International Trade Committee on Oct. 27th, 2016

[Derek Nighbor]

Yes. There's no doubt, given the geography, that the western-based industry will benefit more than companies will in the east. That said, I think the key for companies in Quebec is.... There is going to be some opportunity. I think there's going to be more opportunity with CETA. I think there's going to be more opportunity for Quebec companies through the innovation path in transforming some of their mills into operations that are going to be making more bioproducts and products of the future.

I know that companies like Résolu in Quebec are doing a lot of work in this space. We really believe that the government needs to clearly better understand the needs of those companies in the innovation path. That's going to be the big key in Quebec.

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

Thank you very much.

Ms. Murray, in terms of insurance companies, you said earlier that by reducing barriers to entering the Asian markets, there would be more transparency and increased opportunities.

Will the TPP clarify matters and make it possible to enter these markets?

[Susan Murray]

What we see the TPP doing is creating more transparency. It's not going to necessarily standardize between countries, but there are rules that countries would at least have to pre-publish regulations. In Canada, it's pretty standard that when there's going to be a change, then there's consultation, publication, and a dialogue. That doesn't always happen in Asian markets, but with the TPP there is the provision that sets out some process. That will be a great assistance to businesses that are trying to operate with some certainty in these markets.

The terms of entry will reduce the ability for countries to arbitrarily introduce restrictions to foreign competitors.

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

Thank you very much, everyone.

[The Chair, Liberal, Mark Eyking]

Thank you, Madam Lapointe. That ends our first round.

I thank the witnesses very much for joining us, and Derek from the west coast for getting up early this morning to be with us. It was great to see you, and of course the other witnesses. Part of your testimony will be in our report.

We're only going to suspend for a couple of minutes, because we have the Ambassador of Japan and his delegation with us.

[The Chair, Liberal, Mark Eyking]

Okay, MPs, we're good to go.

First of all, welcome, Ambassador, and welcome to your delegation.

As you may know, we have two official languages, so sometimes you may have questions in French.

It's a big deal this TPP, and of course your country is one of the biggest ones in it—in GDP. It's a deal that we see is going to eventually affect all Canadians in business. We've been travelling across the country to all of our provinces and territories and consulting with Canadians. There is quite a bit of interest in the TPP. We're doing our study all this year, and probably presenting to Parliament in the first of next year.

You have the floor, and as much time as you need, and then we'll open up for dialogue with the MPs.

Again welcome, and thank you for coming.

[His Excellency Kenjiro Monji, Ambassador of Japan to Canada]

Thank you.

I'm delighted to make a statement, as Ambassador of Japan, during this public consultation at the House of Commons international trade committee regarding the TPP.

There's no need to emphasize the importance of Japan-Canada economic relations, so I will go directly to the subject.

Taking this opportunity, I would like to address, from Japan's point of view, how meaningful the TPP is for the people of Canada and the Asia-Pacific region. In doing so, I would like to reiterate the significance of this agreement from four different but closely related perspectives.

To begin with, the TPP is an unprecedented free trade agreement for its scale and level of standards. In light of the unfortunate and difficult reality of the WTO Doha round negotiations, no one can overemphasize the TPP's importance to the global economy.

The TPP creates a new set of rules for the 21st century in a wide range of areas, such as customs duties, services, investment, intellectual property, and state-owned enterprises among the 12 Asia-Pacific countries by establishing an enormous market, representing 40% of the world's GDP and 800 million people.

The objective of the TPP is to promote free and open trade and investment, while preventing protectionism, which I believe is completely in line with Canadian economic policy.

Furthermore, it is quite natural and self-evident for Canada to join the TPP when we see Canada's current situation. The TPP covers more than 70% of Canada's trade and investment flow. The TPP also includes three of Canada's top five trading partners, namely, the United States, Mexico, and Japan.

By establishing new economic rules, especially with seven new FTA partners in the TPP for Canada, the TPP gives Canada new market access to and greater economic integration with the Asia-Pacific region.

The analysis by the Canadian government estimates that the TPP would generate total GDP gains of $4.3 billion for Canada.

Second, in the context of Japan-Canada bilateral economic relations, the TPP further enhances the attractiveness of the Japanese market for Canadian exporters and investors.

Japan is by far the largest Canadian trading partner within the TPP, except NAFTA members. According to the analysis by the Canadian government, Canadian exports to the new FTA countries of the TPP would increase by $2.2 billion U.S. The most significant new export opportunities exist in Japan, where Canadian exports are expected to increase by $1.1 billion U.S.

Most of Japan's customs duties will be eliminated, either immediately or in stages. The tariffs on canola oil, dried cranberries, wine, ice wine, and sparkling wine will be completely eliminated. Likewise, snow crabs, lobsters, shrimps, scallops, salmon, halibut, mussels, sea urchins, bluefin tuna, and oysters—my favourites, all of them—will become completely tariff-free. The tariffs on some forestry and value-added wood products such as lumber, plywood, and veneer panels will be removed.

