International Trade Committee on May 5th, 2016

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

You have certainly heard the comments of people who have testified before you. They have suggested that, should we not sign the agreement, we should establish a trade agreement directly with the countries, particularly Japan and China.

[Lawrence Herman]

That's out of the question. If the TPP gets approved in the United States and Japan joins, they will have no interest in negotiating a bilateral deal with Canada, in my view. If they do, it will be a deal that will be based on the TPP. Why would the Japanese enter into bilateral negotiations with Canada and say they'd accept something less than what they got in the TPP?

To me, it's a mug's game to suggest that we'll be all right and that we can negotiate a deal with Japan and anybody else we want. I think that is pie in the sky.

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

Thank you very much.

[Lawrence Herman]

I don't know how to say “pie in the sky” in French.

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

Thank you very much.

Mr. Sookman, you spoke about e-commerce. However, people are wondering how this will work with the TPP. I'm wondering about it. You said that there weren't any barriers. Could you expand on that?

[Barry Sookman]

Thank you very much for your question. I apologize for answering in English. I actually grew up in Montreal, but my French is so rusty I'd be worried about giving everybody in the room tetanus, so I'm going to answer in English.

The e-commerce provisions are one of the innovative features in the treaty. They're not in CETA; they're not in NAFTA; they're not in GATT. They recognize that trade in the 21st century is quite different from what it had been. We now have powerhouses in Silicon Valley—the Googles, the Facebooks, and others—which we hope we can develop in Canada. Those have made major, major inroads into foreign countries. They found in some of those countries that there were effectively attempts to block their market access. The goal of the e-commerce chapter was to take the GATT's framework, which not only dealt with tariff barriers but started to deal with non-tariff barriers, and to look at what were going to be the barriers in the 21st century, and to then try to deal with those in the same way that the GATT and others dealt with other non-tariff barriers. So when you look at e-commerce, some of the barriers related to recognition of signatures and documents, one out of the way, and they've done that in a very elegant manner by referring to two international documents. They've set out a whole set of rules as one provision, but it has very extensive implications and benefits for Canadian businesses.

It also has benefits with respect to transborder data flows. If you think about Canada, we actually have a very sophisticated IT sector that is very good with networks. There is the potential benefit that we could leverage all those technologies and do business in other countries. In fact, some of our major FIs today run their foreign affiliates from Canada, so we want to be sure they're able to continue to do that.

There are some exemptions for FIs in the commerce chapter, but in general it restricts non-tariff barriers that are specifically related to e-commerce.

[The Chair, Liberal, Mark Eyking]

Thank you.

We're quite over time there. We got some complaints that we went over time here with our committee last time, and we want to be out of here in about eight minutes, so I think the Conservatives are going to split their five minutes.

Go ahead, Mr. Van Kesteren.

[Lawrence Herman]

We didn't start on time, Mr. Chairman, with due respect. We were about 10 minutes late.

[The Chair, Liberal, Mark Eyking]

Were we?

Okay, go ahead.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Thank you.

I have two questions for you, Mr. Herman. I'd like you to maybe address the concern my colleague had about the auto workers. That's my part of the world as well.

The second thing I've been hearing about is easy entry by foreign workers and the inability of the Canadian government to guarantee that skilled workers meet Canadian standards, which have resulted in massive job losses for Canadians in, for example, construction. Maybe you could address those two things for me.

[Lawrence Herman]

On automotive, if we aren't part of the TPP, we'll be competing in the U.S. market with lower-cost suppliers like the Mexicans. Plants and investments will move to Mexico, because Mexico will be able to get duty-free entry for their automobiles into the U.S. market easier, or at a lower threshold, than we can. We will be stuck with our NAFTA requirements, which is 62.5% NAFTA content, in the TPP. If we're not there, the Mexicans will have a lower threshold. They will be able to source lower-cost inputs and compete with lower-cost automobiles that they manufacture in competition with our Canadian producers in the U.S. market.

I don't see why any automotive company would not want to be part of the TPP. Do they want to compete with higher-priced products in the U.S. market? We sell most of our automobiles in the U.S. market. It doesn't make sense to me. As well, we mustn't forget that parts suppliers, like Linamar and Linda Hasenfratz, for example, have said they agree that the TPP is of great benefit to Canadian parts suppliers.

