International Trade Committee on April 20th, 2016

[Kent Smith-Windsor, Executive Director, Greater Saskatoon Chamber of Commerce]

Great. I'll steal some of that to say that I think you can see from my girth there are restaurants available.

Thank you very much for the opportunity. I will start by talking a little about our chamber of commerce. It's been around for well in excess of 100 years. It was formed in 1903, before there was a city of Saskatoon.

Its first piece was to welcome newcomers that saw opportunities in our market. In this particular case, it was people from Britain that saw opportunities to bring products from here to the world. At our cultural core as a chamber we've always been trade-oriented.

We represent over 1,900 businesses in Saskatoon. As the folderol of the most recent federal election cleared, one of the first pieces of business on our going global committee was to bring to attention our consideration around the Trans-Pacific Partnership that advocated to our board of directors we ought to be supporting this. That resolution was passed unanimously by our board of directors.

There was a similar debate that occurred at the most recent Canadian chamber annual general meeting where there was again an endorsement of the concept of the Trans-Pacific Partnership.

Saskatoon has the youngest demographic of all major cities in the country. Part of creating career opportunities for these young people is to provide career paths. In Saskatchewan, that amounts to trade. I think the earlier presenter talked a bit about this. We are blessed with resources, which means we are able to produce far in excess of our own domestic needs. For us to be able to take those products elsewhere, we need access to markets, not only in terms of logistics and transportation, but also relating to trade rules that can create opportunities.

We also wish to acknowledge we're aware some components of the Canadian economy will be adversely affected by this particular agreement, and we support initiatives by the federal government to mitigate that and allow for transition, because we think that's important as well.

Even with those people affected, we submit they're in a far better position to be part of this agreement, with growing wealth in Canada, compared to being on the outside. That's where the real risk lies. Should Canada choose to extricate itself from this agreement, we find ourselves in a position where it will be, over a period of time, more difficult for us to even access the traditional markets, let alone expand the opportunities and the productive capacity of this amazing region.

We are concerned about comments around protectionism and isolationism you may have detected in other countries. We think it's important symbolically for Canada to move forward on embracing trade agreements as they come forward, with all of the compromises that are entailed, to say we agree with the idea of opening the world in terms of ideas and products.

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you, sir. We also noticed, when we were going around the community last night, the young people here. It's a vibrant community. We could only wish that in certain parts of the country where we live that we had the youth and vibrancy you have here. It was great to see. You guys are doing a great job.

Thanks for keeping your comments under the time.

We're going to move over to the Saskatchewan Trade and Export Partnership, and Brad Michnik.

Go ahead, Mr. Michnik, for five minutes.

[Brad Michnik, Senior Vice-President, Trade Development, Saskatchewan Trade and Export Partnership]

Again, thank you for the opportunity to speak today.

My name is Brad Michnik. I work as the senior vice-president with the Saskatchewan Trade and Export Partnership, or STEP, as we're commonly known.

My organization is a public-private partnership between the Government of Saskatchewan and the Saskatchewan exporting community. It's a member-based organization. We currently have a membership that exceeds 400 Saskatchewan companies, each of which has a vested interest in international trade and exports.

My organization provides a variety of services to assist those companies to build their businesses and markets around the world across many industry sectors. We're not a lobby or advocacy group but we are often asked to gather input from Saskatchewan exporters, which is used to make trade policy decisions in the areas of international business, market access, trade promotion services, geographic market and sector priorities, trade agreements, and so on.

I guess as an opening, and in general, I can unequivocally state that STEP and our membership of Saskatchewan exporters support any initiatives that opens new markets, lessens regulatory environments and levels playing fields in the marketplace, reduces tariff and non-tariff barriers, and results in any reductions of any unreasonable impediments that can restrict business.

We believe the Trans-Pacific Partnership agreement will see many positive benefits for Saskatchewan exports. We feel it's important that Canada ratify the TPP so that the agreement can be implemented as soon as possible.

We're a province that's abundant in many resources, and we've certainly developed a strong and diversified economy. This has been achieved by developing products and industries to support our agricultural and resource industries. Many were built for the local market, but we found that there are also markets around the world. We work with many very outward-looking companies that provide products, technologies, and services that support agriculture, mining, and oil and gas industries.

Beyond our strength in resources, we also have an economy that's diversified in areas such as manufacturing, information and communications technology, environmental products and services, industrial goods, building products, and so on.

We're absolutely dependent on international trade. Saskatchewan continues to have one of the highest percentages of exports as a percentage of GDP of any region in the world.

Certainly, greater access to world markets through the TPP and other trade agreements aligns with what Saskatchewan is all about. It's safe to say that the markets in the Americas and Asia are of the utmost importance to Saskatchewan exporters, and we see tremendous opportunities for our resources and our value-added products and services throughout the TPP region.

