EVIDENCE

Standing Committee on International Trade NUMBER 017 1st SESSION 42nd PARLIAMENT Wednesday, May 11, 2016 Le mercredi 11 mai 2016 Standing Committee on International Trade CANADA [Recorded by Electronic Apparatus] EVIDENCE May 11, 2016 Committee Edited Evidence * Table of Contents * Number 017 (Official Version) Official Report * Table of Contents * Number 017 (Official Version) Témoignages * Table des matières * Numéro 017 (Version officielle) 17 11 05 2016 2016/05/11 08:00:00 House of Commons Comité permanent du commerce international Standing Committee on International Trade CIIT Chair The Honourable Mark Eyking 42 1

(0800) [ English ]

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

I call the meeting to order. [ Translation ] Good morning. My name is Mark Eyking and I am the member for Sydney—Victoria . I am also the chair of the Standing Committee on International Trade. [ English ] Our committee has been quite active in the last while since Parliament started. We have a couple of things on our plate. We're dealing with finishing up the European agreement and we have softwood lumber issues, but our main issue right now is the TPP. We are going across the country to listen to Canadians, stakeholders, and whoever wants to talk to us about this trade agreement.

We are also constantly holding meetings in Ottawa with stakeholders. We've done the western provinces. We're doing Quebec right now. Starting tomorrow, we are going to do Ontario, and probably the Atlantic provinces and the territories in the fall. With us in our committee we have Madam Ludwig, from New Brunswick; Mr. Peterson, from Ontario; Madam Lapointe, from Quebec; Ms. Ramsey and Mr. Van Kesteren, from southern Ontario; and, from the wonderful province of Saskatchewan, Mr. Hoback. This is our committee today. We have other members, but they're in Ottawa right now. We take turns travelling around the country.

We will give the witnesses, or whoever is representing witnesses, five minutes each. On this first panel, we have the Desjardins Group, the Québec Chamber of Commerce and Industry, Québec International, and the Réseau québécois sur l'intégration continentale. We're going to start with the Desjardins Group. Go ahead, Mr. Brun.

[ Translation ]

Mr. Bernard Brun (Director, Government Relations, Desjardins Group) :

Thank you, Mr. Chair. Members of the committee, I would like to give a brief introduction to the name of the Desjardins Group. First, I want to thank you for the invitation. It is much appreciated. My name is Bernard Brun. I am the Director of Government Relations for the Desjardins Group, which is a cooperative financial group. It is the leading financial cooperative group in Canada, and the fifth largest in the world. It has 7 million clients. We offer a full range of financial services, from basic financial services and insurance to access to capital and, of course, financing services. We are a leading actor.

Desjardins is the leading financial group in the agriculture and agri-food sector. We would particularly like to discuss this field and the potential impacts of the free trade agreement on the agriculture and agri-food market. Alain Gagnon, who is Vice-President, Agriculture and Agri-Food Sectors Division, is with me today. He will talk to you more specifically about this subject.

Mr. Alain Gagnon (Vice-President, Agricultural and Agri-Food Sectors Division, Desjardins Group) :

Good morning. Thank you for the invitation. Our institution's activities in this sector extend from coast to coast, but a majority are concentrated in Quebec. The Desjardins Group has a more than 41 per cent share of the farm credit market in that province, more than all of the other financial institutions combined. Overall, nearly half of all farmers in Quebec do business with Desjardins. Overall, the implementation of the Trans-Pacific Partnership will have favourable repercussions for Canadian agriculture, and in particular for the major exporting sectors.

We need think only of pork producers, cranberries, blueberries and maple syrup. Signing the agreement will lead to greater general competitiveness in the agri-food sector with its main competitors in the international markets. Notwithstanding the generally positive aspects of the treaty, some Canadian exporters could be disadvantaged by the new access it grants. We are thinking mainly about exporters subject to supply management, such as milk and poultry, who will experience new pressures on the domestic market.

The agreement in principle signed by Canada includes partial opening of agricultural markets under supply management to foreign countries. That openness will directly affect a number of sectors, and particularly milk. For the dairy industry, that comes on top of the chink created by the agreement between Canada and the European Union. Sectors under supply management are an important part of the Desjardins Group's farm credit portfolio, and we are also a major partner of many companies in the farm supply and food processing industries.

That is why it is essential, for all actors in the agricultural sector, including financial institutions like the Desjardins Group, that the compensation and financial support programs announced in the fall of 2015 be put in place. Financial compensation and the deadlines that the government wants to put in place for compensating for certain provisions of the TPP agreement will encourage a gentle transition and enable companies to develop strategies for adapting.

Without those measures, losses of markets will lead to declining revenues, which will have consequences for companies' capacity to meet their financial obligations and continue to expand. In addition, the shock could be particularly great for regions whose economic activity depends more heavily on agricultural sectors that are under supply management. It is important to note that 31 per cent of Desjardins Group service points are located in municipalities with populations under 2,000. There were be more negative impacts for us than for the other financial institutions.

Smaller companies and those that have recently been acquired by the next generation of farmers will generally be the most affected. The Desjardins Group wants to have a clear picture of its members' and partners' business environments so that it can manage its risks appropriately. As a cooperative financial institution that has a significant presence in agricultural regions and is active in farm credit, the Desjardins Group considers it to be important for the compensatory and transitional measures aspect to be clarified quickly.

As long as those measures have not been officially confirmed and put in place, all actors in the agricultural sector will have to make important business decisions against a background of uncertainty. Similarly, we urge the government to remedy the inconsistencies in federal legislation that allow goods to be imported by circumventing customs tariffs. This was the case in the past, for example, for certain poultry products, and the most recent example is diafiltered milk. That is why we believe that in addition to adopting compensatory and transitional measures that are necessary for the sectors...

(0805) [ English ]

The Chair :

Excuse me. If you'd just wrap up your final comments, I'd appreciate it.

[ Translation ]

Mr. Alain Gagnon :

We support the Trans-Pacific Partnership and we are persuaded that the government has the desire and the necessary tools to ensure that all stakeholders in the Canadian agri-food have a stable business environment that encourages the dynamism and synergies of agri-food exporters. Thank you, Mr. Chair, and members of the committee.

[ English ]

The Chair :

Thank you. We're going to move on to the Quebec Chamber of Commerce, represented by Mr. Aubut.

[ Translation ]

Mr. Alain Aubut (President and Chief Executive Officer, Quebec City Chamber of Commerce and Industry) :

Good morning. Thank you very much for your invitation. I would also like to thank the committee members for coming to meet with us in Quebec. It is very much appreciated. The Québec Chamber of Commerce and Industry is the second oldest chamber of commerce in Canada, after Halifax. It is firmly rooted in the community. It has more than 5,000 members, making it very representative. The economy of the Quebec City region is essentially based on services. Insurance and finance, together with tourism, account for nearly 40 per cent of the region's GDP.

There are also other industries such as technology, optics-photonics and other niches of excellence, but I will let my colleague tell you more about them. At present, our main issues relate to employment and access to the region. Quebec City, like the province of Quebec, is a small market. With globalization, we have no choice but to be present in as many global markets as possible, to maximize the growth of our SMEs, and obviously this calls for innovation and internationalization. Lifting tariff barriers is therefore very important and very positive for a large segment of companies in the capital region.

Canada is at the heart of a number of markets: the Atlantic, the east, the west, the north, the south with NAFTA, and Europe with CETA. Although the TPP countries are physically distant from us, this agreement nonetheless is a very important issue. Establishing tariff barriers will promote the development of our companies. Of course, it will expand access routes, with a view to the growth of our companies. Overall, government support for innovation is an essential tool. Innovation and marketing become essential tools to encourage companies to expand.

Tariff barriers help us, but that is only one factor among others that the government must take into account. This agreement is a very important lever that will eliminate barriers to expansion for our companies. We are talking only about the TPP, but overall, we are talking about eliminating or reducing 18,000 customs duties, and that is very substantial. We have just heard from a representative of the agri-food sector. The TPP will be more favourable for other economic sectors.

At present, in some markets, our companies are taxed as much as 30 per cent on innovative or luxury products, and this means that we are not competitive on those markets. Eliminating tariff barriers is what will enable us to access those new markets. This is a great opportunity for our SMEs, but we will have a challenge to meet, as I said earlier, in connection with information and marketing our products in those markets. We will have to know how to access those markets once the tariff barriers are reduced.

Ninety per cent of the entrepreneurial fabric of Quebec is composed of SMEs, that is, 98 per cent have fewer than 500 employees. Those companies do not always have easy access to information and to marketing methods to reach those markets. In Canada, we have Export Development Canada. We also have Canada Economic Development for Quebec Regions, which Mr. Lebel supported in Quebec. We have a number of tools, but they are not always accessible, and companies are not always well informed about them. The role of the chambers of commerce could be to inform them.

In order for us to be able to inform our companies, the government of Canada will have to facilitate things for us by simplifying the information, the niches, and the access to information networks. An innovative company is prepared to take advantage of the new markets and face the competition. We support preserving the supply management system in sectors that are less heavily represented in Quebec City itself, but are represented elsewhere in Quebec. In short, we are persuaded that eliminating or reducing tariff barriers will enable our networks and companies to export more products.

Once again, we must not forget communication, to inform companies about how to go about this, and support for marketing, which is a very important factor, as were all the research and development tax credits in the past. Now, were are in a marketing phase. We have world-class exportable products. It is very important not only to inform companies about the benefits, but also to support them in their marketing. Thank you very much for listening.

(0810) [ English ]

The Chair :

Thank you. We're going to move over to Québec International and Madame Lagacé.

[ Translation ]

Ms. Line Lagacé (Vice-President, Business Growth and Foreign Investment, Québec International) :

Thank you. Good morning. I assume that you do not have a lot of time to enjoy it, but nonetheless, I would like to welcome you to our beautiful city of Quebec. Québec International is the economic development agency for the greater Quebec City region. We support and stimulate the strong industries in the region. In February, Québec International had the opportunity to lead an information session about the TPP for companies in the region.

Last fall, we led a round table in Quebec City that included David Lametti, MP, to help people better understand the issues that companies in the region have to deal with in relation to the TPP. It is this perspective that I want to share with you this morning. The TPP undeniably presents a good opportunity for companies to expand their markets. The TPP will result in Canada signing free trade agreements with 51 countries, and this will amount to access to 60 per cent of the global economy. For companies located here, that is an opportunity that is not to be missed.

The agreement will also provide suppliers of Canadian services with more predictability by guaranteeing the present levels of access to the markets and future improvement of the existing measures in the various parts of the TPP. That means not only that our manufacturing companies, but also services companies, will be able to profit from it. Those companies supply services for construction, computer services and research and development. They have a reasonable presence in the national capital region. The TPP represents business opportunities for those companies.

Notwithstanding the opportunities presented by the opening of these new markets, nothing is yet certain for our companies. In a competitive situation where their environment is in a state of perpetual change, companies just prepare themselves well. These are words that you must be hearing just about everywhere at present, but it is what is of most concern to our companies. Apart from the opportunities presented by access to these new markets, our companies are facing greater competition. They must therefore be able to study the new markets and distribution networks.

