International Trade Committee on Oct. 20th, 2016

[Jim Everson]

It's really interesting, and it's related to the TPP in western Canada, where we have a large expansion in soybeans. We're getting close to a point in acreage where it could attract an investment of a processing facility in western Canada. Instead of exporting whole beans, we would be crushing those and turning them into oil and meal for the export market and keeping those jobs in Canada.

When you look at some of the markets in the TPP, and Japan is a really good example, we have tariff-free access already for seed into Japan, but we have very high prohibitive tariffs on oil and meal. That means we don't export oil to Japan. We export seed. The TPP will take those tariffs immediately down to zero in all TPP countries. What it does is it gives an opportunity for the industry to put jobs in Canada in processing value added before we ship the product to those export markets.

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

Have you done any calculations as to how much the industry could grow?

[Jim Everson]

I don't have a specific economic model for it, Mr. Van Kesteren. I always look at the trade agreements as the beginning of the decisions that companies would then make. To make a crushing plant is a very significant economic decision. They're not even going to start looking at that before they note that tariffs are predictably and forever at a zero rate, and then they can build business plans around that.

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

Okay. I don't have much time, so I'm going to go to Mr. McLinton.

As I said, we just develop that way. You brought out a very important point. We keep talking about jobs, and that's primarily why we want to do this, but we're forgetting one key factor. I brought it out in a speech just a couple of days ago, and it's consumers. Consumers are really going to benefit from this.

As in my neck of the woods, most of Canada borders the United States. How will this affect cross-border shopping?

[Jason McLinton]

It's an excellent question. Maybe I could touch on the notion of jobs first and then talk about cross-border shopping.

[The Vice-Chair, Conservative, Randy Hoback]

I'd have to ask you to do that in two seconds. We're out of time. Thanks.

Mr. Dhaliwal.

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

I have some questions for the panel members.

My first question is for Ms. Salmon.

Ms. Salmon, you talked about competitiveness, and my friend Dave on the other side talked about GMOs. Your organization recently remarked that Canada's aquaculture producers have no interest in GMO seafood. Will increased TPP market access mean that Canadian producers will have to compete against other countries' aquaculture exports that are genetically modified? How will that impact Canada's competitiveness?

[Ruth Salmon]

That's an interesting question.

We're at early days in terms of genetically modified salmon, and it's the first animal that's been approved, so we don't even know where that will lead. Right now the marketplace is not interested in the product, and that's one of the reasons my members aren't interested in the technology, because the buyers are not interested in purchasing the product. I think it's really early days to know how this will be over time and how much of a place in the marketplace it will have.

Our perspective is that there is such a demand for farmed seafood that Canada could be meeting now, and we could be doing more if we had the opportunity, that I don't see that as a real threat right now in terms of trade.

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

Thank you.

My next question is for Mr. McLinton.

You mentioned the regulatory requirements and the standards across signatory nations. Has the council done any study to indicate the total cost to Canadian retailers with such harmonization?

[Jason McLinton]

We have not done that kind of analysis because our industry is very unique. There are a lot of other industries that are interested in regulatory coherence and harmonization that have one or two major issues; whereas, by definition, our members sell hundreds of thousands of products, so the impact is very large. To do that kind of analysis would involve having to work across a number of industries.

What we have done is taken a few examples in order to focus on specific product areas. One example would be child car seats on which we're working towards harmonizing requirements in the U.S. Technically right now, if you were to purchase a car seat in the U.S., because of small technical differences, it wouldn't meet Canadian requirements. That sort of thing has an impact on trade, and for Canadian consumers it has an impact on consumer choice—the latest and greatest models and that sort of thing—and ultimately on price because of differences in design and having to do different tests.

No, we have not done that global analysis because for our industry it involves hundreds of thousands of products.

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

Thank you.

My next question is for Ms. Marsden.

If signing the TPP includes access to the international market, when it comes to agrifood producers in Canada, what happens to domestic food production? Currently we see the split is just over 50% for exports. Will increased interest in Canadian agrifood products mean that we will need to import more food products for our own population?

[Sandra Marsden]

The experience with the NAFTA, for example, shows that there is a growth in both exports and imports, but on balance the export growth exceeded the import growth.

I mentioned that the trade balance had been deteriorating, particularly under the NAFTA, and a lot of that was reflected in exchange rate problems, which are now looking better. Some of it was reflected in small food processing operations in Canada that left the country for various reasons.

