International Trade Committee on Oct. 27th, 2016

[Susan Murray]

Today we're active in Japan, Malaysia, Singapore, and Vietnam, but the other countries that are included in the TPP we're not active in, so we would certainly be interested in moving forward with other countries that are in the TPP.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

I assume New Zealand and Australia would be potential markets for you, or—

[Susan Murray]

Potentially, it would depend on the lines of business, and in those countries probably less so just given the market itself also already has some pretty good coverage.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Who are your association members? There are big companies, I think, but are there smaller companies as well? Is it a broad range of—

[Susan Murray]

Yes, domestically we have about 70 members, but I'll say we only have three members that are active internationally. That's Sun Life Financial and Manulife Financial, which are in the Asian markets, and Great-West Life, which is mostly in Europe. Of course, they're all active in the U.S. as well.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

They're all big companies. I appreciate those comments.

Mr. Bruer, I have a quick question for you.

My understanding of the reason an ISDS is in trade deals is that investors need to protect their investments, perhaps mitigate their risks; otherwise, their investment may not flow into foreign jurisdictions. Is there a dispute mechanism that you would find appropriate in these situations in these trade deals, or is it just if you want to invest you do that at your own risk and the loss might fall where it may?

[David Bruer]

I think if you look at the cost to small and medium enterprises of using the ISDS, you could take the amount of money paid to the corporate lawyers to fight an ISDS case—we're talking about $3,000 a day as a normal fee for a lawyer involved in that—and that money would easily be enough for risk insurance for small and medium enterprises to deal with the risk of going into markets like that. I think as well the court systems.... I question why under CETA we don't trust the Canadian court system or the court systems in Europe to deal with this kind of trade dispute.

Again, you're saying we need an alternative to this. I think the ISDS is very badly stacked against southern countries and has tremendously high costs associated with it. I think it's based on the idea that the court systems in those southern countries don't work and I remain to be convinced of that.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

I appreciate that, but I'm wondering if your position is that ISDS would somehow be prejudicial to Canadian investors in some of these other TPP markets.

[David Bruer]

If Canadian investors are going to be using ISDS to bring lawsuits in countries they're wanting to make investments in, is it going to be prejudicial against them? No, I don't so.

[The Chair, Liberal, Mark Eyking]

Thank you.

[David Bruer]

I think it's a system that was designed for them.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Peterson.

We're going to move over to the NDP.

Ms. Ramsey, welcome back, and go ahead.

[Tracey Ramsey, NDP, Essex, ON]

Thank you so much for your presentations.

Mr. Bruer, you're not the first person to appear before this committee to talk about ISDS and the deep concerns that Canadians have. Under chapter 11 in NAFTA, we're the most sued country in the world. We've had a bad experience with these provisions. It's well documented at this committee, and certainly in our travels.

I want to give one example of the regulatory chill that my colleague was asking about. In 2004, in New Brunswick, there was an attempt by that province to put in public insurance. It went as far as to receive all-party legislative committee approval, but then they received immense pressure from private insurance companies from the U.S., and they actually threatened to sue them under NAFTA, so they backed off. That's a prime example of the chill that has taken place in our own country.

We had Mr. Gus Van Harten before the standing committee, and he proposed some amendments. He talked about a rule for investor states with respect to some countries. He said that it “should come with a duty to exhaust local remedies and a duty to go to the local courts, unless the foreign investor can show there's something wrong with the domestic courts and they shouldn't be held to that requirement”.

I wonder if you can speak to that and if you would see a move towards something more in that vein, where there's actually proof that it's necessary to go to this arbitration.

[David Bruer]

I think that would be a very good first step, if we are determined to keep the ISDS as it stands, and reform it in some way, as opposed to getting rid of it, which, frankly, would be the strong preference for most of the counterparts we deal with in southern countries. If you're going to reform it, however, then I think there are a number of things you can do. First of all, you can bring in conflict of interest guidelines for the people who are the arbitrators on these tribunals. You can work for one company and get paid by them, and then in the next case you can become the arbitrator, the judge. Quite simply, there are not adequate conflict of interest guidelines for that.

