International Trade Committee on May 12th, 2016

[Tracey Ramsey, NDP, Essex, ON]

This is even a larger picture because we know that when people aren't able to use their medication, this affects their health outcomes, which becomes a burden on our health care system. This has a ripple effect that goes far beyond the TPP. As a country, the way we're judged is really on the way we are able to keep our citizens healthy on the determinants of that. If we're unable to do that because of inadequate access to medications, that would be an incredibly horrible experience for all Canadians.

Mr. Lundblad, in your presentation you mentioned to us that you're under stress from dumping. That's something that I've heard quite often from the steel sector, about the Chinese steel dumping. I wonder if you can speak to us about the currency manipulation and dumping, and how these would impact your sector's signing the TPP.

[Troy Lundblad]

It would affect us in the negative sense, in that we don't see anything in this deal that would resolve these issues. I know Brother Jerry Dias from Unifor and the representative from Ford Canada had come to speak about the impact that currency manipulation by Japan is having on the auto parts sector. Japan's currency manipulation is helping that country support its own export markets.

For us, we've had issues recently with Chinese dumping of rebar into the Canadian marketplace, and we were able to push that back through a trade tribunal case that was pursued about six months ago. The problem is that those trade cases have to be pursued by the companies, so the companies, representing a large swath of the industry, have to take the initiative to push these forward. Unlike in the U.S., unions and workers do not have similar rights to approach the Canadian government and say they want it to pursue this trade tribunal to protect an industry here in the country.

That's something we'd like to see. That certainly hasn't been referenced in the TPP, and we know that the NDP has pushed that forward in the past, but we haven't been able to get it through the House. We'd like to see that as a domestic policy that would accompany any trade deal, setting aside our broad issues with the TPP.

[The Chair, Liberal, Mark Eyking]

You have half a minute left there.

[Tracey Ramsey, NDP, Essex, ON]

Natalie, do you think we need patent extension in a trade agreement for pharmaceuticals?

[Natalie Mehra]

Absolutely not. I think the question that needs to be answered by our government is why would Canadian residents be paying more in taxes for drug company profits? Why do we need to do that?

[The Chair, Liberal, Mark Eyking]

Thank you. That wraps up the time.

We'll move on over to the Liberals.

Mr. Peterson, you have five minutes.

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

We've sat through a number of these panels, and we've heard both sides of the equation, those who support the agreement and those who are against it. I think some themes are starting to emerge.

On the opposed side, it seems to be a three-pronged argument. The benefits are negligible; ISDS will fundamentally change Canada and the provinces' ability to regulate their own industry and their own jurisdictions; and this isn't really a trade deal at all, but a corporate framework.

On the other side, we see producers and manufacturers who see this as a way to tap into bigger markets and to be able to create jobs in their industries and their communities, which of course will benefit Canadians, if that's true.

It's hard to balance the two competing interests. I don't think there's a way to actually reconcile them. We have to decide who to give more weight to and who to believe, frankly, and who not to believe. It's sounds that crass, but that's kind of the analysis we need to do. The answer probably lies somewhere in between. I have no doubt about that.

Then we hear from the steelworkers. I think the issues that the steelworkers are bringing to the fore have more to do with the issues of the manufacturing sector in general, regardless of the TPP.

The TPP is why you're here today, Troy, and this is what we're talking about. I just wonder whether you've given any thought to what the federal government can do to support manufacturing generally and to help steelworkers in the country.

[Troy Lundblad]

Before answering that question, I would say that there will be a direct impact from the TPP. There will also be a secondary impact, as a derivative of the impact that the steel will have on the auto sector, from the tariff reductions in the auto sector. The Canadian Steel Producers Association has joined with their American and Mexican counterparts to release a statement to that effect. They have said that for steel producers providing products such as tubing and piping to the automotive industry, a regional value content disadvantage within the TPP would encourage offshore sourcing and supply, creating devastating consequences for North American economies.

Peter Warrian from the Munk School of Global Affairs, in an oft-cited report of his, said that every auto sector job creates seven other jobs in the Canadian economy, and every steel sector job creates five other jobs in the Canadian economy. So you can imagine the downstream impacts this deal will have.

