International Trade Committee on June 7th, 2016

[Randy Hoback, Conservative, Prince Albert, SK]

This is why I brought in my motion, because I'm being told that these people would be trained, that they would have the standards and the qualifications. So that's the question I want to ask our trade officials to ensure that it's correct.

[Steven Schumann]

And—

[Randy Hoback, Conservative, Prince Albert, SK]

Because I don't want anybody to be unsafe on a work site, just as you don't.

[Steven Schumann]

And that's a question we've had with officials right now, and we are not getting a clear answer. What they're looking at now is that if someone says I got trained at the University of Mexico, for example, someone then says okay, they've got the training, check mark. Does it mean that training is actually sufficient? Has anyone gone to check that school to see if it's sufficient?

[Randy Hoback, Conservative, Prince Albert, SK]

You'd actually want to see certification.

[Steven Schumann]

Yes.

[Randy Hoback, Conservative, Prince Albert, SK]

I agree with you on that. That's one of the questions I'd like to ask, for sure.

Mr. Ross, I have to go back to the pork sector because it's such a good success story, and it can be a really sad story if we don't have trade. There are examples of country-of-origin labelling. We've seen what happens to the pork sector when we don't have trade.

Maybe for the committee's benefit, could you just remind us again how important trade is to Canadian farmers and how important the pork sector is to the economy of Canada?

[John Ross]

Thank you very much.

Certainly, the majority of Canadian farmers at large are fully dependent on the export market and it really is what drives the business. We're a small country, but we have tremendous potential to provide really high-end products to the global marketplace.

We've seen on the pork side what happens when we lose access for whatever reason and we scramble to find our way again with the products that we have. It's one of the reasons that it's so very important for us to be involved in this agreement. If we get backed out of a market and we have no opportunity to go anywhere else, where do we go with that product? You can't store it. You can't pile it. You can't turn it off. When we shut off the infrastructure, the infrastructure is gone, it doesn't come back. For these reasons, it's super important for us.

Moreover, if we think about the rural economy and jobs in rural communities and if we do want folks to be able to live and make a living in rural Canada, this is what they're going to do it on. It's going to be on agriculture and our ability to sell into the global marketplace.

[Randy Hoback, Conservative, Prince Albert, SK]

There's the domino effect. When I used to farm, we used to supply feed barley into the feedlots and into the hog industry, and I surely felt it when you guys weren't there. All of a sudden, I had to ship all that barley overseas at a substantial discount plus freight rates, plus time delivery, rail issues, and stuff like that. I think the domino effect could be in excess of how much per bushel, let's say, a price of a bushel of barley is at.

I would say a buck a bushel, but you're in the industry, and what would you see?

[John Ross]

I don't know if I could give you a reasonable price effect directly. We, of course, arbitrage with the United States on a daily basis and the ability to move grain into the Canadian marketplace is there. It exists. The challenge for us is if we get offside with our TPP, either in terms of opportunities to sell in that marketplace or the folks whom we compete with. So if the advantage goes to the United States because they're in and we're out, we're going to be seeing grain move south because there's going to be nobody to eat it in Canada. We need to keep these markets integrated so we can continue to be profitable. Without that, we're out.

[Randy Hoback, Conservative, Prince Albert, SK]

Do I have more time?

[The Chair, Liberal, Mark Eyking]

Your time is up. We're going to move on to the NDP for three minutes.

Ms. Ramsey, go ahead.

[Tracey Ramsey, NDP, Essex, ON]

I'd like to focus my questions to Mr. Nickerson. I think what you brought up is so incredibly interesting because, on the one hand, we Canadians value our humanitarian efforts around the world. You mentioned, for example, the billion dollars we have spent on the vaccine initiative, the $785 million going to the Global Fund. Then, on the other hand, we have these extended patent provisions in the TPP, which will ultimately make drugs cost more. We heard that pretty clearly from the generics and the pharmaceutical industry last week.

I'm wondering if you can speak a little bit about the broken research and development that you mentioned and the relationship between patent extension and potential innovation in pharmaceuticals.

[Jason Nickerson]

Absolutely. I'm actually going to turn it to my colleague, Judit, in New York, who has been following quite closely these conversations that have been held at the World Health Assembly and in many other international fora. So, Judit, I'll ask you to answer.

[Judit Rius Sanjuan]

Thank you for the opportunity to further elaborate.

There's global recognition right now that the current research and development system that's on the capacity to charge high prices to recover research and development costs is failing in many different ways. I was at the World Health Assembly two weeks ago, where Canada and all the member states agreed to a variety of resolutions that tried to address these issues.

