International Trade Committee on March 8th, 2016

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

In a Maclean's article, Trevor Tombe says that access to cheaper parts will ultimately lower the price of the car and this is beneficial for both consumers and producers. With lower production costs, cars will become more affordable for consumers and equally the auto sector will have increased export opportunities.

Would you agree with that statement, or do you have any concerns, Ms. Craig?

[Dianne Craig]

I would not agree with that statement.

I think it's going to reduce the cost for the producers. It is not a given that it's going to be passed on to the consumers. We can just look to last year with the South Korean free trade agreement and what's happened with Hyundai and Kia products that have come into Canada. Their prices have not gone down. They have gone up.

You price to the market and if you have an opportunity to reduce your costs, you're going to do so.

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

Mr. Dias, did you have something to add?

[The Chair, Liberal, Mark Eyking]

Your time is up for this round.

We still have roughly 10 minutes left for the second round of questioning with the witnesses we have.

There was a question from Ms. May, but the clerk has informed me there has to be unanimous consent for the member to be able to do that.

She's just asked for a couple of minutes. Do we have agreement? Okay, Ms. May, you have two minutes—sorry, we don't have unanimous consent?

[Elizabeth May, Green, Saanich—Gulf Islands, BC]

Mr. Chair, I appreciate your efforts and I'm sorry the Conservatives will not let me speak at this committee.

Thank you.

[The Chair, Liberal, Mark Eyking]

Okay, we're going to move on to Mr. Peterson. These rounds have six minutes and we're probably only going to have two questions.

[Randy Hoback, Conservative, Prince Albert, SK]

Mr. Chair, I have a point of order.

On this whole handling of Ms. May, as I've said to you before, I have no problem with her coming and asking at the end of the session once everybody else has had a chance to discuss and have their rounds, because these rounds have been set up and it's been very tightly scripted on who gets what.

I'd be willing to share some of my time with her in the last round if she wants to wait until the next round of witnesses and speak then, but for her to try to insert herself at this point and without any warning to the chair that she was coming today is not appropriate. It makes it really awkward. We have our questions that we want to get on the floor and if we insert her now and then I don't get a chance, nor do the Liberals, nor do the NDP, that's not fair to the rest of the committee who are working on this file day in and day out.

[The Chair, Liberal, Mark Eyking]

Your point is taken, Mr. Hoback.

Maybe when we start the second round if we want to bring it up again then, we will.

We're going to finish this round and go from there.

We're talking about the next set of witnesses.

Sorry for that, Mr. Peterson, because we'll probably only have two questions left. You have six minutes.

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

I'm going to split it with Ms. Lapointe, if that's okay. I just wanted to make sure we get that, so I'll take three minutes and let me know when that's up.

First of all, to the witnesses, thank you for the presentations. They were very informative, and we appreciate your taking time to come here and for putting the work into these presentations.

Mr. Dias, you mentioned in your comments about structural issues in the Japanese economy that present more barriers to trade than the tariffs do. Can you elaborate on what those are?

[Jerry Dias]

Of course.

Japan manipulates their currency better than anybody. That's why their export industry, especially in auto, is so successful. On top of that they have a culture whereby if you buy an imported vehicle, there are frequently taxation issues, and there's a whole culture of making sure they buy Japanese vehicles within Japan. So it's structural as it relates to their trade policies, how they deal with trade, but all the decisions they make are geared to a successful export industry.

To the credit of the Japanese citizens, they understand the importance of buying Japanese.

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

Ms. Craig, on the currency manipulation, you alluded to the IMF and WTO provisions about how to deal with those scenarios, but you're saying they are not effective.

Could you elaborate on why they are ineffective? Is there a way to address these issues when it comes to the TPP?

[Dianne Craig]

To add to what Jerry said, Japan has a very strong automotive manufacturing industrial strategy. The Japanese companies produce in Japan nine million vehicles. They only sell four million. Because their entire industrial base is so strongly geared to manufacturing, the production has to go somewhere. This is the reason they are so keen on trade agreements and the opportunities to export more to Canada.

On the IMF and the WTO, they just haven't been effective. The principles have been there, but for whatever reason they have not been enforced, even when we know we have had currency manipulators.

Caroline, do you want to speak a little more about our thoughts on making the IMF more enforceable?

[Caroline Hughes]

Certainly. As I mentioned, the IMF has a strict definition of currency manipulation. In fact, there was a proposal put forward as part of the TPP negotiations in the U.S. It was developed by external experts in monetary policy and external economists. It suggested how you could take those IMF principles and in a simple three-part test put them into a trade agreement. If a country failed to meet the three-part test, there would be a remedy. We would suggest the remedy should be that the tariff goes back on the imported goods until such time as the currency manipulation ends.

That three-part test is as follows: Did the TPP member have a current account surplus over a period of time? Did it add to its foreign exchange reserves over that same period of time? Are the foreign exchange reserves more than sufficient?

All three of these are what the IMF uses when they evaluate currency manipulation. In fact, I'd be happy to have this proposal translated and submit it to the committee if you're interested in having it.

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

I'm going to defer to Madame Lapointe, who has a few questions.

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

Thank you, Mr. Chair.

I thank the witnesses very much for being here with us today.

I would like you to answer briefly because I have a lot of questions for you.

Ms. Craig, you said that the current agreement needs to be amended. In your opinion, what should be changed in this agreement? Earlier you said that other manufacturing sectors and other businesses could be impacted in a negative way. What businesses did you have in mind when you said that the agreement could have negative effects?

[Dianne Craig]

I apologize. I missed the beginning of the question.

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

I asked you what should be changed in the current agreement. In your opinion, what is not the way it should be in the current agreement?

[Dianne Craig]

There are two things, and if we change just these two areas, Ford would be supportive of the TPP. First, we need to have the tariff phase-out match that of the U.S., so 25 years on cars and 30 years on trucks. Second, would be to add currency disciplines. As Caroline just outlined, with the IMF principles in place, we could understand what the provision would be regarding the snap-back, when it would happen.

Those are the only two things. We want to support the TPP.

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

You also mentioned that other business sectors may be negatively impacted. Which ones did you have in mind when you said that?

[Dianne Craig]

The small automakers in the auto industry will be harmed by this agreement. There are lots of global automakers in Canada that have supported the TPP because of, as I mentioned earlier, self-interest for the organizations, the companies, versus what is in the interests of Canada in the longer term.

That's why the smaller manufacturers of auto parts will be harmed.

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

Thank you.

Mr. Dias, you said that you are a unionist and that you represent the automotive industry. You also referred to telecommunications, health care, the media and agri-food.

What impact would the agreement have on these industries? Do you think it would be the same as for the automotive sector?

[The Chair, Liberal, Mark Eyking]

Please keep it short, Mr. Dias, because the time is up.

[Angelo DiCaro]

Yes, I'll try to keep it short.

[Jerry Dias]

Because I can't.

[Voices]

Oh, oh!