International Trade Committee on Feb. 18th, 2015

[Ailish Campbell]

I believe in participation on the basis of excellence, but it's great to see a number of women members of Parliament here today.

On your point on China, first of all, a bilateral agreement is complex. It is a very different market than Canada, but we have seen economies very similar to Canada, namely Australia and New Zealand, identify the market potential there and take the plunge.

This won't be an agreement necessarily that matches perfectly our other FTAs, such as with the United States, which is a perfectly comparable capitalist market economy. There may be more, shall we call them, managed trade items to this. Approved visa status, as we have seen for Canada, has increased Chinese travellers. So it is going to be different. It does involve educating the Canadian public, learning more, and involving SMEs and large firms that have had success in that market to bring those lessons back to Canada, but the potential is huge.

Now we have a model agreement with an apples-to-apples economy, Australia, that has recently concluded. We don't want to be further behind because Australia provides, in some cases similar products to ours. Why not have that market access?

The lack of a 10-year visa is something we should take a look at, as well as the issue of transitioning students who come to Canada much more quickly for residency and citizenship. The whole visa regime is something that, as you point out, deserves a look. We want to keep pace, particularly with the United States, on those important people-to-people links.

[Chrystia Freeland, Liberal, Toronto Centre, ON]

I saw you nodding, Mr. Myers, as I asked about China. I'd like to give you a chance to pitch in. In particular if Canada were to get to a bilateral agreement with China ahead of the United States would the companies you represent see that as a competitive advantage for them?

[Jayson Myers]

I think they would in many respects, like the European trade agreement. I agree with Ailish that the agreement with China would need to be precise and targeted. One of the key components of any successful trade agreement, or air or transport agreement for that matter, is a good trade remedy system.

Trade agreements or economic agreements are all about rules. It's important that rules are followed and that rules are implemented. This is an important component of a free trade or a free open market agreement; that we have compliance with rules and that we have sufficient investigation and sufficient adjudication powers here in Canada to make sure that's effective.

I think that would be an important part of any agreement with China and something our members would be focused on.

[Chrystia Freeland, Liberal, Toronto Centre, ON]

We have 60 seconds left. Ms. Campbell, I was really struck by your emphasis on the U.S. trade relationship and describing it as primordial; great adjective.

You talked about Buy America, which I think is a real issue for a lot of us. I'm happy for Mr. Myers to take this quickly also. What specifically should we be doing to get past that?

[Ailish Campbell]

Jay, you take that. It's Buy America.

[Jayson Myers]

It's a bit like whack-a-mole right now. The first thing is to make sure we're fighting every state's Buy America, like New Jersey's, and trying to overcome that. The only way we can put pressure on the United States is to show that if they implement Buy America it hurts American business. That's what we're trying to shine a light on.

We're trying to make sure that is a part of the TPP negotiations. I think it would be very important in that context, but it's a very difficult file. It's politically attractive to both parties right now in the United States. Our best defence is an offence, but right now it's keeping the problems under control.

[The Vice-Chair, NDP, Don Davies]

Thank you.

We'll go to Mr. Cannan for seven minutes.

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

Thank you, Mr. Chair, and once again thanks to Ms. Campbell and Mr. Myers, who are no strangers to our international trade committee over the years.

I want to start off with our global markets action plan and the air transport agreements. We have about 112 to date, and the number is growing.

Have you been consulted by the ministers' offices as the GMAP and ATAs are being developed? Have you had good consultation?

[Jayson Myers]

Yes, we have, both from the point of view of where the main markets of interest are as well as, from the air negotiators themselves, in terms of whether capacity exists and whether there is much interest in pursuing these agreements and what the specific terms are.

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

Ms. Campbell.

[Ailish Campbell]

Yes, we have. I would commend the department of trade for the outreach both on GMAP and between trade and transport departments. The outreach on the air transit agreements has also been excellent.

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

Mr. Myers, you mentioned the word capacity. We've had some of the airlines recently testify; Air Canada, for example, was here on Monday. Earlier in the month we had the chief air negotiator, who indicated that we would have 112 agreements but that there would be air carriers not using the rights provided by the ATAs to full capacity.

Do you see potential additional opportunities for your members?

[Jayson Myers]

I do, but our members are going to go where they see the business opportunities. It's a really good example, that even though you have an agreement, they may not take advantage of it right now. For air service, you need the capacity—they have to make money on their routes. It doesn't surprise me that rights are not being taken up to the maximum extent they could be, but I think it's a good thing that they have the ability to do so once the capacity is there.

This is the question that the air negotiators and the department keep asking us: when will the capacity build up? This, frankly, is the reason it's important for them to keep asking this and to keep their finger on where the opportunities in the business community are.

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

Do you want to add anything to that?

[Ailish Campbell]

Sure. Let me give you an example.

Canada has an air transport agreement with India, which is a really exciting emerging market. But exactly to your point, the capacity is not fully being used. There is only a once-a-day direct service by jetBlue through Toronto. We'd like to see far more, but that's because we'd like to see far more trade generally between Canada and India.

In this case, the leading indicators will probably be things such as a foreign investment protection agreement, such as India's addressing some of its tax dividend issues or increasing foreign ownership limits to bring in Canadian companies. One CCCE member, Sun Life, has been in India for more than 100 years, working with Indian partners providing insurance and financial services products to the Indian middle class. This is something they would like to see expanded.

