International Trade Committee on June 16th, 2016

[The Chair, Liberal, Mark Eyking]

Welcome, witnesses and everybody in the audience.

This is the trade committee. We have had a very active session of Parliament so far, with a lot on our plate between softwood lumber, the agreement with Europe, and also our main focus, the TPP, and consulting with stakeholders and Canadians about it.

We've travelled to the western provinces, Quebec, and Ontario. We're also taking individual submissions up until the end of October. MPs are also holding some town halls. We will finish up with the Atlantic provinces and the territories in the fall. We hope to have a report to Parliament in the new year.

That said, welcome, guests. If anybody is here for the first time as a witness, we'd like whichever group you represent to speak for about five minutes. If it goes over five minutes, I'll give you a little reminder to make your conclusions.

When the MPs are in dialogue with you, try to keep the answers short, because it's a big panel and we'd like to get in as much input as we can.

Without further ado, we'll start with our first witness. As an individual, we have Gus Van Harten. Go ahead, sir.

[Dr. Gus Van Harten, Professor of Law, Osgoode Hall Law School, York University, As an Individual]

Thank you very much for the opportunity to present.

I'll be speaking about the TPP's investment and financial services chapters, and in particular the investor-state dispute settlement mechanism or foreign investor protection system. The acronym is typically ISDS these days. I'd like to make a few points in the time I have.

By the way, you should have a short PowerPoint handout. I won't refer to it, but when you have time, if you are interested, please take a look at it. I'll emphasize just a few points in my initial presentation.

First, ISDS is very difficult to measure in terms of costs and risks associated with these trade agreements. It's difficult to measure, for example, because it's hard to track all of the implications of the pressure ISDS puts on countries, legislatures, or governments to change their decision-making in favour of the perspective of a foreign owner of assets or a foreign investor. For example, in the past Canada withdrew legislation banning a gasoline additive when sued in ISDS under NAFTA. As a result, Canada had a chemical additive called MMT in its gasoline for approximately six years when the United States did not. This was thought by the auto industry to mess up their new auto emissions technologies. A range of costs that were associated with that outcome—significantly attributable to ISDS—have never really been researched and tracked, even though this happened about 15 years ago. These were costs to health due to increased air emissions in urban areas, and costs to people taking their car to the garage when the engine light went on because the catalytic converter was messed up.

I just want to stress that these risks and costs are very significant, but they're not well understood and not well measured. What is the significance of the costs? I'd like to highlight three concerns that are typically raised with respect to ISDS and trade agreements.

The first concern involves a profound institutional transfer of power from a country's legislatures, governments, and courts to a panel of three lawyers sitting as arbitrators, who now have the ability to award uncapped amounts of compensation against a country for decisions made that affect foreign investors. When I say “foreign investors”, I'd like to add that the primary financial beneficiaries of this system to date have been very large multinationals and very wealthy individuals.

The power that the lawyers sitting as arbitrators have is very much unique in international law because of the potency of the compensation awards they can issue. In effect what it does, in a way that domestic law and other areas of international law would not do, is put this unclear price tag on any legislation, governmental decision, or even court or tribunal decisions that a foreign investor may object to. The decision-maker will not know how the arbitrators decide years down the road, but if it considers it has any risk of losing down the road, if the assets are big enough—it may entail $100 million or even billion of financial uncertainty associated with the decision—that can be a very powerful check against responsible decision-making in a country. In effect, it pits the interests of voters who elected a government to do certain things against the interests of taxpayers who want to be protected against uncertain but potentially catastrophic financial risks.

The second concern I'll flag is this. What's the rationale for giving this special access to public money to foreign investors as opposed to any other actor? It's a special access to public money to protect the foreign investors against risks associated with democracy, regulation, and judicial decision-making that's not available to anyone else. Everyone else has to settle for the usual ways of dealing with their issues in elections, in public debates, in the courts, etc. But foreign investors get this special access to ISDS. What's the justification for that?

