EVIDENCE

Standing Committee on International Trade NUMBER 015 2nd SESSION 41st PARLIAMENT Monday, February 3, 2014 Le lundi 3 février 2014 Standing Committee on International Trade CANADA [Recorded by Electronic Apparatus] EVIDENCE February 3, 2014 Committee Edited Evidence * Table of Contents * Number 015 (Official Version) Official Report * Table of Contents * Number 015 (Official Version) Témoignages * Table des matières * Numéro 015 (Version officielle) 15 03 02 2014 2014/02/03 09:00:00 House of Commons Comité permanent du commerce international Standing Committee on International Trade CIIT Chair The Honourable Rob Merrifield 41 2

(0900) [ English ] The Chair (Hon. Rob Merrifield (Yellowhead, CPC)) : We'd like to get this started. We'll ask our members to take their seats and we'll get going. We are continuing our study on the comprehensive economic and trade agreement between the EU and Canada. Tomorrow, we'll be into the Trans-Pacific Partnership. As a committee, we have a whole day of witnesses before us today. I'll just let the committee know that we will be interrupted to some degree by a fire alarm from about 9:55 to 10:30; they are doing a drill. We don't have to move, depending on the noise level.

If the noise gets too intense and we can't carry on with the meeting, we'll break, suspend at that time, and bring back the next panel a little later once the fire drill is over. We will play that as best we can depending on the noise level. So don't get too alarmed when the fire alarm goes off. We want to thank our witnesses for coming forward. In this first hour we have with us, from the Wavefront Wireless Commercialization Centre Society, James Maynard, and from the Business Council of British Columbia, Jock Finlayson. It's great to have you with us. I see in my notes, Mr. Finlayson, that you're up first.

We look forward to your testimony, and then we'll get into questions and answers. We'll kick it off with you, sir. Thank you. Mr. Jock Finlayson (Executive Vice-President and Chief Policy Officer, Business Council of British Columbia) : Thank you very much, Mr. Chair. On behalf of my organization, I want to thank the committee for the invitation to appear before you today.

I should just say by way of background that the Business Council of British Columbia is a cross-sectoral business organization that represents about 260 enterprises that are active in all parts of the provincial economy—resources, manufacturing, construction, high tech, utilities, transportation, hospitality, retail, wholesale, trade, health care, education, and the professions. Our member companies and affiliated industry organizations account for about a quarter of all private sector jobs in B.C. I should say that we have looked at the technical

summary of the proposed Canada-EU economic and trade agreement in principle, which was unveiled last year. We have also looked at some of the academic and policy literature that has been published on this topic. As well, we have consulted with our members who happen to have an interest in trade and investment relationships with the EU. Based on all of that, we are supportive of Canada bringing this agreement over the finish line. Our judgment is that CETA will be positive for the Canadian economy, particularly over the medium and longer term.

We expect it will boost gross domestic product, stimulate the creation of more jobs, reduce costs for taxpayers in Canada, promote two-way investment flows, and, importantly, help more Canadian enterprises, including enterprises based here in British Columbia, gain a stronger foothold in the EU marketplace. I would just emphasize that, notwithstanding some of the challenges that a number of European countries have been having, the EU is collectively the largest marketplace and economy in the world.

Specifically, we think that being part of a broadly based modern economic and trade agreement like CETA with the European Union is going to benefit our country in a few key areas. First, the agreement will give Canadian firms improved and to some extent preferential access to the world's largest market, consisting of 28 countries that are home to more than 500 million relatively affluent consumers. The EU accounts for about a fifth of global economic output, consumption, and production.

Once it is fully implemented, we believe CETA will result in the elimination of tariffs on a wide range of products of interest to export-oriented firms in Canada—including those in B.C.—and reduce a lot of non-tariff barriers to trade that tend to operate at the border. Very importantly, it will expand and promote trade in services between Canada and the EU. These will include engineering, professional, computer and information, and scientific and technical services, all of which are an important part of the economic base here in British Columbia.

Of interest, Canadian trade with the EU has actually been growing in a period when trade with the United States has been stagnating. So even though the EU is not a fast-growth market, it is actually a market that is looming a bit larger for Canada and Canadian exporters. The Conference Board of Canada, in a recent study, projected that Canada's exports of goods and services to the EU are poised to increase significantly particularly if market access is in fact improved. Second, we think CETA will open up government procurement markets both in the EU and here in Canada.

This situation should be advantageous to our businesses because the EU procurement market is worth almost $3 trillion a year. Under the terms of this agreement, Canadian companies will be better able to bid on most types of procurement contracts issued by public bodies in the EU collectively as well as by the national, regional, and local governments of the 28 EU member states. At the same time, we have to recognize that EU suppliers will have a greater ability to bid for public sector procurement contracts here in Canada subject to a list of exceptions.

Since the EU public procurement market is vastly larger than that in Canada, it stands to reason that Canada should gain more from reciprocal access to public sector procurement. In addition, taxpayers in Canada should welcome the prospect of greater competition in the whole domain of public sector procurement as this will tend to reduce prices, improve quality, and increase transparency. Third, CETA will support and advance the strategic goal of diversifying Canada's international trade and commercial relations so that over time we will become less dependent on the United States.

(0905) Here I would note that increased diversification has been a strategic goal set by federal governments over recent decades. It's a goal that's also endorsed by most of the provincial governments and supported within the business community, so it's something I think most Canadians would like to see. Fourth, and importantly, CETA will encourage greater direct foreign investment between Canada and the EU, and strengthen the protection afforded to investors from each party in the other's market. The EU globally is an enormous source of outbound foreign direct investment.

It is also the second-largest source of the stock of FDI here in Canada, at about $175 million in 2013. Canadian companies, for their part, are increasingly our direct investors in the EU as well, and will benefit from the greater protections of foreign investor rights afforded by CETA. CETA will also help to set the stage for Canada to participate in a credible way in another set of international trade negotiations that are also of interest to this committee. I'm referring here to the proposed Trans-Pacific Partnership.

A Canada-EU agreement that addresses such topics as agricultural protectionism, intellectual property, foreign investment, and services trade will better position Canada to negotiate effectively as part of the TPP discussions. Finally, I would just remind committee members, and you no doubt are aware, that the United States and the EU had signalled quite clearly that they intend to pursue negotiations aimed at reaching a far-reaching transatlantic trade and investment partnership arrangement.

These are early days yet, but the EU-U.S. agreement if it comes to fruition is expected to go well beyond the elimination of tariffs and other border restrictions to trading goods by encompassing intellectual property, foreign direct investment, and the alignment of regulations concerning manufacturing and services. In other words, the EU-U.S. agreement will probably be similar in scope to what we see in the proposed CETA. With CETA, Canada becomes the first western developed economy to hammer out a comprehensive agreement with the EU.

Should CETA not proceed, Canada will be on the sidelines and Canadian business will be placed at a competitive disadvantage in the EU market if the Americans and the Europeans in fact move ahead to conclude their own agreement. In

summary the Business Council of B.C. believes CETA will provide a number of benefits to Canada. It will enhance our access to the world's largest market for both goods and services, enable Canadian companies to bid for EU government procurement contracts on a non-discriminatory basis, promote two-way investment flows, and enhance competition and transparency in the domestic public procurement marketplace.

We also hope that the final terms of CETA will entail a gradual reduction in the agricultural trade barriers currently embedded in Canadian supply management regimes governing the production and sale of eggs, poultry, and dairy products. These regimes not only lead to higher prices for Canadian consumers, but they actually make Canada a less attractive place for value-added food-processing industrial activity. Based on the technical

summary document released by the federal government last year, it's not clear to me to what extent CETA will actually affect agricultural supply management, but we'd like the committee to know that my own organization would strongly support reform of supply management regimes in Canada if this turns out to be part of the outcome of the CETA deliberations. Thank you, Mr. Chairman.

(0910) The Chair : Thank you very much. We'll now move to our second panellist from the Wavefront Wireless Commercialization Centre Society. The floor is yours Mr. Maynard. Mr. James Maynard (President and Chief Executive Officer, Wavefront Wireless Commercialization Centre Society) : Thank you, Mr. Chairman. Committee members, thank you for the invitation to appear before you today to discuss the importance of the Canada-EU comprehensive economic and trade agreement. Wavefront is Canada's centre of excellence for wireless commercialization and research.

We accelerate the growth and success of wireless companies by connecting them with critical resources, partners, and opportunities to drive economic and social benefits for Canada. Wavefront is dedicated to supporting wireless companies in Canada and is making a big impact on our economy in the process. We are very focused on specific aspects of commercialization. We work with SMEs in the wireless and ICT sectors to accelerate their go-to-market capability by facilitating access to specific key services that drive growth and profitability.

It is important to know that 90% of the export activity in the ICT space is conducted by companies of under 100 employees in size. This is a critical thing, and it's a significant driver of jobs, growth, and prosperity for the country. We focus on five platforms that drive growth. We provide access to technology resources, key business and advisory services that companies often go without because of their size, and skills development and training.

One of the important things is that we have a very strong market linkages program where we actively work on linking continents all around the world, making strategic linkages that then provide accelerated pathways to connections for Canadian companies going into markets. Over the last three years, as a centre of excellence, we've engaged in almost 20 trips to 17 countries and have introduced almost 100 Canadian wireless companies to major economic opportunities around the globe.

We see the impact of trade and trade legislation every day in our activities with our member companies, and Europe is a big area of involvement for us. As a result of these capabilities, an audit of our impact at the end of our first year as a centre of excellence showed Wavefront's activities had accelerated the time for Canadian wireless businesses to market by up to 12 months—anywhere from 4 to 6 months on average, but almost 12 months out of a sell cycle—by using the strategic assets that the federal government funding of a centre of excellence can facilitate.

We've helped companies, on average, to grow 20% faster than they could on their own, and we've also shifted their trade, or their business, into international markets 33% faster than they were able to do on their own. As a result, for every dollar of public funding that we've received as a centre of excellence, we have been able to generate $4.80 of GDP activity. More importantly, those activities have returned $1.25 back to the treasury, so it's a good financial deal for the Government of Canada to invest in organizations like that. In these times, a 25% rate of return is a pretty good rate of return.

It is a good business deal for Canada. On average, ICT exports to Europe are about $1.8 billion per year. These exports face tariffs often as high as 14%. Upon entry into force CETA will immediately eliminate these EU tariffs on ICT products, making world-class products more competitive and creating conditions for increased sales. For example, Sierra Wireless, which is headquartered here in Richmond, B.C., is the world's largest provider of machine-to-machine communications devices. They generate about $500 million annually in revenues, and they have about a 35% share in this sector.

This tariff reduction will directly impact their competitiveness, so this is a good thing. Sierra Wireless is Canada's second-largest telecommunications manufacturer, so this is a significant impact on a significant piece of the Canadian economy. CETA should provide market access for the Canadian ICT sector that is commensurate with the access that is given to European competitors into Canada. This is a significant win for Canada given the size of the market to which we now have access.

With this agreement, Canadian ICT companies will have preferential access now to the two richest economies in the world: the United States, through NAFTA, and the EU, through this agreement.

(0915) One thing that's really important is access in terms of people and temporary entry into Europe. Because so much of the IT sector is based around services, people are a big part of the opportunity here. The reducing of barriers, which allows our Canadian business people to enter more easily both for business purposes as well as for the delivery of services, is a huge benefit for us. Again, most of our companies are small and they don't have the legal departments to actually fight the overhead to get in. So this is a big benefit, improving the efficiency and effectiveness of our Canadian companies.

