EVIDENCE

Standing Committee on International Trade NUMBER 032 1st SESSION 42nd PARLIAMENT Monday, September 26, 2016 Le lundi 26 septembre 2016 Standing Committee on International Trade CANADA [Recorded by Electronic Apparatus] EVIDENCE September 26, 2016 Committee Edited Evidence * Table of Contents * Number 032 (Official Version) Official Report * Table of Contents * Number 032 (Official Version) Témoignages * Table des matières * Numéro 032 (Version officielle) 32 26 09 2016 2016/09/26 09:05:00 House of Commons Comité permanent du commerce international Standing Committee on International Trade CIIT Chair The Honourable Mark Eyking 42 1

(0905) [ English ]

The Chair (Hon. Mark Eyking (Sydney—Victoria, Lib.)) :

Good morning everyone and welcome to the House of Commons Standing Committee on International Trade. It's going to be like in the House of Commons. There's going to be translation, French and English. We have the translators, if you need translation. My name is Mark Eyking. I am the chair of the committee. I'm from Cape Breton, Nova Scotia. Not all of our committee members are with us, but a good majority are here today.

We have Tracey Ramsey and Dave Van Kesteren from southern Ontario, Gerry Ritz from Saskatchewan, Sukh Dhaliwal from British Columbia, Linda Lapointe from Quebec, and Karen Ludwig from New Brunswick. It's great to be here. Our committee is very busy, as you know. Trade is important to Canada. Of course, the United States is our biggest trading partner. Our committee has been busy with the softwood lumber and many of the agriculture issues that we are faced with, but our biggest task that we took on this year was the TPP. Right now, we are in the midst of an agreement with the Trans-Pacific Partnership.

We're tidying up the European agreement which is a moving target over there, but it looks like it's coming together. TPP is very important for Canada. There are 12 countries with 40% of the GDP in the world. There are 800 million consumers, so it's an area that we have to look at very strongly. There are, however, differing opinions on this agreement, and what our committee is doing is travelling the country and listening to Canadians, listening to stakeholders, those who have an interest. At the end of the day, this agreement will affect all Canadians, whether they're consumers or they're supplying a product.

We visited six provinces already and had a video conference with the territories. We're finishing our last leg of travel this week. We're saving the best for last. I'm an Atlantic Canadian. We're going to visit the four Atlantic provinces this week. We're going to P.E.I. tomorrow and then Newfoundland, and then finishing up in Halifax. In addition to our travel, we probably have 125 briefs. So far, we've had almost 265 witnesses. The other thing we're doing differently with our committee is that we've opened it up to the public. We are accepting emails from the public. Right now, we've received over 2,000 emails.

We're going to accept them until the end of October. We are also doing something different that no other committee has done when travelling. We have an open mike segment for an hour at the end of each of our our meetings, so we can hear from the public. We are going to be finishing up our consultation process, receiving information until the end of October. After that, we are going back to Ottawa, and our committee will draft a report. That will take probably at least five or six weeks. We're hoping that by the end of December, or at the very least the first of January, we can present our report to Parliament.

Without further ado, we are here in wonderful New Brunswick. We have quite a list of presenters today. We have segments of one hour. This morning, we have three witnesses. We have the Canadian Manufacturers and Exporters, Cooke Aquaculture, and the New Brunswick Federation of Labour. For the presenters, we try to keep it within five minutes, if possible. After that, we open up for dialogue with the members. We're going to start with the Canadian Manufacturers and Exporters. Mr. Joel Richardson, welcome.

Mr. Joel Richardson (Vice President, New Brunswick and Prince Edward Island Divisions, Canadian Manufacturers and Exporters) :

Thank you very much, Mr. Chair, and thank you to the members of the committee for the opportunity to speak with you today. We greatly appreciate the opportunity to be present. My comments are going to be focused primarily on some of our national perspective. CME has taken the opportunity to present across the country, and I think you've heard from some of our other representatives. My comments won't be dissimilar to some of the things they've said. I will add maybe a bit of local flavour from here in the province of New Brunswick on some of the things we're experiencing.

As you know, New Brunswick is Canada's most trade-intensive economy. A larger percentage of our GDP in New Brunswick comes through the export and trade of our manufactured goods. We're also very reliant on the service industry. We have a significant percentage of our population in New Brunswick who work in services, as well as the manufactured goods sector. Canadian Manufacturers and Exporters is actually Canada's largest trade and industry association. We have representation right across the country, in every province.

More than 85% of the members that we represent in the manufactured goods sector are small and medium-sized companies that represent pretty much every industrial sector of the export economy. That would also be representative here in New Brunswick as well. The members I represent are large-scale companies, such as the McCains of the world. I also represent our smaller manufacturers and exporters that would have maybe less than 10 employees and are doing metal fabrication and exporting that metalwork to other regions around the world. Manufacturing is certainly the single-largest business sector in the country.

Canadian manufacturing represented sales of about $600 billion in 2015, and directly accounts for about 11% of Canada's total economic output. Manufacturing employs about 1.7 million Canadians. Here in the province, the manufacturing sector directly employs approximately 26,000 individuals. I will say that we have seen those numbers go down in recent years. Over the last 10 years, across Atlantic Canada, employment in this sector is down significantly in manufacturing. It's somewhere in the order of about 30% over the last number of years.

Unfortunately, that has come at the cost of some of our traditional resource industries: forestry, fishing, and other sectors. In New Brunswick, about 95% of the businesses here employ 200 people or less, so there's approximately 4% of New Brunswick companies that employee more than 500 people. Our large pool of companies is actually quite small. There are over 500 companies in New Brunswick that employ under 10 people. We have a very broad mix of companies, but the lion's share of all the companies in the province are fairly small-size companies.

Simply put, Canada's domestic market is too small for manufacturers to thrive. It is an export-intensive business. More than half of our industrial production is involved directly in exporting as part of the global supply chains and integrated manufacturing, such as finished consumer goods, in almost every product category. Manufactured goods account for roughly 70% of all Canadian exports. The growing importance of the natural resources prices, given the fact that they remain weak, has certainly had an impact on the provincial economy here in New Brunswick, and obviously across the country.

This is all the more reason why it's important to focus on new markets. We're very supportive of TPP for that reason. While Canadian and U.S. markets remain the priority for most of Canada's exporters, a growing share of our members are looking to take advantage of new and emerging markets that go beyond NAFTA, especially countries represented in the TPP. As you stated, Mr. Chair, today its collective market represents over 650 million consumers and over $20 trillion in GDP. That, we believe, provides a significant opportunity for us to grow our exports from New Brunswick.

CME believes strongly that no trade agreement is worth signing unless three things can happen. First, it should create a fair and level playing field for Canadian manufacturers and exporters to ensure they have an equal opportunity to export to foreign markets, as our competitors have to import into Canada. Second, it should allow value-added exports from Canada and not just the export of natural resources or unvalue-added product. Third, the trade agreement should not undermine the existing integrated manufacturing supply chains that have been developed through previous free trade agreements, especially NAFTA.

(0910) CME has, in principle, supported Canada's entry into and signing of the Trans-Pacific Partnership because of our small domestic market, the export orientation of our manufacturers, the deal's inclusion of our major trading partners, and the significant new market opportunities that it affords. Throughout this process and in the lead-up to coming to present to you today, I did take the opportunity to speak to a number of companies, such as McCain and Irving, and a number of the smaller manufacturers.

Two weeks ago, I was in Moncton and met with a number of seafood companies that were presenting at the Moncton Air Cargo Symposium. They were very supportive of growing our seafood trade into those particular markets. Our position, however, is not without reservations, certainly from several of our CME members. There are concerns over certain elements of the proposed deal, and they do remain fairly significant. While these may relate more to our Ontario colleagues, the lowering of content levels on automotive rules of origin, the lack of additional measures to curb the U.S.

Buy American policies for government procurement, provisions to deal with currency manipulation, and the uneven tariff phase-out in certain sectors compared to those of our American counterparts are but a few of the concerns we've heard about directly. So we're not without some reservations, but we believe overall that the TPP would really open up opportunities with some new markets. We do continue to encourage negotiations to work through these issues prior to final ratification to ensure fair treatment and opportunities for Canadian exporters.

It's critical to keep in mind that export opportunities obviously start at home and are propped up by the strength of our domestic market, the innovativeness of our private sector, and the supports that Canadian exporters receive in accessing and supporting foreign markets. For us, TPP means entering into an agreement with very aggressive, export-oriented countries. If we don't have similar domestic strategies for success, Canada has the potential to lose. We need a national strategy that aims to support domestic competitiveness in global exports.

First, all trade agreements open the door to increased competition. This can and should be perceived as a good thing. However, we need to be ready for that competition. While the private sector is willing and ready to compete on a level playing field, our business environment is often not entirely level. While our corporate tax regime is world-class, many other areas are not. Canadian companies face higher input costs, a much more costly regulatory burden, higher labour costs, and higher energy costs.

Meanwhile, domestic supports for investment in innovation and advanced technologies significantly lack those of our international competitors.

(0915) The Chair :

Would you like to wrap up?

Mr. Joel Richardson :

Absolutely, sure. CME believes that with the right support network in place for TPP as well as other international trade, Canada could double its manufacturing output and value-added exports by 2030. We've actually launched a national manufacturing strategy—we've heard from many of our manufacturing companies—and we believe that here in New Brunswick the advantages of TPP are certainly significant, particularly with regard to the elimination of tariffs on key exports, such as industrial goods, seafood, potatoes, and maple syrup, to name a few. The last thing I will say, Mr.

Chair, is that we do have a lot of investments in the transportation logistics infrastructure in this province, which is very critical to getting goods to market, and we do see the TPP as an opportunity to strengthen our ports, including the port of Saint John in particular with its container traffic; the Moncton airport with its air cargo logistics, which directly exports product, particularly seafood, into Asia; and last, our transport truck network. Thank you very much, Mr. Chair.

The Chair :

Thank you, sir. We're going to move over to Cooke Aquaculture, and we have Mr. Andrew Young. Go ahead, sir.

Mr. Andrew Young (Senior Vice President, Global Sales and Marketing, Cooke Aquaculture Inc.) :

Good morning. On behalf of Cooke Aquaculture and our affiliated businesses, both the aquaculture and fisheries sectors, I thank you for the invitation to appear before the committee today. We are headquartered on the east coast of Canada in Blacks Harbour, New Brunswick, which is just a short drive from here. The Cooke family founded this company just over 30 years ago. They had humble beginnings with a single marine site containing over 5,000 fish.

Since 1985, the company has seen remarkable growth through acquisitions and has become the largest vertically integrated salmon-farming company in North America with operations in Atlantic Canada and Maine. The family also owns a major sea bass and sea bream operation in Spain, as well as a salmon-farming company in Chile and a salmon-farming company in Scotland.

In addition, the family recently expanded its interest in the fisheries sector by purchasing the Wanchese Fish Company based in Virginia, and Icicle Seafoods, which is based in Seattle, Washington, and has three business units: wild salmon; a ground fishery in Alaska; and a salmon-farming operation in the state of Washington. The Cooke family businesses employ 5,000 people globally, including more than 1,500 people here in Atlantic Canada. We expect to generate $1.8 billion in annual sales in 2016. With global production of 275,000 tonnes of seafood, we export to more than 30 countries around the globe annually.

