International Trade Committee on Dec. 1st, 2011

[Michelle Cooper, Director, Services Trade Policy, Department of Foreign Affairs and International Trade]

Good morning.

I think we're in early days in the negotiations with India on services. We haven't actually officially exchanged requests yet, but the joint study done between Canada and India has identified some of the complementarities in services between our two economies. As pointed out by Don, there are a lot.

I think that for Canada we have a lot of expertise to sell in India. Engineering firms were mentioned by Don. I think that's a strong advantage of Canada abroad, not just in India, but in most emerging markets. We have the engineering firms that can bring in the design and special specific skills. Often, they're specializing in different areas.

We mentioned energy and energy services as one area. Electricity distribution is another area in which Canada has a lot of skills. There are also oil and gas exploration and infrastructure--building and architects--as Don mentioned as well. There are a lot of Canadian firms that are very active and obviously look at the Indian market as a great area for expansion.

Another advantage for us is obviously that in these negotiations we are looking for more transparency. Often companies will raise the fact that they don't necessarily know the regime that operates in India. So transparency would be one area, as well as just binding the current regime. In many cases, India has taken autonomous liberalization in various areas—financial services is one example—but hasn't bound this. So companies aren't always assured that they are going to have the same investment or service conditions that are currently in existence. So an advantage of the CEPA will be to bind the current regime. That's what Canada would be seeking in an agreement.

On the other way back, of course, as Don mentioned, India is the 13th-largest services exporter in the world. They are actually a larger services exporter than Canada; we're 18th in the statistics. They have a lot of advantages. Information technology has been mentioned; that's an area where India has expanded quite a lot. Call centres have been mentioned, too.

India tends to make known their interest that they are obviously looking at different modes. We talked about the modes of service supply, but obviously their interests are in temporary entry of their workers, as well as in cross-border, which would be with information technology as an example.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

It's interesting to be coming from a country of 34 million and trading with a country of 1.2 billion and growing. The dynamics and the size are really quite staggering.

I'm going to ask the committee.... We will take a quick five-minute break at this time--at most--if that's okay. They have to reboot the system for our microphones to work properly. We'll suspend for five minutes.

[The Chair, Conservative, Rob Merrifield]

We'd like to call the meeting back to order.

I'll give you a quick explanation. It's the best I have and it's the only one that was given to me. It seems that if we touch the button at the same time that they try to engage the button, it blows the system. Let's just put it that way in simple terms. So if we keep our hands off the buttons now, for the rest of the time I think we'll be okay. Nobody moves, nobody gets hurt...it's all good.

[Voices]

Oh, oh!

[The Chair, Conservative, Rob Merrifield]

We want to continue now with the rotation. We'll start with Madam Péclet.

Ève, batter up.

[Ève Péclet, NDP, La Pointe-de-l'Île, QC]

Yes.

I would encourage the witnesses to put in their earpieces because I'm going to be asking my questions in French.

Thank you very much for joining us today.

My first question has to do with a presentation that Mr. Serge Godin, co-founder of CGI, made before the Montreal Board of Trade.

In his presentation, he said that the transfer of strategic jobs—likely to take place if we sign a free-trade agreement with India—will further reduce Canada's productivity, which is already below the productivity of many other countries. He added: “The jobs that are being transferred to emerging countries are the start of people's careers... By moving those jobs elsewhere, we are going to lose the next generation of IT designers and developers, which is so essential to our productivity. We are cutting off our nose to spite our face.”

In other words, he said that we should be cautious about signing a potential free-trade agreement with India, since the government made no announcement whatsoever about a strategy to keep jobs in Canada and to avoid moving them to India. That is what happened here. Montreal was greatly affected by thousands of jobs being outsourced.

Where is the government's strategy to prevent the outsourcing of jobs? What stage are the negotiations at? What will be the consequences if no such strategy is developed to keep jobs in Canada?

[Don Stephenson]

What stage are the negotiations at? They have not started yet. We are still at the very beginning of the negotiation process. So, as Ms. Cooper said earlier, no service requests or offers have been exchanged yet.

I have met with Mr. Godin on two occasions and I have also met with some of his team members in order to have a good grasp of his concerns. A CGI representative will be on the industrial consulting committee to follow the whole negotiation process closely. We understand his concerns and we obviously have to make sure that the agreement is in Canada's interest before signing it.

That said, we are currently competing with India, and we are going to continue competing with India after signing any agreement whatsoever. So we cannot get around competing.

The last part of your question is more appropriate for Industry Canada than for my department. Anything that has to do with the industrial sector falls under Industry Canada.

[Ève Péclet, NDP, La Pointe-de-l'Île, QC]

You are telling me that we are talking about something that we don't know the outcome of.

[Don Stephenson]

Yes.

[Ève Péclet, NDP, La Pointe-de-l'Île, QC]

We actually have no idea what is going to be negotiated and presented. We should almost invite you back in a few months after the negotiations started. Because right now, I can ask you all the questions I want but you won't be able to answer.

Would you also be able to tell us exactly what the government's position on corruption is? My colleague touched on this topic, and I would like to know what you are going to do about it. A 2005 report prepared by Transparency International Canada Inc. shows that corruption is at 53% at the municipal level. Those are people who take bribes to approve construction plans.