The STEP board of directors, which is composed of 12 senior executives of Saskatchewan exporting firms plus three senior-level government employees, wholeheartedly endorsed support of the Trans-Pacific Partnership at their third-quarter board meeting on December 3, 2015. In follow up of that, STEP's board did in fact write a letter to Minister Freeland in support of the TPP agreement.

Following this, in January 2016 we hosted a round table with Mr. David Lametti, who is the parliamentary secretary to Minister of International Trade Chrystia Freeland. The event was organized to elicit feedback on the TPP from Saskatchewan stakeholders. It was attended by over 25 prominent member companies and industry organizations who unanimously supported the TPP, stressing the many benefits it would bring to their businesses and the Saskatchewan economy in the areas of increased trade, diversification, markets, competitive factors that would come into play being a signatory or a non-signatory, intellectual property protection, setting the ground rules for trade disputes, and so on. These are all reasons that this trade agreement needs to happen from that group's perspective.

Our exports to the other 11 TPP countries in 2015 totalled just over $20 billion, which amounts to 61% of our exports. Not surprisingly, a large percentage of that—54%—goes to the United States. But the one nuance to this is that for Canada as a whole, I think about 77% of Canadian exports go to the United States; for Saskatchewan it's 54%. I think our province has done a good job of diversifying our markets, which is certainly important to anybody's strategies when you're building your exports or your book of business. We see that the TPP really continues down that path of diversifying markets for Saskatchewan exports.

TPP would limit tariffs in most of our key exports from the province and provide new opportunities in the Americas, Australia, New Zealand, southeast Asia. The main trade advantages we see are in such areas as duty-free market access for industrial goods, including metals, materials, and agricultural equipment—key industries in our province—duty-free access for most agricultural and agrifood products, including feed wheat, feed barley, canola seed and oils, dried peas, as well as enhanced market access for food wheat, food barley, and malt; duty-free access for wood and other forestry products, including lumber and oriented strand board; and more transparent and critical access for service suppliers in key sectors, such as construction and R and D services.

As well, there are the general predictability, non-discriminatory rules for Canadian investors when they're investing in the markets that they need to do business in.

[The Chair, Liberal, Mark Eyking]

Sir, do you want to just wrap it up?

If you have any final comments, we'd appreciate it.

[Brad Michnik]

Yes. I did include in the notes some specific examples that most benefit the province.

Beyond the immediate and direct advantage, should Canada and Saskatchewan not enter in this agreement, there's a real fear that we'll be on the outside looking in as other key export markets for Saskatchewan products and services potentially sign this TPP in the future. Most notably that would be China, as our number two trading partner; India, as our number three trading partner; and Indonesia, which is our number six trading partner from Saskatchewan.

We certainly feel that the TPP would keep Canada on a level playing field with their other markets from the U.S., Australia, and Mexico, which are strong competitors in many of the products that we export around the world.

With that, I'll conclude. Thanks for the opportunity.

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

As another witness said this morning, Saskatchewan is definitely a big exporter and importer, and trade agreements are very crucial to the people of Saskatchewan in how they go and in what direction they go.

We have our final panellist for the day. It's Richard Wansbutter, with Viterra.

Go ahead, sir, for your comments.

[Richard Wansbutter, Adviser, Viterra]

Thank you very much, Mr. Chair.

On behalf of Viterra, I would like to thank the standing committee for this opportunity to present our views on the Trans-Pacific Partnership agreement.

By way of a quick background, Viterra is Canada's grain industry leader and marketer of grains, oilseeds, and pulses. We are headquartered in Regina, Saskatchewan, and our commitment to agriculture goes back over 100 years, partnering with farmers to market and move the crops to areas of need around the world. Our assets in Canada, from Quebec to British Columbia, include 67 elevators, nine special-crop facilities, six port terminals, and two oilseed processing plants. As a company, we export to every significant market when it comes to our grains, oilseeds, and pulses.

We're also a member of Cereals Canada, the Canola Council of Canada, the Western Grain Elevator Association, and the Canadian Special Crops Association. We support the views put forward by our commodity organizations.

From the very outset, Viterra strongly supports Canada's ratification of the Trans-Pacific Partnership. The TPP is of direct and vital importance to Canada as a major exporter of grains and oilseeds, as well as processed products. Over 90% of Canada's farmers depend on world markets for their livelihoods.

The countries in the TPP represent a significant opportunity for export growth. Together these countries represent about 40% of the world's domestic product, and the region is the destination for 65% of Canada's agricultural and food exports. Many of the countries in the TPP, for example, Vietnam, are growing rapidly in income and population. Expanding market access will pay long-term dividends for our exports of grains, oilseeds, and pulses, and Canada's overall economy.

To touch on a few of the benefits, on the major ones for wheat, there's a potential to grow Canada's exports to TPP countries by 20%. In canola, improved access to Japan will mean up to $780 million in increased exports. When we look at barley and processed barley, this could result in an increase of an additional 400,000 to 500,000 tonnes annually.

