International Trade Committee on Sept. 28th, 2016

[Mary Shortall]

For the auto industry, it would be bad.

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

It would be pretty bad, yes.

Mr. Murray.

[Kerry Murray]

We've been trading forever, so the problem is not trade. It's the trade agreement, the way we do it.

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

So you're saying trade agreements...?

[Kerry Murray]

I think there will be bad and good. That's a big question. Certain sectors would suffer, but it would give us a chance to revisit and restore balance to how we trade with our partners.

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

Mr. Whelan.

[Des Whelan]

Let me give you this example. I was on the phone this very week with a company from England, the U.K., about doing business together. We got into a conversation about Brexit. It's going to make it more difficult for me to provide a service that isn't locally available to my customers that is available through this U.K. company, because of Brexit.

Without agreements, we actually place restrictions on ourselves to international trade. When we have agreements we have a basis to go forward.

To answer your question, it would be terrible. I think at times of great economic distress we would fear that a country like the United States would become insular, and that's exactly what's being pointed to. They're our biggest trade partners, so if they become insular, we're going to lose business opportunities. We're going to need TPP, CETA, and a new agreement with the U.K. directly to counter the challenges of Brexit.

[The Chair, Liberal, Mark Eyking]

Thank you.

That wraps up our time. We're finishing this panel right on time. I appreciate everybody keeping to the schedule. It's a little more difficult to get everybody's point of view when you have so many panellists. I appreciate your coming here and giving your briefs and having a dialogue with the MPs.

Anything you feel you couldn't convey here today, or if you feel you need to add to your submissions, please send them to the clerk.

The things you've said today in the dialogue with the MPs will be put into our final report. Thank you for coming.

We'll break for five to ten minutes and then start on the next panel.

[The Chair, Liberal, Mark Eyking]

I would ask all the MPs to take their seats, please.

Welcome, panellists, to our House of Commons international trade committee. I don't know if you heard our earlier remarks, but we are a very busy committee. This year we are dealing with the European agreement being tidied up. We have many issues dealing with the United States—softwood lumber and agriculture products. We have some issues there with them now.

One of the biggest things we're taking on this year is the TPP and how it will impact Canadians, the opportunities and challenges that we face in this agreement. It's a huge agreement. There are 12 countries, 40% of the world's GDP. We're talking about 800 million consumers. One way or another, this agreement will affect all Canadians in various ways.

We've been on the road quite a bit, and in Ottawa, receiving briefings. We had over 125 briefings and heard almost 300 witnesses. We've done pretty well eight provinces. We're here now, and we're going to Nova Scotia tomorrow, and we've had video conferences with the territories.

We're one of the first committees in the House of Commons to open up quite a bit to the public. We've been getting emails. We're at over 20,000, and we're still getting them in. We also do an open-mike session at the end, where the audience can have some input.

We're very proud of our committee and we're getting a lot of input. We're learning a lot, too, about what's in the agreement and the details of how it affects Canadians.

We will be finishing up our consultation process at the end of October, then we'll put a report together for the House of Commons, then let the members of Parliament decide where we go from here.

Without further ado, I welcome the panellists here today. What I'd like to do over the next hour is make sure that you guys get your input in and have a dialogue with each of the MPs here, so if you can keep your briefings to five minutes or under, it would be appreciated.

We'll start here with the Social Justice Cooperative of Newfoundland and Labrador. We also have the Association of Seafood Producers and Ocean Choice.

Bill Hynd, go ahead.

[Bill Hynd, Co-Chair, Social Justice Cooperative of Newfoundland and Labrador]

First, let me thank the committee for allowing the Social Justice Cooperative to present.

The Trans-Pacific Partnership is being sold as another free trade agreement that will expand trade opportunities and thereby help economies grow. If only.

The trickle-down impact, we are told, will lead to increased economic activity and more jobs for everyone. If reducing tariffs and increasing trade was the start and end of this agreement, I am sure the opposition to the TPP would be much more muted. However, any serious cost-benefit analysis of the TPP will tell you that social, environmental, and political costs are simply too great, and the economic benefits limited.

At its core, TPP is less about increasing trade and more about securing corporate investor rights. That is why there is such strong opposition from people like Joe Stiglitz, Nobel Prize-winning economist. In a recent CBC interview, Mr. Stiglitz called the TPP the worst trade deal ever, and he called on Canada to demand renegotiation. The problem is that renegotiation is not part of the equation or on the table as a possibility. Stiglitz has also co-signed a letter with 200 of the U.S.A.'s leading law and economic professors, and gone to the U.S. Congress opposing the inclusion of investor-state dispute settlement, ISDS. These scholars are firmly opposed to the inclusion of such a regime because it creates a parallel legal system granting multinational corporations undue power.

