International Trade Committee on June 18th, 2019

[Mathew Wilson]

I'm happy to talk about it since I was the one who raised it.

Here's an example that I've heard from companies in the past about their repair person coming across the border. When you buy machinery or equipment, and you buy from an American supplier, for example, there are typically regional specialties and so the repair person will travel back and forth to fix a piece of machinery. Those people get to the border with tools and equipment and often get stopped because they're carrying goods into the country, That occurs coming into Canada or going into the United States. The simpler we can make that and the more clear we make it to border officers that this is supporting integrated trade, it's supporting jobs on both sides of the border, it isn't stealing someone's job, it's actually supporting jobs, the better off we are.

In the current agreement they tried to remove them, I think, early on in the negotiations. If they had removed those, people like us who have had to go down for meetings in Washington.... For meetings that Brian was in last week, he would have had to get a visa to go into the United States, which many other countries have to do. Just think of the millions of people who cross the border almost on a daily basis who do that type of work. The border would have been so congested.

It wouldn't have been just for business travellers like us going down. It would have been the repair people, but it also would have been the goods that would have been stuck behind all those people as well. The cost of eliminating that type of visa would have been massive on our economy and felt right across all sectors.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Great, thank you.

To our egg farmers, you mentioned that 88% of Canadians would like to buy from Canadian farmers. What is the value of actually having a maple leaf on Canadian eggs, so that when I go to the grocery store I know they're from Canada?

[Dan Paszkowski]

Yes, it is quite valuable. On social media, when there are imports coming in.... Consumers are eating more and more eggs all the time. They'll take a picture showing the Canadian flag and then when there are American eggs which say "Product of U.S.A.", it's like.... They really wish they didn't have to buy eggs that are a product of U.S.A., but they still need some eggs to cook and bake with. We can't put a dollar amount on the value, but Canadians really want Canadian eggs. That's the overwhelming....

[The Chair, Liberal, Mark Eyking]

Thank you. We're going to move over to the NDP now.

Ms. Ramsey, you have the floor for five minutes.

[Tracey Ramsey, NDP, Essex, ON]

Thank you so much.

Thank you to our witnesses. It's a diverse panel, and it's nice to see different interests being represented, because there are certainly different sides to the CUSMA and the way that Canadians are feeling about it.

I will start with the egg farmers.

If I understand you correctly, you said the amount of market share that's going to be open would represent the entire annual egg production from the Atlantic provinces.

[Roger Pelissero]

That is correct.

[Tracey Ramsey, NDP, Essex, ON]

Wow. That would be the elimination of all egg production essentially in four of our provinces, which is quite stunning.

[Roger Pelissero]

Mr. Chairman wouldn't have a job to go back to.

[Tracey Ramsey, NDP, Essex, ON]

People in rural ridings like mine wouldn't have farms to go back to, and those farms that support the local economies would suffer as well in small towns like the ones I represent. Also the vintners, I have vintners in my riding as well.

I want to talk to you a little bit about the TRQ. This provision that has now been included in the agreement for eggs says that 30% of the import licences for shell egg imports will be made available to new importers. I know this was a big issue previously, under the cheese quota in the CETA. I wonder if you can speak to the importance of that coming to actual egg farmers and those who are being impacted versus being dispersed across retailers and everyone else in that space.

[Roger Pelissero]

Mr. Chair, if I may, I'm going to pass that question over to my director of international trade. She is far more versed on it than I am.

[Judi Bundrock, Director, International Trade Policy, Egg Farmers of Canada]

As Roger was mentioning earlier, the way in which trade agreements are implemented is almost as important as the wording in the agreements themselves. We were a little bit surprised to see the 30% provision, especially because we were the only commodity that actually had that provision included. When we explored further with the negotiators what was behind that, we saw it really was the U.S. actually indicating that it wanted to have more access to eggs in Canada.

It's interesting, because of course, as Roger also mentioned, we have a very good relationship with the United Egg Producers in the U.S., and they have indicated that they're happy with the status quo and, as Roger mentioned, they did send a letter to the USTR asking for status quo. I think really the concern with regard to the 30% is that the 30% really should go to those who are being impacted by the trade agreement—graders or processors. If it were to go to a retailer, ultimately it would mean more U.S. eggs on Canadian grocery shelves. It would further perpetuate the problem or the issue that Roger was also talking about, and as he said, we know that Canadians want Canadian eggs, and therefore allocating that 30% to a retailer would perpetuate the issue.

It also has an increased cost on Canadian egg farmers. If the eggs go directly onto the shelf, they displace eggs that would go onto the shelf from a Canadian perspective. It's far better to have those eggs directed to processing. Actually, there's wording in the agreement that says the imports should be directed primarily to processing.

[Tracey Ramsey, NDP, Essex, ON]

One of the other things that's concerning around supply management is regulatory oversight that the U.S. is seeking and has achieved in dairy. I'm wondering if the same is true in terms of your egg producers. Really, this is woven throughout this whole chapter 28, when we're talking about regulatory co-operation. The fear is that not just corporations but the U.S. will have a say over any changes that could be made to our supply-managed system.

Have you looked at that in more detail and is that a concern of yours? If Canada tries to change our system or look at our system differently, will the U.S. have the oversight to change that?

[Judi Bundrock]

At this point in time, there were no attempts made at taking a look at how the egg industry works in Canada from the American point of view.

We understand the concerns from our dairy farmer colleagues, obviously. We're following it very closely for the reasons you pointed out, that it could have some downstream impacts on how the Americans feel looking at either our system of supply management or really any other domestic tool that we use. That really isn't any of their business.

