EVIDENCE

Standing Committee on International Trade NUMBER 019 1st SESSION 42nd PARLIAMENT Friday, May 13, 2016 Le vendredi 13 mai 2016 Standing Committee on International Trade CANADA [Recorded by Electronic Apparatus] EVIDENCE May 13, 2016 Committee Edited Evidence * Table of Contents * Number 019 (Official Version) Official Report * Table of Contents * Number 019 (Official Version) Témoignages * Table des matières * Numéro 019 (Version officielle) 19 13 05 2016 2016/05/13 08:00:00 House of Commons Comité permanent du commerce international Standing Committee on International Trade CIIT Chair The Honourable Mark Eyking 42 1

(0805) [ English ]

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

Good morning everybody, and welcome to our committee meeting. We are the international trade committee from the House of Commons, and we are a very active committee. We have a lot on our plate since Parliament resumed. We have softwood lumber issues. We are finishing up on the European agreement, and right now we are up to our eyeballs on the TPP. What we have decided on our committee is to travel the country and visit all the provinces and territories, and listen to people, companies, stakeholders, consumers, workers, and everybody who is going to be affected by the TPP agreement.

Everybody will be, one way or another. Whether you're buying a product at a local hardware store, or whatever you're doing, it's going to have a big impact, and it is a big trade bloc. That is what we are doing, and we're going to be doing that throughout the year. In the new year, we'll have the report in to the House of Commons for a debate. On that note, we have with us members of Parliament from right across the country. We have Mr. Hoback and Mr. Ritz from Saskatchewan. From Ontario, we have Mr. Van Kesteren, Ms. Ramsey, Mr. Peterson, and Mr. Fonseca. Ms.

Ludwig is from New Brunswick, and Madam Lapointe is from Quebec. We have a broad group from across the country. I am Mark Eyking. I am the chair, and I am from Cape Breton, Nova Scotia. The way we do it is we give each panellist or group roughly five minutes to do a presentation, and then we'll have dialogue with the members. On our panel this morning we have the Canadian Association of Importers and Exporters, we have Magna International Inc., we have the Toronto Regional Board of Trade, and we have the United Food and Commercial Workers Union of Canada. We will start off with Ms.

Nott for the Canadian Association of Importers and Exporters.

Ms. Joy Nott (President and Chief Executive Officer, Canadian Association of Importers and Exporters) :

Thank you very much, Mr. Chairman and members of the committee, for giving I.E. Canada, the Canadian Association of Importers and Exporters, which is far too long to say, so we call ourselves I.E. Canada, the opportunity to testify this morning. I.E. Canada is a national trade association that's been speaking on behalf of Canadian importers and exporters for almost 85 years. Next year is our 85th anniversary. Our members include importers and exporters, Canadian manufacturers that of course both import and export, wholesalers, distributors, retail importers, and supply chain service professionals.

Our membership in total employs over one million Canadians and generates $270 billion in annual revenue to contribute to the Canadian gross domestic product. We represent some of the largest importers and exporters in Canada as well as some small and medium-sized companies. Our members import all sorts of different commodities, everything from coffee beans to car parts. In fact, sitting next to me is Magna International, which is a member, and also happens, as a company, to be the chairman of the board of directors for I.E. Canada. In brief, I.E. Canada members overall strongly support the TPP agreement.

That being said, there are a few considerations that must be taken into account whenever Canada considers signing an agreement of this magnitude. It becomes even more important when you look at an agreement like TPP that has so many different economies all at once in a single agreement, especially with the likes of Japan and the United States. In the business world, supply chains are tightly integrated. There is very little distinction, when you're in a boardroom, between an import and an export when strategizing on where supply chains are going to be positioned.

Rather, companies view their supply chains as a continuous flow of materials, components, and finished goods back and forth through the supply chain until the finished goods reach the customer. It's the continuous flow of materials and goods that companies base strategic decisions on, rather than discrete import or export processes. Traditional government policy, however, sometimes does not match that business reality.

Imports and exports are generally viewed as two distinct operations when you talk about government policy, where imports are generally viewed as being bad for the economy, and exports are being viewed as good for the economy. In today's reality, an import and an export, when you're in a boardroom, is a single transaction. That distinctive thinking, when you start getting down into the weeds about an import being bad for the economy, and an export being good for the economy, actually hurts the Canadian economy.

The reality in today's integrated supply chains is that most manufacturers and most exporters cannot achieve what they need to achieve without importing at least something, some sort of material or whatever. When private sector companies look to trade internationally, they develop integrated strategies that disregard whether an international movement is an import or an export from a policy position. They look to the end results that they're seeking to guide their decisions, and do not develop import trade strategies without considering export and vice versa.

The Chair :

There's a minute left.

Ms. Joy Nott :

One of the things we think is important for the panel to understand is that right now there seems to be.... I was saying to the chair, in a chat before we got officially started, if you had asked me to make comments on TPP about 18 months ago, I think my comments from member feedback would be slightly different than they are this morning. There seems to be a high level of skepticism right now amongst our members that TPP, or in fact any of the major free trade agreements that are on the table, such as CETA, are likely going to come to fruition. The P word, the protectionist word, seems to be on the air globally.

Whether that's justified, I'll leave to others to decide, but it seems to be the feeling that's where we're heading. I think a lot of it is based on what's happening in the U.S. primaries right now, and some of the things they are seeing and hearing on television, and I think it's leaving people with an impression. The final comment I'll make is that normally we don't deal with interprovincial trade. We focus on imports and exports at the national border and international transactions. We're hearing things about the state of current trade interprovincially in Canada.

The New Brunswick beer story is so widely known that it's striking how many people have focused on that. The thinking is if we can't get that right, bringing TPP, and layering TPP onto New Brunswick beer.... The final comment I'll make is that I've had some members surprisingly say to me, “I long for the good old days when the tariffs were high, non-tariff trade barriers were few, and trade was transparent. I paid a lot more in duty, but I knew exactly where I stood then.

Non-tariff trade barriers, which are often opaque, are much harder for me to understand what I should be doing.” With that, I thank you for your time, and I welcome your questions.

(0810) The Chair :

Thank you very much. You did well on your final comments. We're going to move on to Magna International. Mr. Johns, go ahead, sir, for five minutes.

Mr. Sean Johns (Director of Sustainability, Energy and Government Relations, Magna International Inc.) :

Thank you. I'm probably going to be briefer than Joy was. Good morning, Chair, and honourable members. Thank you for this opportunity to appear before the committee to comment on the Trans-Pacific Partnership agreement. I'm pleased to share Magna's perspective on the impact of this agreement and how it relates to our business in the automotive parts manufacturing sector. Magna International is a leading global automotive supplier with 306 manufacturing operations, and 92 product development engineering and sales centres, located in 29 countries.

We have over 147,000 employees, and approximately 20,000 of those in Ontario, all focused on delivering superior value to our customers through innovative products and processes, with an emphasis on world-class manufacturing. Our product capabilities include producing body, chassis, exterior, seating, powertrain, electronic, vision, closure, and roof systems and modules, as well as complete vehicle engineering and contract manufacturing. In 2015, our global sales amounted to $32.1 billion.

In anticipation of the pending changes the Trans-Pacific Partnership agreement could present, Magna is currently assessing how this might enable us to achieve new benefits, while also building an understanding of the compliance implications and evaluating the necessary tools that would enable us to meet these new requirements. Overall we expect the net impact of the agreement on Magna's consolidated global operations to be neutral.

Through increased competition and reduced regional value content rules, it is expected there will be additional pressure on automotive parts manufacturers within Canada where facilities are producing products that are low value, labour intensive, cost sensitive, and can be officially transported for export purposes. The impact on small and medium-sized enterprises with limited access to capital and challenged mobility may be greater than that on Magna, as we currently have a global operating footprint with an existing presence in many markets.

With this flexibility to shift our operations to remain competitive, we will continually evaluate the optimal locations to manufacture. Although investment decisions are not based on local content requirements or tariffs alone—and for us the quality of infrastructure, access to skilled talent, ease of doing business, and proximity to our customers and suppliers is far more important—trade agreements and tariff barriers could be elements that factor in decisions on where new facilities and programs are located.

While Magna is headquartered here in Canada, and has significant operations in the province of Ontario, the location of our production facilities is highly dependent on the requirements of our customers. The broader implication for our business will be the impact of the agreement to these OEMs and any resulting reassessments of sourcing strategies to optimize supply chains.

It is critical to the automotive parts manufacturing sector that the Trans-Pacific Partnership agreement does not substantially detract from Canada's competitive position and rather strengthens its abilities of supplying products into expanding global markets. I'll save further comments for our question session.

The Chair :

Thank you, sir. We're going to move on to the Toronto Region Board of Trade, and Madam De Silva.

(0815) Ms. Jan De Silva (President and CEO, Toronto Region Board of Trade) :

Thank you, Mr. Chair. Good morning, honourable members. Welcome to our very rainy city today. It's a good thing we're inside taking comments. I'm pleased to have this opportunity to present to you on behalf of the more than 12,000 businesses and 120,000 professionals that make up the membership of Toronto Region Board of Trade. For us, TPP is critical to the growth and success of our region, and to our country, because it provides our businesses access to high-growth markets.

Having personally spent 15 years running Canadian companies in Hong Kong and China, I've experienced first-hand the tremendous impact and opportunities that growth markets create for Canadian companies. More trade translates into more jobs and a higher standard of living for the people of Toronto region and, quite frankly, for many of the people in the markets that we're trading with. Firms engaged in global markets have a remarkable economic effect. They're more innovative, more productive, and generate more jobs and higher wages.

As The Conference Board of Canada reports, every $100-million increase in exports creates approximately 1,000 new jobs at home. In Toronto region the diversity and strength of our industry mix is one of our greatest assets. We're home to a larger share of traded clusters in our economy than New York, Boston, and Chicago. In 2012, traded clusters accounted for 38% of Toronto region's total employment, compared to 33% in Canada as a whole.

From human health sciences, food and beverage manufacturing, automotive, aerospace, ICT and advanced manufacturing, the region has the right assets to succeed in a global economy. The TPP will eliminate tariffs on almost all of our key exports and provide access to new opportunities in Asia Pacific. If ratified, Canada will be the only G7 country that is part of NAFTA, potentially CETA, and TPP, giving us access to 60% of the global economy. TPP alone will give Canadian businesses preferential access to an economic zone covering 40%, or $28.5 trillion of the global economy. Now, the agreement is one thing.

It's what do we do to get businesses active and taking advantage of this. To realize this tremendous opportunity, we really do need to find a way to get our businesses taking better advantage of all the growth that this trade access provides. Currently, only 5% of Canadian businesses that can export are exporting. In May last year, our board undertook a study to understand why this was, and what we could do to solve it. Our export strategy report, which I've left copies of here today, revealed that current exporters and businesses considering export feel they face a number of barriers.

To help these businesses overcome these challenges, we established a multi-year trade accelerator program called TAP GTA. It's a platform that brings together key government trade agencies and some of our largest corporate members to provide their high-export potential SME clients access to our trade accelerator program. The program is very practical, very hands-on. Over a 90-day period, each company develops an export business strategy and has access to resources needed to activate it.