We have to help them clearly understand the rules governing entry into those new markets. To that end, the government will have to establish a clear strategy and policy to support exports for companies, that goes well beyond promoting the opportunities that the TPP may present. I will come back to this a little later. Apart from the strategy to support exports, there is support for innovation, which was mentioned earlier.

That will also have to be part of the government's thinking, because, faced with this new competition, our companies will have to adapt their products, but will also have to be extremely innovative in the way they do things and try to be a little more competitive. We know that we are behind in this regard. Companies have to improve the quality of their goods and services and develop key competencies. The TPP presents opportunities in the realm of e-commerce, where we also have catching up to do.

If we want to enable our companies to access all of this, we will have to support them in incorporating a significant digital strategy in the region. There needs to be an export strategy and a strategy to support innovation. We consider the fact that the TPP will result in much greater openness or mobility for both people and capital to be of considerable interest. In terms of innovation, this openness will also enable our companies to better understand how to adapt a product to the culture and language.

In the case of video games, for example, it is extremely important to have a good grasp of the impact of these aspects. Mobility on the part of people will probably make it easier to understand these factors, for developing or adapting products.

(0815) [ English ]

The Chair :

Excuse me. Do you want to wrap up? You have a half a minute remaining.

[ Translation ]

Ms. Line Lagacé :

In conclusion, for all sectors, the stakes are high. We will have to reinstate real support for companies in relation to expanding markets and innovation. We are talking about an export strategy in terms both of export networks in the target areas and of understanding those markets beforehand. We also have to support them in protecting intellectual property, which is something of enormous concern to our companies. We must provide support on the ground to target distribution networks and networks of experts, and the business network in the target countries. Thank you.

The Chair :

Thank you. [ English ] We're now going to move over to Réseau québécois sur l'intégration continentale. We have Mr. Serinet.

[ Translation ]

Mr. Pierre Serinet (Coordinator, Réseau québécois sur l'intégration continentale) :

Good morning. The Réseau québécois sur l'intégration continentale is a broad network in Quebec that has been in existence and working on free trade agreements for 30 years. It brings together the trade unions movement, the women's movement, the student movement, the grassroots community movement and the human rights advocacy movement. It is also the oldest network of its kind, as a multi-sector network, in all of the Americas. More than one million people are represented in it. I am going to begin with my conclusion and then continue from the beginning, given the time we are allowed.

However, I must make two comments at the outset. The first concerns the nature of the consultation itself. I am not certain, but I have the impression that, like us, you are concerned about the format of the consultation. Because the agreement has already been signed, civil society finds itself faced with two options: approve the agreement or reject it. So this is a consultation in which it is difficult to make recommendations. That is somewhat unusual. My second preliminary comment is that we absolutely must look at the TPP in a broader context.

We see it precisely as a structure that is being put into operation. I therefore urge the committee, as the elected representatives of our society, to take a broad view of the TPP, and include the agreement with the European Union. There have also been no consultations on that agreement, and it has not been signed. It is therefore possible to modify its problematic issues. The Trade in Services Agreement and the agreement with China must be part of a comprehensive picture. I therefore formally urge the committee, today, to study the agreement with the European Union in depth.

Before getting to my initial conclusion, I would like to urge you to step outside the rationale imposed by the free trade agreements, which is to define winners and losers. After 30 years with NAFTA, that is the perspective that we have adopted. We have done studies on the subject, and it is clear that the free trade model does not work. We have to free ourselves from that straightjacket, the idea that free trade is good in itself. We have to rethink the principles.

We believe that we absolutely must base the discussion on principles of cooperation and complementarity, rather than on competition and taking markets by storm. I was surprised to hear the chamber of commerce representatives saying, yesterday and today, that the TPP led to opening up of the Asian markets and a reduction of tariffs. The fact is that, in the countries covered by the TPP, 97 per cent of tariffs have already been eliminated. That's right: 97 per cent.

When we hear that we are going to take the international markets by storm, we have to ask why our companies have supposedly not already taken those markets by storm. They tell us we are not ready, and they talk about information. Well, companies could have internationalized, but they have not done it. This brings us back fundamentally to the problem of the economic structure of Canada and of Quebec. That point has to be made. The TPP is a bad agreement in economic, social, political and environmental terms. It is a bad agreement because it is not a trade treaty.

It is a bad start, given that it is supposedly a trade treaty. What is it, then? The TPP is essentially an agreement that will enable a system of rules to be set up that limits the ability of states to legislate. It talks about non-tariff barriers, but that is a euphemism. In reality, it is about legislation, protecting health, education, public services, measures to actively stimulate the economy, and the environment: in other words, all of the standards there may be to regulate and guide investments. That is really what it is about.

You have heard a lot about investor-state, the mechanism by which corporations can institute proceedings. We will say it at the outset: this mechanism must be removed from the trade agreements. It has no business there. I will not go on about this. You have heard enough speeches on this subject. Public services must also be excluded from the negotiations. For the first time, culture is being put on the table, with a view to marketing.

(0820) Mandatory obligations for corporations have to be included, so we can return economic, social and cultural rights to their rightful place in the foreground, above the private rights that are already adequately protected by...

[ English ]

The Chair :

You've got to finish up, sir.

[ Translation ]

Mr. Pierre Serinet :

I will conclude by saying that we absolutely have to change our way of thinking, look at the dynamic, and acknowledge that we have a structural problem in terms of the economy, that we have had trade deficits for the last six years, focusing the economy on raw resources under the Conservative government, and deindustrialization. We have to be proactive when it comes to the economy, and, most importantly, we must not adopt a system of international rules that reduces our ability to legislate and regulate. I will be able to address the other issues in greater depth during the discussion. Thank you.

[ English ]

The Chair :

Thank you. We're going into dialogue with MPs right now. We'll start off with the Conservatives for five minutes. Mr. Lebel, you have the floor.

(0825) [ Translation ]

Hon. Denis Lebel (Lac-Saint-Jean, CPC) :

Thank you, Mr. Chair. Most importantly, we must not isolate ourselves. On the agreement with Europe, every province was actively involved in the discussions and negotiations. In Quebec, Pierre Marc Johnson took

part in all of the discussions and discussed all the issues, and Ms. Marois signed the agreement before making it public. On the TPP, when 11 trading partners, including the biggest one, our primary partner, the United States, want to renegotiate an agreement that has already been negotiated, we cannot exclude ourselves from the discussions. Let us remember that 72 to 75 per cent of our products are exported to the United States. It is therefore important to hear the opinions of the various stakeholders, but we have to make the decisions that are necessary so as not to be excluded from the agreement.

When the other 11 partners were negotiating, we had to be there; otherwise, we had no voice in it. And so we were there. I will now address the Desjardins Group representatives. I enjoyed hearing you. You are interested in the future of agriculture and in farm succession, as I am. I would like to hear your thoughts on the compensatory measures proposed and how they have been received by your customers. In addition, can you tell us how these compensatory measures might mean that the future can be secured for farmers?

Mr. Alain Gagnon :

We believe the compensatory measures are essential for some companies to survive. I am thinking particularly of the young generation, the ones who are just taking over the family farm and the ones who will do so later. Without protection against the new circumstances that result from the agreement, it will be difficult for the next generation to expand. That is why I said, in my remarks, that we had to know, fairly quickly, what the agreement provides, so we can establish strategies with that generation, a way of operating over the years to come.

We have to create an environment that will enable us to continue to support them, in terms of financing. The agri-food industry in Quebec is spectacularly robust, but we have to continue providing it with a business environment that enables it to invest, in particular by making relatively clear rules concerning changes like the ones proposed in the TPP.

Hon. Denis Lebel :

Mr. Aubut, I would like to make a comment. Yesterday, we heard from Stéphane Forget, who talked about the strength of the chamber of commerce network in Quebec. Of course, we agree on the need for strategies, for both marketing and innovation. There seems to be a consensus on this. I do not know whether the consensus extends throughout Canada. In Quebec, however, we observed two days ago, and you have repeated it right here in Quebec City, that there is no Quebec City vs. Montreal war of any kind whatsoever.

The chambers of commerce everywhere in Quebec form a very consolidated network that can prepare for the future by implementing marketing and innovation plans. My question is now for Ms. Lagacé. The question of labour mobility brings me to the workforce in Quebec. Our government, the previous Conservative government, always thought that every Canadian man and woman who was able to work should work, and find dignity in work. Of course, during times when jobs were scarce, we had to be able to take action and put people to work.

At present, the government wants to allow people to maybe live longer on employment insurance. How do things stand in terms of the work force and the demand for labour in the greater Quebec City region?

Ms. Line Lagacé :

In the Quebec City region, we are the advance guard. Our region has had an unemployment rate that wavers around 5 per cent for several years. Last year, it was 4.7 per cent, with a labour market participation rate of around 65 per cent, which means that workforce needs are the priority issue for all sectors in the region. At present, we are mobilizing to attract workers. We are even going on recruiting missions abroad to fill various positions. For information, we are on our 25th international recruiting mission.

This is an issue in various growth sectors, be they applied technology, for example, video games and information technology, or the manufacturing industry. We need welders, mechanics, and operators. This is an issue that has concerned us since 2008. Regardless of how the figures are presented, the situation will not be improving. We have to open ourselves up more to recruiting internationally to fill the labour needs in the region.

(0830) [ English ]

The Chair :

Thank you, Mr. Lebel. Your time is up. We're going to move to the Liberals for five minutes. Go ahead, Madam Lapointe.

[ Translation ]

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

Good morning. Welcome to our city. I am very pleased that you are joining us today in Quebec City. I would like to ask everyone a question. I would then ask each of you to answer briefly, so we have a chance to hear the witnesses in order. Mr. Serinet, a little earlier, you said this was a bad agreement in environmental terms. Would you like to clarify what you consider to be bad, in environmental terms, in the agreement? That would help me.

Mr. Pierre Serinet :

I will be brief. This agreement ties governments' hands when it comes to environmental policy. We know the Liberal government wants to be very active on that issue. However, there are several mechanisms that limit governments' ability to propose effective environmental measures. For example, the investor-state arbitration mechanism imposes restrictions and allows corporations to bring actions against a state if its policy does not suit them or if it reduces their profits.

There is also the perspective of the regulatory cooperation mechanism that already requires that states consult their economic opponents or adversaries to see whether certain measures would be restrictive in terms of their desire to do business. So there are some elements that do really restrict the ability to legislate on environmental issues.

Ms. Linda Lapointe :

Thank you. Ms. Lagacé, you said you had concerns about intellectual property. What are your concerns in that regard?

Ms. Line Lagacé :

At present, companies in the region operating in the video games field have concerns about the protection of intellectual property. The TPP contains provisions that are much more permissive for the transfer of electronic documents, information, or games. As a result, the companies are wondering about that protection. We know that, in some Asian countries, that has caused enormous problems concerning the protection of intellectual property. We therefore do not want that to be repeated in this case. It all turns on making the company aware of this protection and how to do it and establish it in the TPP, to enable companies to properly protect their intellectual property.

Ms. Linda Lapointe :

Thank you. Mr. Aubut, as my colleague, Mr. Lebel, said, we met with representatives of the chambers of commerce in Montreal. How could you help SMEs get assistance with exporting and innovation?

