International Trade Committee on April 26th, 2018

[The Vice-Chair, Conservative, Dean Allison]

Good morning, ladies and gentlemen. We're going to get started with our second round.

Joining us from the Canadian Association of Moldmakers, we have Jonathan Azzopardi, who is the Chairman, and Tim Galbraith, who is one of the Directors. As an individual, we have Pamela Palmater, who is the Chair in Indigenous Governance at the Department of Politics and Public Administration at Ryerson University.

Welcome. We're glad to have you here. We'll start with your testimonies.

First up is the Canadian Association of Moldmakers. If you can keep it to around five minutes, that it would be great. Will only one or both of you be speaking?

[Jonathan Azzopardi, Chairman, Canadian Association of Moldmakers]

It will be a combination of both of us.

[The Vice-Chair, Conservative, Dean Allison]

Perfect. We'll turn over the floor to you guys to get started, and then we'll turn it over to Ms. Palmater. Thanks.

[Jonathan Azzopardi]

I bring tidings and greetings from beautiful, sunny Windsor. I'm from the Canadian Association of Moldmakers. Thank you for the opportunity today to be able to speak on behalf of our association to all of you. It's quite the honour to be able to weigh in on the free trade agreements and we appreciate the opportunity.

Most people don't know what a mould is or how important it is to the manufacturing industry, so if you don't mind, I'll take a few minutes to give you a brief overview of what mould-making is and how important it is to Canada.

The mould-making industry in Canada is approximately $2 billion in GDP. It's highly concentrated between Toronto and Windsor, with about 80% of our members being in that region, in that corridor. We have about 170 individual shops, which means we're quite clustered, but we're also fragmented, which is good and bad. Our average shop has about 60 employees. There are 11,000 employees directly related to the mould-making industry. It is heavily dependent on the automotive industry; about 70% of what we make lands in the automotive industry. The group is part of a larger group of about 1,400 companies. Basically, the entire infrastructure is about 1,400 companies and about $25 billion in GDP. That's what we service just in Canada.

What we've been able to establish is that there's no manufacturing industry in the world that does not have a mould-making industry, primarily because everything you touch—and I assume you've all touched something plastic today—has the mould-making industry affiliated or associated with it. That's why we're so heavily sought after. We're very highly technical, and not necessarily expensive but not easily replaceable because of the experience that it requires.

We've been in the industry for about 70 years in Canada. During those 70 years, we have grown into super shops and small shops, so it's very dynamic but a very large part of the manufacturing community.

I'll let Tim explain to you briefly what a mould is, because I assume most of you have neither experienced nor been in the mould industry.

[Timothy Galbraith, Director, Canadian Association of Moldmakers]

Thank you, Jon.

Again, thank you for the opportunity today.

In terms of whether you've touched something plastic, you can look around the room and see lots of stuff. We basically take two raw pieces of steel, carve out two halves, put them together and squirt liquid plastic in between, and the components come out. We don't do the squirting. We build the moulds. As Jon indicated, it's very elementary. We buy components from around the world to incorporate into our moulds, and we're a very important part of the automotive industry.

With lightweighting, being driven from steel to plastic, there is more and more plastic being used in the world. That's our niche. Once upon a time, a mould-maker was a tradesman, an artist. It's now technical. It's done on multi-million dollar machines: five-, seven-, and nine-axis machines that remove the metal precisely. It's all computerized and is very highly technical. That's basically the nature of our business.

There were more moulds built in the world last year than the year before, and there will be more moulds built in the world next year than there are this year. It's a growing business and we are looking for opportunities. As Jon so well put it, we're one of a few areas in the world where there's a concentration of that, and our supply chain build-up has allowed us to be very good at what we do.

[The Vice-Chair, Conservative, Dean Allison]

That's it? Great. Thank you.

[Dr. Pamela D. Palmater, Chair in Indigenous Governance, Department of Politics & Public Administration, Ryerson University, As an Individual]

Good morning.

[Witness speaks in Mi'kmaq]

I'm Pam Palmater. I am from the sovereign Mi'kmaq nation on unceded territories of the Mi'kma'ki, which is most of the eastern provinces. It is an honour to be here on sovereign Algonquin territory having this discussion. Thank you for including an indigenous woman's voice on the issues of trade.

