Thank you very much, gentlemen, and welcome to Halifax.
I'm not sure exactly what my credentials are. I'm vitally interested in public policy. I chair a local public policy institute called the Atlantic Institute for Market Studies. My business is international, both in seafood and telecommunications, and I spend more time travelling than I and my family would like, which gives me a global perspective, if you like, that influences my views as well.
Perhaps more poignantly, in the 1988 debate on the free trade agreement and whether that was appropriate policy at the time or not, I can tell you that I participated in 52 debates. The lesson from both the FTA and NAFTA is that both sides of the argument at the extreme ends tend to be wrong. I'm looking around the committee and I don't see many of you who would have been old enough today to remember the emotion that was poured into those debates back in 1988, but both sides were forced into extreme positions. Those who were against were talking about the loss of pensions, the loss of Canadian identity, the loss of the right to manage our own social welfare system, and the collapse of the Canadian fabric as we knew it. The tragedy about that kind of argument is that it forces the other side to make ridiculous promises as to the value of the agreement and what it's going to do to try to counter, if you like, the extreme positions on the other end.
My point is that you have to ignore extreme ends. These agreements, by definition, take a long time to affect the economy. That means that dislocation doesn't happen right away and it also means that the benefits don't happen right away. This is a signal to the business community that macro-environmental change is going to impact: it's going to hurt some people and it's going to help others.
Obviously—not obviously—but I certainly take the view that more free trade is a good thing and, in fact, the experience of both the FTA and NAFTA is exactly to that point. I don't think there is any serious economist who would suggest that both those free trade agreements weren't good for Canada and the Canadian economy.
The one thing that I'm not sure is well understood is that it has actually increased our dependence on the U.S. market, and that is a danger. In fact, this present agreement with Europe is just what we need to try to get the business community to look elsewhere in the world for trade opportunities and to become more global.
Again, sort of sticking with the macro environment and the failure of the Doha Round, I know there are those who are trying to put more energy into the Doha Round. I'm not sure whether they'll get anywhere, but, in any event, given that it hasn't happened, the world has run around trying to do bilateral deals, as you know, and the danger with these bilateral deals for an economy the size of Canada is that we could easily be left behind. We do not have the global influence to run around and do bilateral deals, so any time there is a trade deal that we can do or is being done, Canada needs to be a part of it because the risk that we face, as a small country, is that we get left behind. We find out that major trading partners of the world do deals that Canada is not a part of, and that should be a huge worry for us.
Again, a lesson coming out of both the debates around trade agreements generally is that they tend to be run by lobby groups. These are the folks who have material vested interests and will, as I said, make ridiculous promises as to the benefits of these agreements and will make similarly ridiculous promises about the negative consequences. I think it's a shame that the economy is being held hostage to some extent by the supply management industry in Canada in agriculture and, in particular, the Quebec dairy industry. It's not that I have anything against Quebec dairy farmers, I don't. It's just that I don't think they have the right, nor does any sector of the Canadian economy, to hold the rest of the economy hostage. That's what happens with these very powerful lobby groups.
We need to become a much more vigorous global player. Taking our assets at the extreme end, we have on the one hand the oil sands, which is a national resource of tremendous economic importance, not just to Alberta but to the entire country. We suffer the consequences of people not being well educated about the environmental consequences of the oil sands versus other energy types.
At the other end of the spectrum, we have tiny segments like the seal industry in Newfoundland. Again, it's ignorance and a lack of education that give rise to these kinds of trade conflicts because people don't understand the importance of the seal industry. They don't understand how the seal industry is prosecuted. They think we still carry out practices that were banned by law 25 years ago.
We need the kinds of communication links with the world. We need relationships that are ingrained in trade agreements to try to educate our trading partners so that they understand the real issues at hand here so we have a chance to help these industries continue to grow and thrive.
In terms of a smaller economic agenda, you may not be aware of the extent to which trade in Nova Scotia has gone down in real terms over the course of the last several years. This is tragic.
The only hope that Nova Scotia has.... We've not yet found the oil and gas riches that Newfoundland has found off its coast. We're working on that and all Nova Scotians' fingers are crossed that BP and Shell will find big reserves. But in the meantime we need to count on our basic industries, and we're headed in the wrong direction. Our population is headed in the wrong direction and we need to do everything we can to expand trade opportunities around our natural resource-based industries here in Nova Scotia.
There will always be those who say they're in favour of free trade but that this or that particular agreement is not a good agreement because they didn't get this and they didn't get that. That's not an unintelligent argument. I remember having to deal with that argument back in 1988, and it's not an unfair argument. But on the other hand, the experience that Canada has in these negotiations is that it does a darned good job. We came out of the 1988 agreement with some advantages that the Americans will look back on and say they should never have given us.
There will be those who will say “Look at the disputes we had around softwood lumber”, and so on. But the softwood lumber dispute ended up being a resolvable difference and softwood lumber accounts for about 1.5% of the trade between Canada and the United States. Yes, this is the largest trading relationship in the world and yes, we had a dispute, but the dispute was around 1.5% of the trade—and I don't remember another dispute that has elevated itself to that extent. Its resolution was not a bad result, frankly, particularly when the softwood lumber industry in Canada continues to thrive. Although it's been through bad times, I'm not sure that has anything to do with the free trade agreement.
As to specific fishery matters, given what I've said to you, I can't sit in front of you and say that the problems of the lobster industry are going to be solved by the incorporation of this agreement and the removal of tariff barriers between Europe and Canada.
What I can tell you is that my own company, Clearwater, sold about $125 million worth of seafood products in Europe last year. We would probably be Atlantic Canada's largest lobster seller. We don't catch lobster on our own. We sell it on behalf of fishermen, and fishermen universally will tell you that the market is in trouble and has not responded to the tremendous catches we've had in the industry over the course of the last several years, which is a good news story. The bad news is the price.
At the moment, Canadian lobster exports to Europe are subject to an 8% tariff, and more importantly, processed lobster exports, i.e., that segment of the industry that creates incremental processing jobs here in Atlantic Canada, are subject to a 20% tariff. And both will be eliminated, one over the course of five years, in the first instance. This is a good thing, but it'll take time for the benefits to wend their way down to the industry in terms of more jobs and better economic performance.
I'd leave you with one thought, that there is no more powerful global economic macro-statistic than the growth of trade. So the more we can do to engage Canada as an international trading partner, the better for the Canadian economy as a whole.
Thank you for this opportunity.