International Trade Committee on Nov. 24th, 2016

[Josh Fine]

I see them on both sides of the business, for sure.

As our business grows, we've needed more people in marketing, we've needed more people in operations, and we've needed more people in finance, and just throughout.

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

Thank you.

I'll read this quickly. This is to Mr. Sinclair.

The chief trade negotiator informed this committee on November 15 that, regarding drug costs that are being reported, it was:

...very difficult to conduct that kind of analysis, mainly because the types of changes we will see with the changes to the Patent Act, particularly for the additional two years of protection, are not likely to kick in until the agreement has been in place for probably eight years or so.

In your analysis, how did you take into consideration the ongoing efforts of Health Canada working with the provinces to modify or reform our domestic health care system?

Sorry, that's a big question.

[Scott Sinclair]

I think it's true that it's very difficult to estimate the future costs. You should ask Joel Lexchin and Marc-André Gagnon these questions. They picked a representative sample of current drugs and estimated how many days the entry of generics would be delayed based on those two changes that I referred to previously. You should ask Industry Canada and Health Canada for their analysis of those changes as well.

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

Okay. Thank you.

[The Chair, Liberal, Mark Eyking]

We're going to move over to Mr. Van Kesteren.

You have the floor for five minutes.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Thank you, Chair.

Thank you all for being here.

Thank you, Mr. Sinclair, way across the ocean, for spending some time with us as well.

I was watching a program on TV the other night. It was actually an old movie about this photographer who was moving through Quebec. My mind just started to go with how we've progressed and how things have changed, and I think that at the very bottom of that lies trade. There have been other reasons as well, but trade has been the avenue that has allowed us to expand our world. I know there are differences of opinion and, as Mr. Ritz said, we talk to so many groups and we basically hear the same lines.

I'm going to go to you, Mr. Sinclair. I just want to ask you this question, because I've done this in every one of my committees. Can you point us to another jurisdiction, another part of the world, where trade has had a very negative effect? If there are reasons for that, do they mirror this trade deal? I don't know, personally, if there is such a jurisdiction.

[Scott Sinclair]

Thank you for the question. I think it should be clear from my remarks that you have to make a distinction between international trade and trade deals. Trade deals, increasingly, encroach upon matters that are only peripherally related to trade. Most of the low-hanging fruit of trade liberalization has already been harvested. Both Canada and Europe have very low average tariffs. There are tariff peaks and you've heard about them today. Yes, of course, I wish our exporters every success. I think trade is vital to the Canadian economy, but I'm very concerned that under the rubric of trade agreements we have inserted these very harmful provisions like investor-state dispute settlement and patent term extensions, which, I think you would have to agree, are actually the exact opposite of free trade. They restrict competition and they increase costs to consumers.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

I understand what you're saying. I think it should be noted that the low-hanging fruit you're speaking of with trade is in goods. Most of the trade deals have dealt with goods, but now we're starting to deal with insurance, banking, services, and those types of thing. Is there an example? We are evolving and as a civilization, we are changing and we're moving more towards globalization. Although there are risks, there have always been risks, but don't the benefits just so far outweigh those risks and haven't we done a good job or at least aren't we listening to some of those concerns of many of the people who are opposed to this movement? Don't you think those things are being addressed?

[Scott Sinclair]

Again, I actually do appreciate the question. I think that if governments do not listen to constructive criticism of trade agreements, say of the type that was heard from Wallonia and their First Minister, Paul Magnette, there is a risk that you will get the demagogic criticisms that we saw surface and lead to a path of victory south of the border. I think that risk actually represents a larger threat to the openness of the global economy than does actually sitting down and seriously addressing principled criticisms about trade deals having interfered too much with regulatory autonomy and democratic decision-making, or at least having a sober discussion about it instead of simply going to the barricades and saying any type of criticism is anti-trade, which it is not.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

I wish we could have a further discussion. I think it would be interesting, but we might bore a lot of people. I'm running out of time. I appreciate your comments.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Van Kesteren.

We're going to move over to the Liberals now.

Mr. Fonseca, you have the floor.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Thank you, Mr. Chair.

I'm going to continue my questioning with Mr. Sinclair and talk about drugs. Ten years ago, there was a lot of discussion that drug costs were going to bankrupt our health care system in Canada and something needed to be done. Well, something was done. A number of provinces have come together. Also different provinces took different steps in terms of their bulk buying or their procurement practices in terms of bringing forward best practices, and those drug costs have actually dropped significantly. Especially with brand-name drugs, they've dropped significantly here in Canada. We've also come to know that many brand-name drugs in Europe are actually less expensive than they are here in Canada.

Do you not foresee also a number of opportunities in terms of continuing to use steps like those used 10 years ago to lower our drug costs, with this agreement with Europe?