First, the current innovation system does not address many unmet medical needs. Here in New York today, we're also meeting about the failure of the current innovation system to address unmet medical needs, specifically antibiotic resistance. There's little innovation going on with regard to antibiotic resistance, because a system that promotes research and development based on monopolies and high prices also promotes overuse and consumption problems with antibiotics. Of course, there are all the challenges with affordability of new medical tools. Innovation that is unaffordable is meaningless.

To further elaborate on the hepatitis C example, I think it is a perfect example. Jeffrey Sachs estimates that the private investment on research and development on boceprevir, the first cure for hepatitis C treatment, was $300 million. That cost, or that investment on research and development, has been recovered 34 times in just the first year of sales of Sofosbuvir. That company, Gilead, has made more than $10 billion in just the first year alone in selling Sofosbuvir. The CEO of Gilead has just made, in compensation, in the first year the product was on the market, more than $600 million, so double the investment on research and development.

So the TPP in a way is a missed opportunity to address the failings of the current R and D system, and it contradicts the efforts being promoted both at the World Health Assembly and here in New York, including a UN high-level panel on access to medicine that has been launched by Secretary General Ban Ki-Moon, which has currently been trying to find solutions to break that link between research and development costs and investments and high prices of medicines. We would be happy to provide further evidence.

Thank you.

[The Chair, Liberal, Mark Eyking]

We're going to the Liberals now. Mr. Peterson, for five minutes. Go ahead, sir.

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

I want to thank everybody for being here today. I think we have a very informative panel and it's nice to see such a diversity of industries and organizations represented here today.

I have a couple of questions. I'll start with Mr. Ross. Your council is from pork producers across Canada. What regions of Canada have more pork farmers than others?

[John Ross]

Certainly, the vast majority of production would be in Quebec, Ontario, and Manitoba, about a third each. The remainder are in the rest of Canada.

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

Following up on that, if we are able to open up Asian markets, like the TPP would, do you have any concerns about our being able to access those markets and logistically getting the goods to those markets with the current transportation systems we have?

[John Ross]

Quite frankly, no. We do it every day now and we've not pushed the envelope where we can't do more. Obviously, if there are work stoppages and some anomalies out there, it would be a problem; but, no, we're fine.

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

That's an issue that would probably need some addressing, to be able to efficiently capitalize on any new markets.

[John Ross]

Not on the transportation side. We're not seeing it there. There may be some other challenges out there, but so far that's not one of them, touch wood.

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

Okay, that's good.

Mr. Perrault, it's nice to have an economist at the table here. There has always been some concern expressed by members of this committee and others that there is no economic analysis of the TPP holistically. Such an analysis may be fraught with some risk in any event, and I'm not sure if we're going to get a clear answer that this is a good or a bad thing. As you know, there are going to be some assumptions made in any analysis that may or may not be correct. But on any analysis that you've done in the financial services sector and as Scotiabank—and I appreciate that you're new to your role—do you see this as being not only.... You've mentioned it's a net positive for Scotiabank employees and that it's going to create Canadian jobs, but do you see this more broadly in the financial services sector as being a positive for Canadian employment?

[Jean-François Perrault]

Yes, without any question. I think you have to look at it from three different perspectives. One is the perspective of our not being in the deal and the limits on economic opportunity that would flow from that. There are different perspectives on this, but given that we think the deal is positive, not being in the deal would be a negative. It would shut us out from opportunities that we'd otherwise be able to capitalize on, either as a bank or an economy, and the financial system would participate in that, obviously.

The second is the opportunities that it provides in the short run, in the sense that we are opening markets. Canadian firms will benefit from that and, obviously, the financial industry will be banking the firms that benefit from that, so there is an advantage there.

I think the third and longer-term aspect, which is possibly even more beneficial, is competitive pressure. There's very well established literature on this, that opening markets increases competitive pressure, that competitive pressure increases productivity, and that productivity is the basis upon which the standard of living increases. Over a longer period of time, as we open markets, develop, and become more competitive, our standard of living increases. That's great for all Canadians and, obviously, it's great for the financial industry as well, because we bank Canadians.

I would look at it from those three different perspectives.

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

I appreciate that because I think that part of the analysis has to be of a scenario where there is a deal and we are not in it, as opposed to the status quo.

Ms. Dey, I'd like to ask you a question on the ISDS. I appreciate your position that a trade deal doesn't necessarily have to have any sort of ISDS provisions, and there are many that don't.

Not specifically with regard to this ISDS but generally, can an ISDS protect Canadian investors? Isn't that the value of it for Canadians? If the pork producers are going to be in Japan or Mexico, or Scotiabank is opening up new offices in Chile, to make those capital investments, wouldn't they want some protection when they are operating in that foreign jurisdiction?