International Trade Committee on Sept. 29th, 2016

[Chris van den Heuvel]

Thank you very much. That's a great question.

As we've said, on the turkey side and on the poultry side, the impact is literally wiping out the entire industry. As far as turkey is concerned, the amount of access that's been granted is equal to the entire production of Nova Scotia and New Brunswick.

On the dairy side of things, farm gate sales in 2015 were $120 million in the dairy industry. If we have to give up, between CETA and the TPP, the approximate 6% to 7% that's out there, that represents a little north of $7 million in our province alone.

Equate that to a per-job basis. What's an average wage for a farm worker? It's $30,000 to $35,000. That means 200 jobs wiped out in Nova Scotia year over year. It's a significant impact.

[Tracey Ramsey, NDP, Essex, ON]

Also, then, the loss of family farms is very significant. I come from a rural riding. I know the impact of that loss on communities and on the spin-off jobs that exist because of farms and communities. Simply, towns exist because of the farming.

Thank you for that.

Mr. Arthur, are you familiar with the intellectual property chapter in the trans-Pacific partnership agreement?

[Ian Arthur]

I would have to say no. Technically, no, I'm not.

[Tracey Ramsey, NDP, Essex, ON]

This is one of the chapters that's of great concern.

I won't go into the anti-union rhetoric like my colleague, but the concern in this chapter is the extension of patent provisions for drugs. What that means for Canadians is that they will pay more, the cost to the provinces will be higher, and people will be less able to afford medication. I assume that this would impact not just your employees, but you as well.

This is one of the major themes that we hear in push-back around this deal: the cost to Canada. We're already second-highest in the world in drug costs, and any increase to that would seriously cripple our communities and our ability to maintain health in Canada. This is one of the main themes that people oppose.

I have another question. Are you familiar with chapter 9, the investor state dispute settlement chapter?

[Ian Arthur]

I'm not the technical person on the TPP.

[Tracey Ramsey, NDP, Essex, ON]

Actually, I'm just asking. It demonstrates the point that this deal is massive. It's 30 chapters, with six that have to do with trade in the way that you two gentlemen are speaking of, and that most Canadians can support.

It's the other 24 chapters that are are of great concern to public health, public safety, and jobs in our country. The chapter on investor state dispute settlement has been used against Canada repeatedly, to the tune of $190 million. Currently, we have cases of $500 million and more that are facing us, mostly around environmental issues.

Essentially, it challenges the government's ability to regulate. When we try to put in legislation, as they did in Quebec to stop fracking, they're sued by companies in the U.S. for doing that.

These are the concerns we're facing, so I encourage you to read the full agreement, and I know it's quite a bit to undertake. I am pro-trade. I would like to see access to the markets that would benefit from that 3%. What I'm concerned about is the rest of the country.

[The Chair, Liberal, Mark Eyking]

Your time is up, Ms. Ramsey.

Madame Lapointe is next.

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

Thank you, Mr. Chair.

Good morning, and welcome to all the witnesses. I am pleased to have you with us today.

You represent people from a variety of industries and that is very interesting.

Mr. Stanfield, I will start with you, but I have questions for the other witnesses.

You talked about duty-free trade. Where do you mainly sell your products? You also said that Canada should continue to support opening new markets. The fact that your company is vertically integrated is a fantastic thing. It lets you respond quickly when you have products manufactured outside Canada. That becomes a real competitive advantage. How can that be taken even further, to continue to keep jobs here in Canada?

In addition, we were told earlier about how innovation and automation could be applied. How can the Canadian government help you do better in those areas?

[Jon David F. Stanfield]

We principally sell our products in Canada, but basically in North America. How can we utilize our quick-to-market strategy to expand our business? Well, we own two U.S. companies as well. We have about 225 employees in the U.S and two factories, one on the east coast and one on the west coast.

The U.S. market looks to Canadian producers like a quick access point. The value of the Canadian dollar is obviously helping us. We have strong relationships in the U.S. We are also orienting ourselves to the U.S. market because it's simply a massive market. We also believe we have a compelling story to sell to them. I think expansion into the U.S. market will benefit us in the future beyond where we are today. About half of our business is done in U.S. dollars now.

As part of the TPP, and also because the United States is part of that, we can use cross-docking with third party logistics people to help land products in there faster with our brand, or whatever brands. The vertical integration will help us in creating better relationships and quicker-to-market terms with the U.S.

Our markets for our products remain principally in North America. I don't think we're going to be able to back-sell products into the TPP, but we would be able to use the leverage of the manufacturing folks back into our company.

The CETA agreement will provide us much more benefit for our products going to that market due to the currency exchange in the same way as in the U.S. They will orient to a lower-cost country, and in this case it is Canada, because of our currency. We can also provide a great skill set. We have great technologies and innovation in our factory to help us expand.

In answer to the last question, yes, I believe that at some point in our future robotics could be part of what we do in technology to replace the human touch in high-volume areas. For instance, there are six processes in making a brief. Those could be done through robotics, so that's an investment. That would be how the Canadian government could help companies like ours, and rural Nova Scotia, to adapt to the market, lower our costs, and make us more competitive.

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

Thank you.

My next question is for Mr. Arthur.

You told us earlier that you ship a lot of live products, but not just that type of product. Given the quotas, how well are you able to meet Asian demand for live products? One thing you mentioned earlier was shortages when it comes to refrigeration.