Even though we have grown to be a global seafood company, we remain deeply rooted in Atlantic Canada. Our global expansion has strengthened and secured Canadian management and administration jobs in coastal and rural Atlantic Canada. As it stands, the Cooke family has a worldwide network of cold storage and distribution facilities. We are consistently focused on vertical integration and diversification in terms of geography, products, and markets. Our strategy has been to achieve growth through acquisitions and organic growth in the seafood sector that are both sustainable and meet market demands.

As an Atlantic Canadian seafood company, we have global operations in Canada, the U.S., Scotland, Argentina, Spain, and Chile. We have sales offices in Canada, the U.S., Europe, and Asia, and thus fully support the Canadian government's participation in the TPP. The Cooke group of companies regards this partnership as an essential component of our future success. We compete on a global scale, and with this partnership, we see the promise of trade opportunities in various export markets. Our current trade with TPP countries is approximately half a billion dollars in fresh and frozen seafood.

One of the most significant attributes of this agreement is that it would give us a competitive advantage over our rivals in non-TPP countries. In the past, we have supported similar initiatives, such as the Canada-EU Comprehensive Economic and Trade Agreement and the Canada-Korea Free Trade Agreement. As a leading Canadian supplier of seafood, we believe we will benefit from the implementation of the TPP. The ease of access to markets such as Japan, one of the largest seafood markets in the world, will prove to be extremely beneficial to our business and our contribution to the Canadian economy overall.

We also look forward to achieving access to markets in countries like Vietnam as we look for ways to further diversify our product portfolio and geographic expansion. Thank you for the opportunity to speak to the committee today to express our support for the TPP.

(0920) The Chair :

Thank you very much for your presentation. You have very impressive operations and quite a reach around the world, so it's good to hear from you. We now have Patrick Colford from the New Brunswick Federation of Labour. Go ahead, sir.

Mr. Patrick Colford (President, New Brunswick Federation of Labour) :

Thank you, Chair. On behalf of the 40,000 members of the New Brunswick Federation of Labour, we want to thank you for giving us the opportunity to present our views on the impact on Canada of the possible Trans-Pacific Partnership agreement. I want to begin by expressing my sincere appreciation of your willingness, and that of Minister Freeland and your government, to sustain an open and frank dialogue regarding the Trans-Pacific Partnership negotiated under the previous administration.

It is a deeply flawed agreement, and our view is the cost of the TPP outweighs the limited benefits that might arise from this deal. Proponents of this deal only expect it to boost Canada's GDP by about 0.5%, and that's 10 years down the road. That's about as much as the previous government promised to pay the dairy industry in compensation for TPP losses. This leaves nothing to cover the losses to the auto sector and other areas. A key study from Tufts University predicted that workers in all 12 TPP countries would lose out because the TPP would increase income inequality.

This flawed agreement is about protecting the rights of multinational corporations. It does nothing to help workers or the environment. The two sectors with the most to lose are auto and dairy. I also want to touch on our concerns with the provision of public services, rising drug costs, and investor challenges to environmental regulations. First, the automotive sector is essentially important to Canada's research and development, high value-added production in manufacturing exports. In 2014, approximately 40,000 Canadians worked in motor vehicle manufacturing and another 70,000 in parts manufacturing.

A five-year phase-out of tariffs on Canada's imports of Japanese vehicles will quickly eliminate the incentive to manufacturers here in Canada. It will encourage Japanese assemblers to import vehicles. Unifor has estimated that the TPP could lead to the loss of 20,000 jobs in the auto sector alone. The Canadian dairy sector provides high-quality, locally produced food, while supporting small family farms in rural communities. Under the TPP agreement, foreign dairy producers would be able to access an additional 3.25% of Canada's 2016 dairy milk production.

This comes at a time when the dairy industry is already under considerable stress. About 250 million litres of milk and subsequent production jobs are at risk annually. We have many concerns with the model of investor-state dispute settlement. By now, the problems with this model of dispute settlement are well known with the unaccountable and ad hoc nature of the arbitration panels and their expansive definition of what constitutes an investment.

The fact is that they do not operate in partnership with national court systems, but above them, and there is an apparent lack of deference to the prerogatives of governments, or even to ask for jurisprudence on any given issue. With regard to public services, the TPP

chapter on public services locks in the current level of privatization with so-called ratchet and stand-still clauses. This makes it more difficult for governments to introduce new public services such as pharmacare or child care without subjecting themselves to an ISDS claim. Canada already has the second-highest per capita drug costs in the world. The TPP would further constrain efforts to reform prescription drug purchasing provisions in Canada.

When it comes to the environment, the TPP also contains broad prohibitions on economic or environmental performance requirements, such as requiring technology transfers or local sourcing to foster green industries. Such restrictions would serve as a chill on governments contemplating steps required to make the transition toward a low carbon and climate resilient economy. It's time to come back to more reasonable forms of investor protection.

These protections should be in line with national judicial processes, should privilege state-to-state settlements, and should emphasize investors' responsibilities just as much as the protection of their assets.

(0925) In conclusion, given the high economic and political stakes, Canadians deserve no less than a full and substantive discussion on the potential consequences of this draft agreement. Thank you very much.

The Chair :

Thank you, sir. I think we have enough time for every MP to have a dialogue for five minutes. If we keep to five minutes, everybody will be able to have a shot at this. We're going to start off with the Conservatives. Mr. Ritz, go ahead.

Hon. Gerry Ritz (Battlefords—Lloydminster, CPC) :

Thank you, gentlemen, for your presentations today. As you rightly point out, we've heard some of this in arm's-length groups attached to you across Canada. Before the negotiations there was the Canada Gazette process, and there were close to 100 different businesses that took advantage of that, and a number of individuals as well. Then, during the negotiations, you were able to have input into what was being discussed if you signed a non-disclosure agreement. Did any of you take advantage of that?

Mr. Andrew Young :

I'm not aware that we did take advantage of that. It's possible that somebody from our company may have, but I don't believe so.

Mr. Joel Richardson :

Yes, we did.

Mr. Patrick Colford :

I personally haven't, but I know some of my colleagues were part of those discussions.

Hon. Gerry Ritz :

As we move forward.... As you know, we signed a number of trade agreements, and the biggest concern that always came up was whether companies in Canada were ready to take advantage of what was out there on the world stage. Are any of you contemplating training or taking advantage of some of the training that's out there to make sure that your associates are willing to do this? I know Cooke already has a global footprint. I've worked with some of your companies around the world, Andrew. Joel, you do as well. On the union side, is there any kind of training on what you're going to have to do to compete with the Koreans, with the Japanese, that type of thing?

Mr. Patrick Colford :

Those dialogues have been happening for years with the former CAW, of course, and now with Unifor. They're actually taking the lead when it comes to the automotive industry, in training the workers and having those dialogues with government.

Hon. Gerry Ritz :

Good. All right.

Mr. Joel Richardson :

Could I speak to that, Mr. Ritz, if you don't mind? We've been talking to a number of companies, not just about this but also about CETA . One of the things we hear is that there are some real challenges with in-house company expertise for new foreign markets. It has been our recommendation that the Department of Global Affairs and the Government of Canada look at expanding the trade commissioner service, not just in key distant markets, but to specifically look at ways they can help companies build more of an in-market presence. That may be through the identification of distributors, buyer agents, representatives, beyond just the current—

Hon. Gerry Ritz :

A trade show is all of those things.

Mr. Joel Richardson :

Yes, it just takes it one step further. Here at home, the trade commissioner service over the past number of years has gone through some challenges in Atlantic Canada. There's one Global Affairs representative at the staff level in New Brunswick. For a multi-billion dollar export industry, it is not sufficient to serve the companies. We really believe that we need to enhance that Global Affairs department, and even here at home domestically, to get more people paired up with our companies.

Hon. Gerry Ritz :

That's an excellent point. There is actually backup on specific areas like Agriculture Canada. We have experts, and they're starting now, on websites and so on, to entice people to come forward so they can help them do whatever they're looking for, connect potato sellers with potato buyers, and so on. I'm a firm believer that we have to get our heads around the fact that we need to sell what the market wants, not what we have. We raise beef with a 16-ounce T-bone. Well, that will feed a village in Japan. They're looking for a two-ounce cut.

We have to come up with ways of doing that carve-out on our beef without destroying the actual carve-out itself and having too much waste. There's education required at all levels, and certainly government has a big role to play in that, but industry itself has to partner with government in order to get the right training. Government sometimes misses some of that. There's a lot of discussion that the Americans may not ratify this, and right now there's a clause which says that if six countries with 85% of the trade value don't ratify it, it won't happen, but that can be changed with the countries that are left.

Should Canada proceed if the Americans don't? Well, you can. The other 11 countries can actually have a different agreement and continue on. Most of the concerns we hear are with the Americans, the Buy American clauses, all those types of things that they have to get their heads around.

(0930) Mr. Joel Richardson :

Yes. I think we have to recognize.... I'm looking at this purely from a New Brunswick perspective. The United States is our best customer, and we need to make sure we're not doing things necessarily that are going to upset the apple cart from a solid and stable market that currently is our best customer. I'm not saying that it couldn't be ratified, but there needs to be a lot of consideration for where we currently sell, for sure. Any opportunity we have to open a new market, whether it's through a trade agreement or through other negotiations, is very much welcome.

Hon. Gerry Ritz :

We've also found over the years that with the country of origin label on softwood lumber, if we keep the Americans honest, then they tend to deal fairly, too.

The Chair :

Your time is up. Ms. Ludwig, go ahead.

Ms. Karen Ludwig (New Brunswick Southwest, Lib.) :

Good morning and thank you so much for joining us. I have to say how thrilled I am to have our trade committee here in New Brunswick. I have a number of questions. As someone who worked for almost two decades in trade education, my first questions are for you, Mr. Richardson. With the preparedness of New Brunswick exporters for trade, we have companies like Cooke, McCain, and Irving that have in-house expertise, as you have mentioned. How prepared, in your experience, are New Brunswick exporters for entering into the TPP market members?

Mr. Joel Richardson :

I would suggest that for those that are at a larger scale, as you pointed out, and that have the in-house resources, sure. One thing that I've observed happening—and I don't know if this is unique to Atlantic Canada, but I know that it is something we promote heavily—is there seems to be a bit more of a collaborative approach here between companies. There are some smaller SMEs, even with 10 employees or under 200 employees, that are getting some mentorship from some of the larger, more successful companies in the market. We've been an advocate to say that if there is training going on.... Cooke's a great example.

They provide ongoing access. They make appearances at conferences. Their executives talk about their experiences in key markets. Those are absolutely critical to helping the other companies along. For the bulk of companies, I would suggest there is still a low level of awareness. It's not about that TPP is out there and it's being negotiated; it's about what the market opportunities are on a country-by-country basis, and on a product-by-product basis, for what they have to offer, or what they should be offering in those markets.

What's the export continuum to help them get there in terms of staffing and market intelligence? How do they work with the trade commissioner service once they're there or to get there? Another key point that has been brought up to me from companies is that at one point in time Canada did have a large emphasis on foreign trade missions to support some of the markets. Those have seemed to be less Canada led and more province led, which I think is great, but it was always powerful to see the Government of Canada going into a market. Look at the recent results from Prime Minister Trudeau 's trip to China.

