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View Judy A. Sgro Profile
Lib. (ON)
I call this meeting to order.
This is meeting number 17, on Friday, February 26. Pursuant to the order of reference of Monday, February 1, 2021, we are studying Bill C-18, an act to implement the agreement on trade continuity between Canada and the United Kingdom of Great Britain and Northern Ireland. Today's meeting is webcast and is taking place in a hybrid format, pursuant to the House order of January 25, 2021.
Welcome to all of the committee members, the staff and our witnesses. From 1 p.m. until 2:30 p.m., we have the following witnesses who will be presenting to the committee.
We have, from the Business Council of Canada, Trevor Kennedy, director, trade and international policy. From the Canadian Alliance of British Pensioners, we have Ian Andexser, chairman. From the Canadian Cattlemen's Association, we have Fawn Jackson, director, international and government relations; and Doug Sawyer, co-chair, international trade committee.
From the Canadian Federation of Independent Business, we have Corinne Pohlmann, senior vice-president, national affairs and partnerships; and from Canadian Manufacturers & Exporters, we have Matthew Poirier, director, trade policy.
Welcome to you all.
Mr. Kennedy, if you'd like, please lead off.
Trevor Kennedy
View Trevor Kennedy Profile
Trevor Kennedy
2021-02-26 13:04
Thank you very much.
Madam Chair, committee members, thank you for the invitation to take part in your meeting on Bill C-18, an act to implement the agreement on trade continuity between Canada and the United Kingdom.
The Business Council of Canada is composed of 150 chief executives and entrepreneurs of Canada's leading enterprises. Our members directly and indirectly support more than six million jobs across the country and hundreds of thousands of small businesses. Representing different industries and regions, these men and women are united in their commitment to make Canada the best country in which to live, work, invest and grow.
It's been said many times before, but it bears repeating, that Canada is a trading nation, and many Canadian companies rely on the rules-based trading system, as well as our networks of bilateral free trade agreements, to provide certainty and access to global markets.
Given its prominent role in the economy, we expect international trade to be an important part of Canada's economic recovery. The facts speak for themselves. Merchandise exports to the world fell by 12.3% in 2020 because of the pandemic, a decline of $70 billion. Canada needs to work hard in the years ahead to restore and grow our exports from precrisis levels.
The potential loss of preferential market access to the U.K., secured under CETA, presented a serious risk to the recovery for Canadian exporters. The U.K. is Canada's third-largest merchandise export market. It was also one of the few markets in the world in which we were able to sustain our exports from last year despite the crisis.
The U.K., as part of the EU, has been a critical component of Canada's fast-growing transatlantic trade relationship. Before the pandemic, it accounted for 40% of Canada's merchandise exports and 36% of service exports to the EU. Merchandise exports to the U.K. grew by nearly 12% since provisional application. Canadian exporters had momentum in the U.K. before the pandemic, and it's important that we continue to grow our trade.
When I spoke to the committee during negotiations, I mentioned how time-sensitive a Canada-U.K. trade deal is. Not only did we risk losing preferential market access by reverting to the WTO most-favoured nation tariff rates, but many of our peers were negotiating bilateral deals that would have undermined our competitiveness in the market.
Given our existing trade relationship with the U.K. under CETA, and the uncertainty surrounding the future of U.K.-EU relations during the negotiations, the transitional trade deal approach taken by our negotiators was the best approach for Canada. The transitional approach provided Canada with an opportunity to take this new relationship into account when we negotiate a long-term trade deal.
As with Canada's existing free trade agreements, we want to ensure that we reach a conclusive deal in the future with appropriate consultation and assessment of the market opportunities for Canadian firms. The transitional approach will also allow us to do that while we maintain our position in the market.
We were pleased to see that a Canada-U.K. trade continuity agreement manages to preserve our gains under CETA. Like CETA, the TCA's benefits include the elimination of 98% of tariffs on Canadian merchandise exports to the U.K. and will eliminate 99% within a few years. This is in addition to important market access opportunities in government procurement and services, among others.
At the same time, because Canada and the U.K. agreed to negotiate a new deal in the future, the TCA does not require that our future trade relationship be based exclusively on our existing EU agreement.
Our priority today is to quickly ratify the TCA. The existing memorandum of understanding between Canada and the U.K. is a helpful stopgap measure but it is time-sensitive. The U.K. is retooling its international relationships and there is a clear opportunity to reimage our bilateral trade and investment ties with a comprehensive and ambitious trade agreement. We hope both parties can start working on this with stakeholders as soon as the TCA is in force.
The Business Council of Canada reiterates the importance of swiftly ratifying the TCA. This agreement provides certainty for businesses at a time of great uncertainty. It will help our economy to recover by driving trade and attracting the capital needed to innovate, grow and improve Canadians' quality of life through the creation of well-paying jobs.
Thank you for the opportunity to address your committee. I look forward to answering questions.
View Judy A. Sgro Profile
Lib. (ON)
Thank you very much, Mr. Kennedy.
We move on to Mr. Andexser, for the Canadian Alliance of British Pensioners.
Ian Andexser
View Ian Andexser Profile
Ian Andexser
2021-02-26 13:09
Thank you, Madam Chair, and thank you to all committee members for the opportunity to address you today.
I am sure many of you are wondering why I have been given the opportunity to speak to a committee formed to discuss future trade agreements between the U.K. and Canada. I hope in the next few minutes to clearly explain why we feel there is an important connection.
I may be one voice, but I say “we” because I speak on behalf of approximately 136,000 British pensioners who have chosen Canada as their home in retirement. The vast majority of these people, like me, emigrated many years ago in response to Canada's request for certain skilled labour, such as nurses, teachers, firefighters and tradespeople, for the booming oil industry in the 1970s. Others came to Canada, after working all their lives in the U.K., to be with family members who had already emigrated.
Before leaving the U.K., we worked and we paid mandatory contributions into the British state pension scheme, which is the equivalent of CPP, assuming that upon retirement we would be treated equally to all British pensioners residing around the world.
