Thank you Mr. Bourgault, Mr. Chair, and committee members.
My name is Jerry Giroux, and I'm the chairman of the international trade committee of the Canadian Association of Railway Suppliers, known as CARS. My sincere thanks for the opportunity to present on behalf of CARS. We greatly appreciate the consultation, and we welcome the chance to share our thoughts on the trans-Pacific partnership from the perspective of our association.
With me is Sylvia Newell, the executive director of CARS.
CARS is a member-driven association representing a diverse group of companies that are involved at all levels within the Canadian freight, passenger, commuter, and urban light rail segments. We supply both products and services through our 140 members.
CARS has long advocated for the removal of trade barriers that inhibit the ability of Canadian rail suppliers to access more global markets. The ability to access the rapidly expanding Asia-Pacific region would be an excellent opportunity for our members. With these objectives in mind, we believe the TPP has the potential to provide our members with increased export opportunities.
The world rail supply market accounted for a record level of approximately $232 billion in 2015. Growth of the worldwide rail supply market is expected to be 2.6% per year and reach $268 billion in 2021. These projections were the findings of a worldwide market study conducted by Ronald Berger and commissioned by the European Rail Industry Association. It is worth noting that compared to the last study, which was two years ago, the world rail supply market has achieved a substantial growth of 3%, largely driven by the Asia-Pacific region.
CARS generally feels that the TPP has the potential to provide an effective way to access the Asia-Pacific region and the potential to eliminate tariffs on industrial goods. It has the potential to provide increased use of international standards and regulations, predictable access to government procurement contracts in a new and harmonized procurement provisions among NAFTA signatories, and easier movement for business purposes to the benefit of the consulting and engineering segments of our association.
In addition, a secondary benefit of the TPP to our members is the potential growth of commodities and merchandise, which results in a volume increase of goods transported on our railways and increased requirements for railcars, locomotives, and rail infrastructure to support increased exports to the Asia-Pacific region.
We've researched the TPP—I didn't read all 5,000 pages—and how it relates to the Canadian rail suppliers segment. We were able to find the TPP government procurement provisions that do cover Canadian rail equipment, but we're unclear within the TPP text how you are addressing the Canadian rail community. We see subsections for auto, agriculture, and construction, but rail just doesn't even seem to be on the radar screen.
While CARS' members generally support the TPP, there are concerns about how the TPP could disrupt our members' North American businesses. Open trade with low-wage countries in the TPP could have unintended consequences for existing Canadian rail manufacturing suppliers.
Here's a little story. Although China's not currently in the TPP, they are an example of a low-wage country that can disrupt the Canadian rail supply. Recently, a Chinese firm invested in a Moncton, New Brunswick, facility to manufacture railcars. The firm has a similar investment in the United States, where recently 47 senators sent a letter to President Obama accusing this firm of dumping steel fabricated rail assemblies into the U.S. through this newly created railcar builder.
Canada has a world-class railcar manufacturer in Hamilton, Ontario, that creates thousands of direct and indirect jobs in Canada. The example of this Moncton facility expresses our memberships' general concern about achieving a fair trade of manufactured goods with any trading partner that may have a largely differing labour, environmental, or tax-law environment. There are countries within the TPP that could cause similar disruptions.
Another concern expressed by our membership relates to currency manipulation, which in many instances is a very significant trade barrier in our space, and it's a risk that Canadian companies face in selling into international markets.
When countries intervene in currency markets to depress the value of their currency to increase export competitiveness for domestic manufacturers and increase imports, they are creating an unfair playing field.
In the context of the free trade agreement, currency manipulation can completely offset the benefits of these tariff reductions by simultaneously creating an unfair export subsidiary or import surcharge. World-class rules have long obliged countries to refrain from currency manipulation because of the potential to distort trade, yet despite these rules being in place at the IMF and the WTO, no multilateral enforcement actions have taken place in the seven years of this global economic system having been in place.