We see agreements as fostering more investment in Canada to serve all of those markets because you can build your capacity utilization here, including in our sector, with a broader range of export markets.

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

Do I have a few more minutes?

[The Vice-Chair, Conservative, Randy Hoback]

You have 15 seconds.

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

Mr. Everson, you already have a lot more demand than production when it comes to soybeans for India and China. Would you be able to meet the demand if we were to ratify the TPP?

[Jim Everson]

Yes. We're confident that we will grow with the opportunity it presents. What a trade deal also does is it creates value. With having more markets, the value of the product goes up, so it brings more value to the Canadian marketplace.

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

Thank you.

Thank you, Mr. Chair.

[The Vice-Chair, Conservative, Randy Hoback]

Colleagues, we're having some technical difficulties. We'd like to reboot the system.

All right. We've reset. We'll continue, folks, and we'll go to the NDP.

Ms. Trudel, welcome to the committee. You have five minutes. The floor is yours.

[Karine Trudel, NDP, Jonquière, QC]

Thank you, Mr. Chair.

I would like to extend a big thank you to the witnesses for their presentations. It is greatly appreciated.

My question will be for the CUPW. I am also on the committee that is currently conducting consultations on Canada Post's services. Earlier, you touched on services and the impact that the TPP would have on them. Could you expand on the impact? You spoke about express delivery. The brief submitted by the union in April 2016 also mentioned that the agreement might have an impact on mail and parcel delivery.

If the TPP is signed, what impact will it have on the jobs and expansion of Canada Post's services?

[Peter Denley]

It's a great question. I'll lead off and likely let Louis finish up.

Simply put, we have an obligation to deliver universal postal services at affordable rates, first under international law, where we're required to do it, and also under Canadian law, under the Canada Post Corporation Act. The model we have used for many years is that we deliver parcels along with letter mail. We use an integrated delivery method.

Letter mail volumes have been in steady decline for many years, but the parcel business has exploded. For instance, Canada Post revenue from parcels in 2015 was $1.6 billion. Without that revenue, Canada Post likely would not have remained profitable, as it has for over two decades, with the exception of one year.

What's essential is that we continue to be able to do that. As you're pointing out, we're in the middle of a review of Canada Post services and how the Canadian public is going to be best served by Canada Post in the future. Again, we think that what we need is the ability to modify Canada Post in response to what the Canadian public needs.

Something like the TPP, with the provisions that the express courier delivery services from south of the border have placed in it, could put serious constraints on our ability to be flexible and agile and to modify what Canada Post does for you. It's of serious concern to us. The TPP, without the annexes, prevents us from having that kind of flexibility to perhaps integrate some of the recommendations that will come out of the review of Canada Post.

I'll let Louis comment as well. Thank you.

[Louis Century, Associate Lawyer, Goldblatt Partners LLP, Canadian Union of Postal Workers]

I would just add to that by explaining a little bit about the risk that we perceive.

Our view is that the TPP ought not to constrain the kinds of activities we're talking about, both our current integrated service model as well as potential expansion into other lines of business.

There are those who take a different view. The private courier industry has been engaged in a long-running campaign to eliminate competition from postal monopoly providers, any involvement in the private sector courier market at all. That was manifested in the long-running UPS versus Canada dispute under NAFTA. Canada won that claim, but they won it by a margin. There was dissent.

There's no doctrine of precedent in these trade regimes, and similar rules are now implemented in the TPP and expanded upon. The possibility of another UPS-type claim is real, in our view. UPS or other companies like that may well take the view that the TPP changes the rules. We think we ought to win such a claim, but there is that possibility. That possibility looms large when Canada Post is in the process of really re-envisioning its mandate and the ways in which it will be able to deliver on its mandate of providing universal service across a vast geography like Canada.

The current government is engaged in this review, looking at other opportunities and exploring options. Now we have the TPP, which adds to NAFTA, and not only in the rules affecting postal providers. It also opens up the possibility of complaints from a number of other countries as well as private industry in those countries.

Finally, the existence of this risk in our view is a real concern, because it can be used as an argument to freeze policy development. We're already seeing this to some extent in the debate surrounding future directions for Canada Post, those arguing that the TPP will—

[The Vice-Chair, Conservative, Randy Hoback]

You're well over your time.

[Louis Century]

Okay. Thank you.

[The Vice-Chair, Conservative, Randy Hoback]

We'll move on to the next questioner.

Mr. Peterson, I believe you have five minutes—or actually, I think you'll get two minutes now.

[Voices]

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