International Trade Committee on June 16th, 2016

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

Thank you, ladies and gentlemen, for your presentations today. They're always good.

The struggle we always have is finding a balance. It is a very diverse country, and wants and needs differ greatly across it.

John, you made the point that you'll see in Japan an increase of $300 million, and that this is going to create some jobs. We see studies that say there is going to be tremendous job loss if we do the TPP, but that's offset by....

You also said there are 228,000 jobs in the beef sector, which is double what is in the auto sector—not to diminish either one; they're both extremely important. When you look at the jobs that are out there and the jobs that will be expanded, certainly, through TPP and trade.... We have seen tremendous opportunities, especially in the agricultural sector; it's fundamental.

I just wanted to make those points.

From the chemical industry, David, you gave an excellent presentation. Thank you for that.

There must be certain products that you have a proprietary interest in such that the expansion of the coverage in other countries is very important to you.

[David Podruzny]

The market access that is specifically being opened up will be Japan and Australia. I think there is one other area that's material.... We already have Singapore, and it's already duty free.

Those are the two main ones.

We are going to have an opportunity to move existing Canadian production into the Japanese market, with basically a 6% to 10% tariff elimination. We've unilaterally eliminated that tariff in Canada already, so this is all improvement in access. It's specifically for a number of chemicals that they are beginning to shut down in their country because it's not viable to make them. They don't have natural gas, as we do; they have to import the raw material—oil—and so we have a competitive advantage, once that tariff is gone, to access that market with the things we're making right now, which will be backed out of the U.S. because the U.S. is starting to make the same product.

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

Right, yes.

The nature of multilateral trade like that is that it draws out the strengths of each country so as to rely on and move those products within that bloc of countries. That's what multilateral trade is all about.

Mr. Van Harten, I want to make one point. You were talking about lawsuits, and certainly we have to be aware of the fact that there are lawsuits out there and that there is the potential for lawsuits, but of course it's reciprocal. Canadian firms can also sue other countries.

But I want to clarify. You were pointing to NAFTA, and NAFTA so far has driven $5.3 trillion in economic activity. The total number that Canada has paid out now is $171 million, which is a big number as well, but when you look at the $5.3 trillion in economic activity, $170 million has been paid out for a number of different issues, and $130 million of that was because Danny Williams nationalized Abitibi, which everybody said was wrong. When you look at what's at risk, it's a pretty slim margin, and I think we have it right. There are always better things to do, and I rely on my friends, such as Mr. Peterson, who is a lawyer, to do that.

The Canadian Labour Congress made the point that our auto sector is going to be at risk because we're removing the 6% in five years and said how terrible that is; but we did Korea in two years, and it hasn't been harmful. We're actually seeing the Japanese investing in Canada. Eighty-five percent of our Japanese autos come in through the U.S. now. That is not going to change, but we're seeing investment from Japan. We're not seeing investment from Korea yet, and Kia and Hyundai are the two largest-selling vehicles in Canada.

I'm a little bit concerned that you seem to have missed the reaction that other countries look at—the investment in Canada to get access to the European market, and so on.

I would also point out that the largest manufacturing sector in Canada is agriculture, food-based and so on, and it's predominantly unionized. The service sector, such as banks and so on, which is going to take a huge advantage from TPP, is unionized. The provinces that support this are predominantly unionized, and they all took part in the consultations and were part of driving this agenda forward.

I'm not sure why you guys missed out, then. If we forgot to call you, I apologize. I'm not sure why, as Mr. Masswohl said, you wouldn't have picked up the phone and said, “Hey, we're here; talk to us”.

[Hassan Yussuff]

Well listen, it's a two-way street. Let's be clear. Much of the discussion leading up to the TPP was not very public. I want to be very blunt about that. It was not very public.

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

There were lots of leaks in the newspaper every week, so....

[Hassan Yussuff]

By the way, we wrote your government a letter, as my colleague just reminded me, and to you specifically, then, as minister.

But let's go back to the point you made about the auto industry. Clearly the Korea agreement has not enhanced our auto industry. They have huge access to our country with very little commitment to investment because, I think, it was flawed as it was put together without any commitment.

It is true that the Japanese auto companies have invested in Canada, but our concern is that future investment will be very much diminished, because now they'll have complete access to the market without having any restrictions in that regard. That's the point we're making here. Yes, they have invested; there are two Japanese companies that have put major investments in Canada. We don't, however, see those being enhanced with this agreement, going forward.

Our American friends got a longer period for phasing out their tariff. The question is, why couldn't we demand the same thing, because the—?

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

Does that not chase investment away?

[Hassan Yussuff]

No, it does not chase investment away. The reality is that we want to protect the industry at the same time as the Americans are trying to protect their industry. We could have demanded the same thing.