We see no industrial policy, no industrial vision, accompanying this deal. What is our vision for the future of manufacturing in this deal? Actually, a lot of the provisions, the ISD provisions, undermine the government's ability to pursue procurement or industrial policy.

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

I appreciate those comments, but we also heard from a professor earlier today from the University of Windsor, who said that the analysis has to be on what happens to Canada if the other partners are in the TPP and we're not. He seemed to conclude that the impact on the auto sector would be far more devastating if we weren't at the table and the U.S. and Japan and other countries were. Again, it's a balancing act and an analysis that we have to do.

Natalie, I want to talk to you about pharmacy. You mentioned that Canada is already the second-most expensive OECD country to buy drugs in, second only to the U.S. That is an issue, but what does it have to do with the TPP? Is it a bigger problem that can be addressed outside of any form of framework like the TPP? Are there other things we can be doing that have nothing to do with international trade whatsoever, or extension of copyright, or things like that? Are there other steps we should be taking and looking at that, if we do ratify the deal, may mitigate that factor?

[Natalie Mehra]

The problem is that, if the deal were to be ratified, chapters 9 and 28 come into effect. Under chapter 9, the cross-reference is also the WTO's TRIPS Agreements, so it's sort of WTO plus. That means that drug companies would be able to sue for cash settlements on creation, limitation, or revocation of intellectual property rights. So the issue of drug patents is inextricably linked to that. The ability of the federal government to regulate drugs is inextricably linked with that. The ability for investors to sue the government puts much more significant risk on the federal government. It would limit our ability to create a national pharmacare program, which would be the single biggest step that we could take to drug cost containment, improving safety, and improving access all at once. It has a significant limiting effect and increase of risk on the one major thing that Canada's government could do to control drug prices and improve access.

[The Chair, Liberal, Mark Eyking]

you. That ends this round.

We're going to start a second round with the Liberals.

Madam Lapointe, you have five minutes.

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

Good afternoon and welcome. We are pleased to welcome you today.

Ms. Mehra, I would like to go back to your comments about drug costs. Given that there is an agreement that protects intellectual property, do you not see an opportunity for Canadians to do research to develop drugs to treat diseases that are found primarily in Canada, such as multiple sclerosis? Sometimes, research is so expensive that pharmaceutical companies do not see the importance of investing or of doing research. What is your view on that?

[Natalie Mehra]

A couple of thoughts come to mind. One is that when the patent extension was granted to the pharmaceutical industry, there was a promise for increased investment in research and development in Canada, and those promises were never upheld by the industry, so they never actually did make the investments that were promised in the initial extension of patent term protection. The evidence internationally supports that. I mean, it just has not happened, so extending patents does not actually increase R and D investment in the host country. That's just the bottom line.

The way to increase investments in R and D.... A lot of our R and D is government funded as it is and will probably continue to be, but what's important then is to have policies to ensure that government-funded research is not just given away to profit-taking companies to use for their profits and not in the interests of the public.

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

Thank you. That's a good answer.

Mr. Lundblad, my colleague asked you a question. If there is an agreement, an agreement or a treaty that interests you, it is probably the comprehensive economic and trade agreement. That is the one you support the most.

If we ever have the chance to resume negotiations for the TPP, what would you change, within the realm of possibility? Earlier, I heard you briefly talk about the environment, but you have not mentioned it again. What would you change in this agreement?

[Troy Lundblad]

First, I would say that I don't think necessarily that CETA is a deal that we can support. It's just closer to being a deal that we could support. I should clarify that.

In terms of the TPP, the big thing that needs to go is the investor-state dispute settlement provisions. These are horrible in terms of the limits that they place on our ability to regulate the environment. They're going to place a regulatory chill on governments because they'll be afraid to regulate, and there are all sorts of examples.

There's the Bilcon example in Nova Scotia. When the provincial government, after some assessments, decided they didn't want to go ahead with the quarry, in return, Bilcon was able to sue the federal government under chapter 11 in NAFTA to considerable cost.

The ISDS provisions with respect to the environment are really placing a huge freeze on governments, and it's not clear to what extent these will impact municipal and provincial governments, but we do know that, in terms of procurement at the federal level, these provisions have been expanded.

More aspects of government regulation and policy are now covered, and there's also a ratcheting up effect. Once you move in a certain direction, it's very difficult to move backwards and it's difficult to respond to the requisites of your constituents.