I would simply ask you, as decision-makers, to be very rigorous in insisting upon clear, compelling evidence of benefit to the public of giving these advantages to foreign investors. It's one thing to say that foreign investors would like to have special access to public money; who wouldn't?

The question should be, what's the compelling evidence and public benefit of doing this?

[The Chair, Liberal, Mark Eyking]

Do you want to wrap up, sir?

[Dr. Gus Van Harten]

I'll wrap up with my last point.

Foreign investors obtain very powerful international rights in ISDS without any actionable responsibilities. It's a fundamentally imbalanced system, and for that reason, I suggest it's a very powerful reason to not commit Canada to the Trans-Pacific Partnership.

Thank you.

[The Chair, Liberal, Mark Eyking]

We're going to move to the Canadian Association of Research Libraries. We have with us Victoria Owen and Susan Haigh.

Ms. Owen.

[Victoria Owen, Chief Librarian, University of Toronto Scarborough, Canadian Association of Research Libraries]

Good morning, and thank you for the opportunity to speak to you on behalf of the Canadian libraries about the Trans-Pacific Partnership Agreement and the potential impact on our work.

My name is Victoria Owen. I'm the chief librarian at the University of Toronto, Scarborough. I am here today on behalf of the Canadian Association of Research Libraries, the Canadian Urban Libraries Council, and the Canadian federation of library associations.

I am joined by Susan Haigh, the research libraries' executive director.

Libraries are society's guardians of the public trust and specifically identified as institutions serving the public interest with regard to providing access and preserving the world's cultural and scientific heritage in all formats across all time periods. The library's role in the dissemination of knowledge promotes innovation, competition, and commerce, as works are used, new works created, and made available in the marketplace.

Librarians believe that chapter 18 of the Trans-Pacific Partnership, in its current form, will have a direct negative impact on the statutory rights that Parliament has claimed in the public interest and it poses a threat to the way knowledge is shared and culture is preserved in Canada. The most troubling articles include the mandatory extension of the term of copyright, article 18.63, and the requirement for a narrow and strict interpretation of digital locks, article 18.68.

Article 18.63 of the TPP requires that Canada extend its term of copyright from the current term of life of the author plus 50 years, the standard established by the Berne convention, to the American term of life of author plus 70 years.

Term extension to life plus 70 will result in a definite cost to Canada's historical and cultural materials. No new works will enter the public domain for 20 years from the time that such an extension passes into law.

Delayed for 20 years will be the artwork of Lauren Harris and Anne Savage, the organ compositions of Healey Willan, and the memoirs of Prime Minister Lester Pearson.

The lack of enrichment of the public domain is in direct opposition to the stated objectives in article 18.2. It is contrary to the provisions in article 18.3 of the principles, and article 18.15 where it states: “The Parties recognise the importance of a rich and accessible public domain.”

The TPP weakens the public interest by robbing the public domain of embellishment for 20 years. The fact that life plus 70 would halt entry of new works into the public domain renders meaningless articles 18.2 of objectives, 18.3 of principles, and 18.15, the statement on public domain.

Libraries and archives fund non-commercial digitization projects that depend on the ongoing release of new materials into the public domain. The digitization work and access to a rich array of materials will grind to a premature halt if copyright term is extended.

Digitization projects and researchers seeking to make uses of works still under copyright are already challenged to locate rights holders that are obscured by the passage of time and the lack of registration. The difficulty finding copyright owners of older works, known as orphan works, will worsen with the extension to the term of copyright.

The 70-year term brings no direct economic benefit to our creators in Canada, as we are a net importer of intellectual property content. Rather, the primary beneficiaries will be foreign publishers, and foreign film and music producers. Canadians will pay royalties to foreign corporations for an additional 20 years, and in all likelihood, the majority of all other works, those created by individuals and not corporations, will join the morass of orphan works.

Term extension will put much of Canada's cultural history out of reach and could have harmful effects on Canada's knowledge-based economy. Canadian librarians believe that potential negative impacts of chapter 18 would be mitigated by a side letter allowing Canada to manage term extensions, and meet the terms of the agreement through a supplemental system of application and registration, assuming it would comply with the existing international framework.

