International Trade Committee on Oct. 6th, 2016

[Kirsten Hillman]

Right. It's really important to understand that a temporary entry commitment in a free trade agreement is something different from domestic policy on temporary foreign workers. Those are two very different things. What we're doing in a free trade agreement with respect to temporary entry is helping to complement and to operationalize and to facilitate. When a Canadian company makes an investment in a TPP country or goes to offer a service in a TPP country, it wants to bring its professionals or its managers for a limited period of time to get the thing up and running, and vice versa, into Canada.

The temporary foreign worker program is a domestic program that deals with all different categories of workers in a very different context. The TPP covers that restricted group of professionals and technicians, spouses, etc., and for a limited period of time. It simply facilitates their entry by removing some of the requirements at the border. It's not an opening of the floodgates, as the statistics that I mentioned would clearly show.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Thank you. That answers my question.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Dhaliwal. I gave you quite a bit of extra time, but it was a good discussion and I think it's what all our MPs wanted to hear from you, Ms. Hillman.

We're going to move on to the NDP now. Ms. Ramsey, you have the floor.

[Tracey Ramsey, NDP, Essex, ON]

Thank you so much.

I think we could have you here every week. We have so many questions. We're often putting to the side the questions we have for you when we come, so thank you for coming again, and I'm sure it won't be until 2040 that we see you again.

My first question is really around something that Mr. Ritz touched on. There's a promised compensation package under the previous government of $4.3 billion to dairy. We were in New Brunswick last week and we heard that the Atlantic provinces will lose a half of their dairy farms under the TPP. This is their prediction. Did you do any modelling or did you look at modelling that would look at the impact of that compensation package being given?

If we give the $4.3 billion in the first 15 years of CETA and TPP, and then the gain by 2040 is $4.3 billion, I'm not the finance critic but I certainly can see that we're not going to see the benefit past that 15 years because of that compensation.

Mr. Downs, did you do any modelling that looks at the impact of that compensation being included?

[Kirsten Hillman]

First, just to be crystal clear, the government hasn't taken a position on that. Isn't that right?

[Tracey Ramsey, NDP, Essex, ON]

Yes, I know that. It's not about the positioning. It's just about whether you looked at it being included and then not being included.

[André Downs]

No, we didn't model it.

[Tracey Ramsey, NDP, Essex, ON]

Okay, thank you.

My second question is again about the economic impact study. Other studies that we've seen have predicted significant job losses. It's been something we've heard repeated over and over, and it's the tough study that predicts 60,000 job losses in Canada. We see that's not included in the study that was released. The job loss is concerning to us all. It's something we hear across the country, certainly as far as we've been now from one end to the other. People are concerned about that.

Would the assumption of employment be unaffected by the TPP, or did you do any modelling including employment predictions?

[André Downs]

We don't explicitly model the labour market when we do a trade policy assessment. Essentially, the focus of our analysis is on the reallocation of resources within the economy. We start with a specific level of employment, which is the current level of employment, and there is some movement in the labour market, but relatively small within the model. That's not the focus of our analysis. Essentially as long as one has aggregate GDP gains, one can assume that this will lead to increased employment. Indeed, in the past we've talked about jobs-equivalent: a GDP gain of x will generate, on average, y, that specific level—

[Tracey Ramsey, NDP, Essex, ON]

The jobs attached.... Okay, fair enough.

[André Downs]

—of jobs. Usually since trade policy leads to reallocation of resources, the impact on aggregate employment is relatively small.

[Tracey Ramsey, NDP, Essex, ON]

Okay, thank you for that.

How has Canada been talking to our U.S. counterparts about renegotiation, or about what that scenario would look like? We're watching what's happening in the U.S. It's something that comes up daily in our committee studies. Is there any scenario that you've looked at or discussed with your U.S. counterparts?

[Kirsten Hillman]

The answer is that renegotiation is something that the U.S. administration has said publicly and consistently is not on the table.

[Tracey Ramsey, NDP, Essex, ON]

Okay.

[Kirsten Hillman]

They have their own domestic process that they're going through. A lot of the debates they are having have to do with how the agreement will be implemented. The administration is talking about how the agreement will be implemented to address some of the points that have been raised within their domestic environment.