This includes our trade commissioner services, as well as access to the international consuls general in Toronto from the target markets they wish to pursue. We're already seeing results. Since the start of our program in November we've had 50 companies successfully complete it. Over the next three years, we're targeting 1,200 companies to go through this, and we hope to generate another half of a billion dollars of export in our region. Our graduates tell us that the program is working to increase their sales, gain access to new markets, and create new jobs within their companies.

For example, one of our first graduates, Fine Cotton company, a company in Scarborough, Ontario, has already increased sales by $250,000 a quarter, through increasing exports to the U.S. They've hired an export manager. They've found a distributor in Italy who will represent them in Europe, and they've just signed an R and D agreement with the National Research Council of Canada, all activities that have come out of that export strategy process they learned through TAP GTA.

In fact, 85% of the companies that have participated in TAP are telling us that the TPP agreement is important, and these are markets that they wish to access. Free trade agreements like TPP can create a robust network of international partners that can facilitate commerce, and organizations like our board of trade will be there to help the business community activate and take full advantage of these opportunities. I welcome any other questions you have in the Q and A part of our discussion.

(0820) Thank you.

The Chair :

Thank you, Ms. De Silva. Those are very impressive figures. It's quite the powerhouse you have here in the Toronto area. It's very vibrant. We got to enjoy some of your good food here last night. There are some nice restaurants. Thank you for coming. We're going to move over to Mark Hennessy now with the United Food and Commercial Workers Union of Canada. Go head, sir.

Mr. Mark Hennessy (Special Assistant to the National President, United Food and Commercial Workers Union Canada) :

Thank you, Chair. On behalf of the members UFCW Canada, I thank you and welcome the opportunity to appear before the Standing Committee on International Trade to comment on the Trans-Pacific Partnership. Before I begin however, I would like to bring greetings and regrets from our national president, Paul Meinema, who was unfortunately unable to appear here today. UFCW Canada is Canada's leading private sector union. Together we are more than a quarter million Canadian workers strong.

Together we are building a stronger future for UFCW Canada members, their families, and communities while protecting and promoting employees' rights, social justice, and equity for all. UFCW Canada is a leading force for workers in the retail, food processing, and hospitality sectors. As part of Canada's most progressive union, our members live and work in communities from coast to coast in every province. Our members are your neighbours. They are your grocery clerk or the cashier you have gotten to to know. They work in meat-packing plants and hotels.

Some work in nursing homes, drugstores, food-processing plants, and many other sectors of the economy. Quite literally, our members help feed Canada. Whether it's moving livestock, picking the vegetables, or helping you with your groceries this week, it's our members who carry out that work. UFCW Canada believes the Trans-Pacific Partnership is not a good deal for our members and Canadian workers. I'd like to outline a few of the concerns that led UFCW Canada to take this position. With regard to industry, we're concerned about Canadian job losses. Some of those jobs would be our members and their families.

The TPP will give foreign poultry and dairy producers an even bigger share of our market, which to us means that processing and production jobs in those industries are at risk. While owners and producers have been promised compensation packages, there has been no such commitment to workers. Another concern is the Canadian auto sector, as we have members in the auto parts sector.

A study by our friends at Unifor found that the TPP could lead to the loss of as many as 20,000 jobs in the Canadian auto sector by eliminating incentives to manufacture vehicles in Canada and increasing incentives for companies to source auto parts from low-wage countries. Also,

chapter 12 of the TPP lays out the labour mobility provisions in a way that undermines the interests of Canadian workers. This provision takes the worst aspects of the temporary foreign worker program and then strengthens them. The agreement prohibits Canada from imposing any limit on the number of foreign workers entitled to enter the country as long as they fall under one of the broadly defined categories of workers that Canada has agreed to admit. Canada is further prohibited from administering a labour certification test before the worker can be given a work permit.

This agreement allows companies to bring in foreign workers to Canada to take jobs that Canadians are ready, willing, and able to fill. These workers will not be immigrants. They will have no path to citizenship. They won't fall under the existing temporary foreign worker program. Under the existing temporary foreign worker program, employers have to pay those workers the same wages as Canadian workers, and train and certify up to Canadian standards. The TPP will not even give these modest protections to exploitable foreign workers. We also take issue with the higher drug costs.

Canada already has the second highest per capita drug costs in the world. The TPP gives even more monopoly patent protections to drug companies than they currently have, meaning it will require more money from Canadians should they require drugs. It also puts a real strain on unions' collective bargaining when trying to negotiate future drug plans. Yet, the big pharmaceutical corporations will continue to fill their pockets and expand their bottom lines. Finally, the TPP is an affront to Canadian democracy.

Through its investor-state dispute settlement provision, corporations are able to directly sue democratically elected governments. Further, the TPP restricts an elected government's ability to pass any new legislation that may negatively affect a corporation's bottom line. This includes expanding public services like pharmacare. UFCW Canada is not against trade. We also understand the nature of negotiations and know that we might not get everything we want, but we are against trade agreements that benefit global multinational corporations to the exclusion of Canadian workers and their families.

We would prefer agreements that are more balanced and fair. While we have other concerns with the TPP, we will speak to those in our formal submission, which is on its way. So far, through our analysis, it is our opinion that the cons far outweigh the pros in the TPP, and for those reasons we oppose it. I would like to mention one final concern, which is the fact there have been no government impact studies on the TPP from what I'm told, and it's been very difficult to get some of the information on what the agreement really means for Canada and Canadians.

If there is still time I would urge the government to consider these types of studies, especially in regards to this agreement. Thank you.

(0825) The Chair :

Thank you, sir. Thank you, to all the presenters for the presentations. We're going to move on to the dialogue with the MPs. Before that, I would like to welcome any of the guests here in the audience. Without further ado, we're going to start off with questioning. We're going to go to the Conservatives first for five minutes. Mr. Ritz, you have the floor.

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

Thank you, Mr. Chair. Ladies and gentlemen, thank you for your presentations here today. We're hearing repeats across Canada from different sectors—the same points are being made. One concern or question that we've heard from many smaller businesses is “how do we get educated?” Ms. De Silva, I'm intrigued by your program and the success you're already having with it. I was going to ask Ms. Nott whether her organization offered the same type of training, just the education component that seems to be there for businesses to take advantage of these opportunities.

Ms. Joy Nott :

We don't actually have training per se. One thing we find challenging and that our members have told us repeatedly over the years is that the kinds of programs Ms. De Silva is talking about are to be applauded, and our members take advantage of them. They're more about market access, though, rather than understanding the regulatory requirements. I like to say that we play really right down in the leaves—or right on the shipping dock is where our members tend to be.

We are the supply chain professionals, who understand that an incorrectly completed form may sound like a small thing, but it can actually grind a shipment to a halt and can cost companies tens of thousands, if not hundreds of thousands, of dollars. As an answer to the question, the baseline is no. There have actually been studies to say that the grassroots understanding of how to commercialize free trade agreements is actually missing from the Canadian educational system. Under the Conservative government, there was a study done by HRSDC that looked at exactly that point.

Access to market and the kinds of programs that Ms. De Silva was talking about exist. Once you actually ship and find out that there's a marketing issue or that the paperwork hasn't been completed.... That kind of education is lacking in the marketplace. The existing Japan—

Hon. Gerry Ritz :

The school of hard knocks can be very expensive, when you have stuff sitting on the dock. Mr. Johns, as a global player do you find that the predictability of trade is sometimes questionable as you move product from country to country? Once you have your footprint established and have the corridors open, it becomes much easier. In a multilateral agreement such as the TPP, however, we're talking about some developing countries and we're talking about developed countries, which you already have a footprint in.

How important to you is having that predictability in order to decide where you're going to put your next client and where you're going to put your next sales office, as global supply chains continue to ripple out?

Mr. Sean Johns :

We've experienced some difficulties moving into some new countries. As I said earlier, we're operating in 29 countries today. What we typically find is that they're not as mature, so their tax rules differ for us. That usually doesn't pose so much challenge on the investment front, but it certainly does when we want to change our footprint. It's something that gets strong consideration, but typically we're a follower. We're not typically first there.

Our customers are usually forging a path, and then we're coming later, so a lot of those things are established and there's some ability to leverage from whoever is there first. Similarly, we operate six different business units, and in the past we've had one or another enter into a country, and then we're able, as soon as we get some feet on the ground, to leverage that around our business and share the best practice. Developing markets are always very challenging, and it requires a lot of resources to understand the new systems and their complexities.

When they're not as mature, the timelines to accomplish what you want get extended, and for us that's typically not acceptable. We're accountable to our customers to meet their timelines and deadlines. That's where we face a lot of challenge.

Hon. Gerry Ritz :

The point there is that there isn't a government in the world that operates at the speed of business, and that's unfortunate, but it is improving. As we have these multilateral agreements, or even bilaterals, you start to bring others up to speed. Mature economies such as those of the U.S., Canada, and even Australia, which are trade-oriented, are looked at with envy by developing countries such as Vietnam, Malaysia, and some of the other smaller countries. As others, such as the Philippines and Indonesia, talk about joining TPP, they look to us to mentor.

Part of the whole idea of education whereby we educate our businesses is that we also have to educate other governments as to how they educate their people to take advantage of import and export. You're right, Joy; it's a two-way street. It's not just about exports; it's about imports that strengthen our own economy as well.

(0830) The Chair :

You have half a minute, Mr. Ritz.

Hon. Gerry Ritz :

Okay. Let's talk about labour. There's always been a concern that there aren't enough people of the right type in Canada. Do you see a government-wide organization, Mr. Johns, as making it easier to move people around? You can actually take Canadians to some of your plants and bring back and forth—

The Chair :

Make it a quick answer, sir.

Mr. Sean Johns :

Actually, we haven't experienced significant difficulty in taking people, but what we have found is that as our business has developed over the early period, what we want to do is use local resources in order to operate in those countries. We're really only taking our culture and our operating practices and are trying to get them implemented with people in those countries. Then we're hoping that from there...we've found it's most successful if we use local resources.

The Chair :

Thanks, sir. We're going to move over to the Liberals for five minutes. Mr. Peterson, you have the floor.

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

Thank you, Mr. Chair. Thank you, everybody, for coming here today. It's nice to hear from you and to get your points of view. I just have a few questions. Sean, I'm going to start with you. Hopefully you're holding down the fort in Newmarket—Aurora while I'm travelling on this committee. You talked a little bit about Magna's footprint. Many of its jobs, of course, are in my riding of Newmarket—Aurora , our riding. It's good to hear about the continued success of Magna. It seems to have survived my departure, which is nice to hear. We're comparing the TPP to the status quo.

Have you guys been able to give any assessment or analysis to, let's say, the U.S., Mexico, and Japan joining the TPP and Canada not doing so? What adverse impact might that have on your supply chains, your business lines?

Mr. Sean Johns :

Kyle, I wish I could answer that question, but the question of whether or not we've considered Canada not joining is probably best directed at our director of trade compliance. Ultimately, I expect there has been some discussion. I'm just not in a position to answer that.

