International Trade Committee on May 12th, 2016

[The Chair, Liberal, Mark Eyking]

Good morning everyone. It's great to be here in Windsor. You know that we are the House of Commons trade committee.

We are a very active committee. We have a lot of things on our plate. We're finishing up the CETA agreement and we have the softwood lumber issue, but the biggest thing on our plate right now is the TPP. Since Parliament started, our committee has been travelling the country. This is our sixth province. We have four provinces and the territories left to visit. We're also doing a lot of consultations in Ottawa with various stakeholders.

In our last few meetings, we've opened up the last hour to the public to get their views on the TPP. We'll be doing this over the next few months. We have also received submissions from the public via email, and we're at over 10,000 right now. We'll be taking them and putting them all together for our final report.

That said, we have four panels this morning. With us on our first panel we have Unifor, the Windsor and District Labour Council, and the Essex County Federation of Agriculture.

The members of our committee are from across the country. We have Karen Ludwig from New Brunswick, Linda Lapointe from Quebec, and Mr. Peterson from Ontario. We also have Mr. Van Kesteren from Ontario and Ms. Ramsey from Ontario. Gerry Ritz and Randy Hoback are from Saskatchewan. So we have good representation.

Without further ado, we'll start with our witnesses.

If Unifor wants to start for five minutes, you can go ahead, sir.

[Dino Chiodo, President, Local 444, Unifor]

Thank you very much, Mr. Chair.

Before I kick off, I want to say thank you very much. What you are doing, coming down to Windsor and going to the different provinces and listening and engaging individuals, is being very well received. I want to say thank you very much. It's something we haven't seen for a long period of time, and it's really great to be able to have that dialogue and discussion. Thank you for your hard work and dedication. I know it takes a lot of time away from your families.

[The Chair, Liberal, Mark Eyking]

Thank you.

[Dino Chiodo]

Good morning, Mr. Chair, and members of the committee.

My name is Dino Chiodo. I'm the president of Unifor local 444 in Windsor, Ontario. As well, I'm the chair of the Ontario regional council.

Our local union represents 17,500 active members and retirees who work throughout Windsor-Essex county. Our members work in many industries, including food processing facilities, casinos, road transport, aerospace, energy, and most notably, the auto industry.

Windsor has the highest auto industry concentration in Canada with the Chrysler assembly plant, major engine facilities, including Ford, and more than 50 independent parts suppliers. In these operations alone, there are more than 12,000 direct jobs, with thousands created in spinoff jobs in industries such as steel and plastic, as well as office workers, car dealers, engineers, researchers, and so many others.

As vital as the industry is in Windsor-Essex, it is a shell of what it once was. Since 2001 Ontario has lost over 300,000 manufacturing jobs, including over 40,000 in the auto industry and more than 10,000 in Windsor alone. In just over the last decade, we've witnessed the closure of the General Motors transmission plant in 2010; the Lear parts plant in 2007; the Chrysler truck plant in 2003; and major cutbacks at Ford engine facilities, just to name a few.

It was in 2001 that a long-standing trade policy, known as the Auto Pact, was officially abolished, as directed by the World Trade Organization. I don't need to revisit the history of the Auto Pact for the committee, because I'm sure you're all well aware of it. I raise it only to reconfirm the direct and deliberate effect trade policy has on Canada's export industries, especially auto, Canada's number one export.

In 2015 Canada exported more than $76 billion worth of auto goods to the rest of the world. Now, in 2016, where smart trade policy has been supplanted by something completely different, the Trans-Pacific Partnership Agreement that is before us offers no benefit to Canada's auto industry. It is hard to see how the TPP will help attract new auto investment to Canada. In fact, it's unimaginable how our negotiators would conclude a deal with so many major auto concessions.

We agreed to phase our 6.1% passenger vehicle tariff in five years when the U.S. protected its tariff for over 25 years. This U.S. extension is considered appropriate by industry experts to guard against more one-way trade flows from Japan. How does an accelerated tariff phase-out help Canada's auto industry? We also agreed to lower the vehicle content threshold for cars and parts in the TPP farther below the current NAFTA standard. Now, a vehicle mostly made in China, up to 55%, can enter Canada tariff-free. What's worse is that TPP allows for special flexibility that further reduces that threshold by an additional 10%.

