International Trade Committee on April 24th, 2018

[Tracey Ramsey, NDP, Essex, ON]

I think the committee takes your point well. We have to not just focus on tariffs but actually dig into what the regulatory issues are behind them. Really, I think that needs to be the focus of trade agreements going forward—to address those really serious issues.

In the context of trade, what are the steps that you think the government should be taking to ensure the viability of advanced manufacturing in Canada in trade agreements? You mentioned the CPTPP and some other agreements. I wonder if you can give us an idea of how Canada could ensure our manufacturing sector stays strong.

[Mark Nantais]

Keeping our existing manufacturing footprint is the key. Because we are one of the highest-cost jurisdictions, if not the highest-cost jurisdiction, in the world, keeping the costs down is pretty critical. We could be doing everything we possibly can, but if it's just simply too expensive to produce here, then we undermine all that.

The co-operation that exists between Ontario, where 96% of the auto industry exists, and the federal government is absolutely critical. The co-operation that takes place on the innovation and technology development side is absolutely critical.

We talk about all these other countries that see the auto industry as a key economic keystone of their economies. All of them put in place strategies, incentives, and supports that far exceed ours in many respects, and they constantly.... It's dynamic. It's not static. We have to continually reassess, continually reposition ourselves relative to these other countries that see such economic benefit from the auto industry.

We have some of that in place now. The federal government, whether this government or previous governments, has made some great progress in terms of incentives and so forth, but it has to be something that is current and it has to be responsive.

[Tracey Ramsey, NDP, Essex, ON]

The NDP, Ontario.... There's long been a call for a national auto strategy, a national manufacturing strategy that would address, I think, some of the concerns you're mentioning.

We had a witness on Thursday who commented that the Mercosur negotiations—

[The Chair, Liberal, Mark Eyking]

Sorry, Ms. Ramsay, there's no more time for a question. Your time is up. I know it probably was a good question.

We're going to move over to the Liberals now.

Mr. Peterson, you've got the floor.

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

Thank you, Mr. Chair. I appreciate the witnesses being here today.

Mark, I'm going to start with you. It's good to see you again.

I've known Mark for about 12 years now since my days at Magna. Mark looks the same age and I think I'm catching up with him. I don't know what your secret is, Mark.

[Mark Nantais]

I'm not sure that's the case.

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

It's good to see you today.

I just want to talk a little bit about all the free trade agreements as they pertain to Ottawa, if you'll let me.

There seems to be a suite of agreements going on and percolating out there right now. There's no doubt that NAFTA is the priority for your group and your industry, as you've said. Can you maybe elaborate on what the ideal outcome of all of these deals might be for your association?

[Mark Nantais]

First off, if we can't preserve our foundation, which is the integrated supply chain on a North American basis.... That's what adds to our competitiveness. Even though we are the highest-cost jurisdiction, we still see a business case to be made so far. That can quickly pivot if some things don't fall into place, particularly under NAFTA, which is why again it's so critical for us.

This is why CETA, as I mentioned, was negotiated recognizing that integration. We should be doing that perhaps not even just for our industry but all major industries that have an integrated supply base on a North American basis. If we don't do that, then we cannot take advantage of some of these other agreements where it clearly provides a benefit to those countries' domestic industries. That's the key here. And yet we continue to do that. We continue, with the exception of CETA, to negotiate these things absent of that approach. That's what needs to change for our industry, and I would also submit it would be beneficial for other industries as well.

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

Thank you, I appreciate that.

Mr. Dietrich, you seem to be of the witnesses at our table today the most bullish on Mercosur, which is, I think, accurate. I think you said Brazil and Argentina were the two biggest markets you see potentially in Mercosur.

[Robert Dietrich]

They're the two that would be the most attractive for us, yes.

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

Their populations are the biggest and their temperatures warm.

[Robert Dietrich]

Yes, right.

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

What sort of infrastructure do you have in place now to get our products, whether they're manufactured here or there, and the technology...? Would you be able to service these markets, if this deal came into place, with your current infrastructure?

[Robert Dietrich]

Yes, we would. As I mentioned, we had a huge debate about whether to invest in Brazil, but given the non-tariff barriers.... In the non-tariff barriers, basically you have to use Brazilian-made motors for electrical standard, which is not true. That's the non-tariff barrier. We had no choice if we wanted to participate in the market but to locate there. If we had a free trade agreement, we would take many more products into the Brazilian market if these market access issues were resolved, and we could do that manufacturing those products in Canada where we have volumes and costs that are attractive.

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

So any successful Mercosur deal would have to deal with those non-tariff as well as the tariff issues.

[Robert Dietrich]

Absolutely, that's the whole point.

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

Otherwise, it wouldn't be worth it.

[Robert Dietrich]

Yes. Also, I'm not so sure with Mercosur but certainly in other jurisdictions—TPP would be an important one—dealing with intellectual property rights and the ability to have regulation and be able to use the Canadian legal system to support disputes would be very important.

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

Okay. Thank you for that.

I think I have about a minute left. I'm going to talk to Mr. Lansbergen from the fisheries council.

I don't want to say you're totally negative on this deal. You seem to say it's got potential if A, B, and C fall into place. Part of it is you don't have supply chain existence in these countries to begin with, and as you've said, there's little to no market there for your products already. How easy would it be to get that up to a place where this would be a lucrative deal for your association, your members?

[Paul Lansbergen]

Some exports would be facilitated through brokers and things like that, so initially to some degree, we wouldn't need to set up a big supply chain. But if we really want to grow the market substantially, like perhaps we did in China over the last 10-20 years, then we would have to set up our own supply chains and certainly encourage them to consume more fish and seafood.

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

Okay, I appreciate that.

I'm done, Mr. Chair.

[The Chair, Liberal, Mark Eyking]

I've got a quick question for you on the fisheries. We do a lot of fishery products from Nova Scotia flying direct to China and various places in Asia and Europe. What about your flying routes from, say, Atlantic Canada...is there any north/south going that could help you if you're going to be selling more fresh products down there?

[Paul Lansbergen]

Good question. I really don't have an answer for you today. I'll have to look into that for you.

[The Chair, Liberal, Mark Eyking]

Okay. Thanks.

We're going to go to Ms. Lapointe.

Go ahead. You have the floor.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you, Mr. Chair.

I would like to welcome the witnesses and thank them for being here today.

Mr. Nantais, I would like to ask you a question.

Earlier, you talked about currency manipulation. Were you referring to certain Mercosur countries?