International Trade Committee on Sept. 28th, 2016

[The Chair, Liberal, Mark Eyking]

Good morning, everyone. Welcome to the House of Commons Standing Committee on International Trade.

We are a very busy committee. We deal with international trade. This year has been quite busy for us because we're dealing with CETA. We have many U.S. issues with softwood lumber and agricultural products. Right now we're dealing with TPP. TPP, as many of you know, is composed of 12 countries with 40% of the world's GDP. There are over 800 million people in this trade block. When you take a good look at it, it will affect all Canadians whether you're producing something or buying something. It's going to potentially have an impact somehow on your lives.

Our committee has been travelling across the country and also having meetings in Ottawa. This is our ninth province now. We're finishing up with Atlantic Canada. We also had video conferences with the territories.

My name is Mark Eyking. I'm the chair, and I'm from Cape Breton, Nova Scotia. I don't live far from this rock; I'm from another rock. Lots of Newfoundland people live in Cape Breton.

We don't have all of our committee members here. Some had to stay back in Ottawa to keep an eye on things for us. Our committee comprises MPs from right across the country from all parties. We have Tracey Ramsey and Dave Van Kesteren from southern Ontario. Mr. Ritz is from Saskatchewan. Ms. Ludwig is from New Brunswick, Madame Lapointe is from Quebec, and Mr. Dhaliwal is from British Columbia.

We've received over 125 briefs. We've had almost 300 witnesses. We're also doing something different that most committees have not done. We are receiving input from the public, from average citizens, and we've received over 20,000 emails so far. We are going to receive those emails, and continue on with our study until the end of October.

The other thing is we have an open mike at the end of each session, so if citizens want to say a few words, they can come right to the mike. That's been quite well-received, and we have a lot of uptake on that.

We are probably going to continue with this consultation process until the end of October. Then our analysts will put together a report with us, and we will table a final report with the House of Commons probably later on in the year or at the beginning of the following year.

As you know, more Canadians are looking at trade now than they did ever before. When you look at the U.S. presidential debate the other night, trade was right up front. It always makes us a little concerned, as Canadians, what the Americans are thinking, and where they're going because it has a big impact. Of course, they're a big player in this TPP, so we're watching that closely.

We're glad to be here in Newfoundland. We had a wonderful flight. We had the tailwinds coming with us from P.E.I. yesterday. A bunch of us went down George Street where I had cod tongues, and that was good. We weren't screeched in yet, so I don't know when that's going to happen. It's always great to be in Newfoundland and Labrador. I remind my colleagues that it's not Newfoundland, it's Newfoundland and Labrador.

We'll have three or four panels today. For the first panel, I'm thanking you people for coming today. We have Citizens against CETA, Canadian Manufacturers & Exporters, Newfoundland and Labrador Federation of Labour, and St. John's Board of Trade.

Folks, we ask that you keep your opening remarks under five minutes. That way we can have enough time for a dialogue with every MP who is here.

We'll begin with the St. John's Board of Trade.

Mr. Whelan, go ahead, sir.

[Des Whelan, Chair, St. John's Board of Trade]

Thank you, Mr. Chair, for the opportunity to speak to the committee today about the Trans-Pacific Partnership Agreement.

I'm speaking to you today, as you mentioned, as the chair of the St. John's Board of Trade. The St. John's Board of Trade is the voice of business in Newfoundland and Labrador and an advocate for sustained economic prosperity.

As a business owner and an active member in the board of trade for many years, I'm passionate about the components to make up a healthy economy. The opportunity to work with the Asia-Pacific region to make a meaningful impact on our economy is something the St. John's Board of Trade fully supports.

The main principle for trade is what economists call “comparative advantage”. That is the ability of an individual or a group to carry out a particular economic activity, such as making a specific product or service, more efficiently than another activity. In other words, find out what you're best at and export it. But it's a two-way street. If we have a specialty or an area of expertise and are able to trade that with another country for their specialty or area of expertise, then both nations benefit.