Mr. Kyle Peterson :

I appreciate that, Sean. I'll talk to Mike later. I think you made a good point about exports and imports and that sort of dynamic. I think all of us on the committee should realize that having access to good imports is also good for a Canadian company's supply chain, because when buying input, companies want to oftentimes buy the best product at the lowest price, and sometimes that's an import. If we don't have access to that import, that lack can adversely affect the supply chain of a corporation and the price of the final product. I'm glad, therefore, that you brought the matter up. Joy, do you think TPP would help, on that side, and would give Canadian companies access to imports?

Ms. Joy Nott :

I do. The bottom line to that is that if you take a look at what countries are involved in TPP, they are already countries that Canadian and American companies are sourcing from. The fact that we would have a free trade agreement with them makes it attractive. Let me go back to the question you asked Sean: whether or not there has been any sort of analysis done as to what would happen if the United States and Mexico were part of TPP and Canada was not. My members have been extremely clear on this one point.

As I said in my remarks, there's a big doubt as to whether TPP is actually going forward, but if it does go forward, the message I have received is that we have to be at the table; we absolutely have to be at the table. There are mixed views as to whether TPP is a fantastic deal, a mediocre deal.... You'll get different, mixed reviews, but the view is unanimous that if TPP goes forward, we have to be in the game.

Mr. Kyle Peterson :

Thank you for that. Mark, I have a quick question for you. I appreciated your comments too about what impact it would have on your members. As you may know, we've been travelling across the country and have spoken to a lot of farmers and a lot of agri-food producers from Saskatchewan, Alberta, even Quebec and Ontario, who think that TPP will actually generate a lot of value-added food processing here in Canada as they're preparing products for the new markets. Have you given any thought to that? That presumably would create some jobs for your members.

Mr. Mark Hennessy :

Yes, we have definitely. Through our analysis we have realized that there might be some uptake in certain industries, such as in the pork and beef sectors for sure. Unfortunately, we don't have enough analysis from some of the other trade agreements that have already been signed, which said the exact same things, but from which we didn't see very much difference in actual real jobs on the ground being created out of—previous trade agreements such as the Korean trade agreement and so on. Again, the cons rather outweighed what was already there as positives already.

(0835) Mr. Kyle Peterson :

Thank you. I appreciate that. Jan, I have known of the program you mentioned for a couple of years, but it's really great to hear the success stories. I think they speak to the fact that companies that export in Canada tend to be more profitable and tend to create higher-paying jobs. The difficulty is in maintaining the ability to export, and Joy spoke briefly about the regulatory regime, which is sometimes difficult, especially for small and medium-sized enterprises. It's sometimes just very cumbersome. Have you all given any thought to helping exporters in the board of trade navigate that world?

Ms. Jan De Silva :

The trade accelerator program does just that, but I think the next generation of what we want to do with it is what I would say is, adopt a sector. For each of our competitive clusters, we want to be able to put support for them to identify which of the markets around the world are most important to them and how do they navigate them, so that we can deal with them as a cluster rather than company by company. That helps both the outbound and inbound missions, as well as forums and opportunities here.

I was speaking with Mark just before this event, and I think on the food side, agri-business is one cluster that we're positive about in the context of TPP. There is a huge demand for the value-added products we offer here. I was on Mayor Tory's trade mission to Asia, albeit not on TPP. It was in China, and we signed a memorandum of understanding with Greenland Group, a U.S. $100-billion company. They're setting up a Canadian purchase centre here in Toronto to source Canadian food products for their international grocery stores in China. They'll take care of all the importation, the clearance, and the retailing.

I visited one of their stores with city councillors, and I was grumpy about how many Australian food products they had on the shelves. We should have Canadian products there, so I wanted to show how, in the context of TPP, that's an important sector for us.

The Chair :

Thank you very much. We're going to move on to the NDP, and Ms. Ramsey for five minutes.

Ms. Tracey Ramsey (Essex, NDP) :

Thank you, and thank you for your presentations. I found it fascinating, Ms. De Silva, because we have heard around the country that businesses are unable to access it, or are not doing it well. They don't see the TPP as being a great opportunity because they can't get there in a real way.

What's been highlighted to this committee over and over is that we're not prepared to be part of this trade agreement in any way that would see benefit, because we don't know how to reduce and protect the import control issues that we have around poultry and different sectors, around the interprovincial issues we have, and around access to those markets. I think what you're doing is good. It's important to understand that we're already 97% tariff-free with the TPP countries. Interestingly enough, Ms. Nott, what you said is something we hear as well, in that this isn't really about tariffs.

When we go to agriculture, what we're looking at are those non-tariff barriers. You spoke a little bit about that and the hurdles people have to climb over with the non-tariff barriers. Can you let us know what some of the non-tariff barriers are that are issues for those you represent?

Ms. Joy Nott :

We were mentioning the food sector, so I'll speak to some food examples. One example that would be probably known to everyone in the room would be country-of-origin labelling that we just went through with the United States. That's a perfect example. I think often non-tariff trade barriers are not brought up by either the Canadian government—because sometimes we do it to ourselves—or foreign governments as a means to intentionally be a non-tariff trade barrier. I don't think anybody sits there with that thought, because they don't necessarily overlie the international trade implications on what they're looking at, but that's how you get there.

Ms. Tracey Ramsey :

We have limited time. Do you have any specific non-tariff trade barriers? We've heard about phytosanitary and sanitary issues in the agriculture sector. We've heard about diafiltered milk, and we've heard about specifics. Do you have anything specific?

Ms. Joy Nott :

You'd have to pick a country and then, yes, all of those things that you said, but they differ from country to country. As Jan is referring to, you have to pick your country and then get educated on that one country. Just because one country is in TPP doesn't mean you can take the learning that you've had from TPP in one country and automatically transfer it to another.

Ms. Tracey Ramsey :

Okay. Mr. Johns, I have one question for you, too. To what extent is it likely that Magna will increase its investments in new and existing manufacturing facilities in Canada as a result of the TPP? What types of jobs would you potentially create here in Canada?

(0840) Mr. Sean Johns :

Our investment decisions still are highly driven around where our customers locate their assembly operations.

Ms. Tracey Ramsey :

If they move to Malaysia, you move to Malaysia. You follow them, right?

Mr. Sean Johns :

Not necessarily. I think if they move to Malaysia, it depends on their requirements for proximity. It depends on the types of components that we manufacture. Where things that are well defined in one of the schedules in this agreement for larger assemblies, things like stampings, welding assemblies and chassis, and some of the larger axle components, are things you need to locate close to assembly facilities.

Ms. Tracey Ramsey :

I think our concern is that there'll be this shift. There are lower-wage economies in the TPP, and there'll be a shift similar to what we saw with NAFTA to the southern U.S., into essentially Mexico. It is one of the concerns we have. My other question will go to Mr. Hennessy. Can tell us how many members you represent? Do you see potential losses in some of those sectors, such as you're identifying with dairy and poultry?

Mr. Mark Hennessy :

For each of the sectors, we have about 546 in the auto parts sector, just over 10,000 in the poultry sector, and just under 1,300 in the dairy sector. Our biggest concern would be the poultry sector. The local union deals with those employers, similar to the considerations that Magna would have to go through, and those employers would take those same considerations into account when deciding are they going to move, are they going to stay, or are they going to move around.

Ms. Tracey Ramsey :

We've heard from the poultry sector that they'll lose $150 million a year in perpetuity under the TPP. Dairy will lose $400 million per year, and it's unclear whether or not there's compensation that sits there for them. That would definitely impact those that are working underneath you, if you will. Do I still have time?

The Chair :

You have half a minute.

Ms. Tracey Ramsey :

Mr. Hennessy, you identified some other issues and ISDS is something that we hear over and over. We had 32 individual Canadians come and present in the last three cities. Nearly all of them mentioned ISDS as a concern for Canadian sovereignty. Can you speak about ISDS to us, please?

The Chair :

It'll have to be very brief, please.

Mr. Mark Hennessy :

As I said in my presentation, that's one of the pieces we oppose the most. Any time we allow a corporation to sue a government, but the government is not allowed the ability to reprimand or take action against that corporation, it seems weird. We're allowing a corporation to supersede elected governments across the country, and it's a major problem for us.

The Chair :

Thank you, and we're going to move over to the Liberals now. Mr. Fonseca, you have five minutes. Go ahead, sir.

Mr. Peter Fonseca (Mississauga East—Cooksville, Lib.) :

Thank you, Mr. Chair. Thank you to all our witnesses for your excellent presentations and for your perspective on the TPP, as well as international trade. We live in a multicultural country. We pride ourselves here in the GTA as being a microcosm of the world, with all of our diaspora communities, but I think we have failed to tap into those communities in terms of international trade. My question is to Ms. De Silva. At Toronto Board of Trade, how are you doing that? Do you have a model for that? How are you attracting them?

I see that in many of our communities, they are importing many products from countries that were their previous homelands, but I'm not sure if that's going in reverse. We are also exporting many Canadian products to those countries, as you've cited on your trade mission.

Ms. Jan De Silva :

I would say one example where we are succeeding is in human health sciences. The diaspora and the diversity we have here in Toronto is enabling us to do research and development for citizens around the world. If I look at some work that we've been doing with the City of Brampton, they're looking at a foundation researching diabetes for the Indian diaspora. They have a partnership now with another teaching hospital in India where they're going to be collaborating on this. What gets developed here in the Toronto region is something that will be developed for export.

That's a good example of how our diaspora can be engaged. When we went into TAP GTA, that was a big piece we were trying to solve, because I don't see us taking full advantage of the breadth of diversity we have in our communities. Part of our TAP advisory council has gone out to all of the different communities, like the Canada India Business Council and the Canada China Business Council to be part of our advisory group. I hope we will find a solution for that. I don't have the perfect answer, but it is a problem to be solved.

Mr. Peter Fonseca :

Thank you. With the 50 or so companies that have had some success, you mentioned one that was having success with Italy. What other countries of those 50 would they be tapping into, and what markets?

(0845) Ms. Jan De Silva :

Interestingly enough, China was a big market. We thought there'd be more of a fear factor, but we've seen a lot looking at China. For some of the examples we've had, we've been able to connect them with students studying at U of T who are from Hong Kong. In some cases they've been able to set up distribution partnerships to represent them in that market and get them up and running. A good example would be a company like New York Fries, which is a Toronto group. They're being built out in China by some former Hong Kong students who studied at U of T and found the product there.

They also have a good vodka out of Oakville. I'm not sure their parents want to know how they found out about the vodka, I think the fries business was easier, but those are good examples where we can take advantage of foreign students coming in to help access markets.

Mr. Peter Fonseca :

Thank you. Mr. Johns, we've heard from the auto sector, and we had an opportunity to hear from the president of Ford, as well as some of the auto parts manufacturers. What they had to say was somewhat alarming. They said there would be little chance of Canada landing another assembly plant here if the TPP were to be ratified. Can you give me your take on that?