[Tracey Ramsey, NDP, Essex, ON]

Right. This speaks to our sovereignty, which is what we've been hearing from farmers. It's the concern around sovereignty and our ability to manage our supply management system.

My next question is for the vintners.

Dan, you've painted a picture here of a lot of losses that were incurred by vintners in signing the original NAFTA. The amount of imports now that come in, the percentage of those imports.... Could you talk about the importance of dropping this escalator and supporting our vintners?

[Dan Paszkowski]

It's absolutely critical. It's the foundation of the entire Canadian wine industry as it stands today. Australia tells us it will drop the panel process. If we simply drop the legislative portion of increasing excise duties every year, the Canadian wine industry will survive. If we allow the WTO panel process to go through, we have no idea what we'll look like at the end of that process.

We do know that the measures currently protected under CUSMA will be at risk and at the discretion of whatever the panel decides to do. It will rule in a report in February with a final report in March or April. There's a lot of risk and there are many Canadian vintners right now that are not investing in their industry. It's a wait and see approach. We could see hundreds of wineries go out of business.

[The Chair, Liberal, Mark Eyking]

Thank you.

Mr. Fonseca.

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

Thank you, Mr. Chair.

We commenced this meeting by talking about how the U.K. is looking to engage with us and around what it's doing with trade. I believe the reason for the engagement, and U.K. representatives have been here a number of times, is they've seen through the Canadian lens the way we've negotiated these trade agreements.

We have to look back even prior to President Trump becoming president, when he talked about ripping up these trade agreements. One of the first things he did as soon as he came into office was rip up the TPP.

Here in Canada we've taken a team Canada approach. I want to thank all of the stakeholders who are with us today, all of the witnesses, for being part of that team.

I'm going to start with Brian.

The approach we've taken over these number of years to get us to this point, to stop the President from ripping up the NAFTA, could you tell us what you see in the success of that and is that something with which we should continue?

[Brian Kingston]

The approach that's been taken by government over the past few years has been very positive. This has been a wild ride, to say the least. Nobody expected that we would have this NAFTA threat. The way it's been dealt with has been fantastic. I must thank Steve Verheul, our chief negotiator, for taking a really inclusive approach and consulting widely with Canadians and keeping people informed in a very transparent process throughout.

On top of that, the diversification efforts that successive governments have been initiating in Canada are absolutely critical. We are arguably the best platform in the world now to export from. We have access into Europe. We have access into Japan plus the NAFTA 2.0. The Canadian trade agenda is truly a success. Now it's up to business, frankly, to take advantage of these deals and make them work.

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

Looking at the whole political spectrum, I have a quote here from Brian Mulroney who said, “I commend all—from the Prime Minister down—who contributed to writing this vital new chapter in the ongoing drive for greater Canadian strength and prosperity.” I can take that from the Liberal side, labour, etc. They have all spoken favourably about the approach we took, where we've come to and the deal we've been able to reach.

Mr. Kingston, you talked about the uncertainty and that it would be reducing business investment by about 2.5%. Can you dig a little deeper into that number and explain that to us?

[Brian Kingston]

Sure. That's a Bank of Canada projection from their macro model, but we have numerous examples from member companies. Throughout this process, we've been thinking of doing things, for example, upgrading a manufacturing line. We decided to hold off until there's more certainty in these negotiations, because 90% of the product that I produce goes to the U.S. If suddenly we were facing tariffs, maybe this is not the place to be exporting from.

There are examples like that across sectors where companies were just holding back on some of their investment plans to see how this all panned out. We're hoping that, with this agreement ratified in all three countries, you'll see this unleashing of investment as companies now have the certainty to go ahead and essentially go back to business as usual.

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

That highlights how important this is and that we need to really get this done.

The economy here has been doing.... We have the lowest unemployment rate in 40-plus years. Over one million jobs have been created over the last three and a half years.

Mr. Wilson, since you're with the manufacturing sector, maybe you can share with us some of the numbers that you've experienced. Adding on to that is the 2.5% lift you may get from CUSMA. What would that mean?

[Mathew Wilson]

First off—and we were talking about this before the committee started—last year was a record year for output for manufacturing in the country and for value-added exports, which is great news.

As we discussed, the challenge is that we're still not clicking on all cylinders. We're behind what the U.S. is doing, for example, and a lot of that comes down to investment. We've seen a significant lag in investment in this country over the last number of years. It tends to be that economic growth follows investment, so measures in the fall economic statement were critical. For example, with the ACCA measures, we saw an immediate kick in investment in Canadian manufacturing as soon as they were introduced, which we also saw in previous governments when they were introduced, and those are critical.

I'm optimistic that the elimination of steel and aluminum tariffs will go a long way to settling some of the uncertainty. That's maybe even bigger than ending the ratification of Bill C-100 and CUSMA overall between the three countries. That was a significant drag. That was obviously a critical step to even get us here today. Again, I commend the negotiators and the team inside the government. You got rid of that because that was the critical step that was weighing things down.

From an employment perspective, things are great, but the biggest problem we have is a lack of skilled labour in this country with skills levelling at all levels of the company. If we don't start solving some of the skills gaps that we have, that investment is going to dry up entirely.

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

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Fonseca.

That wraps up the first round.

We will go to Mr. Drouin. He's the member for Glengarry-Prescott-Russell.

Welcome to our committee. I had the honour to go to your riding. This is where dairy farmers have happy cows.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

And the eggs. Don't forget the eggs.