Across this province and country there are countless examples of where we have been more successful working together. There are many reasons that we support a TPP agreement, but in the time I have today, I will outline three.

The first is about economic opportunity. Trade is an area in which we in Newfoundland and Labrador have not been performing particularly well of late. In many parts of Canada, and in Newfoundland and Labrador, there are opportunities to enhance the number of companies that export. Part of the problem has been our failure to diversify trade towards high growth markets like the Pacific Rim. The Asia-Pacific region is an increasingly important market for Newfoundland and Labrador and Canadian businesses. In 2014 Newfoundland and Labrador businesses exported to nations such as Japan, Chile, and our biggest trading partner, the U.S., to a tune of over $7 billion. However, that is only three of the 11 other nations in this trade partnership. We could be trading with many more. The TPP offers a huge growth potential for our province and for our country. If Canada does not ratify this agreement, these other 11 nations will offer each other privileged arrangements that we will be locked out of. A TPP that eliminates trade barriers will open up new opportunities for businesses in Newfoundland and Labrador, Canada, and the Pacific.

Another reason that we support the TPP agreement is modernizing our international trade agreements. Innovations and technology have changed the world in which we now do business. Today over 10% of goods traded and 60% of services traded are happening online. Knowledge industries like financial services, management consulting, and information technology are among Canada's top five fastest-growing export sectors. That said, nothing in our current trade agreements prevents countries from blocking data flows or imposing local data storage obligations. A TPP would help extend free trade into the online realm and bring our international trade agreements into how we do business in today's technologically advanced world.

The third reason is similar to the position of the Canadian Chamber of Commerce. A TPP would be favourable for environmental reasons. The TPP requires participating countries to maintain and enforce strong environmental laws and regulations under threat of economic sanction. One environmental group went as far as to say that TPP has the strongest environmental provisions of any trade agreement in our history.

In conclusion, we recognize that there are those that could be negatively impacted by such an agreement, and there are tough choices to be made ahead. I echo the words of the Canadian Chamber of Commerce's CEO, Perrin Beatty, who said: “There are workers and companies who face challenges, and those concerns deserve respect, but if we stop doing trade negotiations except in cases where no one is affected, we stop negotiating at all.”

We think this province and country would fare much better for generations to come by taking advantage of opportunities available to us through the TPP. We at the St. John's Board of Trade support the TPP agreement and hope for a swift ratification.

Thank you very much for the invitation and for your time this morning.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Whelan, for a very concise and informative report in a timely manner.

We'll move over to the Newfoundland and Labrador Federation of Labour. We have Ms. Shortall and Mr. Murray.

Go ahead for five minutes.

[Mary Shortall, President, Newfoundland and Labrador Federation of Labour]

Thank you and good morning.

Good morning, Mr. Chair and members of the committee. Welcome to our beautiful province of Newfoundland and Labrador.

On behalf of the 65,000 working women and men and the affiliates that make up our federation, we'd like to thank the committee for the opportunity to express the important views of working people on the impact of a ratified TPP, not only on Newfoundland and Labrador but all across Canada.

We'd also like to acknowledge the recognition by this government of the need to have an open and transparent dialogue on the TPP, a trade agreement negotiated by the previous administration in secret, with only corporate interests at the table.

The history of international trade agreements negotiated by previous governments in Canada has rarely ever resulted in working people being better off, in our opinion. Areas such as health care, procurement, public services, labour laws, and wages have all been impacted by past trade agreements in a manner that has cost working Canadians and their families. These agreements have become less about trade and more about increasing the wealth and influence of corporations.

A substantial body of independent research points to the negligible positive outcomes that will flow from this agreement and the negative impacts that will be felt by workers, especially lower- and middle-income earners. These include a 2016 study from the C.D. Howe Institute, which predicts that the macroeconomic impact of the TPP on the Canadian economy would be a mere 0.068% growth in GDP by 2035. Perhaps even more interesting is that the study predicts only a 0.026% drop in GDP by 2035 if Canada does not ratify the TPP.