Mr. Alain Aubut :

For SMEs and what causes problems for them, there is theory and there is practice. We hear that exporting is not a problem. However, people who are on the ground, every day, tell us that customs duties on the order of 30 per cent prevent them from exporting to certain markets. When you are on the ground, every day, you have to realize this. How can we help them? We can do it by informing them. To do that, we have to have help from the government, to facilitate or simplify the approach to take, to get access to those markets. That is another aspect.

When we talk about customs barriers in very specific areas, whether agri-food or high value-added products, we have to be able to communicate, very simply, the way for our companies to proceed, to facilitate exporting. That is more or less the message we are sending.

Ms. Linda Lapointe :

I understand that you could play a role for both Québec International and the chambers of commerce. You could be a conduit for information or assistance.

Mr. Alain Aubut :

In addition, Québec International works in the strong industries, as we said a little earlier. In Quebec City, however, there are also the insurance, financial and tourism industries. We talked about the scarcity of jobs, earlier. That affects all areas, not just high value-added services. We must therefore be able to open up the city and give clients access to the city who may even be Canadian, not solely international. We therefore need to inform people about the measures and services already offered by the federal government.

Ms. Linda Lapointe :

Thank you.

Ms. Line Lagacé :

The companies are very aware of the fact that the government cannot be an expert in everything. Companies tell us that what they expected much more was that the government would try to target networks of experts in the different areas so they would have good support. We are very familiar with the network of international trade delegates. However, in this case, when we are talking about this kind of opening of the market, it is very difficult to develop that expertise. The companies' expectation relates much more to support and the ability to better target the experts.

For example, being able to bring in the big buyers, like Sony, in the video games field, rather than letting each company do its little bit and trying to enter that market, would probably help companies much more. This means involving the organizations a lot that are on the ground to support the companies.

(0835) [ English ]

The Chair :

Thank you. Your time is up, Madam Lapointe. We're going to move over to the NDP. Ms. Ramsey, you have five minutes.

Ms. Tracey Ramsey (Essex, NDP) :

Good morning. Thank you so much for your presentations. They all brought some cautions and some pluses to the TPP, which is something we've heard at this committee table often. I want to say to Madame Lagacé that we had Jim Balsillie from Research in Motion in last week, and he cautioned us about the TPP being signed, saying that there would be no Canadian innovation on that type of grand scale going forward. He has grave concerns as well that probably your members share. I'd like to go to Mr. Serinet. It's worth repeating that 97% of Canadian exports to TPP countries are already duty free.

We know this; we've heard it from many witnesses prior to you. The concern is that of the 30 chapters contained in this 6,000-page document, only six have to do with trade in the traditional sense that we hear those who are in favour of it sitting before us saying they would like to see. It's clear that foreign corporations will have more rights in Canada under the ISDS provisions than domestic corporations. Can you speak to us a bit about that? Of the 19 people who presented yesterday, I think 19 of them said to us that they have concerns around the ISDS. Can you elaborate on that for us?

[ Translation ]

Mr. Pierre Serinet :

Yes, of course. I am going to repeat what I said. Already, 97 per cent of the markets are open. We are told that this agreement will give us an opportunity to access markets, but this is false. In reality, a system of rules is being put forward that favours the commercial, transnational actors, the big multinationals. Some are Canadian; many are American. They are being given rights and privileges that are absolutely unacceptable.

They are being given direct access to an extranational tribunal that would be outside our own legal system, to bring action against a state when that state adopts a public policy that limits their opportunity to make profits. At present, there are more than 700 actions. Canada is the subject of the largest number, at 39. This affects a range of issues, including minimum wage, the environment, health care measures and judicial decisions. Transnational corporations are thus being given extreme tools and powers.

Individuals, and even our own domestic corporations, do not have access to these tools to bring action against another state. We have been familiar with this system since NAFTA came into existence, and we really have to put an end to it. In my opinion, this is a lost opportunity, in terms of the negotiation and the possibility of removing this investor-state mechanism from the free trade agreements. The TPP reproduces, extends and expands this mechanism, which gives extreme power to the multinationals. It is absolutely unacceptable.

[ English ]

Ms. Tracey Ramsey :

I'd also like to address the Desjardins Group, Monsieur Brun and Monsieur Gagnon. Monsieur Bourbeau was here yesterday from the Quebec Federation of Milk Producers. He brought the same message forward. He said they'd lose $400 million a year in their sector forever. The compensation will only sustain us for a period of time. Then, where will we be going forward after that 15-year period, if the compensation even exists?

[ Translation ]

Mr. Alain Gagnon :

Ourselves, we have confidence in industry. During the transition period, and once it is completed, mechanisms will have to be found for continuing to develop and improve the costs and establish better business plans, that will enable us to survive, once the compensation period ends. We believe that a transition period spread over 15 years will allow industry to adopt new methods. It will probably never make up the amounts that have been allowed for finding a balance, in the treaty, but the investment period will be long enough for it to adapt.

(0840) [ English ]

Ms. Tracey Ramsey :

I think his concern was the same as yours around the heritage farming: would future generations take it up after seeing those losses incurred? We really don't know at this point if the compensation package will even exist, let alone what it will look like. They're actually going into consultations again with dairy and supply management folks. You also brought up the issues of diafiltered milk, import controls, and broiler chickens. These are all direct threats as well to your clients. Can you speak to that?

The Chair :

It will have to be a quick answer.

[ Translation ]

Mr. Alain Gagnon :

When industry manages to get money from the supply management system, it is always a threat. It has direct repercussions on the producers' financial situation, especially those in the new generation, who are the most heavily indebted because they are taking over the family farm.

[ English ]

The Chair :

Thank you. We're going to move over to the Liberals now. Mr. Peterson, you have five minutes.

[ Translation ]

Mr. Kyle Peterson (Newmarket—Aurora, Lib.) :

Thank you, Mr. Chair. Thank you to everyone for being here today, and thank you for your instructive presentations. I have a few questions. My first question is for Mr. Brun or Mr. Gagnon. [ English ] You mentioned the agri-food sector and the agricultural sector. I realize, Monsieur Gagnon, that's your speciality, but are there other sectors that Desjardins sees as benefiting from the TPP. Is there a way to leverage any benefits that might be present in the TPP into those sectors?

[ Translation ]

Mr. Bernard Brun :

In fact, that is one of the aspects that we examined. We have to look back at the structure of the Desjardins Group, which is a financial cooperative. It is wise to remember that, of the major Canadian financial institutions, Desjardins is, ultimately, the only one that is 100 per cent Canadian owned. Our market is here, in Canada. The other aspects relate more to supporting our client companies that operate in various industries. Obviously, if they benefit from a free trade agreement, they are going to expand their business. There is an opening, and there will be benefits for them. Otherwise, the agricultural sector is really where we see dangers.

[ English ]

Mr. Kyle Peterson :

Thank you for that clarification. Monsieur Aubut and Madame Lagacé, I understand there are some similarities in your positions. You think that the TPP would be beneficial, but it seems to me that it would only be one tool, and you seem to also focus on the need for a robust innovation strategy to be able to effectively leverage the tool that the TPP might be. Can you elaborate on that? As well, are there ways to improve the innovation component, absent the TPP? Is there a way to tap into innovation and access new markets in that manner without the TPP?

[ Translation ]

Ms. Line Lagacé :

Certainly innovation is an issue for us, whether in relation to the TPP or to the tools that we put in place for our companies. At present, a company's positioning is primarily a result of its ability to position its service or produce well and to be innovative, whether in terms of pure management or of marketing. Obviously, in the range of services that can support a company, innovation is in the forefront. We are behind, in this regard, in Quebec and in Canada as a whole.

All of the actions taken when it comes to innovation are in the forefront, whether they involve marketing strategy or incorporating a digital strategy so that our SMEs are up to date. We also have to understand that our industrial fabric is composed of small businesses. I do not recall the exact figure, but nearly 80 per cent of them have 20 or fewer employees. That is an enormous percentage. If a company is to be able to position itself, it has no choice but to do it through an innovation process so that it can structure the process properly.

In order for companies to be able to expedite that process, they need programs to guide them and they need to be supported, both financially and in terms of expertise.

Mr. Alain Aubut :

On the question of the exporting process, 97 per cent of information transfers are not to small businesses. The big corporations have internal resources to work on this way of exporting, but SMEs do not have these internal competencies and resources. We are often told that this curbs exporting and innovation. That is why we talk about communication and informing these companies, including through our channels, about ways of doing things to facilitate access for them. There are laws, regulations and treaties, of course, but on the other side, there are SMEs.

Communication does not always flow between them, because the resources do not exist. That is why we believe the program can help them, as long as it is properly communicated.

(0845) Mr. Pierre Serinet :

What I find interesting in the discussion is that there are calls for an active policy, an industrial policy and innovation, but that does not have very much to do with trade agreements, given that the markets are already open. In the last ten years, under the Conservatives, there was a laissez-faire approach when it came to an active policy for innovation and industry. The agreements will limit the ability to adopt policies like that.

The TPP agreements and free trade with the European Union, for example, prevent focusing on results, that is, basing investments on maintaining expertise here, on creating jobs, and on certain segments of the labour force. An active innovation policy must have that freedom to legislate and regulate. Free trade agreements, as we know them, limit that ability. I agree with my colleagues that we need an active industrial policy when it comes to innovation, but the agreements limit that ability, and that is why we reject the TPP agreement.

[ English ]

The Chair :

We'll have to wrap it up and move on. That ends our first round, and we're going to start a second round with the Liberals. Madam Ludwig, please go ahead. You have five minutes.

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

Good morning. Thank you so much for your excellent presentations. They were quite diverse, although with somewhat of a common theme. In 1999 I started working in export trade, specifically in the area of trade training, so I know the points that have been mentioned here are quite significant. You had mentioned that 98% of businesses are SMEs. That is not unique to Quebec. We've heard that from across the country. In terms of the themes that have been mentioned, we're definitely starting to see some common themes.

How do you think we can best support these small businesses, increase their awareness of the trade policies, and help them work with corporate social development, which Desjardins has done so well with and for which you have been receiving awards? How to we bring that all up together to create a stronger community and a stronger country?

[ Translation ]

Mr. Alain Aubut :

For our part, we do an enormous amount of work to raise awareness of foreign markets, because Quebec, and, ultimately, Canada, are too small a market, in a context of globalization. Recently, Simons, which is a major retailer, explained the issues involved in globalization, particularly in relation to taxes on e-commerce. Our role consists in raising people's awareness. It is not up to us to develop the methods. Rather, it is up to the departments and governments to provide the information and enable companies to access it. We are a conduit for information and awareness.

We are told there are a lot of tariff barriers, even though that is not what we hear on the ground. This indicates a lack of information. Governments need to provide that information and tell us how we can manage to export our products as efficiently as possible.

Mr. Alain Gagnon :

In our sector, agri-food, we are privileged. Given the unique character of agriculture and the complexity of international regulations, there have been structures in place for several years to guide entrepreneurs. We need only think of the Groupe Export agroalimentaire, in Quebec, the food research institutes, or the Canadian Food Inspection Agency, which as a role to play in all this. In reality, a cranberry producer today can export their product to the international markets, even if the product was harvested on a family farm. That is one example, and I know there are examples in other sectors, but that is the kind of support that SMEs need in order for each of them to enter the markets.