Mr. Sean Johns :

I'm not sure that's entirely contingent just on TPP. Going forward and at least for the foreseeable future, that looks like the probable case, but it's based on a variety of competitiveness factors that I think the government and the industry are working hard to understand. They're shifting production around the globe to support new, emerging markets. The North American market has had a lot of attention over the last several decades, and we've industrialized to support it, and our OEMs have similarly done that.

As these other markets emerge, they need to have footprints in those markets, and that has also driven our global distribution of facilities. If you look at our footprint here specifically, because we're predominantly in Ontario, the footprints have changed and the numbers of facilities have reduced, but overall our employment numbers have stayed relatively the same, so our facilities have grown in size. We've continued to maintain growth in our sales. So our footprint has changed.

Whereas historically we would have a facility that might have 200 people, today we have some that are approaching 2,000 people. It's very critically important to our business in Ontario that we at the very least maintain the manufacturing we have here today. We incentivize it to stay and we look for successive programs to backfill the ones that we're making. I'm not in a position to be very hopeful that we're going to attract a new investment in the near future, simply because I don't think we need the additional capacity. I'm not sure this is the optimal position from which to support that growing global market demand.

The Chair :

Thank you. That wraps up your time. Ms. Ludwig.

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

Thank you. Good morning and thank you for your excellent presentations. I'm going to start with Ms. Nott. Thank you for raising the significance of importing. We've heard several times throughout our panel discussions of the significance and the value of a low Canadian dollar. On the importing side, if we're importing to export, how does the Canadian dollar impact our companies, if we have a low Canadian dollar and they're importing as part of their business?

Ms. Joy Nott :

A low Canadian dollar, I think it goes without saying, helps on the export side. On the import side of the house, as long as the dollar remains stable and is not in a free fall, as it was a few months ago—that's a very disquieting circumstance.... As long as it remains relatively stable, a low Canadian dollar doesn't actually negatively impact imports, because you can plan what your cost needs to be in your spreadsheet and you move on, and it actually enhances your export sales.

One thing that I think is important to understand, though, is that on the import side of the house, import policy in Canada over the past, I'm going to say, seven to 10 years has actually been quite hostile towards importers. There's a pending Federal Court case called Bri-Chem that is being very widely watched by all importers, because it speaks directly to that direct hostility from the Canada Border Services Agency towards all importers.

Ms. Karen Ludwig :

Thank you. On that, Ms. De Silva, regarding importing, you have mentioned working directly with 50 businesses that export a business strategy. I really commend you for the work you've done with it and for its successes. In the early 2000s, when I was involved in this, many people relied on and wanted to jump into the export market based on the low Canadian dollar. That was their plan. When the dollar started to fall.... In our own business, for example, we import “one side polished” slabs of marble and granite, and it's great on the exporting side.

On the importing side, when the dollar falls to 64¢ you can't offset all those costs to your customers. With your expert business strategies, most often was it a direct export, an indirect export? Were there many times when you were working with a business and they just weren't ready to export?

(0850) Ms. Jan De Silva :

There are examples of some companies that have come through saying that at this point they're just not ready. We're continuing to work with them, and over time we'll see whether we'll navigate it. The one thing I did want to say about the program is, please think of Toronto as a kind of pilot site. I am in discussions. I know Vancouver Board of Trade and Calgary Chamber of Commerce were looking at rolling it out there. We've also had some discussions with Deputy Minister Hogan about the potential of creating this as a national program, because quite frankly we would love to see more Canadian businesses take advantage of growth markets.

Ms. Karen Ludwig :

Mr. Johns, 98% of businesses in Canada are small to medium. We've heard a number of times across the country about the risk of currency manipulation. What advice would you, as a representative of a large company, give to a small to medium-sized enterprise to mitigate the risk regarding currency manipulation?

Mr. Sean Johns :

You have my apologies. I don't think I'm in a position to answer that effectively and provide advice to them.

Ms. Karen Ludwig :

Is there anyone else on the panel?

Ms. Jan De Silva :

I was just going to say that, in the way the TAP works, we have three major corporate sponsors that fund it and that identify and nominate clients in, one of which is RBC. They're quite involved in helping with currency strategies and export-related strategies as well, from a financial perspective. EDC is also quite actively involved with us.

Ms. Karen Ludwig :

Okay, thank you.

Ms. Joy Nott :

I would just throw in there that I think many small to medium-sized companies still question and become confused about the difference between BDC and EDC. There's confusion around the two. In direct answer to your question, I think EDC can help small companies with hedging strategies and stuff for currency, but small companies often don't know that.

Ms. Karen Ludwig :

The other big concern we've heard across the country, which I've also heard from constituents, is regarding human rights and the environment. From a business perspective, how does that work? How do you rationalize comments and concerns about the risk to human rights in the host countries as well as the risk to the environment and the threat to environmental practices here?

Ms. Joy Nott :

It's not something our members have ever brought to us as a concern. Going back to my earlier statement, the one thing they made very clear to me is that if TPP goes forward, we have to be in the game. They've never directly addressed that point. I'm sorry.

The Chair :

Thank you. Your time is up, and I see that we have some more visitors in our audience. Welcome. Now we're going to move on to Mr. Van Kesteren for five minutes, for the Conservative Party. Go ahead.

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

Thank you, Mr. Chair. Thank you all for being here. Mr. Johns, what a story. What did I hear? Was it $32 billion in sales in 29 countries. That's not bad for an immigrant who started in his garage. I think he was getting up in years, too.

Mr. Sean Johns :

He certainly was when he left, yes.

Mr. Dave Van Kesteren :

Yes. It's an incredible story. Mr. Hennessy, how many companies do you represent?

Mr. Mark Hennessy :

I actually would not know the answer to that question. I can get it to you, though, and to the rest of the committee members.

Mr. Dave Van Kesteren :

Do you have any idea?

Mr. Mark Hennessy :

I'm sorry, no. The number of sectors and employers we cover is just far too numerous.

Mr. Dave Van Kesteren :

Do you have any idea how many of them would have started like the Stronachs' enterprise?

Mr. Mark Hennessy :

No, I don't, I'm sorry.

Mr. Dave Van Kesteren :

I can save you the bother: every one of them. Every one of them started in the imagination of somebody who had an idea and needed the ability to take that idea to the marketplace. I have to tell you that almost without exception every one of those companies—and many these companies are small, but many of them are absolutely huge—have told this committee that it's not only something that they want to see, but it's imperative that open markets.... It's how the system works actually.

It's a free market system that has raised literally billions of people from poverty, which means that today they're able to enjoy things here in this country too. As I said, without exception these companies are telling this committee, the very companies you represent, that this is important for them. How do you square that hole? I'm curious how you come to the conclusion that this is not a good idea.

(0855) Mr. Mark Hennessy :

Well, it came from our members originally, especially the poultry members, so—

Mr. Dave Van Kesteren :

Have you polled your members, though?

Mr. Mark Hennessy :

Yes. It came through our steward bodies, and those folks who started to bring it out wanted an analysis done on it, so we started the work. They raised concerns. We also had concerns, as I mentioned before and as the poultry sector had mentioned, that should the TPP go forward, they would seriously have to consider whether to remain here, whether they need to remain here to maintain or expand their bottom lines and that sort of thing.

Mr. Dave Van Kesteren :

As a nation, we know this, we have studied this, and it's not something for which we've come to a conclusion recently. We know that we are a trading nation. We know that we produce much more than what we consume, and we need those markets. What other alternative would you have? What would you offer your people if we didn't have those markets, if we couldn't expand those markets, and if we couldn't encourage people like Mr. Stronach to endeavour on an enterprise that would hire more people and would expand those possibilities? What would you tell them? What would your alternative be?

Mr. Mark Hennessy :

Right now we would say it's status quo at this point. We understand we do have to have trade. We understand we have to be competitive in other markets. We understand we would work with those employers to help that. We're looking for more fair trade and an approach where there's a commitment to keeping the work here in Canada, keeping our members' jobs in place, and keeping those communities viable. That's where we are.

Mr. Dave Van Kesteren :

I'll go back to you, Mr. Johns. It's been asked whether or not this would expand to more possibilities on this continent, specifically here in Canada. What opportunities are you seeing? When Magna started there were just a few components you were creating. What other possibilities...where are you moving as a corporation? What's on the horizon?

Mr. Sean Johns :

I'm not sure we still use this, but historically we've been the most diversified automotive parts supplier. We cover pretty much the entire value chain aside from a few small sectors like tires, windshield glass, and so on. Today we're in a position where we're looking at how to optimize the businesses we're in. We are seeing that electronics are an enormous opportunity for us moving forward. A high percentage of our employees relatively are focused on our production operations, but we have an engineering staff of approximately 10,000 people, and so the complexity of things is moving upwards.

Our opportunities are not just in parts, but we've moved heavily into modules and big systems. Electrification is what's driving a lot of things across all of our products today.

The Chair :

Thank you, sir. That wraps up the time. We have time for two slots of three minutes each, and we're going to Madam Lapointe for three minutes and then Mr. Hoback for three minutes. Go ahead, Madam Lapointe.

[ Translation ]

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

Good morning and welcome. Thank you for joining us this morning. I find your contribution very useful. Ms. De Silva, a little earlier, you mentioned something very interesting. You talked about the accelerator program for exporters. My colleague talked about it a little. Would you like to add anything so that we can include it in our recorded information? You talked about a national program. If possible, could you elaborate on that a little?

[ English ]

Ms. Jan De Silva :

We're currently in discussions with the corporate partners who have helped us build this program about taking this nationally. What that would look like is we would continue to operate it using the platform we have created, which is this 90-day program, plus we have a former member of our Canadian trade commissioner service who works in our office and who does hand-holding support with the companies to get them through their planning process. The intention would be to run some pilots at different cities across Canada with that same platform, and see if we can then help those boards of trade or chambers get staffed to be able to support it as an ongoing program.

(0900) [ Translation ]

Ms. Linda Lapointe :

Thank you. During the consultations, we have repeatedly heard that the SMEs are limited and that they don't know how to establish themselves on the export market. The chambers of commerce have no idea what to do. They need training. The businesses need training as much as the chambers of commerce need support. If a new round of negotiations were to be held, what would you like to see changed in the TPP?

[ English ]

Ms. Jan De Silva :

I would say, from a change perspective, there is nothing we have identified. I would tap more of the industry sector expertise on that. We're focusing more at looking at it from the business community perspective, and how do we take advantage of all these growth markets. I wouldn't be able to comment specifically on a change in TPP.

[ Translation ]

Ms. Linda Lapointe :

That's good. Ms. Nott, do you have something to suggest? You said that we absolutely must participate. If we were able to renegotiate, what changes would you like to see?

[ English ]

Ms. Joy Nott :

I would have to agree with what Ms. De Silva was saying in that we look at it from more of a macro sampling, from that perspective. We represent so many different industry sectors. We know at one point in time there was definitely concern in the automotive sector, and we worked closely with our automotive partners during the negotiations when that was raised as a concern. Earlier I heard some of the concerns when it comes to food, but our members tell us a positive story. They're very much hoping that TPP comes through, because when you start talking about food, the Canadian brand is extremely valuable.