I think Canada is in a healthy position, and we want to work with our international partners to get some of those leading indicators, such as investment agreements, in place. And absolutely we want a trade agreement. India is a very complex market, particularly, as Jay was saying, on the implementation piece. We want just basic things, such as trade facilitation and ensuring consistency in the application of rules.

When we see those pieces falling into place, and they will happen in some sectors.... I would note very healthy two-way R and D and investment work between Canada and India in ITC, in the telecom and IT and service provision world, which we think is very positive.

Those are the leading indicators, and then the commercial airline piece will follow when there are more business travellers.

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

You mentioned FIPA, and there was discussion about China. We have the Canada-China FIPA now. Business wants certainty, predictability, and stability.

Does that FIPA help your members expand into China?

[Ailish Campbell]

Absolutely, it has given them more assurances. There have been many myths around that FIPA. It is more than China had ever offered to any other country. It doesn't map perfectly onto our FIPA agreements with other, what I would call perfectly commercial markets, but it is still a fantastic opportunity for Canadian investors.

We also have in that FIPA a ratchet clause, which essentially means that should China conclude a deal such, for example, as it is now negotiating with the U.S. or the EU, Canadian investors will benefit from whatever improvements are negotiated to those agreements with the U.S. and the EU.

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

I have one last question, about the WTO. I was just reading a speech that was presented about the Trade Facilitation Agreement and our trying to expand the markets within it. What sectors of air transport do you see growing fastest in the future? Would it be both passenger and cargo? What opportunities are there in Canada? What do you see as the growth patterns for the future?

[Jayson Myers]

Air transport on the cargo side is going to be particularly important for the transport of more specialized types of products or products that have to get to market very quickly. There's a whole Asian market that will open up very quickly for everything from seafood to other food products, agricultural products that can be transported over there. More generally, on the technology side we're already shipping high-tech products around the world by air. That's extremely important.

The other thing is that it's important for us and maybe it shows how other economic and commercial opportunities feed into a Canadian perspective. We often look at our economic relationships bilaterally or regionally between Canada and other parts of the world. There's a real opportunity for Canada to position itself as a logistics hub here. This is not just about Canada and China. It's about Chinese product coming into North America, and North American product going into China. Or, how do we connect Canadian technology with European multinationals procuring out of the United States to do business in China and leverage our airports as the hub for doing that, and the logistics? This is really some of the thinking behind what Winnipeg is trying to do right now.

There's a tremendous opportunity in not seeing our airports and air services as passive, but rather working with them so that they become air hubs that are themselves drivers of economic development and so that we're developing the infrastructure and the services around that. That just speaks to the need to get all levels of government aligned behind some of these new opportunities.

[The Vice-Chair, NDP, Don Davies]

Thank you, Mr. Myers.

Ms. Liu, the floor is yours. You have five minutes.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Thank you very much, Mr. Chair.

Ms. Campbell, I really liked what you said about the importance of having a public transit option for getting to airports. That was especially insightful, as airports represent a fairly significant economic contribution for urban centres The same applies to the regions. In the Sherbrooke region and other Canadian ridings, regional airports are very important for the local economy.

The Sherbrooke airport has asked to be added to the list of airports designated by the Canadian Air Transport Security Authority Act. Over the past few years, several dozen airports have also requested to be placed on that list and to be approved by the federal government. So far, they have still not been approved or designated by the government.

Do you think it would be advisable to add those regional airports to the federal government's designated list?

[Dr. Ailish Campbell]

Unfortunately, I don't know why the federal government has not given its approval. I am not familiar with that process. However, I have to say that infrastructure is economically important for airports. It's not very complicated. The entire business community should participate in the assessment of an airport's request for approval.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Mr. Myers, have you carried out your own study to assess the impact of air transport agreements on your association's members? Have you produced any relevant reports you could submit and share with the committee members?

[Jayson Myers]

I think it's really difficult to assess the impact of a particular agreement there. The only way of assessing it is, does it actually lead to more international business, more flights, more travellers, and more cargo that is being shipped? At the end of the day, that's the key performance indicator, I think.

But the other problem here is that there are so many factors that could lead to whether that agreement is being used to the maximum extent that it could be, and not just commercial.... There are two areas I'd like to flag that I think are right now operating as major constraints on air travel, both cargo and passenger. The first is the security and the regulations around security. The second area, which is tied to that, is the rules around business travel and business visas, both of which are probably more problematic today than they were five years ago.

I'm always surprised when I have a business audience and I ask how many people are travelling on NEXUS. A lot of people put up their hands. Then I ask how many people travelling on a NEXUS card go into secondary inspection. It's amazing how many people put up their hands. Then I ask how many of the people who are not on NEXUS go into secondary inspection, and hardly any of them put up their hands.

The immigration inspectors are stopping people to see if they're compliant with a regulatory program that is supposed to let them enter a country with no holdups at all. We need to focus on what's important here on the security. Unfortunately, we're in a process right now where we've lost the risk management side of that.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

That's actually an issue that we've heard about from a lot of witnesses. What kinds of models would you suggest Canada look at to modernize this visa system?