We didn't, and ultimately I think it's going to have a detrimental impact on the industry.

[The Chair, Liberal, Mark Eyking]

Thank you, sir. The time is well over here.

We're going to move over to Ms. Ludwig for five minutes.

Go ahead.

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

To respond to your question, Mr. Yussuff, we are looking into and following up with Global Affairs, and they will be conducting an economic impact study.

[Hassan Yussuff]

Thank you.

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

Thank you for asking that question.

[Hassan Yussuff]

Will that be made public?

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

Yes, it will.

[Hassan Yussuff]

Thank you so much.

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

My next questions are for Mr. Masswohl and Mr. Podruzny.

In relation to the job market itself, we have heard one oft-referred to study state that there will be a loss of 58,000 jobs. When we have our economic impact studies done, we'll have a much clearer picture on the Canadian system.

However, looking at agriculture, as well as the chemical sector, what might be the impact on jobs in both of those areas for Canada, and manufacturing as well as beef, if the U.S. ratifies the TPP and Canada does not?

[John Masswohl]

I think that's a really important area where some analysis needs to be done. I know that people talk about there being a small benefit overall. It's a positive benefit, but you don't hear a whole lot about the negative impact of not going forward, because there is no status quo.

If people think we're just going to stay where we are by not doing this deal, that's a fantasy. There are going to be negative impacts. That is something that we're extremely worried about. If we're not part of this deal, Australia has already gone ahead. They're already eating our lunch in Japan. If we have the Americans going ahead and we're not part of it, we can forget about most of our exports to the Japanese market, as well as other markets in the TPP region.

We probably won't lose it entirely. Like I say, we compete on other things, with quality; we have other advantages. Also, there's always a market for beef where price is no object at some restaurants for some people. However, that's not the majority of the market, so we'll keep a little bit.

I guess in terms of the actual job numbers, maybe I should submit the report I mentioned earlier, the study of the economic impact on the livestock sector in Canada. I'll submit that to the committee.

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

Would you project job losses if we do not ratify the TPP and the United States does?

[John Masswohl]

I think so, absolutely.

You have to look at the investment in the meat packing sector in Canada, and the cattle-feeding sector. If the United States has that advantage and you're a company....

Of the three largest beef packers in Canada doing about 90% of the federally inspected slaughter in Canada, one of them is an American-owned company and the other is a Brazilian-owned company. They don't need to be in Canada if they don't have the ability to export their products around the world. They're going to look at those investment decisions.

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

I'm going to ask my friend over here the same question.

[David Podruzny]

The chemical industry in Canada is making its products from natural gas. The chemical industry in Japan makes theirs from oil. There is a significant advantage to making them from gas.

The U.S. makes its chemicals from gas too. There would be a significant disadvantage. That Japanese market is five times the size of our market. It's a real opportunity.

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

What about the opportunities for market diversification? You mentioned specifically that in the chemical sector there is a heavy reliance right now on exporting to the United States. Also, there is a need for market diversification.

Do you think companies are prepared for export in terms of looking at different markets other than the U.S.? If they're not, how can we better prepare them?

[David Podruzny]

I think we'll have to take that in two parts.

When it comes to the industrial chemicals area, every one of our members already has experience in exporting, in going after international markets. The concern today is that we are going to lose some of the American market because they will replace imports, where they've had a deficit for a long time, with domestic production. That forces us to look around the world, and we'll even be competing with them in third markets.

I think we have the opportunity, we have the skills. We have the competitive advantage because of the low cost of our feed stock.

One of the complications I mentioned in my opening remarks is that it is not just chemicals that we'll have to move. We're going to have to move natural gas too, because it has to come out of the ground before we can bid on some of that to convert it into chemicals. If it stays in the ground, we're in trouble.

[The Chair, Liberal, Mark Eyking]

Thank you. That wraps up your time, Ms. Ludwig.

We are going to move over to the Conservatives. Mr. Van Kesteren, you are up for five minutes. Go ahead, sir.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Thank you, all, for being here. It is another interesting discussion.

As you heard from our chair, we have done quite a number of consultations. We have gone across the country. There is a reoccurring theme: small, medium-sized, and even large businesses—with the exception of Ford—all agree that this is really a good thing, that this is something that must be done. Yet we hear repeatedly from labour, and from other groups not necessarily directly involved with industry, that this is a bad idea.

I am going to do something a bit different. We have labour here today. I am going to ask you to wrap up, really quickly, some key points and politely tell David why he is wrong. Then, David, I am going to give you an opportunity—just like the TVOntario show—to respond and say why he is wrong.

Why don't you give me about a minute and a half, and tell Mr. Podruzny why his position is absolutely wrong?