International Trade Committee on Feb. 6th, 2024

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

I call the meeting back to order.

Welcome to meeting number 91 of the Standing Committee on International Trade.

Today's meeting is taking place in a hybrid format pursuant to the Standing Orders; therefore, members are attending in person in the room and remotely using the Zoom application.

I would like to make a few comments for the benefit of witnesses and members.

Please wait until I recognize you by name before speaking. For those online, please mute yourself when you are not speaking.

For interpretation online, you have the choice at the bottom of your screen of floor audio, English or French. For those in the room, you can use the earpiece and select the desired channel.

I ask all participants to be careful when handing the earpieces, in order to prevent feedback. This can be extremely harmful to interpreters and cause serious injuries. Please speak only into the microphone that your headset is plugged into. Place earbuds away from the microphone when they are not in use.

All comments should be addressed through the chair. For members in the room, if you wish to speak, please raise your hand. For members on Zoom, please use the “raise hand” function. The clerk and I will manage the speaking order as best we can. We appreciate your patience and understanding in this regard.

If any technical issues arise, please inform me immediately. We may need to suspend in order to ensure that interpretation is properly restored before resuming proceedings.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Tuesday, October 17, the committee is continuing its study of Canadian businesses in supply chains and global markets.

We have with us today, from the Atlantic Canada Opportunities Agency, Mr. Dave Boland, vice-president, Newfoundland and Labrador; and Mr. Daryell Nowlan, vice-president of policy, programs and communications.

From Canada Economic Development for Quebec Regions, we have Mr. Sony Perron, deputy minister; and Ms. Marie-Claude Petit, vice-president, operations.

From Groupe Gilbert, we have Ms. Maxime Lavoie, director of operations.

From SERDEX International, we have Ms. Nadine Brassard, general manager.

From Institut de recherche en économie contemporaine, we have Mr. Robert Laplante, managing director, who is joining us by video conference.

Welcome to you all. Thank you so much for being here.

Mr. Nowlan, I would invite you to give us a presentation of up to five minutes, please.

[Daryell Nowlan, Vice-President, Policy, Programs and Communications, Atlantic Canada Opportunities Agency]

Thank you, Madam Chair.

Thank you, members of the standing committee, for the invitation. I'm pleased to be joined here today by my colleague, Dave Boland, who, as you mentioned, is the vice-president and assistant deputy minister for our office in Newfoundland and Labrador.

For 37 years, ACOA has worked closely with small and medium‑sized businesses and organizations in the four Atlantic provinces.

One of our greatest strengths is our presence throughout the Atlantic region.

We have employees working in over 30 communities, ranging from large cities to small rural, coastal and remote municipalities.

The Atlantic Canada Opportunities Agency, or ACOA, works closely with federal, provincial and local partners to identify priorities and opportunities to maximize the potential of our region in a strategic and sustainable manner.

I'll give a bit of context on the Atlantic economy. I think it's fair to say that Atlantic Canada is facing a strong momentum of heights that we really haven't seen in the last 60 years. In fact, Halifax and Moncton are two of the fastest-growing cities in Canada, and population growth and the transition to clean energy are creating significant investment opportunities. This momentum positions the region uniquely to tap into new markets, participate in global supply chains and attract investments.

Currently, exports comprise over 30% of Atlantic Canada's gross domestic product, with traditional sectors like food, seafood and seafood processing contributing significantly to that and that part of the economy.

In 2022, the Atlantic provinces marked record export growth, surging 22% higher than prepandemic levels. Notably, fish and seafood exports alone are worth over $6 billion, representing 72% of the full Canadian sector. The United States continues to be our dominant market for export, representing about 70% of total exports.

Despite the region's momentum, recent global disruptions and economic challenges such as geopolitical conflicts and labour shortages have highlighted the vulnerability of global supply chains.

Atlantic Canada's concentration on resource‑based industries and its small market make it particularly vulnerable to these shocks.

Emerging sectors like energy and technology‑intensive industries present growth opportunities, but diversification is crucial.

ACOA has implemented a number of tools and measures to support more diversification and supply chain development in our region. Most notably, in 2016, the Government of Canada—with ACOA as the lead and Global Affairs Canada supporting—entered into a formal partnership with the four Atlantic provincial governments.

Together we created the Atlantic growth strategy. This strategy has laid the foundation for initiatives like the Atlantic trade and investment growth strategy, or ATIGS, as I may refer to it. It's supported by the $20-million Atlantic Trade and Investment Growth Agreement, or ATIGA. This strategy in the agreement aims to increase internal business and attract foreign investment across the region.

