International Trade Committee on Feb. 23rd, 2016

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

I know Honda has mused about building a CRV plant here in Canada that could access the European Union. That's the type of thing that we're looking for.

[Perrin Beatty]

Yes. Let's just come back for one second to automotive, in particular, and manufacturing. We've had an issue in Canada long before any discussion of TPP where we have not been able to attract those new manufacturing plants. We need to have a manufacturing strategy for Canada.

Core to that has be an automotive manufacturing strategy. Our starting point has to be that we will not only ensure that the sector does not die, but we'll ensure that it prospers and that we do that in the case of TPP, within TPP. Walking away would not solve our problems. It would exacerbate our problems.

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

Yes, the last two Magna plants were built outside of Canada. That's the point you're making.

A couple of things have come under fire, and I take Mr. Wilson's point about the U.S. and our working jointly with them. I get that. One of the largest manufacturing sectors, of course, is agriculture and food production. From my perspective, we have too many eggs in the American basket.

We saw, when we were arguing with them over country of origin labelling, what got their attention more than anything was us renewing and invigorating markets into China and Japan, and pulling product out of the U.S. That got their attention.

I don't necessarily buy the fact that we're tied to them, joined to them at the hip, and can't move unilaterally. One of our strengths is Japan looking at us, the Mexicans looking at us, and the Australians looking at us to help buffer them against some of that U.S. forcefulness that they bring to these trade agreements.

There's a role for us to play in helping the Americans drive to the finish line on this sooner rather than later, so I think we need to play a leadership role in getting it ratified.

[Mathew Wilson]

Could I just comment in terms of the integrated supply chain?

Yes, looking for new markets is important but there's a limit to how much you can diversify outside of a North American environment. If you're supplying auto parts to an assembler in Detroit, you're not going to be able to send them to South Korea, for example, or Japan. They have their own supply chains, which are local.

Agricultural equipment is the same thing. Mr. Hoback and I talked about a lot of suppliers in the Saskatchewan area that are suppliers to Case New Holland, for example. They tend to be regionalized supply chains, which are not all suddenly going to diversity outwards. On the other hand, there are companies that are able to do that. Magna, Linamar, Martinrea, those global companies have expanded their footprint.

My point is that you're not going to get someone with an existing production capacity in southern Ontario to start diversifying their markets automatically when they're already at, say, 95% or 100% capacity, which is typical of manufacturing plants today. What you need to do is help them grow overseas and invest more in Canada so that they can export more and seize those new opportunities. But right now, given the way we're set up, that's not going to happen. It's just a reality.

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

The point was made that there's not a tremendous amount of change in the IP sector from what we already have in Canada. How do you see that with ISDS when it comes to TPP?

Please give us just a quick answer because I know my colleague has a question for you.

[Warren Everson]

I think trade remedy solutions are going to be part of every trade agreement. We're seeing a big fight in Europe and it's an odd one because Canada was not the demandeur on that one. I'm not quite sure how to handle your question.

As long as a national government intends to deal with all players fairly regardless of their national origin, there's no particular concern. As you know very well, the problem comes when someone says they'll treat a Korean investor in Canada differently from a Canadian investor with the same application, regulation, or law, just because they're foreign. That gives them cause of action. It has not been the tradition in Canada to do that, so I don't quite see the foofaraw about this.

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

It's to protect our investments abroad.

[Warren Everson]

On the offensive side, of course I believe Canadians will benefit from having recourse to the law, especially in the TPP nations that have not been all that respectful of property rights.

[The Chair, Liberal, Mark Eyking]

Thank you.

We have five minutes for Liberals and I want to try to get in a couple of minutes for Ms. Ramsey, if there's any time.

That's just the way the rounds go.

[Tracey Ramsey, NDP, Essex, ON]

I thought we we're doing five, five, five. Isn't that what you said before?

[The Chair, Liberal, Mark Eyking]

Yes, five, five, five. That's just the way it goes here, Liberals, Conservatives, Liberals, five.

[Randy Hoback, Conservative, Prince Albert, SK]

It should come back to the Conservatives before it goes to the NDP.

[The Chair, Liberal, Mark Eyking]

There might not be any time because it's twenty minutes to the hour. I'm just trying to...