This mirrors the recent U.S. international trade commission study that showed that the TPP will increase the U.S. trade deficit and will have almost no positive impact on the U.S. economy. A Tufts University study also shows that Canada will actually suffer a net job loss across all sectors of 58,000 jobs if the TPP is put into effect, and that the problem of income inequality will be made worse.

The temporary entry commitments contained in the TPP cover a wider range of occupations in sectors than past trade deals. It also prohibits countries from applying any form of economic needs test or numerical quota, including labour market impact assessments. Therefore, employers hiring migrant workers under the 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. Allowing multinational corporations to bypass the current regulations around assessing foreign workers does not contribute to a healthy labour market, and will only increase unemployment, suppress wages...and working conditions.

Due to the smaller size of the Newfoundland and Labrador labour market relative to most other provincial jurisdictions, the ability to absorb such numbers is challenging and the impact magnified. The collective impact on the national labour market would be significant as well, and would result in downward pressure on wages, higher unemployment, as well as higher inequality.

In addition to the impact on labour markets is the absence of any binding requirements that will see improvement in and increased protection of the rights of workers. As per chapter 19 of the agreement, employers are only required to comply with the labour laws and regulations in their own countries, however bad they are. The attempt in this part of the agreement to establish and promote labour rights actually serves to diminish the strength of Canadian labour laws.

While requiring parties to have laws governing minimum wages, hours of work, occupational health and safety, and unionization rights, the TPP is void of any minimum standards that govern these areas. Without any acceptable minimum standards, the recognition of the importance of workers' rights carries little weight.

The enforcement obligations are equally light. There would have to be a sustained failure to enforce labour measures over time to the point that it negatively affected trade and investment before any form of remedial action could be initiated.

When you compare this level of protection for workers with the investor-state dispute settlement at the disposal of corporations, it clearly shows how much the TPP is weighted towards the interest of corporations and not workers. This area of TPP accelerates lowering the floor for workers and the global race to the bottom, especially in the areas important to working people.

A highly problematic aspect of the TPP agreement is the inclusion of generous foreign investment protections enforced by the investor-state dispute mechanism. Giving international investors the right to seek compensation when public interest regulation interferes with their commercial objectives clearly weakens democracy. It restricts our ability to create and apply legislation that protects our standard and quality of life, as well as laws that govern occupational health and safety, labour standards, and even areas such as climate change and the environment.

Newfoundland and Labrador has seen the impact of this measure first-hand.

[The Chair, Liberal, Mark Eyking]

Excuse me. Could you make your final comments and wrap up, please?

[Mary Shortall]

Absolutely.

The TPP represents an unprecedented erosion of the ability of all Canadians to ensure that they will be guaranteed access to a decent standard of living and that Canadian legislation protect the right to that standard of living. The entire structure of this deal is drafted so heavily in favour of multinational corporations and at the expense of working-class Canadians that it simply cannot be improved or fixed with minor changes.

The Minister of International Trade herself has confirmed that there are only two options—to ratify the TPP as it is or to reject it outright. On behalf of working Newfoundlanders and Labradorians, we implore the federal government to reject the TPP outright as a bad deal for working people here and across the country.

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you for your presentation.

Before I go to the next witness, I'd like to mention a couple of things. We do have translation, French-English, and there are headphones provided for that. As well, there's tea, coffee, and juice available. Another thing is that you can't take photographs or record videos when presentations are happening, but in between sessions, you are free to talk to us or take pictures or whatever.

We ll move on now to Canadian Manufacturers & Exporters, with David Haire.

Go ahead, sir.

[David Haire, Vice-President, Newfoundland and Labrador Division, Canadian Manufacturers & Exporters]

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.

[The Chair, Liberal, Mark Eyking]

Thank you, sir, for a good report in a timely manner.

Now we'll move over to Citizens against CETA.

Ms. Reid, go ahead. You have the floor.

[Marilyn Reid, Volunteer Spokesperson, Citizens against CETA]

Merci beaucoup. Thank you very much for giving me the opportunity to present.

