International Trade Committee on Feb. 23rd, 2016

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

Thank you, Mr. Chair.

Mr. Kingston, thank you for joining us this morning.

You talked about diversifying our economy and, if I'm not mistaken, increasing our exports. In which fields would that benefit us and in which ones would we run into problems, in other words, a decline in market share?

[Brian Kingston]

In terms of export opportunities, there are a couple of things. I'd mentioned agriculture. I think that's an area where there would be an immediate gain, simply because there's traditionally been high tariff protection in a lot of these sectors and for a lot of these products.

Services would be huge. They're a huge part of our economy that rarely gets mentioned, but the interesting thing about TPP is that it's actually GATT-plus, so it goes beyond our WTO services commitments. I think that creates a huge opportunity for, as I said, financial services, but we have real strength in things like engineering services, so there's a big opportunity there.

I think a lot of our manufactured products could do very well and we have some top-class auto parts manufacturers, for example, that export all over the world. Increasing access through reduced tariffs would make a big difference there as well.

Those were just a few off the top of my head.

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

What you're saying, then, is that the benefits would lie in the sectors where market share would increase.

When you were carrying out your consultations, I imagine that some of your members were 150% in agreement, while others had reservations. Could you tell me which ones were hesitant and what their reservations were about the TPP?

[Brian Kingston]

This is not an example from my membership, but one area where we obviously saw some rather strong reservations was in the dairy sector in supply-managed goods. As I'm sure you know and you've heard, Australia and New Zealand are obviously extremely powerful in that industry, so that's a pretty significant competitive threat to Canadian producers. That's an area where you could see some concern, absolutely.

[The Chair, Liberal, Mark Eyking]

There's going to be one more round for your guys, anyway, if you need any more.

We're going to the NDP. As I said, we're just doing one round and the NDP has six minutes.

Go ahead, Ms. Ramsey.

[Tracey Ramsey, NDP, Essex, ON]

Thank you.

Thank you for presenting to us today.

I have a question for you. Under the TPP, Canada and other countries have made commitments to facilitate the movement of business people. From a business perspective, which Canadian sectors will likely benefit from increased labour mobility, and would any sectors be negatively affected by increased labour mobility?

[Brian Kingston]

Labour mobility was a big issue. Particularly with the U.S. and NAFTA, we've had a list of professions that are provided with enhanced access into the U.S. It hasn't been updated for some years, so we are hoping that this agreement would update that and facilitate the movement across the Canada-U.S. border. I know we did secure some additional access, I believe, in architectural services and a few other professional services, so that's a very positive outcome of the agreement, to allow professional service providers to move with more ease into TPP markets.

[Tracey Ramsey, NDP, Essex, ON]

From a business perspective, then, do you think the increase in labour mobility will result in a net inflow of workers to Canada or a net outflow of workers from Canada?

[Brian Kingston]

That's a good question.

I'm not sure what the net figures would look like. We were looking at it more from a temporary service provision aspect, so you could go, for example, to Australia on a contract to provide a professional service for a fixed period of time. I don't know if there would necessarily be a net outflow. It would be on a temporary basis more so than a permanent one. It's a good question that I haven't seen an answer to.

[Tracey Ramsey, NDP, Essex, ON]

Since the release of the TPP text, various organizations have published studies that provide information about the potential impact that the agreement would have on particular sectors.

For example, the Automotive Industries Association of Canada has published a report on the impact of the TPP on the automotive market. Have business organizations or companies in various sectors analyzed the costs and benefits of a free trade agreement with the TPP countries, and if so what were the results of these analyses?

[Brian Kingston]

The main study I have seen on this, which was a broader Canadian economy study and not a particular sector analysis, was released recently by the Peterson Institute in the U.S. It estimated a national income gain of about $37 billion by 2030. That's the main study I've seen. I'm hoping we'll see something here in Canada soon that applies the same type of methodology but from more of a Canadian perspective as opposed to the methodology of the Peterson study.

[Tracey Ramsey, NDP, Essex, ON]

Your particular organization has not done any reports or any analysis of the potential gain or loss for Canada then.

[Brian Kingston]

We have. We released a study two years ago. I'd be happy to share it with you.

[Tracey Ramsey, NDP, Essex, ON]

Can the committee have that?

[Brian Kingston]

Absolutely. The only thing I'll note, though, is that in that study we didn't do economic modelling. We did our own analysis, but we didn't actually use a model to look at the sector benefits. I would be happy to share it with you.

[Tracey Ramsey, NDP, Essex, ON]

Okay.

You mentioned the consultation process. I'm wondering if you can elaborate for us on the consultation process that you've been through with our current government and if you can give us some indication of how that process went.

[Brian Kingston]

With the current government, so far we have seen the call for input, so we've submitted our position to the government on that, and then, frankly, we are here at committee. Those have been our consultations to date.

[Tracey Ramsey, NDP, Essex, ON]

Okay.

I also want to ask you about small and medium-sized enterprises. According to a survey conducted by StatsCan in 2015, 11.8% of small and medium-sized enterprises exported in 2014, and of the SMEs that exported during that year, 89.2% reported that they exported to the United States. Europe was the second most popular export destination. To what extent do Canadian SMEs know about the full range of trade promotion services that are available to them?

[Brian Kingston]

That's a great question.

I don't think that SMEs necessarily know about the full range of services available. We've actually done a recent study on this among our members, and we found that a lot of the time large companies are helpful in bringing small companies into market. On average, our members use about $750 million in inputs from SMEs, and then they can help introduce them to new companies abroad. I think it's a combination of both. You obviously have to help SMEs learn about the opportunities and work with our trade commissioner service to take advantage of those, but I think there's also an interesting angle here by working with large companies to access these new markets and then having the protection and know-how of a large company that's sophisticated and that has been in the market for some time.

[Tracey Ramsey, NDP, Essex, ON]

To what extent would the TPP likely lead to diversification in the export markets for Canadian SMEs on their own?

[Brian Kingston]

I think there's huge potential. With the right government support, I think there's huge potential. The market alone is enough to drive an SME to look at it, and then they simply need to know that our trade commissioner service, which is top class, is there to help them and to help them access that market. I don't have an estimated figure, but I think there's a huge upside there.

[Tracey Ramsey, NDP, Essex, ON]

You also mentioned the service sector. I just want to ask you quickly which Canadian service sectors would benefit the most from the agreement provisions regarding trade and services? Are there any Canadian service sectors that would be adversely affected by these provisions?

[Brian Kingston]

I have to go to financial services again as the one that I think can really benefit, but other areas including engineering services and architectural services are areas in which we have a really distinct advantage. Another sector, for example, is infrastructure and transportation.

[Tracey Ramsey, NDP, Essex, ON]

Are there any adversely affected?

[Brian Kingston]

I'm not aware of any.