International Trade Committee on May 10th, 2016

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

I think your opinion on the extension could be summarized, quite frankly, as “let it be”.

[The Chair, Liberal, Mark Eyking]

We'll let that one under the wire.

That ends our first round, and we're going to move on to the second round.

It's going to go to the Liberals. Ms. Ludwig, you're up first.

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

Thank you. I'm pleased to be here in Montreal.

Starting off, my questions are with regard to labour and labour mobility. We've heard from witnesses across Canada about the implications for labour of ratifying the TPP. We consistently hear the number of 58,000 job losses.

We've also heard, consistently across the country, from a number of witnesses in a variety of sectors, although we don't have a study, about the cost and implications of not ratifying TPP.

I would ask Mr. Jobin if he could speak to that.

[Guy Jobin]

If the United States and Mexico, our biggest trade partners, ratified the TPP and we did not, I think that would have an even bigger impact. A study on that should also be carried out. In fact, I think it is important to know what the TPP brings, but also what being excluded from it would lead to.

We think that's important because, if the U.S. has a competitive advantage on all markets and we have no such advantage, we are affected, as in the case of South Korea when the U.S. signed an agreement with that country. We had no agreement in place and lost huge market shares.

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

Thank you.

A number of agricultural companies have discussed the implications of not ratifying it and what that would mean. In the west, we heard from a number of associations that said the cost would be well in excess of 58,000 jobs, and it would be quite significant, with a serious domino effect.

How might ratifying, or not ratifying, the TPP affect areas with labour shortages, such as the trucking industry and the meat and fish processing industries?

We have heard the arguments that increasing the wage will draw more people into those occupations, but statistically that has not been the case. An increase in wage from $15 an hour to $20 an hour is not drawing people, for example, into the area of fish processing with the opportunities for labour mobility.

[Charles-André Major, Head, Analysis and Communications, Board of Trade of Metropolitan Montreal]

We represent the Montreal area. We do not have a big sector in fish processing, so it's hard for us to talk about these issues.

About the trucking industries, quite a few changes are being tried and tested in the Montreal area to draw in new people to the trucking business. I think that's a better way to do it. If there's a labour shortage, then as with other sectors, we should have people from other countries coming in to help us.

If we cannot get our trucking industry working to export our goods and making Montreal the transportation platform it should be, we might lose a lot more than we would by calling upon foreign workers.

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

In ratifying TPP, what would be some of the opportunities and threats in terms of imports, or the loss of market share, to Montreal businesses?

[Guy Jobin]

We don't see a lot of threats. I think it's good for our industries, such as aerospace,

industrial equipment, transportation equipment and life sciences. We have also identified cosmetics, energy, equipment and construction materials. Our local industries in those sectors would benefit from the TPP's ratification.

[Charles-André Major]

With no agreement in place, Canadian export companies often face higher barriers than those faced by foreign companies coming into Canada. Having an agreement helps ensure a level playing field. It enables our companies to export in certain sectors.

We were talking about climate change earlier, and I would like to come back to that. Two years ago, the Board of Trade of Metropolitan Montreal led a mission to Japan to look into green technologies. I think it is really important to come back to this because our markets and sectors are full of small players who develop important technologies and would benefit from promoting them abroad because our domestic market is very small.

This agreement addresses climate change and its repercussions. Climate change is a global issue. Montreal is lucky to have a centre of excellence in that sector, but it does not have a large enough domestic market to develop it. The countries involved in the partnership will have a high demand in that sector. It's an excellent idea to help our SMEs export their technologies.

[The Chair, Liberal, Mark Eyking]

Thank you.

That wraps up the time for the Liberals. We're going to move over to the Conservatives.

Mr. Hoback, you have five minutes.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

I have five minutes and I want to ask everybody questions, so I'll try to go down the table.

Madame, I agree with you on IP protection. If you invent it, you should have the protection and rewards from that invention, whether it's a song, a book, or something you've manufactured that's unique and creative that helps people around the world.

One of our presenters last week talked about the freedom to operate and that we should have an innovation policy based on the freedom to operate. Do you know what that means? Are you familiar with it?

[Ysolde Gendreau]

No, I'm not.

[Randy Hoback, Conservative, Prince Albert, SK]

I call it freedom to steal, because basically what they want to do is have access to any new technology in the IT sector immediately so that they can actually take advantage of it and grow on it.

In the case of Montreal and the video game industry that's going on here, if they didn't have proper IP protection, would that industry actually grow, or would it disappear?

[Ysolde Gendreau]

I don't think it would grow very well. I would bet that it would disappear and that they would go elsewhere. It's an interesting industry. It's a bit low profile for all the hype it can actually create, but this is the kind of industry in which people move around very easily, and if you don't give them the protection they want, then they can look elsewhere.

