International Trade Committee on Sept. 28th, 2016

[David Haire]

I would look certainly at the education for small to medium-sized countries in regard to export readiness, getting ready to go into new markets, understanding upfront homework on where they're going, and what kinds of challenges they'll have in those countries.

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

Do you think that small and medium-sized businesses are familiar with the free trade agreements and that they are ready to take advantage of the markets available to them?

[David Haire]

I would say that a lot of them are unaware of the.... In Newfoundland, I'd say there are small companies that start out with the intent to export right from the get-go, and they probably know exactly what markets they're going to enter into. I'd say there are a lot of small to medium-size companies in Newfoundland that are only interested in export diversion. They don't exist to export.

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

Thank you.

I have a question for Mr. Whelan.

Earlier, you talked about modernizing the technology. Not many of the witnesses who appeared before our committee talked about e-commerce and the ways technology could help businesses.

From Newfoundland and Labrador's perspective, are there measures that would help businesses with technology that may have been forgotten in the agreement and could foster free trade?

[Des Whelan]

My understanding is that these new agreements will modernize the way that business happens. I'll give the example of the technology sector in Newfoundland and Labrador. I was involved in the sector 10 years ago. It was a $30-million sector. Right now it's over $100 million of business, and the majority of that has been achieved through international trade.

They're expecting the sector to double in the next 10 years. I would say that based on that and the work I do.... I'm a training company and I do business with small tech companies. We're hearing from them that in the analysis they've done of TPP, along with the work that the St. John's Board of Trade has done, it's going to create opportunities. That makes it a good thing, from our perspective, for our small companies.

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

Which kinds of businesses do you think would see an increase in sales because of technology? Will this help other existing businesses? What are you seeing?

[Des Whelan]

It will. As Mr. Haire said, I think the fishing industry is probably the one that's primed the most. Our organization is very broad. We're seeing opportunities for technology companies. We're seeing opportunity for new media companies.

It's going to depend on readiness, as Mr. Haire said. With our organization, we work on that. I guess I could answer one of your questions about how small companies get ready. They should join the St. John's Board of Trade. We would help them to get ready.

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

That's a good observation.

I have a question for Ms. Shortall and Mr. Murray.

You talked about chapter 19 and the minimum labour standards that should be in the agreement. What would you like us to add to that end?

[Kerry Murray, Director, Economic and Social Policy, Newfoundland and Labrador Federation of Labour]

When it comes to the protection of working people, I think this agreement and agreements that have come before, which have been the foundation of international trade, have been more weighted in the protection of the interests of the corporation and not of the working people. It compromises, as a country, our sovereign right to enforce our legislation and laws that protect workers and working people.

The investor protection pieces in these agreements are weighted to the corporation. If there's a violation of any form of labour standard, it has to happen over a sustained period of time, more than once. It has to negatively impact trade or the bottom line of the corporation before any remedial action can happen. If a corporation is thought to have its ability to earn a profit infringed on, they can use the investment protection mechanism for one instance for remediation. We've seen first-hand here how skewed that framework is.

When we spoke about R and D, we had ExxonMobil that was.... We have an agreement here called the Atlantic Accord, which governs local benefits. Companies that extract resources here have to invest in R and D in the local economy. That's economic development, training for workers, innovation. Under the investor-state protection mechanism, Exxon made a complaint. The decision was in their favour, and they were awarded $17.5 million. We all know that ExxonMobil is one of the biggest oil companies in the world, and a lot bigger than the Newfoundland and Labrador economy. That just—

[The Chair, Liberal, Mark Eyking]

Thank you, sir. The time is up.

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

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

Good morning, and thank you all very much. Thank you for your presentations. They were quite interesting and very thought-provoking.

I'm going to try to get my questions out quickly, but I will give you a bit of my background. I have an international trade designation that I earned in the late nineties. That probably puts me in a different viewpoint in terms of trade, but in terms of trade education, I taught trade education for almost 20 years. There has never been a time when I have not oriented students and businesses toward focusing on corporate social responsibility. I think that's critical.

On that, my first question is for you, Mr. Whelan. You said that in terms of getting prepared for trade and looking at opportunities, certainly joining a board of trade or working with the Canadian Manufacturers & Exporters is really critical. What I've talked about with my colleagues and with other witnesses is that so often businesses don't know what they don't know, so they're not exporting in their second or third years.

At the St. John's Board of Trade, do you work with your businesses to focus on some element of corporate social responsibility, whether domestic or international?

[Des Whelan]

We do. One of the things the chamber of commerce movement tries to achieve is full education. I'll just give you an example. We had a meeting with members and other organizations yesterday, and we started the whole day with a conversation about corporate social responsibility. This is a small town we live in. We have to live both socially and economically. We believe very, very strongly in social responsibility.

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

Thank you.