There was a company in Fredericton that participated in that. It was a tremendous opportunity for exposure, connectivity, and new relationships.

(0935) Ms. Karen Ludwig :

Thank you so much for raising those points, because one of the opportunities here with the consultation is beyond and much broader than TPP. It's also about what our Canadian companies require to be prepared to enter into export markets. Where are the gaps? Where has there been a lapse in the last even 20 to 25 years? When I first started working in trade preparation, we focused heavily on trade missions. We focused on qualifying Canadian companies to go off to the trade missions and the significance of the trade commissioner service, but also helping companies become more aware.

It is hard for the companies, as you mentioned, that have fewer than 10 employees, and there is work to be done there. Regarding Cooke, certainly over the last 30 years, Mr. Young, you have expanded your market for employees. As your company entered into more global markets, expanded, and became more integrated into those markets, how have the types of jobs that you have offered changed? How have the training requirements and the investment in training changed?

Looking at the wage increases, we often hear trade agreements are about big business, but certainly every business has to start at some size, and Cooke started off as a small business. We in New Brunswick appreciate that you take an integrative role into our small rural coastal communities.

Mr. Andrew Young :

You're absolutely right. You always have to start somewhere. I'll use an example outside of the TPP simply to illustrate what you're talking about. We sold, from New Brunswick.... We had zero sales into China as of two years ago, and having nothing to do with a trade deal, today in 2016 we will sell well over $70 million in China. We're looking at opening up sales offices there. But in order to do that, it requires people on the ground here in New Brunswick to understand how to access the market, how we were going to transport into the market.

There are trucks that will leave the Blacks Harbour plant every night on their way to China. But that didn't happen overnight and it did require some retraining. It did require specialized jobs in New Brunswick in order to help develop that market. The same could be said for markets like Japan.

The Chair :

Thank you, Ms. Ludwig. We'll move to the NDP now, and Ms. Ramsey, for five minutes.

Ms. Tracey Ramsey (Essex, NDP) :

Thank you so much for your presentations this morning. I think on balance, what's facing us here at the trade committee, is that there are benefits for certain sectors, but overall, the deal itself is flawed in many ways. You pointed out some things, Mr. Richardson, around the challenges to Canadian companies to be able to export. I believe the amount was 10.4% of small and medium-sized enterprises were exporting in 2011, so the majority of small and medium-sized businesses are not in these markets at all. I have one quick question for Mr. Young. How many people are you employing here in Canada at Cooke Aquaculture, and how many Canadian jobs would TPP create here?

Mr. Andrew Young :

Today, we have more than 1,500 employees in Atlantic Canada, so the majority of Canadian jobs would be Atlantic Canadian jobs. There would be a few more outside of that in the rest of Canada. I wouldn't be able to put a number to job creation as it relates to the TPP. We don't really go by those metrics. We're looking for a level playing field, and access to markets is important to us, and we already know—

Ms. Tracey Ramsey :

Thank you. We have estimates of 60,000 job losses, so we're trying to determine where jobs will be created through the deal as well. Mr. Colford, you brought up drug costs and the patent extensions. This is one of the most deeply concerning pieces of the Trans-Pacific Partnership to most Canadians. I wonder if you could give us a perspective from your membership, as well as from people in general in New Brunswick how they feel about the cost of drugs being increased through the Trans-Pacific Partnership. You also mentioned pharmacare. How would they feel about the inability of us to create a pharmacare program because we could potentially be sued for doing so?

(0940) Mr. Patrick Colford :

The short answer for that, I guess, is that I can give you some specifics. As most people know, especially in the northern part of this province, a lot of people live well below the poverty range. Actually the same can be said.... As a member here knows, Saint John has some of the highest poverty rates. We're hearing stories of people having to cut their heart medication and other medications in half, into fours, because at the end of the month, it's necessary to make a choice between affording to have their medication or to have their lights on.

I know that sounds really, really scary, and maybe a little bit on the fearmongering side, but the extension of these drug patents, I think, only serves to increase that. When it comes to pharmacare, it's no secret that Canada really needs a pharmacare program. That was the vision for medicare when it was first established in this country. With these possible lawsuits that could happen, that could only serve to really quash a program that we really need here, not only in New Brunswick but in Canada.

Ms. Tracey Ramsey :

Thank you. Mr. Richardson, as a former auto worker, I certainly understand what you're saying about the implications for auto. An economic impact study was just released from Global Affairs Canada. It was pretty dire. It showed some pretty negligible growth over the next 24 years, 1.27%. But understandably, it was saying that auto manufacturing will be hurt. I'm going to read you a line from it:

As a result, Canada’s bilateral trade with existing FTA partner countries is expected to decline under the TPP Agreement. Net Canadian exports to the existing FTA partner countries would drop by US$1.5 billion, largely due to an erosion of NAFTA preferences in the US and Mexico....

Perhaps you could tell us about the implications of that to your membership here in New Brunswick. I also wonder if you have a breakdown of your percentage of exports to the U.S. versus globally.

The Chair :

A short answer would be good.

Mr. Joel Richardson :

Sure. On the first question, with respect to the auto industry, I would say there's no impact here in the province. We have no auto industry here in this region, nor in Atlantic Canada, nor do we have any real number of companies that would feed into that supply chain in terms of components or other things. I'd defer to my Ontario colleagues to speak with you about that, if you don't mind, but I thank you for sharing it with me. On the second piece, New Brunswick's exports, 87% of everything we make in New Brunswick is exported to the United States. The remainder, all other countries, would fit the rest of that.

That gives you some idea of what we're looking at. We already do significant multi-million dollar sales to countries already in the TPP. Irrespective, as Mr. Young said, of China, there are already a lot of sales into those markets.

The Chair :

Thank you, sir. We're going to move to the Liberals, with Madam Lapointe, for five minutes.

[ Translation ]

Ms. Linda Lapointe (Rivière-des-Mille-Îles, Lib.) :

Thank you, Mr. Chair. I want to welcome the witnesses who are joining us today. I am really happy to be here with you in New Brunswick. Mr. Young, I would like to follow up on what our colleague Ms. Ramsey said. The Trans-Pacific Partnership would lead to an increase in employment. If the agreement was not ratified, could Cooke Aquaculture Inc. experience a decline in employment?

[ English ]

Mr. Andrew Young :

No. To be perfectly blunt, we don't rely on trade deals in order to expand our business globally. We're already out in these countries. The level playing field aspect of trade deals is always helpful to us, but there would not be any job losses if this were not ratified.

[ Translation ]

Ms. Linda Lapointe :

Thank you. If this does not work, what countries do you want Canada to focus on in terms of free trade agreements?

[ English ]

Mr. Andrew Young :

They would be the two countries that I mentioned in my submission. Japan is arguably the largest seafood market in the world. Obviously, easier access to that market is going to be helpful. We actually have a sales office in Japan. Then there are other growing markets, such as Vietnam, where we've explored, along with some of the Canadian trade commissioners, accessing markets like Vietnam that are growing. We look to those for future sales.

(0945) [ Translation ]

Ms. Linda Lapointe :

Thank you. I will ask a more specific question. Under

article 20.16, the signatories will not be able to provide or maintain any subsidies for fishing that negatively affect fish stocks or subsidies given to vessels engaged in illegal, unreported and unregulated fishing. I would like to hear your thoughts on that.

[ English ]

Mr. Andrew Young :

That has never been raised with me, so I'm not sure how much of an impact that would have. I think it would be minimal. Again, I haven't been part of any internal discussions as they relate to that, so I would say the impact would be negligible.

[ Translation ]

Ms. Linda Lapointe :

Thank you. Mr. Richardson, you briefly talked about currency manipulation with various countries in the Trans-Pacific Partnership. I would like to hear your comments on that. Could that kind of manipulation be prevented? What challenges do you think are involved in that?

[ English ]

Mr. Joel Richardson :

I'll couch that in my comments made in an earlier round—looking for ways to maintain competitiveness for New Brunswick companies. If there are any opportunities to maintain competitiveness on the currency side, certainly, I think that's an important consideration. I'll be the first to admit I am not a currency expert; however, I know it is an issue with fluctuating dollar values and securities, so I would just suggest that I'd couch that in maintaining competitiveness for our companies.

[ Translation ]

Ms. Linda Lapointe :

Thank you. You also said that our exports from New Brunswick could double by 2030. You talked about the elimination of tariffs on products such as seafood, maple syrup and potatoes. With that elimination, what products would have the most potential in terms of increased sales?

[ English ]

Mr. Joel Richardson :

With this particular agreement, we've looked at it, and we've also looked at some of the provincial data with the Government of New Brunswick. If you look at the opportunity for market access and tariff reduction on industrial goods, metal, mineral products, market access for wood forestry products, other types of paper products, uncoated paper, paper board, duty-free access and removal of tariffs, as Mr.

Young said, for the fish and seafood product industry—that includes things like frozen snow crab, herring roe, lobster, salmon—market access for agricultural and agrifood products, potato products in particular.... As Mr. Young said, Japan is a key market for that with, I think, about a 13.5% tariff or something coming off in Japan on the prepared potato side—that's very substantial—and a number of other pieces.

[ Translation ]

Ms. Linda Lapointe :

Could the demand be met if tariffs were removed for potatoes?

[ English ]

Mr. Joel Richardson :

Yes, I believe we not only have the capacity on the product side, but we have the capacity on the people side. There are approximately 47,000 people in New Brunswick who are unemployed, so there is a workforce available. As I mentioned, we've seen that some of the manufacturing sectors have gone down over the last number of years, and we do see an uptick in growing our export sales as a way to put people back to work, particularly on the goods-producing side.

[ Translation ]

Ms. Linda Lapointe :

Thank you very much.

[ English ]

The Chair :

We're going to move to Mr. Dhaliwal, for five minutes. Go ahead, sir.

Mr. Sukh Dhaliwal (Surrey—Newton, Lib.) :

Thank you to the presenters. It's always great to come to Atlantic Canada. There's always a warm welcoming hospitality from the people in Atlantic Canada. My question is for Mr. Young. Mr. Young, since 2002 there has been a 47% loss in the global market when it comes to the aquaculture industry. I understand that you're looking for a level playing field to compete on the international scene, but if we ratify the TPP, do you think we will be able to gain some of that market we lost since 2002?

(0950) Mr. Andrew Young :

I can't speak for the industry overall. I can only speak for our company's experience. I think what you're getting at is there are really different levels in the market. When you compete at the higher end of the scale, it's much different from when you compete at the lower-quality products. A lot of the products that get imported into Canada and the United States typically tend to be on the lower end of the quality scale and pricing scale. Again, that's not part of our competitive network. We tend to be on the premium side. On our end, again, access to markets is important.

Again, we're not impacted very much at all by the imports coming in. Unfortunately, I can't speak to the industry as a whole. I can only speak to our own experience.

Mr. Sukh Dhaliwal :

Mr. Colford, you talked in general about the auto industry and whatnot. We are in New Brunswick today. You said it's a flawed agreement, but on the other hand, if I look at it this way, we are in a free enterprise and workers always gain when opening up to different markets. Could you focus only on New Brunswick and how it will help your members if we ratify the TPP, or how it's going to negatively affect them if we go for that as well?

