Evidence of meeting #40 for International Trade in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was zealand.
A recording is available from Parliament.
11:50 a.m.
Jeronim Capaldo Research Fellow, Global Development and Environment Institute, Tufts University, As an Individual
Thank you for that question.
We put in place a disclaimer because we did this work as an academic exercise as part of a research agreement between UNCTAD, the UN organization that specializes in trade, and Tufts University. This is part of a research project that I started as an independent researcher at Tufts University, well before joining the United Nations.
11:50 a.m.
Conservative
11:50 a.m.
Research Fellow, Global Development and Environment Institute, Tufts University, As an Individual
I have another prior to this, on the Transatlantic Trade and Investment Partnership, and it's part of the same research project.
11:50 a.m.
Senior Economist, United Nations, As an Individual
To complement that answer, the institutions within the United Nations umbrella signed a number of collaborative research endeavours with a variety of universities around the world, precisely to deepen our analysis and our ability to understand the world economic effects of trade, investment, finance, etc. This is one of the many memoranda of understanding that we write with various universities.
Recently, UNCTAD signed another memorandum of understanding with the University of Geneva, and it goes on and on.
11:50 a.m.
Conservative
Gerry Ritz Conservative Battlefords—Lloydminster, SK
How many Canadian universities are involved, and which ones?
11:50 a.m.
Senior Economist, United Nations, As an Individual
There are none at this moment that I'm aware of, but I don't have in front of me the complete file of written memoranda of understanding with universities around the world.
In my area, in economics, I don't think there is currently a memorandum of understanding with a Canadian university, but we would be very happy to consider one, surely.
11:50 a.m.
Research Fellow, Global Development and Environment Institute, Tufts University, As an Individual
To answer the second part of your question, it is normal for academic researchers not to speak for a university, because they speak individually for the research they do. The answer to your question about who commissioned the study is that nobody commissioned it. It was decided as part of the initiative, as an application of a research project.
11:50 a.m.
Conservative
Gerry Ritz Conservative Battlefords—Lloydminster, SK
I'm just wondering how accurate your data is for Canada when you don't even have a university from Canada supplying some of that input. Anyway, I'll leave that for now.
To the Barley Council, Mr. de Kemp, there is so much more at stake here than just tariffs. Tariffs are the easy part. It's all about the non-science side, the phytosanitary and the non-phytosanitary, the low-level presence. It's about stability and predictability in these trade corridors. That's very important in this particular agreement as well. I wonder whether you have a comment on that.
11:55 a.m.
Executive Director, Barley Council of Canada
I can't speak for some of the other grains and oilseeds commodities, which we've heard.... I've been there. I was in Japan, with you and others. Sanitary and phytosanitary non-tariff barriers are certainly really important for some of the other commodities, such as grains and oilseeds, but for barley, not so much just yet. The issue coming up for everyone is on maximum residue levels, MRLs. That's really important for barley.
Here is the other thing that people have to understand. Whether it comes down to trade or transportation and railways, as far as security of supply to countries is concerned—particularly Japan—Canada has always been known in the past for timely deliveries and what have you. That's starting to erode a bit. That's not part of the discussion here with this committee, because it deals with transportation and the railways, but hopefully we get some resolution in the next couple of years.
Without the TPP—we've heard it from the cattle guys, and we are seeing it right now in barley—we have bilaterals with other countries, such as Australia, and we are really back-slipping, as far as our exports are concerned.
11:55 a.m.
Liberal
The Chair Liberal Mark Eyking
Thank you, Mr. Ritz.
We are going to move over to the Liberals now. Mr. Dhaliwal, you have the floor.
11:55 a.m.
Liberal
Sukh Dhaliwal Liberal Surrey—Newton, BC
Thank you, Mr. Chair.
Thank you to the presenters. My question goes to Mr. Capaldo.
A new report released by the chief economist at Global Affairs Canada finds that Canada's GDP would have a permanent increase of $4.3 billion by 2040 if the application of the TPP occurs. By contrast, if Canada chooses to remain outside the TPP, there would be a projected loss in the national GDP of $5.3 billion. Your research seems to have a different perspective. Can you comment on these findings, please?
11:55 a.m.
Research Fellow, Global Development and Environment Institute, Tufts University, As an Individual
Thank you.
I have not seen the report you mentioned. I would be happy to answer the question after I have seen it. However, if it is anything like the other studies that have been done on TPP, meaning if it uses the same model that has been used for every other standard study of TPP, then those gains are probably the result of several unrealistic assumptions, the first being the assumption of full employment in Canada from here up to 2040, or the end of the projection period.
I cannot answer this question until I have read the study.
11:55 a.m.
Liberal
Sukh Dhaliwal Liberal Surrey—Newton, BC
My next question goes to Dr. Mehta.
Dr. Mehta, is it just the Canadian universal medicare system that is at the most risk from the TPP, or are there any other nations on which it will have a negative effect as well? Also, would it benefit the U.S. more than Canada?
11:55 a.m.
Member, Canadian Doctors for Medicare
To answer that question, globally other countries are at a much greater health risk than even Canadians are. I'm going to use a quick case study of hepatitis C.