(0850) Ms. Line Lagacé :

Even if we acknowledge the benefits of that kind of partnership, we also have to understand that an SME needs coaching to enter the international markets. The programs we offer may involve coaching for a period of 12 to 18 months, at a minimum. The first steps on the ground are really the end of the process, but first there has been coaching, which must be personalized and relatively long-term. Preparation is what will guarantee success for companies in a foreign land. In this case, we want them to avoid grasping at opportunities too hastily, and rather to prepare for opportunities.

That is the stage where companies need ongoing support. Here, we are talking about training in relation to information, the first steps taken into another country, and access to business networks. All of that has to be brought to bear. Financial support is also necessary to provide companies with security as they move forward.

[ English ]

Ms. Karen Ludwig :

Many of the communities in my riding are similar to yours. You mentioned that many of them are communities of less than 2,000 people. I'll give you an example, and I'm wondering if it's similar here. The companies that have been involved in export over the long term tend to weather the storms, they typically branch out and hire the services of other local companies, and they tend to be the ones that are most likely to give back and promote the environment to others, maybe because they can. Is that the situation here in Quebec as well?

The Chair :

I'm sorry, but you're not going to have time to get that question in. We can do a yes or no. We're going to move on now to the Conservatives and Mr. Van Kesteren for five minutes.

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

Thank you, Chair, and thank you all for being here. It's wonderful that we're able to be part of this. We obviously could have asked you all to come to Ottawa, but one thing I find very important when we travel is that we get a glimpse of the place we're in when we're asking these questions. The bus ride from Montreal to Quebec was a real eye-opener. I'd never done that before, and I was talking to somebody about that. What struck me was the incredible number of SMEs groups that popped up along the corridor. I drive from Chatham to Ottawa, and we have nothing on you. This is simply amazing.

I see a culture of entrepreneurship that I've always known existed in Quebec, but to really see it is astounding. Because I'm a bit of an agriculturalist as well, I was watching the farms, and I see you're even reclaiming some of the land at this point. This tells me there's a market for your...I'm suggesting that you're into corn, soybean, and wheat here as well. You have the heat units to do all that, and your farms are getting bigger, and they're looking for markets. I saw some pork operations, some poultry operations, and a huge dairy operation along the way as well. I'm not looking for....

In a court of law, they'd say I'm leading the witness, and I guess in a sense I am. Having seen all that, I think it must be important for your farmers to access markets. Am I correct in that assumption?

Mr. Alain Gagnon :

Quebec has diversified agriculture. It's important for us to be able to export products such as pork and also to preserve the dairy sector. The agricultural market around the world is exploding with the increase in the population. You're right in saying that agriculture is also moving north with the changing climate. The potential for agriculture in Canada and Quebec is fantastic. What we can do to preserve the productions that are under supply management is important, but TPP has also brought an equilibrium into production that will allow us to export and expand.

(0855) Mr. Dave Van Kesteren :

We'd heard from credit unions in the past that the FCC was, as we say, mowing your grass. Is that an issue here in Quebec as well? Are you having some competition from Farm Credit that you feel is...?

Mr. Alain Gagnon :

Farm Credit is a fierce competitor here, as it is elsewhere in Canada. It's a little less in Quebec historically, because we have a competitive provincial program, but still it's a fierce competitor here.

The Chair :

You have a minute and a half left.

Mr. Dave Van Kesteren :

The other thing we've heard repeatedly is the question of dairy. I mentioned yesterday that dairy is very interesting. I have a son who would love to get into dairy, but he simply can't afford the quota system. Is it realistic for an operation that would have, say, 39 cows, in today's age? I need an answer because I'm an auto dealer, and a number of years ago our manufacturer made me spend a million dollars just to do a facelift. That's reality today. The result was that we sell many more cars now than we did 10 or 15 years ago.

Is it realistic for a farming operation to expect to stay in the same environment that his grandfather or father was in, or are we moving forward? Is that a reality that we have no control over?

Mr. Alain Gagnon :

I think we can preserve the family farm, and we do—

Mr. Dave Van Kesteren :

I'm not suggesting preserving the family farm, but is the family farm changing?

Mr. Alain Gagnon :

It is changing, definitely. It is getting bigger, but there's still a place for smaller units, sometimes with diversified products. We do non-relative farm transfers every day. It's more complicated. It's a little bit less easy to do, but we do it every day. I think that in Canada, especially with supply management in dairy—that's your question—we can have the best of both worlds. We can preserve the family farm and we can also offer an environment where if someone wants to milk 500 cows, he can do so.

The Chair :

Thank you. We only have enough time for two short slots. We're going to go to Madam Lapointe for three minutes.

[ Translation ]

Ms. Linda Lapointe :

Thank you. The discussions we are having are very interesting. You certainly all know that a presidential election is underway in the United States. It will eventually have an impact on the situation in Canada. Mr. Serinet, earlier, you made a comment, that we should be more proactive economically. I would like you to clarify your thinking.

Mr. Pierre Serinet :

We have to acknowledge that, over the last two years, in the manufacturing sector, the Canadian and Quebec economies, among others, have had problems. This is confirmed by the trade deficits. As I was saying earlier, for four years out of six, we have had a trade deficit. The TPP, in itself, promotes imports of value-added manufactured products and promotes exports of natural resources. Agriculture is one of those resources, but there are also oil, gas, and so on. The agreement does not stimulate sectors where innovation takes place and does not promote industrial policies.

We can actually be much more active and proactive in developing an industrial strategy. I think this is what we have to work on, on a national level. However, these are also societal choices. We have to decide what elements are part of a system in which they will interconnect. That is why I suggested, at the outset, that we move away from the winner-loser concept. We have to set aside the idea that one side's loss is the other side's gain, that there are winners and losers, pork producers versus dairy producers. We need to rethink an entire strategy.

I believe that the various actors, not just economic actors, but also social movements, have to be able to participate in the discussions.

Ms. Linda Lapointe :

So, if we were to go back to the negotiating table, for whatever reason, you would want to see a change made, to include economic innovation.

Mr. Pierre Serinet :

We have to give ourselves some latitude when it comes to industrial policy. We have to reserve a right to regulate, a right that the TPP takes away, or remove the investor-state mechanism in the agreement in its entirety. It cannot just be given a new coat of paint. We also have to preserve our levers, our social pillars, like public services and culture. We have to exclude those areas from the agreement, because they should not be bargained away. We believe these are assets that contribute to the dynamic. We have to avoid adopting a commercial rationale when it comes to public services and social services, culture, and the environment. They must be preserved.

(0900) Ms. Linda Lapointe :

If the changes you want to see were adopted, we could then consider ratifying the agreement.

Mr. Pierre Serinet :

Some elements would have to be radically amended, and we could participate in the discussion of the aspects to be changed. For one thing, I think that the entire system of excessive protection granted to foreign multinationals is particularly an issue to be raised.

Ms. Linda Lapointe :

Thank you. Unfortunately, I have not been able to hear all of you.

[ English ]

The Chair :

Thank you, Madame Lapointe. We just have three minutes left and we're going to give the time to Mr. Lebel. Go ahead, sir.

[ Translation ]

Hon. Denis Lebel :

What I would like us to do is compare the figures, from 2005 to today, in relation to investment in research and development, but that discussion would take too long, Mr. Serinet. So I will just say this: in order for 97 per cent of the tariff barriers not to apply, we have to be a party to the agreement, because otherwise, they will be reinstated.

Mr. Pierre Serinet :

I can answer that, though. We are exchanging opinions. You know that we already have trade agreements. We have agreements with Chile, with Mexico, with Peru, with Singapore...

Hon. Denis Lebel :

If we are not a party to the agreement...

Mr. Pierre Serinet :

No, I'm sorry. Those agreements are already in place. You know that we have now been operating under the NAFTA rules for 25 years. The United States is our biggest partner. The countries I just mentioned already cover 76 per cent of the market. For the rest, there are Vietnam, New Zealand, Malaysia, Brunei and Australia. For Japan, in the automotive sector, massive imports are being promoted, and that will have a major impact on jobs. The markets are already 97 per cent open, under previous agreements. So there is no economic cost to not signing the TPP.

Hon. Denis Lebel :

That is your answer, Mr. Serinet. Thank you, but I do not agree. Quebec's economy is changing. We are increasingly looking to globalization, and infrastructure is extremely important. We have announced $50 million in funding for the airport. We are also meeting with the people at the Port of Quebec later today. We have provided $60 million to develop the Port of Quebec. Mr. Aubut, what is the importance of these major infrastructure components to the future of the Quebec City region?

Mr. Alain Aubut :

You mentioned infrastructure, but in terms of innovation, the government has supported the National Optics Institute, the INO.

Hon. Denis Lebel :

We are talking about $9 million per year over five years, for 15 years now.

Mr. Alain Aubut :

That's right. In the case of optics-photonics, nearly 100 per cent of sales are outside the country, in Asia, in particular. Actually, they are selling pieces of something, so for the manufacturing sector, that is very good for the region. This is, indeed, innovation. There are other sectors as well in research and development, for example, the water industry. At Laval University and the Institut national de la recherche scientifique, the INRS, there are extraordinary projects in this field. When we talk about globalization, we have to look at all opportunities for innovation.

We need to be familiar with the products that have been developed, but, once again, we have to go back to information. We have to determine what channels are the easiest and simplest. With the help of the INO, companies have developed in Quebec that are known around the world, because of their very innovative, high value-added products. I think we can do the same thing in other niches. Since we are talking about infrastructure, I would like to say something about another project. We met with Mr. Desjardins-Siciliano to discuss an HFT in the in the Quebec City-Windsor corridor.

I don't recall who comes from Windsor, but I met him a little earlier. Accessibility and mobility for people is also a very important issue. We are talking about the Trans-Pacific Partnership, but the issue of people's mobility is also very important and the government has to continue investing in infrastructure.

[ English ]

The Chair :

Thank you. That wraps up our first panel for this morning. I would like to thank the witnesses for coming here early and getting us started. We had a very lively conversation. It was great. Now we are going to break for 10 minutes, and then we will be back with our second panel.

The Chair :

Good morning, everyone, and welcome to our trade committee. Our committee is doing a dialogue and a report on the TPP and how it affects Canadians. We've been travelling across the country. We did the western provinces and now we're doing Quebec and we're doing Ontario tomorrow. We'll be doing the Atlantic provinces and reaching out to the territories in the fall. With us today we have Fruit d'Or. We drove by your place yesterday, and hopefully we can go in and see it. We also have the pork producers and the poultry producers with us, and I think the manufacturers are with us as well.

Each group has five minutes for a presentation, and then we have a dialogue with the MPs afterward. We will begin with Fruit d'Or. Go ahead, sir.

