International Trade Committee on June 1st, 2023

[The Chair, Liberal, Judy Sgro]

If you could submit that to the clerk so that all of the committee would have access to it, that would be appreciated.

Thank you.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

That's great.

In that case, we will wait for Mr. Ghadawala's written answer.

I will now turn to Mr. Allam.

What business opportunities does the Middle East market present for Canada in terms of international trade?

[Omar Allam]

In the Middle East, I think Canada has congruence with a lot of capabilities and requirements that are in the Middle Eastern market. You can start with professional services, from infrastructure development, capital projects, education, health care, technology to energy renewables. It really varies, but it touches probably every sector of the economy.

What is important to note I think is that these are very high-risk marketplaces where Canada has had some success, but we're falling behind our competitors. We don't have a lot of financing or tools or even leverage in these marketplaces because of political relationships or various, let's say, non-tariff barriers.

I hope that answers your question.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

So there are also specific irritants that impede trade relations.

We talked about tariff barriers in the United States and Europe.

We know that, in the Middle East, regimes are more unstable or repressive. Is that a barrier in itself?

[Omar Allam]

Absolutely. I think you have markets that pose various challenges for doing business and also corporate social responsibility practices that are being adopted in certain marketplaces. Certainly, there are challenges in that respect.

What I think is important to note is that there's a lack of awareness of these opportunities in the Canadian marketplace for Canadian firms. There are also Canadian companies that are actively pursuing these markets but don't have the early-stage support, export financing and mechanisms in place to take advantage of government-supported project pursuits in different markets, for instance, Saudi Arabia, Qatar or the UAE, where Canada has a competitive advantage. Companies don't want to put in the upfront costs in terms of the prefeasability studies and that kind of thing, so it does put Canada at a disadvantage.

However, you have to also look at the societal changes that are happening. You have a lot these countries that are sending students to be educated in the Canadian marketplace, which at the end of the day is a big-ticket dollar amount for the Canadian economy.

There is affinity and there is progress in terms of relationship building. A lot of these countries are saying to Canada, come and do work. You're most welcome to come in and operate in the marketplace. However, Canada just doesn't have the leverage, the reach, to actually do that in a lot of cases.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Cannings is next, for six minutes, please.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thanks again to all the witnesses.

There are so many interesting points here that I'm not sure where to begin.

Mr. Dade, I believe you mentioned surviving access. I'm going to start there, with one of the western provinces, British Columbia, where I'm from.

One main trade problem that they've had over the past 40 years is surviving access to the U.S. lumber market through the softwood lumber disagreement, as I would call it. As Mr. Virani mentioned, we were just in Washington and we talked a lot about softwood lumber. It seems to be an especially sticky situation.

I'm wondering if you have any insight as to how Canada should approach this, because it seems to never go away.

[Carlo Dade]

About three years ago, I was in Big Timber, Montana, down in the middle of the state, at the bar having dinner. This group of ranchers walked in. This isn't a joke. This is a true story. It sounds like a set-up to a joke.

They see the Alberta licence plate out front. They look around the bar, and it's pretty easy to tell who the Albertan is. They start giving me a hard time about country-of-origin labelling. At the end of the discussion, I say, “Look, we won the decision. You've been forced, finally, to take the WTO decision. That's the end of the story.” The rancher closest to me looks over—he actually picked up the tab at the end of the night—and I thought he was going to kill me, but he leans over and he says, “Son, you won the battle. You ain't won the war.”

It's a reality. It's a political issue in the U.S. They've assembled the coalition that runs from Texas through Georgia and into the Carolinas, up into the Pacific northwest and into Texas. It's both sides of the aisle. We are going to be fighting this until the end of time. The engagement, the investment of resources, premiers going down, MLAs meeting their counterparts and the work of your visit to Washington, D.C., are Lamb Chop's playhouse in that this is an issue that's never, ever going to end, and we're going to have to invest these resources.

It's the cost of having access to the fattest, richest and easiest market in the world. It's not free.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I was going to ask about the usefulness of increasing those relationships on more personal levels, like the Pacific NorthWest Economic Region meetings that I've gone to. It seems like maybe those help a bit, but not really.