I think that a lot of my points are similar to what Jock has said so I won't be repetitive. One of the things I want to stress here is that while this is a great agreement, there's more work to be done because this is only the beginning. This is like laying the foundation to a huge trade opportunity and a huge window, especially the window that is open while the U.S. still does not have this agreement. I'd really encourage the committee to look deeply at other things that need to be built on top of this foundation to continue to drive the opportunity.

I have a couple of suggestions that can capitalize on this achievement and drive the momentum for Canadian small and medium enterprises in European markets. First of all, it's really important to emphasize the importance of the trade commissioner service to Canada's small and medium businesses, given that most of our companies are under 100 employees. The fact that there's a network of trained, on-the-ground trade commissioners in all the major countries in Europe is a huge asset and a huge strategic leverage point that we can use to, again, accelerate our time to market in these markets.

Right now many of the countries, like Finland and some of the northern European countries, do not have direct trade commissioner coverage. That's a huge hole; these have been cutbacks over the last few years. Again, this is about incremental investment that will deliver, many times over, return in terms of economic growth. Second, we need to make more strategic use of some of our trade assets that are already in place. For example, EDC is regularly negotiating pull-lending facilities with major multinationals around the world.

You are all familiar with the pull facilities, where they will go to an AT&T and they'll do a debt facility. The intent of the debt facility is to provide dollar-for-dollar access to Canadian markets and Canadian companies. It is very similar to an industrial regional benefit on the defence side. We need to capitalize on those. We work hard to get the agreements in place, but then we don't actually hold accountability for the economic impact of those agreements. Most of those agreements for the pulls are based on a best-effort basis as opposed to having real strategic emphasis pulled on that.

When we have large agreements with Deutsche Telekom, which is the number seven or eight wireless operator in the world, which has access in 55 markets around the world, not just Germany but 55 other countries.... When we have that trade facility in place, we need to strategically focus in and bring all the influence of the Government of Canada to drive that agreement to open up markets for our companies. With the CETA and the EDC trade agreements, it's like we have our foot in the door and they can't shut the door on us. Now we need to push the door open and drive it to the next level to get our companies access.

We have agreements now with AT&T, Telefonica, Deutsche Telekom, and America Movil. These are major agreements in major markets of the world where there is huge exploding growth. With extra emphasis, just incremental to the amount of energy that has gone into CETA and to what EDC has put in place, we can see huge economic benefits to our companies doing trade in these marketplaces. The other thing is that I want to congratulate the government because it's very clear that the prosperity agenda and the focus on trade has had an impact.

The bad news is that a lot of ministries and departments are now converging on duplicative and overlapping trade agendas. I would say, again, this is a question of focus. DFATD is focused on trade. We need to make sure that there is sharp focus to drive the trade agenda, because sometimes messages can get blurred when you have overlapping agendas from different ministries. I think the last thing, to echo Jock's point, is that we need to bear in mind that a competitive country like Canada in global markets needs a competitive market inside Canada.

I would strongly urge the committee to create emphasis on knocking down the trade barriers inside Canada, because oftentimes it's more difficult to do business between provinces. Also important is bringing the Canadian brand together to create a unified international market as opposed to small regional voices from the provinces. We need to come together under the brand. I've experienced the strength of the Canada brand. We have a huge asset in that. We need to leverage that much more than we do.

(0920) The other piece is the opportunity cost for the lack of productivity investments in ICT in Canada. On average, that represents about 10 times our trade with Brazil. This is a significant thing. If we were, for example, to do away with supply-side management, that would force companies to invest; it would force them to become more competitive; and that would better position them to take advantage of the international agreements. That's it for my comments. Thank you for your time, and again congratulations on an excellent agreement. The Chair : Thank you very much.

I'm sure we'll get into more of that discussion as we get into the questions and answers. We'll start with Mr. Davies. The floor is yours for seven minutes. Mr. Don Davies (Vancouver Kingsway, NDP) : Thank you, Mr. Chairman. Thank you, Mr. Maynard and Mr. Finlayson, for being with us today. Welcome to the trade committee. Mr. Maynard, I'll start with you and pick up on something you talked about, which is something I think we all agree on. Increasing trade opportunities for Canadian exporters is not just a question of signing an agreement.

There's a lot of infrastructure that goes around that to fully take advantage of those agreements. You mentioned, I think, something very important, which is making sure that Canada has trade commission officers abroad to provide on-the-ground support for Canadian businesses that want to access those markets. The other side of that coin is to have effective Canadian trade offices here in Canada, particularly for our SME sector, so they have a resource they can go to if they have questions or are interested in accessing a certain market in Europe, and somewhere they can get information.

Do you feel that exists now, that we in Canada have sufficient resources to support our small and medium enterprises to learn about those export opportunities? Mr. James Maynard : Yes, actually, I think we do. I know there have been some reductions, but if you look at the amount of overlap with provincial trade offices and NGOs like ours that are actively engaged in trade, I think if we can find new and creative ways...the existing organizations are there.

It doesn't mean we need to have another overlapping layer but just that we need to find more effective ways to mobilize organizations to fit up into the trade strategy. For example, as is happening now, trade commissioners could be embedded inside organizations like ours. I think that's a very effective way to pull it together without having to overlap and get another layer of organization.

(0925) Mr. Don Davies : Okay, thanks. I have one other question for you. We understand that Europe right now has stronger privacy laws vis-à-vis Canada. There was an

article in the Ottawa Citizen from January 9, 2014, that expressed a European parliamentary committee's concern about the adequacy of Canada's data protection laws—I think they were talking about PIPEDA—in the context of CETA. Are you concerned that Canada's weaker privacy laws will be an impediment in terms of fully taking advantage of trade opportunities in the IT sector? Mr. James Maynard : I'm not really an expert on privacy. I can only speak to the experience of our companies. We have not seen that impact the ability of any of our companies to do business in the European market. Mr. Don Davies : Mr.

Finlayson, Steve Verheul, the chief negotiator for CETA, gave a speech recently. He said, “We need a business community willing and able to take on new opportunities. We now need to build a broader strategy to take advantage of the European market.” I'm just wondering if you have any comment on that, and if so, whether you have any suggestions for the kind of strategy the business community might need to have or the things it might need to do to better take advantage of CETA. Mr.

Jock Finlayson : Well, you know, even if we have good trade agreements in place, with important markets like the European Union, ultimately it's up to enterprises, entrepreneurs, and companies to step up and take on new business and to take the risk associated with investing abroad. Exporting is not an easy thing for a lot of companies—small and mid-sized companies—but we clearly need more of our firms in Canada to do that. I don't think government can really force that to happen.

Government can put in place framework policies, trade agreements, market access arrangements, and some of the support infrastructure Jim has mentioned, but ultimately it's up to companies and entrepreneurs to take advantage of opportunities that are there. I suspect that Canada's going to have to raise its game. I think the business community in Canada is going to have to raise its game in terms of the global economy we're operating in today. The gravitational pull of the U.S. market has been powerful and in some ways overwhelming for a lot of our enterprises.

We've just gone through five years in which the U.S. economy has really underperformed. Our trade has stagnated. We've seen that in our own member companies. I think it's really heightened the importance of diversification, of building markets overseas. The job of government is to do the kinds of things like putting a trade agreement in place, but I think it's really up to the companies to take advantage of it. Hopefully, they will. Mr. Don Davies : Former Bank of Canada governor Mark Carney stated that he estimated there was $500 billion of idle capital, Canadian capital, right now.

Compared to a lot of European countries, Canadian employers under-invest in research and development and employee skills training. Would those be areas that you would think the Canadian business sector should look at in order to more effectively compete with European businesses? Mr. Jock Finlayson : I do believe the corporate sector in Canada is going to have to step up on things like innovation and employee training. We do undertrain relative to a lot of other countries. I'm not sure what all the reasons for that are. It's one of the reasons that more competition here in the domestic marketplace is a good thing.

It will stimulate our own companies to up their game. A protective market is not effective in stimulating the kind of corporate behaviour that I think we want to see. Trade liberalization, I think, can be helpful in not only creating opportunity abroad, but also more competition at home that will hopefully spur some of that corporate action. Mr. Don Davies : Thanks. You mentioned you thought that CETA would be positive over the medium and long term. Do you see any short-term pain or structural adjustments to the Canadian economy?

In terms of jobs, which I think is what people really are concerned about, how many jobs do you estimate will be created in British Columbia because of CETA? Do you have that number? If so, when might we be able to actually see those jobs? Mr. Jock Finlayson : I'll answer that as an economist rather than as a business representative. These kinds of policies and agreements affect the structure and performance of an economy over a long horizon, longer than the kinds of horizons that elected officials typically need to be preoccupied with, and that creates a bit of a dilemma, I think, for all of us.

I would not see this agreement as having a dramatic effect one way or the other, frankly, on the macroeconomy of Canada or B.C. in the short term. I don't know how many jobs would be created in B.C. I've seen the federal government's modelling work from 2008 or 2009. That should be updated, by the way, because it's out of date now. I think it would be important to redo that study. It wouldn't be a huge number, frankly, because our trade with Europe is modest, but they would be high-quality jobs.

One of the things we are concerned about is the quality of employment that's being created, particularly in the private sector. Export-oriented industries, industries that are involved in international commerce whether on the trade or investment side, tend to pay their workers more, tend to have higher productivity, tend to be more innovative. Those are the parts of the economy where we should be trying to stimulate growth and investment. An agreement like this can be helpful in a modest way, but it can be helpful in setting out on that path.

(0930) Mr. Don Davies : Thank you. The Chair : Thank you very much. We'll now move to Mr. Cannan. The floor is yours, sir. Hon. Ron Cannan (Kelowna—Lake Country, CPC) : On behalf of my British Columbian colleagues, welcome to our trade committee, and thank you for welcoming us and being part of these important talks. We've had an opportunity to spend some time out on the east coast, in Halifax, to listen to some of our friends in eastern Canada. Witnesses have come to the committee over the last several months to look at the economic benefits since the agreement was announced and prior to its announcement.

This has been a work in progress for the past five years, and as you mentioned, it's not going to happen overnight. We had the European Union ambassador at our committee last week. The EU has to translate it into 23 different languages, and it's a couple more years before it comes into effect. It is a historic trade agreement. It seems like a natural fit for British Columbia. I think the EU is about our fourth-largest trading partner. There are a lot of cultural ties. There are strong economic and environmental labour policies. They tend to bode well. You mentioned the professional perspectives.

I have a couple of questions based on your comments, gentlemen. James, in your

preamble, you mentioned the growth opportunities for small and medium-sized businesses, the SMEs. We know that about a million SMEs are exporting, the majority of them to the U.S. How do we get them to see those opportunities? One of the reasons we're out here, too, is to educate and create awareness. From your industry perspective both of you, Jock and James, is there something the government can do to partner with the EU to help your members become more aware of these potential trading opportunities and partnerships down the road? Mr. James Maynard : Promote the successes.

In true Canadian fashion, we don't talk a lot about our wins like we should. We have some very interesting Canadian companies that are doing significant things in the European market. I just think if we promote those successes, that's the number one step. The other thing is to work more closely with organizations like ours. We touch 7,000 companies a year across the country in terms of access to information.

