International Trade Committee on Feb. 25th, 2020

[Scott D. Smith]

The shortcoming is that there was a lack of possibility, as I understood it. Again, we're not into the details of the investigation that they made. We fed in the information and our concerns, but it was expressed to us that there was a lack of legislation and support for solving this problem today on the legislative books of Canada.

We are working with ISED and the copyright team on the review of the Copyright Act and the things they can do there. Their indication is that this is a process that's very long—it may be 10 years out—and that's not going to work for us.

[Michael Kram, Conservative, Regina—Wascana, SK]

Okay, I'll leave it at that.

Thank you, Madam Chair.

[Jamie Pegg]

May I add to that?

[The Chair, Liberal, Judy Sgro]

Yes, please go ahead, sir.

[Jamie Pegg]

It is really important that we understand when we talk about that—because the competition question has been brought up—that they recognize there is a problem there. They recognize that not only are we going to have a problem, but that all these other short-line industry people are going to have a problem as well. What they are saying is that we don't have anything to stick it with. That's what we're looking for. The opportunity came to present to this group here, to present on an act that we've reopened again, and this is our opportunity to be pro-Canadian and to really watch for an industry that's been really strong for it. That's the message we want to bring.

I'll repeat it over and over again. It is critically important and not just for Honey Bee. There are others that don't see this yet, but they're going to see it very soon. We want to be on top of that.

[The Chair, Liberal, Judy Sgro]

Mr. Hoback.

[Randy Hoback, Conservative, Prince Albert, SK]

This is, again, for Honey Bee.

A few years back when David Anderson was your MP, he was talking about labour issues that you were having in Frontier and how there were farmers in Montana who would love to come across the border to work for you, but there was the issue of getting them across the border.

Do you see anything in the USMCA that may alleviate those concerns, or is it actually a concern anymore in light of all the layoffs and what's going on in Alberta?

[Jamie Pegg]

That's a great question. I worked on that intimately, and our solution at that time was to go overseas to bring future Canadians into our workplace. That was done very successfully. We want to highlight that. We have a lot of people who have come. The dynamic of our community has changed significantly. We have a Filipino cultural club there and other cultural clubs—

[Randy Hoback, Conservative, Prince Albert, SK]

You may have to explain how big Frontier is for the other members so that they can understand this.

[Jamie Pegg]

The best way to describe how big Frontier is would be the example we use so that we have some recognition of this. The nearest stop light, the nearest Tim Hortons, the nearest Starbucks or McDonald's is 160 kilometres away.

There are people who really enjoy the freedoms that are offered there, the differences that are there. It's a great opportunity for the right person. That's one of the great things about Canada that we have here, that we have those opportunities.

To come back to your question, Mr. Hoback, in terms of the United States agreement, one of the things we struggle with occasionally is to get experts there, to get experts into Frontier, whether it be around our MRP system, the design around that, or.... We had an expert who worked with us. Over the course of the last few years, that was rejected because they felt that it was taking a job away from a Canadian, which wasn't true. The difficulty of bringing that person in had a big impact on our company because we were having a lot of success with the computer writing and what needed to be done wasn't there.

In terms of the new act, I'm not familiar enough with it to be able to answer that question, but I think that behind it we hope there are possibilities to bring those people across the border. We're 10 miles away. There are people who would love to come and be part of that workplace. It's a huge recruiting effort to bring people in. That's one of the privileges and also difficulties of living where we do and doing business where we do.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Hoback.

Are there any further questions? Is everybody okay?

All right, we will suspend for 15 minutes until our next panel is ready.

[The Chair, Liberal, Judy Sgro]

I'm calling the meeting to order.

Pursuant to the order of reference of Thursday, February 6, 2020, we are studying Bill C-4, an act to implement the agreement between Canada, the United States of America and the United Mexican States.