Such a system would benefit rights holders by giving them control over term extension and benefit the public interest by allowing many works to enter and enrich the public domain according to the Berne life plus 50.

In addition to the term extension, Canadian librarians take issue with the digital locks requirement. Article 18.68 of the TPP poses a more rigid interpretation of the digital locks requirements than those that were added to Canada's Copyright Act in 2012.

The digital locks provision in the TPP, without adequate legislative or regulatory protection to allow for the effective use of statutory limitations and exceptions, will make it difficult for Canadians to practice fair dealing, a users' right that was instituted by Parliament and repeatedly upheld by the Supreme Court of Canada.

[The Chair, Liberal, Mark Eyking]

Do you have your conclusions?

[Victoria Owen]

I do.

Canadian librarians urge Parliament to seek an amendment that clearly and specifically allows for the circumvention of digital locks. They are concerned that the TPP has no provision in its process for comment and, as a result, proposes provisions that are not in the best interests of Canadians.

Thank you.

I'm sorry. I saw that flash and—

[The Chair, Liberal, Mark Eyking]

That's all right.

[Victoria Owen]

—I didn't realize that it was for me to stop.

[The Chair, Liberal, Mark Eyking]

That's all right. We're not that strict, but we just like to get everybody in. If you have other comments when they're asking questions later on, you'll be able to get more comments in.

I remind witnesses also, if there are thoughts that you have after today, submit them to us and we'll enter them into our report.

Now we'll move on to the Canadian Cattlemen's Association, which we heard quite a few submissions from when we were out west.

It's good to see you here.

John Masswohl, you've got the floor. Go ahead, sir.

[John Masswohl, Director, Government and International Relations, Canadian Cattlemen's Association]

Thank you, Mr. Chairman, for the invitation to be here this morning. There's always a lot of important work being done at this committee, and we're always pleased to be here.

It is really important, and I want to commend the committee for doing such an extensive consultation with Canadians. I think it is worth highlighting that this is meeting number 27 on this subject—27—and a lot of those meetings have been marathons with upwards of dozens of groups providing testimony in a single day. On top of that, the minister of trade, and Parliamentary Secretary Lametti, whom I'm pleased to see here this morning, have also been conducting dozens of consultations with groups and companies and holding public town halls across the country. There was one just last night, which I understand was quite interesting. We had a few beef farmers of Ontario there.

I would say that you are really to be commended for beating the bushes and giving everyone an opportunity to have a voice. As you said, I know you have heard from Canadian beef producers in several provinces. They've given me some feedback that they were very appreciative to have that opportunity to meet with you in their home provinces. They don't often have the committees coming out to some of those towns, so that was very much appreciated.

What you would have heard is that Canadian beef producers are strongly supportive of the TPP. We achieved our primary objective in those negotiations, which was to re-level the playing field for Canadian beef exports to Japan. Japan was a $103-million export market for Canadian beef in 2014. That was down a bit in 2015, and we don't yet have enough data to know what 2016 is going to look like, but so far this year it's looking like it's keeping pace with last year.

You've heard that one of our real concerns is that Australia has seized a competitive advantage over us by already implementing a free trade agreement with Japan last year. While Canadian beef is still subject to a 38.5% tariff in Japan, Australian beef has already enjoyed its first three tariff cuts. It's down to 30.5% for chilled beef, and 27.5% for frozen. Rates on both of those products are going to continue dropping further, and that disadvantage will grow.

Once the TPP is implemented, if the TPP is implemented, and I know that decision hasn't been made yet, that tariff inequality will immediately be levelled and then decrease in lockstep with our other TPP partners, to 9% over 15 years. We feel that with the TPP we can double or nearly triple our beef exports to Japan, to about $300 million a year. Without the TPP or a bilateral agreement with Japan, Canada will likely lose around 80% of the value of our exports to Japan.