However, we are not treated equally because we have chosen to live in Canada, and indeed neither are pensioners in most Commonwealth countries. This results in almost half a million pensioners never receiving the annual uprating in their British pensions. We are known as frozen pensioners.
You may ask why.
One answer is that the U.K. has continuously refused requests from Canada's officials to sign a reciprocal agreement to stop this discrimination. They argue that pension increases are to take into account inflation in the U.K., but they ignore the fact that they already index pensions for half a million expats overseas in many countries, including, just to the south of us, the United States.
A recent U.K. House of Commons briefing paper covering frozen overseas pensions states that the unfreezing of British pensions in Canada did not arise during the negotiation of a social security agreement with Canada in 1959. This is not surprising. The pension payable overseas was only introduced in 1946. Movement around the world was in its infancy. There were very few people affected in 1959, but here we are 61 years later, and the U.K. still clings to this piece of history.
As more people started to be affected during the high inflation days of the 1960s, more and more United Kingdom MPs began to receive correspondence from pensioners abroad protesting the unfairness of the freezing policy. This protest has magnified over the years as travel around the globe has exploded.
Let me give you a couple of examples of the impact of this policy here in Canada.
Peter Duffey, a 95-year-old from Vancouver, lives only 300 yards from the U.S.A. border. He worked for 40 years in the U.K. He flew bombers in the Second World War and he still receives 52 pounds per week, as he has done for 30 years. A similar individual in the U.S.A, however, is paid 134 pounds. Anne Puckridge, 95, of Calgary—also a war veteran—receives only 72 pounds a week instead of 134 pounds.
Both of these seniors have been cheated out of thousands of pounds of their rightful pension, and the same is true of countless others of the 136,000 frozen pensioners in Canada.
The standard boilerplate response that we receive from the U.K. is that this is a policy that has been continued by successive governments for many years. However, having a history doesn't mean something is right. What was applicable 70 years ago isn't in today's world. If something is morally wrong, it is wrong, plain and simple.
Some years ago, our association joined forces with a similar group in Australia to begin a consolidated approach to seeking justice, and the International Consortium of British Pensioners now advocates on behalf of frozen pensioners everywhere in the world.
Only two months ago, Sir Roger Gale, a Conservative MP in the United Kingdom for 38 years and chairman of the All-Party Parliamentary Group on Frozen British Pensions, released a report that was extremely critical of his own government for perpetuating this practice.
For decades, the U.K. has maintained that they are not entering into any new agreements covering frozen pensions, yet with Brexit, the U.K. recently signed new pension agreements with 23 countries to ensure uprated pensions continue for all expats in EU countries, as indeed they should. The U.K. can no longer claim it's not entering into new agreements, and Canada should most certainly be given the opportunity to enter into an updated agreement under the current trade negotiation discussions.
Earlier this week, Sir Roger Gale invited more than 30 MPs from the U.K. and Canada to discuss ways to advance talks on the frozen pension issue, and a number of Canadian MPs, including pensions minister Deb Schulte, suggested that your upcoming trade negotiations would certainly be a good starting point.
On behalf of the 136,000 frozen pensioners residing in Canada, we would be extremely grateful if you could raise this issue with your counterparts across the pond. As Canada enters into trade negotiations with the U.K., worth an estimated $27 billion annually, there is no better time to have this critical discussion.
This policy is estimated to cost the Canadian economy close to half a billion dollars every year, and the onus to support those struggling on very low incomes should not fall on the backs of the Canadian taxpayers, as it currently does through subsidies such as GIS and welfare.
One recent high commissioner to the U.K. told us that the only thorn in an excellent bilateral relationship was that of frozen pensions in Canada. Surely one would have thought that as a major Commonwealth partner, Canada would have been the last place where this immoral, unjust and discriminatory practice could have been allowed to perpetuate for so long.
I hope that I have demonstrated that the current policy is a cost to Canada and deeply impacts the well-being of many of the most vulnerable in our society.
In conclusion, I realize that this issue might not appear to fall within the parameters of normal trade discussions, but now more than ever, your committee is in an excellent bargaining position to demand that the U.K. quickly respond to the recent official request from Canada to sign a social security agreement.
One definition of the word “trade” is to willingly give things or services and get other things or services in return.
View Sébastien Lemire Profile
BQ (QC)
Madam Chair, I apologize for interrupting Mr. Andexser, but the interpretation is not working.
View Judy A. Sgro Profile
Lib. (ON)
Mr. Andexser, could you just hold for a moment?
View Sébastien Lemire Profile
BQ (QC)
The interpretation is back.
Thank you very much.
Ian Andexser
View Ian Andexser Profile
Ian Andexser
2021-02-26 13:17
We feel that momentum to end this policy is now on our side. Please use your voices to help us.
Thank you. I would be pleased to answer any questions.
View Judy A. Sgro Profile
Lib. (ON)
Thank you, Mr. Andexser. I appreciate that.
We'll go on to the Canadian Cattlemen's Association.
Ms. Jackson or Mr. Sawyer, whichever one of you would like to go forward, please begin.
Doug Sawyer
View Doug Sawyer Profile
Doug Sawyer
2021-02-26 13:17
Thank you, Madam Chair, to you and your fellow committee members.
I am Doug Sawyer. I'm a rancher out here in the west, in snowy Alberta. I am also a board member of the Canadian Cattlemen's Association, the national voice of Canada's beef farmers and ranchers. With me today is Fawn Jackson, director of government and international relations with the CCA.
Thank you for the opportunity to reappear before the committee regarding the act to implement the agreement on trade continuity between Canada and the United Kingdom of Great Britain and Northern Ireland. We will refer to this agreement as the “continuity agreement”.
Today we advocate for two things. Firstly, we strongly encourage a swift return to the negotiating table to establish a permanent, progressive and ambitious free trade agreement, with a culmination in the U.K. joining the CPTPP. Secondly, we cannot replicate the trade agreement that we have under CETA in a Canada-U.K. FTA or CPTPP.
