, an organization of indigenous nations in British Columbia, founded in 1969 and dedicated to promoting and supporting the efforts of indigenous peoples to affirm and defend aboriginal title, rights, and treaty rights. The UBCIC is guided by the principle that indigenous peoples possess an inherent right and responsibility to care for and protect our lands and resources, to govern ourselves, and to enter into relationships with other nations guided by our laws and traditions.

The TPP and associated processes threaten our inherent indigenous rights, title, and treaty rights, as well as our respective territories. UBCIC is extremely concerned the Government of Canada signed the TPP without consultation or consideration of the constitutionally protected, judicially recognized, and internationally enshrined rights of indigenous peoples across this land. It is especially true in B.C., as many of the resources require direct access to our lands, lands protected by our inherent and unceded rights and title. Trade agreements, such as the many foreign investment promotion and protection agreements, CETA, and TPP, prioritize corporate rights over our rights.

The TPP will impose non-discrimination between a local and an international investor, thereby granting more rights to the transnational firms, like PETRONAS, under its investor-state dispute settlement provision. The TPP provides a path whereby third parties could avoid the consultation and consent of indigenous communities.

The ISDS provision in the TPP allows companies to challenge and sue the Government of Canada if we, as indigenous people, choose to protect our lands from resource development. Canada will then have to choose between supporting aboriginal rights, title, and treaty rights, and the foreign state. If multinational corporations are able to sue national governments in private tribunals for a loss of potential profits, what incentive is there to obtain the consent of indigenous communities? Therefore, ISDS provides a loophole to ignore indigenous rights and title.

The UBCIC believes that the ISDS provision will also pressure the Government of Canada to defend international resource development corporations rather than honour, as Prime Minister Trudeau stated in the mandate letters of his cabinet, the “renewed, nation-to-nation relationship with Indigenous Peoples, based on recognition of rights, respect, co-operation, and partnership”.

The UBCIC opposes the ratification of the TPP. The previous Government of Canada bypassed indigenous involvement at every level. This complete lack of consultation directly contravenes the United Nations Declaration on the Rights of Indigenous Peoples. The current government has stated that it supports UNDRIP. Therefore, it has no right to ratify this deal without our free, prior, and informed consent. We have witnessed the devastating impacts of similar free trade agreements on the rights and lives of indigenous people around the world.

The benefits of trade agreements have flowed largely to corporate balance sheets, investors, and highly paid salaried executives. Indigenous peoples have been criminalized for protecting their indigenous rights.

It is our hope with the new government in place, and with the recommendations on reconciliation adopted by them, that Prime Minister Trudeau's commitment to walking the path with indigenous people in partnership and in friendship will be more than just lip service and will include a real partnership when it comes to important matters, like trade treaties, that will affect the lives of all Canadians.

I thank you for your time.

[The Chair, Liberal, Mark Eyking]

Thank you, and thank you to all the witnesses for your presentations.

We're going to move on to questions from the members of Parliament.

We're going to start off with the Conservatives.

Mr. Van Kesteren, for five minutes. Go ahead, sir.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Thank you for your presentations and thank you for appearing this morning.

Mr. Crawford, those are interesting, to use that word lightly, statistics: that 98% of all businesses in B.C. are...did you say small, or small and medium-sized?

[David Crawford]

It's small and medium-sized businesses. That's correct.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

I wonder whether you could just tell the committee again about an increase of 2,500 jobs. What does that mean, exactly?

[David Crawford]

The Province of British Columbia has estimated that the positive economic impact of TPP will result in approximately $300 million in increased economic activity and 2,500 corresponding jobs.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

I see.

Mr. Boon, what was the percentage of beef production in B.C. as distinct from the rest of the country?

[Kevin Boon]

We're about 5% of the country's production.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

You're not large, but nevertheless, it's still sizable. How much room is there for growth?

In the previous panel, we were talking about usage of lands. I'm trying to think where those cattle would be. I've seen some areas of B.C., but how much potential is there for growth?

[Kevin Boon]

Currently about 15% of the province is suitable for agriculture. Of the 15% of the land base that is suitable, about 85% of it is utilized by the cattle industry. That is because of our topography. We farm the valleys and the lowlands. With the sides of the mountains, we're able to put out our harvester, and our harvester goes out on four legs and turns that protein into food. The potential for growth...in 2005, we hit our maximum number of cows on range at 320,000 head. That's the mother cows. Right now we're currently at 185,000 head. We've lost a third of our cows through the BSE and a few years of drought. We are poised for expansion. With the markets rebounding, and coming back to where they are, we're looking for the signals. One of the things that is there is where are our markets, and how do we supply them?

I would say that our ability is there. With the mountain pine beetle, and with some of the forests being gone, the forage and the grass take over, and we're able to be compatible with them and work through it to the transition phase as we regrow the forest.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Of course, just a percentage point can make the difference between losing in a year and having a profitable year. What kind of a percentage do you think you could see as an increase?

[Kevin Boon]

We have recently done a viability study on some of the packing and processing industry, and we very much see the opportunity to get ourselves up to that 250,000 head. That's about where we average out between the deals. You can quite easily say that we could gain another 20% very handily, without requiring much infrastructure change. There's also an ability to expand our feeding industry here in British Columbia. With the north producing more and more grains, there is an opportunity to do further expansion on that end.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

I was going to ask that question because down in my neck of the woods, we finish them off with corn. Is that done here as well, or is mostly grass and grains?

[Kevin Boon]

A lot here are grass fed because of the mountain range, but grass only grows for five or six months of the year, so we still do the grain production. Grain finishing also gives us consistency and a high quality product, which is what exports well. Corn is grown a lot here, especially in the south. In the north, and in the piece where most of our grain is grown, it's mainly barley and the cereal grains.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

That's all. I'll end it there, then.

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you.

We're going to move on to Mr. Fonseca, from the Liberal side.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Thank you, Chair. Thank you to the presenters.

My first question is to Mr. Crawford.

Mr. Crawford, in 2015, in a press release your president and CEO Mr. Black made the statement that the deal is great news for the members across Greater Vancouver, particularly for small businesses. As you mentioned, there's a high percentage of small businesses here in the province.

Do you think this agreement does enough for small businesses, when we've heard so much debate on whether this agreement will actually benefit small businesses?

[David Crawford]

I say this with some first-hand knowledge. In my comments I made a reference to our processing trade documents. We can actually see who's selling and who's buying. We talk to our customers, as any organization should and could, and we ask them about their view of the role.

I bring to your attention three countries in particular: Japan, Vietnam, and Malaysia, specifically for forestry products. When tariffs fall away, immediately small, nimble entrepreneurs are already beginning to “kick tires” and look at expanding their ability to export both services and goods. Because a large number of new Canadians live in Metro Vancouver, we have the ability to communicate in other languages and provide services. Those new Canadians are often quite entrepreneurial, so they're quite interested in making these connections, but also looking at opening new markets in which there are prohibitive tariffs that come off immediately under the proposed agreement.