With us in this next short while we have, from the Canadian Council for Aboriginal Business, Tabatha Bull, chief operating officer; and from the Greater Vancouver Board of Trade, Bridgitte Anderson, president and chief executive officer. By video conference from Halifax, we have the Toronto Region Board of Trade, Leigh Smout, executive director, World Trade Centre Toronto.

I will open with Mr. Smout.

Please, go ahead.

[Leigh Smout, Executive Director, World Trade Centre Toronto, Toronto Region Board of Trade]

Thank you, Madam Chair.

I would like to express our thanks to the Standing Committee on International Trade for allowing us to address you today.

My name is Leigh Smout. I'm the executive director of the World Trade Centre Toronto at the Toronto Region Board of Trade.

I'd like to make a few comments.

Canada is a trading nation. Because of our small population, we're much like a small island nation. We cannot grow that international trade. Trade results in three main things, prosperity, growth and jobs, and it's as true for any small business as it is for our geographically large, but small population nation. Without international trade, Canada cannot accomplish any of these objectives. One in five jobs depends on trade. In Ontario alone that is 1.3 million jobs, and the U.S. and Mexico are our closest major trading partners with a geographic connection that is unique to Canada. The U.S. alone is responsible for buying 75% of our exported goods and services. We are a highly important partner to the U.S., but we are far less important to them than they are to us, and this puts us at a disadvantage in negotiations with them.

Our next closest trading partner, China, is not even 5% of our exports. The World Trade Centre trade services arm of the Toronto Region Board of Trade has two mandates: grow Canadian businesses through international trade and help Canadian businesses diversify their markets away from the U.S.

Both mandates are a long game. Our trade accelerator program, TAP, helps SMEs from coast to coast develop their export plans and connects them to all the resources that can help them trade, including the trade commissioner service, Export Development Canada and Business Development Canada, as well as the private sector experts in legal, tax, process, finance, etc.

An example is Core LED. They're a company that came through our very first TAP back in 2015. They were happily doing three million dollars' worth of business in retrofitting places with LED lighting and they didn't see the need to grow their business. They had enough sales, but they didn't see how they had the capacity to operate in larger numbers. Through TAP they met RBC and BDC, which were able to help fund the growth of their production capacity.

Not having any thought of international trade to service their sales domestically, they decided that since they had the capacity they would take a look south of the border. They found two large $5-million contracts. One was retrofitting a military base, the kinds of things they had never thought of. They were helping [Technical difficulty—Editor] at that point. When they came to talk to us a year after the TAP, they said that taking a look at international trade had changed the view of their business. A year later, from being a $3 million revenue company, they were going to do $12 million that year, and they expected to do $20 million the following year because they had decided they would look further afield than the U.S., and then $50 million eventually.

International trade, including starting in the U.S., has completely changed the path of that business. Without our free trade agreements, they would not have had the competitive advantage they had in the United States.

Although TAP companies focus a much improved 70% of their efforts into markets other than the U.S., and we will shortly graduate our one-thousandth company, this can only make a small dent in our dependence upon the U.S. The Board of Trade has over 13,000 business members and our community tells us they need CUSMA in place. We need it ratified by Canada, as has already happened in Mexico and the U.S.

It is our understanding that the business community feels it has been consulted to a degree that's unparalleled in free trade negotiations. In developing the details our voices have been heard.

Although our sense is that the new agreement may not be as favourable to Canada as NAFTA, we nonetheless think it is a much better situation than living with the truly destructive results of a lapsed NAFTA . We also worry about current U.S. political volatility. Therefore, we're hopeful and we respectfully request that all political parties see the value and necessity of ratifying CUSMA as soon as it can be accomplished.

In our own efforts to continue to break down barriers for businesses of all sizes, we submitted a proposal to the Department of Finance for the unilateral elimination of 101 low-yield tariffs. That can save businesses $773 million in duty and compliance costs every year in two priority sectors: manufacturing and clean tech. The real cost is compliance; it's not the tariffs. The tariffs are not netting a great deal of money for the Canadian government, but compliance is costing companies significantly.

