Evidence of meeting #27 for International Trade in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was tpp.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Gus Van Harten  Professor of Law, Osgoode Hall Law School, York University, As an Individual
Victoria Owen  Chief Librarian, University of Toronto Scarborough, Canadian Association of Research Libraries
John Masswohl  Director, Government and International Relations, Canadian Cattlemen's Association
Scott Sinclair  Senior Research Fellow, Canadian Centre for Policy Alternatives
Hassan Yussuff  President, Canadian Labour Congress
David Podruzny  Vice-President, Business and Economics and Board Secretary, Chemistry Industry Association of Canada

9:35 a.m.

Liberal

The Chair Liberal Mark Eyking

Thank you, sir.

Your time's up, Ms. Ramsay.

I'd also like to welcome the member from London North Centre, Peter Fragiskatos.

9:35 a.m.

Liberal

Peter Fragiskatos Liberal London North Centre, ON

Thank you very much for having me here on the committee today.

9:35 a.m.

Liberal

The Chair Liberal Mark Eyking

It's good to see you here.

As you can see, this is one of the most vibrant, active, and lively committees on the Hill, so welcome.

9:35 a.m.

Liberal

Peter Fragiskatos Liberal London North Centre, ON

Yes, thank you.

9:35 a.m.

Liberal

The Chair Liberal Mark Eyking

On that note, we're going to move to the Liberals. Mr. Peterson, you have five minutes.

June 16th, 2016 / 9:35 a.m.

Liberal

Kyle Peterson Liberal Newmarket—Aurora, ON

Professor Van Harten, I'm going to follow up a little on the ISDS provisions. As a lawyer, I don't necessarily share the sentiment that just because lawyers make money, it's inherently bad. Anyway, I'm just teasing.

9:35 a.m.

Voices

Oh, oh!

9:35 a.m.

Liberal

Kyle Peterson Liberal Newmarket—Aurora, ON

I take a keen interest in the ISDS provisions of this trade deal and others. I want to make sure I'm clear on your position. I don't hear that you're necessarily against some sort of settlement dispute mechanism, but you see that this one as flawed for the reasons that you indicated.

What sort of dispute mechanism do you think would be appropriate for trade deals going forward? What sorts of elements should be present in such a mechanism?

9:35 a.m.

Professor of Law, Osgoode Hall Law School, York University, As an Individual

Dr. Gus Van Harten

I'm not against lawyers making money either, because I still am a lawyer.

It's more about the so-called judge, who sits working on the side as a lawyer, not having a set salary, not having security of tenure, and not having the conventional safeguards of institutional independence we're used to in public law that are all missing in ISDS.

What is the alternative, and how should foreign investors be protected in the world?

Foreign investors in the marketplace should make judgments about which country they're going to invest in based on the risks that everyone assesses in the marketplace about particular countries. The primary place to go is domestic court. What should be part of their risk assessments are domestic courts in particular countries. If they're not happy with the reliability of domestic courts in a particular country, they can buy political risk insurance in the marketplace. They can also negotiate for arbitration clauses in their contracts, especially with government entities.

When it comes to the international level, I think there's a role for state-to-state international adjudication, like at the World Trade Organization, where the remedy is a forward-looking remedy that doesn't create anywhere near the same regulatory chill that the retrospective damages awards in ISDS create.

I do think there may be a role for ISDS with respect to some countries, but it should come with a duty to exhaust local remedies and a duty to go to the local courts, unless the foreign investor can show there's something wrong with the domestic courts and they shouldn't be held to that requirement.

That's the standard approach in customary international law and under other treaties that allow private claims against the state. It creates room, as you'll understand as a lawyer, for all kinds of mischief when you can skip domestic courts, or go to them first and then challenge their decisions. Even in Canada, with the experience under NAFTA and ISDS, there's some pretty troubling examples of that.

9:40 a.m.

Liberal

Kyle Peterson Liberal Newmarket—Aurora, ON

I appreciate that.

Having practised as a commercial litigator, sometimes the domestic courts get things wrong, but I think having the appeal mechanism is a safeguard that should be in any dispute mechanism, which I don't think is necessarily present here.

I appreciate your comments.

Mr. Sinclair, I appreciate your comments, too.

I'm hearing an oft-repeated refrain that there are very few trade benefits in this agreement and that it's maybe not worthwhile. However, then we hear from Mr. Masswohl who's saying there are tariffs of over 30% on his products right now in Japan. Perhaps the trade benefits are not as large as one would hope, but I think Mr. Masswohl's not lying about the trade benefits his industry would realize with this agreement.

What do you say to those who would benefit from this trade agreement, and how can we reconcile both those positions?

9:40 a.m.

Senior Research Fellow, Canadian Centre for Policy Alternatives

Scott Sinclair

I think we have to look at the overall impacts on the Canadian economy and Canadian trade. We have to ask whether there's a net benefit. This is setting aside all the other chapters of the TPP that deal with these important regulatory issues we heard, from copyright to ISDS, temporary workers, and so on.

Looking at the trade barriers, I think everyone who's looked at the TPP seriously agrees that the overall benefits and impacts, positive and negative, are fairly small. That's for a simple reason. We already have tariff free access for our exports. Currently 98% of them within the TPP region go to countries with whom we already have tariff-free access, either with a trade agreement, or in the case of Singapore they don't apply trade agreements. For everyone who's looked at it seriously, and there are a couple of outliers, they predict it will have a very small impact.