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

Thank you.

Mr. Huston, it was mentioned earlier that grain farmers had an export advantage under the TPP.

Of the 12 countries, which one do you think would enjoy the highest increase in exports?

[Mark Huston]

We already have great trade with Japan and the U.S. They're two of our four biggest trading partners for soybeans, but I think when you look at some of the smaller countries like the Malaysias and the Thailands, those are the ones we see the opportunity in. I think that's where we hope to get most of the benefit.

The challenge is that we don't want to have Japan and the U.S. sign a trade agreement and the U.S. gain preferential access into Japan, where we've already done the hard work of gaining those marketplaces. It's as much loss as the gain, which I think is one of the challenges that you are facing. If we aren't sitting at the table of the TPP, what are we losing? It's not an easy answer, by any stretch of the imagination. From our standpoint, we'd lose preferential access to one of our biggest and highest value marketplaces, which is Japan.

[The Chair, Liberal, Mark Eyking]

We're going to move over to the Conservatives now. Mr. Ritz, for five minutes.

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

Mark, it's good to see you again. I hope seeding is going well. The bees are good this year, I understand. They're growing back, and it's not a problem at all. I'll get to you at the end if I have time, because I know that my colleague, Mr. Van Kesteren, did a great job of questioning you and finding out your views.

I do want to start with Troy Lundblad, if you don't mind. You made a couple of comments about dumping, and it's all about China. Well, China's not part of the TPP. There seems to be a lot of misinformation out there on the World Wide Web that somehow China's the fly in the ointment here. They're not in the TPP, and they really probably will never get into the TPP because of the environmental and labour standard chapters. They'd never measure up. Whether we go there on a free trade agreement bilaterally, or not, is something for the future, I think. So, that's off the table.

Having worked in construction with equipment and so on, to pay for my nasty farming habit, the one thing I see as very beneficial is labour mobility. I know you guys are quite concerned that we're going to have a flood of unqualified workers come into Canada. I don't see that happening because there are safeguards for that. Certainly when I look at global Canadian companies like SNC-Lavalin, as they get out there in the world marketplace, in TPP countries there is all kinds of qualified work for operating engineers—which is what I was—and welders and machinists and engineers, and so on. Would you not agree that there is reciprocity, that we could actually benefit from some of those chapters?

[Troy Lundblad]

In principle, reciprocity exists with some of the countries that we've signed on with in article 12.1(a), I think it is. One question I think we should ask is, why did the U.S. not participate in the discussions around labour mobility? There are probably a lot of reasons that come to mind.

I would say there are three reasons to believe that temporary entry of foreign workers under the labour mobility provisions will have a huge impact.

First, it opens up entry commitments to more major developed countries such as Australia and Japan. You can imagine Japan sending over their own engineers within the auto parts sector, and taking those jobs away from our engineers. We don't really have a history of sending these people overseas. We don't find that our engineers really want to go overseas. They like working in their home country and spending time with their families.

The second is that there is broader occupational coverage under professionals and technicians, which includes lower-skilled workers under the TPP. This will have huge impacts on carpenters, tradesmen, mechanics—

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

You're talking about low skilled. You have to have the skills to be a carpenter, an electrician, a plumber, and so on. Yes, you do—

[Troy Lundblad]

It's an expansion of what's under the NAFTA—

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

There are three streams, and it's very prescriptive as to what qualifications you must have to come in under each stream.

[Troy Lundblad]

Right. This is an expansion under what currently exists under NAFTA. These occupations aren't included under NAFTA.

Third, the share of migrant work has already doubled, both in terms of access to the temporary foreign worker program and under the labour mobility provisions in free trade agreements. It's doubled just over the last decade. We can imagine that if we expand this under the TPP, it's going to exacerbate the effect it has on our labour market.

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

The biggest rationale for the U.S. not to sign on to that is all their labour standards and so on are state by state. The federal government there does not have the authority to actually sign on to that, and that's part of the problem.

On the national pharmacare program, how do you ever envision that happening when the first hurdle you have to cross is that this is totally provincial jurisdiction? At the federal level, we can't even get them to talk together about bulk buying, which would make a huge difference in pricing.