I will now expand on these points.
The beef industry is one of Canada's largest agricultural sectors, supporting a total of 228,000 jobs and a contribution of $17.9 billion to GDP. Canadian beef and livestock genetics are sold to 58 markets around the world and about 50% of what we produce is actually exported.
Although COVID has been extremely difficult for all Canadians, agriculture stands out as a vital and resilient part of our whole economy. I am pleased to report that while COVID was very difficult for the first part of the spring of 2020, we were able to recover and the value of trade was up 1.4% in 2020 over 2019. Having a record year, despite the difficult conditions, demonstrates the value of having robust and ambitious trade agreements in place.
Export Development Canada reports that Canada's agricultural exports are growing three times faster than the overall Canadian average, confirming that agricultural products are a net cash generator for Canada's economy and an area for future growth. This is important context indeed for the conversation we are having today about trade, both for recovery and for the long-term economic health of our great country.
Since it became clear that the U.K. would be exiting from the EU, CCA consistently communicated concerns with trade obstacles being carried over from CETA to the Canada-U.K. transitional agreement and any permanent trade agreement with them.
Last time we presented before this committee, the details of the continuity agreement were not available, but today we are able to share some thoughts on what the deal means for Canadian beef producers.
First of all, on access, Canadian beef will have 3,279 tonnes of access in 2021, and 3,869 tonnes in 2022. All beef must be hormone free.
In 2020, Canada exported 1,415 tonnes, which is within the total access we have gained, with some room for growth.
In the same time frame, the U.K. exported 5,393 tonnes to Canada, almost four times more than we exported to them, and significantly over the access we have in their market in this continuity agreement. Under the continuity agreement the U.K. has maintained duty-free access to the Canadian market, so even if we were able to resolve some of the trade limiting factors on our exports, beef will not be a net even trading partner with the U.K.
In 2020, Canada had a negative net beef trade of almost $14 million with the U.K., and a negative net trade of $83 million with the EU. This net trade deficit has grown since the implementation of CETA. The overall Canada-EU beef trade deficit, which includes the U.K., was a half a million dollars in 2018, $17.3 million in 2019 and an astounding $96.8 million for 2020. Needless to say, CCA is significantly concerned with how beef trade with the EU and the U.K. has actually progressed.
Unfortunately, because of the growing trade imbalance between Canada and the EU, we have had to ask the Government of Canada for some compensation. In future agreements, we must obtain reciprocal access. Anything less is unacceptable to our beef producers. It is disappointing to see that this reciprocity has not been obtained in the continuity agreement.
As you all know, CCA as an organization is a proud advocate of free trade, but we cannot have free trade in one direction without free trade in the other direction.
The continuity agreement does have some improvements. We are pleased with the tariff rate quota, TRQ, administration that will be handled on a first-come, first-served basis, which will make shipping to the U.K. less burdensome. Previously, the quota access was managed through a licensing system. We also recognize that this is a continuity agreement largely replicating CETA, and that without a trade agreement in place, the Canada-U.K. trading relationship could have fallen back to the MFN tariffs, which could halt trade between Canada and the United Kingdom.
For the reasons we have discussed today, CCA's highest priority is achieving a long-term FTA with the U.K. that resolves trade barriers and enables reciprocal trade. CCA is pleased to see both governments committed to negotiating a full FTA starting this year, and encourages both parties to do so, especially given the U.K.'s formal application for access into CPTPP.
Aside from reciprocal access, which we stress is imperative, there are a number of other factors that need to be addressed under a future trade agreement with the United Kingdom. We also advocate for a full systems approval. Canada has a world-renowned food safety and meat inspection system that is recognized throughout—
View Judy A. Sgro Profile
Lib. (ON)
Please deliver your closing remarks, Mr. Sawyer.
Doug Sawyer
View Doug Sawyer Profile
Doug Sawyer
2021-02-26 13:25
I'll skip right down to them.
CCA recognizes the importance of avoiding trade interruptions and the need for a transitional agreement. We are strongly advocating for a swift return to the negotiating table to establish an ambitious agreement. We are confident that Canada has the right team of negotiators, and look forward to achieving the same level of ambition that was achieved in the CPTPP agreement, with our U.K. partners.
I thank you and look forward to taking your questions.
View Judy A. Sgro Profile
Lib. (ON)
Thank you very much, Mr. Sawyer. You have my apologies for having to interrupt you.
From the Canadian Federation of Independent Business, Corinne Pohlmann is next.
Corinne Pohlmann
View Corinne Pohlmann Profile
Corinne Pohlmann
2021-02-26 13:26
Good afternoon, everybody.
Thank you for the opportunity to be here today to share the CFIB's perspective on Bill C-18.
You should have a slide presentation that was sent to you by the clerk. I'm hoping to walk you through it, so I hope you'll have that in front of you as I present my speaking notes over the next few minutes.
First, I just want to say that the CFIB is a non-profit, non-partisan organization that represents about 110,000 small and medium-sized businesses across Canada. They come from every sector of the economy and are found in every region of the country.
It's important to remember that, normally, Canada's small and medium-sized enterprises employ about 90% of Canadians, and they're responsible for the bulk of new job creation. However, the last year has been particularly challenging for many small businesses right across the country, as they had to deal with shutdowns and limited capacity to help Canada deal with the pandemic.
As of early February, you should know that only 51% of businesses in Canada were fully open, that only 39% were fully staffed and that only 25% were back to normal revenues. The CFIB also released some new data just yesterday that found that seven in 10 businesses have taken on new debt during the pandemic, with the average debt being almost $170,000 per business.
I share these staggering numbers to highlight why it is so important to continue to find ways to bring stability and continuity to businesses trying to operate in these challenging times. I think that is what Bill C-18 aims to do.
I also believe that trade, both domestic and international, will be key to Canada's economic recovery. Agreements such as this one are essential in making sure that small and—to be fair—large businesses, as well, have some certainty when dealing with some of our largest trading partners.