Another important point for Canada is that the impacts are asymmetrical. Industries like oilseeds, pork, and beef, where tariffs are still high, will see new opportunities. At the same time, our manufacturing sectors have to be offset against the damage to supply management that will result from the agreement. That is clear—and they're in a unique situation.

We also have to look at the damage to the auto sector, which is going to be hurt by tariff elimination and the fact that our tariff will be phased out much more rapidly than the U.S. tariff, but also. It's also going to be harmed quite significantly by changes in the rules of origin, which are going to allow more non-TPP content from China, Indonesia, and other countries to be integrated into cars sold in the North America market.

9:40 a.m.

Liberal

The Chair Liberal Mark Eyking

The time is up for your session, Mr. Peterson.

That ends the first round. I want to start the second round with the Liberals.

Madame Lapointe, for five minutes.

9:40 a.m.

Liberal

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

Thank you, Mr. Chair.

I want to thank the witnesses for joining us today. I appreciate their appearance before the committee.

I will put questions to Mr. Masswohl.

I would like to talk to you about the livestock industry. You said earlier that, by signing the TPP, we could double or even triple our beef exports to Japan. Is that correct? Do you also know what impact an increase in our exports would have on the number of jobs created?

9:40 a.m.

Director, Government and International Relations, Canadian Cattlemen's Association

John Masswohl

Right. That is what we expect in the Japanese market. If you think of our having done more than $100 million in beef exports with a 38.5% tariff, bringing the tariff down to 9%—we would have liked to go to zero, but it is going to 9%—would result in increased margins for the Canadian side of the same size. We paid $40 million in duty to the Japanese government on that $100 million of exports. Now, if you instead take that extra nearly 30%, it's margin on the Canadian side. It means that the packers who process those animals into meat can pay more for the animals.

In terms of jobs, the University of Saskatchewan did a study on the economic impacts of the livestock sector in Canada. There are more than...I think the number is around 228,000 jobs directly in the beef sector in Canada. Every job in the beef sector generates 3.54 jobs somewhere else in the Canadian economy. When farmers get money, they don't sit on it; they spend it. They buy equipment, they upgrade their facilities, they expand. Any additional margin that we can bring back and put into farmers' pockets is going to be extremely positive for the overall economy in Canada, but particularly the rural economy in Canada.

9:45 a.m.

Liberal

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

I would like to stay on the same topic.

Australia has signed a trade agreement with Japan. If we sign the TPP, do you believe we would get the same access to the Japanese market or the same export volumes as Australia? What is your assessment of the opportunities to increase our market compared to Australia's opportunities?

9:45 a.m.

Director, Government and International Relations, Canadian Cattlemen's Association

John Masswohl

That's an extremely important point. In fact, it was our objective to catch back up to Australia and go beyond. On day one of TPP's coming into effect, the Japanese tariff for Canadian beef will immediately drop to the same level that Australian beef gets, so we'll be equal again. Right now we're at about a 10% disadvantage.

That tariff is going to drop, as I said, down to 9%. In the Japan-Australia agreement, it only goes down to 18%, so we get an even better rate than the rate that exists in that Australian bilateral.

9:45 a.m.

Liberal

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

In addition, Canada is closer to Japan than Australia is.

9:45 a.m.

Director, Government and International Relations, Canadian Cattlemen's Association

John Masswohl

In terms of the ability to compete, Australia has a bit of a geographic advantage over us. They have a slightly different beef. We have very different genetics in Canada; we have a northern, cooler climate; we produce beef that marbles better and has very good quality that the Japanese consumers particularly like. We tend to be more at the high end of the market. We probably won't do the same number of tonnes as Australia, but we're going to do very well on the value and the ability to compete on our advantages.

9:45 a.m.

Liberal

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

Thank you.

You also said earlier that Malaysia and Vietnam would also become important markets, since middle-class people will have higher incomes.

What is your assessment of that?

9:45 a.m.

Director, Government and International Relations, Canadian Cattlemen's Association

John Masswohl

That's very much the case. Many people think of Vietnam right now as being, as Hong Kong was 30 years ago, poised. If you look back at where we exported beef to 15 years ago, before the BSE scenarios, we exported almost nothing to China and Hong Kong. They weren't very high among our priority markets. Even five years ago, when China reopened, our prediction was that maybe within 10 years we could get to about $100 million in the Chinese market. Last year we did $255 million in China.

9:45 a.m.

Liberal

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

I have another question.

You also said that we should take steps if Canada does not sign the agreement and that we should

“take care of our own interests”

and come to an agreement with Japan if we don't participate in the Trans-Pacific Partnership.

Could you tell me about those issues, as we have a few more seconds?

9:45 a.m.

Liberal

The Chair Liberal Mark Eyking

It will have to be a quick answer, please.

9:45 a.m.

Director, Government and International Relations, Canadian Cattlemen's Association

John Masswohl

We think it's a very viable strategy that should be explored.

9:45 a.m.

Liberal

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

Thank you very much.

9:45 a.m.

Liberal

The Chair Liberal Mark Eyking

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

Mr. Ritz.