Overall, import tariffs cost both Canadian consumers and businesses, harming our nation's competitiveness by increasing input costs and drowning Canadian businesses in red tape. Our proposal identifies several compelling reasons for unilateral tariff elimination, demonstrates international leadership in reducing trade barriers, cuts costs and red tape for business, boosts competitiveness and economic growth, supports growing industries, and reprioritizes border resources, all the things we need in our future agreements, for instance, and in CUSMA as well.

In addition, once we have CUSMA ratified, the government needs to support organizations like our own across Canada to ensure that we have the capacity to help Canadian businesses understand the changes from the NAFTA rules, with which they are familiar. A focused and concentrated effort should be undertaken so that the uptake of the agreement is not skewed in favour of our trading partners in the same way that has occurred with the Comprehensive Economic and Trade Agreement , CETA, with the EU, such that European countries have grown their exports to Canada much more rapidly than Canadian companies have grown our exports to Europe, leading to a trade imbalance and leaving us to play catch-up.

Thank you again for allowing the World Trade Centre to address this illustrious committee today. I look forward to any questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll now go to the Canadian Council for Aboriginal Business, and Ms. Bull.

[Tabatha Bull, Chief Operating Officer, Canadian Council for Aboriginal Business]

[Witness spoke in Ojibwa and provided the following text:]

Aanii, Tabatha Bull n'indignikaaz, Nipissing n'indoonjibaa, Migizi dodem.

[English]

Hello. My name is Tabatha Bull. I am from Nipissing First Nation, and I belong to the Eagle Clan.

Thank you, Madam Chair and all the distinguished members of the committee.

I want to begin by acknowledging the Algonquin peoples for hosting this meeting on their ancestral and unceded lands.

I am the chief operating officer for the Canadian Council for Aboriginal Business, CCAB. I'm honoured to speak here on behalf of our association regarding Bill C-4.

CCAB supports corporations and governments to engage directly with indigenous businesses so that they may take advantage of mutually beneficial opportunities. Our work is backed by data-driven research, recognized by the OECD as the gold standard on indigenous business in Canada, on the barriers and opportunities for indigenous businesses, business capacity and supply chain analysis that has informed both government and corporate policy.

Through our research, programming and events, CCAB has earned the confidence of both indigenous and non-indigenous businesses in Canada, established a leading procurement platform and achieved meaningful results for indigenous companies over the past 37 years.

Our research work has led to a threefold increase in corporate commitments to improve indigenous relations and procurement—over $100 million in provincial government funding commitments to indigenous businesses.

We currently have close to 1,000 indigenous and non-indigenous business members working toward a more prosperous and diverse Canadian economy.

We were very pleased to be invited to participate as a member of the Global Affairs indigenous working group on trade.

We were also extremely pleased to see the involvement of National Chief Perry Bellegarde in the renegotiation of NAFTA and in the invitation to us here today.

As a result of this inclusive approach to trade negotiation, this work resulted in the most inclusive international trade agreement for indigenous peoples to date.

I echo the comments by National Chief Perry Bellegarde, when he testified on June 18, 2019, and those of Judy Whiteduck and Risa Schwartz, when they testified on February 20, 2020, that this agreement is not perfect but to date it is the best we have in Canada.

With the ratification of the Canada-United States-Mexico agreement, we would take a step to make international trade more aware of and more equitable in its treatment of indigenous peoples, and especially indigenous women entrepreneurs.

The aboriginal trade interest is not presumed but instead strongly asserted through the positive economic trends that have been observed by the CCAB within the aboriginal private economy.

ln 2016, aboriginal peoples contributed over $30 billion to Canada's GDP, $12 billion of which was generated by aboriginal businesses.

Through trade agreements and treaties, the Canadian Council for Aboriginal Business finds immense value in promoting and supporting the distinct demand of the aboriginal private economy to facilitate and substantiate economic growth.

