Evidence of meeting #104 for International Trade in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was agreement.
A recording is available from Parliament.
Liberal
Linda Lapointe Liberal Rivière-des-Mille-Îles, QC
Thank you very much, Mr. Chair.
Welcome. Everything you have said today is very interesting.
Ms. Saad, you said earlier that the change in tariffs for companies in Brazil would primarily benefit SMEs. Yet we have often heard at this committee that it is very difficult to include SMEs and to inform them of opportunities available to them.
How could we inform SMEs about the benefits of a potential Canada-Mercosur agreement?
Vice-President, Brazil-Canada Chamber of Commerce
Can you please summarize the question for me in English?
Liberal
Liberal
Linda Lapointe Liberal Rivière-des-Mille-Îles, QC
You said earlier that, among Canadian companies, SMEs would be the most likely to benefit in Brazil. At this Standing Committee on International Trade, however, what we have heard most often is that SMEs must be made aware of business opportunities in Brazil so we can help them break into those markets.
In your opinion, how could the Brazil-Canada Chamber of Commerce inform SMEs and help them break into those markets?
Vice-President, Brazil-Canada Chamber of Commerce
That's a great question. I have worked with the Quebec government in Brazil in bringing in companies. The company I mentioned was a Quebec company in the automobile industry.
Liberal
Linda Lapointe Liberal Rivière-des-Mille-Îles, QC
Yes, they are. They are doubling their production.
Vice-President, Brazil-Canada Chamber of Commerce
It makes me really proud to have helped them enter the market. I have to say that the Quebec government is doing a great job in Brazil, getting those companies to enter the market and supporting them.
A Canadian company did all the flooring for the subway in Sao Paulo, for example. I did the trains and trail trade show. I'm actually very proud of Quebec's presence in Brazil, because they are doing well.
You could improve that through something we did with our sister chamber in Brazil. It's a road show that explains to small businesses how business works in Brazil and does cultural training for them. The French companies are closer, in many ways to Brazilians, for example, in that theirs is a Latin language and in the way they behave and in the way they think, so that's a plus for us.
Really, it's about getting the knowledge out there that there are opportunities in the markets and that the companies should not be afraid to go into such a big market. When they look at Brazil, they see a big wall and they don't know how to go over it. They don't know the resources. The Government of Quebec is doing an amazing job in doing that, but they need to do more in terms of reaching out to those companies, the SMEs, and talking to them personally. A lot of them just go into a little bubble, just sell in Canada or in the U.S., and they don't think about going abroad and the size of the market abroad.
What you can do is educate more people on the benefits of trading with the Mercosur bloc. It's the same thing that the rest of the country should do.
Liberal
Linda Lapointe Liberal Rivière-des-Mille-Îles, QC
So you think that the Quebec government is essentially helping Quebec companies enough, but that those good practices must be extended to the rest of Canada.
Liberal
Linda Lapointe Liberal Rivière-des-Mille-Îles, QC
Mr. Galimberti, you talked earlier about currency manipulation. Which countries were you referring to as regards Mercosur?
President, Canadian Steel Producers Association
I will answer in English. I learned French in Saskatchewan.
Specific to Mercosur, I don't know that we necessarily have recent examples of currency manipulation out of those jurisdictions. I'd need to go back and take a look at how long ago that was. I think we've mentioned that there has been some instability in that region. Certainly we've seen currency manipulation for the purposes of stimulating the economy in other jurisdictions that share, I would say, a profile.
I would suggest that the reason we would like to see controls on state-owned enterprise and currency manipulation in this agreement.... We'd like to see that in any agreement. We talked about this in the context of the CPTPP. We are, as a nation, looking at the initiation of a negotiation with China, in which those kinds of controls on state-owned enterprises and currency manipulation would have to be fundamental to any kind of a deal.
Really, I think there is a continuing opportunity to find what Canada views as acceptable behaviour in these agreements and to find what it is we're prepared to tolerate. We're going to encounter such challenges in negotiations going forward, and we should really start proactively thinking about what those are going to look like.
Liberal
The Chair Liberal Mark Eyking
Thank you, Madam Lapointe.
That wraps up our first round and our first part of the meeting on Mercosur.
Thank you very much for coming, witnesses. This is a good way to start this study. It's going to take a while, because we're also potentially going to be travelling to South America, but we should have the study wrapped up in the fall, and you're free to have a copy of our study when we get this report done.
Thank you for coming.
We're going to suspend for five minutes because we have another group of witnesses coming in at a quarter to eleven.
Liberal
The Chair Liberal Mark Eyking
We're going to continue with the second part of our meeting today, the first meeting on the Mercosur and its potential.