These rules will simply encourage automakers to explore new sourcing arrangements from lower wage jurisdictions. How does this benefit auto parts workers in Ontario, and specifically in Windsor? How does this develop our Canadian productivity capacity? I think the answer is clear: it doesn't. What's worse, I think auto workers in Canada have been sold a bill of goods.

I've been following closely the committee hearings so far. I was struck by something Jim Balsillie said in his presentation on May 3.He not only criticized various parts of the TPP, he criticized Canada's overall approach to trade. I'm paraphrasing here, but he suggested the approach to trade negotiations is based on myths and orthodoxies. In fact, many of the third-party studies released suggested there is still little to no benefit for us at all. Yet we're plowing ahead on a blind faith that, if you tear down the rules and regulations, if you limit the decision-making powers of governments, and if you just give corporations more freedom to make money, then somehow we'll all be better in the long run. For more than 30 years we have followed this game plan, and it's not working.

NAFTA promised jobs and prosperity; instead, we saw our auto trade deficit in Mexico balloon to $11.5 billion last year and we saw a series of new investor lawsuits by U.S. firms under chapter 11.

The recent Canada-South Korean trade agreement promised new opportunities in fairness for auto experts; instead, Canada's exports fell by 3.9% in the first year. Now the TPP promises more of the same: more prosperity, more jobs. We simply don't believe it.

This is a deal we simply cannot accept. The potential damage this will bring to the Windsor community in the long term is severe. We've seen what bad trade policies can do to our jobs. Ultimately, Canada needs to rethink its general approach to trade. Rejecting the TPP might help kick-start this discussion, and that's not a bad thing.

Thank you very much for the opportunity to share my views.

To the committee, thank you for being here. I look forward to any questions.

Thank you.

[The Chair, Liberal, Mark Eyking]

We're going to move on now to the Windsor and District Labour Council.

Go ahead for five minutes.

[Brian Hogan, President, Windsor and District Labour Council]

Dino is one of the past-presidents of the labour council, and as he said, it's great to be here. Thanks for coming down. It's closer for a couple of the MPs.

My name is Brian Hogan. I'm president of the Windsor and District Labour Council, representing 40,000 members. My friend Randy is a member of the Council of Canadians, and also a labour council member.

Millions of Canadians voted for “real change” with the Liberal campaign. In February, unfortunately, there was no real change when you signed the Conservatives’ negotiated TPP agreement.

At our recent labour council meeting, the TPP was panned by every committee because it affects many citizens in so many ways. Our social justice committee talked about inequality, our sovereignty, and the challenges of local solutions like “buy Canadian” and “buy local”. Our human rights committee talked about our aboriginal community being affected, especially in terms of the environment. Public Health talked about drug costs. Environment talked about corporations affecting green economy initiatives we have tried here in the province.

There are some specific examples of the downside of trade agreements in our area. We've been looking forward to the construction of our bridge. Since it's a public project, it could be challenged under TPP or CETA as having unfair competition. Plenty of local workers would love to work on that project. Who knows if that will actually occur because of trade agreements?

Look at Leamington. When U.S. billionaire Warren Buffett was able to buy Heinz at the stroke of a pen, a 105-year-old plant closed. Now with the plant under new ownership, the workers make a fraction of what they made before; many are laid off, and many face the loss of their pension. This makes no sense, but it is what neo-liberal free trade has brought us. This is what the companies mean when they talk about the need to be more competitive, which is at the heart of the TPP.

Look at Hamilton just down the highway. The U.S. owners first took over a competitor, Stelco, in a smart business move. Now they're shutting it down to strengthen their empire and, in the process, using bankruptcy courts to try to get out of their legal obligations to thousands of pensioners. I'm telling you something you already know.

