International Trade Committee on Feb. 6th, 2008

[Peter Julian, NDP, Burnaby—New Westminster, BC]

That's very kind of you. Normally it goes to the Conservatives next, but I'm pleased.

[The Chair, Conservative, Lee Richardson]

Well, you go ahead.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you very much, Mr. Chair.

Thanks to both of you for coming. I'm speaking on behalf of the Conservative Party today, so I'm sure you'll appreciate my comments.

I want to make sure I have understood the heart of the testimony both of you have given.

Ms. George, is it appropriate to say that according to your presentation it's too early to come to a conclusion as to whether or not a Canada-Korea trade deal should be signed?

[Shirley-Ann George]

That's right.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

In Mr. Crow's case, are you essentially saying it is inappropriate to ratify a deal at this time?

[Robert Crow]

Yes, that would be our view.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

That's very important, because as you know, there have been a lot of concerns raised about this deal—I'll come back to that in a moment—and I appreciate your caution and healthy skepticism about the merits of this deal.

Mr. Crow, I'd like to come back to what you touched on in your testimony about an agreement that was made with the Korean government that was essentially broken, around access by BlackBerry to the Korean market. Could you go into a little more detail about that agreement and how the Korean government stopped access?

[Robert Crow]

It has a couple of dimensions. The most important--and again this has been the subject of discussion back and forth for some months now--was written clarifications to the policy governing the application of the WIPI standard that was issued by the Ministry of Information and Communication in May of 2007.

This written policy sought to clarify that business-oriented devices, similar in characteristic to BlackBerry, that were not going to be made available for sale to the general public would be exempt from the WIPI standard. Our view was that this clarification was required because our intent in Korea at this time is not to make the BlackBerry broadly available to the consumer market, but rather to serve the business and institutional market, which has been the founding core of our business. So BlackBerry would not be something someone would pick up at a store on the street; rather, BlackBerry would be an offering of a service carrier and our partner to a business or an organization that would then buy BlackBerry on behalf of its employees.

So we felt, and still feel, that against that stated policy in May, we qualify for an exemption under the WIPI regulation. Notwithstanding that, when our partner submitted a proposal for a rate plan to the regulator, they were rebuffed and told, no, BlackBerry is for everybody; therefore, BlackBerry must have WIPI.

Again, this was very distressing, and furthermore, throughout this period, a number of other products that had characteristics not unlike ours were exempted from the WIPI requirement. So we were rather taken aback at this position by the ministry.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

And that's why you have this healthy skepticism today that you're bringing forward, that essentially, given that there was an agreement in place, the access should have been guaranteed. If we can extend that, if we sign a trade agreement that is in the interest of Canada, we could end up in the same situation.

[Robert Crow]

Exactly. Again, the principle I espoused in my previous answer to your colleague is that we, as business people, need to know how we will be treated and that we will be treated consistently and fairly within the regulations of that nation.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you for that.

We've had a number of people testify to potential job losses. The only credible study that's been done on the potential for a trade agreement shows over 30,000 net jobs lost to Canada. So there are obviously real concerns about the potential impacts of this agreement.

I'd like to take you to another alternative, to simply signing an agreement that may have dramatic repercussions for Canadian jobs.

We had testimony earlier this week from the Pork Council and the Canadian Vintners, both of whom testified very clearly to the fact that Canada does very little in trade promotion, product promotion, abroad. The Pork Council mentioned they get $1.2 million from the federal government for product promotion when their export market is worth $2.5 billion, and the Canadian Vintners testified they get a grand total of $265,000 from the federal government to promote their products abroad, and they're competing against European vintners, who get $120 million in trade product promotion, 480 times the Canadian budget.

Very clearly there's a problem here. Australia spends $50 in trade product promotion for every dollar that Canada spends. There's a huge imbalance.

I'd like both of you to respond to that. What support are you aware of for the Canadian Chamber of Commerce, for Research in Motion? What support have you received from the federal government? And how does that compare to other countries, other sectors?

[Robert Crow]

Support of that type is not common in our industry. We have received the support, as I mentioned, of our missions around the world in assisting us by making venues available and providing counsel and advice as we move into foreign markets. We have participated in trade missions to various regions of the world, along with ministers, over a number of years.

Generally, in our sector, we don't see much of that, and neither do we see a great deal of government activity in the electronics sector from other countries.

I would need to defer to Shirley-Ann to speak to other sectors, but it strikes me that this particular issue has not to date been a problem for RIM and other companies like us in Canada.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

So that means you've not received any government support.

[Robert Crow]

Other than what is given to everybody in terms of access to the trade commission service and so forth, access to the mission and the trade missions, no direct resources have been made available.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Thank you.