Do you think you will be able to continue to meet the demand?

[Ian Arthur]

Thank you. It's a good question.

We do believe we can satisfy the Asian demand simply because a lot of product is shipped south of the border and then redistributed. We currently ship $150 million in live lobster. We believe that the potential for growth is an additional $400 million to $500 million per year.

Refrigeration is really an easy problem to solve in that all we really need to do is build another facility. We have developers who are interested in doing that, so we will be looking to expand as we continue to see more freighters come in.

I must say that while these freighters are of vital importance, Air Canada, WestJet, and Cargojet are our largest shipping partners. Cargojet has dedicated freighters, but Air Canada and WestJet ship in the belly of passenger planes, so we do a lot of belly shipments as well.

[The Chair, Liberal, Mark Eyking]

Thank you, Madam Lapointe.

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

Thank you.

I am sorry, but my allotted time is up.

[The Chair, Liberal, Mark Eyking]

Now we're going to move on to Madam Ludwig.

I know it's difficult sometimes. Our main objective as a committee is to listen and extract as much information as we can from the witnesses and to try to stay away from a debate with them. There's nothing wrong with making suggestions to our witnesses about information that's out there, but I encourage you not to have that debate going on. It makes it very awkward for the witnesses.

Madam Ludwig, go ahead, please.

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

Thank you.

Good morning, gentlemen. You gave excellent presentations. They were very different, but as my colleague mentioned, there were some similar themes.

My first questions are to Mr. Stanfield. You mentioned that you have offshore manufacturing in Bangladesh. Do you sell direct from Bangladesh or is the product coming back to Canada and then being redistributed in Canada and the U.S. primarily?

[Jon David F. Stanfield]

The products would be distributed only in Canada because they're duty-free, so if we were to look at the U.S. market and a cross-dock, we would look at a more preferred nation there, but Canada is probably one of the most preferred nations of manufacturing apparel products into the U.S., from our perspective and our cost base.

When we partnered with Vietnam, for instance, over there, they have about 18% duties, so if that were to come off, it would make us much more competitive in the market. With our sources, we were first on the ground over there, so that would be helpful. All of those monies saved can obviously be reinvested in the business, whether for technology, innovation, expansion, or acquisition south of the border. We're quite proud that we have our head office here in Truro, Nova Scotia, and we run two U.S. operations as well.

We would use those dollars to reinvest.

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

Thank you. I'd like to continue with you on this line of questioning.

I heard what you said about labour and access to labour and the challenges you face there. As my colleague Mr. Ritz mentioned, we have had significant challenges regarding the temporary foreign worker program. Are you familiar with the Atlantic growth strategy?

[Jon David F. Stanfield]

I'm not really.

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

I would encourage you to reach out to your local MP in Truro. I believe it's Bill Casey.

[Jon David F. Stanfield]

Yes.

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

I could reach out for you.

In the Atlantic region we are encouraging businesses to look at their needs and the skills they require, and also to look at the markets in terms of immigration. In this region, we have a pilot to increase employer-led immigration by 2,000 to help fill some of the gaps that you mentioned, particularly in rural Atlantic Canada. I just wanted to mention that.

Of the TPP countries, which one is your greatest threat in terms of a country importing to the U.S., which I believe is the primary market for your products?

[Jon David F. Stanfield]

I don't feel threatened by the deal, because we've been in Nova Scotia for 160 years. We've been through free trade agreements that allow countries access by Canada. I think that the world has been levelled to a certain degree, and we have to be competitive in nature to solve a unique problem with each individual customer, whether that's making it in Canada for a Canadian customer, or making it in Canada for a U.S. customer, or making it overseas for a Canadian customer, or cross-docking—landing it in the U.S. for a U.S.-based customer.

We have all kinds of avenues we can pursue, so I wouldn't say that any of these countries is a threat to our business or really a threat to our industry. Our industry was rebalanced in 1993, and it was pretty much decimated across the country then.

In sum, the more access we have to labour and the more access we have to markets as well, the more beneficial it will be.

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

Thank you.

We've heard from the agricultural sector and the seafood sector, and certainly the garment sector is new. We've not really heard from anyone to the extent that you've presented, so that's very informative in terms of the access to new markets, the need for diversification, the need for innovation, and certainly the support of government programs.

My next questions are to the presenters for the Nova Scotia Federation of Agriculture. You had mentioned the need for support programs to add changes to market access and not to penalize farmers for looking to diversification on the export side, and how adaptable farmers are is definitely is a theme that we've heard across the country. Are there product lines that potentially the dairy farmers could also be producing alongside, but to a greater extent? We saw quite a bit of that, actually, in P.E.I.

[Chris van den Heuvel]

Product lines for export, you mean?

The problem with export as far as dairy is concerned is that we're forced to export at the prices that we have set domestically, so that actually creates a disadvantage for us when we export product.

There certainly are value-added lines that we could be getting into—the ice creams and yogurts and those types of things—rather than just fluid milk. I don't want to say the word “negative” because it's not negative, but one of the things I mentioned about the supply-managed systems is the fact that we have to sell worldwide at our domestic price, so that makes it difficult.

[The Chair, Liberal, Mark Eyking]

Thank you.

That wraps up your time.

We're going to go to our last MP on this panel, Mr. Van Kesteren.

Go ahead, sir.