For about seven years I worked back and forth with Cuba, not only on trade education but also on social development, and teaching with the University of Cienfuegos. Certainly I've seen first-hand, where countries are not heavily involved with trade, particularly with the restrictions with the United States, the devastating effects it can have.

We are a country of 33 million people. If we only traded interprovincially from coast to coast to coast, where would that leave us, currently and looking to the future, in terms of trying to provincially cover costs of education and health care? Can we sustain ourselves from within with very limited trade and export—and also import?

This is for anyone, because we also have to look at the importing side.

[Des Whelan]

I look at it from the Newfoundland and Labrador perspective. We have some of the worst demographics in this country. We're challenged every day with how to grow an economy at a time when we have an aging population, a population that's declining, and only half a million people. There have been some studies that show that a city is only self-sustaining when it's at a half a million, so we're really a big city that's spread across a very large geography.

Trade becomes the most important component of what we do. International trade is critical to us. As I said, at our organization, we focused in on our version of diversification for Newfoundland and Labrador. We have to bring new money into the economy; we have to bring new people into the economy; and the only way to do that is to look externally. We will perish if we do not get outside our borders and bring new business to our companies and to our community.

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

Looking at Newfoundland and Labrador, for example, and your small business numbers, 98% of your businesses are small. That's less than 100. In terms of micro-businesses such as yours, Mr. Whelan, which is from one to four, that's about 54% of Canadian businesses. When we look at who's presented before this committee, we've often heard the comment that it's only large corporations that will benefit. Please keep in mind that associations will represent so many small businesses, businesses of less than four, less than ten.

We have a manufacturing business of less than 20. My husband and his business partner would not have time to come out and present to a committee, although they would go to a board of trade or a chamber of commerce to represent them. Small businesses are being represented. Keep in mind that 98% of businesses in Canada are small—they're not large—and there are benefits; there are pros and cons.

[Des Whelan]

Our membership is 72% small business. As I said, we count that as 50 and under. I represent a company of three. I'm here making a presentation and my business partners are back in the office trying to get the job done.

This is critical. As I said, I value the points of the co-panellists we have here. The work they do is important, but the group that I represent sees this as a way forward, and we intend to use it as it gets ratified.

[The Chair, Liberal, Mark Eyking]

Thank you, sir. Your time is up.

We're going to move on to the last MP on this panel, Mr. Van Kesteren, for five minutes.

Go ahead, sir.

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

Thank you, Chair.

Thank you all for coming and thank you for this invitation. This is a wonderful place to be. Every time I come here I feel so welcome.

I appreciated the questions by Ms. Ludwig. I was going to go along the same directions, but I'm going to take a bit of a twist.

When I was first elected, the United States represented 28% of the total world GDP. Think about that: 5% of the population and 28% of the GDP. Now, they have slipped significantly. I think the last figures are somewhere around 20% or 21%, or something like that. Nevertheless, we live next door to the largest market in the entire world. We are the luckiest people on planet earth. Quite frankly, I'd rather be here. Once I listened to some South Koreans complaining about the United States; I said I'd rather live here than next door to Red China.

At any rate, the Americans, interestingly enough...because we've heard quite a discord, actually, about whether or not we should go forward or even scrap these things. The Americans are in a heated debate, at this present time, on scrapping free trade, scrapping NAFTA. TPP is not even being discussed, or at least the Democratic Party doesn't have the nerve to discuss it because there's such an appetite to scrap this.

I'm going to use a different line. I'm going to ask every one of you: what do you think the effect to the Canadian economy will be if the Americans take the approach that we need to scrap or stop having free trade agreements?

I'll start with you, Ms. Reid, and then we'll go to Mr. Haire and across.

[Marilyn Reid]

I think if the Americans scrap NAFTA, we're going to, in some ways, have problems particularly with the auto sector if they go into the TPP or elsewhere. Frankly, I'm for trade. I think if we can have trade without these trade agreements that impose all these restrictions on us, we're going to do just fine. We really are. We're going to have to start working on our small businesses. I think everybody here feels that way. We have to give opportunities to small businesses.

So if NAFTA goes, it's going to be quite a challenge for us to get into the American market, but there are global markets. Let's not forget that at the moment we are primarily an exporter of primary resources—

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

I only have five minutes, and I want to invite others to answer. But thank you: you think we'll do fine. Okay.

Mr. Haire.

[David Haire]

I can't see it being scrapped, just because of the natural resources we have.

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

It's a hypothetical question. What would happen to the Canadian economy if they scrapped NAFTA and walked away from free trade agreements? It's really simple, actually. It's either going to be good or bad. What do you think?

[David Haire]

I'd say it would be bad.

[Mary Shortall]

I have to go where Ms. Reid went on the argument. Obviously, there is an issue if trade agreements stopped altogether. Our issue and our objections to the trade agreements aren't that they're trade agreements; it's the other conditions that are put in. I guess we'd be left to have to try to negotiate a trade agreement with—

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

Good or bad: what do you think would happen to the auto industry?