Keep in mind that in 1994, when the North American Free Trade Agreement was signed, it inspired a Mayan uprising in southern Mexico led by the Zapatista National Liberation Army for the specific purposes of the failure to address indigenous rights, land rights, and the protection of their women. They said it would be the death of them.

Sure enough, to this day, free trade agreements in which Canada has been involved show a huge divide between who benefits, largely transnational corporations, and who pays the ultimate price in terms of the environment, women. and indigenous peoples.

What I want to talk to you about today is indigenous peoples and their support of trade, but trade in a fair way, a safe way, and a sustainable way that does not cause harm to them or indigenous peoples in other countries. Given that you're considering this free trade agreement, there's a large number of indigenous peoples with the four member states, particularly in Brazil, which has particular sensitivities around some of their groups that are no-contact groups. Given the high levels of violence experienced by indigenous peoples in those countries from transnational corporations that are involved in trade, Canada should really take a step back and consider how it is not only impacting indigenous peoples in Canada but also indigenous peoples in that territory.

That being said, this country was founded on trade. It was founded on trade with indigenous nations and colonial settlers. That was something that was very important. In fact, the Supreme Court of Canada has acknowledged that there would not have been able to be peace or settlement in this country without specific trade protections for indigenous nations in our treaties. Those treaties are now constitutionally protected, and that means that indigenous peoples share jurisdiction over trade and trade management, unlike provinces and territories. That is a shared jurisdiction, and it's something indigenous peoples have been specifically left out of any say.

In addition to the failure to recognize the shared trade jurisdiction, there are also legal obligations. Section 35 of the Constitution Act protects inherent aboriginal rights, treaty rights, land rights, and all of the corresponding rights that go along with that. It requires, at a bare minimum, consultation, accommodation, and consent in the domestic context. In the international context, since this is an international trade agreement, it requires free, prior, and informed consent of the indigenous nations.

The fact that Canada is even considering another free trade agreement without any process in place to consult with indigenous peoples on the ways in which they want to be represented, and I would strongly suggest that indigenous women should factor very strongly in here, means that it violates Canada's Constitution and is legally challengeable. It's something that we have been working with indigenous peoples on in those member states, about coming up with another joint declaration to make sure that their rights are also protected.

In addition, Canada is made up of a large segment of aboriginal title lands. The Supreme Court of Canada has said very definitely that aboriginal title lands aren't about having the ability to go pick apples on a piece of territory. It is in fact exclusive ownership. That means indigenous peoples get to decide what happens on their territory, when it happens, and who benefits. If they want to get all of the benefit, then it is their legal right to do so. All the free trade agreements to date simply don't recognize that.

I will also mention, very quickly because time is limited, that all of the international United Nations experts and special rapporteurs on things like food, water, housing, democracy, judicial independence, peace and security, indigenous peoples, and women's rights have all collectively said that all of these free trade and investment agreements violate both domestic and international human rights law principles. They don't take into account protections for indigenous rights. In fact, they put them at greater risk.

I'll go through my recommendations very quickly, if you'll allow me just a few seconds.

This agreement shouldn't go ahead until there is a fair, open, and democratic process of consultation with indigenous peoples. Free, prior, and informed consent has to be the basis.

Human rights have to be the fundamental framework of all of these agreements, not a side chapter, not a mention. There must be specific and binding legal protections for indigenous rights throughout all of these agreements, not in a side chapter.

ISDS must be eliminated and not replaced with investor-court mechanisms that do the exact same thing as ISDS.

There has to be a rights-based, benefit-sharing formula with indigenous peoples. If resources and lands are going to be taken for the purpose of investing in free trade, then indigenous peoples should benefit first and foremost.

Finally, there must be a fulsome monitoring, research, and evaluation mechanism conducted by external parties to ensure that these free trade agreements, including this one under study, is fair, safe, sustainable, and outs human rights and indigenous rights first and foremost.

Thank you.

[The Vice-Chair, Conservative, Dean Allison]

Thank you, Ms. Palmater.