(0920) [ Translation ]

Mr. Sylvain Dufour (Vice President, Sales, Marketing & Innovations, Fruit d'Or) :

Good morning, Mr. Chair. I would like to thank the committee members for having me this morning. It's a pleasure to appear before you, on behalf of Fruit d'or, about the Trans-Pacific Partnership. In 2000, my company, Fruit d'Or, was founded in Villeroy, in the Centre-du-Québec region—a region where cranberry production has developed tremendously. Thirty-five years ago, it was practically a collection of vacant lots. Today, a visitor would find that nearly 70 cranberry producers have set up operations in the area since then. FFruit d'Or specializes in berry processing—specifically, cranberries and blueberries.

The products in greatest demand from us are dried cranberries and dried blueberries. We also produce blueberry and cranberry juices and concentrates. We already sell our products to some 50 countries, so we rely on exports for our company to grow. More than 85% of our earnings are from exports. We export to Asia, the U.S., and Europe—pretty much everywhere. Fruit d'Or has more than 225 employees. They are the people who work in our plants and offices. If the company's producers and suppliers are added to that count, we are talking about nearly 500 jobs directly tied to exports and market development.

I can tell you right now that Fruit d'Or supports the Trans-Pacific Partnership. Our industry, berry production, faces protectionist measures, including taxes, on export products. On frozen blueberries, in particular, you'll find such measures in Japan, Vietnam, Malaysia, Australia, and New Zealand. The taxes on processed products are sometimes quite high. Malaysia, a country we're already exporting to, is an example of this. The United States and Chile are our main competitors. Like Canada, they also produce dried cranberries and dried blueberries.

The importing countries already have free trade agreements with Chile and other countries. Earlier on, I was chatting with the people from Desjardins Group, and I gave them an example of what this can entail. Last year, we lost one of our biggest European customers, because of the free trade agreement that Chile has with Europe. We are subject to a 17.6% tax on every pound of dried cranberries we send there,

whereas Chile is tax-exempt. As a result, Fruit d'Or lost a customer that accounted for $1.7 million in annual sales. Unfortunately, there wasn't much we could do to offset a 17.6% tax. We can find efficiencies, but there's a limit to what can be done. Quebec agriculture, as a whole, is a topic of frequent conversation. It's a well-known fact that the dairy industry is very big in Quebec. I, myself, come from a family of dairy farmers. My brother is a dairy farmer. We often have lively debates about opening up markets versus keeping the protection structures currently in place.

One of the arguments I often bring up is that we have to consider what Quebec agriculture will look like in 10, 15, or 20 years. Will dairy continue to be the driver of agricultural development, or will other kinds of farming take over that role? The Quebec cranberry industry is a good illustration. Thirty-five years ago, there was no such thing. Today, it employs more than 2,000 people in the Centre-du-Québec region alone. So I think there's an opportunity for many businesses to achieve success in foreign markets, if as many constraints as possible are eliminated.

As far as my own company is concerned, each distortion or barrier that limits access to foreign markets poses its own set of problems. In some countries, such as Vietnam, we have trouble selling cranberries because buyers don't know what they are. It's the first time they are seeing the fruit. If we go to Japan and talk to Japanese people about dried blueberries, it's a different story altogether. There, we hear stories dating back to the Second Word War. Apparently, when American fighter planes were shot down by the Japanese, a basket of blueberries was always found in the wreckage.

So the Japanese figured that the pilots had these blueberry baskets because blueberries were excellent for eyesight. That was something I learned in Japan.

(0925) That said, as a Canadian executive with a company specialized in berry processing, I can tell you that the image of Canadian products, and of the wide open spaces we live in, gives us a head start in relation to many international competitors. I've been talking to you about the little Quebec wild blueberry, but, as I mentioned, the good old cultivated blueberry is ubiquitous pretty much worldwide and is competing against mine in the marketplace. So, having products—

[ English ]

The Chair :

If you want to finish up, you have a few seconds.

Mr. Sylvain Dufour :

Yes. I'll just take 30 seconds. [ Translation ] Actually, I was just going to say that having products that enable us to compete on equal terms, without trade barriers, means we're quite capable of taking our place and succeeding in international markets.

[ English ]

The Chair :

Thank you, sir. We're going to move to the pork producers for five minutes. Go ahead.

[ Translation ]

Mr. David Boissonneault (President, Les éleveurs de porcs du Québec) :

Mr. Chair, honourable committee members, good morning. My name is David Boissonneault, and I'm the president of Les éleveurs de porcs du Québec. I'm here with Ms. Leruste, who is in charge of communications with our farmers. My organization represents 3,300 pork producers throughout the province. The Quebec pork industry employs 26,500 people province-wide, generating $2.5 billion in economic spinoffs, with benefits for all of Quebec's regions. Quebec is the leading pork-producing province in Canada, accounting for 40% of the country's total production. We represent many slaughterhouse operations in Quebec.

Our collective marketing system enables us to slaughter 100% of the hogs raised in Quebec, generating added value and a strong value chain for our regional economies. In all, Quebec exports 70% of its production. Like my colleague also said, we rely heavily on exports. Exports from Quebec account for 45% of the value of Canadian exports. Over the past five years, Canadian pork has been exported to more than 125 countries. That's 9% of the global trade in pork.

Pork meat is Quebec's most exported bio-food, with exports amounting to $1.45 billion in 2015—far ahead of sectors like chocolate, soybeans, and maple syrup. In fact, the pork sector generates a positive balance of trade comparable to that of the lumber and hydroelectricity sectors. In this regard, free trade agreements are crucial to the vitality and dynamism of our industry. That is why Les éleveurs de porcs du Québec welcomes this trade agreement, which encompasses 800 million consumers and 40% of the world economy.

According to various analyses conducted for the Canadian Pork Council, the TPP will mean more than 4,000 jobs and $300 million in exports. If, instead, the agreement is not ratified, our exports and jobs could decline. A recent study, published by the C.D. Howe Institute in April 2016, shows that pork is one of the bio-food sectors that would benefit the most from such an agreement. Thanks to the agreement, Quebec pork breeders will be able to compete on equal terms with their American competitors. In my opinion—and I agree with my colleague from Fruit d'Or in that respect—this is an important consideration.

If we're to be competitive, it's essential that we have such tools. One of the world's major markets is Japan. Already our second largest market, it represents 18% of our pork meat exports. The agreement should allow the Quebec pork industry to maintain its capacity to export pork meat to Japan on terms competitive with those enjoyed by the U.S. industry, our main competition. All this would also help us position ourselves advantageously in relation to countries that are not part of the agreement, like Brazil and Denmark, which are pretty ferocious players in the export marketplace.

I am thinking, among other things, about Olymel, which has offices in several Asian cities; F. Ménard, which has just invested several million dollars in a plant so it can export more to Japan; Lucyporc, which exports 90% of its production to Japan with its famous Nagano Pork; and Aliments Asta and Viandes DuBreton, which also have a major presence in the export marketplace. It's worth noting that Japan recognizes the high quality of Quebec pork. The most valuable cuts are exported there, making it the most lucrative market for Quebec pork exporters.

Furthermore, the TPP would help build business ties with other member countries, such as Vietnam, a market with 90 million consumers. Vietnam has the second highest consumption of pork per capita, after China. Based on FAO and OECD projections, Asia's economies are set to grow considerably, and in so doing, they're expected to increase their pork consumption by 14% between now and 2020.

In terms of tapping these markets, Canada, as a founding member of the TPP, would be able to negotiate the terms of entry for other fast-growing Asian countries interested in joining—countries like the Philippines, Thailand, Indonesia, and perhaps even China. I was hoping to make a few other points, but I'll wrap up. Let's just say that it would be hard to overstate how important exports are to us.

(0930) A sector such as ours depends on trade agreements and market access in very concrete ways. I believe I've made that case with you today. But the government must understand that a comprehensive strategy is needed. Market access is important, but in order to seize the opportunities and maximize our industry's potential, we must have all the necessary tools. Our industry needs major investments in areas like risk management, research, and animal health and welfare. We have some catching up to do in that regard.

It's important to work as part of a comprehensive strategy, and within the framework of the agreements, but it's also important for the government to implement strategies that support the development of our pivotal industry players. Thank you, Mr. Chair.

[ English ]

The Chair :

We're going to move to the poultry producers. Please go ahead.

[ Translation ]

Mr. Pierre-Luc Leblanc (President, Les Éleveurs de volailles du Québec) :

Thank you very much. I appreciate this opportunity to express our point of view on the Trans-Pacific Partnership agreement. Our organization, Les Éleveurs de volailles du Québec, brings together 814 chicken and turkey producers in Quebec. In Quebec alone, our industry employs 25,000 people, accounting for nearly $2 billion of Quebec's GDP. Our organization understands that the signing of a trade agreement like the TPP means major economic spinoffs for Canada. And we have always supported the initiative.

At the same time, we have a supply management system, and we've been consistent in our requests that the Canadian government limit the damage that the TPP could cause to supply management. Canada imports much more chicken than the countries that have ratified the TPP, including the United States. That has an impact on the prospects those these countries can offer. We feel there's a question of fairness here. It's important that the environment in which the agreement is implemented be fair.

If the agreement that has been signed is ratified, foreign access to our chicken market is expected to increase from 7.5% to 9.6%. For turkeys, it will increase from 3.5% to 5.5%. This additional access will have major economic consequences for Quebec and Canadian poultry farmers. It could result in the loss of 2,600 jobs and cut $175 million from our GDP. That would clearly be a major blow to the poultry industry in Quebec, and all other parts of Canada. But the problem could be attenuated by eliminating the circumvention of import controls and implementing a compensation package.

Agriculture Canada announced such measures on October 5, 2015. Specifically, the government announced safeguards and much more stringent border controls. In fact, if those controls are applied, the financial impact on Canadians will be much less serious.

Ms. Martine Labonté (Director of Economic Affairs and Programs, Les Éleveurs de volailles du Québec) :

A bit more specifically, I would add that the news release we received from Agriculture Canada on October 5 contained various commitments regarding three import control circumvention techniques. The first commitment is about the duties relief program. The program enables Canadian processors to import, process, and re-export products if it's done within a four-year period. Currently, 96 million kilograms of chicken come through under that program. That's equivalent to 9% of our production, and it's a major issue for us. We suspect that a portion of those products are not re-exported.

A program intended for re-exports already exists. It's called the import for re-export program, or IREP. It's truly intended for supply-managed products. So there's a duplication here, in our view. Removing supply-managed products from this program would really be a disengagement, and we urge the government to maintain its position. The circumvention involving so-called spent chicken imports is also a very serious problem for our industry. Here is what's happening. Chicken is coming into the country as "spent fowl", when the importation is, in fact, fraudulent.

Roughly 10% of our production is imported as "spent fowl." A portion of those imports is legitimate, but another portion is not. Based on the statistics at our disposal, in 2012-13, Canada supposedly imported more spent poultry breast meat than the entire U.S. production of such meat. This is a strong indication of fraud.

We therefore ask that this government, in keeping with the announcement made in the October 5 news release, truly put mandatory certification in place for spent poultry imported to Canada—it needs to be certified—and that the government use the DNA tests developed to identify which chicken is spent. The other import control measure that is needed should address specialty defined mixtures—that is, the use of sauces or dressings in products containing 87% chicken or less.

