Evidence of meeting #9 for Industry, Science and Technology in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was dollar.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

  • Perrin Beatty  President and Chief Executive Officer, Canadian Chamber of Commerce
  • Jayson Myers  President, Canadian Manufacturers & Exporters
  • Mark Nantais  President, Canadian Vehicle Manufacturers' Association
  • Avrim Lazar  President and Chief Executive Officer, Forest Products Association of Canada
  • Michael Murphy  Executive Vice-President, Policy, Canadian Chamber of Commerce

4:45 p.m.

Conservative

The Chair James Rajotte

You have 30 seconds.

4:45 p.m.

Conservative

Dave Van Kesteren Chatham-Kent—Essex, ON

Mr. Beatty, I want to get your take. We had some talk about foreign investment, but we want to make Canada the best place to invest your money, through Advantage Canada and the economic update. Is that the right direction to be going in, or should we target individual manufacturers or sectors of the economy?

4:45 p.m.

President and Chief Executive Officer, Canadian Chamber of Commerce

Perrin Beatty

What we need to do is look at the performance of the whole of the Canadian economy and get the fundamentals straight.

We have to ensure that we have a competitive skills base in our country; we have to ensure that our border functions correctly; we have to ensure that we have a competitive tax and regulatory system. The focus should really be on the fundamentals that apply across the board in Canada. All sectors of business will benefit from that.

There may be specific areas in which we're dealing with an uneven playing field, areas where there are subsidized foreign competitors or where there is some inequity. Clearly that would call for special attention, but what we want to do is to ensure that this country as a whole has an investment climate that makes it attractive both for foreign and for domestic investment. That means getting the fundamentals right.

4:50 p.m.

Conservative

The Chair James Rajotte

Thank you, Mr. Van Kesteren.

We'll go to Monsieur Vincent.

4:50 p.m.

Bloc

Robert Vincent Shefford, QC

Thank you, Mr. Chairman.

You said earlier that political parties should work together. We worked for a full year with all players in the manufacturing sector in order to develop a plan with 22 recommendations—right here in this report.

The parliamentary secretary referred earlier to a list of measures taken. However, out of the 22 recommendations proposed by the sector, only one has been implemented, and only half way at that.

You talk about partisanship. We are indeed partisan. We behave in a partisan fashion, obviously. However, we are here to help your sector, the manufacturing industry, and to implement these 22 recommendations. This is what we want to do. If this is partisanship, we are indeed partisans, but of your sector.

We want to give another chance to this government and to these political parties through a new bill. I am giving you notice. It is Bill C-411 which is at second reading stage.

We often hear manufacturers say that there is dumping of imports from China, that our markets are inundated by an avalanche of goods and that they are unable to compete.

This bill will ensure that imports from China will be subjected to five evaluation criteria. These are the same five criteria used by the European Union and the United States. Since these two jurisdictions find these five criteria useful, Canada should adopt them also. We should use the same five evaluation criteria regardless of the country of origin. Presently we have only one and we are not even able to determine if there is a market economy in China or in other countries. We do not have enough criteria.

Are you hearing from people in your sector that imports from China are in direct conflict with products of your manufacturing industry?

4:50 p.m.

President, Canadian Manufacturers & Exporters

Dr. Jayson Myers

If I could answer first, dumping and subsidization of product coming in today from China and from other countries are very important issues that concern a number of sectors within the manufacturing sector. In Canada, a number of industries are affected.

The recognition of what constitutes a market economy is critical to how we run our trade remedy system, how we make the determinations about what is fair and unfair trade, and how we enforce the trade rules that we negotiate in trade agreements. The criteria you've enumerated in your bill, Mr. Vincent, are the criteria used by the European Union and by a number of other OECD nations. That's extremely important, because the recognition of a market economy then puts the onus on Canadian companies to show subsidization or to show that there is dumping activity. In some economies, such as China's, it is very difficult now to show that.

It is a very important issue and it goes to the heart of one of the recommendations of this committee, which was to ensure effective compliance with the trade rules that we negotiate in our trade agreements.

4:50 p.m.

Bloc

Robert Vincent Shefford, QC

How much time do I have left, Mr. Chairman?

4:50 p.m.