If we could work and increase our organization and alignment with the Department of Foreign Affairs and with EDC, and I would say strategic trade assets that the government's already deployed, then we could start to get leverage flow of companies into these markets. Mr. Jock Finlayson : I would add I think big companies can sort of do it on their own. The one area where government can be helpful there is having competitive export financing programs in place because a lot of the people we're competing with are using those instruments quite aggressively. We have 385,000 businesses in B.C. and 98% of them are small.

The vast majority of them are never going to get involved in exporting outside of North America or even outside of Canada. The task for government, I think, is to try and work with the relatively small proportion of all businesses that are not currently involved in international commerce but have the capacity to do so—in other words the high-potential businesses—and they would certainly include a lot of our technology companies that are producing tradeable goods and services from day one. That's where I would put the effort, not with business holistically.

I think you need more of a rifle shot approach frankly where you're identifying the high-potential sectors, working with accelerators, working with well-organized industry associations that represent particular subgroups of companies that have the potential to do trade. That's where I would put government's limited resources in terms of providing information, assisting companies, and taking advantage of markets overseas.

(0935) Hon. Ron Cannan : So it would be like the forestry wood products, agriculture, fish and seafood. Mr. Jock Finlayson : Forestries have been great, not in Europe, but we've had the story of the B.C. lumber industry and the penetration into Asian markets—which by the way took a dozen years—again it was a long-term exercise, industry working together with the federal government, with provincial officials, consistently through different governments and different ministers. They continued to push to get into the Chinese market and some of the other Asian markets.

It has now paid huge dividends, and it actually saved the industry and allowed it to survive the epic downturn of the U.S. housing market. That's a good example of where quite a targeted approach carried out over more than a decade really positioned us in a very favourable way. There may be some lessons there for how we would do it in other offshore markets. Hon. Ron Cannan : Mr. Finlayson, in your opening comments you mentioned something about government procurements. Did you say the figure of potential market was approximately $3 trillion? Mr. Jock Finlayson : I've seen $2.5 to $3 trillion for the EU.

They have a big government over there, as you know, so there's a lot of procurement that takes place. It's a huge market for us. As I understand it, very few Canadian companies today are selling goods or services into the EU public procurement market. One of the big wins that may emerge from this agreement—ultimately it's an empirical question—one of the promising areas I see here is improved access to that enormous procurement market in the EU public sector, which our companies really don't have today. Hon.

Ron Cannan : Which do you see as some potential British Columbia businesses to benefit from government procurement opportunities? Mr. Jock Finlayson : We have very strong companies in engineering, in project management, in the IT side of the public sector. IT is a huge chunk of the procurement dollars spent by public sector entities. We have great companies in that area. Those would be three. Infrastructure providers. We're building a lot of infrastructure here in B.C. We have people and companies that know how to do it. There are lots of infrastructure opportunities I would think in Europe.

We focus a lot on tariffs, than what I would call kind of traditional trade barriers, but I think the bigger opportunities in agreements like CETA are potentially in services, government procurement, and investment more than just reducing tariffs, although that will be helpful as well. Hon. Ron Cannan : I have one quick question for Mr. Maynard. I know we're talking about breaking down tariffs internationally, and something we have talked about before is the interprovincial trade barrier. We worked with our provinces, the territories, and local governments.

This is a historic trade agreement as far as even negotiations go. Do you see the opportunity for the provinces to come together—and territories—to help break down those Canadian barriers so we can be more competitive internationally as well? Mr. James Maynard : Yes. A lot of it is not explicit, but within the provinces, focus on excluding other provinces within their competitive process. It's one of those things where if you're from B.C., it's hard to do business in Ontario and vice versa.

I think we need to find a way to work with the provinces and understand we need to build a Canadian economy, not just focus on regional performance. Hon. Ron Cannan : I know Minister Moore is passionate about that as well. Thank you very much. The Chair : Thank you very much. Mr. Pacetti, the floor is yours. Mr. Massimo Pacetti (Saint-Léonard—Saint-Michel, Lib.) : Thank you, Mr. Chair. Thank you to the witnesses for coming here. I'm from Montreal so I guess I had to come here, but thank you for actually coming before us. I have a question for Mr. Finlayson.

The first thing you said was the Canada-Europe free trade agreement is going to reduce costs to taxpayers. Your member companies...are we going to get a guarantee that the consumer is actually going to benefit from this, or are your member companies going to pocket the profits or the benefits? What's your feeling on that? Mr. Jock Finlayson : Every profit-maximizing business will try to maximize its profit. That's how market economies work. When I referred to more competition, I meant in the Canadian marketplace.

If we reduce trade barriers in Canada, whether that's with the Europeans or anyone else, there's going to be heightened competition in our domestic marketplace, which will tend to reduce costs and actually reduce profits in industries that might be earning unusual profits today. That's how open trade works. Mr. Massimo Pacetti : I have limited time, but when you're talking about bigger markets, you didn't mean Canada. You meant Canada's going to have access to a bigger market. Wouldn't that also mean more competition and wouldn't that pose a bigger threat to Canadian companies? Mr.

Jock Finlayson : It will mean more competition at home, and not all companies will welcome that, but it will be good for the Canadian economy over time, and business in general will benefit from that. There may be some companies that don't, but that's not our problem.

(0940) Mr. Massimo Pacetti : Okay. Mr. Jock Finlayson : The other side of it is in the procurement area, to the extent that we have more competition in public sector procurement markets in Canada. In principle, that should be beneficial to taxpayers. I'm a taxpayer; I'd like to see my governments be as efficient as possible in the procurement of— Mr. Massimo Pacetti : My next question has to do with the fact that we're out here in B.C. How much influence or how much effect will trade with Europe have on businesses out here in B.C.?

Just to get out to the Atlantic provinces requires a six- or seven-hour plane ride. Mr. Jock Finlayson : That's a very good point. I think Europe, the EU collectively, is our third- or fourth-largest commercial partner here in British Columbia. Like some other provinces in the west, we are quite heavily focused on the U.S. but also on Asia-Pacific. I don't think Canada-EU trade is going to transform the B.C. economy or anything along those lines. It will have a modest benefit. There are probably some other parts of the country that may have more commercial linkages than would the EU. We're part of Canada.

We want to see Canada succeed even if we're not necessarily going to do quite as much trade with the EU as Ontario or Quebec. Mr. Massimo Pacetti : Okay. I have a question for Mr. Maynard. I have a tendency to agree with you in terms of smaller companies having a more difficult time exporting or even taking on the challenge, because normally they don't have the resources. I'm talking about personnel.

They'll trade with the U.S. if doing that is something they're familiar with, but as soon as it starts getting a little bit more complicated, it's not necessarily that they don't have the brainpower, but they don't have the time. In your industry or your sector, is the wireless more focused on selling services or on selling the actual products or goods? Mr. James Maynard : That's an interesting definition, because typically one of the challenges with our trade tracking is that we've tended to track hard goods manufacturers.

If you look at a company like Nortel, which is actually tracking manufactured devices, in that case it's very little, but a significant part of it is software products. It's in that grey area. I'm sorry to be vague, but I would say the majority of the opportunities are in goods for Canadian companies in software and software services. Mr. Massimo Pacetti : Is it easier for your member companies to sell to the bigger companies? For instance, Sierra is not a small company, but would your smaller companies not be in a better position to take partnerships with existing Canadian companies? Mr.

James Maynard : It seems as though in Canada you need to go and establish yourself in the international market before Canadian companies will give you the credibility to do trade here in Canada. Mr. Massimo Pacetti : That's interesting. How's your sector in terms of dealing with Europe right now? Mr. James Maynard : For us in the ICT sector, Europe's a huge opportunity. This is one of the differences: we often view trade policy through a resource lens or an advanced-manufacturing lens, and we see it as a mature market.

Europe right now is making huge investments to increase its competitiveness around manufacturing and infrastructure. These are all net new opportunities for Canada. I think one of the real wins in the ICT sector is that we can see the opportunity for immediate, large amounts of growth whereby Canadian companies can literally go from 10 or 20 employees to 100 employees in two or three years. Mr. Massimo Pacetti : Where's the competition in Europe in the ICT sector? Mr. James Maynard : It's in Finland. Mr. Massimo Pacetti : Is it in Germany? Mr.

James Maynard : There's a little bit in Germany, but mostly it's in northern European countries. Finland is amazing in terms of their ability to deploy. For a small country of five million people, they punch well above their weight class. Mr. Massimo Pacetti : I have just a quick question. You mentioned 33% faster shipping of goods because people have worked with the centre of excellence. How do you determine that number? Mr. James Maynard : We track them. Mr. Massimo Pacetti : But how do you do a parallel system so you can say what it would be if they had not done it and what it is if they are doing it?

That is the concept I'm trying to understand. Mr. James Maynard : We have an audit. We have a whole audit process whereby we track what they were doing before, and then, once they use our services, the growth to market. Mr. Massimo Pacetti : Okay. Thanks. Mr. James Maynard : We hire guys like Jock. Voices: Oh, oh! The Chair : Thank you very much. That was a very good round. Mr. Hiebert, the floor is yours. Mr. Russ Hiebert (South Surrey—White Rock—Cloverdale, CPC) : Thank you, Mr. Chair. Thank you for being here, Mr. Finlayson and Mr. Maynard. We appreciate your time. I want to start with Mr. Finlayson.

You talked about the 385,000 businesses in B.C. and how a small segment of them will ultimately benefit from this trade agreement. Are there certain members of your organization that will benefit more than others? Can you foresee a certain sector or category of businesses that could immediately see benefits from this trade agreement, versus some others that may not even be interested in exporting?

(0945) Mr. Jock Finlayson : I think the industries I see that are most interested in the Canada-EU agreement, based on the phone calls we've had and the turnout we've had at meetings where this has been discussed, would include the technology sector, broadly defined, and I think for reasons that Jim has alluded to. It wouldn't just be wireless. It would be other components of the ICT sector: some of the advanced manufacturing companies, aerospace, and optical equipment.

As for the forest industry, some tariffs remain in the EU that raise the cost of importing certain Canadian wood products, so those will be phased out over the term of CETA. That would benefit the forest products industry. The seafood sector here in B.C. is quite an export-oriented industry. A lot of the seafood products produced here in B.C. end up being exported. For Europe, I think today there's $50 million to $60 million in trade, of exports into the EU marketplace, so there is some promise there. Then there are the service providers. One of the things about this agreement is that it has a lot of....

Now, we don't have the final draft, but based on the technical

summary, there are a lot of provisions in there that are actually related to trade in services rather than goods. We have engineering companies and technology service-producing companies that are quite interested in the EU marketplace. There is a broad interest. It's not something that's a dominant day-to-day concern for most CEOs I work with, but it is something that they see as beneficial over time. That's why we're very supportive of this agreement. Mr. Russ Hiebert : What steps is the B.C. Business Council taking to educate its membership on the benefits of CETA? How are you doing that? Mr.

Jock Finlayson : That's a very good question. We had one written piece that we did for the members before the technical

summary was actually released by the federal government, to sort of alert them to what we were hearing and what we had been briefed on by federal officials. We invited guest speakers—one academic, a deputy minister from the provincial government—a while ago to come in to do a briefing for our members on CETA. Now that the technical

summary has been released and we've done a bit more of our own research on it, we'll be putting together a somewhat more substantive document to share with our members, and with others, by the way. We'll distribute that out through our network to many other industry associations in the province. It won't just be our members. There is an education job, frankly. This has not been a topic that has been top of mind, I think, for most CEOs here in British Columbia, so it is something that we do need to push.