Some may have a concern that the TPP may increase the import of automobiles from Japan. It should be noted, however, that Japanese automakers have been continuously investing in Canada, and the largest automobile manufacturer in Canada now is Toyota. In 2015, nearly one million vehicles were produced in Canada by Toyota and Honda.

Statistics also show that in 2015, the number of Japanese vehicles imported from Japan was 145,000, accounting for 22% of all the Japanese-brand vehicles sold in Canada, while Japanese automakers in Canada exported five times more vehicles, or 784,000 units, from Canada to other countries.

It can be said, therefore, that Japanese automobile companies are already part of the Canadian economy, and will bring enormous benefits to Canada, such as creating local employment.

Some of you may also have concerns that the TPP would increase auto parts imports from overseas. As you know, the auto industry has a broad range of supporting industries. If the Canadian automobile sector as a whole grows enormously by increasing its production and export through the TPP, that also brings considerable benefits to related companies surrounding the auto industry. It is quite clear that the auto parts sector is one of the big beneficiaries of the TPP as a major component of the auto industry.

It is my belief that the TPP will promote trade and investment and pave the way for Canada's further economic growth through increased international competitiveness of Canadian firms and factories. Most of the aforementioned GDP gain of $4.3 billion for Canada under the TPP will be brought about by Canada having market access to Japan through the TPP, according to analysis by the Canadian government.

Third, the TPP is an open government agreement, meaning that any country or customs territory able to meet our high standards is welcome to join. Once this agreement is in place, other economies in the region will follow in joining, ushering in even more dynamic economic growth. In fact, a number of economies, namely Indonesia, the Republic of Korea, the Philippines, Taiwan, and Thailand, have already expressed their intention to join the TPP. This new Asia-Pacific economic engine linked with other parts of the globe, including Europe, will lead global economic development in this new century.

I would also like to remind you that there are other important negotiations undertaken as well, such as the Japan-EU economic partnership agreement, the trilateral Japan-China-Republic of Korea FTA, and the Regional Comprehensive Economic Partnership, RCEP, for 16 countries, including China, but it is the TPP that would lead all these FTA and EPA efforts in terms of geo-economic imperatives, high-level standards, and wide and deep coverage.

Fourth and last, the TPP is not only a gigantic free trade agreement but also a strategic deal. The strategic deal, I believe, means something far beyond tariff elimination or any other immediate economic benefit. It is a long-term blueprint to achieve our ultimate goal, which is ensuring peace and prosperity for the entire region.

Strong free trade partnerships among countries sharing fundamental values such as democracy, human rights, freedom, and the rule of law, supported by strong economies in the region, are an integral part of regional peace and stability, which goes hand in hand with regional networks of alliance and friendship.

On May 24 this year, Prime Minister Shinzo Abe and Prime Minister Justin Trudeau, on the occasion of his first official visit to Japan, had their third meeting in only six months. The two leaders agreed to create a new era for co-operation between Japan and Canada. At the meeting, Prime Minister Abe explained that early entry into force of the TPP is important for strengthening the economic relationship between Japan and Canada.

The TPP has been under deliberation in the current extraordinary session of the Japanese Diet. Let me quote Prime Minister Abe's statement:

The TPP in particular is key to our growth strategy. The TPP was agreed after clearing political hurdles. We must not allow it to come to a standstill. Securing domestic approval as early as possible will give momentum to early entry into force [of the TPP]. Japan will dedicate its greatest possible effort to this issue.

It is my sincere hope that with the understanding of all of you here in this committee, Canada's domestic procedure for the approval of the TPP will speed up for its earliest possible approval.

In closing, I would once again like to express my deep appreciation for this opportunity.

Thank you very much.

[The Chair, Liberal, Mark Eyking]

Thank you, Your Excellency, for that good report.

We have a four-minute slot for each party. We're going to start off with the Conservatives.

Mr. Ritz, go ahead.

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

Ambassador and delegation, thank you so much for your presence here today. I can't tell you how much it means to us as well to hear exactly what's happening in Japan as we move towards the implementation of this, as you said, Mr. Ambassador, strategic deal. The geopolitics that are created and the stability this brings to a lot of the Pacific Rim area is so important and is often understated.

I also want to commend your president on his bold initiatives early on. He put a lot of political capital into this, and it actually worked out for him in the latest elections.

Could you outline for us the timeline you have in mind as you move towards ratification and implementation?

[Kenjiro Monji]

It depends on the developments in the Parliament. What I know is that the current session of our Parliament ends November 30. I think my government is trying to get approval as soon as possible, so logically, it would be by November 30, but I'll just say we hope to do it as soon as possible.

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

There are no guarantees in the political arena; there's no doubt about that. But at the end of the day, this is such a huge win for all the countries that are involved.