Citizens against CETA is a rather grandiose-sounding name for a local group of concerned citizens. We submitted a brief last June filled with statistics refuting the supposed benefits of the TPP, but today I'd really like to talk to you about values.

In his meticulously researched book on wealth and income, Capital in the Twenty-First Century, French economist Thomas Piketty concluded that we were heading into a period of inequality such that the world had never seen. If we want to change that, he said, we have to bet everything on democracy.

I believe inequality continues to grow precisely because around the globe, democracy is under attack. The aggressors aren't terrorists or rogue nations. The aggressors are international corporations backed by financial elites. The weapon used is a contract.

The TPP and CETA are gigantic contracts that define not what corporations can and can't do in our country. Instead, these contracts define what government itself can and can't do. Any government action, present and future, that is not clearly defined or not written into the contract can be challenged by corporations in those infamous offshore tribunals, where the public good and environmental protection count for nothing. There, it's all about entitlement under the contract.

According to Osgoode Hall investment treaty expert Gus Van Harten, these contractual agreements have succeeded in doing what no parliament has been previously able to do under our English common law system, which is to fetter or straitjacket future parliaments. That is huge.

I believe government is asleep at the wheel when it comes to acknowledging the threat these trade agreements pose for our democratic rights. But then too, I'll acknowledge that so are the passengers in the back seat, and that's the public. The reason in both cases is that we live in an age in which economic values trump everything.

I'm a retired social studies teacher. Around the turn of the century, every single course that allowed a discussion of democracy and politics was deleted from the high school curriculum in this province and was replaced with economic education courses. There was a consequence. In the 2011 federal election, the last election for which we have a breakdown by age, only 29% of our young people aged between18 and 24 years bothered to vote.

I'm going to suggest that the same neglect of our democratic values has happened in government. Economic values now dominate, more precisely the economic values of neo-liberalism with its emphasis on free trade.

This committee now has all sorts of hard evidence—I've read the briefs—disputing the Liberal Party's claims about the benefits of free trade. Two important reports came out last week that I want to highlight. The first was a Tufts University study on CETA. This is a direct quote: “...CETA will cause unemployment, inequality, welfare losses and a reduction of intra-EU trade.” That certainly suggests that CETA is not the gold standard of trade agreements that Prime Minister Trudeau and Minister Freeland maintain it is. Will the Prime Minister and the trade minister now reverse direction and call for a halt to the provisional acceptance of CETA? Well, it all depends, I think, on what their true values are.

The new OECD report that has just come out is even more interesting, in spite of its blinkered call for more trade liberalization. Trade as a driver of GDP has fallen steadily since 2009. In fact, trade growth is now lagging growth in the broader world economy this year. That lag—this is really interesting—is likely to continue, particularly because emerging nations are pulling back from a dependency on exports and choosing instead to develop internal markets as a means of increasing GDP.

As for OECD countries, governments are increasingly being forced by their citizens to question the benefits of a free trade model that has heightened inequality, caused job losses, and straitjacketed government's ability to deal with either.

Consider the way the TPP unexpectedly became a campaign issue in the U.S. elections. Consider Brexit, or last week when 320,000 Germans in multiple cities demonstrated in the streets against the TPP and CETA.

You know, these will not be isolated incidents. According to the OECD report, election results and polls in OECD countries are pointing to a shift away from the traditional left-right divide amongst voters and toward anti-globalization and pro-globalization electorates. That's a very significant development for you to consider.

As members of the trade committee, you hold I think an enormous responsibility, and I know how hard you are working. I'm sure you've been watching closely how public opinion and the research against these trade agreements are developing everywhere. But you're also affected by the unwavering ideological enthusiasm that those who control policy in our two major parties still have for free trade.

[The Chair, Liberal, Mark Eyking]

Your time is up unless you have a few comments to wrap up. Go ahead.

[Marilyn Reid]

How do you choose between ideological faith in free trade on the one side and substantial evidence on the other side that our trade policy will hurt Canadian value-added industries, increase inequality, and fetter democratic governance?