Any additional information that the Government of Canada can provide us that helps to provide more detail, such as updating that economic modelling study I mentioned that was done a few years ago, would be very helpful. That would be beneficial for the outreach work we want to do. Mr. Russ Hiebert : Okay. We've talked a bit about the new $3-trillion European procurement market being available to Canadians. Putting on the other hat, could you anticipate what type of British Columbia government procurement the European Union companies might want to get access to that would reduce the cost to taxpayers? Mr.

Jock Finlayson : I haven't thought about that, but I would say that a lot of major European companies are very experienced in the project development and construction business, so they would have better access into the B.C. marketplace, as I understand it, under the terms of this agreement. For European suppliers of equipment, technology, and computers, one could imagine the full range of goods and services from sophisticated IT systems down to paper clips, and there may very well be European companies that could come in and compete in this marketplace.

If they were allowed to do business on a non-discriminatory basis, that might pose some challenges, frankly, to local suppliers that may have preferred access to their procurement marketplace. But as a taxpayer and an economist, I think it's good to have more competition, and I think we would really welcome that. Again, we have to remember that the EU is a marketplace of 500 million people. Canada's is 35 million. To the extent that there's a reciprocal opening up of procurement opportunities, it stands to reason that we're going to gain disproportionately.

But more competition in procurement at home is something that I think we should welcome and that you should welcome as policy-makers and legislators.

(0950) Mr. Russ Hiebert : Yes. Thank you. Mr. Maynard, you talked about the EDC's trade agreements, or pull facilities, as you described them. I'm familiar with them through the defence department. When I was parliamentary secretary for defence, we did a lot of work with industrial and regional benefits, but I'm less aware of how they work through EDC. For the committee members, I'm wondering if you could elaborate on exactly what you're talking about when you refer to Deutsche Telekom maybe making a large investment in Canada.

Then they have a reciprocal responsibility to...or even if there's a large purchase.... Can you explain how these benefits would work and how we can enforce them? Mr. James Maynard : Yes, certainly. I don't understand all of the details. I can only speak as someone who deals as a partner with EDC. Basically, they will go in and negotiate a debt facility with some of these large multinationals. In return, as part of the agreement, there is a commitment to provide dollar-for-dollar pull for Canadian products into that organization.

If it's a $100-million facility, the commitment would be $100 million of Canadian goods and services on a best-efforts basis. I think we could do more to drive the leverage from those agreements in terms of taking out the term “best efforts”. That would be a good place to start. We could start to negotiate networks in terms of who the contacts are and how we can actually start to engage companies into that process and hold accountability to their performance.... The Chair : Thank you very much.

Before we go on any further, I want to use the chair's prerogative to ask the Business Council of British Columbia a question. In your testimony, Mr. Finlayson, you referred to the TPP. Tomorrow we have a full day of hearings on the TPP as well, because we're having a joint study. I don't want to put you on the spot at all, but if there's anything you'd like to add with regard to the TPP, any comments with regard to that potential for this area of the country, I think the committee would be interested in hearing it. Mr. Jock Finlayson : Thank you, Mr. Chair.

I should be clear that because B.C. is on the Pacific Ocean and we're Canada's Pacific gateway, according to many, we've been quite keenly interested in the process leading up to the TPP. We were very much pushing for Canada to be at the table prior to the decision that we would actually be there. It's a big deal from a Canadian point of view because of course you have the U.S. there, and you have a number of the rapidly growing Asian markets.

It's going to be a more complicated process, I think, than the Canada-EU agreement, because you have countries that are much more disparate in terms of their levels of economic development and maybe their environmental and labour standards. When we're dealing with the Europeans, we have I think a somewhat more common platform. The Canada-EU agreement is obviously much further along. Our view, I would say, is that if we can't get over the finish line with Europe, it seems to me that it would be quite difficult to envisage that Canada could successfully be part of an emerging TPP agreement.

That's why, in our written testimony, we noted that concluding the Canada-EU agreement will help to set the stage, I think, for Canada to credibly be part of the TPP process. We are supportive of it. Obviously we don't have as much information on it at this point in time, but we've communicated with government officials on a number of occasions. Our province seems very supportive of the TPP, so we are looking forward to getting more information on that. But we're full-square behind it, based on what we know today.

The Chair : Sure, if you are just looking at trade agreements being tariff-free zones, if you want to look at it that way, I know they get much more comprehensive than that, particularly CETA, but if we were to look at our crystal ball, it would be fair to say that the TPP would be more advantageous for this part of the country than CETA. Mr. Jock Finlayson : There's no question. We have a bigger commercial interest, a bigger trade flow.

(0955) The Chair : Which of your businesses would be the most impacted? Mr. Jock Finlayson : With respect to the TPP, right across the spectrum of resource industries, everything from energy, forestry, mining, a lot of the same industries we mentioned in connection with Canada-EU. We have a lot of B.C. companies involved in selling services into TPP markets, so it is very broad. Mr. Jasbir Sandhu (Surrey North, NDP) : Thank you, Mr. Chair, and thank you to both of the witnesses for being here this morning. There are a number of factors that are required to facilitate trade domestically.

We need infrastructure to get our products to port and rail facilities. We need these products to arrive on time at these facilities. Mr. Finlayson, could you describe the state of infrastructure domestically here in Canada? Mr. Jock Finlayson : I'm more familiar with my own province. I would say one of our competitive strengths here is we have good infrastructure to support trade. We have Canada's largest port. We have a second port up in Prince Rupert. We've made major investments not only to expand port capacity, but also to improve the efficiency of port operations.

If you had the CEO of Port Metro Vancouver here, he could throw a chart up for you that shows the efficiency gains they've had through improved management, and investment in technology and better systems. We're actually winning business from other west coast ports to the south coming into B.C. That's obviously for the shipment of western Canadian primarily resource goods into overseas markets, but it's also on the receiving end of imports of products that are then shipped elsewhere in Canada. We're well positioned, frankly, in terms of physical infrastructure to support trade.

The bigger challenge is whether enough of our companies are able to take advantage of global market opportunities. Do they have the management capacity? Do they have the access to capital? Do they have the knowledge and information needed to do business? That's where the challenge is more than on the physical infrastructure side. Mr. Jasbir Sandhu : How are your members being served by the railway companies? Mr. Jock Finlayson : You would get a variety of views on that. There is some concern. I have been reading in the newspaper about not enough railcars being available for some of the bulk commodity producers.

The CEO of the Forest Products Association of Canada had a letter in The Globe and Mail a couple of days ago, in which he was quite critical of one of the major railway companies. I can't say too much about it. We have the railway companies as members, but we also have the large resource and shipping industries. There doesn't seem to be enough capacity in the industry to support the growth in trade flows for all the different industries that rely on rail. It's definitely an area of concern at the moment. The Chair : Mr. Holder, please. Mr. Ed Holder (London West, CPC) : I want to thank our guests.

I am the only Ontario member of Parliament here. It's great to be here in your part of the world. The eastern bastards are freezing. I just want you to know that. What I heard from both Mr. Maynard and Mr. Finlayson was that CETA lays the foundation for greater opportunities within Canada. Mr. Finlayson, you made a comment about the TPP as well when prompted about that. Mr. Maynard, you said that what we do is we get ahead of the United States, which we clearly are with CETA, and that should be advantageous to us. Mr.

Finlayson, you indicated in the case of the TPP that the U.S. is there and is a major part of that play. Does the fact that we're ahead of the United States with CETA have any impact on the TPP as you see it? Is there any advantage? Is it neutral for us as it relates to the TPP? Mr. Jock Finlayson : I don't think it's a huge advantage. We'll see whether the U.S. administration is able to get the authority that it currently lacks from Congress to actually participate in a meaningful way in both the discussions with the Europeans and the TPP. I think it would be unfortunate if they couldn't.

There is a risk, and I don't think this is going to happen, but if Canada was to sit on the sidelines both in terms of Asia-Pacific and with Europe, and the Americans went ahead and finalized major comprehensive trade agreements with these two huge blocs, that obviously would be a big disadvantage from a competitive point of view for Canada. We're already a bit concerned out here that the Americans have a free trade agreement with South Korea, which has been implemented. For Canada, even though we started the discussions with South Korea prior to the Americans, our process is stretched out a bit.

Korea is an important market for Canada, particularly for western Canada. There is a competition here among countries to get access to markets. We don't want to be left out of that. I think there's a small advantage if we get the agreement with Europe ahead of the United States. I rather suspect the Americans will eventually conclude—if not under this president maybe the next one—an agreement with the Europeans because there's a huge strategic interdependence between those markets. I think in the big picture they will come together.

(1000) Mr. Ed Holder : Thank you. The Chair : Thank you very much for your testimony. It's very valuable and we appreciate the questions. This is exciting to be able to talk about trade opportunities for Canada, and particularly for this area. It's a privilege for the committee to be able to be here in British Columbia. I know my colleagues certainly appreciate the weather that you have here if nothing else, beautiful sunny weather. I just had to put that into the record for those in Ottawa who are listening to us. I might as well rub it in a little bit. Thank you very much for your time with us this morning. With that we'll suspend as we set up the next panel.

(1020) The Chair : We will call the meeting back to order. We have our second group of panellists before us. We want to thank, from the City of Burnaby, Derek Corrigan, mayor, and Sav Dhaliwal, councillor. Thank you for joining us. We have from CUPE BC, Blair Redlin, research consultant. Mr. Redlin, if you are ready, the floor is yours. We want to thank you for being here and we look forward to your testimony. Mr. Blair Redlin (Research Consultant, CUPE BC) : Thank you very much, Mr. Chair. Good morning, everyone. Thank you for the invitation to speak with you about CETA on behalf of CUPE BC.

CUPE BC is the B.C. division of the Canadian Union of Public Employees. CUPE BC represents more than 80,000 workers in 170 local unions across many sectors. CUPE members in B.C. work for municipalities, school boards, post-secondary institutions, and similar employers, mostly at the local level. Nationally CUPE represents 627,000 Canadians. We have many concerns about CETA, the proposed economic and trade agreement with the European Union.

Over the last few years CUPE's national president, Paul Moist, has repeatedly raised objections to the proposed treaty, and in 2011-12, toured 16 communities across the country to speak about his concerns. CUPE BC's recent past president Barry O’Neill and current president Mark Hancock have been doing likewise here in B.C. CUPE does this work in concert with a broad range of civil society groups under the umbrella of the Trade Justice Network. For my part, I've been on the research staff of CUPE here in B.C. for the last several years, and my assignment included CETA.

I've helped develop our analysis and have travelled twice to the European Parliament to meet with elected and civil society representatives there. I'm recently retired from CUPE staff now but continue to assist them with this topic. CUPE's critique is based on extensive analysis of various leaked texts and now the 26-page agreement in principle

summary released in October. Although it goes without saying that we support increased trade with Europe and the whole world, we think that trade arrangements between Canada and the EU should mostly focus on reducing tariffs rather than locking in sweeping investor rights protections that constrain the ability of elected governments to act on behalf of citizens. Among other things, we're concerned about a big increase in pharmaceutical drug costs in Canada and now the potential federal subsidy of the drug companies through compensating payments to the provinces.

We're concerned about restrictions on the ability of local and provincial governments to support local businesses and create local jobs through procurement and purchasing. We're also concerned about job losses in manufacturing sectors, the threat to public water, intellectual property, Internet issues, and that your committee, and Parliament, are reviewing and planning to endorse CETA based only on a 26-page technical agreement in principle and without the benefit of any actual text.