To better understand why this is so important to small businesses, I'm going to be referring to a survey that we did back in 2017 that got almost 4,400 responses. As you can see, 31% of survey respondents had some experience with exporting, and 71% had some experience with importing.
These may be slightly higher than what is actually out there, as the survey likely attracted those, but they're not going to be too far off from what's actually the experience of many small businesses. For some, though, it's only an occasional thing. They maybe do it a couple of times a year. Others, though, do engage in trade daily. What's important, though, is that, regardless of the frequency of their trade experience, it needs to be as seamless and as easy as possible if we are to encourage more small businesses to continue to trade internationally.
Which countries do they trade with? Not surprisingly, the United States, of course, dominates the trading experiences of small businesses in Canada. However, as you'll see, more than 5% of small business owners import goods and services from the United Kingdom, and slightly more—closer to 6%—export to the U.K. In fact, amongst small firms, the U.K. is the third most likely region that Canadian small businesses will be exporting to—behind only the U.S. and the EU—and it's the fourth most likely country that Canadian small firms import from. Clearly, it's an important trading partner for small businesses.
We know also that governments around the world are interested in getting more small businesses involved in international trade. Therefore, understanding what motivates them to get involved in trade is still an important question. As you can see, most do it because they see a growing market demand for their product or service, want to expand their business or see good potential market opportunities. However, more than a third—36%—are also citing favourable trade agreements as having an influence on their intention to export. Having trade agreements address small and medium-sized business trade priorities would encourage even more to engage in trade.
That's why we've always welcomed the small business—or SME—chapters that were included in the CPTPP and the Canada-United States-Mexico Agreement, as they're a starting point in recognizing some of the challenges that may be unique to smaller firms.
While CETA did not expressly have an SME chapter, there was some work done through a joint committee to recognize the unique needs of small firms. We would strongly encourage a continued focus on SMEs in this trade continuity agreement. We would also highly recommend that the new Canada-U.K. negotiated trade agreement include a small business chapter that has within it the development of such tools and activities aimed at assisting smaller firms with their trading challenges. It's these types of initiatives that will ultimately encourage more smaller firms to engage in trade.
At the very least, of course, trade agreements have to help small businesses overcome some of the barriers they face. Those challenges can include everything from currency fluctuations to the cost of shipping, but they also include dealing with various duties and taxes and understanding rules and regulations—basically those non-tariff barriers.
We are pleased to see that Bill C-18 will honour the tariff elimination agreements made under CETA, which includes the elimination of 98% of tariffs on products exported to the U.K. right away. That, of course, will go up over the next couple of years.
We're also pleased to see that chapters remain on improving technical barriers to trade, as well as an emphasis on working together on regulatory co-operation. Also, it's important, though, to improve customs and trade facilitation, as this is often where small businesses can get discouraged. Efforts to help them better understand all the various rules, all the various customs processes, will be an important component of making this trade agreement and others really work for small businesses.
While much of the information I'm sharing today comes from a survey done prior to the pandemic, I did want to share some more recent data that illustrates that these issues remain important for small businesses, even during troubling times.
A survey was conducted just last August. In it we asked what the federal government priorities should be or what it should focus on. As you can see, over one-third wanted the government to focus on ensuring favourable trade conditions for small businesses. This actually jumps to more than one-half among manufacturing firms. This is despite all the challenges that were in place at the time.
We want to ask that you ratify Bill C-18 and then move quickly to negotiate a comprehensive trade agreement with the U.K. The trade agreement to be negotiated should include a small business chapter that addresses their unique needs and provides them with tools like a centralized website that has relevant information in plain language. It also should ensure that Canada and the U.K. provide tailored information for small and medium-sized enterprises on what changes to the agreement may impact their existing trade relationships, and how small businesses can benefit from the agreement. It should also focus on making customs processes easier, as this is often where the greatest stumbling blocks are for smaller companies.
Incorporating some of these ideas and moving quickly on this agreement will help make sure that businesses already trading into the U.K. can continue to do so with limited interruption, and could potentially attract even more smaller firms that are looking to expand into new markets to engage in trade.
I want to thank you for your attention. I look forward to answering any questions.
View Judy A. Sgro Profile
Lib. (ON)
Thank you, Ms. Pohlmann.
We move on to Canadian Manufacturers & Exporters, and Mr. Poirier.
Matthew Poirier
View Matthew Poirier Profile
Matthew Poirier
2021-02-26 13:33
Good afternoon, and thank you for inviting me to participate in today's discussion.
It's my pleasure to be here on behalf of Canada’s 90,000 manufacturers and exporters, and our association's 2,500 direct members to discuss Bill C-18, the implications for Canada’s manufacturing and exporting sector, and the future of this vital industry.
Our association’s members cover all sizes of companies, from all regions of the country and all industrial sectors. We represent the majority of Canada’s manufacturing output, as well as Canada’s value-added exports.
With over $20 billion in exports, the U.K. is one of Canada’s largest export markets. Canada-U.K. trade was one of our very first trade relationships and traditionally has been our doorway to the European market. According to our management issues survey, which is a large biennial survey of Canadian manufacturers, the European Union, and the U.K. in particular, is one of the top three markets that exporters see as having the most potential in the next five years.
As the committee knows, this is a unique situation. We've had a free trade agreement with the U.K. for many years under CETA, so the discussion today is all about maintaining that access and then, we hope, a discussion on how Canada can take advantage of a new bilateral trade agreement between Canada and the U.K. We, therefore, fully support the Canada-United Kingdom trade continuity agreement, and we urge swift passage of Bill C-18. This interim measure is required, obviously, while our negotiators hammer out a more permanent Canada-U.K. agreement, and like my fellow panellists, I urge that it happen as soon as possible as well.
However, beyond these mechanical trade agreement issues lies an even bigger problem that I must raise. That is the problem of our declining value-added export performance, a decline that has been accelerating despite signing more and more free trade agreements across the globe.