By reducing barriers and creating fair, equitable and inclusive trade conditions, the aboriginal private economy will be provided with equal footing to Canadian and North American business and service providers through trade exclusions, intellectual property and provisions and by expanding labour mobility policies to honour the unique barriers and operations of aboriginal service providers and enterprises.

With the levelling of the economic playing field through targeted trade policies, aboriginal enterprises and service providers can benefit from increased market access, procurement and investment opportunities.

Importantly for the CCAB, we believe that with specific preferences to carve out procurement benefits and other opportunities for indigenous businesses and service providers, there is also a promise of future co-operation to enhance indigenous businesses.

Procurement is of interest for the CCAB, as our research has found that indigenous businesses can supply 24.2% of the goods and services purchased by the federal government annually.

We appreciate that the Government of Canada has committed, through the mandate letter to the Minister of Public Services and Procurement Canada, to have at least 5% of federal contracts awarded to businesses managed and led by indigenous peoples. This target is achievable, and the CCAB wants and is willing to work with the Government of Canada to meet and exceed this target.

CCAB believes that trade with the United States is directly tied to the future economic success for aboriginal business and hence directly tied to the prosperity of indigenous peoples across Canada.

Our research with Global Affairs Canada showed that indigenous businesses are twice as likely as non-indigenous businesses to export. Of indigenous companies, 24% export today, which means more than 13,000 indigenous firms are exporting. As well, indigenous women are more likely to export than indigenous men.

While the Canada-United States-Mexico agreement is a new example of the difference it makes to engage with indigenous people at an early stage, there must be increased opportunities for participation of indigenous peoples not only in international trade negotiations in decision-making as per UNDRIP but also in trade missions.

Programming and support need to be provided to indigenous communities and leaders to build capacity in trade to ensure that their participation is meaningful and resourced appropriately. The CCAB looks forward to continuing our important work on the Global Affairs indigenous working group to support the inclusion of language in Canada's current and future trade agreement negotiations, including with Mercosur and the Pacific alliance countries.

The CCAB also welcomes the opportunity to be more actively involved in the planning and execution of trade missions to increase indigenous exports.

Thank you for the time. Meegwetch.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Now we have Ms. Anderson from the Greater Vancouver Board of Trade.

[Bridgitte Anderson, President and Chief Executive Officer, Greater Vancouver Board of Trade]

Madam Chair, I would like to thank the committee for the invitation to speak and for all of the hard work you are doing to make this important agreement as robust as it possibly can be.

My name is Bridgitte Anderson. I am the president and CEO of the Greater Vancouver Board of Trade.

I would also like to recognize that we are on the traditional territory of the Algonquin people.

For over 130 years, the Greater Vancouver Board of Trade has worked on behalf of our region's business community and our over 5,000 members to promote prosperity through commerce, trade and free enterprise. Our mission is to work in the interests of our members to promote, enhance and facilitate the development of the region as a Pacific centre for trade, commerce and travel.

British Columbia's economy relies on its trading relationship with the U.S. Our natural resources, including lumber, oil and gas, and metals and minerals, are some of our largest exports. The value of B.C.'s top five exports to the U.S. is $22 billion a year.

A wide spectrum of industries benefit from our trading relationships in two B.C. examples. B.C.'s tourism industry employed 138,000 people in 2017. It generated $5.4 billion in export revenue, an increase of 7% from 2016.

Film and television is another bright spot in our economy that is experiencing rapid growth. B.C. is now the third-largest motion picture production hub in North America. The sector's GDP increased at an average annual rate of 15% between 2010 and 2018, five times the economy-wide pace. The creative sector contributes over $6 billion to the B.C. economy, with a workforce of nearly 110,000.

B.C. has the most diversified trading relationships in Canada, but the U.S. is still our largest trading partner. As of 2017, just over 50% of our exports in goods went to the U.S., followed by China, Japan, South Korea, the EU and India.