Beyond Japan, the TPP secures our future access to Vietnam and Malaysia. Although those countries aren't traditionally large beef importers or consumers, we foresee people in these markets moving up the income ladder in the future, and as people earn more disposable income, we know they tend to eat more beef.

The TPP also gives us the opportunity to seek concessions from prospective members, such as Korea and Taiwan, as those countries negotiate their admission with the existing members.

Those are the benefits for us. I want to spend just the last bit of my time commenting on the strategy of where we go from here. We understand that the TPP cannot go forward without the U.S. It's fair to say it's not certain what the U.S. is going to do with that agreement.

The CCA believes that the Government of Canada should actively consider whether there's a better strategy than waiting to see what the U.S. will do. American agriculture groups are working very hard in Washington to explain to their congressmen and senators how vital the TPP is for America's farmers. They're worried that if the U.S. rejects the TPP, other countries, including Canada, are going to seize the opportunity to fill the void, and that's not just speculation. We know that Australia already has, as I talked about that. We know that the European Union already launched negotiations with Japan in 2013, and they've had 16 negotiating rounds since that time.

I hope our U.S. counterparts will also be correct that Canada will not be content to wait for the U.S. to lead the way for us. The Canadian Cattlemen's Association hopes that Canada will formulate a made-in-Canada strategy to ensure that Canadian exporters are not disadvantaged.

Canada and Japan launched bilateral free trade agreement negotiations in 2012. This committee held numerous hearings and issued a report in 2013 that had very positive conclusions and recommendations. That committee report envisioned that bilateral FTA negotiations and the TPP could proceed in parallel, and that the TPP was not a substitute for a bilateral agreement. Since that time, seven negotiating rounds have been held, but we haven't had one since November 2014.

I would suggest that Canada's taking care of its own interests in Japan would not require starting from scratch. We're already well beyond the preliminary work, and the government machinery is already in place to proceed. Moreover, reigniting a bilateral initiative with Japan would not go unnoticed in Washington. A Canadian strategy and efforts with Japan can help to motivate the Americans to recognize their own self-interest in implementing TPP.

I'll conclude by telling you that Canada's more than 68,000 beef farmers would solidly support the Government of Canada moving quickly to finalize a bilateral FTA, both on its own merit and as a strategic initiative to encourage others to move on implementing the TPP.

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you, sir, for that briefing.

We'll move on to the Canadian Centre for Policy Alternatives. We have Scott Sinclair. Go ahead, sir.

[Scott Sinclair, Senior Research Fellow, Canadian Centre for Policy Alternatives]

Thank you to the committee for the invitation.

The Canadian Centre for Policy Alternatives is an independent, non-partisan research institute. This year, as part of the ongoing debate over whether Canada should ratify the TPP, we have published seven studies and will release more soon.

One recent CCPA report challenges claims that the TPP will generate significant trade benefits for Canada. The reasons are fairly straightforward. Canada already has tariff-free access to most of the TPP region. Canada imports significantly more from, than it exports to, the TPP countries that we do not already have a FTA with. The quality of that trade is also imbalanced. Our exports are mainly commodities while our imports are mostly more sophisticated manufactured products.

Since what we import from these countries currently faces higher tariff protection than what we export, tariff elimination under TPP will likely worsen Canada's existing trade deficits with non-FTA TPP members. We'll also deepen our dependance on natural resource exports at the expense of our manufacturing sector.

These findings are broadly consistent with the results of other studies, including those carried out by Tufts University and the C.D. Howe Institute, and with Canada's experience so far under the recently signed FTA with South Korea.

A highly problematic aspect of the TPP agreement is the inclusion of generous foreign investment protections, enforced by investor-state dispute settlement. Giving international investors the right to seek compensation when public interest regulation interferes with their commercial objectives clearly weakens democracy.