[Shirley-Ann George]

The Canadian Chamber of Commerce has not received any such support, nor have we asked for it. We have encouraged the government to continue to put more resources into the DFAIT budget. The global commerce strategy, for example, was a very good start but not with sufficient money yet.

If we are going to market Canada and our companies, there is a need for a greater budget. You just need to look at some markets like India, for example, where we could be increasing our budget by many multiples before we'd even begin to put the kind of money in it that other countries are doing.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Julian.

We will conclude the first round with Mr. Cannan, saving the best for last.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair.

Thank you, Ms. George and Mr. Crow, for your presentation, and definitely to RIM for our “CrackBerrys”. We're all addicted to them here on the Hill. They're definitely a great communication device, and you are recognized around the world for your leadership and innovation in technology. We hope that other companies in Canada can take your leadership role--and to Ms. George, for the chamber.

I just want to follow up. My colleague Mr. Julian mentioned that several other witnesses have testified to the committee and presented some of the information that he has correctly stated and some that's not too accurate.

I come from the Okanagan Valley, where we have the wine capital of Canada, and talking about the Canadian Vintners Association support, there's a lot of money in kind as well as in just dollars. There is a lot of support, and also the volume that we produce in Canada versus Europe...you have to look at it on a comparison basis. The vintners are doing very well, thank you very much. It's absolutely a success of NAFTA, from the late 1980s and early 1990s.

Also, we had some reports, which are on the minister's website. Minister Emerson has also testified to the committee, and there have been a couple of independent reports tabled that very accurately articulate the fact of the impact of this free trade agreement that is in place. The numbers, based on 2005, indicate an impact of approximately a 56% increase in Canadian exports and an increase in Canadian GDP of about $1.6 billion per year, versus the extremely flawed IWA study, which had a lot of inaccuracies. So we need to make sure that the facts are articulately presented.

I know that some of the witnesses we heard from on Monday were talking about the timing of this agreement. Some were saying we have a window of opportunity because the Americans haven't ratified yet, and some we've spoken with have said it's a window of necessity.

It's a challenge in business. You obviously have to go on faith when you work on agreements.

To deal with the non-trade barriers, is there a better way, in your mind, rather than comprehensively addressing these issues through the NTBs and through the free trade process and a free trade agreement? Do you have another way in which you think we might be able to deal with this?

[Shirley-Ann George]

I believe a free trade agreement would be a cornerstone to leverage additional activities for working against non-tariff barriers. For example, the fact that we're negotiating this agreement has put some pressure on the Koreans to open up their market for beef. So part of it is taking advantage of the opportunities that come along. If there is an agreement in place in Canada and Europe and the U.S., there may be an opportunity for us to work with our counterparts in trying to formulate a strategy on how to deal with any additional non-tariff barriers that pop up.

Korea put non-tariff barriers such as the WIPI standard in place, believing they were for the good of their country. At one point Canada was doing all these “made in Canada” standards. We were going to show leadership and they'd roll out around the world. We learned the hard way that it wasn't a good strategy. Korea is going through that same process, we hope, of adopting global strategies. You can encourage countries in that direction by joining arms with your international counterparts. I think that's something we need to continue to work on.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

The Cattlemen's Association said that in fact every time the U.S. gets better access for its beef in Canada, it becomes more difficult to justify slaughtering cattle in Canada. It's another example where we need to move, as you said, cautiously, but as quickly as possible.

The value-added is something I would like to ask about. We have a very resource-rich country. In looking at this agreement, do you see the opportunity to expand our opportunities in the value-added chain?

[Shirley-Ann George]

There are some real opportunities with Korea. For example, insurance services is an area I think we would be able to do well with. The RIM BlackBerry, which is wrapped around a Canadian good, has opportunities. There are opportunities also in some of our commodity products, whether those be beef, lumber, or wheat.

I think there's definitely an upside to a good Korea agreement. We need to keep that in mind when we're looking at the legitimate concerns that exist.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Mr. Crow, in your closing comments you mentioned keeping the principles of the agreement. I wonder if you could clarify what you meant by that.

[Robert Crow]

I'm sorry, I missed that question, sir.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

In your closing comments you refer to having an agreement in place that adheres to the principles.

[Robert Crow]

If we can reach an honourable agreement, that means we have signed to a set of principles, at which time we can delve into a number of these details. In particular, we can hold one another accountable for the kinds of behaviours I've advocated for today. It's when we can see what we are getting against the principles that have been ascribed to that we will really know whether this agreement will benefit us in the long term.

And thank you for being a customer of BlackBerry, by the way. We very much appreciate it.