Let me explain what I mean. Two-thirds of Canada’s value-added exports, the types of exports that Canada makes the most money from, are manufactured goods. In other words, Canadian manufacturers take the raw ingredients, transform them into something of higher value and then sell these goods abroad. This “bigger bang for your buck” type of trade has been declining for years. In fact, with the U.K., manufacturing exports have been declining steadily for five years, even after we signed CETA. Canada can no longer afford to ignore the lost economic potential that the decline in value-added exports represents. It's simply not sustainable.
How do we fix that? We have ideas.
Simply put, Canada’s manufacturer-exporters are too small, and at full capacity. Generally speaking, Canada has a higher proportion of its businesses being smaller SMEs than most of our global competitors. From a fundamental structural perspective, we need to get our companies to invest in their businesses and help them grow and scale up. Larger companies are simply better positioned to take advantage of global trade. CME’s manufacturing survey results back this up. When asked what is holding them back from exporting to new markets, they told us that the risks are too high because they lack a competitive edge with foreign companies. They simply feel that they can’t compete and don’t bother.
It's important that we agree that this structural domestic business problem is driving our export underperformance. Landing new global customers through FTAs is rather pointless if we cannot produce the goods to sell to them at competitive prices.
Now, you might ask yourselves, isn’t this the point of EDC, BDC, CCC and the trade commissioner service? Aren’t they supposed to help derisk exporting and help SMEs get out there? The answer is yes, and we would argue that they are all quite good at doing that. The problem is the disconnect between these great programs and exporters knowing that they exist. When we polled manufacturers, we found that those who used these agencies and programs loved them, but a majority of respondents couldn’t even identify the agencies, let alone the programs they offer. This is a big problem.
Therefore, we have the dual challenge of our exporting companies being small, underinvested in and uncompetitive, and a big gap between government assistance and companies using that assistance.
Here are some concrete actions that we would like to put forward to address some of those problems.
Number one, create a manufacturing and export strategy for Canada that focuses on modernizing and growing our industrial sectors. It needs to help companies invest in the technology that will help them scale up and truly become global players. We happen to have such a plan, which we discussed with many of you in the past, and I would be happy to leave a copy with the clerk.
Number two, launch a made-in-Canada branding exercise at home and in international markets to celebrate our manufactured goods. This will boost awareness of Canadian capabilities and technologies as well as sales and exports. The maple leaf is a global brand with a sterling reputation that we don't take advantage of enough.
Number three, bridge government export agencies and exporters by leveraging the vast networks of business trade associations. This can be done by investing in Canada's trade associations' capacity to link the two sides and act as a concierge service for exporters. The government used to support these types of initiatives to great effect. We think they should again.
Number four, expand our efforts on SME exporter mentorship. Organizing and managing private peer-mentoring networks is another way Canada's trade associations can be used to maximize company-to-company learning.
All these actions are table stakes if we want to play a bigger role in global trade. They will also go a long way to helping current manufacturers maximize their export potential for years to come. However, while we at CME believe these solutions are something we need to work on now, the priority, of course, is ensuring we maintain current global market access.
Let me reiterate that CME fully supports Bill C-18. We need a transitional agreement in place between Canada and the U.K. as soon as possible and, in time, a permanent trade agreement between our two nations.
Thank you for inviting me. I look forward to the discussion.
View Judy A. Sgro Profile
Lib. (ON)
Thank you very much, Mr. Poirier. Thank you to all the witnesses.
We'll go on to Mr. Hoback for six minutes, please.
View Randy Hoback Profile
CPC (SK)
Thank you, Chair, and thank you, witnesses, for coming out on a nice Friday afternoon to talk about trade. It's one of my favourite topics.
I'm going to start off with you, Mr. Sawyer. You raised quite a few concerns about the agreement that we have with the EU, yet this is a copycat agreement that's gone on to the U.K. As we look forward, we're not going to stand in front of this agreement. We're not going to hold it up. I think everybody understands that, but in the same breath, we have to make sure that when we go into our bilateral negotiations, all the sectors are properly represented.
As we go forward, what are the things that you'd key in on that would help the beef sector in Canada be part of that agreement?
Doug Sawyer
View Doug Sawyer Profile
Doug Sawyer
2021-02-26 13:41
I think there are a few. We run into the non-tariff trade barriers that always give us grief. We need to equalize that. We also very much need to equalize our ability to trade in the same amount of tonnage. That's imperative. As you've seen, that huge trade imbalance, which has caused.... As you see, we still have some room to move upward on our quota there.
Those trade imbalances are caused by the non-tariff trade barriers that we're up against. We've been working through those for years, as you well know. We're not making the progress on those that we had certainly hoped for. If we had the non-tariff trade barriers removed, we would soon hit that quota limit. Free trade has to be free trade, so remove the quota limits.
I don't know if Fawn has anything to add to that or not.
Fawn Jackson
View Fawn Jackson Profile
Fawn Jackson
2021-02-26 13:42
It's in a future FTA with the U.K. and also as we move into CPTPP. It has to be imperative in both of them.
View Randy Hoback Profile
CPC (SK)
The odds are that we'll do the British agreement first. I agree with you, Fawn, that we then have to address the science-based approach on all our trade and how other countries are using non-tariff trade barriers and avoiding science to restrict Canadian access for beef or other goods.
As we look at this agreement, one of the things they've said is that they've made no concessions and they've given up no access to supply management. Supply management has been compensated in the past when they had to give up access. When you're talking about compensation, where is your justification for compensation? Where do you feel you need compensation and why?
Doug Sawyer
View Doug Sawyer Profile
Doug Sawyer
2021-02-26 13:43
Fawn, I think you're close to that file, closer than I am.
Fawn Jackson
View Fawn Jackson Profile
Fawn Jackson
2021-02-26 13:43
I can tell you that it was a robust discussion for our board to go down that path, but it has been extremely frustrating that we have not been able to access the European market, including the U.K. market, as we had anticipated. Some of the problems are within Canada. We haven't been able to develop the supply chains, for which we need support from CFIA and AAFC to be able to do, to have the same sort of system, for example, that's readily available in the United States.
