International Trade Committee on Nov. 24th, 2016

[Tracey Ramsey, NDP, Essex, ON]

If that quota goes to retailers versus staying with the cheese producers, what will that mean then?

[Yves Leduc]

That means that some of the profits, or the proceeds generated from the importation of that cheese will go into the hands of the retailers only, as opposed to being potentially used by some of the smaller or medium-sized cheese makers.

I'll go back to the alliance that I talked about earlier. The alliance has agreed to put in place a market development fund not only to help position the cheese that they might be able to import but also to help position and grow the Canadian cheese market at the end of the day.

[The Chair, Liberal, Mark Eyking]

Thank you.

I think we have enough time for one more round of five minutes for each party, so maybe we'll start off with the Conservatives.

Mr. Hoback, you have the floor.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Mr. Chair.

It was very interesting to see Angela Merkel on the news yesterday talking about TPP and the multilateral state and concerns about how some people are saying that we should go back to just bilateral agreements and the dangers in that.

That's one thing. We look at CETA and TPP and look at the multilateral aspect, and we also look at the fact that there is commerce involved, for sure. One thing we never really talk about in committee is the other things that are involved. There is the cultural exchange of people, the security exchange, and the understanding of being part of a global supply chain.

I think Kyle touched a little on being involved in supply chains and getting people involved in those supply chains. Then because they have parts from Germany and parts from Ontario going together, they can compete with parts from China.

I'm just kind of curious. The retail association must be really interested in seeing exactly what that's going to look like in new consumer goods and new products. Will it mean a drastic change in the flow of goods coming from other parts of the world into Canada instead of coming from Asia? Will we see more products coming out of Canada and coming out of Europe, or a combination of both?

[Karl Littler]

I'll try to field that.

It's pretty speculative. We certainly looked at the implications of the loss of the TPP, because we are now presuming that it is a loss, and the gains on CETA. We looked at the kinds of goods that were being brought in, and there is quite a differentiation between them.

Roughly speaking, we have TPP, at least on consumer goods, as being about twice the size of CETA, frankly, but the CETA impact is hugely significant in the grocery space and in the apparel and footwear space, and a few other fairly specialized places, whereas the TPP was somewhat more diffuse.

Do we envisage a world in which goods with a more sophisticated supply chain mix might compete for other sources? I think that's probably a bit beyond the retailers' brief but we'd certainly like to see that.

[Randy Hoback, Conservative, Prince Albert, SK]

Again, it comes back to the history of NAFTA and what has happened there. You have three countries taking the strength of three countries and building products within the three countries, using resources that are strengths in each of the three countries, and competing against the Brazilians, the Chinese, people from India, and people from Europe.

Now I look at the strength that Europe would bring to that portfolio and the quality of manufacturing products. When I see the robotics and the manufacturing concepts, I think this must be exciting for what can be developed and built with these types of expertise coming together.

Corinne, you've done some polling and stuff like that. Of course for anything to really happen, we have to be competitive. Our companies have to have the same competitive playing field to locate those facilities here in Canada versus in other parts of the world. Are they concerned about things such as carbon tax and high power rates? Is that coming up in your surveys? Are they very concerned about the fact that they would be paying fees on things that definitely don't add value to their product line, at least not a value that you can charge for in the marketplace? It might have good value in making you feel better, and it might reduce the global consumption of carbon, for example, but the reality is that they're going to pay a lot of money. What are they telling you, and what are the concerns there?

[Corinne Pohlmann]

Certainly you need to be competitive in order to expand and grow your business; there is no doubt about it. I think some recent initiatives have certainly worried a lot of small business owners.

Just this morning we released our monthly business barometer, and one of the most startling things we've been seeing just in the last couple of months is a bit of a reversal in hiring intentions. We're now seeing more planning to lay off than to hire, which is sort of unusual, and it's been two months in a row now across Canada.

[Randy Hoback, Conservative, Prince Albert, SK]

Is that because of changes to CPP?

[Corinne Pohlmann]

It's deeper in some parts of the country than in others.

What's that?

[Randy Hoback, Conservative, Prince Albert, SK]

Is that because of changes to CPP or just lack of confidence in the Canadian economy now?

[Corinne Pohlmann]

I think it's a combination of factors. It's confidence in the economy; it's measures being taken, not just federally but provincially as well, across the country that I think have caused a little bit of cautiousness among small-business owners.

We're still monitoring it closely and trying to understand why we're seeing this higher number. I think about 20% are planning to decrease, and about 10% are planning to increase, which is worse than we've seen in a while, and it's something we're starting to worry about.

