International Trade Committee on April 18th, 2016

[Stewart Beck]

I agree, it's a very complex deal. It's a new deal, but any free trade agreement is complex.

I've been through the exercise. We've gone through nine rounds, 10 rounds with India. Again, trying to meet people and understand what the critical issues are in a negotiation of that matter is confusing even for people who are trade policy experts.

You have to deal with it at the high level. What are the opportunities that it offers Canada across a broad spectrum of areas? If you get into the single lined items and codes, I think that gets way too complicated.

The role of government and the foundation is to basically say where are those areas, where do we want to be as a country five to 10 years from now, and how will this free trade agreement help us get to where we want to go?

We talked about innovation. We talked about productivity as key. It's a fundamental plank in the Liberal platform. You're seeing all sorts of interesting things emerge because of that. If that's the case, then a free trade agreement like the TPP will help Canada move in that direction.

Yes, it's great to lower the tariffs on goods and give us opportunities. Whether it's canola in the west or pork into the Japanese market, if we don't have it, then we'll be at a distinct disadvantage.

These are things that people understand. It's the things that people don't understand. We are becoming more and more of a service industry. We actually export more services than we do goods. People need to understand that. The government should focus on those areas where we want to be five years from now and how we're moving basically not so much our society but our business environment into that direction. It's really critical for us to understand that and it's the role of the foundation and government to explain it.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

To Mr. Silvester, you mentioned the TPP will help us to create more opportunity.

Could you tell me, on the waterfront side, how many jobs were created over the last five years, and what would be the impact if we ratified the TPP agreement in the coming days?

[Robin Silvester]

It's very tough to draw a direct correlation, but let me give you some numbers that point towards where those statistics would be.

The last economic impact survey we did formally as a port was for the 2012 calendar year, which showed that there were 100,000 jobs relating to the supply chain in the port. This is people working on the waterfront, people working on the railways, people driving trucks. As I mentioned, it showed that those jobs pay 50% above the national average wage. Since 2012, the volumes through the port have already grown by a further 20 million tonnes or so, which would be growth of around 18% to 20%. We would project opportunities to continue growing at that pace.

To pin down exactly what might happen as a result of the TPP is hard, but it's insightful to look, particularly as we talked about it a lot, at the trade relationship with Japan. Japan accounts for about 10% of the trade through the port, between 12 million and 15 million tonnes of cargo, but much of that cargo—it's interesting to look at the relationship—is metallurgical coal for steelmaking, canola, wheat, lumber, the major Canadian export commodities. Even on the import side, it's industrial automotive parts—176,000 tonnes of parts going into the manufacturing industry in Canada, further supporting the economy here.

I think it's fair to say, then, that if the deal goes ahead without Canada, or if other competitors form a deal with Japan and Canada is not part of it, there is a significant risk to the economy relating to those trade flows. Conversely, if the deal goes ahead and Canada is part of it, there is definitely continued upside for Canada relating to those trade flows.

Putting an exact number on it is hard, but I personally feel very confident that there is significant economic upside, which leads directly to well-paid jobs for Canadians.

[The Chair, Liberal, Mark Eyking]

Your time is up. Thank you very much.

Just because some of you may not know who we're meeting with here today, we have in front of us here right now the Asia Pacific Foundation of Canada, the Vancouver Fraser Port Authority, and the B.C. LNG Alliance. In the next hour we'll have British Columbia Maritime Employers Association, the Canadian Architectural Licensing Authorities, and the Trade Justice Network. From 11:30 to 12:30 we'll have the British Columbia Cattlemen's Association, the Greater Vancouver Board of Trade, and then we'll have the Union of British Columbia Indian Chiefs. In our last hour we're going to have OpenMedia, Chris Brand, and Tom L. Green.

We're going to go back to our questioning. We're going to go over to the NDP.

Ms. Ramsey, you have five minutes.

[Tracey Ramsey, NDP, Essex, ON]

Thank you for your presentations to the committee this morning.

There have been a lot of conversation this morning about the benefits of TPP and yet this committee has seen little evidence of that. Global Affairs presented. The chief negotiators presented. By all accounts they have no economic impact study around the Trans-Pacific Partnership. This is of concern to us, and we know they're working toward that.

The Tufts University study shows 0.2% growth to our GDP over the next 14 years. The Peterson Institute shows zero per cent growth. Nothing is being presented to us to tell us that these opportunities exist.

In your poll you say that you spoke to Canadians about being slow to embrace the TPP despite general support among Canadians for free trade agreements in general. In general we think of them lowering trade barriers, removing non-tariff barriers, and such. Do you think this is at least in part because the TPP is more of an investment deal than a trade deal, and Canadians have legitimate concerns around the amount we've been sued under such provisions, such as Chapter 11 in NAFTA?

[Stewart Beck]

In the context of a free trade agreement, you're negotiating both goods and services, and investment. In the context of this, when it comes to the actual benefits of the TPP in the study that you're talking about, I think you also have to take a look at other trade investments we've entered into or are in the process of negotiating.

India is a good example. The studies we did on India will add.... Both sides did their own independent studies, and both have pointed to the fact that if we enter into a free trade agreement, we'll end up increasing our bilateral trade by $6 billion, which will create an awful lot of jobs in both economies, particularly in the Indian and the Canadian environment.

[Tracey Ramsey, NDP, Essex, ON]

Yes, I think there's always this general thought that it will improve, that we'll be able to train—

[Stewart Beck]

But you have to take a look at the success we've had through existing trade agreements that are already in place. We've shown that they have increased certainly our standard of living in the country.