We're going to start with our first round. We'll turn it over to the Conservatives for five minutes.

Mr. Carrie, the floor is yours.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair.

I want to thank the mould-makers for being here. My first job was in fibreglass moulds with Oshawa Glass Fibre Products. I think I was 14 years old. I got to appreciate a little about the trade and the art.

I want to ask you a question about potential for this agreement. According to your association, you stated that 50% of the moulds sold in Brazil are imported, and these imports are valued at between $500 million and $700 million annually. How would this potential trade agreement affect the value of Canadian mould exports to the Mercosur countries?

[Jonathan Azzopardi]

We see the whole Mercosur agreement as a potential for us to be able to export to Brazil. Brazil is probably the one partner that we're very interested in doing business with.

We see Brazil as similar to what we have seen in Mexico. If we're able to establish a beachhead early on in their growth cycle, we will be able to establish an industry that we will be able to export to on a regular basis. It's similar to Mexico, which is probably our number-two trading partner for moulds, so we'll greatly be able to improve our opportunities there.

To date, we have not been able to penetrate that market because of protectionism, because of tariffs. We believe that the opportunity is there. We don't believe that it's going to happen overnight. We will encounter protectionism continually. Trade barriers will continue to exist. We'll have to do education.

We do not believe that we'll be able to establish there early on, but it will be about exporting. Luckily for us, our product is very export-friendly. As I said before, it's normally very expensive and it's highly technical. We stand to take great advantage of that market because it's in its infancy in the manufacturing life cycle. The other partners that we see in the agreement don't necessarily pose as much of a threat at this point because they're not as technical. We believe that the opportunity is actually very good for us to continue to export to that market.

[Colin Carrie, Conservative, Oshawa, ON]

How big is the market growing? I think, Mr. Galbraith, you said there are more moulds this year than last year, and then next year the potential is just growing and growing. How is our domestic market growing for mould-making?

[Timothy Galbraith]

Eighty per cent of what we do is not used domestically. Eighty per cent of the product that's made by our members is exported. The world is getting smaller, and we're exporting to more and more countries.

As Jon mentioned, we don't have a great foot in South America at this point, but we see it as an opportunity, because there are mature economies down there as opposed to emerging economies, which are typically not clientele of our industry.

[Colin Carrie, Conservative, Oshawa, ON]

Okay.

I was trying to get an idea of the growth domestically. I know that in my riding of Oshawa there's a lot of automotive. During the last election, the Prime Minister said he wanted to transition away from manufacturing, and that sent a bit of a chill to our community. I just want to get your opinion on how important it is with our domestic market to maintain a certain amount here so that we do have the opportunity.

Is more of the growth going to be international, or is it going to be domestic? How do you see this playing out over the next 10 years?

[Jonathan Azzopardi]

I'll be totally honest, and hopefully you can appreciate my candour. The opportunity in Canada to grow our market here is very slim to none. We see the manufacturing role in Canada continue to shrink internally, domestically. We've seen this over the years. We feel the same chill that we felt from some of the words that have been used when it comes to manufacturing.

Being chairman of the association, I have been promoting very heavily that all manufacturers, and specifically very highly technical ones, as mould-makers are, must have a global footprint outside Canada if they're going to survive into the next generation. It is essential to us to continue to be able to export our products. If it weren't for Mexico and their life cycle in manufacturing, I don't believe the manufacturing world in Canada would be the same, because as they grow, we've been able to grow with them.

I believe we are one of the industries that deserves a certain level of protection, because we are very export-friendly and not easily duplicated in other countries. If I can use the example of my own company that I manage, 90% of what I make is exported: 40% goes to the United States and 50% will land in Mexico. That is not unique. I believe that is typical for most manufacturers in our industry.

By your being able to make this free trade agreement work with Brazil, we believe that will improve our opportunities abroad. Contrary to some other agreements we've seen, such as the CPTPP, we believe this is the total opposite. We believe CPTPP is high risk and has low potential. Mercosur is, for us, low risk and high potential.

[The Vice-Chair, Conservative, Dean Allison]

Thank you very much, Mr. Carrie.

We're now going to move over to Mr. Fonseca, please, for five minutes.