Mr. Patrick Colford :

Thank you very much for the question. I think it's going to harm our members a little more than benefit them. As Mr. Richardson had alluded to, there may be more jobs, but my worry is that on that level playing field, if you will, in order to make products and things sustainable, we'll have lower wages. It will become a race to the bottom. Again, I'll come back to the auto industry. We're already seeing that with jobs and manufacturing being shipped to Mexico, because the wages are lower there, and there is more of a profit margin to be made, if you will. All in all for New Brunswickers, I don't see this being a great deal whatsoever for our members and New Brunswickers.

Mr. Sukh Dhaliwal :

Mr. Richardson, you mentioned new and emerging markets. Do you see any other country that is not part of the TPP, or is part of the TPP and we'd have bilateral agreements, that would benefit people in New Brunswick?

Mr. Joel Richardson :

I think there's been a substantial effort made by the federal government and the provinces on working together, particularly for the countries involved with CETA, with Europe. We do see that. CETA is holding some promise for New Brunswick as well. CME has been very supportive of that, as have many New Brunswick companies. We have been part of that negotiation as well. Again, many sectors within New Brunswick, particularly on the agriculture and aquaculture sides, could benefit substantially from increased exports into European countries as well, along with other value-added types of products in the forestry industry, high-end industrial equipment, and a number of other areas.

The Chair :

Thank you, Mr. Dhaliwal. We'll move on to our last MP for this round. Mr. Van Kesteren, you have the floor.

Mr. Dave Van Kesteren (Chatham-Kent—Leamington, CPC) :

Thank you for having us here in Saint John. It's a wonderful place. As was stated, we're learning lots. It's great to visit the area to get a proper perspective. We thank you for taking this time to be with us. Mr. Young, I want to go to you first. Your industry is fascinating. Of course, your focus is on farms. Do I have it right that as this industry increases, there will be less stress on wild stock? Is that a correct assumption?

(0955) Mr. Andrew Young :

That's definitely part of the aquaculture business proposition. Just so you know, 30% of our global sales are non-aquaculture. That's a growing segment of our total business. But in terms of your question, yes, that is one of the major benefits of aquaculture. It takes stress off of wild stocks, which, as most people know, have been declining drastically over the last 25 years.

Mr. Dave Van Kesteren :

It's very heartening to hear that. Are we seeing a reversal in areas where we've seen overfishing, where your industry has been able to compete against that, which is subsequently better for the environmental picture?

Mr. Andrew Young :

To use salmon as an example, there hasn't been a commercial Atlantic salmon fishery since the early 1970s. Salmon aquaculture actually only started in earnest in the 1990s. It fills a void that exists in the market. There's also a wild salmon fishery, of course, on the west coast in both Canada and Alaska. Those fisheries coexist very nicely in terms of meeting the demands of the consumer today. But definitely there's a big demand for farmed salmon from consumers. I can speak anecdotally about the argument of aquaculture versus wild, but I can't speak as an expert as it relates to the net benefit of having aquaculture as an industry globally.

Mr. Dave Van Kesteren :

So it's a good-news story. As a little sidebar, I come from southwestern Ontario, as my colleague Ms. Ramsey does. Wheatley is in my riding. I don't know if you're familiar with Wheatley, Ontario, but it's the largest freshwater fishing port in the world. There's a fair fishing industry there as well. I visited a processing plant, and they, too, have quite an expanded trade with China. However, that is for processing. Is that the case with you as well? Do they buy stock and then process it in China?

Mr. Andrew Young :

Our sales into China are right to things like supermarket chains and distributors for restaurants. The product literally comes out of the ocean here, is processed here in New Brunswick, and is sold fresh into China. We're not part of the reprocessing where we're sending it to China and then it's coming back. We're actually selling fresh fish into China.

Mr. Dave Van Kesteren :

You're doing processing here.

Mr. Andrew Young :

It's being processed here in Blacks Harbour. All of it is certified in Blacks Harbour and then it gets put on a truck and goes to Montreal. It's flown to Doha and then it goes from Doha into the Chinese market.

Mr. Dave Van Kesteren :

How much of the processing labour is done by foreign workers as opposed to domestic workers?

Mr. Andrew Young :

In that plant, we have very little access to foreign workers. It's almost exclusively domestic. That plant needs more workers. We have a very hard time finding labour. We could put through a lot more business in our plant in St. George if we had greater access to labour and foreign workers.

Mr. Dave Van Kesteren :

Am I running out of time?

The Chair :

Yes, you're out of time. I'm sorry. I know you're on a roll.

Mr. Dave Van Kesteren :

That's a shame. I'll look forward to having a quick discussion afterward, but thank you very much.

The Chair :

That wraps up our first session this morning. Gentlemen, thank you very much for coming in. It was very informative, and there was good dialogue with the MPs and good questions from the floor here. I wish you continued success. You're welcome to stay throughout the day. We have many presenters here. Just a reminder to the audience, you cannot take photographs during the session, but in between sessions you can take photographs and even talk to some of the MPs, if you want. We're going to break for 10 minutes now, and then we're going to go to our next panel.

(1000) (1015) The Chair :

We're going to begin the second panel that we have this morning. Welcome, panellists and stakeholders. If you were here earlier, you might have heard my opening remarks. Our committee has been going across the country and we've done six or seven provinces so far. We're finishing up Atlantic Canada and then we'll have a video conference with the territories. Over 20,000 emails have come to us from Canadians. We're going to be receiving emails until the end of October. We've had 125 briefings and 265 witnesses, so we're hearing a lot across Canada. We started early in the year.

The other issues that our trade committee is facing are softwood lumber and trade with the United States and we have a European agreement. Our committee is fairly busy. We have committee members from right across the country. When we finish consulting with Canadians at the end of October, we're going to put a report together. That will take us a month or so, and at the end of the year, we're hoping to put a report in front of Parliament. Welcome and thank you very much for coming here today and being part of this whole process.

In this group of panellists we have Connors Bros., the Council of Canadians, and Grand Manan Fishermen's Association. We'll start with David Lomas from Connors Bros. Welcome, sir. You have the floor.

Mr. David Lomas (Vice President, Marketing and Business Development, Bumble Bee Seafoods International, Connors Bros. Clover Leaf Seafoods Company) :

Connors Bros. Clover Leaf Seafoods Company is one of Canada's oldest companies. We've operated a sardine and herring cannery in Blacks Harbour since the 1880s. We currently employ about 600 people at our Blacks Harbour facility, and are one of the main employers in Charlotte County, New Brunswick. In addition, we operate an international sales and marketing office in Saint John, New Brunswick, which sells seafood through our own brands in over 50 markets around the world. Our Canadian head office is in Markham, Ontario.

We're responsible for just under half of all canned seafood sales in Canada just through our own brands, Clover Leaf and Brunswick. In addition, we have a sushi-quality frozen seafood food service business through our affiliated Anova unit. We are affiliated with Bumble Bee Seafoods in the United States, with its headquarters in San Diego, California, and we are owned by Lion Capital, a U.K.-headquartered private equity firm. I'll skip to the main concerns that we have with respect to the TPP. Connors Bros.

Clover Leaf Seafoods Company has several concerns related to the proposed TPP FTA with respect to our Canadian operations. The current herring resource constraints from Canada mean that there are no market outlet advantages gained by the TPP for our company with production from our Blacks Harbour canning facility. We currently have to procure finished goods mainly from Europe to meet our overall corporate requirements for branded sales in Canada, the United States, and other international markets.

Labour cost differentials among many of the TPP parties such as Mexico, Malaysia, Peru, and Vietnam put our continued production at risk in New Brunswick. Our labour standards and obligations are also disproportionately higher than many competitive sources supplied by TPP partners, which further affects our competitiveness. The simple elimination of tariffs, without addressing other regulatory issues affecting our operations in Blacks Harbour, may be a threat to the competitiveness of that operation.

This results from operating requirements imposed on Blacks Harbour for regulatory compliance under a number of Canadian regulatory bodies, including CFIA and DFO. One example is with respect to import restrictions on raw material being processed in Blacks Harbour. We are currently unable to import herring from Sweden to offset our shortage of locally available fish. The concern is that this may be a vector for marine diseases being spread through the Bay of Fundy region.

To our knowledge, several TPP parties where canned sardine products are produced are not similarly constrained and freely import and process fish harvested from outside their territorial waters. We are unclear on what implications the TPP will have with respect to NAFTA. We currently export canned sardines from Canada to the United States and Mexico, and our affiliated company, Bumble Bee Seafoods, has major concerns about the TPP with respect to its operations and its market position in the U.S. market. Bumble Bee Seafoods is the largest branded canned seafood company in the U.S. market.

Those are the essential concerns that we have.

(1020) The Chair :

Thank you very much, sir, for staying within time. We're going to move over to the Council of Canadians. We have Leticia Adair and Paula Tippett. You have five minutes together. You can split your time or do it whatever way you want to do it. Go ahead.

Ms. Leticia Adair (Saint John Chapter, Council of Canadians) :

All right. Thank you. Chair and members of the Standing Committee on International Trade, thank you for the opportunity to address the committee on the issues that concern us. Both Dr. Tippett and I are health care professionals and have more than 30 years of experience each in the field, she as a family physician, and I as a registered nurse. We are also here representing the local

chapter of the Council of Canadians. Although it is not really possible to predict how the TPP will be interpreted or enforced, we are left to draw on our experience with previous trade agreements, such as NAFTA, and their impacts, such as the use of dispute resolution procedures. Canada has suffered the most under investor-state dispute settlements. Our country is in first place among developed countries for the number of ISDS lawsuits against us. This has cost millions of dollars in damages. The TPP builds on the NAFTA model, but goes well beyond the traditional free trade issues.

It's very important for us to keep in mind that this was a made-in-America deal and that it was negotiated behind closed doors between U.S. corporate advisers and officials, not parliamentarians like you from participant countries. As we are understanding now, the TPP will affect us in many ways. We want to really convey to your committee the negative impacts that the TPP will have on New Brunswickers, Canadians, and global citizens to access affordable medications.

According to a Health Council of Canada study, 21% of Canadians with the lowest income report not filling a prescription because of cost compared to 2% of those with the highest income. Rising prescription costs lead to negative health outcomes, and we have experienced it ourselves. Some studies have demonstrated that increased out-of-pocket costs for prescription drugs have resulted in negative health outcomes. Older patients were less likely to fill their prescriptions when they had to pay for them. This resulted in increases in the rate of hospital admissions, emergency care, and visits to physicians.

Health Canada has stated that high prescription drug costs will rise under the pending free trade agreement. The TPP and similar trade deals will add more than $800 million to prescription drug costs in Canada at a time when our drug prices are already 26% higher than the Organisation for Economic Co-operation and Development median. If the TPP is ratified, many more Canadians will experience higher costs, and this will represent a significant financial burden relative to their income.

Some additional individuals will be faced with the difficult choice between putting food on the table and taking necessary medication. The TPP requires extended patents and facilitates evergreen practices, allowing pharmaceutical companies to stay in monopoly protection for drugs whose patents are about to expire by adding new uses and modifying formulas. Canada has made important contributions to the world's health by contributing to the development of affordable vaccines and by investing in the Global Fund to fight AIDS, TB and Malaria.