A few weeks ago, Prime Minister Trudeau hosted a Global Fund replenishment conference to fight AIDS, tuberculosis, and malaria. The Prime Minister's website explains the Global Fund this way:

By uniting around a common vision of a better and healthier future, the international community can fight diseases more effectively, and tackle the associated issues—including poverty, lack of access to education, and social and political inequality—which disproportionately impact women, girls, and young people.

Our Prime Minister should be congratulated for his vigorous support of this worthy effort. However, his concern for the Global Fund does not square with the government's support for the TPP. Doctors Without Borders, one of the most prestigious medical humanitarian organizations in the world, has called TPP one of the worst trade pacts for restricting access to affordable life-saving medicines for millions of the world's poorest people. Doctors Without Borders depends on accessing generics to treat people with HIV, TB, malaria, and other infectious diseases. The new intellectual property rules will see them lengthened and strengthened, and they'll allow for new patent and data protections for pharmaceuticals. This will only lead to higher prices and could affect thousands or millions of desperate people who need access to generics.

It's our view that public health needs should trump commercial greed.

Bringing it back to Canada, Canada is the only developed country with a universal health care system that does not provide national coverage of prescription drugs. Canada has the second-highest per capita drug costs in the world. There are simply too many personal stories of sick people who have had to forgo their prescriptions simply because they could not afford them. For far too many, the choice is food or medicine.

Canada needs an affordable pharmacare program that makes available selected medicines at little or no direct cost to patients in need. Canada should not be supporting any deal that will force extended intellectual property provisions, including patent and data protection, which, for the general populace, will mean higher drug costs. Research by the Canadian Centre for Policy Alternatives has estimated that Canada could add $636 million annually to the price of drugs in Canada, and Canada should not be signing any deal that ratchets up the ISDS, that allows pharmaceutical companies to bypass Canadian courts and take their case to a non-judicial arbitration process. How can it be that government has no right to bring a claim against a foreign investor, yet foreign investors are granted the power to sue sovereign nations?

[The Chair, Liberal, Mark Eyking]

Sir, you've just got half a minute. Would you like to wrap it up with some final comments?

[Bill Hynd]

Sure.

With this ISDS, we're seeing Eli Lilly sue Canada for $500 million. We're seeing, right now, a Canadian corporation trying to sue the U.S. government, that's trying to take action on climate change, for $15 billion.

We're just saying that, if you sign on to these things, this is the road we're going down, more of this behaviour. If we can sign a UN climate change pact in a transparent way, then maybe it's time that we renegotiated a trade deal that was more transparent, that supported people, and advanced the Universal Declaration of Human Rights, which was initially drafted by a Canadian. That's the core.

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

We're going to move on to Ocean Choice.

Go ahead, Mr. Sullivan. You have the floor.

[Martin Sullivan, Chief Executive Officer, Ocean Choice International L.P.]

Good morning. My name is Martin Sullivan. I'm the CEO of Ocean Choice International. Thanks for the invitation to appear before the committee and share our thoughts on the TPP.

First of all, I'd like to give you a little overview of our company, and then I'll give you our perspective on the TPP.

OCI, as we're commonly known, is a family-owned company based here in Newfoundland with operations in the Maritimes as well. We employ about 1,700 people on an annual basis, with most of them in Newfoundland, and others in the Maritimes and in sales offices around the world. We also buy fish from over 1,400 fishers here in the province. The total payroll for both fishers and employees is about $130 million per year. We operate six processing facilities and six offshore vessels in Atlantic Canada.

In our global sales and marketing network, we sell about 80 million pounds of seafood, and that's 20 different species, to more than 400 customers in over 30 countries. We have sales offices in six countries. We've invested heavily to try to maximize the value of all the products we sell.

Our annual sales are about $280 million Canadian, with about one third each to North America, Europe, and Asia. We are strong proponents of sustainable science-based fisheries and we engage regularly with DFO with respect to science and research on many species. About 90% of our seafood is either certified by the Marine Stewardship Council or is in the process of being certified.

With respect to the Trans-Pacific Partnership, we believe opening up trade opportunities like this for our industry is extremely important, as our industry relies on trade for its existence. We believe trade agreements like this are an important factor in increasing the size of the economic pie and will lead to increased returns for all participants. Too often we engage in battles over sharing a smaller economic pie rather than trying to work together to increase the economic pie so that all participants can experience a better return.