To learn more about our analysis, I recommend committee members review the extensive body of CETA background information available on CUPE's national website, cupe.ca/ceta. We have only a few minutes here today so I'd like to focus in my remaining time on one element of the proposed CETA that is especially worrisome and that is also the matter of intense debate and review in Europe right now. That is the matter of investor-state dispute settlements. The European Union has an economy larger than that of the U.S.

It is home to some of the world's biggest and most powerful corporations, companies such as private water giant GDF SUEZ, pharmaceutical giant Bayer, and oil giant Royal Dutch Shell, just to name a few. Canada needs to think very seriously about the implication of extending new rights to these European corporations and others to sue elected Canadian governments, suing them not in front of our long-established and respected courts, but instead at an unaccountable and secretive and non-appealable commercial arbitration panel.

If Canada does this, we will further reduce the ability of elected governments to act and regulate on behalf of Canadian citizens and it will increase pressure to privatize public services. Both the Canadian and European court systems are well developed and respected. Investor arguments against elected governments should be handled in the regular court system and not in these obscure, yet powerful, dispute chambers. We now have lots of experience with this type of investor-state mechanism through

Chapter 11 of NAFTA. It has not been positive, especially in the context of NAFTA's very broad

definitions of investment, right of establishment, compensation for direct and indirect expropriation, minimum standards of treatment, and prohibitions against performance requirements—all things I recommend your committee study in CETA. We've paid out over $160 million in taxpayer-funded damages on NAFTA claims, and Canada has borne the bulk of corporate suits. Right now, for example, there are eight active complaints against Canada versus three each for the U.S. and Mexico. If all of those eight were successful it could cost Canada some $2.5 billion.

Most important, we've been under unrelenting pressure to change public policies in response.

Examples abound, including Mobil Oil's successful challenge to the research and development requirements of the Newfoundland government; Mercer International's current $250-million suit against BC Hydro's industrial power rates; the $130-million payment to AbitibiBowater by the Canadian government because Newfoundland exercised its provincial water and timber rights; Lone Pine's $250-million suit against Quebec's fracking moratorium; and perhaps most egregious, drug giant Eli Lilly's $500-million challenge of our generic drug rules in a case that the Supreme Court of Canada declined to hear.

(1025) It's not right that the NAFTA investor-state system is being used to circumvent decisions of the Canadian courts, and we certainly shouldn't expand that to Europe. Meanwhile, the U.S. is yet to lose a NAFTA

Chapter 11 case, and all three North American governments have incurred tens of millions in legal costs. Barrie McKenna described it well in the November 24 edition of The Globe and Mail , “Chapter 11 has become a way for companies either to bypass domestic courts and regulatory agencies, or to get restitution denied through normal channels.” The question is, why would we consider expanding to Europe a NAFTA dispute settlement model which has been so detrimental to us?

If one accepts that we need an investor-state dispute system outside of the regular courts, why isn't Canada taking advantage of the CETA negotiations to insist on a system that better suits our interests? Interestingly, it's just these kinds of questions and that kind of approach that caused the European Commission to announce on January 21 of this year that it's suspending investor-state dispute settlement negotiations with the United States while it undertakes a comprehensive consultation with the European public.

The commission will publish proposed investor-state language in March, and then receive submissions and comments from citizens and member states. What a contrast to the approach in Canada. As I noted earlier, I've been to the European Parliament a couple of times to discuss CETA. I must say it is much more open and transparent in these matters than in Canada where, for example, the federal government recently denied a freedom of information request for a copy of the working CETA text.

The European Commission made this review decision after extensive representations from civil society and hearing from the S&Ds, the second-largest group or caucus in the European Parliament, that the S&Ds oppose any inclusion of investor state in an EU-U.S. deal, and will vote against any deal that has it in it. The S&D caucus currently has 184 members, and they're supported in this position by the third-largest, which is the Greens-European Free Alliance. So a very significant chunk of the European Parliament is raising concerns, and the commission has been responding.

Among other public inputs, the parliamentarians in Europe against investor state have been informed by a broad, four-year-long civil society engagement process that culminated in November's release of a new trade strategy for Europe, called The Alternative Trade Mandate, which I recommend to you. The common critique both inside and outside the European Parliament is that implementing NAFTA-style investor-state dispute settlement with the U.S. would be bad for democracy and not in Europe's interest.

Canada needs a similar examination of whether the NAFTA investor-state paradigm will serve our interests with Europe. The European Commission review of this in its deal with the U.S. will inevitably have implications for CETA, the details of which are still being negotiated. Our economy is closely integrated with the U.S., so it would be strange for the Europeans to agree to a model of investor state with Canada that is significantly different from that which they will agree to with the U.S. It's not only in Europe that investor-state dispute settlement is being actively debated.

Both Australia and South Africa have decided not to include the mechanism in their future trade agreements. Many South American countries are also opposed, including a big economy like Brazil, which has never included investor state in any trade deals. The United Nations Conference on Trade and Development released a comprehensive briefing on the global status of investor-state dispute mechanisms in May 2013. It found that 58 new cases were filed against governments worldwide in 2012, a record number. I recommend that resource to you as well.

We need much more public debate of this in Canada, similar to the active process in Europe. CUPE BC urges your committee to ask for information about the European review of investor state and to give Canadian negotiators your advice about it. Ultimately, our view is the same as the S&D group in the European Parliament. We think we have advanced and respected court systems in both Canada and Europe, so there's no need to expand the undemocratic investor-state dispute system in CETA. A trade treaty dispute should be between trading partner states, not a special tool to benefit private parties.

Thank you for the opportunity to present today. I provided the clerk with my speaking notes, which include hypertext links to the sources that I've mentioned in this overview. I welcome your questions later. Thank you.

(1030) The Chair : Thank you very much. I'm sure you've stimulated a few, but before we get to that, we'll have the Mayor of Burnaby. The floor is yours, sir. Mr. Derek Corrigan (Mayor, City of Burnaby) : Thank you very much. It is a real pleasure to be here. Good morning to everyone. I am going to share my time with Councillor Sav Dhaliwal. As you mentioned, I'm the mayor of Burnaby. I've been on city council for some 27 years. I have previously been a director of the Federation of Canadian Municipalities, and for about 20 years I have been a director of the Greater Vancouver Regional District.

I have been mayor for the past 12 years. Our city is the third-largest city in British Columbia, with a population of about 230,000 people. Councillor Dhaliwal is presently a Federation of Canadian Municipalities director and is also vice-president of the Union of BC Municipalities. This is a very interesting issue for our city, and as you can see we've taken a great deal of interest in how federal issues affect our municipalities, through our participation in the Federation of Canadian Municipalities.

So it is really nice to have an opportunity to be here today to talk about CETA and specifically about my concerns regarding its negative implications for municipalities and for the hard-working families in our communities. This proposed agreement would have a significant detrimental effect on the ability of municipalities to protect and promote local resources, employment, and an improved standard of living for middle-class families.

It would further widen the growing gap in our country and our cities between rich and poor by reducing the number of working people who are able to maintain a reasonable and modest lifestyle. This agreement has been prepared without a meaningful public consultation process for municipalities. A confidentiality agreement, signed by the provinces and territories as a condition of their participation in the CETA negotiations, has made effective public consultation for municipalities and the resident businesses and individuals impossible.

Lack of consultation on the details of the agreement will inevitably lead to inclusion of rules that will detrimentally affect local procurement policies. For example, the agreement will prohibit municipalities from using procurement as a local economic social development tool by requiring municipalities to remove any preference for local companies, goods, or services.

Foreign companies will have the right to claim damages if CETA rules are not strictly met, and the decision as to whether or not the municipality has violated the rules will be made by a tribunal of business people, in secret, without our participation. This is truly a threat to democracy as we know it in Canada. To add insult to injury, even when we win the occasional hearing, in some cases repeatedly, the so-called partners ignore the rulings and continue to practise protectionist policies where it benefits them to do so, and we cower from enforcing our rights.

Have we learned nothing from the softwood lumber dispute? We all seem to be programmed to light up when we hear that anything is free, whether it is a free sample, free enterprise, or free trade. We do this despite the fact that we know nothing that businesses do is for free. There is always some benefit to be gained by their shareholders. This proposed agreement is certainly not free. Ask Canadians in the auto industry, the forest industry, and the manufacturing industry how free trade has worked out for them. Though its details are vexing, our ability to be involved in a tweaking process won't change anything.

The real damage is inherent in the deal itself because it is designed solely to meet the interests of big business and multinational corporations. The root of the problem is our federal government's willingness, and in fact its zeal, to engage in these negotiations in the first place, again, of course, without any real consultation with municipalities and without any real understanding by the citizens who will be affected. I am convinced that the majority of the provisions in these agreements are not for the benefit of Canadian citizens.

They are instead a charter of rights and freedoms for multinational corporations. The international trade agreements protect the interests of big business and ensure that multinational corporations can exploit the resources of our country without impediment. It is patently absurd that we are providing multinational corporations more protection from expropriation than we do for our own citizens. Unfortunately we end up with the very businesses that stand to benefit as part of our negotiating team while democratically elected representatives are kept in the dark.

(1035) Trade agreements are about exporting jobs to the jurisdictions with the least protection for workers and the lowest wages and environmental standards. That is what makes manufactured goods cheaper and allows corporations the greatest profit. There is a reason that generation after generation of politicians provided protection for their country's internal production and markets. Tariffs and duties were imposed to protect jobs, to stimulate industries, and to ensure the legitimate autonomy of nation states.

Globalization is all about breaking down national identity, driving living and working standards down, and empowering the very rich, those who control these multinational companies. Wealth is being concentrated in the hands of fewer and fewer people, but the greatest fear is that individual citizens will assert their democratic rights and change the rules of the corporate game.

They have figured out, along with their legions of accountants and lawyers, that the best way to protect their financial interests is to establish that there are international consequences should any local or provincial authority interfere with their assets or their opportunities. Many of these corporations are bigger than nations in terms of their economic power, and most of them have directors who are part of the societal elite. Among them, they continue to acquire and accumulate, while the middle class dissolves into nothingness and the gap between rich and poor widens exponentially.

On the World Bank's website there is a file that shows the world's top 100 economies based on GDP and revenues. Thirteen of them are companies with $406 billion GDP revenues. For example, Walmart has a bigger economy than Switzerland, Sweden, or Israel. So what happens when citizens wake up and smell the coffee? If they do, they face international consequences for daring to assert their desire for local control of their own resources and jobs for their own people. In effect, they are powerless to act locally because their government has negotiated away their ability to stand up for their own community.

As local government, we have no control over what the national government does. We can only ask that you not trade away our limited ability to promote our local interests. Thank you. I'll be available for questions.

(1040) The Chair : Mr. Dhaliwal, you have less than three minutes. Go ahead. Mr. Sav Dhaliwal (Councillor, City of Burnaby) : Thank you, Mr. Chair and committee members, and good morning. Further to Mayor Corrigan's cited concerns for municipalities, I would like to say although he speaks specifically for the City of Burnaby, I believe that the City of Burnaby's concerns are shared by municipalities throughout our region, province, and country.

As Mayor Corrigan mentioned, as a director of the Federation of Canadian Municipalities, an executive member of the Union of British Columbia Municipalities, and past president of the Lower Mainland municipal government association, today I do not speak for these organizations, but my involvement in them over many years has given me some knowledge of our shared goals and objectives. This makes me feel confident in stating that most, if not all, share our deep concern about the implications for municipalities of implementation of this agreement, CETA.