[Carlo Dade]

It's what we have. It's the tool that we have, and it is effective at the end of the day.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I want to continue with you. You mentioned what Australia and Brazil have achieved. Ms. Sun mentioned something about the Australian side of things, but could you expand on that? What other lessons can we learn from those two countries on relationships with China?

[Sharon Zhengyang Sun]

Yes, sure. That sounds good. I think it also goes back to the other ministers.

Do countries share similar SPS problems? I was just telling Émilie before we started that I was looking at the WTO database, and the country that has the most SPS and TBT measures in place in the world is the U.S. They have around 554 measures in place. This is compared to China, which has 66. Canada has 60. India has 92.

My point there is that the U.S. has the most measures, and we have in the past—and even still today—experienced NTB issues with the U.S. However, what we have in the U.S. that we don't have in the Indo-Pacific region, which we're looking at now increasingly, is all these.... Firstly, we don't have a trade agreement with countries like ASEAN, China and India, which we're currently trying to get. Secondly, we don't have the subnational engagement and presence that we have in the U.S. We don't have the association-level engagement, so this is the kind of thing that we should take insights from—at least in lessons from the U.S.

Also, this is what we observe in what Australia is doing with China to ensure this market access, despite the difficulty, in addition to having an FTA. We don't even have an FTA with China. We're just trading with them under the bigger WTO rules.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I'll turn to Mr. Allam. You've touched on the problem that Canada doesn't provide the financial assistance that other countries do. We have the EDC.

Could you expand on what other countries are doing that Canada needs to do?

[Omar Allam]

I think EDC is a great tool that we need to continue to leverage, especially when it comes to buyer financing models, but I think what fundamentally we're seeing in the global marketplace from a Canadian commercial perspective is that early-stage export financing is a major problem.

Let's say you're going to look at the Qatari market. You want to invest in a project in the infrastructure space that could yield a multi-million dollar contract for the Canadian firm, creating a lot of Canadian jobs at the end of the day. You're transferring not only the skills but the technology and the know-how to build and operate a school, let's say—or even just to build—in the Qatari marketplace. Who is going to take on the risk of the feasibility study? EDC is not going to touch it. You go to your bank, and they're not going to touch it either.

What we need is a mechanism such as what the U.S. has in place. The U.S. Trade and Development Agency has in place a mechanism such as that, which provides for a company's access to this type of financing. There are other examples that I can certainly send you in response. There is a shopping list. The Koreans are doing it, as are European markets and the Germans. They all have access to these types of financing. I think what Canada needs to do is seriously look at a mechanism that would allow Canadian companies to even just have a foothold, let's say, in the marketplace.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We will move on to Mr. Baldinelli for five minutes, please.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Madam Chair.

Thank you to the witnesses for being with us this afternoon for these interesting presentations and quite an interesting conversation.

I'm going to follow up with Mr. Dade, if I may.

During your presentation, you talked about three points. The second point was about maintaining that kind of presence in those markets, such as the United States. You said that we can't just simply rely on winning arguments and winning on the agreements. You used the example of what happened in Montana.

You also mentioned a U.S.-China agreement, and you said to come back to ask for more detail on that. Is there something in particular or something specific that we can learn from certain aspects of that agreement and that we can use moving forward?

[Carlo Dade]

Sure. That's the focus of the two-volume study, which I'm sure you'll be using to go to sleep at night in the near future.

Here's one example. We've had an issue with China on beef age restrictions, beef exports, unpredictability over BSE issues and the MRL issues. What the Americans have in their agreement is the following:

...within one month of the date of entry into force of this Agreement, China shall permit the importation into China of those...beef products, except...in Appendix I...inspected by the USDA's Food Safety and Inspection Service (FSIS) in an FSIS-approved facility.

5. Within one month of the date of entry into force of this Agreement, China shall adopt maximum residue limits (MRLs) for zeranol, trenbolone, [etc., that meet Codex standards]....