The TPP will undermine these contributions when the provisions in it drive medicine prices up. The hardships that this agreement will impose on the poor and sick in developing countries that are part of this agreement are reason enough for Canadians to reject such abuse of intellectual property provisions. The TPP will have profound effects on the criteria that Canada uses to decide on drug safety and effectiveness, how new drugs are approved or not for marketing, market surveillance and inspection, the listing of drugs for unpublished formularies, and how individual drugs are priced in the future.

Drug prices need to be affordable so our patients and millions of others still waiting for treatment can get the medicines they need. It is our understanding that generic competition in the production and distribution of health technology saves lives by reducing price and increasing access. I will let Paula continue.

(1025) The Chair :

You only have a couple of minutes, so it will have to be brief.

Ms. Paula Tippett (Saint John Chapter, Council of Canadians) :

When I saw on the

schedule that we were to be on a panel with Connors Brothers, I got a sudden craving for Brunswick sardines, so I had to go to the kitchen and eat some. We are very fortunate in Saint John, New Brunswick, to have ready access to safe, local, nutritious, and affordable food. Will safe local food be as readily available to us after CETA and the TPP? I don't think so. What about maritime turkeys or local chicken? Turkey farmers have said that reducing tariffs and increasing imports under the TPP will put them out of business, and I believe them.

Locally produced sardines, turkey, chicken, eggs, cheese, and milk are excellent, safe, and affordable protein sources for the people of Saint John to buy to feed their families. We need to protect all of them from CETA and the TPP. For over a century, Saint John has had an excellent system for protecting the public's health. The city market managers always had the authority to ensure the food sold in the market was wholesome.

When the Saint John Board of Health was established, and then the provincial health department, we had health inspectors to ensure our food workers were trained in food safety and that our food was safe to eat. When I was health officer for the four counties from St. Stephen to Sussex, the public health system worked well. One weekend evening, I got a call at home from the head of the emergency department at the regional hospital. A number of people had arrived ill. Samples had been taken from a woman who was vomiting. They had all had takeout food from the same restaurant.

I called the health inspector for the area. He went to the restaurant, located the contaminated food, took samples, and threw the rest of the contaminated food in the garbage, stopping the outbreak. The restaurant owner was informed of the food safety rules he had broken, which had resulted in the outbreak of illness. We take safe food for granted, but we shouldn't. With NAFTA and the harmonization of our food standards with some other places, there has been a deterioration in food safety in Canada. Federal inspectors and inspection services have been reduced.

Food processing can take place far away from where it's eaten. Meats are especially dangerous. In 2008, 22 people died from eating sliced meat from Toronto, which was contaminated with listeria bacteria from meat slicers that were not properly cleaned. The listeria outbreak lasted from June to October, five months. Compare this to the few hours it took to end the outbreak in Saint John. Many people across Canada became ill in 2012 from E. coli bacteria in beef from out west that was processed in a plant with poor hygiene practices.

An inspection at this plant in 2014 showed no running water in the sinks of the men's and women's washrooms, no paper towels, and other problems. This plant was said to have processed 40% of the beef in Canada exported to the U.S. Since NAFTA, American-origin lettuce, other fruits and vegetables, and even nuts have been contaminated with disease-causing bacteria. In May of this year, CBC announced a massive recall of frozen fruits and vegetables produced in the U.S. from 2014 on, in regard to a listeriosis outbreak that began in 2013, causing illness in many people and some deaths. Am I to slow down?

The Chair :

No, you're way over time. You're three minutes over time. I'm trying to be polite and trying to get you to get right to your point so we can have a dialogue with all the MPs.

Ms. Paula Tippett: I'm sorry.

The Chair: Are you finished?

Ms. Paula Tippett :

Yes.

The Chair :

Thank you very much. We're going to move on to the Grand Manan Fishermen's Association.

Ms. Bonnie Morse (Program Co-ordinator, Grand Manan Fishermen's Association) :

Good morning, and thank you for the opportunity to address the committee today. The Grand Manan Fishermen's Association represents inshore commercial fisherman on Grand Manan Island. Grand Manan is located in the mouth of the Bay of Fundy and is about a one and a half hour ferry ride to mainland New Brunswick. Our population has been steady, at around 2,500 for the past 200 years. While aquaculture and tourism contribute to the economy of the island, it is most dependent on the health and prosperity of the fishery. Members of our organization are owner-operators.

They own their own boats and licences and fish them themselves. They are small business owners who generally employ at least two other people besides the captain, and there are about 100 of them on our island. The fact that fishermen operate small businesses and offer good employment opportunities in rural coastal communities is often lost in the discussion about the fisheries. Our fishermen fish lobster, scallops, groundfish, and herring. Lobsters were our primary species, with a landed value of close to $80 million on Grand Manan in 2014-15, the last year that statistics were available.

New Brunswick's GDP grew last year based on the growth from resource industries, including fisheries. Despite the way the fishery is sometimes depicted, we are a growing, healthy industry. Traditionally our lobster market has been primarily the United States, with much of the catch moving through the Boston market. The economic downturn in 2008 combined with increased lobster catch throughout the Maritimes changed that.

While the U.S. is still a primary market, more markets have opened up in Europe, and more recently an emerging Asia market, which has allowed the industry to diversify its dependence on any one economy. As such, we are very interested in trade and in securing market access for our products, particularly in Asia. The Trans-Pacific Partnership agreement is of keen interest to us. However, we note that China is not part of it and have concerns about what that may mean.

We, with many other inshore fishermen's groups across the country, are members of a national organization, the Canadian Independent Fish Harvesters' Federation. This federation represents the independent fleet sector of the Canadian fishing industry and wants to participate in the discussion about our trade policy. We want to be able to do so from an informed perspective. It has been frustrating that there has been very little information forthcoming about the portions of the TPP that could and will impact fisheries.

We are requesting that there be a briefing provided to the federation specific to the fisheries issues.

(1030) Ms. Melanie Sonnenberg (Project Manager, Grand Manan Fishermen's Association) :

We know that trade agreements are not just about the trading of products; they're also about rules, particularly about rules that give rights to corporations that can override national legislation. This is of great concern to us, because Canada's approach to fisheries is based on the owner-operator concept. Rules like owner-operator and fleet separation were put in place to make sure that fishing communities benefit first and foremost from the adjacent fisheries resources. They are critical for rural development and sustainability in Atlantic Canada.

They rest on the notion that Canada's fisheries resources are a common property resource to be managed by the federal government in the public interest and for the benefit of Canadians. Our concern about the TPP is that certain key countries behind the deal, like New Zealand and Chile, both fishing nations, over the last several decades have taken a very different approach to their fisheries resources. They have in essence privatized access to fisheries quota. The situation is quite alarming in New Zealand.

Fish quota is now harvested by foreign industrial vessels, South Korean for the most part, using indentured crews from very low-wage countries like Indonesia, the Philippines, and Vietnam. The working conditions aboard these vessels have been described as slave-like by Bloomberg business report. This was confirmed by New Zealand department of labour investigations after repeated cases of crews jumping ship to flee the abuse they were subjected to.

This kind of arrangement, having a country's fisheries resources harvested by foreign industrial boats using slaves, is no doubt good for the bottom line of companies that control or own the quotas, but we don't see how it could be good for fishermen or fishing communities. News last week that similar practices were taking place in Hawaii only emphasize the need to maintain and enhance Canada's approach to fisheries management. Let's be clear here: fishermen understand the market. We deal in it every day. We know the market doesn't care about our fishing communities or their future.

Our concerns are that the big fishing companies of the Pacific countries involved in the TPP, including our own, will use the negotiations—which we understand were conducted in secret and which Canada had to sign on to before even seeing them to be allowed into the deal—to get access to Canada's fisheries resource at our expense. That critical policy like owner-operator and fleet separation, and the notion that Canada's fisheries resources are a common property resource, will be sacrificed so that other sectors of the economy, pork producers perhaps, can get access to TPP markets.

We want to participate in the shaping of our international trade policy, and we want to do it on an informed basis. What we don't want is to have our interests and the long-term interest of our communities and future generations traded away by people who do not value the importance of coastal rural communities. Thank you.

The Chair :

Thank you. You're right on time. Apparently, you have a very vibrant fishing industry up there. It's a beautiful island and I'd recommend to any Canadians or travellers to go to your island. It's a wonderful stay and hospitality. It's great to see you here this morning. That wraps up our briefings. We're going to move on to dialogue with the MPs. We're going to start off with the Conservatives for five minutes. Mr. Van Kesteren, you have the floor.

Mr. Dave Van Kesteren :

Thank you all for being here. We're having a wonderful visit here. We're learning lots about your industries and your people. I'll start with you, Mr. Lomas. I'm somewhat confused. Is yours a multinational company?

(1035) Mr. David Lomas :

We have a Canadian legal entity, Connors Bros. Clover Leaf Seafoods Company, and we are in turn owned by Lion Capital, which is a U.K.-based private equity firm. We're affiliated with Bumble Bee Seafoods. I'm just talking strictly about the legal structure. Functionally our president and CEO is based in San Diego, California. The president of Connors Bros. Clover Leaf Seafoods Company is based in Markham, Ontario. He was formerly living here.

Mr. Dave Van Kesteren :

Do you fish globally? Do you have a presence in different areas?

Mr. David Lomas :

We're primarily a processor and marketer and seller of canned seafood products.

Mr. Dave Van Kesteren :

Does that product come from different locales?

Mr. David Lomas :

I'm here today to speak more with a focus on our operation here in New Brunswick.

Mr. Dave Van Kesteren :

I'm confused, because on the one hand, the local fishing population, those who are involved with the locals in places like Grand Manan, are concerned about your types of operations. Yet you're concerned that trade deals won't benefit you. I'm just looking to square that.

Mr. David Lomas :

Let me clarify one point. Connors Bros. is one of Canada's oldest food companies. We've operated a sardine cannery in Blacks Harbour, New Brunswick, 45 minutes south of here, since the mid-1880s. The history of our company is one of consolidation. In 2004, Connors Bros. basically entered into a merger with Bumble Bee Seafoods. However, here today we employ 600 people in the Blacks Harbour area, and we process herring into canned sardines—

Mr. Dave Van Kesteren :

I get that. I'm sorry to cut you off but I have only five minutes. I really want to get to the bottom of this. You're talking about fish quotas for herring and the fact that you're allowed only so much, and yet the other parties are worried that these quotas will not be respected and we'll see overfishing. I know that you don't fish but you get that fish from different sources. Quite frankly, I was a little bit surprised to hear that. I'm concerned about those things. I'm concerned about overfishing and the world fish population and having good rules.

I always understood that those rules were being applied generally and increasingly applied and that we were improving the situation. You seem to indicate that when you say you don't get the quota that you need in order to move it across, and yet your group is saying that we're moving in the opposite direction.

Mr. David Lomas :

You're touching on a lot of different points that I don't think five minutes can do justice to. First of all, just to clarify again, Connors Bros. does harvest. We have a seiner. But we also buy from many of the local fishers here including weir fisheries in addition to seiners. The point I'm trying to make is that right now, we've seen a situation in which the total allowable catch, the TAC, in the Bay of Fundy Area has now declined to around, I think 50,000, tonnes.

Mr. Dave Van Kesteren :

Is that because the quota has decreased?

Mr. David Lomas :

The quota has decreased. We actively support and our livelihood is tied up with sustainable resources.

Mr. Dave Van Kesteren :

We have to do that, yes.