Canada's experience under NAFTA confirms this. Because of NAFTA, Canada is now the most sued developed country in the world. Two recent losses are particularly disturbing. The 2015 Bilcon ruling, which found fault with an environmental assessment recommending against a quarry on the Bay of Fundy, will exert a detrimental chill over future environmental assessments. Another NAFTA tribunal recently awarded ExxonMobil, or its Canadian subsidiary, an initial $19 million in compensation for having to fund local research and development as part of an agreement that all companies make to drill for oil and gas offshore in Newfoundland and Labrador. As long as that policy remains in place, the federal government must pay ongoing damages.

The TPP not only expands the deeply flawed ISDS system to investors from more countries, it includes new investor rights—which I hope we will be able to explore in the question period—and significantly, the TPP would not replace NAFTA's investment protections, but will exist alongside them, giving investors the option to use the agreement most favourable to them when challenging Canadian policy.

Both CETA and TPP would require the federal government to extend the term of patents to account for supposed regulatory delays in approving drugs for sale. Canada already has an industry friendly system for protecting pharmaceutical patents, which is reflected our having the fourth highest drug costs in the OECD. Meanwhile, R and D levels in Canada have fallen to historic lows.

Research published by CCPA estimates that by further delaying the availability of cheaper generic medicines, TPP's patent term adjustment system would result in an annual cost increase of over $600 million, or 5% of the annual cost of patented drugs in Canada.

As you have heard in previous testimony, the devil will be in the details of implementation. In effect, TPP gives the United States trade representative, a long-time critic of Canadian intellectual property laws, a seat at the implementation table, since the U.S. must certify that a TPP member is fully compliant before the treaty enters into effect. In any event, the agreement would burden the Canadian health care system with higher drug costs.

Finally, Canada's TPP temporary entry commitments cover a wider range of occupations and sectors than past trade deals. The system would be extended to countries such as Australia and Japan for the first time.

The temporary entry system prohibits countries from applying any form of economic needs tests or numerical quota, including labour market impact assessments. Therefore, employers hiring migrant workers under TPP will be able to do so even in areas where unemployment is high and qualified local workers are available. Furthermore, unlike the temporary foreign worker program, which can be reformed, the temporary entry system in the TPP cannot easily be altered once the treaty is ratified.

My remarks today only scratch the surface of the issues surrounding this complex and far-reaching agreement. For further analysis, I refer you to the studies on our website. Future reports will address copyright protection, the auto industry, labour rights, and other issues. Our research to date strongly suggests the risks for Canada in ratifying the TPP, especially the negative impact on our governments' ability to regulate in the public interest, significantly outweigh the benefits. While certain sectors or groups may gain, the TPP would not be of net benefit to Canada. We therefore recommend against its ratification.

Thank you.

[The Chair, Liberal, Mark Eyking]

We'll now go to the Canadian Labour Congress. With us, we have the president, Hassan Yussuff, and also Angella MacEwen, senior economist.

Go ahead, folks.

[Hassan Yussuff, President, Canadian Labour Congress]

Let me begin by expressing my sincere appreciation for your willingness, and that of Minister Freeland and the government, to sustain open and frank dialogue regarding the Trans-Pacific Partnership negotiated under the previous administration.

It is a deeply flawed agreement, and our view is that the costs of the TPP outweigh, of course, the limited benefits that might arise from the deal.

Proponents of the deal only expect a boost to Canadian GDP of about 0.5%, and that's over 10 years and down the road. That's about as much as the previous administration promised to pay the dairy industry for compensation for TPP losses. This leaves nothing to cover the costs to the auto sector and other sectors.

A key study from Tufts University predicts that workers in all of the 12 TPP countries would lose out because the TPP will increase income inequality within those countries.

This flawed agreement also is about protecting multinational corporations' rights. It does nothing to help workers or the environment.

The two sectors with the most to lose are the auto industry and the dairy sector. But I also want to touch on our concerns with the provisions on public service, labour mobility, rising drug costs, and the investor-state and environmental regulations.