I was very much involved in agriculture, and I've had the great opportunity to be in Japan a number of times. There are huge wins to be had in the service sector too. The growing global supply chains, which Japan is a major part of, are also often under-represented. You mentioned the trilateral agreement with Japan, China, and Korea. The ability for secondary processing and value added from Canada to Japan and on into the Chinese market is often not even considered, but I know it's a huge part of what can happen. China's not part of the TPP, but certainly the ability to have that flow through Japan or Korea into that market is an unfound wealth that we'll work towards.

You also talked about the value of the auto sector in Japan and the investments they've made in Canada. I know Honda is looking at further investments, because once the CETA deal is ratified, they're looking at the European market. How important to Japan are the global supply chains?

[Kenjiro Monji]

Automakers have a broad area of supporting industries, and the Japanese auto industry has tried to pursue the most efficiency in every part of the world. It is important that they can take the best options, the best selection, of any possible measures. Japanese automakers, as in many other countries, are now operating globally. The TPP agreement, which would ensure the flow and movement of the goods and services, is vitally important.

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

There are chapters on labour standards and environmental standards. There are also some guidelines—they tried to put it into the text at the end, but it didn't actually make it—on currency manipulation.

Is there a fulsome enough discussion on that to satisfy Japan moving forward?

[Kenjiro Monji]

Do you mean with currency [Inaudible—Editor]?

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

Yes.

[Kenjiro Monji]

Actually, I understand that the currency matter is not directly linked within the TPP, but authorities of the TPP participating countries have been discussing those matters in order to strengthen the coordination on the macro-economies and currencies. I think many people welcome this.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Ritz.

We're going to move to the Liberals.

Madam Ludwig, you have the floor, for four minutes.

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

Thank you very much, Your Excellency, for your wonderful presentation. Certainly, Canada enjoys a mutual friendship and admiration for Japan.

Before my questions, I will give my background. Prior to being elected as a parliamentarian I was a university educator in the area of trade. Many of my students came from Japan. If we look at the linkages between academic institutions in Canada and Japan, we have over 550, and we have 75 sister city/provincial relationships, so clearly we have significant relations with Japan that have previously been fostered. Thank you.

Throughout this process, as parliamentarians we've gone from coast to coast consulting with Canadians on the TPP, getting feedback from Canadians, Canadian businesses, associations, and labour groups.

I'm wondering what your process has been in Japan for consultation. Could you explain that to us?

[Kenjiro Monji]

Thank you.

There are many people involved in these issues. Frankly speaking, there are some people who are quite unhappy with this matter, so the government is trying to deal with those organizations, for example, mainly agricultural organizations. We have already presented the TPP and the related agreements to Parliament, so now the discussion is within the Parliament. In Japan's case, we need parliamentary approval for the government to conclude a treaty, so after preliminary consultations with related people, I think the main discussion is now in the parliamentary committee meeting.

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

Thank you.

There has been much discussion back and forth during these sessions, where we ask a lot of witnesses this question. We have posed it to many witnesses. What position would Canadian businesses be in, or the labour movement, or different interest groups, if Canada did not ratify and the U.S. did?

May I ask you what the impact on the relationship between Canada and Japan, business and cultural relations, might be if Canada did not ratify and the United States did, and Japan did as well?

[Kenjiro Monji]

Frankly speaking, it's unthinkable that Canada would not join if the U.S. and other countries sign the TPP. Even according to your own analysts, Canada would lose huge benefits. Actually, one of the values of the TPP to Japan lies in North America, because we don't have any free trade agreement with Canada or the United States.

I really hope that Canada and other countries will join the TPP, so that we can form a much greater economic entity under which we could pursue further economic growth.

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

Thank you.

I represent a large riding, New Brunswick Southwest, in the eastern part of Canada. We've heard from many businesses and associations that are interested in trade with Japan, particularly in the areas of forest products, energy exports, such as oil, oysters from northern New Brunswick, lobster, snow crabs, and salmon.

What sectors and regions are Japanese businesses looking to enter and access for mutual benefit in Canada?

[Kenjiro Monji]

I think Japanese companies are interested in almost every area where it is promising. You mentioned a lot of seafood. I already mentioned quite a large part of the seafood and fish will be duty-free, or duties would be eliminated in stages, so it is a very important area for further co-operation.

Actually, the trade volume between Japan and Canada reached its peak in the year 2000. In the 15 years since 2000, it has gradually shrunk by 5%. I was shocked to find that number. This indicates that we have a huge potential to expand once again, especially under the TPP, under which we would both enjoy more favourable treatment.

That is why Mr. Trudeau and Mr. Abe agreed that we should really expand our relations. In every area, trade, investment, tourism, student exchanges, we have a lot of potential to pursue much bigger, wider, and deeper relations between our two countries.

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

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you, Your Excellency. Thank you, Ms. Ludwig. We have four minutes left for the NDP.

Ms. Ramsey, you have the floor.