What will negotiators do to prevent Canadian companies from setting up shop in India and from receiving bribes? That's not what we do here, so I don't see why it would be any different elsewhere.

[The Chair, Conservative, Rob Merrifield]

Okay. Very good. I'll ask for a response back.

[Don Stephenson]

I am going to ask my colleague Luc Santerre to talk about that.

[Luc Santerre, Director, South, Southeast Asia and Oceania Commercial Relations, Department of Foreign Affairs and International Trade]

You are referring to a report from 2005. There has been a lot of water under the bridge since then. India is a democracy with very strong constitutional guarantees, including freedom of the press. Corruption is one of the topics that makes it to the headlines. Inquiry commissions are in place. All sorts of mechanisms are in place. I feel that mentioning a report from 2005 might be slightly inappropriate.

Of course, Canada has very strong legislation on corruption. In no way can our companies give bribes or get involved in corruption with foreign officers, foreign government officials, at any government level. We have it covered in Canada. So Canada's position seems very clear to me. The same goes for the social responsibility of those businesses abroad. I think this is all part of the negotiations for the comprehensive economic partnership agreement.

You also talked about the outsourcing of jobs. As representative of the Canadian Trade Commissioner Service, I would say that the general advice we give Canadian companies is to keep focusing on their international competitiveness and their cost structure. In some cases, that could mean dealing with foreign service providers. Earlier we talked about call centres for lost luggage, for example. This might also affect value-added services, such as those in computer engineering.

I think you have raised a valid point when you talked about the protection of jobs in Canada. But we also have to make sure that Canadian companies pay attention to their international competitiveness and their cost structure. They have to see what their competitors are doing, be they American or otherwise, in order to monitor and reduce costs for computer services, for example.

[The Chair, Conservative, Rob Merrifield]

Thank you.

Mr. Shipley.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chair.

I would like to go to the witnesses regarding agriculture. From our involvement in these discussions, it would appear that we have incredible opportunities for agriculture businesses in Canada to assist the growth of an industry in India that in some cases in terms of production subsists only to sustain a population. I think the imports from agriculture likely are much like the soup we had today: a mix of everything. It's about proteins, pulse crops.... Can you expand a little for me on the opportunities for Canadian businesses to assist the Indian people in their agriculture industry, whether it's the actual products we ship, the fertilizers to make the crops grow, or the innovative technology?

[Don Stephenson]

Well, first of all, the basics: our largest exports to India are lentils and fertilizer--potash. So the tariff that either applies or could be applied to those exports in the future is relevant to us and a basic objective in the negotiations.

With respect to those crops, India is looking for investment in food storage and food-handling systems beyond simply receiving the lentils. With respect to potash, they are looking for a long-term supply relationship with Canada.

With regard to the opportunities beyond our basic and current exports, I would say that what India is looking for is investment and expertise--technology--in the area of food handling and food processing.

An interesting example I was just relating is the investment of McCain Foods. They took several years to study the optimum potato to grow in the Indian market. They then took the time to train local farmers in methods of irrigation and fertilizing the crop that greatly reduced the requirement for water and chemicals. They now have a relationship with 1,200 Indian farmers to supply their plant in India. That's the kind of partnership.... Now, that also involves the transportation and cold storage facilities to get their product successfully to their buyers in the Indian market. Those are the kinds of investments and partnerships that India is looking for.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Okay. Then does that stretch out...? I think I read somewhere that they're talking about GM in one of the products in terms of the genetics that might come from Canadian research on crop development, for example, in terms of the tolerance to be able to grow. You touched a little on that, Mr. Stephenson.

Would that include the genetic research that we have available here in Canada, along with some of the regulatory processes that we implement, so that we can continue to have a free trade flow of those goods uninhibited by regulatory processing?

[Don Stephenson]

Very much so: I would say that one of the exports from Canada that is of interest to India is our governance in areas such as food safety, but also our research and our technology with respect to increasing the efficiency of agricultural production. Even if it is David and Goliath in terms of the size of our markets and our population, we have an awful lot to offer each other, particularly in agriculture.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

I would like to follow up on my previous question with regard to asbestos. Canada is developing quite an international reputation related to that. Why couldn't we carve that out as part of the negotiations? Has that option been presented?

[Don Stephenson]

In any trade negotiation, you can carve things out. The likely response on the other side of the table is to carve something else out. The danger to the negotiation in the long run is that everything is carved out.

With respect to our position on asbestos, there is no export restriction on asbestos in Canada. Canada believes that...and I'm no expert in these matters, I can't debate these policies.... But it is the policy of the Government of Canada that there are safe uses of asbestos and that it is the duty of importing countries to regulate that usage in their country, as Canada does in Canada.

[Brian Masse, NDP, Windsor West, ON]

I find it ironic that you're testifying here today in this building because the building that we used to have these hearings in is having asbestos removed from it; it's too dangerous for people to stay in that building because of the cancer-causing agents in asbestos.

[The Chair, Conservative, Rob Merrifield]

I'm going to intervene here.

I don't mind a question about trade on asbestos, but the debate around asbestos is a natural resources committee question, so I don't--

[Brian Masse, NDP, Windsor West, ON]

It's a trade issue, Mr. Chair.