As you know, the TPP is a major trade initiative involving 12 countries, including seven new free trade agreement partner countries, with a combined market of nearly 800 million people and a GDP of almost $29 trillion. The biggest incremental opportunity for us is in the Asia-Pacific region. Our company currently sells in six of the 12 countries in the TPP, and we see many opportunities to increase sales in those six countries and expand to many of the others.

We have seen from past trade agreements the tremendous opportunities and extra value that resulted after implementation. The lower tariffs will lead to increased opportunities and make the Canadian seafood sector much more competitive in the international marketplace. This is especially true when you look at competitors in countries such as China, Russia, South Korea, and Thailand, which are not part of the TPP.

In this particular agreement we will see tariff reductions on many species that are important to Newfoundland and Labrador and the rest of Atlantic Canada. This includes snow crab sold to Japan. We'll see the elimination of the 4% tariff come into force immediately upon entry. There will be an elimination of the 5.3% duty on shrimp and processed shrimp into Japan immediately, which will provide more opportunities for our cooked and peeled shrimp sector. There will be a reduction or an elimination of tariffs on lobster in several of the TPP countries. The 15% tariff on scallops to Japan will be eliminated over 10 years, and on frozen fillets tariffs it will either be reduced or eliminated.

For a country like Malaysia, all tariffs will be eliminated immediately, which will open a lot of new opportunities for our seafood.

There are many other examples too numerous to outline in detail here. We will also have strong provisions on non-tariff measures, which are important with respect to dispute settlement provisions.

As an industry, we've experienced the benefits that trade liberalization can provide and the huge impact it has on the incomes in our sector. This is particularly true in rural areas, which is where most of our employees and fishers who supply us live. When you combine the reduced tariff access, as well as the resulting new market opportunities in these countries for many new product forms, there are many examples where it has led to increased prosperity for our people and communities. For example, on snow crab, which is important to Newfoundland and certainly to the other maritime provinces as well, we have seen the expansion to Asia, and particularly to Japan in addition to the traditional U.S. market, resulting in significant price increases to fishers, this year, in the range of $3 a pound. I can remember when we were paying 35¢ a pound in the 1990s before we had some of these trade agreements in place. This has meant significantly more money in the economy of rural Atlantic Canada, and on other species we have seen similar results.

As we expand tariff-free access, we open up whole new markets to buy various product forms that add significant value to our industry and result in a larger economic pie shared by all participants. For example, we may get the best value from fillets in the U.S. market, raw crab sections and parts in Japan, whole fish in China, raw scallops in Australia, and headed and gutted fish in southern Europe. Each market has its own unique culture and tradition of eating fish in different ways than we're used to. As we expand our free trade agreements to more countries, we bring back significant value to Canada. We believe this has a very positive impact on incomes for people in the industry, and greatly enhances the communities in which they live.

In conclusion, we strongly support the TPP, we strongly support lower tariffs and better market access, and we encourage Canada to finalize and implement this very import trade agreement.

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

We're going to move on now to the Council of Canadians.

Mr. Kavanagh, go ahead, sir.

[Ken Kavanagh, Chair, St. John's Chapter, Council of Canadians]

Thank you, Chair.

Let me first of all thank the Standing Committee on International Trade for the opportunity to make these few brief remarks with respect to the Trans-Pacific Partnership.

In case there is any doubt, let me say unequivocally and with the strongest conviction, right from the start, that I do not support the TPP.

On September 16, 2016, I did submit a written submission on behalf of the St. John's chapter of the Council of Canadians. I'm here today to express the concerns of my chapter on this controversial trade deal. While I represent a local chapter of the Council of Canadians and the council in general, I wish to state that I am not simply and blindly regurgitating the official position of a much-respected and widely supported, citizen-led organization. The council did not come to us. I and my chapter or colleagues came to the council, because it represented our values and views on a number of critical issues, including trade. The views expressed here today on the TPP are not just the views of the council; they are my views and those of my chapter compatriots.

The Council of Canadians was founded in 1985 to bring Canadians together to act for social, economic, and environmental justice here and abroad. We are Canada's leading social action organization, mobilizing some 100,000 Canadians and a network of 60-plus chapters across the country. Through our campaigns we advocate for clean water, fair trade, green energy, public health care, and a vibrant democracy. We educate and empower people to hold our governments and corporations to account.

Let me be very clear: the Council of Canadians, contrary to the stated opinion of some political and corporate leaders, is not anti-trade. We are for fair trade. We support trade deals that respect the rights of people, labour, and the environment and that reduce inequality between and among nations.

An early definition of “trade” was the act or process of buying, selling, or exchanging commodities within or between countries. Modern-day trade deals are no longer just about the exchange of goods and services between countries or about the reduction of tariffs. No, modern-day free trade agreements have morphed into a comprehensive and complex bill of rights for huge and powerful multinational corporations that desire to enshrine and protect their right to maximize profits at the expense of the rights of people and the environment.