The Americans have essentially taken some of the issues we face, and they've dictated terms for China. There is no dispute resolution mechanism in this agreement. China either complies and the U.S. either complies or the agreement ends. China has lived up to this part of its trade agreement with the U.S.

I am not talking about purchase agreements. Wipe purchase agreements from your mind. This is the long game the Americans were playing with the U.S.-China phase one agreement, and this gives them a structural advantage in the terms of trade that leads Chinese importers to prefer Americans because of the certainty.

The Americans dictate the terms. There is no argument. There is no negotiation. China accepts and adapts. There is a host of issues that we face—from MRLs and BSE to pork, dairy, infant formula and rice—where the Americans have put these terms in the agreement.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

It's interesting. You talk about certainty, and I think everyone has spoken about that notion of certainty.

Mr. Allam, you spoke to that as well. You talked about the need for clarity and for goals and priorities that should be part of our trade policies moving forward. You talked about doing things differently. You said that it's beyond looking just simply at the trade agreements and these partnership agreements, maybe to what Mr. Dade said, and not only building upon what you have in the trade agreements but maybe using these partnership agreements to resolve some of these issues, like “if we do this, you can do that”. Could you expound on that?

[Omar Allam]

I think it's a good point, and there are a couple of areas I want to touch on.

When it comes to trade and economic partnership models and design.... Look at what the key drivers and key areas of interest are when it comes to advancing commercial and investment ties. You can create governance models as part of the partnership design. Mr. Dade noted that you want to have yearly visits. You want to have frequent contact, where you have the people coming into the marketplace understanding and learning how policies and frameworks are designed at various levels in the agricultural space.

When you look at the partnership design, you have to ask, “Okay, what is the partnership model going to be? Is it going to be an instrument that will facilitate investment in the marketplace, one that goes beyond an FTA?” Look at support in terms of technical assistance. I think Mr. Dade also mentioned how, back in the day, CIDA put money towards technical co-operation to advance commercial interests. The Europeans are doing it, and so is Indonesia, I heard.

I'll give you an example. The EU and Indonesia have a comprehensive economic partnership arrangement. Most or all of the EU free trade agreements with technical assistance projects have an underlying agenda: commerce and investment attraction. The EU is using a trade-related technical assistance and capacity-building project to strategically work with their partners in emerging and high-growth marketplaces. They have a multi-million dollar program in Indonesia called “ARISE+ Indonesia”. I'd be happy to share more information with you.

Take, for example, this trade-related project—ARISE+ Indonesia with ASEAN. Trade facilitation is a component of that, as well as trade investment policy to support countries that negotiate and comply with the EU free trade agreement.

To the point of my colleagues at Canada West Foundation, if there's an understanding of, let's say, the irritants, or even, from a technical standpoint on the back end of an agreement.... You have the two countries working together already, in addition to an affinity and a relationship that's being developed not only at a political level but also at a technical and scientific level, in order to further advance commercial interests.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We're over to Mr. Miao for five minutes.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you, Madam Chair.

Thank you to all the witnesses for being here today.

Through the chair, I would like to ask my first question of Mr. Ghadawala.

How does Magellan Aerospace assess and address regulatory compliance requirements when exporting products and services internationally?

[Rushi Ghadawala]

Thank you so much, Mr. Miao.

I'm not an expert in this particular domain. However, we can definitely consider it internally and forward a response on that front, if that is acceptable. We can provide a response to the honourable committee.

[Wilson Miao, Liberal, Richmond Centre, BC]

Okay. If that's the case, I'll also include another question, and you can provide your reply to the committee.

Which specific trade agreements or arrangements have best facilitated Magellan Aerospace's ability to overcome NTBs in the international market? Please share that with the committee when you have it.

[Rushi Ghadawala]

Yes.

Thank you.

[Wilson Miao, Liberal, Richmond Centre, BC]

In that case, I'd like to ask my next question of CropLife and Mr. Kolz.

One of the goals of CropLife Canada is creating a positive domestic regulatory environment. Can you share with the committee how NTBs play into this goal?