MPs, there is the potential of a vote. I'll let the witnesses know that it's not that we don't want to hear from you, but when a vote is called, we have to go.
Since we have Unifor by video, I think it would be best that we go with Unifor first, in case we have a disruption. We can go from there.
I appreciate that Unifor and the Canadian Agri-Food Trade Alliance are with us this morning. Welcome.
Without further ado, maybe we can start with Unifor.
Angelo DiCaro National Representative, Unifor
Thank you very much.
Good morning, Mr. Chair, and members of the committee.
My name is Angelo DiCaro. I am a national representative and the lead trade policy researcher with Unifor, Canada's largest private sector union.
Unifor represents 315,000 workers across Canada in nearly every major sector of the economy including manufacturing, communications, resources, and services.
On behalf of our national president, Jerry Dias, I want to thank this committee for the invitation to once again appear before you and for also accommodating my participation today. There's certainly a lot to discuss regarding how a potential agreement with Mercosur fits within Canada's overall trade strategy. I will be as brief and direct as I can.
I want to make two points. The first is macroeconomic. I think it's worth noting some of the broader trends in Canada's merchandise trade with Mercosur. For starters, overall exports from Canada to Mercosur have declined over the past decade by about 26%. At the same time, there's been a sizable increase in imports from Mercosur to Canada, with imports nearly doubling in value since 2008. One of the stated objectives in proposing an FTA with Mercosur is to diversify Canada's trade and explore export opportunities away from the United States. While tactical, it's also important to acknowledge that North America is still the proverbial centre of gravity for Canada's trade policy. The lion's share of our trade is still within the NAFTA zone, and there are still many open questions for key industries in Canada—particularly in the auto sector—that are still to be resolved as part of the NAFTA renegotiation. What we don't need is Canada committing to a trade agreement in the spirit of diversification only to exacerbate excessive one-way import flows and actually do little to boost exports. I think in this case Korea is a cautionary tale for Canada.
The second point I want to make is that in the context of Mercosur, Canada has signalled its desire to advance its so-called progressive trade agenda, or PTA, with a trade partner that appears willing to engage. Even though the PTA remains a bit of an enigma to the those of us who are following it closely, the desire to do this is certainly welcome news. However, I think it's important to remember that, despite advanced thinking on progressive issues among Mercosur nations, the original conception of the customs union was entirely silent on labour and social conditions—not unlike the original NAFTA.
Any advancements that were made since its inception in 1991, particularly on labour conditions, have come in the form of structural institutions developed in the framework of the accord but not found in the accord itself. These advancements were a response to mass social unrest and public protest, and that includes the development of the 1998 social-labour declaration within Mercosur. There is strong, aspirational language within that declaration but its conditions remain non-binding and unenforceable. This has been the target of lasting criticism among many progressive organizations. It's unclear whether or not the nations of Mercosur have signalled the willingness to expand their level of ambition regarding social clauses in trade agreements. Brazil, we know, has historically been a vocal opponent of this approach.
If Mercosur's own intramarket ambitions reflect their negotiating mandate, then that would appear to be out of step with Canada's own approach in current free trade talks, notably within NAFTA and the Pacific Alliance. In fact, it would put Mercosur out of step with the level of ambition expressed by countries like Mexico, and that's quite concerning.
Canada must not misinterpret Mercosur's stated willingness to advance progressive ideas. In our view, a truly progressive approach must include, among other factors, clear and unequivocal protections on public interest regulation, full protection for the delivery of current and future public services, and strong and binding social clauses.
In closing, it's important that Canada clarify its desired outcomes and underscore its overarching principles in these Mercosur talks, and this must extend beyond matters of market access. We're glad that Canada has committed to conduct various economic and social impact assessments, but we also need those assessments done immediately, before talks start in earnest. Done independently, these will help provide a careful assessment of our total objectives to trade, and a clear articulation of our principles. This should inform our approach to Mercosur talks, whether and how we should proceed.
Thank you very much, and I'm happy to take any questions.
Liberal
The Chair Liberal Mark Eyking
Thank you, sir. You're right on time.
This isn't the first time you've come in front of our committee. It's good to see you.
National Representative, Unifor
That's right.
It's nice to see you again. Thank you.
Liberal
The Chair Liberal Mark Eyking
Thanks for joining us again.
We're going to move on to the Canadian Agri-Food Trade Alliance. We have Madam Citeau.
It's good to see you here again.
Liberal
The Chair Liberal Mark Eyking
You have the floor. You know how it rolls, and we're looking forward to your presentation.
Go ahead.