The auto sector is centrally important to Canada's research and development, high value-added production, and manufacturing exports. In 2014, approximately 40,000 Canadians worked in motor vehicle manufacturing in our country, and another 70,000 in the parts manufacturing. A five year phase-out of tariffs on Canadian imports of Japanese vehicles will quickly eliminate the incentive to manufacture in Canada, and it will encourage Japanese assemblers to import more vehicles into our country. Unifor, our major industrial union, has estimated TPP will lead to at least 20,000 job losses in the auto sector alone.

The Canadian dairy sector provides high quality, locally produced food while supporting small family farms and rural communities in our country. Under the TPP agreement, foreign dairy producers will be able to access an additional 3.25% of Canada's 2016 dairy milk production. This comes at a time when the dairy industry is already under considerable stress. Two hundred and fifty million litres of milk and subsequent production jobs are at risk annually.

The TPP makes unprecedented changes to Canada's policy for the use of temporary workers. Under the TPP, there is no limit to the number of temporary workers who can get temporary work permits, and no ability to set economic needs tests on specific sectors. There is also no mechanism to enforce fair labour rights for these workers. This will immediately impact on infrastructure projects and workers in the building trades.

We have many concerns with the model of investor-state dispute settlement. By now, I think the problems with this model of dispute settlement are well known: the unaccountable and ad hoc nature of the arbitral panels, their expansive definition of what constitutes an investment, the fact that they do not operate in subsidiarity to national court systems but above them. And then there's the apparent lack of deference to the prerogatives of governments, or even national jurisprudence on any given issue.

The TPP chapter on public services locks in the current level of privatization with so-called ratchet and standstill clauses. This makes it more difficult for governments to introduce new public services such as pharmacare or child care without subjecting themselves to ISDS claims.

Canada already has the second highest per capita drug costs in the world. The TPP will further constrain efforts to reform pharmaceutical purchasing provisions within Canada.

The TPP also contains broad prohibitions on economic and environmental performance requirements, such as requiring technology transfer or local sourcing to foster green industry. Such restrictions will serve as a chill on governments contemplating steps required to make the transition toward a low-carbon and climate-resilient economy.

It is time to come back to more reasonable forms of investor protection, protections that should be subsidiary to national jurisprudence, should privilege state-to-state settlement, and shall emphasize investors' responsibilities just as much as the protection of their assets.

In conclusion, we have called on the federal government to conduct its own impact analysis of the TPP, and to make this analysis public so all Canadians can learn what the impact would be.

In closing, I want to ask the committee today if you have requested a thorough study or analysis by Global Affairs Canada. If you have not, I would like to recommend that you do so. Given the high economic and political stakes, Canada deserves no less than a full and substantive discussion on the potential consequences of this draft agreement.

I want to thank the committee again for the opportunity to present here today.

[The Chair, Liberal, Mark Eyking]

We're going to move on to our last witness. From the Chemistry Industry Association of Canada, we have Vice-President Dave Podruzny.

Go ahead, sir.

[David Podruzny, Vice-President, Business and Economics and Board Secretary, Chemistry Industry Association of Canada]

Good morning, and thank you for this opportunity to present briefly on who we are, why this trade agreement and trade generally matters, and then to take questions.

CIAC is the voice of Canada's chemistry industry. We represent the large industrial chemical producers and chemistry service providers across the country. In 2015, we had shipments of $53 billion. Most important, we are second in exports in manufacturing, third in value add. Over 70% of our production is exported. Over 80% of any new investment will be aimed at the export market.

To put this in perspective, though, we are 1% of global production, and 2% of global trade. We may think we're a big manufacturing sector in Canada, but growth in China in 2014 was five times the entire size of our sector. The U.S., at 15% of world production, and China at 37% are the elephants in the room, and they do impact global trade.

With regard to change, 10 years ago, global production of chemicals was roughly a third in the Americas, a third in Europe, and a third in Asia. Today, Asia is 54%; China alone is 37%. That's up from 10% in less than 10 years. While over three-quarters of our exports are to the U.S., this will change. The U.S. is investing heavily in new capacity in the chemical sector. That will be my key message today.