It is at the local level, the municipal level, that we see and hear most directly the needs of all the individuals, workers, and businesses that are affected by trade agreements. It's here that we can directly interact to support the goals and the development of these businesses and address their needs. The proposed CETA, and in fact all trade agreements developed by our federal government, diminish and sometimes completely remove those opportunities.

In spite of these facts, we have no opportunity to stop or shape these agreements, and experience tells us that once they're in place, any amendments proposed to the federal government are rejected when they come before Parliament for review, regardless of the fact that everything from how we purchase most goods and services to the establishment of local economic development policies would be subject to new trade disciplines and possible court challenges under CETA. Because of their many concerns, more than 80 Canadian municipalities have passed resolutions and motions against CETA.

More than 40 municipalities are seeking a clear, permanent exemption from the deal. The UBCM has called for the exclusion of local governments from this agreement. The FCM has passed resolutions that they hope will enable local governments to be heard on this issue. In addition, municipalities across the country have opposed CETA's proposals, as proposed by local provisions. The executive director of the Columbia Institute and policy analysts have noted— The Chair : Excuse me. I see the text you're reading from, and you don't have the time to finish that text. I'll allow you to wrap up very quickly. Mr.

Sav Dhaliwal : I will then, Mr. Chair, by saying that given what Mayor Corrigan has said and what I have stated, and everything we know about CETA, Burnaby is concerned. Clearly, our concern is broadly shared by municipalities across our country.

As Burnaby continues to work towards exposing all of the detrimental implications of CETA and to fight to ensure it will not be implemented as proposed, we will do so with the municipalities across the country knowing that they share our many legitimate, substantiated, and significant concerns about the dramatically detrimental effect CETA implementation would have and working to mitigate against those effects with every tool we have at our disposal. Thank you, Mr. Chair, and committee members. The Chair : Thank you very much. I'm sure you stimulated some good questions here. We'll start with Mr. Davies.

(1045) Mr. Don Davies : Mr. Redlin, Mayor Corrigan, and Mr. Dhaliwal, thank you for being with us today. Welcome to the committee. Mayor Corrigan, I want to start with you. There has been concern expressed that once a municipality privatizes its services, CETA may work to prohibit the retaking of that privatized service back from the public sphere, or it may impair it by subjecting the retaking of that to investor-state lawsuits which would effectively chill.... Is that a concern that has been expressed by your council or any other municipal leaders in your experience? Mr.

Derek Corrigan : It has certainly been expressed by our council. It has also been expressed at our meetings of the regional government here in the Lower Mainland. There is a concern that public-private partnerships, the effective privatization of infrastructure, will mean that in the future it will be impossible to take that infrastructure back into public hands. That concern has not been allayed despite our efforts to obtain legal advice and to establish some kind of protocol to ensure we are not eliminating an option from future public bodies.

It is a big concern for us locally and a concern for regional government also, and something that's shared right across Canada in my experience. Will we as a result of any privatization initiative lose the ability to make that a public enterprise? Mr. Don Davies : How long have you been mayor of the City of Burnaby? Mr. Derek Corrigan : For 12 years I've been mayor. Mr. Don Davies : Can you tell us briefly, how does local economic development factor into the decisions you make as a council on a day-to-day basis? Mr.

Derek Corrigan : I think this is true even in a city like ours where we're in the middle of a big metropolitan area—we have about 10% of the population of metro Vancouver—we're focused on improving the economy of our city in relation to the economies even of the cities around us. We're attempting to develop business, to provide initiatives so business will in fact locate in our city. To ensure we are supporting the businesses that are local, we do attempt to put in rules that will establish a local preference, an opportunity for local businesses to be able to participate.

There has been a significant chilling effect in regard to that, and local businesses request that, request a benefit if they in fact are participating as taxpayers. We're finding the advice we're getting from our lawyers is that is not available to us, that we may very well suffer a challenge under the existing NAFTA. Mr. Don Davies : I was going to move to that. When we mention lawyers, the first thing that comes to my mind is the lawyers' costs and money. Has your city council done any estimate, or do you have any concerns about the costs that complying with CETA will fall to the City of Burnaby? Mr.

Derek Corrigan : As a lawyer myself for some 30 years, I'm well aware of the implications in regard to these agreements, and the requirement that we get legal advice and accounting advice consistently. These agreements have been a big benefit to lawyers. My profession has become wealthy as a result of interpreting these agreements, particularly since often they are so vague.

Interpretations really are going to be subject to multiple challenges in front of tribunals and eventually in the courts. We have seen that already. Canada has not had a good record in winning those battles, and so we're nervous. Each time we get a question, we look to get legal advice in order to deal with it. That is not something that was a factor in our ongoing procurement policies, that each time we went out to have a procurement decision we needed to hire a lawyer in order to make the decision about whether or not we could in fact follow the policy we had implemented. Mr. Don Davies : Mr.

Redlin, I'm going to talk about the investor state. I have the press release from the EU Trade Commissioner Karel De Gucht from January 21, and I will quote from this: Governments must always be free to regulate so they can protect people and the environment. He continues: But some existing arrangements have caused problems in practice, allowing companies to exploit loopholes where the legal text has been vague. I know some people in Europe have genuine concerns about this part of the EU-US deal. Now I want them to have their say.

I have been tasked by the EU Member States to fix the problems that exist in current investment arrangements and I'm determined to make the investment protection system more transparent and impartial, and to close these legal loopholes once and for all. TTIP will firmly uphold EU member states' right to regulate in the public interest. The press release then goes on to say that, “The Commission wants to use the opportunity to improve investment provisions already in place....

In practice this would mean referring explicitly in the deal to states' right to regulate in the public's interest.” Is there anything that you've seen in the leaked documents that satisfies you that CETA has a clear statement that protects Canada's ability to regulate the public's interest?

(1050) Mr. Blair Redlin : Not at all. I haven't seen anything like that. The quote that you are citing there is very important because that is the direction that the European Commission is going with the United States of America. Are we really considering that we will have a completely different arrangement than the U.S. has with regard to Europe, with regard to investor state?

I think that we should be stopping at this point and saying, “What about Canada?” Do we think that CETA should have language in it that protects the ability of governments in Canada to regulate on behalf of citizens and act on their behalf in the type of way that you've just described and that the European Commission is exploring in Europe?

This is an important moment, given the European Commission's decision, for Canada to say, “What kind of investor state, what kind of dispute settlement mechanisms do we want to see in CETA?” That is very challenging to do, given that we are in the dark, looking at leaked texts. I think the 26-page

summary doesn't address that question and I think it's a very important question. Mr. Don Davies : Mr. Redlin, can Canada have a trade agreement with a jurisdiction that increases trade but also protects the ability of the jurisdictions to take decisions in the interests of the citizenry to protect the environment and pursue local economic development? Is that possible? Mr. Blair Redlin : Absolutely. I cited some examples of major trading partners in the world.

Australia, South Africa, Brazil, many countries in South America have entered into trade agreements that are about trade and not about trying to constrain the ability of democratically elected governments to act on behalf of their citizens. We can have trade agreements that reduce tariffs and reduce other real, concrete impediments but not this vague concept of non-tariff barriers. As I mentioned in my presentation— The Chair : I'm going to hold you there. Mr. Hoback, the floor is yours. Mr. Randy Hoback (Prince Albert, CPC) : Thank you, Chair.

Thank you, witnesses for being here this morning even though we had a nice rainy morning to start off the day, or this session anyway. I've got some questions on how Burnaby operates and runs its municipality. What is the major industry in Burnaby? I'm from Prince Albert, Saskatchewan so you can give me a little bit of detail on what makes up Burnaby and what companies are actually your key industries. Mr. Derek Corrigan : Burnaby is a high-tech city. It does a lot of work with the movie industry.

We are home to 60% of the movie studio space in British Columbia so that's a big part of the business in our community. Obviously we have major companies that do international work like Electronic Arts Canada. It's a company that was formed in Burnaby and has been extremely successful in the gaming industry. We're the home of Telus, which is a communications company that works all across Canada. We obviously historically have been a distribution centre because we are in the very centre of the Lower Mainland so movements in goods and services have gone out from our area.

We're now becoming much more urban and developing town centres that are seeing a big increase in commercial and professional office space development. Burnaby is very prosperous. We were named by Maclean's magazine a few years ago as the best run city in Canada. We've very proud of that accomplishment. We have no debt. We have over $600 million in reserves. We are one of the few cities that have been able to meet the public sector accounting rules. Now most cities are modelling their reserve system after ours. So we are very pleased. It is a very well run city. Mr. Randy Hoback : Congratulations.

Those are all strong feathers in your cap. I congratulate you on your performance for sure. When you go through the tendering process—let's say on a water pipe process, and you talked about how you think it's important to have local participation in tenders such as that—how much of a range are you willing to sacrifice in the cost of the project to make sure it's local? Is it 20% higher, or 30% higher, or equal? When you look at that, how would you take that into consideration? Mr. Derek Corrigan : We're very aggressive at finding ways to deliver back into our local economies.

People can't pay our municipal taxes if they're not taking home a reasonable wage. So in fact we're one of the few cities right across— Mr. Randy Hoback : My question was how much you would you tolerate in that tendering process. Would you tolerate 20% over top of the lowest tender or 5% or equal?

(1055) Mr. Derek Corrigan : It depends on the evaluation of each and every project as to exactly what we think is the appropriate measure. Usually we work in terms of small margins—a 5% margin—in order to create an advantage for local industry in regard to our procurement. Mr. Randy Hoback : If it's a small tender—for me, $5 million is a huge number of dollars, but for you guys that's probably a small tender—then 5% on that is not a big deal. But what about a big tender? What if it's a waste water treatment facility that's $100 million?

How much leniency are you going to give to local players versus a bigger player that would come in with the expertise? Mr. Derek Corrigan : We may not look at any local advantage in regard to larger projects. We work on those generally through the Metro Vancouver government, the regional government. Generally there isn't any local procurement advantage. In fact, this isn't something we typically do in each and every area. It's not a matter of policy that each procurement has a local advantage.

It means that in certain areas of procurement, we may decide that it's necessary to stimulate industry in our city or to encourage the development of industry in our city to look at procurement policies. Mr. Randy Hoback : So how do you pick the winners and losers and in which areas? How do you go about doing that, and saying that this is a priority sector and this isn't? You may have local people in both those different sectors. Mr. Derek Corrigan : Of course, and that's obviously one of the concerns all governments exercise—who picks the winners and the losers? And we know that— Mr.

Randy Hoback : But you're not picking it based on price or value necessarily. You're picking it based on, first of all, whether they are local, and second, you're willing to tolerate paying more for local—and I can understand that—but you're saying that not all sectors get that privilege. So depending on what type of sector they're in, they may or may not have that privilege. Mr. Derek Corrigan : That's right. It may very well not be that area. For instance, for providing communications assistance, we may want to give preference to Telus, the biggest company that's in our city.

There are 5,000 employers in our city. We may want to be able to look at implementing policies that will in fact encourage Telus to keep situating in our city, and that is an advantage. But it's difficult at all times to figure out who the winners and losers are. Often when we make applications for federal grants, exactly that issue comes up for us: how does the federal government pick the winners and the losers? So far we've found it's based mostly on who is sitting as an MP in your area. Mr. Randy Hoback : Really? Mr. Derek Corrigan : Really. Mr.