Globally when you start talking about Canadian food, it's perceived as being healthy, nutritious, and high quality. Whether or not we deserve that reputation is a different story, but that's the perception, and our food members, who make up a large percentage of our membership, are hopeful this deal goes through. I don't have any specific points where we need to renegotiate.

The Chair :

Thank you. That ended at three minutes, and we're going to wrap it up here. Mr. Hoback, three minutes, go ahead, sir.

Mr. Randy Hoback (Prince Albert, CPC) :

Thank you, Chair, and thank you, witnesses, here this morning. Ms. Nott, you talked about the fact that during the negotiations you're consulting with your members about things that are coming forward. For example, auto parts manufacturers said you talked to them, tried to explain it, and worked with them as this agreement moved forward. Can you talk quickly about that process? Do you feel you're involved in the process?

Ms. Joy Nott :

I would defer to the industry trade sectors that were in that. We were consulted and conferred with relative to some of the rules, specific things, and what our thoughts were, and we gave those thoughts to our members. One sector we also consulted with, aside from automotive, was oil and gas. The oil and gas industry sector is pleased with the rules of origin that are in TPP, which are different from the rules of origin for their sector that are in NAFTA. It's one of those things. NAFTA was a great agreement. It's 20-odd years old now, and it's a different world.

TPP addresses and corrects some of those issues, so I know the oil and gas industry is very much keeping its fingers crossed that TPP goes through.

Mr. Randy Hoback :

Okay. You made a comment that concerns me. Eighteen months ago, you polled your members, and they thought this was a done deal. They knew this was going forward, they were starting to bank on it, and now they're questioning things. I understand what's going on across the line and the rhetoric that's there. I'm curious, are they also concerned because there's no leadership being shown on this side of the border on TPP?

Ms. Joy Nott :

I don't think so. What I'm about to say is going to sound un-Canadian, and I don't mean it to sound that way. For the most

part in Canada, my members feel—specifically, because those are the only ones I can speak to—when we're sitting at the table that we're not one of the most powerful players. We're not Japan, and we're not the United States. A perfect example of that would be there are sidebar negotiations that happen, such as the automotive deal, where Canada finds out about post discussion. We know that we're not the biggest hammer at the table. That being said, in the TPP we're also not the smallest hammer at the table. There's definitely a feeling that—which leads to the comments I was making—we need to be there. No matter what, we need to be there.

Mr. Randy Hoback :

You need that multilateral strength to have the leverage with some of these big players. Is that fair to say?

Ms. Joy Nott :

That is correct about being left out. If the United States and Mexico were part of the deal, and Canada steps aside for any reason, that's when you start to hear pessimism as to what the potential future is. NAFTA does not equal TPP, and TPP does not equal NAFTA. They are not interchangeable.

(0905) Mr. Randy Hoback :

Ms. De Silva, I'll give you a bouquet, because that's interesting what you're doing here in Toronto. Half a billion dollars in sales is what, 5,000 jobs in the Toronto region? It's huge. It's a major factor. If you don't have market access, is it worth doing?

Ms. Jan De Silva :

I think there are two ways to answer that. Number one, there are gross markets out there that are not just the U.S., and I think the important thing about these agreements is that they give us preferential access. Number two, it raises awareness when businesses are hearing about TPP. What does that mean for them? What are the markets that matter? Is that a good fit for my sector? There's that piece of it as well. It's the preferential access that's important, and the fact there are tremendous growth markets out there that are not just the U.S.

The Chair :

Thank you. Sorry, Mr. Hoback, I know you were on a roll there, but your time is up. Those are good questions. It's a great panel here for the first panel and great witnesses. Thank you for coming, and for your comments, and for the good dialogue you had with the MPs. When we get our report done, you will get a copy of it. It'll take us a little while yet, because we still have a lot of interaction to do. Thank you very much. We're going to break for 10 minutes, folks, and we'll get back at it with the second panel.

(0905) (0915) The Chair :

Welcome, everybody. This is our second panel this morning of our dialogue on the TPP. With us on our second panel we have three panellists and three different groups. The first one is from the Canadian Environmental Law Association. We also have the Canadian Music Publishers Association and UPS Canada. Without further ado, we're going to start, and maybe we can start with Ms. Wilson. Do you want to speak for five minutes?

(0920) Ms. Jacqueline Wilson (Counsel, Canadian Environmental Law Association) :

My name is Jacqueline Wilson. I'm a lawyer with the Canadian Environmental Law Association. We are an Ontario legal aid clinic specializing in environmental law and policy, and we have a long history of analysis of the environmental implications of trade agreements. I'm going to focus my presentation today on two issues to do with the environment

chapter of the TPP. The first issue is the weak and unenforceable language throughout the chapter, and the second issue is the dispute mechanisms, both the state-to-state dispute mechanisms and the citizen dispute provisions. I go into more detail about these two issues and other issues, including the limited coverage of the chapter, in a paper called, “Bait-and-Switch: The Trans-Pacific Partnership’s Promised Environmental Protections Do Not Deliver”, which is available on the Canadian Environmental Law Association's website and the Canadian Centre for Policy Alternatives' website. Our conclusion after analyzing the environment

chapter is that it does not safeguard the environment or promote effective environmental protections. It's not going to counteract the negative environmental implications of other provisions of the TPP, including the investor-state dispute settlement provisions. The vague and discretionary language in the environment

chapter is exemplified by the general commitments section, which allows each party to determine its own levels of domestic environmental protection and its own environmental priorities. The overall principle reflected throughout the

chapter is that state sovereignty is unviable if you're talking about setting levels of environmental protection. That approach is to be compared with the fact that strong environmental measures taken by a TPP party, which might interfere with trade or investment, are exposed to challenge under the investment chapter.

Article 20.15 of the environment

chapter is also of particular concern. It deals with the transition to a low emissions and resilient economy. In a fairly shocking act of climate change denial, the words “climate change” aren't used in this section, or at all in the TPP. Instead the TPP recognizes that each party's actions to transition to a low emissions economy should reflect domestic circumstances and capabilities. That's at odds with the government's commitment to take climate change action seriously, and its commitments in Paris. The other specific

article I want to bring to your attention in the environment

chapter is

article 20.10, which deals with corporate social responsibility. It raises significant equity issues because of the radical difference between the strong, enforceable rights for investors in the ISDS scheme, and the essentially meaningless requirements of this section, which asks each TPP party to encourage enterprises to voluntarily adopt principles of corporate social responsibility, and that's it. In terms of the dispute resolution mechanisms, the primary weakness of the state-to-state dispute mechanism is that it depends on the political will of the parties to enforce the chapter.

That's an approach we've seen before in trade agreements, and it hasn't worked. The system includes three levels of confidential consultations, so the public won't know that those consultations are taking place. If the dispute settlement provisions are used—which hasn't been the case in the past, and there is no real reason to think things will change with this agreement—then public participation is not assured. The arbitration panel must consider requests to participate only for non-governmental entities or persons in one of the disputing parties, and it's only written submissions.

The documentary disclosure provisions are quite limited, so the TPP parties are asked to make best efforts to release written submissions and oral submissions as soon as possible. There is no specific timeline.

Article 28.13(d)(ii) contemplates that some documents won't be released until right before the final report is issued.

The Chair :

Ms. Wilson, you have half a minute to wrap up, please.

Ms. Jacqueline Wilson :

The citizen complaint provisions are also quite weak. Again, only a person of a party can challenge its own government's implementation, it is only by written submissions, and the TPP party is only required to respond “in a timely manner”. Once that response takes place, there's no opportunity for the citizen to follow up. It would take a TPP party to take up the complaint and request that the environment committee continue to review it. Our analysis here is that the environment

chapter doesn't protect the environment, it won't likely be enforced, and it's not nearly strong enough to counteract the environmentally detrimental provisions elsewhere in the TPP. Thank you.

(0925) The Chair :

Thank you. We're going to move over to the Canadian Music Publishers Association, Mr. Hutton, for five minutes. Go ahead, sir.

Mr. Robert Hutton (Executive Director, Canadian Music Publishers Association) :

Thank you, Mr. Chair. Thank you for having me today. I appreciate it. Music publishers are businesses that own, administer, and control the rights to musical compositions. These compositions are the foundation of the entire music industry. The music industry in Canada represents more than $4 billion of economic activity annually. A recording is an end; a live performance is an event; but without a musical composition, neither of them can take place.

There are no music recordings without a composition; there are no live performances without a composition; there are no jingles on advertisements; there are no soundtracks to movies. There is nothing in the industry. Therefore, the music publisher has perhaps one of the biggest interests in the IP provisions of the TPP, and certainly in the term extension provisions in the TPP, because they own and administer that musical intellectual property. It's the bedrock of the entire music industry. We will primarily focus our comments today on the term extension provisions of the TPP.

We know that they have been very controversial. We know that there have been some strong opinions expressed. We hope to perhaps debunk a few of the opinions that have come before you. We have no opinion on the broader provisions of the TPP; that's not our issue. Our goal is to address those misconceptions and some misrepresentations by people we may best describe as copy fighters, which is an interesting term. First of all, there's a myth that extending copyright terms will be costly to consumers. That is in fact not the case at all. It will not cost the consumer, at least not the consumer of musical works.

It won't cost them one cent. The New Zealand and Australian studies that have been cited are based on a 20th-century consumer “packaged goods” model of music consumption that frankly no longer exists and certainly, by the time term extension really has any meaningful impact, won't exist at all. It's 2016. That's the environment we operate in, and those models are based on people continuing to purchase music as a physical product in a store or online. Third, extending term is not about the heirs.

It's not about “life plus 50” or “life plus 70” and some music writer's great-great grandchildren by their third marriage getting a whole windfall of money. That's certainly not the case. It's about creating a secure financial instrument for music publishers—Canadian companies—to invest in. Extending the term increases the value of that financial instrument, which they can leverage to invest. Music publishers, that are mostly affected by term extension, are investing in Canadian artists—Canadian songwriters in the Canadian industry—and term extension gives them an instrument with which they can invest further.

Publishers invest more in talent development than any other element of the music industry, including record labels. Term extension gives that asset greater long-term value to leverage and invest. You've probably heard that term extension will make it more difficult for the next generation to create new works. We don't understand how extending the pool of investment capital available could possibly do that. It's just counterintuitive. It does not. We've heard about DRM provisions that could possibly block experimentation and innovation.

Well, they do block innovation that's based on intellectual property theft; they absolutely do that. That's not innovation, no matter how much the average consumer may like easy, convenient, free access to the contents that such innovators exploit. The fact is, DRM enhances investment in that same intellectual property that the innovator in every case basically wishes to exploit for free.

The Chair :

You have half a minute, sir, to wrap it up.

Mr. Robert Hutton :

I will try to be fast. The elephant in the room is the notion advanced that consumers will suffer. This is simply false. The physical scale model has been replaced by a streaming model. Buying music will be supplanted long before any hypothetical consumer impact takes place. The Canadian business model is based on investment at the bottom level, and music publishers are doing that. Today we can buy a song from a wide variety of sources for 60¢. There's no reason to believe that extending term provision will have any meaningful impact on a consumer.