A signature ATIGA initiative is the market entry development program, providing in-market support to companies looking to enter export markets in Europe and the Indo-Pacific region. From the implementation of this strategy to the present we've supported over 150 projects, valued at over $31 million.

In addition, through our regular programming, such as ACOA's regional economic growth through innovation program, or REGI, we're helping firms with technology adoption, productivity improvement, commercialization and increased export potential and capacity.

We advocate for Atlantic firms to be considered in national policies and programs. For example, we are working in collaboration with Transport Canada on the green shipping corridor program. We also participate actively in the industrial and technological benefits program, which supports investment in the aerospace defence sector.

Madam Chair and members of the committee, thank you very much for your time.

I'd be happy to take any questions.

[The Chair, Liberal, Judy Sgro]

Thank you, Mr. Nowlan.

We'll go to Mr. Perron, please.

[Sony Perron, Deputy Minister, Economic Development Agency of Canada for the Regions of Quebec]

Good afternoon, Madam Chair and members of the committee.

Thank you for inviting me to testify about the work done by Canada Economic Development for Quebec Regions, or CED, to help Quebec businesses break into global markets. With me today is Marie‑Claude Petit, who is vice‑president of operations.

I would like to acknowledge that we are on the traditional territory of the Algonquin Anishinabe Nation.

The agency's mandate is to support the economic development of all regions of Quebec by paying particular attention to those with less growth potential. We support SMEs and the organizations that support them in projects that have a positive impact in their regions. Market development is a preferred way for companies to grow by accessing new customers and integrating into global value chains. In doing so, they generate new revenue that is invested in the regions.

That said, these SMEs, which make up the vast majority of businesses, face challenges in achieving their full potential through exporting and internationalizing their operations. Quebec’s SMEs face a number of challenges, including their production capacity to meet the demands and requirements of major suppliers, along with increased compliance with various standards, the cost and risks associated with exporting activities, and the lack of expertise, knowledge and market access in a rapidly evolving and complex world characterized by a changing geopolitical context, rising protectionism and supply chain disruptions.

While exports accounted for 27% of Quebec's gross domestic product in 2022, there has been a relative decline since 2000, when it was 39%. However, over the past five years, we've seen an increase in manufacturing production, where exports have rebounded.

To help small and medium-sized businesses address these challenges, the agency uses three approaches. These are the innovation assistance program, support for the ecosystem that helps businesses, and referral and networking services, including the implementation of the industrial and technological benefits policy.

In all cases, CED provides services tailored to the reality on the ground in the region. CED's 12 business offices, located across the province, are community-focused and understand the features and needs of small and medium-sized enterprises and economic organizations in their respective areas.

Through the regional economic growth through innovation program, or REGI, Canada Economic Development, or CED, can invest across the entire business development and growth continuum to make businesses competitive, from start‑ups to the deployment and adoption of technologies, to the marketing and export of products and services. For example, CED supported CONFORMiT Technology Inc., based in Chicoutimi, in the international marketing of innovative health, safety and environmental software platforms.

Second, we support the ecosystem that supports SMEs and provides the referrals and market information they need to grow. In this regard, CED supports 18 regional export promotion organizations, the ORPEXes, which provide Quebec SMEs with local and front‑line services to facilitate their efforts to develop international markets. CED also supports incubators and accelerators, and college technology transfer centres.

Third, CED itself provides referral and networking services to businesses. We do so, for example, by guiding SMEs to good sources of funding or support. CED also implements the Industrial and Technological Benefits Policy in Quebec. Through this policy on national defence procurement, CED supports SMEs to help them integrate into the global supply chains of major stakeholders in the defence and security sector.

I should add that all work is done in close collaboration with key players in the ecosystem, including the Quebec government. We also have excellent working relationships with federal government departments such as Global Affairs Canada, Export Development Canada, Innovation, Science and Economic Development Canada, Indigenous Services Canada and the Business Development Bank of Canada.

Canada Economic Development, or CED, supports businesses at every stage of their development, encouraging them to take advantage of international trade to contribute to regional prosperity. This is how we help them grow, leverage their competitive advantages and integrate global supply chains.

We would be pleased to answer any questions you may have.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go to Mr. Lavoie, please, for up to five minutes.

[Maxime Lavoie, Director of Operations, Groupe Gilbert]

Good afternoon, everyone.

First of all, I would like to thank the chair and the members of the committee for having us here today.