Perhaps the most offensive and insidious aspect of FTAs is their investor-state provisions or investor-state dispute settlement mechanisms. As a Newfoundlander and Labradorian, I am quite familiar with investor-state provisions as a result of chapter 11 of NAFTA.

In 2011 Stephen Harper paid a record $130 million to AbitibiBowater to avoid a chapter 11 challenge. In 2012 ExxonMobil won its challenge to premier Danny Williams' insistence that it spend a few paltry million dollars on R and D.

Under NAFTA, Canada has twice as many claims against it, 34, compared with the U.S. and Mexico. Canadian investors have zero successful claims, while we have paid out nearly $180 million. There is some $2.5 billion in eight outstanding claims, including a $500-million challenge by Eli Lilly.

Investor-states are an infringement on the right of nation-states to enact laws, policies, and programs that are in the best interest of citizens. The underlying premise in such laws, policies, and programs interferes with a corporate entity's right to make profit. Fundamentally, the concept of investor-state provisions is an affront to democracy and an assault on the sovereignty of a nation.

A further affront to the oft-promised open transparency and accountability of our democracy is the ultra-secretive manner in which the TPP and other trade agreements have been negotiated. Canada first engaged in discussions on this mammoth deal in October 2012. Then, for years the Harper government continued negotiations in absolute secrecy. That's a far cry from what happened in New Zealand, which held a series of stakeholder sessions with the country's chief negotiator to keep business groups and the public informed. There are many other issues with the TPP that others have dealt with, all of which are of concern to ordinary Canadians.

Most Canadians are very busy earning a living and living a life. The matter of an international trade deal may not seem important or top of mind most days. But the more they learn about TPP, the more they oppose the deal. Interestingly, citizen opposition to the deal is growing steadily on both sides of the political spectrum. Both Bernie Sanders and Donald Trump attracted millions of supporters because of their respective positions on trade deals in general, and the TPP in particular. Clearly, citizens are waking up to the false promise of these new generation trade deals. It is also very interesting that both U.S. presidential candidates oppose the TPP.

With all due respect to committee members here, I can't help but wonder if this whole process of conducting these cross-country hearings is nothing more than a charade by the Trudeau government in the hope that the U.S. will scuttle the deal in due course anyway. There is some irony in the fact that I find myself depending on the U.S. government to save Canadians from a trade deal that is not in their best interest.

Thank you, Chair.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Kavanagh, and thanks for being on time.

We're going to move to our last panellist, Mr. Butler from the Association of Seafood Producers.

From what we're hearing today, you guys are big seafood producers in this province. It's been your mainstay for hundreds of years, and it looks like it's going to be for a while to come.

Welcome. You've got the floor. Go ahead, sir.

[Derek Butler, Executive Director, Association of Seafood Producers]

Good morning.

Welcome to our province, and thank you for the invitation to appear before the committee to share our position regarding the Trans-Pacific Partnership trade deal, or TPP.

Let me first make some quick remarks regarding the association—who we are, what we do—and then provide some additional brief remarks with respect to the TPP.

In short, we're an industry trade association and we represent seafood producers, both small and large, in the province of Newfoundland and Labrador. Our membership includes mostly family-owned companies and some harvester-owned as well.

ASP's members produce the vast majority of the province's seafood by value and by volume, ranging from 90% of the province's inshore shrimp production and 80% plus of the snow crab—those two represent most of the value in the industry—and a large majority of pelagics, such as capelin, mackerel, herring, and varying percentages of groundfish. ASP is also the client for several fisheries holding the Marine Stewardship Council, or MSC, label, a third-party, independent, eco-certification. We certified the first fishery in Canada, the first on the eastern seaboard of the continent, and the largest cold-water shrimp fishery in the world.

Achieving MSC certification is an important element in maintaining market access. I call it the democracy of the marketplace, assuring consumers who want to buy from sustainable fisheries that the fish from Newfoundland and Labrador are sustainable. We now hold four certificates for shrimp in the Maritimes and Newfoundland and Labrador, as well as snow crab in the province. I raise it here because I think it is a trade issue and is of interest to you.

I've appeared more often before trade committees of the House than I have before fisheries committees. I like that, because we are a trading industry. It is 80% to 90% of all Newfoundland and Labrador production that is exported. It's a considerable figure.