It enhances the ability of Canadian companies to invest in developing Canadian culture further over the long term. Thank you very much Mr. Chairman.

(0930) The Chair :

Thank you, sir. We're going to move on now to UPS Canada. Ms. Falcone, go ahead, for five minutes.

Ms. Cristina Falcone (Vice-President, Public Affairs, UPS Canada) :

Thank you, Mr. Chair, and committee members. Good morning. My name is Cristina Falcone, and I am honoured to be here to testify on behalf of UPS Canada, our over 12,000 employees, and the thousands of businesses and consumers we serve across the country. As a global logistics company, UPS has watched businesses grow from tiny home operations to companies with formidable reach outside their borders. For Canada, like other countries, the new digital economy is shaping the way we do business, and with that comes a tremendous amount of potential to tap into markets and production chains all over the world.

At the same time the global trade economy grows, there is a pressure on Canada to stay relevant. The majority of the world's growth is happening outside of the Canadian border, and that isn't going to change. Canada is facing a significant aging population whose consumption tends to drop after retirement. In addition, as witnesses stated this morning, the role of imports to Canada for Canadian manufacturers and business is just as important and impactful as exports. Compare this with Asia, where by 2030 there will be 2.7 billion middle-class consumers.

For Canada, one of the main attractions of the TPP is enhanced trade access to emerging dynamic markets. As emerging market consumers enter the middle class, they become interested in purchasing the goods and services that Canada has to offer, including energy and food products, as well as financial, business, and construction services. TPP is a comprehensive and modern international trade agreement that will give Canada the competitive edge it needs, offering Canadian companies preferential access to a market of 792 million people, and close to 40% of the world's economy.

TPP countries comprise some of the fastest growing markets in the world, as well as two of the world's three largest economies. We see this as a key opportunity. UPS is the lead partner and mentor in the Toronto Region Board of Trade's trade accelerator program, which you heard about this morning, as well as other similar programs in conjunction with the Canadian Manufacturers and Exporters, and Startup Canada. In the past six months, UPS has delivered go global boot camps in over seven locations across Canada.

Our model is to clearly communicate the provisions of trade agreements and global purchasing trends, and help companies use these changes and information to gain market advantage. TPP will begin to open doors for smaller players across all the member countries. Without TPP, we could eventually find ourselves on the outside looking in. As emerging markets take their places at the table, global trading is taking on a shape the world has never seen before.

At UPS we operate around the world, and as supply chains become increasingly global, we see that North America, South America, Europe, and Asia will be important all at the same time. If Canada wants to compete in that world seamlessly, including maintaining our important trade relationships with the United States and Mexico, and with leverage, TPP must be approved. I've touched on why this deal is important for access, but the content of the agreement is equally important. It will bring much needed modernization to international trade policy.

It is a deal custom crafted to the opportunities and demands of a networked world. It eliminates thousands of taxes in the form of tariffs, making Canadian businesses more competitive. It was built for the needs of digital commerce, with the standards to make sure trade rules recognize the power of growth and the special demand of an increasingly interconnected consumer-driven world. Importantly, it cleans out the clutter at customs, with fewer documents and more electronic processes and clearance, to help goods pass through customs more easily and get to customers faster.

For the first time in any trade agreement, it has a

chapter devoted exclusively to small business. The Internet has turned the barriers to SMEs reaching global markets into on-ramps, but what technology offers, outmoded border processes often deny. Opaque regulations, complex paperwork, and slow delivery of small shipments all conspire to cause SMEs not to venture across borders. At UPS we have seen that even small companies, once they decide to move beyond their borders, grow at faster rates and often become our largest customers that we service in Canada.

The agreement addresses many of the issues with customs clearance certainty, alignment of regulations, and national treatment, which will begin to open doors for small to medium-sized businesses in Canada, letting them drive growth and create jobs. With the TPP, Canada has the opportunity to expand its economic partnerships. We also have the opportunity to shape the rules now that will govern trade relationships in the 21st century. One thing is certain, while we review the provisions of this trade agreement, and weigh the risks and the benefits, global commerce won't hit the pause button.

(0935) The Chair :

You have about half a minute. Go ahead, if you want to wrap up some comments.

Ms. Cristina Falcone :

As we're reviewing all these provisions, global commerce continues. It is our opinion that we need to expedite the opportunity to enable small businesses to grow.

The Chair :

Thank you. Thank you, panellists, for being on time. Moving on, we're going to now have some dialogue with the MPs. We're going to start off with the first five minutes going to the Conservative party, with Mr. Hoback. Go ahead, sir.

Mr. Randy Hoback :

Thank you, Chair. Thank you witnesses. Ms. Falcone, you touched on something that maybe we haven't talked enough about, the actual process of taking stuff across the border and the paperwork and the ability to get goods shipped in a speedy fashion. We had fruit producers before us yesterday saying that it was vital to their industry that they not have a shipment of lettuce get held up at a border for a week or two because of improper paperwork or just the functionality of the border.

How does TPP assist you in making sure that Canadian goods that are bought—you used the example of Internet goods, small goods, small manufacturers shipping stuff across the world into TPP countries.... How does it make it easier for them to get their goods into other areas?

Ms. Cristina Falcone :

We call this the modern trade agreement because it is addressing many issues that previous agreements did not, including NAFTA. There's a lot of work right now with the Beyond the Border agreement and various working groups to address what wasn't included in NAFTA, because commerce has changed. There's actually a whole new customs

chapter in this agreement that addresses many of these issues. For example, electronic pre-arrival processing and clearance goes beyond the WTO trade facilitation agreement, which only commits parties to pre-arrival processing of information. That gives the certainty that by the time a shipment has arrived at the border, it has been cleared. It gets rid of that holdup...time release guarantees. We always look at customs provisions in terms of how they are going to make Canadian companies more competitive in the markets we're competing with. Having that time release gives them time-in-transit advantage.

Also, there is a de minimis provision in this as well whereby each country is going to look at what the threshold is that they set as duty- and tax-free and come up with an economically viable figure for it. This helps with the low-value, smaller shipments, which we often seek from small businesses as an entryway, selling online. We work with Mompreneurs; we work with various companies, such as eBay Canada, that are starting businesses from their homes. It's often these low-value shipments that, when they get caught up, can make a difference to their success or otherwise.

Mr. Randy Hoback :

When you looked at the history of the customers you have here in Canada, you made a comment about how you've seen them grow and how exports have driven that. Can you give us a couple of examples of these?

Ms. Cristina Falcone :

Sure. I won't name them, but I can give you an example of recent companies that we've met with. We had one recently speak to management at our organization. It's a tea company. They're tea manufacturers, and they started in their home. Then they started to expand beyond their borders and now they're shipping all over the world. One example he gave was that they actually had to pull out of selling into Australia because of customs issues and market entry issues. We asked them what the key markets they were looking at were, in terms of growth. They were Chile, Peru, Australia. This is one example of how the provisions in this customs

chapter in the agreement can help this already successful company grow even further. Other organizations that we've helped started in the basement of their company: fine scents, ranging from even gluten-free products and food to a company in Alberta.... The main thing we ask them is what is hindering their success. It's the non-tariff barriers, as we've heard from other witnesses this morning. That's why we place such a strong focus on that. TPP does certainly reduce tariffs in key markets such as Vietnam and Malaysia, but it's really those non-tariff barriers that are going to help the SMEs grow.

It's the non-tariff barriers that cause them to pull back from global trade when they receive that heads up, because they don't have the resources to deal with the issues.

Mr. Randy Hoback :

On those non-tariff trade barriers, then, in TPP we have a mechanism to deal with those situations, if something should come up. Is that correct?

Ms. Cristina Falcone :

There are provisions in there to prevent those barriers from happening in the first place—the friction.

(0940) Mr. Randy Hoback :

Mr. Hutton, concerning IP protection we heard a witness in Quebec City saying that we shouldn't worry about life plus 70, because that's the norm throughout the world now. Is that a fair comment? Would you agree with it?

Mr. Robert Hutton :

Absolutely. As a matter of fact, the Organisation for Economic Co-operation and Development worldwide has cited Canada as one of the weakest jurisdictions for IP protection, purely because life plus 70 isn't in effect in Canada.

Mr. Randy Hoback :

Do you know what “freedom to operate” means?

Mr. Robert Hutton :

Yes

Mr. Randy Hoback :

Do you believe in freedom to operate?

The Chair :

Mr. Hoback, you have 15 seconds left.

Mr. Randy Hoback :

As far as freedom to operate, do you believe that should be a policy Canada should have?

Mr. Robert Hutton :

In what context, sir?

Mr. Randy Hoback :

To me, when I look at freedom to operate, I call it freedom to steal. Some people are saying we should have everything open so other companies can take that knowledge, apply it to whatever they're building, and build their sector—

Mr. Robert Hutton :

Sir, my music publisher's opinion is that freedom to operate is not freedom to utilize somebody else's intellectual property to your advantage without compensation to the creators and originators of that intellectual property.

The Chair :

Thank you, sir. We're going to move over to the Liberal Party for five minutes. Mr. Fonseca, you have the floor.

Mr. Peter Fonseca :

Thank you, Chair. Thank you to the witnesses for their excellent presentations. As I was listening, all three of you were talking through the lens of what the impact would be, good or bad, for the environment, for IP, and for logistics. Mr. Hutton has mentioned that's the only way he will look at this agreement, and he was not looking at it in a holistic way. As parliamentarians, our job is to look at it holistically.

As we're looking at it, some of the key factors in terms of our decision-making will be an increase of good paying jobs here in Canada, an increase in trade, and the opening up of markets around the world. My question, Ms. Falcone, is this: Has UPS looked at how many jobs the TPP would bring to Canada through UPS?

Ms. Cristina Falcone :

I don't have jobs related to the TPP specifically, but what I can tell you is that at UPS, every 22 packages that cross the border create or sustain a job at our company. We've certainly seen patterns that once a trade agreement is signed, we see growth in our volume, which leads us to expand our facilities and to add jobs across all areas, including teamster jobs and management positions. Trade, to us, definitely has a correlation with growth. As I mentioned before, with small businesses and larger organizations, we see companies that trade beyond Canada grow at a faster rate than those that don't.

Mr. Peter Fonseca :

You can't quantify that with a number.

Ms. Cristina Falcone :

I can't quantify specifically to this agreement. We are looking through analysis on projected growth of volume.

Mr. Peter Fonseca :

Thank you. Mr. Hutton, do you see an increase in jobs through the provision around IP and increasing that from 50 to 70 years? How would that help in terms of job growth?

Mr. Robert Hutton :

That's a great question. I would answer you by saying we have to look at how many jobs will be lost if we don't, more so than jobs that are created. Our members are trying to sell products into foreign markets. It's the only growth market for our members, by selling musical compositions to TV pilots and movies, into foreign markets, and so on. It's difficult to do so when you're on a different basis in protecting that intellectual property than for those markets you're selling them into.