Randy Hoback : I disagree with that, because if you look at our Building Canada fund and if you look at the distribution right across Canada, that would not be proven, but that's your privilege and you're willing to believe what you want. It may not be based on fact, but it is what it is. I'm just going to quote something. This is from Jayson Myers, president and CEO of the Canadian Manufacturers & Exporters—and, by the way, they're very happy with this agreement.

I'm going to read to you what he said to us: CETA will help Canadian manufacturers and exporters diversify into new export markets, increase their presence in the world’s largest market, and help improve Canada’s position as a destination for manufacturing investment. This agreement enables new business opportunities, sets the standard for 21st-century trade agreements, and stands to benefit Canadian businesses, their employees and communities across the country. I heard you say in your testimony that these guys are going to be screwed over.

He doesn't feel that, so why would you make the statement you've made when Jayson Myers is stating this? I can take this a step further. If you want to hear some of the other testimony we've had from different people who have been in front of us, I'll quote what David Lindsay, president and CEO of Forest Products Association of Canada, said: We welcome a Canada-EU trade agreement. It will see the elimination of a quota and tariff on Canadian plywood and will help the Canadian industry secure access to key EU markets for its other product lines.

As part of its Vision 2020 initiative, the forest products industry has a goal to increase its revenues by $20 billion by 2020 through new markets and new innovations. The government’s focus on regions that can provide opportunity for the industry’s traditional and future products is important to achieving our goal and to supporting the more than 230,000 Canadians the industry directly employs cross the country. If Telus wants customers, it needs to ensure that people have jobs. Is that correct? Now, I'm hearing from you.... You made a comment that the forestry sector— Mr.

Derek Corrigan : Do you have a question for me at all? Mr. Randy Hoback : No, I have a statement. I have the time to do what I want. Mr. Derek Corrigan : Oh, okay. I'll relax. Mr. Randy Hoback : I guess I do have a question for you. Why are you contradicting what people in the industry are actually saying? The Chair : Your time has gone, Mr. Hoback. Committee members, I will just remind you that when you're reading text, that's not a problem. The problem is that when you read it very quickly, the interpreters have a very difficult time catching up to it.

I know you're rather emotional about it, but nonetheless I will remind the entire committee. Go ahead, Mr. Pacetti. The floor is yours. Mr. Massimo Pacetti : Thank you, Mr. Chair. Thank you to the witnesses for coming and seeing us today. I'm the only friendly one here, so I'm just giving you a heads-up. Voices: Oh, oh! Mr. Massimo Pacetti: I have a quick question for Mr. Redlin. You said that you went to the European Parliament on a few occasions. Who did you meet with? Was it the Democrats, or is that...?

(1100) Mr. Blair Redlin : We met with people from all caucuses. They call them “groups” there. I'm thinking of the caucuses in Canada. We met with the range of MPs, any MPs we could meet with. We also made presentations to committees of the Parliament, the intergroup on public services and others. Also, there are many civil society groups engaged with the Parliament, and we met with them, too. Mr. Massimo Pacetti : When you say parliamentarians, what is the spectrum? In Europe it's not clear. It's even less clear than it is here in Canada sometimes.

In Europe they're not necessarily all to the left and to the right. The Green Party sometimes leans as far to the left as it does to the right. Who would be in favour of this type of agreement? There has to be somebody in favour if somebody from the European Parliament agreed to this agreement. So who would be in favour? Mr. Blair Redlin : What you would call the right wing is in the majority in the Parliament right now, so the right and the Liberals would. Mr. Massimo Pacetti : Did you have any discussions with them? Mr. Blair Redlin : Yes. Mr.

Massimo Pacetti : Was there any exchange of ideas, or was it just black and white? Mr. Blair Redlin : They tend to have very specific interests about certain particular elements, based on the country they come from, the committees they're on at the Parliament, so— Mr. Massimo Pacetti : There are varied opinions in Europe as well, right? Mr. Blair Redlin : There are varied opinions. That's right. Mr. Massimo Pacetti : So my question to you is if we took out the investor-state dispute settlement, would you be in favour of the free trade agreement? Mr.

Blair Redlin : I'd still be concerned about local procurement and about massive increases in drug costs in Canada, and I would have a number of other concerns, but I think it would make a big improvement. Mr. Massimo Pacetti : So the major three would be the investor-state dispute settlement, pharmaceuticals, and procurement? Mr. Blair Redlin : Yes. Mr. Massimo Pacetti : Would they be in that order? Mr. Blair Redlin: Umm... Mr. Massimo Pacetti: Well, it doesn't matter. They're the top three. Okay, thank you. Mr.

Corrigan, maybe I'll give you an opportunity to clarify, and I will not be as hostile as my buddy Randy over there. You're saying that this agreement will benefit the multinationals. But then you also said that the people who lost with the NAFTA agreement were in the forestry sector, the auto sector, and the manufacturing sector. Especially in the auto sector and forestry sector, they would be multinationals, so can you reconcile the two? Mr. Derek Corrigan : In essence, in the past in Canada, in order for multinationals to do business here, we've required them to establish jobs here.

We've said that if you're going to utilize our resources, if you're going to take away our commodities, we want to be sure that you create jobs in our country. In fact, despite what was said by the members, that's an area in which we've had significant loss—in manufacturing jobs, particularly in traditional industries. Mr. Massimo Pacetti : So you're saying you want some type of job guarantee? Mr. Derek Corrigan : I want to create jobs in Canada and to ensure that jobs are guaranteed and that if you are doing business in Canada it will be to create jobs and not simply to take resources. Mr.

Massimo Pacetti : There's nothing wrong with that. So what would your advice be? For example, in the manufacturing sector in my riding I have one of the largest suit manufacturers in North America. They've benefited from the free trade agreement with the U.S. Now, because of China, the only reason the jobs are still there is because they're able to export to the States. So they're bringing in goods from China, but they're still able to export to the U.S.

That industry is actually still benefiting from the free trade with the United States and not benefiting from the, let's say, less expensive items coming from China. How do you guarantee that the jobs are going to stay in this country? Mr. Derek Corrigan : It's like the earlier question, how do you pick the winners and losers? Who's going to win and who's going to lose? Who's going to be in a position where they're going to be overwhelmed by imports that are going to cause their industry to go into bankruptcy, and who's going to find that there's new markets that are open to them? Mr.

Massimo Pacetti : Wouldn't you rather trade with countries that you actually have a free trade agreement with, friendly countries, for lack of a better term? Mr. Derek Corrigan : I think that it's not necessary to have free trade agreements, or to create investor rights in order to do so. I think you can simply have tariff adjustments that will allow you to manage whatever investment you want.

(1105) Mr. Massimo Pacetti : What does tariff adjustments mean? Mr. Derek Corrigan : Reducing or increasing tariffs based on what you want to stimulate in your own economy. The Chair : Very good. Thank you very much. Mr. Holder, the floor is yours for seven minutes. Mr. Ed Holder : Mr. Chair, I would like to thank our guests today for a very engaging dialogue so far. While Mr. Hoback was speaking, I went to get some tea. I was going to put some honey in it until I realized that it's a produit de France , a product of France. I don't want to offend anyone here, so I'll just set that aside for the time being.

Perhaps when you're gone I might slide a little in, unless you find some good B.C. honey for me, and I'd be very grateful if you would, mayor. By the way, Burnaby is a beautiful city. Congratulations to you for the honours that you obviously richly deserve, all of you. Councillor, I assume you're part of that as well, so let's throw an honourable mention to you as well. Thank you for that. I'm going to start with Mr. Redlin, because I think he's feeling a little left out, and that's not right.

In your capacity with CUPE, I understand you're now retired, but you like it so much you're still kind of hanging on and doing more. Mr. Blair Redlin : Because I did a lot of work on CETA, with this opportunity they asked me to come here and talk about CETA. Mr. Ed Holder : So you speak from wisdom. How many years have you been involved in doing this, sir? Mr. Blair Redlin : Twenty-three years with seniority. Mr. Ed Holder : So you speak from some background and some wisdom. Mr. Blair Redlin : I was a deputy minister in the provincial government here in B.C. as well.

I was the deputy minister of employment investment for a period of time, and that included the trade policy shop. Mr. Ed Holder : I come from Upper Canada, but I have to tell you, this is an absolutely stunning province. Mr. Redlin, I have a question for you. You're talking about your focus on CETA, and I'm trying to understand where CUPE is in the mix of this. You look for balanced comments. You look for input that's constructive and supportive. That's the whole intention with our colleagues here.

If I might ask you, in your capacity with CUPE and your understanding of them and any involvement you've had with any of the past deals that we've had, when Canada first struck the Canada-U.S. deal, was CUPE in favour of it? Mr. Blair Redlin : No. Mr. Ed Holder : When it was decided then to accelerate that to NAFTA, was CUPE in favour? Mr. Blair Redlin : No. Mr. Ed Holder : Then we went south with the Liberals and they went to Chile. Was CUPE in favour? Mr. Blair Redlin : I can't recall. Mr. Ed Holder : It's a little bit since then. On Costa Rica were you in favour? Mr.

Blair Redlin : I don't think we had too much to say about Costa Rica. Mr. Ed Holder : On Colombia were you in favour? Mr. Blair Redlin : No, we were definitely opposed. Mr. Ed Holder : On Peru were you in favour? Mr. Blair Redlin : I don't recall that they commented on Peru. Mr. Ed Holder : What about Panama? We just passed that. Mr. Blair Redlin : I don't think they talked about that. Mr. Ed Holder : Jordan's a little smaller, but it's on the other side. Mr. Blair Redlin : No comments there. Mr. Ed Holder : Israel? Mr. Blair Redlin : No comments there. Mr.

Ed Holder : I haven't listed them all, but that's probably a pretty good indication of CUPE's perspective. I'm not here to suggest that you don't support anything, but it strikes me that what I'm hearing is either no, you didn't, and there either may have not been some comment, or you don't recall. What I'm trying to understand is I look back and I'm particularly struck by Canada-U.S. and Canada and NAFTA. Going back 20 to 23 years ago, do you know what Canada's exports were to the United States? Do you have a number? Mr. Blair Redlin : I don't have that number in my head. Mr.

Ed Holder : That's not fair because I do. That number was a little over $80 billion of Canadian exports. Do you have any rough guess of where it is for 2012, or this past year? Mr. Blair Redlin : No. Mr. Ed Holder : I can help you with that too. You'd be pleased to know that we're actually at about a 400% increase, some $262 billion. I'm not talking about trade the other way, which by the way, did you know that Canada is the number one trading country for 35 of the 50 united states? It's fairly compelling. That relationship between Canada and the United States is an important one. Mr.

Blair Redlin : I clarified in my presentation that we're in favour of increasing trade. We don't think this is the way to do it. Also, many of the predictions about the Canada-U.S. trade agreement and NAFTA have actually been borne out. For example, we're a much more resource-dependent country, and our exports are much more...the export of raw resources, like oil and gas, and minerals. Our manufacturing sector took a big hit in response to NAFTA with the transfer of many manufacturing jobs to China and Vietnam. Mr.

Ed Holder : So aren't we glad in an economy where there are ebbs and flows....I come from a business background, only more lately into politics, unlike Mayor Corrigan whose commitment to public service has been like forever, and I salute you for that, but not me. I'm more recently into community service. As I see that, I still look at a 400% increase in exports as quite valuable. You made the comment about pharmaceuticals so I'd like to bring it up, about the impact.