Obviously, the core issue of the TPP and other free trade agreements, which Dino touched on, is the control over our country's economy. Through these agreements, the global monopolies legally gain direct control over key aspects of the economy and deprive real people like us the rights to exercise control over our country, our wages, and our working conditions. When we talk about so-called free trade, we have to discuss reality. Dino touched on much of this. The downturn in manufacturing in Canada during the last two decades can certainly be traced in some part to NAFTA.

The TPP will only lead us further down the same path. It will cause more insecurity in communities like the ones all of you are from. We don't want Windsor and Essex to face collateral damage from the expanded corporate takeovers of our country under the guise of a new free trade deal. That is why workers are against it. The labour movement in Windsor-Essex is against these free trade deals, and has been against NAFTA and all the others that have come before. It's not that we are against trade; it is that we are against the selling out of our country and our communities to corporations.

Merci.

Randy has a few comments too.

[Randy Emerson, Treasurer of The Council of Canadians, Windsor and District Labour Council]

Hi. My name is Randy Emerson. I was born in Windsor and I've lived here all my life. I am treasurer of the Windsor-Essex chapter of the Council of Canadians, a member of an environmental group called Windsor On Watch, and a Unifor 444 member. I am 56 years old and have worked 32 years at the FCA Windsor assembly plant, 11 years as an assembler and 21 years as an electrician.

No doubt you've heard a lot in these hearings about, ISDS, patents, copyright, regulatory standards, etc., but I'm not going to talk about these. Instead, I wish to speak from my heart.

Trade has always been good for Windsor. As Dino said, it's gotten us Ford, Chrysler, and GM plants, and, along with those, well-paying jobs. Free trade has not been good. Free trade has created the loss of thousands of manufacturing jobs. Ford is a former shadow of itself. The Chrysler van plant, Plant 6, is gone, and GM no longer has any presence in this city. A GM transmission plant is in the process of being torn down as I speak. We have low-paying, minimum wage and temporary jobs, for example, call centres. We have more temp agencies than we do Tim Hortons. Our food banks have been considerably stressed; some have even run out of food. My city has had the highest unemployment rate in Canada off and on for over a decade.

Recently, though, it dropped by 3%. Why? Because my plant hired 1,200 people, not because of free trade but in spite of it. All these free trade jobs that we obtained before did nothing for the unemployment rate. Nothing. The call centres did nothing. The rate stayed the same. It was good high-paying manufacturing jobs that did that, and now you want to bring in the TPP.

Another free trade deal will put more pressure on manufacturing jobs. Instead of waking up in the morning and looking at my future retirement with confidence, I wonder if this is the deal that will make my employer pull out of Canada. I wonder if I will lose my pension or just get pennies on the dollar. I ask myself why the federal government refuses to see that their previous trade deals have killed hundreds of thousands of jobs in Canada. Free trade has turned Ontario from a have to a have-not province. Why does the federal government not see the devastation free trade has wreaked on working class families? I implore you to turn down this agreement.

[The Chair, Liberal, Mark Eyking]

We're going to move over to the Essex County Federation of Agriculture. Go ahead, gentlemen, for five minutes.

[Louis Roesch, Director of Zone One, Kent and Essex Counties, Ontario Federation of Agriculture, Essex County Federation of Agriculture]

Thank you for the opportunity to speak. I'm not going to take five minutes. I basically have questions.

My first question is, what protection do we have as producers in all sectors of the agricultural industry from the importation of products that have medications, pesticides, or herbicides that are not registered in Canada, or have been banned by Health Canada and the PMRA—or, in our case, our own province? This takes away our competitive edge in many ways, especially with the cost of production. Have the regulations for federal inspections changed? In the near past, federal inspection was done according to the country of origin, and not necessarily following our Canadian federal regulatory standards. What will the labelling standards be for the blending of imported TPP country food products that will still be classed as a product of Canada? How will agriculture be protected for our geared up production for export to TPP countries if those countries are closed because of non-tariff issues? Our federal support programs have been reduced to a level of basic non-financial liability. These are only a few of the questions that need to be clearly spelled out.

[The Chair, Liberal, Mark Eyking]

Thank you. Farmers do things quickly. We have some farmers around this table, and it's good to see you here.