In the Canadian population, 0.8% are hepatitis C positive. People who are chronic carriers need to be treated, because at the 30- to 35-year mark they will most likely go into liver failure or develop liver cancer, which is very difficult to treat or is incurable in many cases
To bring that home to the Canadian context, the first-line medication that is currently being used, which came out a year and a half ago, is called Harvoni. It costs $24,984 for 28 tablets, and it's a three-month to six-month course of treatment, so the cost per patient just to the Ontario health care system ranges between $75,000 to $150,000.
That's just a start, because for some of the other genotypes that are not treatable by this medication, the new drugs are coming out in the price range of $150,000 per person, so in Ontario alone, this potentially will cost $9 billion to $10 billion for one disease and one drug. Globally, 2% to 3% of the world's population is hepatitis C positive, so this is a very significant public health crisis that's before us nationally and internationally.
Noon
Liberal
Sukh Dhaliwal Liberal Surrey—Newton, BC
Thank you.
My question is to Mr. Nantais. Your organization suggests a bilateral automotive oversight body to ensure the enforcement of tariffs and all these things.
Would it be a simple process or a very cumbersome process to implement within this agreement?
Noon
President, Canadian Vehicle Manufacturers' Association
I'm not sure I understand your question, Mr. Dhaliwal.
Noon
Liberal
Sukh Dhaliwal Liberal Surrey—Newton, BC
You are saying there should be a bilateral automotive design oversight body that should be overseeing the enforcement of key commitments, including auto tariffs. What kind of organization would that be?
Noon
President, Canadian Vehicle Manufacturers' Association
That is one of the things that actually came out of the negotiations. It's been our experience in other bilateral agreements or plurilateral agreements in the auto sector to have similar mechanisms to address things when things go wrong.
As an example, we have seen this happen in Korea, where although we have a free trade agreement, they continue to put in non-tariff barriers to trade, yet there's no really quick, fast mechanism to address the reintroduction of that non-tariff barrier without holding back the tariff relief that was otherwise provided in the agreement.
In other words, this would be something that is not new to trade agreements, but it would be necessary in terms of whether you would have snapback provisions included in the agreement, whether you would have other mechanisms to address non-tariff barriers that had been introduced after the agreement's been in place, and so forth.
These mechanisms can be very useful if they are constructed properly. They are looking at that in this case, but our experience previously, in agreements such as the agreement with Korea and elsewhere, has shown they have not been very effective, at least in the way they were constructed then.
Noon
Liberal
The Chair Liberal Mark Eyking
Thank you, Mr. Dhaliwal.
We're going to move over to the NDP now.
Madame Trudel, you have the floor.
October 25th, 2016 / noon
NDP
Karine Trudel NDP Jonquière, QC
Thank you very much, Mr. Chair.
Many thanks to the witnesses for their comments.
My first question is for Mr. Capaldo and Mr. Izurieta.
In your study, you talk a lot about full employment. I also found that troublesome when I read the TPP agreement. You mentioned in your study the possible loss of 58,000 jobs by 2025. In order to help the committee understand, could you explain how you arrived at the figure of 58,000 jobs lost by 2025?
Noon
Senior Economist, United Nations, As an Individual
Thank you very much for your question.
As we tried to explain initially, this is a trade, finance, macroeconomic, employment, and distribution model. It's a very comprehensive model of the world economy in which various feedback loops are taken into account.
When, for example, there are increases in productive efficiency due to increases of fixed capital resulting from freer trade and financial movement, we are somehow displacing jobs in industries when they shift into more capital-intensive activities or when the same industry supplements or replaces jobs with robotics. There are increases in fixed capital.
In the standard trade literature, all these jobs that are lost are recycled through the economy by a sort of magic trick that assumes that the economies will always revert to full employment. In the non-standard literature and in our model, for example, we take into account past dependency or the fact that over time workers who lose their skills in particular industries are out of the labour market long enough to actually lose the ability to reinsert themselves into the labour market.
Together with that, there are also influences of freer financial flows in the distribution between profits and wage earners because of the process of further capital intensification. Also, because of the process of further diversion towards financial speculation, there is a tendency for workers to lose the potential for their wages to follow the rise of productivity in the workplace.
These differences, which are translated into increases of profit shares and decreases of wage shares, diminish the purchasing power of households, and diminishing the purchasing power of households diminishes the demand for household consumer goods. It is through this process over a long period of time that you lose a considerable number of jobs.
The case of Canada in our exercise is not dramatic. Losing 60,000 jobs over 10 years is not a figure large enough to create a cataclysm, but it is certainly a change of direction. It is contrary to the assumption that everybody who is displaced because of changes of intensification or changes of capital flows will come back to the job market some months afterwards. Only if you have a magic assumption of this kind in a standard model can you create full employment, but the reality on the ground is far different.
12:05 p.m.
Research Fellow, Global Development and Environment Institute, Tufts University, As an Individual
If I may, I'll add, as I said earlier in response to Mr. Dhaliwal's question, that I have not read the study by Global Affairs Canada, but I just looked at the type of model they used, and it is exactly this model that assumes full employment in order to make its projection happen.
12:05 p.m.
Liberal
The Chair Liberal Mark Eyking
Thank you, Madam Trudel.
That completes your time.
We're going to move over to the Liberals now.
Madam Lapointe, you have the floor.