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

Thank you, Mr. Chair, and thank you to our presenters.

It's very enlightening. It's interesting to hear about an industry such as moulds that is highly specialized, and about the success you're having in terms of exports. We often hear about a race to the bottom, but our government believes in a race to the top.

When we have people who are highly trained and skilled, who are able to now compete globally, one of the things we've been working on very actively through our agreements, be it with CETA or CPTPP, is progressive trade agreements where we push towards looking at lifting all boats and bringing in higher standards. That means higher standards when it comes to the environment, to labour, and to increasing the participation of women and indigenous, marginalized communities.

One of the things we also do heavily is consult on these agreements, and that's why you're here today. In terms of the competitive advantage for moulds, you look as though you're doing great. You're increasing your trade globally. Where does your competitive advantage come from here in Canada? It sounds as though you're doing really well.

[Timothy Galbraith]

In terms of our competitive advantage, I'll give a bit of a quick history lesson. Our industry grew out of European immigrants in the post-Second World War era. It was artists who migrated to southwestern Ontario.

That said, when the dollar went even and we had the 2008 crash, Canadians lost their advantage for export. They looked internally and said, “We're not going to quit.” We grasped technology, and that was really the saviour. We said we're going to turn this from an artistic to a technological entity, and by following that path, we have elevated our product into a premier product in the world.

There are primarily three centres of manufacture of the quality that we have, and southwestern Ontario is one of them. We've done a very good job. We are growing, and we're growing primarily because of exports.

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

Mr. Galbraith, that's an amazing story with the innovation, the entrepreneurial spirit of Canadians who have come here, rolled up their sleeves, and got the job done. We want to make sure they have a level playing field globally. What are your thoughts in terms of being able to deal with, around the world, the countries they've come from, from European countries, or now with the Mercosur? Do you think we should work on raising those standards?

At times you'll find that some jurisdictions go to the lowest common denominator. They're trying to lower standards so they can get that competitive advantage. We don't believe that's the right way. What are your thoughts?

[Timothy Galbraith]

We don't believe that's the right way either, and we don't cater to that market. There are countries in the world that do cater to that market. That's not something we address. In terms of what we're looking for, as I mentioned earlier, more developed markets, or markets where the level has been raised, would typically be our customers, the markets we seek out.

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

Congratulations.

Ms. Palmater, did you participate in GATT's public consultations, when it came to Canada and Mercosur in a potential FTA?

[Dr. Pamela D. Palmater]

There were no first nation consultations at all on NAFTA, TPP, CETA, or Mercosur. First nations have specific, particular rights and different consultation standards separate from the public consultations.

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

I know, Ms. Palmater, at our committee we have had many indigenous groups that have been able to participate and come, consult, and bring their points of view, etc., and their priorities with the agreements that you've brought up.

You're here today, actually, consulting and talking about this potential FTA with Mercosur.

[Dr. Pamela D. Palmater]

Yes, I've been given a five-minute public presentation in a committee consultation, which, as you know, is exceptionally restrained and limited. First nations' leaders and their communities have not been consulted on any of these by the federal government, including Mercosur. None of them even knows what the content of these agreements are. It's impossible for them to have free, prior, and informed consent without the federal government taking on their legal and fiduciary obligation to consult directly with first nations, which have different legal interests and constitutional rights than the general public.

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

With your opportunity right now, would you prioritize the top two or three priorities that you would like to see in a potential FTA. What would they be?

[Dr. Pamela D. Palmater]

One is that it's not negotiated or signed without first nations at the negotiating table.

Two is that indigenous rights are paramount, that first nations have a direct benefit from all of these, and not just jobs and contracts, which is the usual throw-away that they offer first nations. I mean a direct percentage of what comes from their lands and resources, for any of those free trade agreements, and protections from things like mining companies.

Canadian mining companies, contrary to what you heard in the previous panel, are the worst, most dangerous, and lethal companies in this country. Those are the kinds of things that we need protections from because wherever there is development that feeds free trade, like the extractive industry, or what have you, there are higher rates of murdered and missing indigenous women, higher rates of sexual assault, and of course environmental contamination. None of that is costed into these free trade agreements, or accounted for.