I'd like to welcome another MP to our table. Over here we have Cheryl Hardcastle. Your riding is Windsor-Tecumseh. It's good to see you here.

We're going to start with some dialogue with the MPs. We'll start with the Conservatives first for five minutes, Mr. Hoback.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you witnesses for being here this morning. It's great to see you. It's great to be in Windsor.

I was interesting driving through Windsor this morning, as you can see the devastation from what it used to be to what it is today. I think if you go across to Detroit, you'll see the exact same thing of what it used to be and what it is today. One thing I often ask, when you look at trade agreements like this, is how we can change that outcome. How can we leverage a trade agreements to change that? Instead of seeing trade agreements that can harm us, how can we turn around and take advantage of them? One of the concerns we always have with small and medium-sized enterprises when we do trade deals occurs when there isn't a follow-up to take advantage of those deals or the recognition of what's available for them.

I'm curious, for the companies you represent, Mr. Chiodo, and the employees, what have you looked at as far as opportunities in the trade deal are concerned, other than just saying that you don't like it? I understand your concerns about it, and I'm not going to question those. Have you looked at the opportunities? Do you see anything there that we can look at say, “Hey, we'll be part of that global supply chain, and we'll create some parts manufacturing and other manufacturing here in the Windsor region?”

[Dino Chiodo]

Obviously, our main focus is dealing with autos and manufacturing, with the nine supplier plants that we have and the big OEMs and Chrysler Corporation directly. All I can do is express what free trade agreements have done in the past and some of the concerns we have with this trade agreement. When you take into consideration where we have been over the past 25 years with free trade agreements, annual per capita GDP, annual business investments, and annual private sector employment grew faster prior to free trade agreements. If the committee wants the information that specifically deals with that, I can make sure you have a copy of that right after this committee hearing to make sure you can look at it.

By extension of that, to be very clear, we have committed to taking way our tariffs within five years and the United States has looked at taking away their tariffs on their auto manufacturing after 25 years and their truck division after 30 years, and places like Vietnam and Malaysia have even gone as far as looking at 13 years. I don't understand why we would diminish our strengths in the automotive sector and get rid of our tariffs. It's that much easier to be able to reduce our business capacity in Canada in auto. I see that as a major challenge, and potentially we could lose a fifth of our workforce because of it, since we have lower content in the rules and regulations for that practice.

[Randy Hoback, Conservative, Prince Albert, SK]

I'm looking at the numbers here, and in 1993 before NAFTA, we had $290 billion worth of trade in North America. In 2012 it was $1.1 trillion. When you look at that, it's a huge number difference in a short period of time. I'm curious why we're not gaining part of that $1.1 trillion in this region. When I look at other parts of Canada, they're benefiting greatly from these trade agreements. What is different here?

[Dino Chiodo]

I don't know if I agree with that. I apologize. I can tell you right now that we've lost a plant in Sainte-Thérèse. We've lost the Oshawa truck plant and the Oakville truck plant. We've lost those all in the last decade. We attribute them to trade deals, so I don't agree with that statement.

What I can tell you about manufacturing trade with TPP countries right now in current numbers is that exports to those countries are $295 billion. Imports are $301 billion. That's a $5.9 billion deficit. Then when you take the United States out—let's just remove the United States and see what the impact looks like—we have exports of $15 billion and imports of $54 billion, which is obviously a deficit of $39 billion. I just don't see that as fair trade at all. At best, with a 6,000-page document, obviously this is some sort of managed trade, and we're at the losing end of it.

[Randy Hoback, Conservative, Prince Albert, SK]

You do understand that we have to look at the country as a whole. You talk about the specific auto sector in one part of it, but then when you look across the country at all the other sectors, the gains that are made are substantial.

[Dino Chiodo]

I think we're trading pennies for dollars.

[Randy Hoback, Conservative, Prince Albert, SK]

No, I don't think so. We're talking huge dollars. It's just a matter of perspective.

[Dino Chiodo]

Not with a $39 billion deficit.

