International Trade Committee on April 19th, 2018

[Claire Citeau]

What happens is that our members do so and then we roll all the information up into our submission.

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

Was there a consensus among your members or...?

[Claire Citeau]

There has to be. That's how we operate.

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

From what you said today, I'm going to infer that the consensus was that there would be limited benefits to joining Mercosur economically.

[Claire Citeau]

At this point, yes. In checking with my members earlier this week, that remains the same.

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

Does that mean we should assume that you're going to be opposed to it, or is there a way that the agreement can be framed and structured that would deliver benefits to your organization?

[Claire Citeau]

I think it all depends on what is in the agreement in particular for our sectors. In general, CAFTA is supportive of free trade agreements that generate growth for our sectors. That's really what we're looking for. Whether we will oppose it, that is too far for me to say. In principle, we're supportive of free trade agreements that create opportunities and help our sectors generate growth.

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

I met earlier this week with the Grain Growers of Canada and they reiterated to me the importance of export markets to their industry. I think 75% to 80% of their production needs to be exported because Canada is a big country geographically but small population-wise. I see why you're saying you're in agreement with free trade agreements generally. It just has to be the right free trade agreement I think is what you're saying.

[Claire Citeau]

We're also aware that the European Union has been negotiating with Mercosur for 20-plus years.

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

Right.

[Claire Citeau]

Our ability to reach something substantial soon is yet to be seen.

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

Thank you for that.

I'm just going to follow up, Mr. DiCaro, on some of the Unifor submission. I hear what you're saying about whether it's a progressive deal. Everybody has to wait to see the deal and see what's in there. I think I agree with you that the analysis needs to be done contemporaneously so that it can inform all participants' decision-making.

I just want to go maybe a little more sector specific. What opportunities do you see? I'm thinking perhaps of aerospace or any other sectors that Unifor has a strong membership in. I met with some of your aerospace colleagues earlier this week. That's why that's top of mind. Are there sectors that perhaps would be more favourable than others?

[Angelo DiCaro]

This is a very good question. On our end, it's something that I think we have a broad handle on, but certainly we're going to be digging more into sector-specific stuff. We're going to have our team looking into this more.

The broad concern we would have—and it's following up on Claire's comments as well—is just understanding the nature of trade currently with Canada and Brazil. I appreciate that it's a sizeable market. It's a region that could be considered in a developing part of the world and a growing economy. Our trade is very minuscule to this part of the world. I crunched some numbers just before this presentation began. I think if you measure total trade between Canada and Mercosur last year, it would equate to something like the same amount of trade we would generate with the United States in four days.

There would be export opportunities certainly in any situation where you would want to eliminate tariffs that would be considered a barrier. In the case of auto, we have sizeable tariffs in Brazil of upwards of 35%. Ostensibly you'd think that would be a boost. There are also issues in the Mercosur trading bloc where there are renowned non-tariff barriers, lots of subsidies, fights going on with the WTO currently right now in Brazil. There's no sense that would end in a meaningful way.

The question I think we have to ask is this. Market access and opening doors is one thing. Is it demonstrable improvements for Canada? Is it worth the trade-off of some of the other things in trade agreements that have been proven to be very troubling for Canada? These would be things around special privileges for investors and locking us into regulatory freezes, and things of that nature.

When we look at these agreements, why my comments around doing the impact assessments independently and comprehensively are so critical is that I think the days are gone when we can just say if you take that tariff off, maybe that will give us more than a couple of hundred million dollars' worth of exports. I think our thinking on free trade has to evolve beyond that now.

[The Chair, Liberal, Mark Eyking]

You're well over time, Mr. Peterson, but it was a good question and I thought we wanted to hear the answer. Thank you very much.

We're going to move on to Mr. Carrie with the Conservatives.

Go ahead, sir.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair.

Thank you to the witnesses.

What I have noticed is that there seems to be a theme that there is some concern about trading with the Mercosur area of the world. My question is why? I know your organization is very supportive of free trade in general. In my community of Oshawa and southern Ontario, we do a lot of manufacturing. One of the things I hear from manufacturers is that basically Canada is becoming one of the most costly places to manufacture. There are some domestic policy issues with unique costs that go into that equation, and whether they're regulatory, the cost of energy, or environmental carbon taxes, the uncertainty that this poses for our manufacturers, particularly right now, means that going out into the world, they just don't know what their bottom line is.