On those two grounds, I think the TPP is of advantage to us and we have to think about the downside if we are not part of the TPP.

On labour mobility, what the TPP does—and I don't know if this is answering all of your questions, Mr. Van Kesteren—is to provide greater mobility to allow Canadian companies to send experts, workers, and technicians abroad to service contracts in foreign markets. That labour mobility part of the TPP is very important. It doesn't prevent Canada from maintaining some standards on labour mobility, but it allows our companies to transfer technicians, employees, experts, into foreign markets, which they can't do now. I think that's of great benefit to Canadian employees and a great boon for Canadian jobs, and I hope that would be taken into account by this committee.

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

Thank you, gentlemen, it has been a pleasure listening to you. Rather than just saying no, no, no, you're actually backing up your arguments with rationale and reason and I appreciate that.

Stability and predictability are what trade is all about. Under the WTO, there's a clause called favoured nation status, and we've enjoyed that with countries, but it comes and goes with political will. What TPP does is entrench that favoured nation status with a set of rules and predictability that, of course, will strengthen Canadian businesses out there.

There's a lot of discussion that somehow the TPP will supplant Canadian sovereignty. I don't agree with that, and I wonder if you have some comments you'd like to make in that regard.

[Lawrence Herman]

Every trade deal is about compromises. It's about giving in order to get, and the balance at the end of the day has to be in favour of your national interest. I think for Canada, having secured both national treatment and most favoured nation treatment in the other 11 countries—we do have it, by the way, in the United States but we would lose our preference even on an MFN basis. But we don't have any preferential treatment or any MFN guarantees in Japan, for example.

Mr. Ritz, as someone from the Battlefords, you know how important access to the Japanese market is for the Canadian agricultural industry. That is of tremendous benefit. That's a good example of where both national treatment and particularly MFN treatment, which would be on a preferential basis, will give Canadian exporters of beef, pork, agrifood products, processed agrifood products of a wide sort, access that we don't have now to the Japanese market, and to other markets in the Asia-Pacific area.

[Barry Sookman]

I have one quick comment to add.

[The Chair, Liberal, Mark Eyking]

We're going to have to move over to Mr. Fonseca now. There's three minutes left. You might be able to get your comment in.

Mr. Fonseca, you have three minutes. Go ahead.

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

Send me a note, Barry.

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

Thank you, Chair. Thank you, Mr. Herman and Mr. Sookman.

The great thing about these meetings is that we get to meet individuals like yourselves, witnesses who bring a great deal of experience and expertise in your field, and also to hear from witnesses who are really polar opposites. Listening to both of you right now, in terms of being very favourable to the TPP, and having heard from Professor Geist and Mr. Balsillie about how the TPP is kind of the worst thing that we can ever sign on to, leads us to trying to balance all of that.

I want to go back to how all this started. Mr. Balsillie mentioned that no Canadian innovator was ever consulted as we were negotiating into this TPP. I want to ask you, were you consulted by the previous government?

[Barry Sookman]

There actually was a consultation that I did attend, but let me answer the question by reference to the actual provisions in the TPP.

When you look at them you can see the fingerprints of the Canadians all over them.

Now, to non-experts in IP, it's just 6,000 pages, and the TPP IP provisions are a portion of them. However, I'm very familiar with a number of the provisions, and when you look at those provisions and you look at those footnotes, and then you talk to the negotiators you will see that Canada had a very clear strategy of maintaining many of the flexibilities that we already have in our law. There are a lot of very unique provisions or exceptions in it.

I can't tell you about the consultations, but I can tell you in looking at the changes, which are minimal, and looking at how Canada got to the position where there were so few changes because of all of the exceptions and caveats, that our negotiators did a really good job.

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

Just quickly, in the process to CETA as compared to the TPP how would you compare the two?

[Lawrence Herman]

CETA was a little different in that the provinces were directly involved for reasons that relate to what the—

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

Is that a better process?

[Lawrence Herman]

It may be, provided that the provinces can all sing to the same song sheet.

There was—

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

Sorry to interrupt, it's just because of the time.

Do you feel there was more consultation on CETA than happening—

[Lawrence Herman]

Well, the provinces were involved—

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

Were you consulted, Mr. Herman?