A few businesses are using a subterfuge: they put more than 13% worth of sauce in chicken wing boxes so the product is no longer subject to the same tariff. That's another problem the government should take care of. I will allow Mr. Leblanc to conclude.

(0935) Mr. Pierre-Luc Leblanc :

I'll conclude quickly, because I realize time is running out. Poultry farmers understand why the TPP was signed. We know the government has worked hard to minimize the impact on supply management. Like our colleagues, we know the agreement will stimulate job creation, and we are not opposed to that. However, to minimize the negative repercussions, border controls will be very important. They can reduce the adverse consequences and create jobs in Canada, which is very important to us. We are pleased with this agreement, but we seek to reduce the negative repercussions through import control. Thank you.

[ English ]

The Chair :

Merci . Thank you very much for the presentations. Our last presenter is from the manufacturers and exporters of Quebec, and we have Monsieur Tétrault. Go ahead, sir, for five minutes.

Mr. Éric Tétrault (President, Manufacturiers et Exportateurs du Québec) :

Thank you, Mr. Chair. [ Translation ] Honourable committee members, Mr. Lebel. Manufacturiers et Exportateurs du Québec—MEQ—is pleased to speak today on behalf of its 900 members in Quebec and more than 20,000 Quebec manufacturers. As you know, manufacturing is the largest sector of Quebec's economy, and Canada's. It accounts for 12% of GDP. In Quebec, it employs 550,000 well-paid workers in jobs that add value. Now that our natural resource sector cannot act as the driver it was just two years ago, the manufacturing sector's contribution is even more essential to the Quebec and the Canadian economy.

It's quite simple. Quebec's manufacturing sector cannot prosper if it's confined to a small economy such as ours. To grow, we need to export. And we are already doing that. More than half our production goes elsewhere. Sometimes, we're a part of an American manufacturing chain. We also export finished and semi-finished goods worldwide. It's important to understand that manufactured goods account for 75% of all Quebec exports. Although the U.S. market remains a priority for us, more and more Quebec manufacturers are considering opportunities elsewhere in the world.

So we obviously support agreements that will allow the free flow of goods, provided those agreements give our manufacturers access to foreign markets on a basis equal to the opportunities our competitors have to penetrate the Canadian market. On a strict reading of the TPP's provisions, that access is being given. I should also mention that our support for agreements of this kind is predicated on the assumption that they're not brought in merely to support the resource sector, adding obstacles to current agreements such as the one we have in place with our U.S. and Mexican neighbours.

Not surprisingly, MEQ and its national organization, Canadian Manufacturers & Exporters, have asked for and supported the implementation of the Trans-Pacific Partnership. We are the main advocates for this kind of agreement in Quebec, and you can count on us to continue to be so in the years ahead. The PowerPoint presentation that I've attached sets out the numerous opportunities for Quebec, which you no doubt know by heart. We do have some reservations that I'd like to discuss today. First, there are two reservations about the agreement itself.

Obviously, we're concerned about U.S. protectionism as reflected in the Buy American Act, notably with respect to American public procurement. That is the first reservation. The second reservation is that we would have wanted the international tariff reduction phase to follow the same timeline applicable to American manufacturers, and for an effective mechanism to be put in place to counter currency manipulations that pose a medium-term and long-term threat to us.

We saw that sort of thing this year with China, and we hope that the space we carve out for ourselves will be safe from manipulations of that kind, engaged in by certain authorities and countries. Those are our reservations about the agreement itself. I would also like to share some important reservations we have about the choices we'll be making here, in Quebec and Canada. If we choose well, we will undoubtedly find it easier to overcome the obstacles. So the reservations I'm about to mention are not about the agreement itself, but about the choices facing us in Quebec and in Canada.

I want to emphasize that, although these treaties are positives for Quebec and Canada, they are only a framework. We need to know how to take advantage of that framework. The main prerequisite for that is a strong local manufacturing base. But Quebec does not have that. Compared to businesses elsewhere in the world, Quebec businesses are not particularly competitive. Quebec is ranked tenth in Canada for productivity, and that's mainly because our processes aren't innovative enough. They're not sufficiently automated or robotics-based. And we don't have all the skilled labour we need to be able to count on.

We are therefore concerned that this government has made strong commitments to the knowledge economy and green technologies, without, first and foremost, supporting its traditional manufacturing sector. (0940) [ English ] I will conclude on this, Mr. Chair. [ Translation ] That is why my first reservation is very important. If we want Canada to be able to profit from these agreements, we have to establish a much stronger manufacturing base and resolutely commit ourselves to a culture of innovation, the likes of which has never really been seen before, either in Quebec or in Canada.

My second reservation is about the fact that we have to provide our entrepreneurs with much more education. We therefore need much more support from Canadian authorities than they have provided up to now. We must be able to go and see people in the field. If we want to be competitive, it will take more companies, which will have to be larger, more innovative and more ambitious. It is a role that we are prepared to play in collaboration with the government. [ English ] I could go on for hours on this, Mr. Chair, but since you want me to conclude, I will finish here for now.

The Chair :

Thank you for the presentations. Before we open up for dialogue with MPs, I have a question for the manufacturers. When we drove up yesterday, there was a big complex outside Drummondville where they make buses. What percentage of what they make there would be exported out of Canada?

Mr. Éric Tétrault :

I'd say about 50%.

The Chair :

Would most of that go to the United States?

Mr. Éric Tétrault :

Yes. Overall, 70% goes to the United States. Half of our members are exporters. There is a reputation in Quebec that we are big exporters, that we're world-class exporters, but that's not the case. Seventy per cent of our exports go to the United States. Of these exports, most are $1 million or less ion value. That means we're not exporters per se: we're part of fabrication chains in the U.S.A. Mexico, which is gaining on Canada in technological advances, is the number two exporter of products to the U.S.A, so it's not going really well for us. We need to become exporters.

I think Quebec and Canada have a good chance in the next five to 10 years to become world-class exporters. Never in our history have we had such a good window. We'll be part of 51 agreements. Canada and Quebec will have agreements with Asia-Pacific, the European Union, and the United States. The U.S.A. doesn't even have an agreement with Europe. We have a great opportunity to become a world-class exporter. I wouldn't believe it if in 10 years' time we hadn't gained some advantage from it. First and foremost—

The Chair :

Thank you. I'm over time. I appreciate it. The members will be saying I'm taking part of their time. You'll have lots of time to expand on that point. We're going to start off with questions. Go ahead, Mr. Lebel.

(0945) Hon. Denis Lebel :

That's not only the U.S.A., but America. [ Translation ] I will repeat what I said yesterday. Mr. Tétrault, I will come back to you in a while, but those who put food on our tables deserve all our respect. They make it possible for our families to grow up with food that is safe. I want to congratulate you for what you do every day. I know that it is not easy and that the challenges are great. Certainly, I know that the blueberries you were talking about, Mr. Dufour, are the best. I will not ask where they come from. Let's say that they may come from New Brunswick. Ms. Ludwig was telling us about that yesterday.

We know how big the challenges are. My question goes mainly to the hog producers and to Mr. Dufour. How do you react to the fact that the sectors under supply management—milk, chicken and eggs—are being provided with compensation and other sectors are not? I know that compensation is important, Mr. Leblanc, I will get to you later. Has this caused any squabbling in the world of agriculture? How has it gone over?

Mr. Sylvain Dufour :

My answer is no, it does not bother me at all. Since we started our company, we have always been in a free market situation without necessarily having support or protection programs. What I think is important is to protect the existing rural fabric. Existing companies who have benefited from these protections have been very major partners in rural communities. So, if only to help them make the transition that has to be starting, I feel that we should let those companies do so as smoothly as possible, as Mr. Gagnon from the Caisses populaires, I think it was, said earlier. If those measures allow them to do so and to soften the blows, I am completely in favour and I see no problem with it.

Mr. David Boissonneault :

We have always supported balanced negotiating. Canada is in negotiating mode and I feel that we have to negotiate these agreements strategically. As I was also saying, our global vision has to be a strategic one. How are we going to roll it out and how are we going to profit from it? It is all very well for us to sign all the agreements we can, but if we are not strategic in terms of our agricultural policies, we will not be able to benefit from them. Every other country has a global strategy: the United States, the European Union, every country has strategies. It must all form a whole and not be one single tool.

There must be a number of tools. Supply management and more protectionist policies are part of Canada's global strategy.

Hon. Denis Lebel :

So even people who are not affected by supply management agree on the compensation measures that have been put in place. We have heard that on a number of occasions. Mr. Leblanc, I know that it is important for you, as milk and egg producers, to receive confirmation about what is going to happen as quickly as possible so that you know which direction to go in. In the former government, we moved things forward to confirm everything and show our desire to secure the future. I also hope that it will happen quite quickly. We are hearing a lot of talk about diafiltered milk and pizza kits from a while ago.

We talked a lot about pizza kits yesterday. Pizza producers, remember, were putting on a bit of pepperoni, a bit of paste and a lot of cheese and exporting the whole thing without it being subject to export rules. So they were not selling what they were calling pizza kits at the time, they were selling cheese. We fixed that. Mr. Leblanc and Ms. Labonté, for you, by way of comparison, are the consequences of what is happening at the borders as bad as or worse than the diafiltered milk situation?

Ms. Martine Labonté :

We estimate that about 6% of chicken production comes into the country by fraudulent means.

Hon. Denis Lebel :

At one point, when I was in the Saint-Hyacinthe area, we talked about one of your local producer's famous brochettes. Is that still a problem or has the situation been resolved?

Ms. Martine Labonté :

It was resolved through the import for re-export program. You were talking about pizza kits. But on the subject of specially defined mixtures, we are currently dealing with the same problem with the sauce and the wings I was mentioning earlier.

Hon. Denis Lebel :

Thank you. Mr. Tétrault, we are fascinated by your sector. We know that you have to export. Aircraft to you means the C Series, but you are not talking about purchases. Our F-18s have come to the end of their useful life. We hear Bombardier talking about the C Series, but Pratt & Whitney, Héroux-Devtek and all the other companies are talking to us about acquiring fighters, such as the F-35, for example. No matter, it is being studied right now. They want to be part of the supply chain and they would prefer to be bidding on parts for 3,000 aircraft rather than for 60. I would like to hear what you have to say about that.

Mr. Éric Tétrault :

First, I will tell you that we are in favour of any assistance that can be provided to the Quebec aerospace sector. This is because, besides Bombardier, our major manufacturer, there is a cluster of about 200 SMEs in Quebec, providing some 40,000 well-paying jobs. You can understand the manufacturing sector's interest in supporting an industry like that. We will support any national strategy designed to strengthen the aerospace sector. We will also do so for the energy sector.

People here may find it a little suspect that Manufacturiers et Exportateurs are supporting the Energy East project, but there is a reason for that: it comes with about 200 to 300 manufacturing contracts. So we always have to be in the background thinking about the degree to which it could strengthen Quebec's manufacturing sector. We must always remember that we form the base of the economies of Quebec and of Canada. We may not provide the 20% of GDP that we did 10 years ago, but 12% to 15% is still the biggest share of our economy.