The consequences of failing to ratify this agreement and not being a participant, we are convinced, would result in Canada being forced to cede some of its Asian markets to our big competitors like the U.S., and Australia, and into that region. The TPP, without Canada, would mean a loss of preferential access to Japan, as well as emerging markets, such as Singapore, Malaysia, and Vietnam. For example, Japan currently imports about 1.5 million tonnes of high-quality wheat per year. For wheat and durum, estimates show a difference between the potential gain of participating in the TPP, and the cost of being left out of the agreement, at about 4.3 million tonnes.

In addition to the reduction of tariffs, another critical element of the TPP is the commitment to reduce non-tariff trade barriers related to biotechnology. In addition, TPP includes provisions that will help ensure sanitary and phytosanitary regulations are based on sound science, and provide dispute resolution mechanisms that are put in place to resolve differences. This is a major element. It tends to be glossed over, but we need those processes where we can resolve our disputes.

One of the earlier presenters made mention of this, but I think it bears repeating.

In addition to increasing Canada's market access, we must also ensure we have the necessary infrastructure to facilitate trade. Canada requires a demand-driven rail freight system in order to meet its trade opportunities, and a rail freight system with clear accountability and corresponding penalties for non-performance. We have to look at that carefully when we're talking about the review of the CTA.

Thank you very much for this opportunity to share Viterra's views on this important agreement.

[The Chair, Liberal, Mark Eyking]

Thank you, sir, and thank you for keeping within the time.

We're giving the floor over to the MPs to have a dialogue with you, and we'll start off with the Conservatives for five minutes.

Mr. Hoback.

Sorry, Mr. Ritz.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

No problem, we look a lot alike.

[The Chair, Liberal, Mark Eyking]

You're the twins of Saskatchewan.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Thank you all for your presentations.

I have a question for each of one of you.

Canpotex, you're one of a number that talked about the ISDS provisions, but everything we've heard to this point is negative.

Richard, you commented on it, too—having a rules-based dispute mechanism.

Natashia, you made the point that you like to operate outside the courts. Courts could be swayed by their own country's business. This takes that away from them, so that there is no adjudication by someone with a vested interest. I don't disagree with you. I just wonder if you have faced these types of situations before. Is that why you think this is a better way of handling it?

[Natashia Stinka]

My tendency in resolving disputes is generally to try to resolve them bilaterally. That's an approach that has seen some success. What the TPP would offer is some predictability and clarity in how to resolve disputes.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

And it's expedited.

[Natashia Stinka]

Yes, and it's an avenue that could be used. I understand it also introduces things like arbitration and mediation. It's another option to resolve disputes in countries where the court system may not be the appropriate avenue.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

They're expedited. Thank you.

Kent, thank you for your presentation. I've had the opportunity to speak to a number of your businesses, gotten to know a lot of them. Saskatoon and Saskatchewan have always led in going global. You're absolutely right.

Do you think that we've all been fooled, that we shouldn't be part of this TPP? We hear this from a lot of people on the other side of the argument saying that somehow we're all being duped. Are your businesses being duped?

[Kent Smith-Windsor]

No.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Okay, great. Thank you, that was concise.

Brad, from STEP, I've had the great opportunity to work and travel with a number of your predecessors. I look forward to that with you as well. Four hundred Saskatchewan businesses, can you quantify, as they go more global, how many jobs these businesses have the potential to create?

[Brad Michnik]

Yes, I mean, in general—

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

You don't have to do it right away. This is something that could be submitted by June 30.

[Brad Michnik]

In the shorter term, during the next year, we're looking at bringing $80 million of business into the Saskatchewan economy. It varies by industry, but we often use the number of $300,000 to $400,000 in increased sales per additional job that's created. If you're using that ratio, I think you're talking about 400 employees through the upcoming year. If you took trade on its own, two-thirds of our GDP in this province is export-related it's from a customer outside Saskatchewan. Then there are all the ancillary industries that support the export companies.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Infrastructure logistics is a big part of moving forward. You guys have an excellent program of capacity-building for small businesses that are thinking of going global. You guys actually sit down and mentor them. You take them along on trips. We've heard this from other people that there needs to be more of that. There's a federal government investment—I think we brought it forward and then the Liberals implemented it—of $25 million for capacity-building. Have any of the other provinces come to you and said they like your model and want to emulate it? Have you tried to capitalize on your mentorship and sell the expertise that you have?

[Brad Michnik]

We haven't necessarily sold the expertise, but we do a lot of work.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Don't give it away—it's valuable.

[Brad Michnik]

We've had some municipal acknowledgement. Development agencies pay us for our experiences. We use money to learn on. We do a lot of work with the other provinces in best-practice sharing. Nova Scotia is probably the closest to emulating the STEP model in another province. We're always talking to the other provinces, but Saskatchewan did take a bold step 20 years ago when we were formed.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Yes, you've been around a while.