The worry I have is whether Canada is getting too expensive to compete and if this is due to government policies where we're putting in unique costs. I'll start with Claire. If the government does move forward, what policies can we put in place to improve our ability to compete? I was wondering if you could talk a little bit about technical barriers, customs procedures, regulatory coordination, even give us some examples of non-tariff barriers and tariff barriers that are out there.

Mr. DiCaro brought up Brazil, and very close to my community, automotive, and the point is well taken. What can we do, if we're going to be moving forward with these trade agreements, from a technical standpoint? Technical barriers, customs, or regulatory, can you give us some examples that the government could be looking at if we want to open up these markets?

[Claire Citeau]

Our members have not flagged Mercosur as a concern or have not flagged concern with the agri-food trade relationship. Where the concern comes from is the resources put on the negotiators that have a lot on their plates right now with regard to the NAFTA, CPTPP, and a potential deal with China, which I think should be prioritized over Mercosur, and fixing the non-tariff barriers in Europe, where there's a huge potential and we can't tap into that market until the non-tariff barriers are taken care of. Canada needs to stand up to the commitments that Europe made in this agreement.

[Colin Carrie, Conservative, Oshawa, ON]

In other words, on moving forward with this agreement, it's not necessarily that you may be opposed to it, but it may be an issue of timing. It may be an issue to see how we work out agreements that we already have. Is that my understanding from you?

[Claire Citeau]

It's part of it. I'd like to add that our members don't see the opportunities at this point. There are much greater opportunities in China. There are greater opportunities in Japan, Vietnam, and Malaysia, a fast-growing market of 90 million people with a growing middle class.

What do people want to do when they have better incomes? Eat better food products. Some of our members are starting to make greater inroads. The CPTPP will certainly help propel that further, and this is where, really, the growth will come from. If you look at the globe today, yes, we're getting better value for some of our products in Europe, which we're not able to fully tap into, but the growth will come from Asia. This is where, really, we should be looking.

[Colin Carrie, Conservative, Oshawa, ON]

I'm curious, because as the chair said, we may be travelling down to these countries and asking some questions down there. I was wondering if, thematically, you could maybe give your advice to the committee here on what questions we should be asking down there—if, like I said, the government decides to move forward at this time—that you think would be beneficial for Canadian agriculture or manufacturing.

I noticed that Mr. DiCaro said maybe we have to take a step back here and take a look at the new world and the new realities out there. Do you have some advice for the committee, as we explore this, so we might be able to bring the concerns that you have right down to the countries, if we do decide to go this route?

[Claire Citeau]

I'll follow up with you on this. I'll circle back with my members, and then I'll follow up with you.

[Colin Carrie, Conservative, Oshawa, ON]

That's good.

How am I doing on time?

[The Chair, Liberal, Mark Eyking]

You only have half a minute, but if it's a short question and we can get a short answer, then we're good.

[Colin Carrie, Conservative, Oshawa, ON]

Yes, I wouldn't mind.

Mr. DiCaro, do you have a comment on some of these things that I brought up?

[Angelo DiCaro]

I can never give a short answer, so I'll do my best.

The comment that you made about the cost factor is very interesting and important to explore. I guess I would pose this back. Part of our expanded thinking about trade and why labour conditions, labour standards, and other social conditions are important is that, if free trade agreements have facilitated the model of globalization that we know, and it facilitated these trade rules around the world, in the case of Mexico, for instance, you could argue that in a lot of ways it was those provisions, the lack of ambition on those issues, that have sort of suppressed Mexicans from enjoying the benefits of expanded trade and seeing the results of expanded productivity. I think if we could explore this in a way where, if social conditions of trade become higher on the priority, there's less of an imbalance in terms of the cost variables between these developing countries and Canada.

Anyway, this is just some food for thought.

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

We're doing really well here, folks. We have time for one more MP.

Mr. Fonseca, you have the honour. Go ahead, you have five minutes.