[Tracey Ramsey, NDP, Essex, ON]

That was my next question. Are you preparing for implementing legislation? I get that the government doesn't have a position yet, but we have to prepare for what would come, so have you met with U.S. counterparts regarding the implementation of legislation?

[Kirsten Hillman]

No, we haven't.

[Tracey Ramsey, NDP, Essex, ON]

Okay.

Do I still have time?

[The Chair, Liberal, Mark Eyking]

You have half a minute.

[Tracey Ramsey, NDP, Essex, ON]

I'm not going to be able to get a question out in half a minute, but I would just say that the intellectual property is where I'd like to go next.

We've heard grave concerns in this country around the impacts of increased costs for drugs. It's been estimated that under the TPP it could be $636 million per year. It's not included in the economic impact study, but I wonder if you could speak to us about these significant costs to our economy and basically what the projections are around that.

[The Chair, Liberal, Mark Eyking]

Ms. Ramsey, you're out of time, but I think you're going to have another shot at this, so maybe you want to park that question for the next time.

We're going to move over to Mr. Peterson.

Go ahead, sir.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you, Mr. Chair.

Thank you, everyone, for being here today, and thanks for that presentation. It was very informative and I think it reflects some of the conclusions or some of the information that we're hearing, too, when the committee does its work. It's nice to see it all in one document. I think that's going to prove very helpful as we go along in this process.

I have a question for you, Mr. Downs. I'll start with you just briefly with regard to the economic assessment, maybe in comparison to the other economic assessments, or so-called economic assessments, that are out there. When I was studying economics at Rotman, Doug Hyatt was my economics professor, and he always said that the outcome is often based on the assumptions.

When you compare these economic assessments—I presume they're peer-reviewed to begin with—are people using different assumptions that will lead to different outcomes and different conclusions?

[André Downs]

We're using slightly different models, with slightly different assumptions, leading to slightly different results.

When it comes to the assumptions, we try to be as balanced as we can when we do our own simulation. We don't have an agenda when we do our simulation. We're essentially trying to reflect to the best of our capacity the potential impacts of trade policy changes on the domestic economy.

As you can imagine, essentially simulating a reduction or an elimination of a tariff rate is pretty straightforward, but it's very difficult to make assumptions when it comes to looking at trade costs for services or for investments and what the impact will be of liberalizing investment regimes on foreign investment flows, for example. These are difficult assumptions to make.

We've been looking at these things for a long time. We do simulations. We do assess most trade policy initiatives taken within the department, so we're quite comfortable with that. We have a range, and we work with worldwide experts on assessing the impact of changes to trade policy on trade costs and trade flows. We're quite comfortable with the assumptions we've made.

There are some aspects that we don't model because they would lead to essentially very marginal impacts, non-significant impacts. We try to capture, through our assumptions, the key drivers of the changes in the domestic economy.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you for that.

I have a question on the investor-state dispute mechanism. As you no doubt are aware, we've heard a lot of concerns about that provision of the agreement. The fear is that there will be a regulatory chill, that corporations will be able to dictate government policy because of the ISDS. I have trouble believing that was the intent of our negotiators when that provision was put in there.

Is there any merit to those positions? If so, how is it mitigated? Or how do you think it will play out in reality, in practical terms?

[Kirsten Hillman]

Whether or not there would be a regulatory chill in Canada in relation to the existence of ISDS and TPP or NAFTA or CETA or any of our other agreements I think is really a question for the governments that are regulating. I personally doubt very much that governments will not regulate in the public interest in ways that they think are very important to Canadians because of ISDS. I don't think that is likely, but you are probably better to answer this question than I am.

I would say there has been evolution in the provisions that we have placed in investment chapters over the years since NAFTA. I think CETA, as people know, is really the high-water mark in ensuring that it's crystal clear that governments are retaining their ability to regulate in the public interest. It puts in mechanisms for the dispute settlement system that further safeguard that.

The TPP also has more assurances in that regard than previous agreements have had. It doesn't go quite as far as CETA does, but in the TPP there are reinforcements with respect to the right to regulate in the public interest. There are additional procedural rules. There is a code-of-conduct provision, so enhancements have been made there as well. I think it's important in every respect, not just for this chapter but in all areas of international rule-making, that we build on our experiences from the past. The TPP, I think, has done that.