[Randy Hoback, Conservative, Prince Albert, SK]

Let me ask another question.

[The Chair, Liberal, Mark Eyking]

You have half a minute left, Mr. Hoback.

[Randy Hoback, Conservative, Prince Albert, SK]

You've got the ability now not only to build cars into TPP countries but also into CETA countries in the future. What are you doing to position yourselves, because Canada's one of the few countries that'll have that benefit. Why aren't we getting more of those platforms here in Canada? If the taxation is right, if the input costs are equal or the same, why are they not locating here when they know they've got unfettered market access into all of these markets out of this country alone? What is preventing them from being here?

[The Chair, Liberal, Mark Eyking]

Sorry, you have no more time. The answer will have to go to your next time around, Mr. Hoback. We have to move on.

We'll move over to the Liberals. We have Mr. Peterson for five minutes.

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

I have some experience in the auto sector. I was at Magna International for a number of years, and my father-in-law is a career GM man who just retired. He lives in Oshawa. I have a lot of respect for the auto industry here in Ontario as a driver of our economy.

I want to comment briefly. I was around the auto sector in 2007, 2008, and 2009, when, as we all know, sales were plummeting. We were thankful that both the provincial and federal governments at the time saw the importance of the auto sector to the economy and helped some of the auto companies get through that time.

Now we're looking at robust sales. They've been robust since 2010 and they're growing. What obstacles are there here in Ontario? It seems that the Ontario auto sector isn't able to tap into the increased sales market. What stands in our way? What improvements can we make? What sort of structures need to be in place to make sure that we can tap into that in Ontario so that we maintain a thriving sector here?

[Dino Chiodo]

I appreciate your bringing up that question because, just as of late as yesterday, we had a policy and solutions forum where the Chamber of Commerce, labour, and academics from the University of Windsor and St. Clair College came together to talk about that exact item.

The reality is, there are a lot of things we can do. One example is a one-stop shop. Bev Matthews, who was at the forum yesterday, was very much enthralled with what we had put together and how we've collaborated in our efforts to really talk about what we can do to make things better. With a one-stop shop, as an example, you have a company right now that could go to Mexico. They could talk about starting an investment. There are tax abatements, whatever they need with regard to rushing to get the job off the ground. They go to one office, and it's taken care of.

You come to Ontario and potentially you're going to 13 or 14 different offices to deal with, and the red tape is just unsurmountable. People become frustrated. It becomes a political football. It's about corporate welfare and it's not about the benefits of the people in the community.

We heard yesterday from panellists, individuals who own corporations, and a gentleman named Marentette, who was the CEO of Toyota Boshoku Automotive in Japan. He basically said that the problem he has here is that he can't get an answer for what he needs with regard to trying to go forward in investment. I think that's one component of what we need to focus on.

We've got great things that we can focus on. As an example, in Mexico, the turnover employment turnover rate is about 20-25%. In Windsor, we're at 1-2%. The reality is that we are doing much better with regard to training individuals. Our skilled trade is much better. We can do the job. We can build it right and we've got a $2.6 billion investment with no government support to prove that.

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

That's great to hear and the kind of stuff I love to hear.

Free trade, I don't think you're against free trade. I mean, the Auto Pact was the free trade deal that built the auto sector in this country. It just has to be the right deal. It has to be fair trade, is what I'm hearing. I think the problems with the auto sector, perhaps, can be solved beyond the TPP.

I think one of the big issues with the TPP is the differential between the American side deal and the Canadian side deal. I think that's an issue, and you raised it with the 25- and 30-year phase-in that the Americans have, but we only have a five-year period, I believe, on the auto and truck side, which I think is an issue. I do agree.

I also think there are ways, even with the TPP, to make sure the auto sector remains vibrant, and we have to continue to explore those. I'm glad to hear that some of those steps have already been taken.

I'd love to talk more about auto, Mr Chiodo, but I'm going to try to move on to our friends from the Windsor and District Labour Council.

Just give me an idea of the sort of trades that are represented in your council. How big is the group and how important are some of the industries, beyond auto, for your members?