Our country is a small trading nation that relies on access to other markets. Our economy depends on trade and on the trade agreements that help bring our Canadian goods to international markets. International trade is especially important to B.C., where we experience a double benefit from trade from selling Canadian goods and from moving the goods by means of our gateway sector, including port, rail, air and road.

Our gateway sector in greater Vancouver alone contributes $20 billion to the national GDP, supports nearly 185,000 jobs and contributes $2.4 billion to the Canadian government in taxes.

The Greater Vancouver Board of Trade supports the ratification of CUSMA and the passage of Bill C-4 and offers the following reasons for support and recommendations for the committee to consider.

First is certainty. The new agreement will bring much needed certainty to Canada's business community. Over the last few years, global trade has been disrupted by the rise of protectionist measures, particularly from our most important trading partner.

The uncertainty has only been intensified by the protests and blockades we've seen across the country over the last few weeks. Shutting down rail access, roads, ports and bridges has hurt and continues to hurt the livelihoods of thousands of people, communities and virtually every sector of our economy. In greater Vancouver alone, right now there are 60 to 70 ships sitting in port waiting to move Canadian goods. It will take weeks, if not months, to recover.

In addition, the effects that coronavirus, or COVID-19, will have on our small trading economy are still yet to be seen. These examples emphasize the importance of a predictable supply chain.

In light of these unfortunate and disruptive circumstances, our businesses need certainty so they can take the lead and propel the economy forward through commerce and trade. Above anything else, CUSMA would avoid the breakdown of our trade relationship with our most important trading partners and thereby help to remove much of the uncertainty facing Canadian businesses.

CUSMA will continue to guarantee tariff-free market access to our most important trading partner, to provide preferential access to commercial opportunities and to allow our businesses to sell more goods. This means more business, more jobs and the movement of more goods. When we move more goods across borders, our businesses can thrive. Ratifying CUSMA in a timely manner to lock in guaranteed market access with the U.S. is more important than ever in light of recent claims that suggest the U.S. is considering raising its WTO-bound tariff rates.

If implemented properly, CUSMA will unlock vast potential for greater Vancouver and Canadian businesses to compete effectively for jobs. These benefits can only be achieved if there is a similar amount of attention paid to non-tariff-related trade barriers.

CUSMA includes provisions on customs administration and trade facilitation to standardize and modernize customs procedures throughout North America to facilitate the free flow of goods, but we cannot stop there. We recommend that government continue supporting and working with industry on initiatives such as the beyond preclearance initiative, which is doing important work around ensuring Canada's gateway cities can build improved processes and border policies to take full advantage of CUSMA.

We also recommend that government continue with initiatives to reduce and remove red tape, and regulatory burdens more broadly, to help business thrive. There is a growing perception in Canada that it is difficult to get things done, especially with jurisdictions in the U.S. that are routinely removing barriers and making access for business easier and simpler. Efforts like this will help ensure we increase competitiveness.

This brings me to my third point. The new agreement will help underpin North Americans' competitive advantage through its new chapter on competitiveness and its chapter on good regulatory practices. The preferential market access and integration with the American and Mexican markets will open opportunities for growth and foster robust supply chains and fair competition that will sharpen the competitive edge of Canadian businesses.

The fourth point is that the new CUSMA modernizes NAFTA by including provisions for digital trade, which reflects the rise of e-commerce and other aspects of the digital economy that didn't exist when NAFTA was negotiated. In addition, CUSMA includes language on protecting gender and indigenous peoples' rights, which is an economic imperative.

The provisions for digital trade and cross-data flows included in CUSMA are based on the provisions in our most modern trade agreement, the CPTPP. This makes CUSMA a trade agreement of the 21st century and prepares us for what will become an increasing part of our economy.