We're extremely frustrated, and the net trade balance has grown to a point where it is truly unbearable.
View Randy Hoback Profile
CPC (SK)
Yes, it's amazing when I think we're importing more from the U.K. than we're sending there. When I look at our cost production, we should be beating them hands down. We're more competitive and we produce a better product in a more environmentally friendly atmosphere. I just can't believe that.
Mr. Poirier, I'm going to move over to you and the manufacturers and exporters. One of the things that we've always been talking about, and I'm hoping is getting addressed in this agreement, is the fact that we need to become more competitive. We need to take advantage of our trading partners and partnerships with our trading partners to become more competitive globally.
Do you see those opportunities coming forward with this interim agreement? What other things would be changed in a final agreement that you would like to see happen?
Matthew Poirier
View Matthew Poirier Profile
Matthew Poirier
2021-02-26 13:44
All of our agreements to a large extent give us access. That's the key point. The issue that I sort of touched on in my remarks was that, before we get out the gate, we're limiting ourselves here domestically in terms of our capacities. If we're speaking about manufacturing specifically, we're at our limit in terms of what we can produce. It's great that we get all this extra market access, but if we can't produce more goods, we're not going to be able to take advantage of the gains from exports.
In terms of the agreement itself, I know Ms. Pohlmann mentioned the SME chapter. We're big fans of these sorts of bilateral or whatever chapters. In the USMCA, for example, we have the competitiveness chapter, the SME chapter and others that are key mechanisms to have the two countries work out problems before they become trade issues. We would like to see that as well.
View Randy Hoback Profile
CPC (SK)
You've brought up a domestic problem, and you said it's the fact that our Canadian companies are at 80% to 90% capacity and that they're not reinvesting to take advantage of these new markets. What is holding them back? They're already exporting to the U.S. in most cases. Why aren't they reinvesting in Canada?
Matthew Poirier
View Matthew Poirier Profile
Matthew Poirier
2021-02-26 13:46
Our production with the U.S. is a trade relationship, but it's an integrated North American production, so that sort of masks our performances there.
When we look at other countries, other jurisdictions, Europe and the other ones around the globe, we see where we start to stumble. Yes, like I mentioned, we're at 89% or so, which is effectively our maximum production capacity. Until we have more favourable business conditions within Canada—and that problem lays at the feet of many governments, federal and provincial—we simply cannot compete.
View Randy Hoback Profile
CPC (SK)
That not competing is restricting the growth of our economy and the number of jobs we have in the manufacturing sector.
In what sectors do you see reinvestment happening here in Canada, where people say it makes sense to do it here because we have all the trade agreements, in fact, more than any other G7 country? We're positioned properly. It still comes back to that cost of production. Why are we not tackling that? What's holding us back?
Matthew Poirier
View Matthew Poirier Profile
Matthew Poirier
2021-02-26 13:47
There are a number of things, but writ large, it's that the cost of doing business in Canada is too high. Whether it's our tax system, which is not as competitive, or whether it's our investment programs and incentives to get businesses to invest in tech adoption or our skill shortages. The number one issue for manufacturing is that they can't find workers. They can't find the basic number of workers to keep production at current levels, let alone be able to grow.
Until we tackle these challenges, and that's shared by the federal government and provincial governments as well when we're talking about cost of doing business, until we get serious about this.... What the pandemic has shown us is that we need manufacturing. These are good jobs, well-paying jobs. Frankly, if we don't do more than just pay lip service to how great it is, and if we don't help them by creating a more competitive business environment and stemming that flight out of Canada, the investment will go elsewhere.
View Judy A. Sgro Profile
Lib. (ON)
Thank you very much, Mr. Hoback.
We will move on to Ms. Bendayan, for six minutes.
View Rachel Bendayan Profile
Lib. (QC)
Thank you very much, Madam Chair.
Thank you to all the witnesses for your excellent presentations on this beautiful Friday afternoon.
I'll begin with Mr. Kennedy and the Business Council of Canada.
Mr. Kennedy, you mentioned a few times during your opening remarks the importance of certainty. I have down here that it is a priority for your organization and the members you represent to quickly ratify the TCA, and that the Business Council of Canada reiterates its request for a speedy ratification of the TCA.
I was wondering if you could comment briefly, Mr. Kennedy, on proposals that I believe this committee will have before them shortly for amendments to the TCA, which would require us to go back to the negotiating table. Such amendments obviously would delay the ratification process but also, more importantly, create uncertainty for the business community.
Do you have any comments with respect to that, Mr. Kennedy?
Trevor Kennedy
View Trevor Kennedy Profile
Trevor Kennedy
2021-02-26 13:49
Thank you for your question.
Yes, swift ratification is a priority. We understand there are concerns with CETA, and I think there are sector-specific concerns that you've heard from other witnesses and in other settings.
We think that in this context the best thing Canada can do is to provide certainty around this trade relationship. We have built a trade relationship around CETA before Brexit, and after Brexit we want to continue that relationship to the greatest extent possible. That's what the TCA does.
Looking towards the future—and this is the key with ratifying this agreement—we have a clear commitment, and we have a timeline to start negotiating a permanent arrangement. As we've heard from many people, that agreement doesn't have to be based on CETA and the relationship with the EU. We have an opportunity to recreate that relationship.
I get a sense from counterparts in the U.K. that there is a lot of interest in working with Canada and building a new economic relationship, so I would just reiterate that it's very important that we move forward with this agreement, as is, and that we move quickly to start negotiating the next step in our relationship.
View Rachel Bendayan Profile
Lib. (QC)
Thank you, Mr. Kennedy.
Let me also say that we, too, are hearing a lot of interest on the part of the United Kingdom to return to the negotiating table, and as a government we certainly look forward to consulting you and the Business Council of Canada before entering into those negotiations.
If I can move quickly to Mr. Poirier and the Canadian Manufacturers & Exporters, I did note with great interest some of your recommendations around communications and the importance of supporting the scale-up of our manufacturers in this country. I really do thank you for being so eloquent on those points.