Since ASP's founding in 2004, a rough estimate would place our industry exports at $10 billion. That is a significant contribution to our economy, to the region, through transportation linkages, and to the country as a whole. While some are quick to say that we lost the fishery in the 1990s, which we did with the moratorium, and while it is true that the fishery's overall contribution to provincial GDP has declined in relation to the overall growth in the economy, the value of the fishery has more than doubled from what it was in the groundfish days with the rise of shellfish. It remains the largest private sector employer in the province. Just last year, I'm pleased to say, it reached its highest ever historical production value, of $1.2 billion.

As a trading industry—this is the reason we're here today—we support the Trans-Pacific Partnership. This trade agreement, with reduced tariffs, can mean more exports to the participating countries. There's room to grow. The issue is not just what is sold now, but what that could be in the future.

As I said in a press release when the deal was announced, we're an export industry, pure and simple. Eliminating tariffs and ensuring fair market access is imperative for us. While we're pleased to sell in our home province and across the country, the reality is that 80% to 90% of Newfoundland and Labrador's seafood will be sold in international markets. Thus it ever was and ever shall be. That was the reason we were settled in the first place. Cod, in our case, was a proxy for the European stock market. It's quite amazing.

We have hundreds of years of experience in exporting, and that will always be the case. While other business sectors might be engaging consultants or attending seminars in light of the TPP or CETA or the South Korea deal, figuring out how to enter those markets, Newfoundland seafood producers, like Martin, are doing what we've always done: selling internationally, exporting the world over.

Very importantly in this instance, the countries in TPP represent a significant and growing proportion of the world's key markets for seafood, both established and new markets. As you will know, the tariffs on seafood in the countries represented in the TPP have been quite high, in some instances as high as 34%.

If you think about any business and what margins might be required to make that business sustainable, and then think about those kinds of tariff rates, well, essentially we're prevented from selling and we prevent consumers from accessing quality fish. These kinds of tariffs thwart market access. They limit where we can sell.

Another point I made in May, when I testified before this committee via telephone, is worth repeating. Reducing tariffs is not really only about the straight math calculation of what happens in those given markets in the TPP countries. When tariffs change in a given market, or several markets, as represented by this deal, the trade flows can be impacted in other countries outside of the TPP. It might mean additional returns from existing markets that now have new competitors, even though the trade flows might not change.

In closing, let me simply say that we support the TPP. We support reduced trade barriers. We support better market access. We think it makes everyone winners.

Again, I want to thank the committee for the invitation to appear, and I'm available for any questions you might have.

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you.

That finishes our presentations. Before we go on, I'd like to remind everybody we operate in our two official languages, so there are translators in the back and you can wear the earphones provided. There's also coffee there. You cannot take pictures or videos here when we're in session, but in between sessions you can.

I have a quick question before we go to the MPs, and I guess it's to you two gentlemen here, on that certification process. I'm from Cape Breton and I know our fishers there are into it.

First, how much of the wild seafood in the world is under certification now, what percentage? I'm thinking of a company like Red Lobster in the United States. Do they put that on their menu? Do they look for it? Is it a big deal with our buyers, like Japan, the United States and Europe? Is that certification something that's really taking off and they're looking for it? What's your scope on that?

[Derek Butler]

On the first question, I think the figure is just over 10% in the MSC program. There are some other competitor labels as well. I could send the committee some information afterwards, just to be sure, but I think it's around 10%, and increasingly more fisheries under assessment.

[The Chair, Liberal, Mark Eyking]

Canada has taken the lead on that.

[Derek Butler]

Internationally, Canada is one of the leaders in this, absolutely. As I think Martin mentioned, most of your seafood is under MSC labels.

On the Red Lobster piece, Martin can speak to it more specifically. It is increasingly prevalent in the marketplace, both in the restaurant trade, food service, and particularly in retail. We see it here in our stores, even, for products from other jurisdictions. The MSC label is well known.

It varies by country, obviously. There are jurisdictions like the U.K. where for cold-water shrimp it was an absolute imperative. There are places where it's growing in importance, including in China.

[Martin Sullivan]

I'd just add that most customers now demand third-party accreditation of the fisheries. We think that's good for our industry, because it's another check to make sure that things are being managed properly. You'll see at the retail level the blue check mark, which is the MSC logo. In our case, in the U.S. market, we have product in over 3,000 supermarkets now, snow crab and other things, and throughout the world, actually. It particularly started in the U.K., in western Europe, spread in North America, and now we're seeing it has growing importance in Asia as well. It is important, and we think it will continue to grow.

[The Chair, Liberal, Mark Eyking]

It's only for wild species, though. That certification doesn't go for farm-raised fish, does it?

[Martin Sullivan]

There's a sister organization called the Aquaculture Stewardship Council that would cover farm-raised fish.