[Scott Sinclair]

I don't think the agreement provides any opportunities. I think it provides obstacles. I do agree that there are many opportunities to lower Canadian drug costs, which are about the third highest in the world.

We have a very generous system of intellectual property protection for brand-name drugs already. For example, if you want to point to one distinction between Canada and Europe, Europe does not have a patent-linkage system and I actually find it a little galling that the European Union has used the CETA to force us to change our patent-linkage system when it is not permitted within Europe itself. I see that there are European models that Canada could emulate to control drug costs, but I don't think the CETA would further that; I think it would impair it.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

What I'm saying is that it's very difficult to project out. If we had projected out 10 years ago, we would have seen a system that was going to go bankrupt. That didn't happen. So projecting out the way you're doing on this trade agreement—which would be a decade out—I think it's very difficult to come up with a number, like the numbers that have been thrown around, to say what our drug costs would be down the road.

[Scott Sinclair]

I think that the number that was published by CCPA and peer-reviewed is a credible estimate. I would like to see, as I said, the internal official estimates and, again, I think you should ask for them.

I'll just point out that a lot of the savings that you've referred to, over the last 10 years, depended upon the availability of cheaper generic substitutes for more expensive brand-name drugs, and that will be impaired by the changes in CETA.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Thank you, Mr. Sinclair.

To the other witnesses, first, it's been great just to see how trade is interwoven among all of you.

I do want to speak directly to dairy and to the cheese issue. I've heard from many of the small-business owners in my riding. My riding is made up of many Europeans—Polish, Portuguese, German, and Italian—and they've come to my office asking if CETA will make it a lot easier for them to import some of the cheeses that many of the consumers in my community want. They go over to their countries to visit their relatives, they taste the cheese, and they'd like to bring it back. The issue touches really Mr. Leduc, Mr. Littler, and Ms. Pohlmann.

I'd like to know, Ms. Pohlmann, whether CFIB represents some of those small retailers that would sell this kind of specialty cheese. How does all that work out? What can I tell them? They're really small retailers. Are they going to be able to import the cheeses that their consumers—Canadians—want in my community?

Go ahead, Mr. Littler.

[The Chair, Liberal, Mark Eyking]

Give short answers, please.

[Karl Littler]

I think the answer to that question is yes, and obviously any regime needs to contemplate smaller operators and specialized operators and, in some cases, those who cater to particular ethnocultural food groups and so on. Absolutely, we see that.

We're worried that, if the quota is allocated to the intermediaries who now exist, people who then turn around and rent quota, if it's allocated to the manufacturer side, which gives them another kind of hold on the pricing balance and so on, that ultimately some of that will come in, but it will be subject to some distortions and probably subject to higher prices.

[The Chair, Liberal, Mark Eyking]

We're going to have to move over to the NDP.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

Ms. Pohlmann, do you want to say anything about your members?

[The Chair, Liberal, Mark Eyking]

We're out of time. There's going to be some more time for the Liberals, if they want to get another question in there, but we have to move over to the NDP now.

Ms. Ramsey, you have three minutes.

[Tracey Ramsey, NDP, Essex, ON]

Thank you. I'd like to direct my questions to the dairy farmers. We've talked about the amount of loss. You're saying you're going to see a loss of $116 million per year. You're going to have $50 million approximately to apply through this new package from the government. It's my understanding the $250 million goes over a five-year period. Therefore, you're seeing a $66-million loss.

I wonder if you could tell me how that translates into losses of family farms?

[Yves Leduc]

The $116 million is the value of the milk that enters into the production of 17,700 tonnes of cheese. These losses would be once the agreement has been fully implemented, so it would be the value of the milk going into the 17,700 tonnes of cheese that would not be produced in Canada, and that would be on a perpetual basis. So it would be in five years, six years, seven years, 10 years, perpetually. Under the current system, had there not been an agreement with the Europeans, those cheeses would not have been imported into Canada.

We do recognize that there's been an effort on the part of the federal government to help the sector better position itself in the face of greater competition from imported cheese, through the package that was announced on November 10; however, this is a transition program whereby the farmers and the processors will be able to apply for some of those funds with a view to investing in their own businesses. This is not to compensate for the loss of income.

[Tracey Ramsey, NDP, Essex, ON]

It was $4.3 billion that was promised under the previous Conservative government, and now we see this amount coming forward that, from our perspective, is a drop in the bucket, no pun intended. What would you like to have seen, or what are you pursuing now, from the federal government on top off this package?

[Yves Leduc]

As I said in my opening remarks, we've publicly stated that we thought that was a good step and a step in the right direction. However, we would have liked to see an announcement with respect to some of the border measures that we have brought before not only the Liberal government but the previous government as well.

We would have liked to see an announcement with respect to how the new cheese TRQs will be administered, so there are a number of issues that have still not been addressed as part of that announcement.