International Trade Committee on May 9th, 2017

[The Chair, Liberal, Mark Eyking]

Sorry, Mr. Oliver, this is going to have to be one person with a very quick answer. Go ahead, please.

[Caroline Hughes]

Yes, an auto table would be an excellent idea.

[The Chair, Liberal, Mark Eyking]

Before we move to the Conservatives, I don't usually ask questions but I have a question for Ms. Marsden. Recently, I read an article in The Economist about the sugar industry in Europe, which said, I think, that 75% of Europeans used to get their sugar from sugar cane, but now it's almost all going to the sugar beets and they are changing their subsidies and quotas.

But that's over there. When we were in Colorado, we had a conversation with an agriculture representative down there about subsidies. Of course, we threw back the sugar thing and how it's been difficult for our sugar beet industry in Canada because of what the United States....

If we're going to go back to the table, and everything might be on the table, how do you think we should approach the Americans on the so-called subsidies and a new deal on sugar? What would you like to see?

[Sandra Marsden]

It's complicated. The devil's in the detail, of course, but I think the TPP approach is something to look back at. We obtained a modest outcome. Of course, we won't see that, but it did address a number of the issues that I talked about. We have quota limitations that have not kept pace with the growth of the U.S. market. For example, they are very small in the case of beet sugar and also in the case of a number of food products.

Regarding rules of origin, Canada can't export products that contain, say, sweetened cocoa powder that has cane sugar under quota, because it doesn't meet their rule of origin due to the sugar. So there are competitive inputs that we can't supply or that our customers can't supply to their United States multinational location.

End-use restrictions are something we experienced in CETA. Canada negotiated some new access under CETA. We don't face those end-use restrictions, or we won't, when CETA is implemented.

For example, a Canadian producer of frozen pies can't send a pie to the United States and have it baked in-store. It's considered further processing. There are some really outdated restrictions that were based on concerns three decades ago, which just don't have a place.

There are a number of things we can achieve to the benefit of all trading partners.

[The Chair, Liberal, Mark Eyking]

Thank you.

We're going to go to the Conservatives now. Mr. Ritz, you have the floor.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Thank you, Mr. Chair, and thank you, ladies and gentlemen, for your presentations today.

We get a crack at rewriting this, and it's not a bad thing. There have been 11 different times that NAFTA's been tweaked, but this is going to be more than a tweak. I don't think that's a bad thing, in and of itself.

One of the first things President Trump did was give a list of 40 issues to Congress, saying let's look at these as we renegotiate. Both Mathew and Matt, you talked about a study you're doing. Is that something you're keeping in mind, saying these are the issues, and these would be our 40...?

[Mathew Wilson]

We actually took that list and asked people what their priorities were around those specifically, so that's exactly what we—

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

So again, you're working from that list. You're not looking at it from the Canadian content side.

[Mathew Wilson]

We added a bit of Canadian flavour to it, just because we needed to. We also asked a bunch of open-ended questions around it, but we actually went to that original list in the leaked TPA document and asked, what are your priorities around each one of these? They were things like supply management, services, all those things. We've included those in our list, yes.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Good, thank you.

The one thing government never does well is work at the speed of commerce. We have all these silos, and even when you talk about a whole-of-government approach, you can never get it done because the bridge from industry doesn't get to trade, doesn't get to ag, doesn't get to...you know. That's something that's always a constant fight.

When you are global in scope—whether you're based in Canada or based somewhere else and global in scope—you're always, as you said, David, arguing for investment here because this is your backyard. How do we address the inequities in taxation, regulatory burden, and red tape? Now we're looking at a border tax and a carbon tax, and by the time you add all this stuff up, you create these huge disparities. How do you take all of that into consideration when you look at making investments in this country or elsewhere?

[David Paterson]

You've outlined very well some of the key things we look into. In fact, hats off to the Ontario and federal governments, which have actually assigned someone to come to us and ask for our list, for the first time. There's a process we go through, and part of it involves our negotiations with labour, because that's a controlled cost we can come up with together.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

You're looking for that predictability and stability.

[David Paterson]

We look at all the policy aspects. Famously, we talk a lot about electricity costs right now in Ontario.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Recycling....

[David Paterson]

On recycling, we can get a competitive advantage by being landfill-free here in Canada, and we do that. There are some advantages we can take from some of the environmental policy here, too. If we can align our efforts to reduce greenhouse gases, which we're darned good at, and save money by paying less in terms of inputs for energy, we can be more competitive.

We are constantly trying to find one inch more of competitiveness to be able to make the case that the next investment should come here to our plants, and it's the sum total of all those things: public policy, labour costs, and overall costs. Currency exchange is a big factor in it. Of course, it's the supply chain, its effectiveness. The innovation base of that supply chain is critical for the future, and then we just have to innovate.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Sure.

Mr. Sinclair talked about there being labour standards in NAFTA, which are never measured up. Mexico keeps punting them down the road. Now they're talking about 2020. If there were chapters in their labour standards, environmental standards, regulatory standards, and monetary standards that actually had teeth in them, would that then set a stronger parameter for government to do what industry needs government to do, or is that getting too intrusive?

[Caroline Hughes]

No, in fact, that mirrors the recommendations that we have as an industry, and it mirrors the AAPC recommendations in the U.S. to the U.S. government.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

When we started the beyond the borders plan, the tough part was to get the Americans to pay attention. They used it as a backstop. It's basically a non-tariff trade barrier. They can pull out whatever they need and say, “No, not today.”

How do you end up with fair trade as well as free trade?

[Caroline Hughes]

One recommendation we are making specifically on fair trade versus free trade is to incorporate currency manipulation into NAFTA because, again, we're all looking to export from NAFTA outside the region. We see currency manipulation ongoing in key markets that are closed to our products, and that sets up a very unlevel playing field for our workers.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

The U.S. talked about hooking that into TPP. I saw an interview with Mike Froman the other day, and he said basically if you're tweaking NAFTA, TPP is the model; and you work to some of those standards. But, again, they didn't go as far as currency manipulation because nobody—Japan especially—would entertain it; and the Americans are some of the worst currency manipulators, without pointing fingers.

[Caroline Hughes]

Despite the fact that Japan has agreed to the IMF standards, and the leading economists have suggested a currency discipline based on a simple, three-part test based on IMF principles that all of the parties to TPP had agreed to outside.... But they don't want the teeth in the agreement.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Yes, it wasn't in the agreement. It was attached to it.

[Caroline Hughes]

We're proposing putting teeth in the agreement, putting it in NAFTA, and making that the gold standard as we go forward to other trade agreements.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Good.

[The Chair, Liberal, Mark Eyking]

Thank you. We're up to your time and we're going to the NDP now.

Ms. Ramsey, you have three minutes. Go ahead.