My name is Maxime Lavoie, and I'm the director of operations at Transport F. Gilbert. I've been working in transportation for almost 20 years.

Transport F. Gilbert specializes in the transportation of bulk commodities, a specialized area of transshipment. We also have a number of other areas of expertise, such as snow removal.

I'm here today because global trade is a challenge for the different customers we serve. Most of the challenges are labour‑related, such as the scarcity of the workforce and the difficulty in hiring staff. That's why the transportation sector often has difficulty in keeping up.

In that context, putting in place a transportation system that's a little more dynamic when it comes to rail and marine transportation could help us in the area of global transportation.

I'm here today to present the various challenges we're facing.

Currently, rail transportation infrastructure in regions like ours, in Saguenay—Lac-Saint-Jean, is very underdeveloped. We believe that by developing rail and marine transportation systems in regions such as ours, it would be much easier to increase global trade and the supply chain.

I'm available to answer any questions you may have.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Lavoie.

We'll go to Ms. Brassard, please.

[Nadine Brassard, General Manager, SERDEX International]

Good afternoon, everyone.

First of all, thank you for inviting us and allowing us to speak to this subject.

As Mr. Perron pointed out earlier, SERDEX International is a regional export promotion organization, which we call ORPEX. So we are the ORPEX that serves the Saguenay—Lac-Saint-Jean region.

There are 20 ORPEXes in Quebec funded by the Government of Canada, the Government of Quebec and the private sector.

For more than 25 years, SERDEX's mission has been to guide, support and equip our region's small and medium‑sized manufacturing and value‑added service enterprises in the development of export markets. It helps businesses develop markets not only outside Canada, but also outside Quebec. So it's present on the interprovincial market.

In addition to being the executive director of the Saguenay—Lac-Saint-Jean ORPEX, I'm also the president of the ORPEX network in Quebec, the Commerce International Québec network. This network, which extends across Quebec, supports more than 2,500 businesses every year through its 65 international trade experts.

The regionalization of ORPEXes in Quebec is innovative compared to what is being done elsewhere in the world. It enables us to offer services tailored to the economic structure of the various regions of Quebec.

Furthermore, the fact that ORPEXes tailor their services to the regional realities of small and medium‑sized enterprises, or SMEs, while providing them with local service helps maximize the positive impact of interventions with businesses.

For example, ORPEXes are able to quickly assess the export potential of businesses by offering them export diagnostics, training, expertise transfer, assistance with the completion of export plans and the development of clear and credible market development strategies. In short, ORPEXes support companies in their export readiness to help them to reduce the risks inherent in their projects.

ORPEXes have a very diverse clientele in various sectors of economic activity. They help furniture manufacturers, industrial equipment manufacturers, agri‑food companies and information technology companies.

It's often said that ORPEXes have expertise in export processes and that they're there to ask companies the right questions.

ORPEXes also provide complementary services to those of all the players in the field. They interact with regional partners, but also with all export partners, such as the trade commissioner service or Commerce International Québec. They're referred to as the regional gateway to the continuum of export services. Their services are unique and complement what's available in the field.

When we look at the more regional side of things, we can see that the regions have great export needs and that the needs of businesses are growing.

It's important to remember that the costs associated with entering foreign markets, particularly those associated with marketing, as well as the uncertainty about success, may discourage potential exporters from selling their products and services in new markets.

The three top issues facing companies in the export sector are lack of market knowledge, lack of financing and liquidity, and logistical obstacles. Combined with the sometimes limited resources of companies, these issues make export diversification more difficult to achieve.

As you're no doubt aware, exporting SMEs have a positive influence on economic growth. Exports are a good way to reduce vulnerability. The more diversified a company is in the products it exports and the markets it exports to, the more effective it is in reducing the risks associated with foreign trade.

The support provided by ORPEXes helps to reduce the risks associated with exporting. They're there to effectively support SMEs in all aspects of their export efforts.

It's important to continue to support the innovative ORPEX initiative, as it provides a local service in the regions to both exporting companies and those looking to export their goods in the not‑too‑distant future. Today's companies are tomorrow's exporters.

I look forward to your questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. Brassard.

Mr. Laplante, you have the floor.

[Robert Laplante, Managing Director, Institut de recherche en économie contemporaine]

Good afternoon, Madam Chair.

Thank you for giving me the opportunity to share with you the concerns that have already been raised by the speakers before me. I think it's particularly important to draw your attention to an issue that's often taken for granted in international trade rules. My perspective is essentially analytical and critical. This issue is that of harmonizing standards and rules among partners working together in the same supply chain.

