International Trade Committee on Nov. 17th, 2016

[John Masswohl]

Yes, absolutely.

With the Korea agreement, our only complaint is that we wish we could have gotten it done earlier. We did get the same access into the Korean market as the Americans did, but we're three years behind them. That would be one of our hopes for the TPP; Korea wants in there eventually, and we could accelerate to match that.

Coming back to your question about NAFTA versus CETA, we do have unlimited access into the U.S. market, which we did not achieve in the CETA. We're constrained by a quota, and that probably is going to be a good-sized quota, but with the U.S., the sky is the limit. We don't have the same regulatory complexities with the United States. We tend to be more—

[The Chair, Liberal, Mark Eyking]

Your time is up. I'm sorry, but we'll have to move on. I know you were on a roll there, Mr. Van Kesteren, but we have to move over to the Conservatives.

Are you splitting your time, Mr. Dhaliwal?

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

We move to the Liberals.

[The Chair, Liberal, Mark Eyking]

Sorry about that.

[Voices]

Oh, oh!

[The Chair, Liberal, Mark Eyking]

Go ahead, Mr. Dhaliwal.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Thank you, Mr. Chair.

Thank you to all our witnesses.

Mr. Darling, you've said that CETA will help all sizes of businesses. Could you elaborate on how it would help small and medium-sized businesses, particularly when it comes to British Columbia?

[Dan Darling]

Sure. Thank you for the question.

First of all, in the agriculture sector for the beef producers, when you put another buyer on the market, it's going to drive the price up. It's going to drive the price up and it's going to find a market for products that we don't value here or that go to the renderer here. That's going to help both small producers and large producers.

As far as other businesses go, it's very well known that agriculture—we'll use Ontario as a prime example—is the number one driver of the economy next to the auto sector. If we find another market and if we have more profitability, that will help small businesses, whether they be electricians or plumbers or whatever, and it will help large businesses, whether they're packers or whatever. It's a win-win for all sectors, really.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Does anyone else want to add to that?

Go ahead, Madam Lapointe.

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

Thank you, Mr. Chair.

I want to welcome the witnesses and thank them for being with us today.

Mr. Everson, I would like to talk about SMEs and, more specifically, about auto parts manufacturers.

In my riding, the Raufoss company manufactures auto parts that are exported around the world. The parts are made from aluminum. We have a trade deficit when it comes to auto parts. We buy more of them from Europe than we export.

Do you think CETA will help that company export more to Europe?

[Warren Everson]

I do. I think we have to be careful not to assume that we know about the complexities of every sector. It becomes quite complex. Already, Canadian parts are extremely significant in certain chunks of the European automobile market. In other words, we have some very strong winners.

It's becoming hard to follow the track because people are functioning in the supply chains; a significant part of the auto parts from Canada is going to the United States, and some of that is finding its way into the world market over United States exports. While we put 70% of Canadian exports into the United States, only about 55% is actually intended for the United States. The rest of it is us and the Americans selling into the world, and some of that happens in auto parts.

I think the main virtue of CETA is opportunity. I think the challenge for Canada, for its government and its business, is to make that opportunity work by supporting smaller businesses and niche suppliers and the like. I think the value of this agreement will only become clear over the years as we exploit it.

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

Thank you.

Do you believe that small and medium-sized businesses know how to take advantage of the market that will open up to them once tariff barriers are removed?

[Warren Everson]

I think that's a really important question. Global Affairs has begun to talk to us about a promotion exercise that they would like us to participate in, and we certainly will.

I think we need to not assume that a small business owner is dumb. They'll see opportunities if we provide support for them. It's mostly information at this point, although we do think there's a very ambitious role for the Canadian Trade Commissioner Service in matching and helping smaller businesses. The complexity of that rises as there are more people playing.

I do think that's the way this agreement will work best for us. The Canadian economy is overwhelmingly a small business one, and a very small proportion of those businesses are exporting today.

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

Thank you.

My next question is for Ms. MacEwen.

Regarding drug prices, some witnesses have told us that free trade agreements hurt their pricing. Do you think the issue with the cost of medication in Canada is caused by anything other than free trade agreements?

[Angella MacEwen]

No. It's specifically the extension of patent protections in Bill C-30 that will cause prices to rise.

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

Our drug prices are already higher. How could you explain that situation?

[Angella MacEwen]

There are other reasons behind our higher drug prices and the fact that they're rising. Bulk buying is one of the things we can do to address that, but what CETA will do is increase it beyond how it's already increasing. Having a national pharmacare program, bulk buying, looking at other options to keep it low—

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

I am from Quebec and we have such a program. We have assurances when it comes to that.

Thank you.

[The Chair, Liberal, Mark Eyking]

Your time is up. Thank you.

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

Merci beaucoup. I'm like Mr. Hoback now.

[Voices]

Oh, oh!

[The Chair, Liberal, Mark Eyking]

We're going to move to the NDP now.

Ms. Ramsey, you have the floor for five minutes.

[Tracey Ramsey, NDP, Essex, ON]

Just quickly, I wanted to say something about the auto sector, because my colleague asked about it. The 2012 study commissioned by Foreign Affairs, Trade and Development Canada said that for the Canadian automotive sector a Canada-EU CETA would lead to a 0.16% decline in automobile production, and presumably those very integrated supply chains would be impacted.

My question is actually in regard to my colleague's last point about the cost of drugs. Twenty-five per cent of Bill C-30 is changes to patents. At this point, unfortunately, we have no IP witnesses scheduled to come before the committee on such a significant change. I believe the generics companies say that this is the most significant change in over 20 years in Canada.

Picking up on her point about what we can do to address this, you mentioned pharmacare and bulk buying, but I wonder if you could speak to the implications that CETA could have for the ability of Canada to bring in some form of pharmacare or bulk buying.

[Angella MacEwen]

What CETA will do is make drugs more expensive, which will make it more expensive to implement a pharmacare program. CETA itself doesn't restrict the introduction of a national pharmacare program—that's allowed—but it's clear that the single largest impact from CETA will be on prescription drugs. There's no clear benefit to Canada, because it only affects drug costs in Canada, not in the EU.

EU nations already regulate prices, so that's one other thing we could do. We could regulate drug prices. We could cap prices. We're told that nothing in CETA prevents us from doing this, but we have been shown no indication that the federal government intends to take any action on that front. Where we're talking about compensation, we should be talking about capping prices. We should be talking about insisting on R and D investment in Canada, which has fallen to 5% of sales when in the EU it's at 20% of sales in comparable countries such as France and Germany.

[Tracey Ramsey, NDP, Essex, ON]

What has been brought before this committee, certainly around the TPP, but not specifically around CETA, are the concerns on the ISDS provision, which in CETA has been morphed into a court system. There is very little language on the actual set-up of that court system in the bill that has come before us. What does this court system, the ICS, offer investors to Canada that our federal courts cannot?