IP is just one aspect, though. You've got tax incentives that are also very important. It doesn't do everything, and you can't say that for a particular industry, whatever it is—the pharmaceutical industry, for example—IP is the sole game changer for that industry. I don't think so.

[Randy Hoback, Conservative, Prince Albert, SK]

Okay.

I'm going to move on to the chamber. I wish I could spend another hour with you, actually, because we agree on a lot of things.

We are hearing a lot of rhetoric coming from south of the border from candidates from both the Democratic and the Republican sides, and they're talking about ripping up NAFTA.

We've always discounted these people, saying “No, they don't have a hope”, but all of a sudden they're the front-runners. They're the ones who actually may be the candidates running for president.

How would the businesses here in Montreal react, or how vulnerable would they be if NAFTA was ripped up?

[Guy Jobin]

I think it's still too early to say. Every time there is an election, some CEOs make phone calls and say:

“Hopefully not, Donald, on what you said about...” whatever.

I think that will be the first reaction. CEOs of U.S. companies that do business in Canada and Mexico will make calls.

There's going to be a reality check there.

[Randy Hoback, Conservative, Prince Albert, SK]

I guess we're hoping, but we've seen some strong personalities across the border, and both Senator Clinton and Donald Trump have been very vocal on this.

One thing I'm curious about is, what advantage do you have now that you didn't have before the Conservative government? There were only four FTAs, and now there are 44 FTAs, so if NAFTA does go backwards and we see protectionism rise in the U.S—maybe it's not ripped up, but to the level that's really going to impact our deliveries into those markets—what are you doing to diversify? Aren't you glad you have those FTAs like CETA and TPP now in those other potential markets?

[Charles-André Major]

That is a strategy. In broad terms, diversified trade does not generally result in more exports to certain countries. However, it does help diversify markets. For a very long time, and still today, the economy of Canada, Quebec and the Montreal region have been closely tied to the U.S. economy. It would still benefit us to diversify our economy and give ourselves the tools to respond, as changes can occur very quickly.

My colleague Mr. Jobin was using the example of the agreement with Korea earlier. The FCCQ also talked about this earlier. Companies know very little about that agreement. Since the European Union and the U.S. signed the agreement, Quebec has lost half of its pork exports in two years. That's a lot. In fact, it's not just a matter of signing an agreement, but of knowing what we will do afterwards. That is why it is important to provide companies with information on business opportunities, future competition and ways to prepare logistically. Consideration can also be given to forming partnerships with the Fédération des chambres de commerce du Québec or the Board of Trade of Metropolitan Montreal.

[Randy Hoback, Conservative, Prince Albert, SK]

I'm going to stop you right there because I want to try to get to everybody.

Is anything preventing unions from expanding abroad? Have you looked at taking on activities in Japan or other countries under an agreement like this?

[The Chair, Liberal, Mark Eyking]

A quick answer, please.

[Denise Gagnon]

We have not discussed labour mobility, which could fill out a whole book chapter on its own. We hold lot of discussions on that topic, especially when it comes to international framework agreements. However, it should be pointed out that people who are invited to Canada to discuss this with us are being refused access to the country and cannot come in.

We feel that this agreement has not been sufficiently studied. We propose a study. To be clear, we are not against the free flow of services. However, we see free trade as more of an international cooperation phenomenon, as was the case at a certain time under the WTO, which had to provide for sufficient protection mechanisms.

You gave some examples of situations in Montreal, in the softwood lumber industry. Despite NAFTA, there was a huge debate on softwood lumber. However, informal agreements are often concluded outside the framework of agreements. That was the case with NAFTA. In this case, we are headed toward “NAFTA plus plus”. As a result, the power of international companies becomes excessive compared with the power of governments and society.

[The Chair, Liberal, Mark Eyking]

We'll have to end it there. Sorry, Mr. Hoback.

We have two three-minute sessions left. Madame Lapointe will have three minutes and Mr. Van Kesteren will have three.

Go ahead, Madame Lapointe.

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

Thank you very much.

I have a question for Mr. Jobin and Mr. Major.

You said earlier that you would encourage the government to sign the TPP agreement. Should the agreement have to be renegotiated following the presidential election south of the border, what changes would you like to see made to the current text?

[Charles-André Major]

The same question was put to the FCCQ, and the answer will be similar. From a technical perspective, no concrete aspect requires a change. We are considering the general concept and are favourable to the principle of the free trade agreement.

I want to come back to what I said. Much more important is what is done upstream with regard to this agreement and the amount of time we have. If rules have to be changed, will have to see what the U.S. will propose in order to react. We are satisfied with the agreement in its current iteration. In fact, everything depends on preparation.

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

You said earlier that you could help companies. It would appear that the information they are given is lacking. You could help them by organizing trade missions and training workshops. I would like to hear your thoughts on that, as the Montreal region is fertile ground for exporting SMEs.