On slide 8, is Canada ready for this new world? New investment in the U.S. will first back out imports and then compete into global markets. The U.S. is the destination of most of our current production. We need access to new markets if we're going to remain globally competitive. The TPP opens up major new markets. More important, it sets the bar for Pacific Rim trade—fair, reciprocal, rules-based market access. Our members believe that we can compete on that basis.

Canada makes its chemicals, at least its petrochemicals, from natural gas. Our carbon footprint is the lowest compared to making the same material from oil or coal, an emerging route in China where the emissions are ten times that of making it from gas. So way to go, Canada.

I've included some information on our responsible care ethic and our delivery of continuous improvement in our environmental performance. We invented responsible care here. What I want to say is that making stuff here for the world from the best technologies and processes with the least waste, that is our vision.

Slide 8 I mentioned earlier, and this should cause some alarm bells to go off. We have the same shale gas as the U.S., the same technologies and skilled workforce. We export 60% of our gas to the U.S. As of today, the U.S. is exporting gas, so our exports will soon be zero—and maybe less than zero. Unless our gas reaches tide water and trades to offshore markets, we will leave it in the ground, and then the chemicals we make from that gas will be made in China from coal. Remember that footprint that I mentioned earlier.

In speaking in favour of exports, of fair market access, of TPP as a model for the future of investments and jobs based on resource upgrading and value-add manufacturing, I'm challenging all of us to facilitate more trade. Bringing down global barriers, achieving certainty around market access, will be factors in securing future investments and the latest and best technologies.

Thank you for this opportunity to present, and I look forward to your questions.

[The Chair, Liberal, Mark Eyking]

We're going to go into dialogue with the MPs. We have quite a few witnesses here, so let's try to keep the questions and answers as short as we can to get as much dialogue in as we can.

We'll start with the Conservatives for five minutes.

Mr. Hoback.

[Randy Hoback, Conservative, Prince Albert, SK]

Mr. Podruzny, you touched on something that is very important and that we need to make sure is included in this report, the fact that by exporting natural gas we would replace coal and reduce overall world greenhouse gases as a result.

Do you want to just expand on what that means?

[David Podruzny]

As a small portion of the world, a lot of our impact will be multiplied if we can replace things happening in other parts of the world. You already used the gas-coal analogy, but I'll use the chemicals analogy. For every tonne of chemicals we make from gas, the life cycle of those products reduces emissions in other sectors by three tonnes. That's things like insulation, light-weight auto parts, and lubricants that reduce friction.

This is all about having a smaller global footprint by doing it better, and we are suggesting that making things from gas automatically has a footprint one-tenth of making it from coal, one-half of making it from oil. Most of the world makes its chemicals from oil. An increasing portion of the world, in China, makes it from coal. We're saying we can have an impact by growing here, at the expense of somewhere else, if we do it better here.

[Randy Hoback, Conservative, Prince Albert, SK]

Then as we look at the new regulations where they're looking at upstream gas emissions and taking that into consideration, they don't take in the global footprint. That's a fault in that system, do you not agree?

[David Podruzny]

I'm not sure, because reducing gas emissions, methane emissions, is something we're all pursuing in every aspect of our operations. Reducing waste and making it a stream for other sectors to make stuff from is a good thing.

I think what they're talking about is fugitive emissions in gas and oil drilling and so on. Our friends at the Petroleum Services Association of Canada are going a long way to improve technologies to reduce that. We think we're ahead of the curve there and don't need to feel too threatened by some of those regulations. Very much our responsible care ethic requires us to be the best we can be and to be tested by the communities where we operate.

[Randy Hoback, Conservative, Prince Albert, SK]

Mr. Masswohl, it's good to see you here again. You said that you have been here 27 times. Obviously, you are involved in the consultation process.

I'm just kind of curious. We've had groups come before us and say they weren't involved, yet when I ask officials and other people if anyone is banned them from participating, nobody was banned from participating, so what got you involved in the consultations? Did you pick up the phone and call somebody, or how did that work?

[John Masswohl]

You know, I may have been here 27 times.