Surely it's with values. What do you value most? Do you believe you have a responsibility as MPs to your children, grandchildren, and communities to preserve democracy and fight initiatives that promote inequality? Because I'm really hoping that, if you do, you will say a resounding and public “no” to trade agreements like the TPP.

Thank you very much.

[The Chair, Liberal, Mark Eyking]

Thank you.

That ends our presentations.

We'll get into dialogue with the MPs right now. I think we have enough time for every MP to have an interaction with you.

We'll start off with the Conservatives.

Mr. Ritz, go ahead, sir.

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

Thank you, Mr. Chair.

Thank you, ladies and gentlemen, for joining us this morning. They were great presentations. Some of it we've heard before, and some of it is a new twist on some of the old ideas. Thank you for the time and energy you put into this.

I want to start with St. John's Board of Trade, because you went first, Mr. Whelan, and also because Mr. Haire raised another point, as well, that I thought was similar to some of what you were talking about.

When you talked about comparative advantage and diversity of trade, Mr. Haire, you made the point that we don't, as a country, spend enough on R and D, innovation, and those types of things. I'm sure Mr. Whelan would echo that.

What is the partnership role of government and business in making sure those things are addressed? What percentage is our role and what percentage is your role?

[Des Whelan]

The St. John's Board of Trade is an accredited organization. We have a strong policy development group that does take some feedback from the Canadian chamber, and then it comes up through.

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

You regionalize it.

[Des Whelan]

Absolutely.

Our position on your question would be that government's job is to create opportunity by setting the table for things to happen, then business's job is to get it done.

In Newfoundland and Labrador, 59% of employment rests in the private sector, so we see this as an opportunity for government to do its job. It's setting the stage for business. Understand the perspective that my organization represents 72% small business.

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

What's your definition of small business, Des?

[Des Whelan]

Small business is under 50 employees.

My company has three employees. We just hired our first person outside of the ownership, and my company is two years old. The best example I can give is based on the way I look at this from my own personal perspective in that we're growing local services that we are providing in the community, but we have a larger plan to build a piece of technology and then go to the outside world. These sorts of agreements are going to allow us to do that, and that's why we're supportive.

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

David, do you have anything to add?

[David Haire]

In regard to innovation and new technologies, I know you work with us on Canada Makes, the federal government does, and provincially they're involved with innovation and technology committees. I think that somewhere along the line, it would be getting into some of the larger companies and doing assessments on exactly where they stand with innovation and technology, more in-depth understanding of where they are and where they could be, and helping work with the industry associations to close the gap in regard to the innovation and technology adoption.

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

How successful would your businesses be if they were constrained to simply doing business in Newfoundland?

[Des Whelan]

There's been a long-term discussion in this province about diversification. We had a premier in 1949, our first premier, whose philosophy was develop or perish.

At the St. John's Board of Trade, we have spent quite a significant bit of time talking about what exactly diversification means. I have an economics degree from Memorial. As I said in my brief, I continually go back to the idea that you do what you're good at, and that's what you export.

We believe our version of diversification is not about creating crazy products and services that we don't really know will sell or fit into our environment. We have an environment where transportation is tough, so creating goods you have to ship out is a tough thing to do for a small business. We focus on looking at what it is we do well and what we can provide to the international marketplace, whether it's a service or a good. Trade and export becomes our version of diversification.

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

Yes, I've had some interesting discussions. I had the opportunity to be on a 15-hour flight with Rick Hillier. As the chancellor of Memorial and a great representative for Newfoundland, he's very much involved in a lot of the new tech sector that's being developed here, which didn't exist even ten years ago. Those are the things that are exciting, and they demand a global marketplace in order to make use of that technology and those new discoveries. The trick is how to find markets. There are tremendous opportunities around the world for a lot of what Canada designs and develops. We've seen that for decades.

At the end of the day, how do you identify the marketplace in another country? Do you make use of government services to do that? Do you do it on your own? The World Wide Web has all the answers, if you know where to look—

[The Chair, Liberal, Mark Eyking]

Mr. Ritz, sorry, your time is up.