Finance Committee on Feb. 19th, 2015

[Peter Harder]

Perhaps it's all speculation.

[The Chair, Conservative, James Rajotte]

Mr. Adler, you have seven minutes.

[Mark Adler, Conservative, York Centre, ON]

Thank you very much, Chair. Thank you, witnesses, for being here today.

I do want to pick up on something that you said, Mr. Harder. This was not by any means a foregone conclusion that Canada was going to be selected by the Chinese to be the RMB hub. We were up against some pretty stiff competition from the U.S. Chamber of Commerce as you had indicated. They did want an RMB hub located within their own jurisdiction. They are currently pushing for a FIPA, as you had mentioned.

Here are just a few things about our own economy. We are the best performing in the G7. We have created 1.2 million net new jobs since the end of the recession. We have the best net debt to GDP ratio of any G7 country. We are the second best place to be doing business according to Bloomberg. We do have the soundest financial sector for seven years in a row running, according to the World Economic Forum.

Wouldn't you say that in the selection of Canada as the RMB hub, these factors were critical in China making that assessment and coming finally to that decision to choose Canada, that these were strong factors in their decision-making process? Would you agree?

[Peter Harder]

The factors you refer to are very positive environmental factors for investment in Canada. The parallel for this is when the CIC, the Chinese Investment Corporation, opened its first office in North America. They opened it in Toronto and for many years it was the only office in North America. They've now opened in New York.

That early period in which Canada was the unique North American office was an advantage for us. In the same fashion, with the RMB trading centre, we have those few years of advantage to help brand ourselves as the advantageous marketplace for investment and for trade. The points you make are part of that attraction.

The Chinese at some point will be present in the United States with these instruments, FIPA or an RMB trading hub. The challenge for us is that in this period of first-mover advantage, let's ensure we move collectively and as broadly as possible.

[Mark Adler, Conservative, York Centre, ON]

I'm glad you said that; it's a good segue into my next question. How many members do you have in your organization?

[Peter Harder]

We have about 250 organizations.

[Mark Adler, Conservative, York Centre, ON]

Primarily business...?

[Peter Harder]

Primarily business and primarily SMEs, but we do have the large corporations. We have a large number of educational institutions, quasi-government, and government organizations.

[Mark Adler, Conservative, York Centre, ON]

Mr. Brakel, how many members does the chamber have?

[Hendrik Brakel]

There are 450 local chambers all across the country and there's a network of 200,000 businesses.

[Mark Adler, Conservative, York Centre, ON]

Thank you.

Mr. Hopkins had said earlier that the hub is not a place. We recognize that. It's more of a process. Given the virtual nature of this process, we heard in the last session from Peter Hall, the chief economist with EDC, that in their assessment only 5% of Canadian businesses seem to be aware of the existence of the hub. Our current two-way trade is roughly $73 billion. We have an opportunity to grow that exponentially over the next 10 years. I'm wondering how we raise awareness among businesses so that it's not 5%, so that it grows and grows to the point where every business is aware of it, and so that we can take advantage of what you were talking about earlier, because we do have that leg up right now on the United States.

How do we cash in on this now so that we can maximize the economic benefit to Canada, and create the jobs and the economic opportunities that should be created here in Canada? How do we do that? Could you both answer that?

[Hendrik Brakel]

Sure. Absolutely.

I think you're right. That's really going to be the key, to see how fast we see the uptake. We've seen incredible uptake at some of the other hubs in the U.K. or in Australia, but it does take a multi-pronged approach.

As I said, at the chamber, we've really tried to raise awareness among our members. We've done joint events with the Canada China Business Council in Toronto. There is a lot of enthusiasm out there. The banks have also acknowledged that they have a big role to play when their trade finance people talk to businesses: “This is what we can offer in terms of cash management and trade plans. Oh, by the way, we can do the deals in renminbi and this could be a big advantage for you.”

What we're telling businesses is to first assess what their needs are, and then talk to some of their suppliers and salespeople about what the advantages are. It's very different in terms of some businesses seeing huge advantages, others being a little bit more cautious and conservative, and some saying that they're perfectly happy doing business in U.S. dollars right now. You're right. It is really a multi-pronged approach.

[Peter Harder]

The only thing I'd add is that the Business Development Bank, EDC, and the local and regional economic development organizations must have some of the tools for publicizing this and for working with the SMEs, in particular, that they know well. Members of Parliament can do their share of raising awareness, because the facility will launch next month I believe, on March 23. It gives an opportunity for networks across Canada to repeat the message.

[Mark Adler, Conservative, York Centre, ON]

But you've both committed budgetary resources to promoting—

[Peter Harder]

Absolutely.

[Mark Adler, Conservative, York Centre, ON]

Substantial budgetary resources....

[Peter Harder]

We're not-for-profit. There's no such word as “substantial”.

[Mark Adler, Conservative, York Centre, ON]

That's just a legal designation.

[The Chair, Conservative, James Rajotte]

You have time for one very brief question.

[Mark Adler, Conservative, York Centre, ON]

Okay.

Mr. Brakel, you had said, on November 11, when it was announced that we have the RMB hub, that this is a big win for Canadian business. You said that this could boost Canada's exports to China by as much as $32 billion over the next decade.

I think that really positions Canada well given that China is the second-largest growing economy, and perhaps could overtake the U.S. as the largest economy in the world over the next decade.

[The Chair, Conservative, James Rajotte]

Thank you. We'll take that as an agreement.

Thank you, Mr. Adler.

Mr. Côté, you have the floor. You have seven minutes.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you, Mr. Chair.

I thank the witnesses for appearing before us today.

Mr. Harder, I will direct my question to you and come back to the matter of awareness-raising among Canadian SMEs, which seems to be an important issue. As Mr. William Zhu said, clearly, the time we have to take advantage of this business opportunity is very limited. When Mr. Zhu talked about our competitive advantage, he said we had a period of three or four years, because China will be pursuing trade and currency liberalization. That seems inevitable.

Do you share his perspective?

[Peter Harder]

Yes.

Mr. Zhu is a member of our organization. He took part in the discussions in our organization and I agree with him entirely.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Fine.

Since Canadian entrepreneurs are clearly less aware than entrepreneurs in other countries—I am thinking of our American neighbour and even of Europe—we are lagging behind and are playing catch-up. Have any particular efforts been made to correct this? Do you have any suggestions to make?

You referred to doing our share by informing our entrepreneurs. Do you think there is something more we could do to meet this challenge, as we are in a race against time?

[Peter Harder]

Yes, and I'd like to give a few examples.

Investissement Québec organized many seminars for businesses. Montreal International did so as well. Economic groups followed suit in various cities.

It is important that the organizations that are very close to SMEs have the necessary tools to explain how, in this case, this initiative can help businesses in Quebec cities. As a national organization, we want to work with them to ensure that a series of seminars will be held.