Good morning.
I'm pleased to be here on behalf of Canada's 60,000 manufacturers and exporters and our association's 2,000 direct members to discuss the Trans-Pacific Partnership. I want to come at this from a Newfoundland and Labrador standpoint, to give an NL perspective on TPP.
From a CME Newfoundland and Labrador point of view, members and non-members who represent the manufacturing and exporting sectors seem to know very little about the TPP and the positive and negative features and benefits. Those who know about the TPP are only focused on the impacts, both positive and negative, that affect their specific industry sector. The seafood sector appears to be the one that's keeping the closest eye on the TPP trade agreement process, but they are not asking a lot of questions.
Out of Newfoundland and Labrador's top 10 export destinations, the United States and Japan are the two that are in the TPP. One of them is worth $6 billion. Japan is worth $190.8 million.
The people who know about TPP understand that all the countries must ratify the deal. Any specific country can veto the deal. There's a strong sense that the U.S.A. does not have an appetite to enter into large trade agreements post the 2008 recession and that their Buy American stance can block this.
There are three key areas that CME feels strongly about with regard to any trade agreement. The first is that it create a fair and level playing field for Canadian manufacturers and exporters to ensure that they have as equal opportunity to export to foreign markets as our competitors do to import into Canada. The second is that the agreement must allow value-added exports from Canada, not just the export of natural resources. The third area is that the agreement must not undermine the existing integrated manufacturing supply chains developed through previous free trade agreements, especially NAFTA.
CME has supported Canada's entry into and our signing of the principle of the Trans-Pacific Partnership because of Canada's small domestic market, the export orientation of our manufacturers, the deal's inclusion of our major trading partners, and the significant new opportunities it affords.
To be blunt, Canada has a poor history of success in free trade agreements. Aside from NAFTA, very few, if any, agreements have led to an increase in our exports. On the flip side, we have also typically not seen a massive increase in imports either. So free trade agreements are signed, and business generally continues as it did before.
This time it will be different. We're entering into an agreement with very aggressive, export-oriented, and coordinated countries. If we don't have similar domestic strategies for success, Canada has the potential to lose. We need a national strategy that aims at supporting domestic competitiveness with global supports.
One of the things we see first is that free trade has opened the door to increased competition. This can and should be perceived as a good thing. However, we need to be ready for that competition. The private sector is willing and ready to compete on a level playing field, but our business environment is often not level. While our corporate tax regime is world-class, there are many other areas that are not. Canadian companies face high input cost, a much more costly regulatory burden, higher labour cost, and higher energy cost. Meanwhile, domestic supports for investment in innovation and advanced technologies are significantly lacking compared with our international competitors.
CME believes that with the right support network in place for the TPP as well as other international trade, Canada could double manufacturing output and value-added exports by 2030. That's why we launched Industrie 2030, a national conversation on the future of manufacturing and exporting in Canada. We would like to create a long-term national strategy and road map to meet these growth objectives.
Thank you for your time this morning. I look forward to the discussion.