CUSMA supports Canadian SMEs that want to tap into international markets. The World Trade Centre Vancouver finds that 95% of SMEs that go through its trade accelerator program choose the U.S. as one of their first export markets. The U.S. is particularly important for SMEs for its size and its geographical and cultural proximity. Many Canadian SMEs use the U.S. as their export beta market where they test and grow their export capacity before targeting other markets.

Last, we recommend the following keys for success.

First, B.C. is the largest Canadian exporter of softwood lumber to the U.S. As you all know, it is a challenging time for B.C.'s forest industry, which supports approximately 140,000 direct and indirect jobs. Thousands of jobs have been lost to mill closures and layoffs due in large part to high tariffs. Bringing CUSMA into force will ensure that the continued chapter 10 protections are available to the B.C. forest industry as it stands up for fairness and ensures that the trade of softwood lumber can continue to support B.C. jobs. We recommend that the government continue working towards achieving a negotiated softwood lumber agreement and defending the industry against any potential trade sanctions brought by the U.S.

Second, there is a critical need for continued investments in trade-enabling infrastructure in Canada, such as container capacity at terminals. In addition, greater Vancouver has a unique challenge in availability of industrial land to support trade-enabling activities. Our vacancy rate is at a record low of 1.2%. Collaboration and leadership is required to ensure growth of our region.

As the Canadian economy becomes more weighted towards services, we should consider a plan to grow Canada's service exports, including making it easier for professionals to work across borders. Our 2018 regional export framework report shows that global demand for service sectors will continue to grow.

Ninety-eight per cent of all businesses in B.C. are small businesses. In order to leverage the benefits of trade, we need a plan to support small businesses as they start to export and grow their exports.

Finally, another important item will be the uniform regulations, which is the fine print of the agreement, including the details that companies must follow to facilitate trade on a daily basis. Businesses are eagerly awaiting these details, especially given the 90-day implementation phase. We hope they can be made available as soon as possible.

I would like to conclude by imparting a sense of urgency to the committee to lock in the benefits I have listed. We recognize that no trade agreement is perfect and that no trade agreement is made without compromise. We support the passage of CUSMA and hope all parties vote in favour of ratification.

Thank you for your time today and for the opportunity to appear before the committee. I welcome any questions you may have.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. Anderson.

We'll turn to the members for questions.

Mr. Kram.

[Michael Kram, Conservative, Regina—Wascana, SK]

Thank you, Madam Chair.

Ms. Bull, in your opinion, what are the main barriers to opportunities for indigenous businesses and business persons?

[Tabatha Bull]

Based on our research, the biggest barrier currently is access to finance. For small and medium enterprises that want to work near their community, it is access to skilled individuals. There is infrastructure, as well. I know there is a movement for broadband infrastructure. That will relieve a lot of that existing barrier.

[Michael Kram, Conservative, Regina—Wascana, SK]

How are these barriers alleviated with the new NAFTA?

[Tabatha Bull]

Working on co-operation for small and medium-sized enterprises, and looking to move on new policies and programs for co-operation, specifically naming indigenous people as one of the minority groups for small and medium-sized enterprises, I believe gives us an opportunity to look at what those barriers are, and based on that research, to develop polices and programs that will enable them to trade.

[Michael Kram, Conservative, Regina—Wascana, SK]

Thank you.

Mr. Smout, you mentioned the 101 additional tariffs that you would like eliminated unilaterally. Can you give us some examples of these tariffs that it would be beneficial to eliminate?

[Leigh Smout]

I don't have a lot of the details with me, but we submitted a proposal to the government.

They're ones that are low yield, in the sense that they are of little use, and they're in the low percentages, 1% and so on. They're not necessarily tied to free trade agreements.

The challenge is that there's a compliance cost, the effort it takes to manage compliance with these tariffs, which costs the companies a significant amount of money. If it costs them $2,000 in tariffs, which is a small return to the government, it will cost them another $5,000 to $7,000 in compliance costs.

I regret that I don't have the list of them with me, but we have proposed 101 specifically within those two areas of clean tech in these essentially emerging markets or sectors.