(0950) Hon. Denis Lebel :

Mr. Tétrault, I would like to hear what you have to say about—

[ English ]

The Chair :

Your time is well over, Mr. Lebel, well over. We're going to move over now to Madam Lapointe for five minutes.

[ Translation ]

Ms. Linda Lapointe :

Good morning, welcome to all the witnesses. I am the only member of Parliament from Quebec. No, Mr. Lebel is here too. I am very pleased to see you here with us. My constituency is Rivière-des-Mille-Îles. We have a number of manufacturers there. In agri-food, we have St-Hubert, le Commensal, Plaisirs Gastronomiques and O'Sole Mio. We are not far from Bombardier. In terms of the manufacturing sector, we certainly have to study the TPP properly. We have met with other producers who talked to us about reciprocity, but you did not.

You did not mention what is happening in other countries that affects us, what our country requires to raise chickens, and other things. Standards are different, so are things like antibiotics, for example. Do you see a problem there? My question is as much about berries—which I find very interesting, it's great—as about chickens. I will let both of you answer the question.

Mr. Pierre-Luc Leblanc :

When we are talking about reciprocity in terms of poultry, I go back to the time during the agreement when the quality of chicken in Canada was being praised to the heavens. In Canada, we know that the Canadian Food Inspection Agency is renowned for its work. The quality of our meat is very high and our standards are very strict. With the Americans, we often find similar standards for slaughterhouses and the packing of the product. However, it is different on the production side. We have to change the litter for each batch. That means additional costs.

With reciprocity in terms of the quality of the product, things are really different. Basically, products approved in the United States are not approved here. There are differences with some products that we are not allowed to use. You can talk about antibiotic-free chicken, but antibiotic-free chicken in the United States or the European Union—where there is no question of it nowadays—are two different categories entirely. They are allowed to use different things. So the situation is not fair, and it is certainly not fair when it comes to labour and the climate. The jobs here are good quality jobs.

Those who work in the poultry sector are well paid, but, in the United States, people working in the sector are often illegal workers from Mexico. The fact that we are not competitive is not only attributable to the quality of the product, but it is also attributable to the demands in terms of labour and the climate. Things are different.

Ms. Linda Lapointe :

Thank you. Do you have anything to add?

Mr. Sylvain Dufour :

With fruits and vegetables, each country continues to impose certain standards that have to be met for things like health, hygiene and pesticide residue. With exports to Europe, we see the Americans allowing the use of more and more new pesticides that are prohibited over there. So, with fruits and vegetables, we are seeing a two-tier system developing because Canadian products have to comply with a lot of restrictions. Producers would like to have the same ability, in order to increase their yields. But, with exports, we are realizing that those restrictions can be extremely advantageous.

More and more, American processors are losing their access to European markets because they are accepting products treated with pesticides that are banned in Europe. So the standards we have adopted here provide us with an advantage. However, we are seeing that, in terms of labour and energy costs, and so on, we are not on a level playing field. However, I believe that it always balances out. A Canadian product subject to health standards that are much higher than elsewhere gains a great advantage internationally, especially in highly developed markets.

Ms. Linda Lapointe :

Thank you. This is very interesting. I have a question for you, Mr. Tétrault. Earlier, you mentioned that our SMEs were not sufficiently developed, innovative or ambitious. What role could you play in helping them become more open to the global market?

(0955) Mr. Éric Tétrault :

I thank you for your question because it deals with the main message I want to deliver today. We have to be much more innovative. Internationally, we have to have better strategies than our competitors. For example, we could act as intermediaries and go into the trenches to meet entrepreneurs to tell them about the various government programs. I have been president of Manufacturiers et Exportateurs du Québec for a year and a half, and I can tell you the only way to have a real dialogue with producers is to go and meet them on their own turf to inform them about all the federal government has to offer.

Unfortunately, not enough is known about it in Quebec. Mr. Lebel, who was the minister responsible for Quebec in the previous government, certainly knows what I am talking about. The whole range of government services needs to be better known, including the already very significant support provided by federal authorities to stimulate exports. In Quebec, for example, I am certain that the CanExport program, which the current government has just renewed, is not at all familiar to most people. It would be a good idea to make it better known.

We also have to make an effort to educate our entrepreneurs so that we can help them to be more ambitious. Perhaps for historical reasons, Quebec is more risk-averse than Ontario or other parts of the country. Our entrepreneurs have to be introduced to that culture. We have to help them to become ambitious. We have to help them to take a longer view. I believe sincerely that we are just about to get there. The older generation of entrepreneurs is ready to retire. They are going to be giving up their companies soon.

Young people are already taking a global view, while current owners are dreaming about retirement, not about innovation and expansion strategies, which cost millions of dollars. I feel that everything is in place for Manufacturiers et Exportateurs du Québec to act as an intermediary and to go into the field introducing much more ambitious government programs. That is probably a full-time job for the next two years, but we are ready to do it. It is our role, our mandate to go and meet entrepreneurs, to help them take a longer view and to provide them with better support. I have several suggestions, but—

[ English ]

The Chair :

Thank you. We have to move on. You are way over time, so we are going to have to move on to Ms. Ramsey of the NDP for five minutes. Go ahead.

Ms. Tracey Ramsey :

Thank you very much. Mr. Tétrault, I share your passion for manufacturing. I have been an auto worker for 20 years down in southwestern Ontario, so I know what we have to offer to Canadians and how unfortunate it has been that under the previous government there was no manufacturing policy. No attention at all went to resources. I think we are sitting here talking about all of these missed opportunities because there are gaps that exist.

We have heard of many programs, and there is a deep irony in talking about having government export education and mentoring programs, innovation policy, agricultural policy, and manufacturing policy, because if we do any of this, in signing the TPP we could find ourselves being sued under ISDS provisions for being protectionist. If we try to improve the way we access these markets, we could in fact end up not having access to those markets and paying taxpayer money in great sums, up in the billions now, to multinational corporations that are saying they are losing potential in our markets.

To me, this is a huge imbalance in where we are focusing. We have to look at how we can improve what we already have and more forward. My question will be for Ms. Labonté and Mr. Leblanc. If we don't fix the import issues that we currently have in the poultry industry—you talked about spent fowl, and there are broiler chickens—if these controls are not put in place and we open up our markets further, what position could we potentially be in? If we don't fix this before we sign such an agreement, how could your industry further suffer when these new countries have access to our market?

[ Translation ]

Mr. Pierre-Luc Leblanc :

That is a very important question. For us, it goes beyond the economy and deals with the survival of the system. We have a system and rules in place. We negotiated the TPP in good faith, but we do not accept it when participating countries ignore those rules. That undermines our credibility. Then what? Perhaps American diafiltered milk is a different situation, but, in terms of poultry, the previous government did the work. Customs documents had been prepared and the Americans agreed to fix the situation. We could have agreements with them because the forms we need are ready.

The economic impact is very significant. We say 6%, but that is the 6% we are aware of. In reality, it is likely closer to 10%. The effects are very harmful right now. We know how important employment is, even here in Quebec. In this case, jobs would be created right away and they are free jobs, jobs with no subsidies. If everyone just played by the rules we have played by, Canadian jobs would be created immediately. It is important for the sector and the Americans agree. Honestly, we do not know why the problem of illegal imports has not yet been fixed.

This is completely different from the diafiltered milk situation. The Americans are ready to put measures into place and the agreements have already been reached. All we have to do is act and well-paying jobs in Canada will be created immediately.

(1000) [ English ]

Ms. Tracey Ramsey :

I think the caution is that here we are getting ready to enter into another huge trade deal without having fixed the problems we already have and without addressing these issues you're all presenting to us. Of course, we've heard from pork and from berries, and we heard from maple syrup yesterday, so we understand the importance of access to those markets. Are there non-tariff barriers that exist for you? We've heard of harmonization and phytosanitary mismatches, if you will, across the sector. I'm sure it applies to poultry as well. Can you speak to any non-tariff barriers that you see in place that would prevent us from being able to access the market?

[ Translation ]

Mr. David Boissonneault :

For the TPP, non-tariff barriers are certainly less important. As for the agreement with Europe, we had reservations, because we did not know what the constraints would be. I would like to respond to one part of the question that Ms. Lapointe asked earlier about reciprocity. It is all about competitiveness. We can put rules in place and often they give us an advantage. Mr. Leblanc mentioned just now that the Canadian agency is doing a good job and is earning us an unparalleled reputation around the world. But, if rules are put in place, it must be part of a global strategy.

We must make sure that we remain competitive and that the competitiveness is measured. If we do not get an advantage or if our choice is made on purely social grounds, there must be measures to assist. We are not opposed, but it must be part of a global strategy.

[ English ]

The Chair :

Thank you, and your time is up, Ms. Ramsey. We're going to move over to Mr. Peterson for five minutes. Go ahead, sir.

[ Translation ]

Mr. Kyle Peterson :

Thank you very much, Mr. Chair. Ladies and gentlemen, thank you for your presentations and your comments. I have some questions for you. According to Global Affairs Canada, one of the main advantages of the TPP for Quebec would be duty-free access for most agricultural products, including maple syrup and cranberry products, as well as expanded market access for some other products, including pork and chicken. [ English ] Are your sectors or industries in a position to capitalize on the increased market access that will result from the TPP?

[ Translation ]

Mr. David Boissonneault :

In our case, we already have studies that confirm the potential of such an agreement and the favourable conditions for exports to Asia. I could not say it earlier because we ran out of time, but we support the TPP as well. We know that the United States and Japan must ratify the agreement for it to come into force. On our side, we want Canada to be proactive in bilateral negotiations with the various countries, in order to be ahead of the game and to have access to the markets. Under better circumstances, we will be able to increase our exports.

Mr. Sylvain Dufour :

I would say that the situation is about the same for the berry industry. In fact, if we look at the blueberries and cranberries, those two sectors are growing. Cranberries have experienced a weighted average annual growth of over 12% in the past five years. We are constantly looking for new markets. Somewhat the same thing is happening with the Quebec wild blueberries, which are becoming more and more popular internationally. We receive requests but, unfortunately, in recent years, due to weather conditions, we have been lacking some resources to be able to supply the markets. However, the growth potential is there.

(1005) The Chair :

Thank you. Mr. Leblanc, you have the floor.

Mr. Pierre-Luc Leblanc :

Things are different with chicken and turkey. We have difficulty in developing export markets. Right now, 7% of Quebec's production is exported. The province exporting the largest percentage of its production is Saskatchewan. I think it has exhausted all the possibilities in the system. As for us, as I said earlier, we have to factor in the competition, the labour and the climate. In the case of chicken, when a facility starts up, you have to heat the site at a high enough temperature first. For example, when starting to brood chicks, the temperature should be 88 degrees Fahrenheit, 38 degrees Celsius.

Our winter climate is very harsh. So many factors make it difficult for us to develop export markets. It's hard for us to compete. That said, we don't want to shut the door, but we certainly need help to develop those markets. We know that we can create jobs through exports. We would like to have a positive balance. If the import rate is 9%, our export rate should be at least 9% to balance the books at the very least. Achieving a positive balance would be good for the Canadian industry.