You won't be surprised that in our nation's capital we had representatives from Rx&D, basically the name brand pharmaceuticals, and the senior representatives of the generics. The net effect of their testimony was they both thought it was pretty balanced. By the way, I must tell you we did have someone in from the Canadian Health Coalition, I believe it was. They actually thought the generics were too high too. That was their perspective. We're not here for you to defend that.

But wouldn't you imagine if you have both sides that are seemingly contrary to each other, both coming back and saying it's a balanced agreement, that CUPE might take a more modified perspective on that?

(1110) Mr. Blair Redlin : The perspective of the Canadian generic pharmaceutical manufacturers association is to represent their members,

whereas I think I'm talking about the broader impact on the health system and on the pocketbooks of regular Canadians. So if.... Mr. Ed Holder : Pardon me, but I would have thought the pharmaceutical companies were there to protect...certainly their corporate interests, but if they are not also in the interests of Canadians, and the generics are a great example of that because we all know that those are dramatically less expensive, but those were the ones that also came back and called that a balanced agreement. Before I run out of time, Mayor Corrigan and Councillor Dhaliwal, thank you. Interesting perspective.

I come from the tenth-largest city in Canada, London, Ontario. We call ourselves an urban oasis in a sea of agriculture. You talked about the things that are important to your industry. You talked about Telus and high tech and all, and of course British Columbia and how important it is. It was interesting that the vice president of lumber sales and marketing from Western Forest Products, Bruce St. John, said, “A trade agreement with the EU will further diversify markets and strengthen relationships for coastal B.C.'s forest industry.

Market diversity and strong global relationships promote business stability, which means secure jobs and reliable economic contributions from the forest sector.” I share that with you because you made a couple of statements that I just want to challenge, and I'm going to do this quickly. You thought this deal was a threat to democracy. That's huge. It felt somewhat isolationist and protectionist. The Chair : Very quickly. Mr. Ed Holder : Chair, if I try to ask a question that goes beyond this, I just want to make the point that in terms of construction services for procurement, I want to make reference.... Mr.

Don Davies : Mr. Chairman, on a point of order, there's going to be no time. This has been a marked attempt to prevent the witnesses from answering. If he wants to ask a question, give the witnesses a chance to.... The Chair : You don't have the floor, Mr. Davies. Mr. Ed Holder : My only point, sir, just to make you feel more comfortable, $7.8 million.... The Chair : And Mr. Holder, neither do you. We're going to allow a quick question from Madam Liu, and then a quick follow-up question from Mr. Hiebert, just very short. You have about one and a half minutes. Ms.

Laurin Liu (Rivière-des-Mille-Îles, NDP) : Thanks, Mr. Chair. I just had a quick question for Mr. Corrigan. You mentioned when you were answering Mr. Davies' question that CETA might add a burden on municipalities, and you mentioned the need to hire lawyers when going out for a procurement process. We know from a CETA legal opinion commissioned by the Columbia Institute, actually some other deal would add more to the administrative burden of the municipalities and open the door to legal challenges from European corporations if corporations were to disagree with local purchasing decisions, as you know.

The increased administrative burden for local governments would include revised tendering procedures, accounting, and successful suppliers for local government decisions, and also provide federal government with additional procurement information and statistics. As you can see, this is a great burden. Is this a concern for you, and what do you estimate the costs will be for this? Moreover, where do you think the funds will come from to pay for these additional costs? Mr.

Derek Corrigan : First of all, it's not surprising to pay $400 or $500 an hour for a lawyer now in order to give opinions, particularly on an area that is as confined as the trade agreement. What we're finding is oftentimes our staff will have enough information to be able to say, “This might impinge or this might have an effect”. As a result, you go out looking for a legal opinion that often is vague in and of itself because there is so little understanding or settled law in regard to the trade agreements.

In fact, we've seen as a result of many of these disputes that it's difficult to understand the base for the dispute, never mind the legal arguments that are applied to it. Often those arguments are done in secret before tribunals where municipalities like us aren't allowed to participate. So it does have a chilling effect.

(1115) Ms. Laurin Liu : Thank you. Now that I know I have my full five minutes of questioning, I would like to add that it's a particular pleasure to be here. Speaking of procurement, I know that TransLink and B.C. Transit actually purchased buses from my riding, from Nova Bus, so my constituents are certainly very happy to have the jobs associated with local procurement. My next question would go to Mr. Redlin. In the agreement in principle, we discovered that the dispute resolution mechanism that would apply to the trade and environment

chapter would be based on a consultative and cooperative approach. This would be a review by a panel of experts who would then issue a non-binding report with no penalties or trade sanctions in cases of non-compliance. Of course, this is a concern to me. As an alternative to this approach, do you see any advantages associated with actually having an approach where international penalties would be applied in cases where a party is deemed not to be in compliance with the panel's report as it relates to the trade and environment chapter? Mr.

Blair Redlin : I'm actually not sure I would be in favour of that, because I think it should be the elected governments of Canada that should be able to make decisions about the environment. Under NAFTA we've lost a lot of environment-related disputes, such as the S.D. Myers dispute, where we attempted to prohibit the export of PCBs and that was overruled by NAFTA. I think that the NAFTA environmental commission process has not been particularly useful. I think it would be helpful in the kind of process that's talked about there, where there is an international review and a consultative process and a report.

That is all helpful, but I don't think that international tribunals should be able to assess fines against Canadian governments for alleged violations of environmental rules. Ms. Laurin Liu : Mr. Corrigan, you spoke about examples that your city has used to stimulate the local economy through procurement. You mentioned the example of Telus. Could you elaborate on other examples in which procurement has been used to stimulate the local economy? Mr.

Derek Corrigan : I think in our city we do something that is unusual in the sense that we have a fixed wage, a fair wage, that is imposed in regard to all of our construction projects. We set unionized wage scales in order to ensure that we are utilizing public funds to stimulate high-quality, high-paying jobs as a result of the work that has been done. It has been extremely successful. Our projects have been on budget. They've been on time throughout almost all of the projects over the course of at least the 25 years that we've been implementing that policy.

We're worried that a policy like that may be challenged in the future as a result of these agreements. I am unabashedly a nationalist. I am very much like the Liberals were 20 years ago. I am looking at protectionism as a way in which we protect our economy. The idea of globalization and the idea that we lose our national identity to this amorphous global entity seems to me to be entirely inappropriate. I think that being Canadian, buying Canadian, ensuring we support Canadian industry, that we support Canadian business and Canadian high-quality jobs is very important. The Chair : Thank you very much.

We did start the session a little bit later, so I'm going to give the last five minutes to Mr. Hiebert, who will close it off. Mr. Russ Hiebert : Thank you, Mr. Chair. Thank you to our witnesses for being with us today. Mr. Corrigan, you talked a lot about how well run the City of Burnaby is. Do you have any idea roughly how many businesses exist in the city of Burnaby? Mr. Derek Corrigan : First of all, I don't talk a lot about, but there's an independent study that was conducted by Maclean's magazine— Mr. Russ Hiebert : I just have a limited— Mr. Derek Corrigan : It was a study done across Canada. Mr.

Russ Hiebert : I'm not disagreeing with you. Just quickly, how many businesses would exist in the city of Burnaby, roughly? Mr. Derek Corrigan : There would be probably 5,000. Mr. Russ Hiebert : Approximately 5,000 businesses, and of those 5,000 businesses, how many would do business with the city through a contract? Mr. Derek Corrigan : A relatively small number of those businesses would, although we do have a very diversified job in the sense that we're working in parks and recreation, roads, sewers—

(1120) Mr. Derek Corrigan : Yes, I was aware that there was a threshold. That number is relatively small in regard to civic projects. Our most recent project was a community centre with costs in the area of $40 million, so typically— Mr. Russ Hiebert : How often do those come along? Mr. Derek Corrigan : Oh, we're having projects like that probably every two years, projects of that nature. Mr. Russ Hiebert : How many of those 5,000 businesses in Burnaby do you think would be involved in the export market? Let me just put this in context.

Your website for the city of Burnaby highlights that Burnaby is a high-tech city, with information technology, wireless, biotech, life science, new media, and environmental technology companies present in your city, and you're trying to attract more of them. Would you not suspect that many of those businesses would benefit from a trade agreement with the European Union, with access to 500 million people and a $3-trillion infrastructure market? Mr. Derek Corrigan : Well, certainly, our focus has mainly been in the Asia-Pacific. Much of our focus has been on China, Taiwan, and Korea for opportunities like that.

Europe is a long way from British Columbia, so in regard to the issue of how much impact there would be directly on our business, it is, I suspect, different than it would be in eastern Canada. Mr. Russ Hiebert : Would it be fair to say that these kinds of companies, though, are looking at world markets, and that the European Union, being the largest single market, would be one that would be attractive to them? Mr. Derek Corrigan : I think there are obviously businesses on both sides looking at attractive markets. I think the most attractive thing about Canada for businesses is commodities.

We know that the main area we're looking at is access to commodities. For us, it's professional advice and professional services. Mr. Russ Hiebert : Exactly, and this brings us to Telus and Electronic Arts. In your opening remarks, you had some very harsh things to say about multinational companies. Did you know that Electronic Arts is a $4-billion company? It's the third-largest company of its kind in the world. Are you aware that it's a multinational company? Mr. Derek Corrigan : I'm aware, fully. Mr. Russ Hiebert : Okay, and Telus, similarly, would be even larger in terms of its revenues. Mr.

Derek Corrigan : I don't know how multinational Telus is. I think Telus is more focused in Canada. Mr. Russ Hiebert : Well, Darren Entwistle recently posted a blog on the Telus website wherein he comments on CETA. He says, “Uninhibited free trade and liberalization of foreign ownership rules will undoubtedly expose”—companies—“incumbent Canadian organizations to increased competition, including in” his industry, which he “wholeheartedly” supports.

He says, “Indeed, we welcome healthy competition and we believe that most Canadian entrepreneurs would share this view given the opportunities that free trade provides.” He closes by saying, “We applaud the Government's move to strengthen our trade relationship with the European Union, and look forward to such future agreements with additional trading partners around the world.” Obviously you know Darren Entwistle. He's— Mr. Derek Corrigan : Of course. Mr. Russ Hiebert : —your largest CEO of the largest company in Burnaby.

That's a huge ringing endorsement for this kind of agreement and future agreements of its kind. You're trying to attract these kinds of businesses to Burnaby, yet you're basically telling the committee that, in your words, there's a small number of local companies that have contracts with the City of Burnaby that should have greater preference, and it's the reason why you, as a city, oppose this agreement, when in fact the largest employers in your city and the kinds of employers you're trying to attract endorse and benefit from these kinds of agreements. How do you square those two? How do you— Mr.

Derek Corrigan : It's not surprising. I disagree with them on tax reform too. Certainly, we have differences of opinion in regard to what we think is best for Canada. Darren Entwistle— The Chair : That's probably the best answer you can give, so I'm going to call it there. I want to thank you very much for coming forward, witnesses. It was a very interesting session. With that, we will suspend as we set up the next panel.

(1130) The Chair : We'd like to call the meeting back to order. We ask members to take their seats. We have witnesses before us and we look forward to this final hour before we get into a lunch break. We have with us from British Columbia Technology Industry Association, Bill Tam, president and chief executive officer. Also we have another mayor. From the City of Abbotsford, we have Mayor Bruce Banman. With that, Mr. Mayor, the floor is yours. Dr. Bruce Banman (Mayor, City of Abbotsford) : Thank you very much, Mr. Chair. Members of the committee, honourable colleagues, ladies and gentlemen, bonjour and good morning. As the mayor of Abbot