Conservative

The Chair James Rajotte

Two minutes.

4:50 p.m.

Bloc

Robert Vincent Shefford, QC

I read in your document, in the document of the Canadian Chamber of Commerce, that tax reductions are good for the manufacturing sector.

How many companies benefit from these tax reductions? Obviously, if one does not pay taxes, one does not need tax relief. This means that only a portion of businesses in any given sector will benefit from these reductions.

Have manufacturers come to you saying that these tax decreases are useless to them since they do not pay taxes because they are not making any profits and that additional measures need to be taken?

I would like to hear you on this, Mr. Beatty.

4:50 p.m.

President and Chief Executive Officer, Canadian Chamber of Commerce

Perrin Beatty

Thank you, Mr. Vincent.

I don't think you will find any manufacturer who will be critical of the reduction in taxes. What you will find are manufacturers saying that we need to look at ways in which manufacturers who are not paying taxes because they aren't profitable today are able to benefit as well.

Mr. Myers alluded to one proposal that's been made, particularly in the automotive sector. And I think the government should be looking at steps we can take to ensure that those people who are not profitable today have the opportunity to take advantage of some of the reductions and to use them to leverage their way back to economic health.

Another area is clearly the SR and ED tax credits. By moving to refundability in the SR and ED tax credits, we would give a much greater incentive to people to make the important investments in innovation that are critical to ensuring our success in the future. So you're absolutely right in suggesting that there are players within the manufacturing sector, but also in other areas, who don't benefit directly from tax reductions and who need some other measures put in place to assist them.

The argument I would make is that we need to be looking broadly at what sorts of measures we can put in place that will be of assistance to industry across the board.

4:55 p.m.

Conservative

The Chair James Rajotte

Thank you, Mr. Vincent.

We'll go to Monsieur Arthur, please.

4:55 p.m.

Independent

André Arthur Portneuf—Jacques-Cartier, QC

Thank you.

Mr. Myers, how much of the bad effect on manufacturing by this superstorm can be related to the fact that for a long period of time we had a low Canadian dollar, and manufacturers and exporters had been receiving a subsidy from us? And now the subsidy has been terminated because the dollar has been going up, and they can't adapt to that. How much of this problem would be with us if the rise had been less steep and if the Canadian dollar had started rising earlier?

4:55 p.m.

President, Canadian Manufacturers & Exporters

Dr. Jayson Myers

I wouldn't call it a subsidy, but clearly the falling Canadian dollar had a very beneficial effect on manufacturing in Canada. It boosted manufacturing output. It made manufacturing in Canada much more attractive for investment. Throughout the 1990s we had the most rapidly growing manufacturing sector of any developed country in the world as a result of that.

You make another very good point, which is that it's not necessarily the level of the dollar that is the problem; it's the very rapid rate of increase, the 65% price cut in four years. It's a movement of 20% to 25%, depending on the day, in the last five or six months. I think it's very difficult to respond that rapidly in your cost structure and pricing structure to that very rapid increase.

4:55 p.m.

Independent

André Arthur Portneuf—Jacques-Cartier, QC

Mr. Nantais, is it possible, still today, that a car built in Canada by one of the two giants could be sold in Canada at a higher cost than it would be to an American consumer? Is it still possible? Two weeks ago it was.

4:55 p.m.

President, Canadian Vehicle Manufacturers' Association

Mark Nantais

Thank you for that question.

Mr. Arthur, first, I can't talk about vehicle pricing. I'm prohibited from doing so, collectively through the association and what we do, by the Competition Act. But I can say that as to what you've read in the papers, vehicle manufacturers are responding to that price differential by various means. Some of them have individually made decisions to reduce prices. Some have or, in addition to that, put in place certain incentives to take away that differential. Some vehicles have a higher differential than others, and quite frankly, our recommendation is that any consumers who venture down to the United States should be fully aware of what they're doing and what they could possibly get themselves into.

We still have, for instance, unique regulations in Canada. The most recent one is anti-theft immobilizers, for instance. We put in place a regulation in Canada that doesn't exist in the United States, and as a result, many of these consumers got caught at the border and are now faced with the possibility of having to return those vehicles, at their expense, in the United States.