Mr. Kyle Peterson :

Thank you. I also have a question for Mr. Tétrault. According to Global Affairs Canada, the TPP will eliminate customs duties on aerospace products in TPP member countries. Since the Asia-Pacific region is supposed to be responsible for about half of the growth in air traffic over the next 20 years, removing customs duties in this area would lead to an increased number of business opportunities for world-class aerospace companies in Quebec. Is that true?

[ English ]

Mr. Éric Tétrault :

Yes.

[ Translation ]

Mr. Kyle Peterson :

Should the coming into force of the TPP lead to an increase in direct foreign investments by TPP countries in the Quebec aerospace industry?

[ English ]

Mr. Éric Tétrault :

Yes, but it's no problem for our industry to be able to import such technologies from Asia and the Pacific. The important thing is that we have equal access to market. I am fully confident in Bombardier's knowledge and ability to be able to import their own technologies in the Asia-Pacific region. That said, it's one thing for us to have such agreements that can put Bombardier in a good position to be able to export, but there is a lot more to it. It's not only about free trade. It's about Canada's position versus Iran, let's say.

The Americans and the Russians were better prepared than we were to take advantage of those markets. They've been there for the last year and a half. For diplomatic reasons—and I'm not an expert—Canada was slower to lift the ban on Iran. That really didn't help Bombardier. Free trade is one thing, but we have to have a global initiative from the government. You have to be able to put Bombardier in a position where it can compete.

The Chair :

Thank you. That ends the first round. We're going to start the second round with the Liberals. Madam Ludwig, you're first up, for five minutes.

Ms. Karen Ludwig :

Good morning. Thank you very much for your presentations. I represent a riding that has maple syrup, berries, fish, dairy, services, and confectionery in very small communities. I hear the message loud and clear. The first thing is that we need to do better at preparing companies for export, but would you say that we also need to do a better job of preparing businesses to do business within Canada?

[ Translation ]

Mr. David Boissonneault :

The Canadian market definitely remains a major market. In recent years, we, the Éleveurs de porcs du Québec, have developed a strong enough marketing strategy for our products to find their way back on the shelves of grocery stores in Quebec, Canada and the United States. It must be mentioned that the United States accounts for almost 50% of our export market share. You are right, we need to be masters in our own house before taking on the world. We do have a good foundation here. We also have ample resources, which ensures that our industry can expand to every corner of the world. It can set itself apart from other suppliers. So we have to seize the opportunities.

(1010) [ English ]

Ms. Karen Ludwig :

Just adding to that, then, I think we have a good network within Canada for business, and certainly looking at the international market. I'll tell you an example. I often hear people say the greatest competition is the company next door,

whereas in terms of trade training, we often would argue that sometimes your greatest competition is your greatest ally. Is there a network within Quebec that's working not only within the province nationally but internationally for co-production, co-marketing, co-distribution?

[ Translation ]

Mr. David Boissonneault :

In the pork sector, we work a lot as an industry. We have developed a strategic plan, called our Table filière, which we introduced in 2014. Our marketing is also done collectively. We bring together all the products and we meet the requests of our processors. I wouldn't say that our coordination is perfect, but we strive to be as coordinated as possible, to be effective and to quickly address requests. Just think of the issue of ractopamine screening. Our system allows us to respond quickly to such requests. Again, in various ways, we work as an industry, either in terms of markets, competitiveness, or the health and welfare of our animals. We have global strategies.

Ms. Karen Ludwig :

Thank you.

[ English ]

Mr. Éric Tétrault :

I'll try to answer your question as well. Yes, commerce has been a north-south thing historically for Quebec and Canada, but we have to be able to do east-west as well. I thought this country was built on the east-west railway. I'll answer in a sentence. Yes, it's more difficult for some of our manufacturers to do business in Edmonton than in Washington. That is not normal. I see two reasons for it, and they are two challenges for us. First of all—and you're all aware of this in the commission—inner protectionism is hurting us, and we need to work as much on that as on opening boundaries throughout the world.

Second, I would say that knowledge about business opportunities between Quebec and other provinces is very low. For example, let's go back to Alberta. These guys are great food producers, but they're not food transformers. In Quebec, we're food transformers. There should be lots of business between Quebec and Alberta. We're missing a lot of opportunities within this country. Fortunately, I speak for Quebec; I don't speak for Canada this morning. We consider Canada as being an export destination as well, but the numbers are not so great. We export lots more to the United States than in the rest of the country.

To me that's not normal.

The Chair :

Time is up, so we're going to move on and split some time, I think. Who's up first? Go ahead, Mr. Lebel.

[ Translation ]

Hon. Denis Lebel :

I will introduce my question by first saying that it is not the government that decides what the global market trends and consumer habits will be. No government is able to decide to sell less lumber or fewer cars. The supply and demand on the markets determine that. We have a number of national strategies in which business people participate. Respect for jurisdictions is one of the many important aspects for us. In Canada, we are working with the provinces and territories, which have their own strategies. We are there to oversee everything, but in compliance with the respective jurisdictions. Mr.

Tétrault, over the past couple of days, we have been repeatedly hearing that nothing is being done in commercialization to help our exporters. Could you tell me what your organization does to support Quebec exporters?

Mr. Éric Tétrault :

We work hard on the ground with them. Over the past year, they were able to recognize that, in the innovation chain, from research work to the commercialization of processes, Quebec manufacturers are weak. There is also marketing, [ English ] all the marketing issues around it. (1015) [ Translation ] Historically, we are manufacturers, not sellers. This is explained by the fact that most Quebec manufacturers, since they have not exported in the past and were happy with the local market, have not always had to market their initiatives.

You will probably not like this part of my answer, but I think we should let time do its work. Furthermore, if we do not pick up the pace, if we do not have more mentoring programs and if organizations like ours do not properly handle them, we'll miss the opportunities that come our way. We have a few years; we thought we had 10 years or so to prepare. Suddenly, with the signing of those agreements, we have a national emergency. We are ready to do so, we are ready to go, but we must recognize the weaknesses facing Quebec right now.

Hon. Denis Lebel :

In terms of the circumstances, Mr. Dufour stated that it was difficult to sell certain products in countries that do not know the products. In Quebec, companies did not have that vision.

Mr. Éric Tétrault :

I could even give you an example. I love examples. In the Lower St. Lawrence, I saw a 73-year-old entrepreneur who owns all the technology he needs to make artificial bridges, bridge replacements, in four days. I think he is sitting on a fortune, but he's just not interested in commercializing it. He wants to sell his business and move on. All of Quebec is like that. It is an unparalleled, world-class inventor, but it is not interested in making money with its invention, in innovating and exporting abroad. [ English ] That in a nutshell is Quebec's problem.

Mr. Randy Hoback (Prince Albert, CPC) :

Actually, I think that's a Canadian problem. As you look at the generations getting older, who's going to come in and buy these companies? You talked about Buy American and the threats that presents. That's one of the issues, I think, in bilateral agreements that are of concern in enforcing that agreement. In a multilateral agreement like TPP, you've got eleven countries standing behind you. In the example of country of origin labelling in the beef and pork sector, Canada and Mexico were able to use the WTO and also use each other to get resolution in that dispute. How important is the multilateral settlement?

A lot of people say that we don't need them, that we have bilateral trade agreements with all these countries, so we don't need a multilateral one.

Mr. Éric Tétrault :

Sorry, I didn't get your question at the end.

Mr. Randy Hoback :

Oh, it's the translation, I guess. I just used the example of the importance of.... You brought up Buy American.

Mr. Éric Tétrault :

Yes.

Mr. Randy Hoback :

You used the example of how a multilateral system gives you the ability to enforce a bilateral agreement or that bilateral agreements are sometimes enforced, especially when you've got a David and Goliath situation between Canada and the U.S. I used the example of country of origin labelling. When we had issues with pork and beef going to the U.S., Mexico and Canada were able to pair up and actually get results in that situation.

Mr. Éric Tétrault :

Yes.

Mr. Randy Hoback :

Can you just briefly explain why a multilateral agreement like TPP is important for countries like Canada?

Mr. Éric Tétrault :

Well, I'm not sure it's going to do the job. I mean, let's be honest, it's not going to be the end of protectionism in the United States, certainly not in the next two years, because of the political context. We have to be aware of that.

Mr. Randy Hoback :

But you're going to have more results with a multilateral agreement with eleven countries, as opposed to just Canada versus the U.S.A.

Mr. Éric Tétrault :

The answer to your question is yes.

The Chair :

Are you finished? I've only got half a minute if you want to make a comment.

Mr. Randy Hoback :

In the pork sector, when we've seen country of origin labelling come into play, how did that affect your sector? Again, if you don't have these agreements in place, if you don't have a dispute-settling mechanism in place, what would you look like today if you didn't have that in NAFTA?

[ Translation ]

Mr. David Boissonneault :

The advantage of trade agreements is that they establish the rules of the game. For us, it is key to set up a familiar business environment in which to invest. There can certainly be vested interests. There are more strategic players who will use protectionist strategies, but having trade agreements allows for rules on which we can rely to ask for the situation to be corrected. This is the advantage of a trade agreement; it is not perfect, but at least it provides a foundation for the rules.

[ English ]

The Chair :

Thank you. We're going to have to move on. We're going to have two short sessions. Madam Lapointe, you have three minutes. Go ahead.

[ Translation ]

Ms. Linda Lapointe :

The discussions we are having this morning are very interesting. We could certainly go on for a long time. In my riding, a lot of concerns were shared with me regarding the transfer of companies. People are close to retirement and have very good businesses. You are surely aware of La Petite Bretonne, in Blainville. That company exports to a lot of places in the world. The owner of the company is close to retirement, and she is not the only one. Other businesses are in the same situation, and that is a cause for concern. If we had the opportunity to make minor changes to the TPP agreement, what changes would you like to see? My question is for Mr. Tétrault first.

(1020) Mr. Éric Tétrault :

As I said, the lowering of tariffs must be equally profitable for both Canadian and American manufacturers. Right now, the American manufacturers have a slight advantage. I would like to see a better defence mechanism against currency manipulation exercises. Honestly, it's true that the TPP strengthens NAFTA and it's true that it provides a window to South America, but Asia needs to be included too, first Japan, but also Australia. Australia must not be overlooked. It has a free trade agreement with China. First, I don't think we could stay out of the agreement.

I think the U.S. has tried to start establishing the rules of trade in the Asia-Pacific region before China, but we must continue to use the momentum, so that China can join us some day in accordance with the provisions that will have already been set out in the agreement. However, we fear that China is manipulating its currency again and continues to do dumping. We cannot benefit from such an agreement if those issues are not resolved.

Ms. Linda Lapointe :

Do you have anything else to add?

Mr. David Boissonneault :

I agree with what Mr. Tétrault said because we have the same concerns about that. Let me turn to another issue. You talked about the next generation. In addition to the trade agreements, the government must have a comprehensive strategy. It must be supported by other policies. Other levels of government and other departments have a role to play in supporting businesses, so that we can fully benefit from those agreements. For our part, we are thinking about research and risk management programs that will support investments and the next generation in our industry.

We are coming to the end of a generation of entrepreneurs and farmers who started their business in the 1970-1980s. Now, there is a period of consolidation during which young people co