We have to look at the reality that if we don't create that financial instrument to continue investing, will people start leaving the market because they're not being compensated sufficiently for the work they create? I'm not trying to be evasive on your question, but I'm putting it back to you saying that we'll lose a lot of jobs if we don't look at this.

Mr. Peter Fonseca :

The TPP first started to be negotiated with a number of countries in 2006. Canada was late to the game. We got in three years or four years ago. We were one of the last three countries to get involved in the TPP and to be at the table. Where we are right now, it doesn't seem like anybody has any urgency to ratify the TPP. That's what we're finding globally with the 12 countries that are signatories to the TPP. Do you have an understanding of why that would be, Ms Wilson?

Ms. Jacqueline Wilson :

In terms of the timing, I don't have an opinion on why that is, but I think this means we have the opportunity to take a look per

chapter at what this is going to mean. For something like the environment, we need to go through it line by line, see what's protected, and notice how weak this

chapter is and how little impact this

chapter is going to have to protect the environment.

(0945) Mr. Peter Fonseca :

How would you improve it? What would you suggest as changes to that chapter, if you had that opportunity?

Ms. Jacqueline Wilson :

The first main issue is the language. It's weak, and it provides a lot of discretion. I'll give you an example. In

article 20.5 it talks about the protection of the ozone layer. What the

chapter does is use words like “recognizing that emissions of certain substances can significantly deplete the ozone layer”, and “recognizing the importance of public participation, but in accordance with the parties' systems of participation already in place”. It commits the parties only to take measures to control the production and consumption of trade in ozone-depleting substances. We need a ban. It's too weak. Saying you should take measures is not well defined enough to control the trade of ozone-depleting substances. There should be a ban on those trades.

The Chair :

Thank you. That wraps up your time, Ms. Fonseca. We're going to move over to the NDP now, for five minutes. Ms. Ramsey.

Ms. Tracey Ramsey :

Thank you so much for your presentations this morning. Jacqueline, you bring an interesting perspective that we haven't heard. It's a very important piece that we sit and talk about because everything we're discussing relies upon this planet and relies upon keeping our natural resources in Canada, including our water, and having protection around those. We know the ISDS provisions have serious implications for us, as parliamentarians. In being able to enact legislation to protect them, we could be sued under ISDS.

In trying to follow through with signing onto the climate change accord in Paris, we could end up being sued by corporations that view that as a threat to their profits. Do you think we'll be able to reach the climate goals we have signed onto in Paris, if we sign the TPP?

Ms. Jacqueline Wilson :

This is going to be a barrier to taking strong action on climate change. What provisions like the ISDS provisions put in place is an assumption the status quo is working. We know for something like climate change it's not. If we take strong action, which we need to and we're committed to do, those are exactly the types of measures that can be challenged under the ISDS provisions, and that's going to be a problem.

Ms. Tracey Ramsey :

Yes, it's going to be a huge problem for all of us, and the government that signed us on, to say we take this seriously and we're going to do this. All Canadians want this to happen. We need to address this. We had a 20-year-old before our committee yesterday saying, “You're erasing hope by signing the TPP. You're leaving a burden on our youth they won't be able to overcome in signing this agreement”. Regardless of the financial benefits, we have to look at the implication to our environment and people. I'd like to ask Ms. Falcone a question.

We had Jim Balsillie before the committee, from RIM, one of the greatest Canadian success stories we've had in innovation and technology, with its ability to tap into a global market, as well. He said there's nothing in the TPP that specifically advances any Canadian companies, and he stressed how the ISDS provisions in the structure are a seismic loss of autonomy and authority. Do you agree with that statement?

Ms. Cristina Falcone :

I would say UPS works closely with groups like the Canadian Manufacturers and Exporters, that are in support of this agreement, and are made up of members that are producing goods in Canada and exporting. As I mentioned earlier, it does address digital commerce, and in our view the innovation agenda ties strongly to small business and the ability of Canadian companies to leverage the Internet to sell—

Ms. Tracey Ramsey :

He also told us we would never see another Canadian success story like RIM, or an innovation, if we signed the TPP. He spoke in opposition to the TPP innovation chapters, but the question specifically is about ISDS. Has your organization looked at the implications it would have on those Canadians you say you employ? Their health costs would go up, their pharmaceutical costs would go up, and under ISDS provisions we could be sued for trying to implement a pharmacare program. Is that part of what you take into account when you're looking at the TPP?

Ms. Cristina Falcone :

We look at all of this, and the competitive or disadvantage to organizations. I would say Canada has the same provisions as it is seeking to compete with in these other countries. It's a provision they can also leverage. It's a fact of the matter of competition. If we look at it, there's the competition that is going to come into Canada regardless.

(0950) Ms. Tracey Ramsey :

It has to be about people, too. It has to be about people, and it can't just be about what's good for corporations. There is the other aspect that you're a Canadian company—

Ms. Cristina Falcone :

It also provides consumers access to—

Ms. Tracey Ramsey :

Yes, you have workers in your company. Presumably you care about their livelihoods and their well-being. This is the balance of the TPP: out of the 30 chapters, it is the six that deal with traditional trade. It's the others that are concerning: the environmental chapters, the ISDS provisions, the others. When you look at the TPP, do you look at the entire agreement and say, “Okay, how will this impact me, as a Canadian, my family, my neighbours?” Or is it simply that you say, “This will advantage us in a business sense”.

Ms. Cristina Falcone :

We also service consumers. More and more of the percentage of the shipments we deliver, a high percentage, is going to consumers. We look at consumers as our customers versus years ago when it was just the businesses selling A to B. The agreement we see gives consumers advantage in terms of access to goods. The ISDS provisions, which could be a risk to Canadians, also have those equal advantages in terms of the other countries, and how Canada is going to protect them. I would say from us looking at it holistically, there's ISDS provisions also in NAFTA. It comes with part of the program with trade agreements.

There's nothing in there that's different that we would say would put Canadians at a significant disadvantage or our employees.

The Chair :

I'm sorry, Ms. Ramsay. Your time is up. We're going to have to move on to Mr. Peterson for five minutes. Go ahead, sir.

Mr. Kyle Peterson :

Thank you, Mr. Chair. Thank you, everybody, for your presentations today. It's nice to have a fellow lawyer on the panel, because we've heard a lot of talk about ISDS and, frankly, some of the positions are based on mischaracterization and misinformation on what the ISDS is meant to do. In fact, the ISDS will protect Canadians who have operation overseas as well, so it cuts both ways, like any trade agreement. I'm not going to suggest that ISDS is not without some risk. There certainly is, but my understanding—and Ms.

Wilson, maybe you can elaborate—is that in order to avail oneself of the ISDS provisions, one must be treated in a discriminatory way by a domestic corporation. A multinational can't just willy-nilly sue the Canadian government because they don't happen to like some regulation. Do you agree with that assessment? Or do you think it's broader and that any corporation can sue the Canadian government or the provincial government because they're regulating trade?

Ms. Jacqueline Wilson :

The way that ISDS has worked in the past—and will work again under the TPP—is that private tribunals looking at these issues are interpreting provisions in a way that gives very broad access to companies to sue the Canadian government. We've been, under NAFTA anyway, the most sued country, and I think the Bilcon case under NAFTA provides a good example. In that case, an American company went through an independent environmental assessment process, a joint review panel out in Nova Scotia. Through a long process, the panel determined that it wasn't an appropriate project to go forward.

They made that recommendation to the government. The government accepted that proposal. After that, the company turned to a NAFTA tribunal that wasn't well versed in our Canadian environmental assessment law and awarded damages. So far, we don't know how much, because that part of the hearing hasn't gone forward yet, but Canada lost. That's the kind of thing that we need to be very worried about, because the idea that they should have gone through the environmental assessment and it should have been a rubber stamp is obviously inappropriate. It's a real process. It should be a real process.

ISDS is opening the door to a company's saying that it doesn't like how the environmental assessment process works. Like a Canadian company, they could have done a judicial review here. Instead, what they get to do is go to a NAFTA panel, which isn't available to Canadian companies, and get money—a lot of money—for it.

Mr. Kyle Peterson :

I've practised litigation for 10 years and, believe me, the judicial process isn't exactly necessarily the best way to settle disputes. There are many private dispute mechanisms in all aspects of life, such as family law. Most divorces are done through private dispute resolution now. I don't think the private nature of it is necessarily the issue. There may be some more issues there, but I don't think we need to say that because it's a private dispute, it's bad. I don't necessarily think it is. In fact, I think it can be more efficient and we can get better results that way.

That seems to be the case through other private dispute mechanisms. There's a lot of talk about ISDS by a lot of people who don't understand ISDS, and I'm happy to hear your input, because as a lawyer you clearly have a better appreciation of it than some others. On the environment, I want to point you to

article 20.4.1 of the TPP, which I'm sure you're familiar with. It's just one line, so I'll read it for you, just to make sure:

...each Party affirms its commitment to implement the multilateral environmental agreements to which it is a party.

From my understanding, wouldn't that reinforce the Paris agreement? If we were a party to it by the time this is ratified, wouldn't that reinforce our commitments to those environmental agreements? How can you say that it weakens it?

(0955) Ms. Jacqueline Wilson :

The first thing to point out, as you were mentioning, is “to which” they are “a party”, right? It's not providing any new standards. It's not requiring the parties of this agreement to meet any standard that they haven't already signed on to.

Mr. Kyle Peterson :

But specifically, you said that the Paris agreement would be watered down. To me, this seems to actually bolster our commitment to those commitments.

Ms. Jacqueline Wilson :

I think the Paris agreement and any climate change action is going to be watered down, based on ISDS and based on other parts of this trade agreement, which would would put in place barriers to taking strong climate action here in Canada. It's not necessarily this

section that's going to do that. It simply affirms our commitment in a way that I don't think has a lot of legal meaning, because we already have a commitment through other agreements.

The Chair :

You have half a minute, sir.

Mr. Kyle Peterson :

Mr. Hutton, I appreciate what you're doing. Just to elaborate, I think someone who owns IP, someone who creates, should be the person who profits from those creations. I appreciate what you're doing. Others who have testified before the committee think that everybody should have free access to any creation and everything should be free online or accessible, not just music, but other types of IP.

The Chair :

You're going to have to be very quick.

Mr. Kyle Peterson :

I'd appreciate your comment, Mr. Hutton. I think you're going to agree with me. Maybe I'll let you talk for 10 seconds on that point.

Mr. Robert Hutton :

Yes, absolutely, I thoroughly agree with you. I think the notion in the world that we can access things online easily does not mean that we should be accessing them for free. The reality is that, down the line, if we don't correct this issue, people won't be creating. The reality is that a creative society is not one that imports all its intellectual property; it's one that creates it. We need to have the environment that ensures people continue to create.

The Chair :

Thank you. That ends the first round. Starting off the second round, we have the Liberal Party and Madam Lapointe, for five minutes. Go ahead.

[ Translation ]

Ms. Linda Lapointe :

Good morning. Welcome. I must say that you have made comments that we have not heard to date. I am really glad you are here. Ms. Falcone, you said that a number of small businesses were working with UPS. Have you estimated how many of your clients are SMEs? Let's say that we skip five years and the TPP is a done deal. You said that, right now, your company is a logistics business that helps transport all the packages from both individuals and SMEs. Do you expect to have more SMEs as clients? Have you made any calculations or forecasts on that?