Mr. David Lomas :

We have to do what's necessary. The point I'm trying to make is that we also run a processing plant. Through our branded products, we have a market outlet potential that is far in excess of what we are able to process from locally available fish, and that includes fish that is harvested in the United States and imported into Canada by us. The point I was trying to make in this context was about the regulatory framework under which we are currently operating.

Our main concern is that there be a level playing field between us and competing processors and providers of product in the global markets, and that includes Peru and Vietnam. There are other places outside of the TPP that we directly compete against, for example, Morocco and Thailand. There are a number of them; it's very much a global business. As things stand right now, we're looking for finished goods just to meet our branded-product outlet requirements.

With respect to the Bay of Fundy, we're deeply tied in with what goes on within the fishery and with our partners in this resource, and their concerns are our concerns in the context of that relationship.

(1040) The Chair :

Thank you, sir. We're quite a bit over time, but that's fine. You had some good information there, so I let it go. We're going to move to MP Ludwig, who is hosting us here in this wonderful province. It's great to be here. You have the floor for five minutes.

Ms. Karen Ludwig :

Thank you. Thank you all for your excellent, very detailed, and locally concentrated presentations. My first question is for you, Mr. Lomas. From what I'm hearing, and my experience with Connors in Blacks Harbour, which is in New Brunswick Southwest, we have a company that is importing in order to export. I fully understand and appreciate the concerns around the level playing field, because we've often heard from Connors and from other companies across the country about the challenges behind the sanitary and phytosanitary requirements. You gave the example of Sweden.

If the stocks were here locally, if the local herring stock were as plentiful as it was 50 years ago, there probably wouldn't be the necessity for importing. So certainly, in terms of your concerns regarding the importing side, yes, there is work that needs to be done there, and we have heard that from different businesses. My question on that is whether you think, with the harmonization of sanitary and phytosanitary measures, there's an opportunity for us to actually raise the standards, as opposed to the concern we heard from many witnesses that we're actually lowering the standards with the TPP.

Mr. David Lomas :

I see the TPP as a framework. It's a trade agreement among the participating members, and the relevance of that is primarily to facilitate trade among those members. We already export canned sardine products from Blacks Harbour into the United States, Australia, New Zealand, and Mexico a little bit, and we are also actually importing some product from the United States. When I say we, I'm talking about our Canadian-branded business under Clover Leaf. There's also a little bit from Vietnam on some sushi-grade frozen seafood products, through one of our affiliates in Canada.

But primarily speaking, I see that really our main competitors would be outside of that TPP set, and it's then about the regulatory environment and framework imposing challenges against our competitiveness within the canned seafood business, particularly—

Ms. Karen Ludwig :

On that, we have heard from a number of businesses the concern that if the U.S. ratified and we did not, it may have an overflow effect and affect Canada's relationship with and competitiveness in the U.S., because the U.S. has bilaterals with Japan, Australia, and others. It's a concern that some others have raised. To the Grand Manan Fishermen's Association, thank you so much. You definitely raised the concerns and the opportunities for the local fishers to have a voice at this table, which is absolutely critical. Those are our communities in coastal southwestern New Brunswick.

On the owner-operator issue, I know the significance locally, why we want to keep it local. Could you explain in greater detail to the group the significance of the boats being operated and owned by someone offshore?

(1045) Ms. Melanie Sonnenberg :

When you have an owner-operator fishery, you have, just as it says, a person who owns the boat and they're in essence a business, a small business, but a business and they're contributing in a big way. We have only to look at the west coast to see how corporate takeover has taken that right away from people. We here on the east coast still enjoy it, although the policy has been eroded considerably over the years and we've lost some of that.

When the owner-operator takes his boat away from the wharf, he generally, as in our lobster fishery as an example, has two to three people on the back end who are making what we would call very good money in our community. They're contributing. All that money stays in the community.

Ms. Karen Ludwig :

What would be an example of good money?

Ms. Melanie Sonnenberg :

We've had crew members in the last couple of years who would be in the $150,000 range and upwards, depending on the captain. That's for somebody who can come out of school and go directly out fishing, with some minor investments to get there. They make a very reasonable wage, more than that, actually. In our case, where we live on an island and we're very isolated, these things are critical. That money being in the community keeps us functioning. If we take that away, and we see corporate ownership take over, for example in the lobster fishery, then our economy is closed and there's no more opportunity.

We've seen this in other sectors. When you take that away from the community, cashflow is reduced and that in turn affects your businesses, your families, and so on. For us, it would be devastating. To speak in a broader term, most coastal communities are somewhat isolated, even when they're not on an island. From a broader perspective, it's really important to the fishing industry that we understand where this agreement is going to take policies like that. In the case of Connors, they already have a quota fishery with the herring, and that is a different discussion. But the lobster, for example, is not.

To see things happen that would allow that sort of thing to go on would be absolutely a devastating situation for us.

The Chair :

Thank you. We were over a bit there. We're going to move to the NDP with Ms. Ramsey, for five minutes.

Ms. Tracey Ramsey :

Thank you so much for your presentations. I think they really give us a snapshot of New Brunswick and the concerns you have individually. Ms. Sonnenberg, I just loved what you had to say about the bottom line and about what's good for fishermen and communities here, because that translates across Canada into what's good for the Canadian people, for our communities, and for our public health and public safety. Those things have to be protected and are paramount in anything we do, so I appreciate your words. Ms. Adair, you mentioned evergreening in the patents.

I think that most Canadians are unaware of the way that drug corporations, large pharmaceutical companies, use this to extend patents. One simple example is the EpiPen. It's not the epinephrine, which has been a drug for 40-plus years in Canada, but it's the mechanism of delivery which continues to keep the cost of that high. I wonder if you could speak to us about the impact of less affordable medication on people here in New Brunswick.

Ms. Leticia Adair :

I work in a nursing home. We have seniors coming to our facility and we see them come with medications that are totally new, brand names that are very similar to the generic drugs we have. I was concerned with the simple diabetic drug people have been taking. All the pharmaceutical companies have to do is change the dosage. It's slightly tweaked to evergreen it. That would bump it up to a new brand-name medication. We see a huge epidemic in diabetes. We also see medications that are available as generics. The pharmaceutical companies, however, push them at doctors at conferences or while training.

They slightly change the formula. It's a possibility and not even proven sometimes that the drug might help. People are paying an incredible amount for their medication. Our facility is run by the provincial government and the aim is to reduce costs, so we start with generics. The general population, however, is being victimized with the high prices of these medications. For us, evergreening is a huge concern. It's not just going to be new medications that work. Some medications are just going to be transformed with a different name, a different formula.

(1050) Ms. Tracey Ramsey :

Thank you. I know you didn't get to finish, Dr. Tippett. I wonder if you could finish your thoughts on food safety and the way the TPP threatens food safety for people here in New Brunswick and across Canada.

Ms. Paula Tippett :

I was just starting to make the point that the weaker food safety standards in TPP countries would further threaten food safety in Canada. There was an example of the unsafe food imports from Malaysia and Vietnam, and how that's treated, the shrimp that are raised in human waste, and then treated with antibiotics. These things may not be properly labelled under the TPP to reflect this. The other thing that people are worried about is the U.S. milk. Canada has banned recombinant bovine growth hormone produced by Monsanto, and the U.S. has not. People are worried about that.

The assumptions of equivalents for animal and dairy products and other food products under the TPP that well-informed members of the Canadian public don't consider equivalent, should be done away with. Many Canadians object to forced consumption of GMOs, dairy products that might contain rBGH. Many are allergic to certain things; many object to food irradiation, and they should all be protected from harm, by either bans or labelling. The labelling of the country of origin should be clear, and of the substances and processes that may affect health adversely.

It should all be labelled well to protect the health of Canadians.

Ms. Tracey Ramsey :

I think exactly what you're saying is the concern that we have. This alternative to the trade agreement, we know that only six of the chapters actually affect traditional trade, in the way we think about it, and I think you've all brought good examples of the other chapters that exist in the TPP. I thank you for your contribution today.

The Chair :

Thank you, Ms. Ramsey. We're going to move over to Mr. Dhaliwal of the Liberals. You have five minutes.

Mr. Sukh Dhaliwal :

I come from beautiful British Columbia. B.C. is a leading exporter of seafood, particularly wild seafood, which accounts for two-thirds of a $1-billion industry. It is said that, if the TPP is ratified, it will open access to Pacific nations, which will create stable, long-term predictable jobs on the west coast as well as on the east coast. I would like to hear comments from the panel. Would you agree? Is this true for New Brunswick?

Ms. Melanie Sonnenberg :

Our experience with what we know in British Columbia is that we've seen a great downturn in the fishery, in terms of access by individuals to keep these communities going. It has been a huge concern. We belong to a group, as Bonnie referenced in the presentation, the Canadian Independent Fish Harvesters' Federation, through which we've called out to government to help re-establish owner-operator in British Columbia. The corporate monies, again I go back to this; we're unclear about what this will mean to us.

I think it would be premature for us to really get into the weeds, in terms of where this takes us, but until we fully understand the regulatory side of it and how it impacts us, I don't think we can say that it's all bad. I think we have to open up a dialogue with the industry at a higher level than we've done to date, so that we can better understand what it means to us, but make sure that we're protected in the process. I'm not really sure how to answer it at this point, given what little we know about some of those questions that we have.

(1055) Mr. Sukh Dhaliwal :

Have you been approached by any of the officials, or have you approached them the other way around?

Ms. Melanie Sonnenberg :

This is the first opportunity that we've had. We have had some discussion in the industry about it. We've had a fair bit on our plate, in the last year or so, with the owner-operator policy, so we've been very focused on that, but this has started to, of course, get more and more traction. You'll hear from the national body. I just spoke with Ms. Ludwig about that, and you'll probably be receiving a brief from the group, then hopefully, we can appear from that standpoint as well.

The Chair :

Thank you. Go ahead, Mr. Lomas.

Mr. David Lomas :

From a processor's perspective, with respect to the east coast and west coast—and I'm familiar with the west coast, as I worked for British Columbia Packers at one point—they're very different. You have to look at it on a sector-by-sector basis within fisheries. Salmon fishing and salmon products are very important on the west coast. The wild salmon catch is very different from what we have on the east coast. I would refer you to the Fisheries Council of Canada for some information. It can give you some numbers and describe the structure of the respective coasts.

I think it will give you some idea of which sectors are important. Each one of them has different competitive dynamics. We're all export driven, regardless of whether you're on the west coast or east coast. The domestic market requirements are, generally speaking, a low portion of the total output. We are, basically, exporters of our fisheries resources.

Mr. Sukh Dhaliwal :

Thank you. Dr. Tippett, you mentioned that TPP would negatively affect affordable medicine. You talked about low- and middle-income families. It's my understanding that if we open up markets, if we open up free trade, it brings affordability to middle-class families. Aside from medicine, do you think there will be a net positive gain when it comes to that?

The Chair :

Do you understand the question?

Ms. Paula Tippett :

No.

Ms. Leticia Adair :

May I answer?

The Chair :

Yes, go ahead.