I also heard you mention that you urge the swift passage of Bill C-18. What do you think about the possibility of having to go back to the negotiating table? What effect would that have on the manufacturers you represent? Do they want us to move forward in a way that provides certainty?
Matthew Poirier
View Matthew Poirier Profile
Matthew Poirier
2021-02-26 13:51
Yes. The transitional agreement is just that. For ultimate certainty, a final agreement is desirable. That's the main outcome.
We get it that the U.K. is trying to sign many free trade agreements in the meantime, so we'll fall into that order at some point with them, but the sooner the better for all involved. The longer it drags on, the less incentive and the less willingness there will be on behalf of businesses to expand and grow, until those fundamentals are nailed down.
View Rachel Bendayan Profile
Lib. (QC)
Absolutely. I certainly concur with your comment with respect to not having this drag on.
If I may turn to the CFIB, I think you can see me coming already. Let me just begin by saying that you were mentioned a few times in question period today. We certainly appreciate your engagement on behalf of small businesses and also your encouragement that we should swiftly pass Bill C-14, which would continue to support our small businesses.
With respect to Bill C-18, which is before this committee today, I note that you would like to see a continued focus on SMEs, that you are happy with the chapter on removing technical barriers to trade in this transitional agreement, but that you would like to see a dedicated chapter for small businesses in a final free trade agreement. That certainly has been noted.
With respect to where we are today and the ratification process, you said that trade will be key to our economic [Technical difficulty—Editor].
Would you also urge us to move quickly on the passage of Bill C-18 and avoid any possible return to the negotiation table at this stage?
Corinne Pohlmann
View Corinne Pohlmann Profile
Corinne Pohlmann
2021-02-26 13:53
Thank you.
You did cut out briefly but I think I got the gist of your question.
Absolutely, we'd like to see Bill C-18 ratified quickly. Again, there are lots of ongoing trading relationships that are reliant on the rules that have been in place for the last few years with CETA. At the very least, we need to minimize disruption at a time when things are very challenging for many businesses out there. Moving into a new agreement, relatively quickly, I think, is also really important.
Again, we need stability and certainty when it comes to the trading relationships that are happening. Knowing that something is coming and that it's not going to dramatically change, or if it does, it will be to improve what's already been out there, is going to be an important message that has to be delivered as these negotiations go on. The quicker it can happen, the better, because that certainty is important.
View Judy A. Sgro Profile
Lib. (ON)
Thank you very much.
We'll move on to Mr. Savard-Tremblay.
View Simon-Pierre Savard-Tremblay Profile
BQ (QC)
Mr. Lemire is going to take my turn.
View Sébastien Lemire Profile
BQ (QC)
Madam Chair, if I may, I will take this turn to speak on behalf of the Bloc Québécois.
My thanks to the witnesses for their testimony.
My colleague Ms. Bendayan, who is in the governing party and whose comments I particularly respect, talked to Mr. Kennedy about consultations.
What consultations have been conducted proactively as part of this strategy?
How do you want to be consulted moving forward? What mechanisms need to be put in place, and when should the consultations be held with the Business Council of Canada, for example?
Trevor Kennedy
View Trevor Kennedy Profile
Trevor Kennedy
2021-02-26 13:55
For this negotiation, our group and other groups have been in regular contact with the team at Global Affairs as well as in the minister's office. There were two stages of the negotiation at one point, dating back to about 2018—I don't want to misquote the year; perhaps it was 2019—when there would have been some of the initial negotiations, and then throughout the summer and fall, engaging with the negotiators.
We had a lot of discussions about the approach that Canada was taking in the negotiation. We understood it was meant to be a transitional approach to the negotiation. The priority was in maintaining and continuing the relationship as is and not so much about reimagining the relationship.
We fully understand in the documents that have been provided and in the standard process that I think the department follows that there's a lot of room for consultation. I've noticed there are many opportunities with the negotiators to interact and to share their thoughts, both in writing and verbally.
View Sébastien Lemire Profile
BQ (QC)
Mr. Kennedy, if I may, I'm going to ask Mr. Poirier the same question.
Is it important for Canadian Manufacturers & Exporters to be consulted? Were you consulted beforehand? When and how do you want to be consulted on the permanent agreement?
Matthew Poirier
View Matthew Poirier Profile
Matthew Poirier
2021-02-26 13:56
At Canadian Manufacturers & Exporters, we always have our nose in these things. We're talking with elected representatives, with ministers and with officials.
For this one we've gone through the same motions as for other free trade agreements. We've also been active with our counterparts in the U.K. at the Make UK association. In coordinating with them, we don't see this as a hostile negotiation, by any means. It's an agreement amongst friends. Everyone has been rowing in the same direction, and we're pleased with where it's going. It could always be faster and it could always be better, but in the grand scheme of things it's moving in the right direction.
View Sébastien Lemire Profile
BQ (QC)
One aspect clearly stands out, namely the whole issue of mechanisms and the provisions applied to the dispute resolution between states and investors.
Are you concerned about that issue? How concerned are you? Should Canada move towards the permanent agreement?
I'm still talking to Mr. Poirier.
Matthew Poirier
View Matthew Poirier Profile
Matthew Poirier
2021-02-26 13:58
I'm sorry. Could you repeat the question?
View Sébastien Lemire Profile
BQ (QC)
My question was about the mechanisms and the provisions applied to the dispute resolution between states and investors. The current situation is temporary. Should Canada move towards something permanent or should it withdraw, as it did with CUSMA?
What do you think?
Matthew Poirier
View Matthew Poirier Profile
Matthew Poirier
2021-02-26 13:58
To the largest extent possible, we want to be able to match our other trade agreements.
Between USMCA, for the most part, and CPTPP, we have mechanisms and structures that we fully support and that give businesses confidence in those structures. To the degree that we can replicate that, we're all for it.
View Sébastien Lemire Profile
BQ (QC)
So predictability and compliance become important. How important is that in the minds of the people you represent?