[ English ]

Ms. Cristina Falcone :

We are in fact working towards that. Five years ago, folks would have looked at UPS and considered us a partner for big business only, UPS being a global transportation company. We've actually made a very focused effort to grow our market share with small and medium-sized businesses, but we're also seeing some good organic growth in terms of entrepreneurship. About 98% of Canadian businesses are small businesses, I believe. That's why we've made the investment to really focus on partnering with these companies.

A lot of them don't get the same attention that other organizations do to help them get started, so we've invested more resources in that. Right now, it's not the largest percentage of our volume. Our goal is to grow the volume amongst those SMEs, tapping into that organic growth that's already happening, and also working with those that aren't getting what they need from their current service providers.

[ Translation ]

Ms. Linda Lapointe :

Earlier, you said that you work with the Toronto Region Board of Trade. Did I understand correctly?

[ English ]

Ms. Cristina Falcone :

We do. We are a lead member with their trade accelerator program, which Ms. De Silva spoke of this morning. We act as a mentor for the companies they've selected to nurture and educate on how to go global. We also work with, as I mentioned, these other companies. Startup Canada is another great organization that's an incubator for very small businesses, micro-businesses, and we've been doing these go global boot camps with them.

(1000) [ Translation ]

Ms. Linda Lapointe :

Earlier, we heard that 50 companies were probably targeted last November and that results could be noticed after 90 days. Have they started to export? Were you able to see that?

[ English ]

Ms. Cristina Falcone :

Yes, we have seen some positive momentum there. Typically, the first country that companies export to is the U.S. You'll find that a lot of these companies start to engage there, but once that comfort level is achieved, they tend to go beyond those borders. Also, a few years ago, we decided to make investments in facilities in Atlantic Canada. We opened up eight operations there. There is significant appetite on that coast in terms of new trade provisions that are going to lower the tariffs on seafood into Malaysia and Vietnam, for example, which are already purchasers of Canadian products. It's only going to elevate that. Again, that's for businesses of all sizes.

[ Translation ]

Ms. Linda Lapointe :

Thank you. Mr. Hutton, what you said this morning is very interesting in terms of increasing the copyright terms from 50 years to 70 years. You see only benefits from that. You said that New Zealand and Australia did not see any costs for consumers. Do you have anything to support that, a study, for example, or would you like to make any additional comments?

[ English ]

Mr. Robert Hutton :

I do not have any specific studies myself, but thank you for the question. We have looked at those studies in New Zealand and Australia. They're purely based on the notion that term extension will cost consumers because they'll continue to pay for physical products that would otherwise have gone into the public domain. But this is not the case because the market is moving toward a streaming model, a rental model, an online model. People are no longer buying physical products. In the future, they will probably not be buying them at all.

The reality is that these pieces of intellectual property will exist online forever and somebody will be monetizing them forever, however this will not be a Canadian anymore. It will be a Spotify, a Tidal, an Apple that will be exploiting those products online, selling them or reaping the benefit of them from Canadian consumers but not putting any of that money back into the Canadian economy. That is the fatal flaw of those studies. They don't recognize that this is the way the model works.

They assume that 20 years from now we'll still be going to a store where we'll be buying a CD or a physical product, and that things that would otherwise have gone into the public domain won't be free then. I'm sorry but this is just a false notion. That's not the way the world is working.

The Chair :

Thank you. Thank you, Madame Lapointe. That wraps up your time. We're going to move on to the Conservatives now for five minutes. Mr. Ritz, you have the floor.

Hon. Gerry Ritz :

Thank you, Mr. Chair. Thank you for your presentations today. Mr. Hutton, I totally agree with you. Everything is digitized now. I download to my iPod. I don't go in and buy the CD. I actually do it on the computer and so on. You're absolutely right that the world is—

Mr. Robert Hutton :

I certainly hope you're paying for it, sir.

Hon. Gerry Ritz :

Absolutely, sometimes double. You guys need a little box that says I can actually leave a tip, because I really like some of these performers. I agree with you on the point that the one thing we're not really looking at is that it's not just about the jobs created; it's about the jobs sustained and maintained, and the possibility of losing jobs. I thank you for that point. Ms. Wilson, I want to follow up on what Mr. Peterson started. You said you're an Ontario entity?

Ms. Jacqueline Wilson :

Yes, that's right.

Hon. Gerry Ritz :

How big a shop do you run? How many lawyers do you have on staff?

Ms. Jacqueline Wilson :

There are about five lawyers on staff.

Hon. Gerry Ritz :

Good. I take exception to this idea that somehow we can no longer drive our own agenda forward as a government. That's absolutely untrue. You're reading between the lines there and sort of making things up. Are you aware of how many TPP countries of the 12 haven't signed the Paris accord?

Ms. Jacqueline Wilson :

I'm going to address your first point first, saying that it's not going to be a problem for challenging our sovereign action on the environment. I mentioned the Clayton-Bilcon case. That's one example but we've also seen other ISDS cases—

Hon. Gerry Ritz :

That's under NAFTA. You also made the point that ISDS is not available to Canadian companies. That's not true. It's reciprocal.

Ms. Jacqueline Wilson :

I didn't make that point, and I agree it's reciprocal so I didn't say that. What I'm saying is that we've seen other examples of particular changes in policy being challenged. For instance, in Germany they decided to turn away from nuclear power and that was challenged under ISDS. That's an example where a policy choice was made and a foreign company was able to challenge that under the ISDS provisions. You can see a similar situation here, where if we make a choice to change something big, to actually fight climate change and make an environmental change that will help, those types of big changes can be challenged by foreign companies.

(1005) Hon. Gerry Ritz :

Yes, okay. I go back to my question. Which TPP countries have not signed on to the Paris accord? You said we could not implement the Paris accord because of ISDS challenges. Which countries would then challenge us? We're specifically talking about the TPP here. Which countries have not signed on to the Paris accord that would take us to task?

Ms. Jacqueline Wilson :

It's not about whether the country has signed on to the Paris accord. All these countries have, to my knowledge. It's about whether it can be challenged by a company when we take an action to implement it. The ISDS we're talking about involves a foreign company, not a foreign government, challenging our actions. We have to make big changes to fulfill our Paris commitment. Once you make a change it can be challenged by foreign companies.

Hon. Gerry Ritz :

Sure, but any company operating under that foreign jurisdiction has quasi-agreed to the Paris accord because the government has signed on its behalf. How would you then have a rogue company that would sue Canada specifically when it's listed as a company in Japan, which is very much focused on climate change as a lot of other countries are? The U.S. is. It's Obama's legacy. Australia and New Zealand, all of these countries are very much focused on climate change, as are we. I don't for a second buy the idea that somehow ISDS is going to be the catch-all for any rogue company that wants to sue Canada for whatever action. I just don't buy that.

Ms. Jacqueline Wilson :

That analysis doesn't take into account how this will really work. Saying you're a company from a country that signed on to the Paris agreement doesn't mean that you won't—in fact, you probably will—use the ISDS provisions to challenge other governments' specific actions that you think are affecting your trade or investment for whatever reason. Being a company from Japan or being a company from the U.S. doesn't mean you can't use ISDS to challenge Canadian government action to fight climate change.

Hon. Gerry Ritz :

I think you have a bit of—what am I going to call it—a laser view on certain things where it actually doesn't work that way. I'm not a lawyer like my friend Mr. Peterson , but the point is that to be actionable, it has to be that a government agreed to a certain thing, then changed their mind, and the company is out money, time, and so on. That's what they sue for. It's not just “We don't like what you're going to do on acid rain. We're going to sue you.” It has to be that a government put in regulations, told them it was okay to move ahead on this point, and they spent money and time on it.

They allocated resources to it. That's what they sue for. It's to cover off what they're not able to move forward on.

The Chair :

I'm sorry, we only have 15 seconds, so please wrap up.

Ms. Jacqueline Wilson :

Okay. It could be something like that, though. A regulatory change is something that could be challenged, right? Unless we're staying with the status quo, it can be challenged under these provisions.

A voice: [ Inaudible—Editor ]

The Chair :

I know that sometimes we get in a fiery debate, and I think that's good, but sometimes we have to let each other have a little space here. We'll move over to the Liberals for five minutes. Ms. Ludwig, you have the floor.

Ms. Karen Ludwig :

Thank you very much for your presentations, and thank you for bringing these issues forward. I think very few Canadians wouldn't be concerned particularly about the environment as well as intellectual property and the opportunity for business expansion. Following up on Mr. Ritz's question, of the 175 countries that signed on to the Paris accord, yes, all of the 12 countries listed under the TPP did sign as well. Let's say we ratify the agreement. If Canada holds the TPP member businesses to the same standards that we hold our domestic businesses, how likely will it be that the government would be sued under ISDS?

Ms. Jacqueline Wilson :

I think it's very likely, because it's an opportunity available to foreign companies not available to Canadian companies. They have the opportunity to get huge amounts of damages, which aren't available. My example of the Bilcon case is a good one. If it was a Canadian company that was upset with how the environmental assessment process worked, they would bring an application for judicial review through our court system. What would be available to them would be overturning the decision, or changing the decision, but they wouldn't get damages. It's not available to them.

Instead, because it's a foreign company, they get to go to a private...if there are other problems with the system, or the way in which all the terms have been interpreted, then they get to ask for damages and get a lot of money. So I think it's available to them, and they'll use it.

(1010) Ms. Karen Ludwig :

I guess I maybe misunderstood. I thought that if Canada was holding foreign businesses to the same standard as domestic businesses, it would be unlikely that the government would be sued. I thought it was more so if Canada was holding the foreign entity to a different standard than a local entity.

Ms. Jacqueline Wilson :

That's fine in theory. That's the theory of the terms, but we have to look at how these terms have been interpreted. I'm sorry to harp on the Bilcon case, but what they said there was that they were treated differently. It was a specific environmental assessment process, so there were concerns in the analysis of that case about what they were comparing it to. How can you really compare two different environmental assessment processes looking at totally different projects? They won at the NAFTA tribunal.

So it's a little bit more complicated than saying, “Don't worry, if we treat everyone the same, it won't happen.” It's more complicated than that. We have to look at how it has really worked in the past.

Ms. Karen Ludwig :

On that as well, if Australia, the United States, and Canada do ratify the TPP, and then there is the risk of breaching commitments made in other bilateral environmental agreements, why would the countries ratify at such a great risk?

Ms. Jacqueline Wilson :

Can you explain your question?

Ms. Karen Ludwig :

In terms of ratifying the agreement, and we either ratify or we don't ratify, when we stand the risk of breaching other agreements and other bilateral agreements that we've done previously, why put ourselves in that risk? Or is there that risk? Will we threaten other agreements?

Ms. Jacqueline Wilson :

One of the issues that I didn't raise in my presentation that's also important is in terms of looking at the TPP and how you can enforce the environment

chapter and what we've all agreed to. One of the main issues is that t