[Tracey Ramsey, NDP, Essex, ON]

When we look at NAFTA, how much we've improved under NAFTA, and how it's opened us up—

[Stewart Beck]

Take a look at CEPA, although it hasn't been completed, and what the numbers are around that and what the studies would suggest on that.

You talk about investment chapters. It's one of those things where at the end of the day people may quarrel about Chapter 11 in NAFTA, but the reality is that we have had investment decisions in our favour. You always go to an arbitration based on the case you make. One would hope that in the way we approach things from a Canadian perspective we would be able to be successful in most negotiations, because we are an open, transparent, and rules-based economy.

[Tracey Ramsey, NDP, Essex, ON]

Okay. I want to move on and ask a question around Japan. Japan has been discussed quite a bit this morning as well, and I hear that you're wishing we would actually have a bilateral agreement with Japan if the TPP ends up not happening.

One of the major concerns we've heard around Japan at this particular committee has been about the currency manipulation. Are you satisfied with the TPP's provisions on currency manipulation?

Also, what else can Canada be doing to address non-tariff barriers like this and to facilitate greater trade with the Asia Pacific? What other non-tariff barriers exist to greater Canada-Asia Pacific trade?

[Stewart Beck]

Who is that directed to?

[Tracey Ramsey, NDP, Essex, ON]

To anyone who wants to answer.

[Robin Silvester]

I would say in terms of what else Canada can do to assist with trade, to pick up that part of the question. I think there has been a strong history of the federal government, both the previous government and the government before that, investing in infrastructure to enable trade, which has delivered huge benefits in terms of employment, not only in this region but also across the country.

If you look specifically, as I mentioned, at the trade relationship with Japan, many sectors are providers of strong unionized jobs, amongst other private sector jobs, whether it's in steelmaking or coal, whether it's in forestry or agriculture, all of which have benefited today from trade with Japan.

I would say there is further benefit available, and risk to the downside, if a trade agreement doesn't go ahead and yet others make those agreements.

[Tracey Ramsey, NDP, Essex, ON]

My last question is actually to the LNG folks.

Has your group examined the ISDS provisions and their possible impact on the development of LNG products in British Columbia? Have you considered that Canada is the most sued country in the world under these provisions?

[David Keane]

We haven't taken a look at that, no.

[Voices]

Oh, oh!

[The Chair, Liberal, Mark Eyking]

Ms. Ramsey, your time is up, and we're going to move over to the Liberals.

I'll just remind everybody that this is like a House of Commons, and the rules here are based on the House of Commons rules as far as questions and answers are concerned. If we're going to have a productive meeting today hopefully we can get through all the witnesses because we have lots of witnesses later on today, and if we're cut short then we won't be able to hear them all. I'm sure we all want to hear them.

We're going to move on to Mr. Peterson, for five minutes, sir.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you, everyone, for being here.

My question, I think, can be open to anyone, and just take your turns answering it.

It seems the analysis and the assessment that's been done by all of your respective groups is comparing pre-TPP to now, or the status quo as to what will happen if the TPP comes into effect. I wonder if you've taken any analysis or given any thought to what happens if the other signatories ratify TPP, and Canada doesn't— particularly Japan, the U.S.A., or Mexico. What consequences would Canada see if that were the case?

[Stewart Beck]

I can start with Japan. We will be at a distinct disadvantage to Australia. They're our major competitor in that market.

Although anybody who's buying will always want to have a diversified source of supply, the majority, whether it's net coal, canola, or pork, will end up going to other markets because it's much cheaper. We'll get some of it, but we won't be able to capture the lion's share.

From a Japanese perspective, that's really quite critical. On the services side, we will get some real net benefits from being part of TPP, which we'll lose in the context of not having that agreement. It will also put in jeopardy where we stand in NAFTA with our U.S. and Mexican partners in that agreement.

[Robin Silvester]

Perhaps I could add something by way of example.

Talking to exporters through the port, in particular for meat products, and using the Korean free trade agreement as an example, I've heard directly from them that the fact that the U.S. signed an agreement before Canada meant that they lost market share in Korea, which they've struggled to recover since. They were very pleased to see the Canada-Korea Free Trade Agreement in place, but they would rather have seen it in place before the U.S., because of that loss of market share. It's a small example of the very real risks to Canadian exporters of being disadvantaged by differential trade agreements.

[David Keane]

I concur. I think that if you look at Japan, were the United States to sign an agreement with Japan ahead of Canada, clearly that is an enormous market for liquefied natural gas. It is the world's largest consumer today. I think it's extremely important for our industry that we not bow out of an agreement that the U.S. and other trading partners are going to belong to.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

I have a few more questions, but for Mr. Beck particularly.

You indicate that the TPP will help alleviate some barriers between Canada and other Trans-Pacific Partnership markets.

Can you elaborate or just explain what some of the non-trade barriers or other barriers are that Canadian companies face when doing business with Asia now?

[Stewart Beck]

Well, take a look at areas in which we're quite successful in Asia. We do very well in the financial services sector. Bringing down barriers in that particular area, whether it's for our insurance companies or banks, has an impact on our economy here in Canada, because it expands the trade in those services. In legal services as well, being able to have a common rules-based approach in that particular area will be very important.

I think the good side is pretty obvious, when you see how the tariff lines will be impacted over a period of time and will increase the opportunities for fruit growers in British Columbia. It covers a broad spectrum. Seafood, of course, is another one we haven't talked about, but it's a huge opportunity.

Again, then, it cuts across a broad swath of the Canadian employment fabric. Many people are going to be net beneficiaries, whether in the services industry or working as a fisherman off a boat in Haida Gwaii.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you for that.

Mr. Silvester, obviously you know what the key destinations are right now for exports leaving the port. Do you see a change in destination or just an increased volume, if the TPP comes into effect?