Matthew Poirier
View Matthew Poirier Profile
Matthew Poirier
2021-02-26 13:59
I would say it's issue number one. Most businesses, business leaders and manufacturers are not trade experts, and it's our job to monitor these things for them.
The more consistency possible between various trade agreements, the better, provided of course that they're matching good things, good elements of the trade agreements. However, we don't have any fundamental clause for our sector in any of our major agreements to date.
View Sébastien Lemire Profile
BQ (QC)
I would also like to come back to what Ms. Pohlmann from the Canadian Federation of Independent Business said.
The statistics are really interesting. They remind us that our trade balance with the European Union is negative, while giving us a sense of what we need in terms of investors, in relation to taxes, duties, and the complexity of the rules and regulations on non-tariff barriers. That has a huge impact.
Your recommendations focus on communication and predictability with respect to our SMEs. How is the current situation falling short?
Corinne Pohlmann
View Corinne Pohlmann Profile
Corinne Pohlmann
2021-02-26 14:00
Historically trade agreements have often been focused on the larger firms and their needs, and I think in the last maybe five to 10 years we've been moving a little bit more to understanding that sometimes smaller businesses have very different needs.
They are even less trade experts than I think larger businesses are, when it comes to these particular issues. For smaller companies, you really have to think a little bit more about how to put things into plain language and how to make sure that they have information that is clear and concise. They don't mind if there are rules and duties that have to be paid. They just want to know the pathway to get to where they're going to go.
Frankly, it's rare that I've met a small business that has engaged in trade that has not faced penalties or fines of some kind, because it's such a complicated process. Anything that helps simplify that process for them—from trade facilitation to the customs processes, to the regulations and rules they have to follow, to the duties and taxes they have to pay—is going to help improve the number of small firms getting engaged. The last thing you want to do is make it more difficult for them. You want to make it as easy as possible.
Moving trade agreements to recognize that and to communicate that more clearly, and having governments work together to get that information across, is going to be essential to make sure we get small firms engaged in trade. That's when we are going to have a lot more growth happen, when we get those smaller firms into those trade agreements.
View Judy A. Sgro Profile
Lib. (ON)
Thank you very much.
We now go to Mr. Blaikie, please.
View Daniel Blaikie Profile
NDP (MB)
Thank you, Madam Chair.
Mr. Andexser, I'm just wondering if you'd like to take a minute to explain what some of the economic benefits to Canada would be of resolving the issue for U.K. pensioners living in Canada.
Ian Andexser
View Ian Andexser Profile
Ian Andexser
2021-02-26 14:02
Certainly, thank you for the question.
Currently, because of the policy, the fact that there are no pensions being indexed here, we all have to pay taxes in Canada.
With the 136,000 people who have been denied their rightful pension, it means that our incomes are obviously reduced and, therefore, we're not paying the taxes in Canada. This ultimately leaves some people in a situation where they're struggling to survive, and Canada is forced, through offering welfare and GIS supplements, to bail these people out.
The onus for supporting pensioners should not fall on the backs of Canadians. It should be the responsibility of Great Britain, and if this policy was to end, it's estimated it would save close to a half billion dollars to the Canadian economy every year. Pensioners tend to be spenders rather than savers, and it would just stimulate the economy.
View Daniel Blaikie Profile
NDP (MB)
Thank you very much for that testimony.
Mr. Sawyer, I know we've heard many times at this committee already, and this Parliament, some of the long-standing complaints of cattle producers with respect to access to the European market. We know that our trade deficit with our European trading partners has increased since CETA came into effect.
I know that you continue to be an ardent supporter of CETA, this transitional agreement, and having a new agreement. I'm just wondering, what kind of empirical evidence might cause you to express dissatisfaction and opposition to a free trade deal?
Doug Sawyer
View Doug Sawyer Profile
Doug Sawyer
2021-02-26 14:04
It would be that it starts going in the wrong direction. Obviously we would not be supportive of a trade deal that would do us harm.
We're very supportive of the opportunities that are presented here. In this particular deal, and the direction we're talking about—working with friendly allies and some understanding because we too have worked closely with our governments, our trade negotiators, our industry, as well as working over there and with them—I see nothing on the horizon that in my view should throw a monkey wrench into it. We're trying to get improvements—better stuff.
View Daniel Blaikie Profile
NDP (MB)
Not being able to meet your export quotas and having increased competition in the domestic market from our trading partners, then, doesn't do harm to your industry, in your opinion.
Doug Sawyer
View Doug Sawyer Profile
Doug Sawyer
2021-02-26 14:05
It certainly does do harm, and that's why we're looking forward to the opportunities we can achieve here. The status quo is not acceptable with the non-tariff trade barriers. Certainly I think we have an opportunity to progress through them, but definitely we've been harmed with these non-tariff trade barriers, as we've seen through many years.
The numbers I was putting out there.... We went from a half a million dollars' difference to—what was it?—$98 million. That's huge. That's damaging to our industry and damaging to the economy here.
View Daniel Blaikie Profile
NDP (MB)
Despite the harm done, you're not prepared to say that you don't support the agreement. Even if the agreement is one that has been doing harm to your industry, it's one that you continue to support anyway.
One day I may be able to square that circle. We've heard similar testimony from the Canadian Manufacturers & Exporters: that we are getting paper access to markets, but when you look at the numbers, it is not producing for Canadian manufacturers, who still struggle to realize the opportunity of those markets.
What kind of empirical economic evidence might cause you to think that a free trade deal is not in the best interests of Canada, that it's not working out and that we should go back to the drawing board to figure out different kinds of agreements or a different approach to structuring our economic activity—or is there none?
Fawn Jackson
View Fawn Jackson Profile
Fawn Jackson
2021-02-26 14:06
If I may jump in—
Doug Sawyer
View Doug Sawyer Profile
Doug Sawyer
2021-02-26 14:06
Thanks, Fawn. I was going to pass it to you, because I'm not getting the answer right.
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