If there's anybody that needs to—

[Randy Hoback, Conservative, Prince Albert, SK]

It's not fair to us.

[The Chair, Liberal, Mark Eyking]

Okay, there are only five minutes left.

We'll go to the Liberals for the last five minutes.

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

Good morning, thank you.

Thank you for your excellent presentations. As an educator, my heart was warmed to listen to the comments of your committee. One of the comments I believe you made, Mr. Beatty, was on the preparation and planning of Canadian businesses with the signing of the TPP. Would you recommend that universities, colleges, and even some advanced high schools now start preparing more readily for trade, rather than waiting for the signing?

[Perrin Beatty]

In a word, yes.

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

Great, thank you. I have a couple more questions.

Looking at Canada's trade export reports, I know from teaching trade that we probably had the most accessed reports internationally, far beyond Canadians' use of the reports. Other countries and businesses recognized that we probably have some of the best data collection in the world and they're accessing it. How do we best prepare our Canadian companies, and how do we better integrate universities and colleges into the stream? So many colleges and universities still separate business and international business, but as you know from working with businesses, we can't really do one without the other.

My other question concerns the low Canadian dollar. There are so many Canadian businesses now that are saying they should get involved in exports because of the low Canadian dollar. But as soon as the Canadian dollar starts to rise the export market is not sustainable because they only relied on the low Canadian dollar. What recommendations would you have, any of you, for businesses in any one of these areas?

[Mathew Wilson]

Can I start with that last one? That's actually a massive concern we have right now. If you look at what happened a decade ago when the dollar rose, we lost thousands of manufacturers and other businesses in Canada, but specifically export-focused manufacturers. In southern Ontario, especially in the auto sector, which frankly had priced contracts into a 70¢ dollar and had no chance of competing when the dollar rose, when the dollar rose by 30% in a few months, you saw the impact in thousands of job losses.

One of the things we're certainly preaching to our members and we're talking to parliamentarians about is that there needs to be a focus on supporting investment in manufacturing now while the dollar's low so they'll be competitive when the dollar rises. It's not going to stay at 70¢ forever, and if they don't do that, the same cycle that happened 10 years ago is going to happen again.

On the education side of things, very quickly, I think you're right. Something that really frustrates us is the lack of business skills that are taught to youth. I'm not talking about in universities; I'm talking about down in the primary grades. I have kids in grade 5 and grade 3 and they know nothing about business and what goes on in the real world. I think we need to start earlier teaching them to be entrepreneurs, teaching them about global business and about how things work, and make that a core part of our curriculum right across the country. Then when they get to university, they can start understanding it in more detail, and then they'll be more useful to the business community when they graduate and they won't have to learn on the job all the time.

[Perrin Beatty]

I might just add a word to that, if I may. I'm also a university chancellor, and one of the things we need is a much better dialogue between the business sector and our educational sector in terms of looking at what the demands are going to be in the future, what sorts of needs there are, how we can better prepare people for entry into the workforce, how we ensure that the skills we're producing are skills that we can use productively. That dialogue is something that can't be mandated by government, but it's something that those of us in the academic sector and the business sector have to show leadership on.

You're absolutely correct that increasingly international business needs to be an essential part of people's education. The world is globalizing and this is ultimately the fundamental decision that you're called upon to make. To look at TPP, it comes down to world view. Is it possible to build a wall around Canada and for us to go back to the good old days where we were free from competition?

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

It is if you're Donald Trump.

[Voices]

Oh, oh!

[Perrin Beatty]

We'll get him to pay for it.

Our future lies in the global stage. We either go out after global markets or else the world is coming here after our markets. It means then that we have to prepare ourselves both in terms of the training of young Canadians and in terms of the business strategies that businesses have.

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

Thank you.

[Corinne Pohlmann]

I was just going to add that I agree with all of that from the education perspective. I think the other piece of this is that those who are already out of school who are looking for assistance and advice on how to enter into new markets are another key piece of this. I think we need to do a lot more work and better work at trying to open those doors for them and educate them better on what they need to do and what the barriers might be.

In the numbers of surveys we've done in which we've asked about the barriers to trade, so often they just didn't know how to go about it in the first round. Many give up because it's so difficult. We have to make sure to educate the folks who are going through school, but we also need to make sure there's some way to help those who are already running their own businesses on taking that next step.