[Tracey Ramsey, NDP, Essex, ON]

I think that's what we see happening in Europe right now. We're all watching Wallonia, and we're curious to see what changes they've made in this latest development. Certainly, I think we support some effort to improve the system, if not take it out of agreements, as India has.

Ms. Murray, we've had a lot of testimony before this committee on the impact on Canadians of the patent extensions for drugs. We had as a witness Dr. Carolyn Pullen, the director of policy advocacy and strategy for the Canadian Nurses Association. She said that, under TPP, “the cost of drugs would increase, and implementing a national prescription drug program...would be less feasible”.

If drug costs were to increase, I'm wondering how this increase would affect health insurance claims and premiums in Canada.

[Susan Murray]

What I can say is that we haven't undertaken a study or an analysis of the potential increase in drug costs. My limited understanding is that there are other agreements that also have an impact on what would happen directly out of the TPP, including CETA. I think some of those issues are still outstanding. There's a common view, though, that those drug costs could increase.

Today we think drug costs in Canada are already too high. We're participating in the Patented Medicine Prices Review Board and undergoing a modernization consultation right now. I think there are a lot of issues that make drug costs high, and in this case we haven't done an analysis linking it to the TPP, because of the other implications there. There may be other witnesses who are better able to answer the drug cost question.

[Tracey Ramsey, NDP, Essex, ON]

I would imagine if there's an increase.... We know there will be an increase in the TPP.... That patent extension starts in CETA. The impact will be felt by individual Canadians and by employers. Employers may be unable to insure at the level they previously did because of these additional costs. I would imagine this would have an impact on the number of people who insure with the businesses you represent.

[Susan Murray]

I think when drug costs are high, then employers have to pay more for the benefit plans they offer to their employees. There's no question about that. That's why we're really focused on trying to bring drug costs down in Canada.

We have a number of initiatives under way. I mentioned participation in the PMPRB, but also we're trying to sit down as the private insurers at the table with the pan-Canadian Pharmaceutical Alliance and negotiate as a bloc to try to bring those costs down. That, we think, will have a really important impact on drug costs in Canada.

[The Chair, Liberal, Mark Eyking]

That wraps up your time, Ms. Ramsey. We're going to the Liberals for the last MP. Madam Lapointe, you have the floor.

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

Good morning and welcome.

Thank you for being here today.

Mr. Nighbor, I'd like to ask you a few questions about forestry products.

You said a little earlier that New Zealand and Australia were major competitors for you, in Japan.

Given that the climate, seasons and tree species are significantly different in Canada, do you think that we have the same opportunities on the markets when it comes to forestry products offered here, in Canada?

[Derek Nighbor]

It's a great question. We do. I think Canada has two advantages. The environmental reputation I talked about is a big selling point for us. It's going to be a huge opportunity for us in places like Malaysia, Vietnam, and Japan.

The quality of our products is the other key driver for us. It does take longer in our climate to grow trees, and that's one of our challenges, but the areas where we can really get the win are in the environmental standards and in the quality of the products we're exporting.

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

Thank you.

Mr. Nighbor, have you studied the potential impact the Trans-Pacific Partnership would have if it is signed?

How might revenues and the number of jobs increase in forestry?

[Derek Nighbor]

Yes. We have looked at the numbers and it's about a 2% increase in Japan. It's going to be about $37 million a year. Right now, we haven't crunched the job numbers, but it's safe to say this is going to be a critical opportunity for us to sustain and to grow jobs.

The bigger driver, and I talked about it yesterday at the finance committee, is that we really need the government to continue to support innovation in the sector. We're moving to a stage now where we can turn wood fibre and chips into biojet fuel. These are the kinds of innovations that Canada is now leading the world on. We're seeing a lot of world firsts in Canada, and to support parallel to the trade agenda, we really need this government to continue to support innovation in the forestry sector.

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

Thank you.

I am the only MP from Quebec on the Standing Committee on International Trade. You spoke earlier about rail and port infrastructures.

In terms of forestry products, how could Quebec obtain a larger share of the market under the TPP?