Ms. Leticia Adair :

On the affordability piece, just opening the market doesn't mean that the prices are going to go down, because the main aim of the pharmaceutical companies—and they're the ones who drew up the TPP agreement—is to keep the patents on medications, which keeps the medications at higher prices. If Canada, for example, were to stop a patent, as they are doing with Eli Lilly, for example, then they are sued under ISDS. We don't foresee it. We hope against hope. It would be nice if they decreased, but they will not. NAFTA has shown that the medication prices just....

The Chair :

Thank you. We're going to go to Madam Lapointe for five minutes.

[ Translation ]

Ms. Linda Lapointe :

Thank you very much, Mr. Chair. I want to welcome the witnesses who are appearing before us today. I am happy to be here with you in New Brunswick. My question will be more for the representatives of the Grand Manan Fishermen's Association, as well as the Connors Bros. representatives. Is it difficult for you to recruit workers?

[ English ]

Ms. Bonnie Morse :

For the commercial fishery, during the very busy peak times, it is a bit of a challenge, particularly because we're on an island and we have a very limited workforce. There are times when it is a problem to find workers, but throughout the season, it generally levels off. Because the economy on the island is so good, in general, finding workers has been a problem. We have a lot of openings, particularly in the service industry.

[ Translation ]

Ms. Linda Lapointe :

Thank you. A bit earlier, witnesses told us that they had a fairly available workforce, but probably not on the island. It is difficult for you to recruit workers.

(1100) [ English ]

Mr. David Lomas :

The answer from the processor's side is, yes, we do. That reflects, in some ways, the interest level of Canadians in working in a fish plant. This has been something that has been well publicized before, when there are restrictions placed on temporary foreign workers coming in. The short answer is yes, we are challenged in finding sufficient employees who will work in a fish processing plant.

[ Translation ]

Ms. Linda Lapointe :

Thank you. If the Trans-Pacific Partnership agreement was ratified, we could assume that exports from New Brunswick would increase. In that context, would it be even more difficult to recruit workers?

[ English ]

Mr. David Lomas :

As I said at the outset, from Connors Bros.' perspective, our challenge is we're constrained on resource right now. While we would love to be able to export a lot more—

[ Translation ]

Ms. Linda Lapointe :

So there are some problems with the supply.

Mr. David Lomas :

Yes.

Ms. Linda Lapointe :

Thank you. Earlier, we talked a lot about food security. Do you think that adopting the TPP agreement would help us increase sales to Japan? That country accepts and prioritizes the food safety standards we apply here, in Canada. Earlier, you talked about Vietnam and Malaysia, but Japan really appreciates our food security when it comes to our exports. Do you believe that exports from New Brunswick to Japan could be increased if the tariffs were removed?

[ English ]

Mr. David Lomas :

Historically, we've only had very nominal sporadic exports of our products into Japan. The issue very often transcends just simple tariff issues and some of the regulatory aspects. It also speaks to what products you have to sell that are of interest to that market. Within fisheries there are certainly many areas, but within the herring side of the business from the Bay of Fundy area it has not been an important market for us at all just by the nature of products that we provide. I'm sure in other sectors of the fishery that would not be true. There is certainly a very active trade with Japan.

I know from the west coast there certainly is, but insofar as our neck of the woods in the herring side is concerned, it's very limited and I don't see the TPP would dramatically change that.

[ Translation ]

Ms. Linda Lapointe :

Thank you.

[ English ]

The Chair :

You have half a minute.

[ Translation ]

Ms. Linda Lapointe :

I have a question for you, ladies. You said that this agreement was signed behind closed doors. Were you consulted when consultations on the TPP began last year? My question is for the Council of Canadians representative.

[ English ]

Ms. Leticia Adair :

Before the agreement was signed by the Canadian government, personally, we weren't. We don't know whether our national organization was, but, no, we were never....

[ Translation ]

Ms. Linda Lapointe :

Thank you very much.

The Chair :

Thank you, Ms. Lapointe. [ English ] We're going to finish up with the Conservatives. Mr. Ritz, you have five minutes.

Hon. Gerry Ritz :

Thank you, ladies and gentlemen, for your presentations today. As you can see, the diversity of opinions is actually very good. It ends up with a stronger agreement at the end of the day. Mr. Lomas, you said that most of the fisheries, and maybe I'm paraphrasing a little, that you're export driven. The vast percentage and the last groups that we had basically said the same thing. Is it not important to have diversity of markets? You rely a lot just on the American market and I understand, and you made the comment about Japan. The point with Japan is they want fresh fish. They don't want it canned.

That's the difference there. Is there any strength then in having diversity of markets in keeping the Americans honest? We found that when we were negotiating with them on country of origin labelling, on beef and pork, and we also found it on softwood lumber, which is still under discussion, that if you have other markets that create demand, then the Americans tend to toe the line and become fair traders rather than just free traders. Is there strength in having that diversity?

(1105) Mr. David Lomas :

The answer would be yes.

Hon. Gerry Ritz: Yes, the easy answer.

Mr. David Lomas: Again, just to qualify this in respect to the Connors Bros., historically, we've been exporting for well over 100 years. In fact, there was a sales sheet I saw from 1923 which said that at the time Connors Bros. was exporting to over 50 markets around the world. At that time the tariff structure into the U.S. was very prohibitive, so the U.S. was not a very important market to Connors Bros. Uniquely, perhaps, as the result of our long history, we have always developed a very diversified branded seafood outlet business. We've always been very diversified.

Now today, yes, certainly, the U.S. market through our brands in the U.S. is very important to us. We are export driven. We look for those opportunities and we look to optimize the returns on the products that we have available to sell from this area. So, CETA, TPP, in theory, if the playing fields are level, then, yes, it would be a positive thing.

Hon. Gerry Ritz :

There was also talk about the chapters that were closed when Canada started to take

part in the negotiations. I can assure you, all of those chapters were opened and discussed. There were changes made within those chapters. A case in point from an agricultural perspective, cheese compositional standards were taken away in one of those closed chapters. We were able to open it and bring that back into Canada's favour. That's worth about $800 million to our dairy farmers. There were a lot of discussions. You made the comment about quasi-slavery on some of the catching boats around the world. There are chapters in there on labour standards, environmental standards, and on food safety as well.

The countries exporting product into Canada, in order to gain our market, have to do it to Canadian standards. The labour that they pay on their boat has to be to Canadian standards; the environment that they're working in has to be to our standards, and of course the food safety has to be to our standards as well, to keep us safe so that we're not importing stuff that is less than what we expect in Canada. It is very important to have those chapters in there. When you folks from Grand Manan talked about not having a proper briefing, have you asked for one now?

You have a local guy who is the Minister of Fisheries . I'm sure Dominic would be happy to sit down with you, or your parent organization will call him, to run through everything.

Ms. Melanie Sonnenberg :

At this point we haven't because we're letting him get his feet under him in his new portfolio, but now that we're into the fall, yes, we will be asking for it.

Hon. Gerry Ritz :

He has officials who have their feet under them and have been involved all the way along. He's a tap dancer; he's fairly quick at being adept in it. We look forward to that. Thank you for your presentation, Dr. Tippett and Ms. Adair. You mentioned that our drug costs in Canada are second in the world, on the wrong end of the scale, and have gone up some 26%. To what do you attribute that? What's to blame?

Ms. Leticia Adair :

Many of the drugs that are being introduced into our country have been introduced through back doors, like many of the pharmaceutical companies I was mentioning before. They've prepared this training, or presentations for the doctors. They're basically enhancing the new preparations. It's a fact; I couldn't really tell you exactly what because—

Hon. Gerry Ritz :

You're speaking to the evergreening of the product.

Ms. Leticia Adair :

No, not evergreening, just the regular.... The facts have been analyzed in the OECD countries, who pays the most per comparative population for drugs, and we are really in the highest.... It's not necessarily evergreening. Evergreening is the new measure that the companies are thinking about. It is a fact, whether they discuss the measures the companies use or whether it's just the number of drugs that people are being prescribed.

Hon. Gerry Ritz :

How do they get away with that in Canada, when the companies that produce are global, the Pfizers of the world, and so on? How do they take advantage of just the Canadian market, when they don't take advantage of some of the other markets?

(1110) Ms. Paula Tippett :

We have long patent protection. We allow them to have their patents for a long time. We used to have a program, and we had a good Canadian generic drug industry, a lot of it in Quebec—

Hon. Gerry Ritz :

We still do, actually.

Ms. Paula Tippett :

Yes, but it's diminished from what it was. The long patent protection makes it difficult for the generics to make drugs. At one time we had a program where they could pay a fee to the person who developed the drug, to the company—

Hon. Gerry Ritz :

Pay a royalty.

Ms. Paula Tippett :

—that developed the drug. They could pay a fee to them and make the generic product of that drug. That's the way it should be, because then you have access for the government to buy drugs and for the public.

Hon. Gerry Ritz :

Thank you.

The Chair :

Thank you, Mr. Ritz. That wraps up this panel. Thank you very much for coming, and for the good submissions and the good dialogue with the MPs. It's going to be used in our final report. Could you stay for a few seconds? The CBC wants to do a shot of all of us sitting around and getting along, as good Canadians do, and having input with parliamentarians. Our committee has done something different from most committees. At the end we set time aside for any of the audience that wants to comment. If anybody in the audience wants to go to our open microphone, it will be in about an hour and a half.

You will have two minutes. We will need your name and where you're from. Then I can call your name when we're ready to go. That'll be in about an hour and a half, but I'd like to get you registered first with your name and where you're from. When I read your name off, you can go to the microphone for two minutes and tell us what you think about the TPP. It won't be a dialogue back and forth with us, we're just going to be here to listen at that open mike for what you have to say. It's your time to say what you want. Try to keep it within two minutes. It's worked quite well. We've done it in every province.

In some provinces there were more in the audience coming forward than others, but it was lively and it was good. People expressed right from their heart what they thought about TPP, what they loved about it, what they didn't like about it, and what they wanted changed. It went well. I don't know if other committees are going to start the open mike process, but it's worked well for us so far. I remind you to put your name down and register. On that note, we're going to suspend.

Mr. Sukh Dhaliwal :

Tell them the time that open mike will be.

The Chair :

I think it's at two o'clock, Mr. Dhaliwal. We're going to break for 10 minutes, and then there will be a new panel coming up.

(1110) (1130) The Chair :

We're going to get going here, folks. We're doing well this morning and moving on to our third panel. Welcome, panellists. You know why you're here. Our committee has been travelling the country on the TPP agreement. We're hearing from Canadians. We're hearing from stakeholders, companies, corporations, unions, and employees. We have over 200 or 300 submissions, and over 20,000 individuals have sent us emails. We're getting a big uptake and we're going to be wrapping it up in the month of October. We're doing Atlantic Canada all this week and we'll have a few more submissions in October.

We'll take any submissions from the public until the end of October. Then through November and December we'll put our report together and present it to Parliament at the end of the year. Thank you for being part of this whole process. If you would keep your remarks to five minutes, we would appreciate it, so we can have lots of time for dialogue with the MPs afterward. Without further ado, we'll start off with Leigh Sprague from the New Brunswick Union of Public and Private Employees. Thanks for coming, Mr. Sprague. Go ahead, please.

(1135) Mr. Leigh Sprague (Legal Counsel and Chief Negotiator, New Brunswick Union of Public and Private Employees) :

Thank you. The New Brunswick union, headquartered in Fredericton, has about 8,500 members, about 7,000 of whom work in the public sector here in New Brunswick. We are the New Brunswick component of the National Union of Public and General Employees, the 360,000 member NUPGE. We have concerns about the effects of TPP on public services, both as users of the public services and as employees working to provide them.