For now we'd just like to try to maintain the jobs we have right now. I think that's important. The small-business sector has always kept that stability in the marketplace. They're the ones who are the first to hire and the last to fire, so if they're starting to look at ways to reduce some of those costs, then I think that's a bit of a canary in a coal mine type of thing that we have to watch closely.

[The Chair, Liberal, Mark Eyking]

Sorry, Mr. Hoback, you're out of time.

We're going to move over to the Liberals.

Ms. Ludwig, you have the floor. Go ahead.

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

Thank you.

Ms. Pohlmann, your slide about the level of support for international free trade agreement looks as though it's about all free trade agreements. Are you able to tell us about the support for CETA on its own and also about any regional differences in the support of CETA?

[Corinne Pohlmann]

The question wasn't specifically about CETA. As you can see, it gave CETA and TPP as the examples, because at the time we did the survey, TPP was still very much in play, so I don't have numbers specific to CETA. I can, however, certainly give you the regional breakdown of this particular chart, so you can see it by region of the country and even by sector of the economy.

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

That would be great. Thank you.

I'm honoured to represent the riding of New Brunswick Southwest. We are very overwhelmingly supportive of CETA. It's really felt that, in the Atlantic region, we are strategically located as a linchpin between the U.S. and Europe.

How do you think we can best explain that message and not only help on the export side but also help domestic businesses benefit to see what value opportunities are there?

[Corinne Pohlmann]

I think there were some comments earlier about looking at those global value chains. I think that's an important piece and a lot of smaller firms don't quite understand how those work and how they can seek those out. That's where I think we can also help grow some domestic firms that may not want to go straight into trade yet but that could potentially feed into companies that are doing that international type of trade.

I think there are ways we can probably do a better job of explaining what those opportunities look like domestically and how those feed into some of these opportunities that come from CETA with new markets—

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

I have one final question, because I'm actually sharing my time. What is your recommendation regarding the best way to share that information with the micro businesses? More than 50% of businesses in the Atlantic region have one to four employees. It would be very difficult for the person who is operating the business to take time out to understand trade. So, how do we get that group of businesses to benefit from these trade agreements?

[Corinne Pohlmann]

That's a very good question, and it is always going to be, I think, a difficult one to answer. I do think e-commerce is where a lot of those smaller businesses go first. I have to agree with Josh Fine that they just have to try it. They have to experiment with a client in another country and then see where that takes them. I think just taking that plunge is really, really important.

In fact, I do want to mention, in response to your previous round of questioning, that there aren't a lot of small exporters that have not had to find out the hard way how to do it. Every single one of them has run into some issues, whether shipping issues or fines by the government for filling out a form wrong. The problem is that not all of them will continue that process if those things keep happening.

So it's about making sure they continue to move forward and continue to try, because it does get easier as they understand the process.

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

Thank you very much.

Go ahead, Peter.

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

What I have heard about the CETA agreement and why it is such a terrific agreement is that our values are so aligned with those of our European friends and there's a level playing field.

The European countries that are part of this agreement have signed on to the Paris agreement; they have robust social services, and they have universal health care in their countries. We've heard that because there are those similarities to Canada, this progressive agreement can move forward and can be a win-win for both parties, the EU member countries and Canada.

Ms. Pohlmann, I just want to go back really quickly to you and your members. I'm thinking about that small retailer of cheese that has 0.001% and sells cheese, but it wants to bring in some more cheese from some of its customers' countries of origin.

[Corinne Pohlmann]

Certainly, we have some of those among our membership, and having the opportunity to do that would be, I think, an important element.

However, I also need to point out that we also have dairy producers as members, so I think we really need to make sure we're balancing. I don't take a position either way.

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

Mr. Littler, would they get part of this quota? Would you see those small retailers also getting part of that quota, at whatever percentage they would have?

[Karl Littler]

Yes, I would. Absolutely. We've supposed that it is based on prior years'...but you'd have to have some aperture for new entrants; otherwise, it would perpetually be sealed among a group of established players. There would always need to be enough flexibility to allow that.

But beyond that, it wouldn't be size-driven. It would just be, “What is your share of the market?”

So, absolutely, I would see there being an allocation for small vendors.

[The Chair, Liberal, Mark Eyking]

Thank you.

We're going to move over to the NDP and—

Oh, sorry, Mr. Leduc. Go ahead, sir.

[Yves Leduc]

I just wanted to intervene on that question.

We think what we're proposing by allocating the cheese quota to cheese makers will also allow for opportunities for the cheese makers importing cheese into Canada to establish long-term relationships with the retailers and to import the type of cheese the retailers need to fulfill those ethnic markets, at the end of the day.