First, it's that the agreement adopts a negative list approach, meaning that all services and investments are subject to the TPP's provisions unless specific reservations or exclusions are negotiated and identified in the country's specific sections. Canada has negotiated a reservation in the area of social services, as well as aboriginal treaty rights and cultural industries, and in doing so, and I'm quoting from the text:

Canada retains the right to adopt or maintain a measure for supplying public law enforcement and correctional services as well as the following services to the extent that there are social services established or maintained for a public purpose—income security or insurance, social welfare, public education, public training, health, and child care.

While this appears to be a positive step, our issue is that the phrase “public purpose” is not defined within the text of the TPP. This is problematic, as all governments do not share

interpretations of what constitutes a public service. Ultimately, it would be up to the arbitration program, with the dispute settlement, to build up a jurisprudence around what it is that public purpose means. We could come to a time where we find the Canadian government and provincial governments constrained as to what they are permitted to do. The annex also doesn't include various ancillary services that ensure the ongoing functioning of the social services that I mentioned.

For example, in the area of health, it does not identify ancillary health services, such as cleaning services, maintenance and administration, as social services. Therefore, anything in that area would be subject to the TPP. The negative list also means any unanticipated services that are deemed to serve a public purpose in the future will not be protected by the reservation, and will thus be subject to the provisions of the TPP, because they haven't been identified in the current text.

Things that governments in Canada might want to provide as a public service in the future, that are unanticipated as of now because they don't exist yet, governments would be constrained in their ability to provide those services. An additional concern linked to this is based on the standstill and the ratchet provisions of the TPP. The standstill provision is intended to create an irreversible minimum standard for liberalization through the exclusion of new or additional restrictions. According to this provision, governments are not allowed to implement new regulations or restrictions on trade and investment.

Quite the opposite, governments are required to only move toward greater conformity with the provisions of the agreement. As an extension to this, the ratchet provisions prohibit governments from reversing any voluntary privatization efforts. Not only does the standstill provision create a new standard of liberalization of trade and investment in services, but the ratchet provision prevents government from reducing privatization in the future. Perhaps even more troubling than the potential trend toward privatization is the fact that it will be irreversible.

As a trade union, particularly one that has members working in the public service, it's natural that we would be opposed to privatization as a concept, but I think regardless of one's view of whether or not services are best delivered by the public sector or private sector, the irreversible nature of some of the rules here in the TPP around that should be bothersome to all of us, because it potentially constrains governments in the future.

The Chair :

Do you want to wrap it up with some final comments?

Mr. Leigh Sprague :

I can. In fact, that was essentially it, the concern around the future autonomy in those areas.

The Chair :

Thank you, sir. We're going to Mr. Peter Johnston from Cavendish Farms. Thank you for coming. You have the floor.

Mr. Peter Johnston (Director, Quality Assurance, Cavendish Farms) :

Thank you. Good morning. My name is Peter Johnston. I'm the director of quality assurance for Cavendish Farms. I focus on food safety and regulatory within our company. I've worked for Cavendish for just over seven years. I've been in the food industry for just over 20 years. Cavendish Farms is a proud family-owned Canadian company with roots in Atlantic Canada. Our operations began in 1980 in Prince Edward Island. That year we shipped 25 truckloads of product a week. In 2015 we shipped 728 truckloads a week. Cavendish Farms is the fastest-growing retail brand in Canada.

For the past two years, most of North America's quick-service restaurants have been our clients. We are also one of the largest private-label packers for many retailers and food service suppliers. Aside from providing products for the U.S. and Canadian marketplaces, we export to more than 50 countries around the world. We are the fourth-largest frozen potato processor in North America. We have four plants in Canada and one in the United States. We produce more than 1.46 billion pounds of finished product a year. Our current market share in the TPP countries ranges anywhere from nothing to about 3.5%.

However, as you'll hear later, we do see opportunity in these markets if the TPP is ratified. Duty rates range from 0% to 40% within TPP countries. I did bring a handout with me. There are additional details within that handout. I do apologize, but I wasn't able to get it translated very quickly. Our duty rates on french fries and frozen potato products are currently the same as in the United States. If the United States ratifies the TPP agreement and Canada doesn't, Canadian processors will be at a significant disadvantage.

Processors in the U.S. have a slight edge with logistical advantages, as they are closer to ports for shipping and require fewer days in transit. To be competitive, we cannot allow any additional barriers to these potential markets. I can offer some examples of export challenges in the TPP countries. In Japan, the number one importer of frozen potato products outside of North America, there are non-traditional requirements on food safety and quality. They also require very specific packaging and labelling.

In Mexico, one of the top three markets for imports of frozen potato products, they recently passed new laws that require unique packaging as well for retail packaging compared with the rest of the world. In Malaysia, market and cultural sensitivities require unique SKUs, or stock-keeping units. In Chile and Peru, where we believe import opportunities are significant, non-traditional barriers to trade exist, including microbiologic and inorganic tests that are not required in other markets and not traditionally done in the industry. Their process to register a new product is bureaucratic and time-consuming.

It can take up to a year to register a product. In order for Canadian frozen potato products to be competitive, increase exports, and not lose existing market share in TPP countries, the Government of Canada must ratify the Trans-Pacific Partnership agreement. Thank you.

(1140) The Chair :

Thank you, sir. That's a lot of french fries; holy smokes. Are you saying it's a billion and a half pounds a year?

Mr. Peter Johnston :

That's correct. All of our facilities combined put out a billion and a half pounds per year. About half of that comes off of Prince Edward Island.

The Chair :

Great. We'll be heading there this evening. We'll move now to Unifor. We have Jessica Smith. Welcome, Jessica. Go ahead.

Ms. Jessica Smith (Unifor) :

My name is Jessica Smith. I'm here before you as a member of Unifor Local 4606, where I represent 1,300 members in the health care sector, predominantly in long-term care. Unifor also represents 30,000 members in Atlantic Canada and 310,000 across the country. I came to Canada as a temporary foreign worker. I moved here from the United States because, as a country, Canada more closely mirrors my beliefs and ideals, with our universal health care, labour relations, and environmental concerns.

All of these things are at risk from the TPP, but what I'm here to talk about specifically is how the TPP relates to being a temporary foreign worker. It's a stressful time of uncertainty when you work this way. I've heard it called “modern slavery” many times, including by our own media. When you work as a temporary foreign worker, the company that has hired you and paid for your labour market impact assessment controls your future. We tend to be very subservient, and I use “we” because I am past this part of my history, but it's something that's not forgotten.

If we rock the boat and our employment is terminated, so is our ability to remain in Canada. It's because of this that we do things for our employers that our Canadian counterparts would speak against. We tend to be moved around our job sites more. We're asked to work overtime more frequently. We work more when short-staffed and even when we're sick for fear of losing our jobs and, in turn, our Canadian future. Immigration is an important key to the diversity of our nation, and diversity is a huge strength. When developing trade agreements, labour must be a key factor in these talks.

Job security is economic security. As economic globalization occurs, we need to progressively look at what this means to our workforces and how we can actively work to get these trade deals to bring all people into the deal while lessening the economic divide that continues to grow apart. Free trade deals, especially the TPP, actively work to widen that divide.

Chapter 12 of the TPP, which the U.S. opted out of, specifically gives rights to the multinational corporations that allow them to completely circumvent Canada's immigration laws. It completely negates the labour market impact assessment, while also lifting the percentage of temporary foreign workers they are able to employ. Let's start with the labour market impact assessment. This was created to ensure that companies bringing in temporary foreign workers don't abuse the system. It requires that they show proof of an attempt to hire a Canadian first. As an immigrant, I understand the need for this.

No immigrant is coming to Canada to take a Canadian's job. We come to seek opportunities for our future, a future that lets us walk beside Canadians and not see them unemployed. By allowing multinational corporations to ignore the labour market impact assessment, this will not always be the case. To borrow an example from the report of the Canadian Centre for Policy Alternatives, “Migrant Workers and the Trans-Pacific Partnership”, Japanese automakers could easily move engineers from Japan into Canadian operations under the intra-corporate transferee rule.

This could happen even if there's a Canadian engineer, with experience, currently on unemployment. The labour market impact assessment may have its flaws, but it's put in place to prevent this from happening. Then there is the fact that the TPP lifts restrictions on the percentage of temporary foreign workers in a workplace. This aspect is at particular risk of being abused at places that often “contract-flip”, such as airports or the oil industry. Corporations ought to award these contracts to the companies whose proposals are the cheapest.

If the company is from a TPP nation, especially Japan or Australia, they would be able to not rehire any of the workforce that was employed by the previous contract winner and doing the job. Instead, they could bring in temporary foreign workers at a much lower pay rate, with decreased benefits. This makes the employees more beholden to that corporation. I feel that the TPP is a missed opportunity.

We should be looking to negotiate a progressive fair trade agreement that does not allow companies to circumvent our labour laws but enforces and equals them by making corporations truly look at the labour market impact assessment and by offering permanent residency options when a need is truly found for employee migration. Thank you.

The Chair :

Thank you, Jessica. Welcome to Canada. When did you come here?

Ms. Jessica Smith :

It's eight and a half years ago now.

The Chair :

Very good. We're going to start our dialogue with the MPs. We're going to start with the Conservatives. Mr. Ritz, you have five minutes.

(1145) Hon. Gerry Ritz :

Thank you, ladies and gentlemen, for your presentations today. They have been very informative. I loved hearing from you. Mr. Johnston, I was intrigued with the size and scope of what you've developed in starting out as a small player and then growing to the size you are now. We hear a lot of discussion about jobs that potentially will be lost if we do this, but you're an example of jobs that are created when you expand your trade footprint, and that's good news. I'm looking at page 5 of your deck.

As we look at the tariff rates in some of the TPP countries, it's going to make a huge difference to you to level that playing field. You don't have the U.S. statistics on that page. Was there a reason they were left out?

Mr. Peter Johnston :

There are no trade tariffs between the U.S. and Canada.

Hon. Gerry Ritz :

No, it's flat.

Mr. Peter Johnston :

It's flat, exactly. This would look the same for the U.S.

Hon. Gerry Ritz :

You didn't show that but.... Peru is an interesting.... I was down there and I think there are 3,000 varieties of potatoes grown. They have 28 different ecoclimates. Then they have the seed bank, of which Ag Canada funds a portion. They have tens of thousands of different seed varieties. The really interesting potato is one that is all knobby and bumpy. It's called the mother-in-law potato. If you go to your girlfriend's house and the potential mother-in-law peels the potato very accurately and nicely, it means she likes you. If she just hacks it all up, she doesn't. That's the potato industry in Peru.

You show the differences in the market from 2014 to 2015. Your increase in Japan and Singapore was phenomenal. Those are valuable markets. On the dollar numbers you still did well. It was the access you lost in Malaysia, Australia, New Zealand, and so on, which weren't big markets to begin with, but it's the value of these markets, not the volume.

Mr. Peter Johnston :

It's the value of these markets. Getting your foot in the door, if you will, should develop further opportunities. These are growing markets. The Asia-Pacific is the growing region for our market and our products.

Hon. Gerry Ritz :

How much do you spend as