This meeting is being held in a very specific context. As we speak, there is a major agri‑food crisis in Europe that is affecting the national economies of exporting countries and causing tensions throughout the European Union. In addition to the issue of income disparity, one of the major elements of this crisis is the difficulty that the various players are having in reconciling contradictory standards and in finding arbitration mechanisms that, beyond those provided for in the European Union, would make it possible to arrive on a day‑to‑day basis at solutions that, on the one hand, serve the interests of each national community and on the other promote smoother, fairer trade between the various stakeholders.

The issue of disparities in standards is one of the most significant distortions in the functioning of supply chains. Of course, we mustn't overlook the logistical aspects and difficulties that can arise, for example, in transportation or the efficiency of customs checks. However, it's a fact that disparities between standards intrinsically define the role of players. They primarily define their flexibility in participating in a supply chain. From there, they determine the overall performance that players can achieve as suppliers or customers. In addition, these disparities in standards don't just determine the role of each of the players in trade. They can also affect the overall performance of the chain in which these players participate. This may, therefore, cause malfunctions or difficulties and as a result increase the cost of participating in this chain because of the expectations that must be reconciled between the various major suppliers and between the various suppliers of inputs or outputs throughout this supply chain.

Discrepancies and differences can be particularly marked by public policy. It's the public policies of the various trading partners that affect, determine or favour the competitiveness of everyone in this chain. The activities of economic players are always part of an institutional logic defined by the political bodies of each of the participating states. These discrepancies, driven by the standards that each economy sets for itself in terms of the quality, safety or security expectations associated with the production and exchange of goods, naturally affect the ability to participate in a supply chain on advantageous terms. In the specific case of agri‑food, these factors weigh heavily on the competitiveness of each business and the various streams.

Just think of the challenges posed by disparities in environmental standards for herbicides, pesticides and application rules, and that—

[The Chair, Liberal, Judy Sgro]

Mr. Laplante, I'm sorry to cut you off, sir. Committee members are anxious to ask questions, and your five minutes are up. If you don't mind, I'm sure you'll have an opportunity to finish your comments in response to some of them.

Thank you so much.

We'll go to Mr. Martel, for six minutes, please.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Thank you, Madam Chair.

Thank you to the witnesses who are here today.

My first question is for Mrs. Brassard.

Mrs. Brassard, it's interesting to hear what you have to say. I've also heard that some businesses are suffering from a severe lack of funding.

What are the consequences of this lack of funding?

[Nadine Brassard]

Exporting is a process that takes a while. Businesses have to make significant investments before they can reap any concrete benefits. Obviously, any costs a business incurs to come up with an export plan, such as for travel, hiring or resources, really add up, so they need adequate support for that.

There are programs to help businesses. That's really great, and we want those programs, but we also want them to be well suited to what businesses actually need and to constantly changing markets.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Thank you.

What we hear a lot is that programs are closed. Sometimes, businesses want to submit an application, but there's no deadline indicated. The programs seem especially ill suited to the regions.

Are our regional businesses missing out on a lot of opportunities with these programs?

[Nadine Brassard]

There is no doubt that businesses take major risks when they expand internationally. There are costs involved, and when programs are closed or entrepreneurs can't access them because of the nature of their business, that obviously impedes their export plans. They have to put those plans on hold and prioritize things that are more profitable for their business.

Consistent access to programs would certainly help them.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Mr. Lavoie, how can we improve regional businesses' performance? The fact that the supply chain is concentrated in Montreal, Toronto and Vancouver puts our regions at a bit of a disadvantage.

What are your thoughts on that?

[Maxime Lavoie]

The main thing we need to do is develop our infrastructure.

In my opinion, infrastructure in regions such as Saguenay is absent or inadequate. It's really hard for our clients to use intermodal transport. Trains aren't always an option, because either cars or infrastructure are lacking, so the only option is trucking. That makes businesses a little less competitive, because it's the most expensive mode of transportation. It certainly makes them less competitive if they export goods to somewhere like the United States.

I should also point out that there's a labour shortage in the trucking industry, where the workforce is aging. I believe that failure to develop could jeopardize the supply chain in the long term.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

I would like to talk about U.S. relations. They have their own ways of making supply chains work. Is there good co-operation with the U.S. when businesses export their goods there?

[Maxime Lavoie]

In terms of rail transportation, the relationship with the various participants is tricky to the point of jeopardizing opportunities for some businesses. Some of our clients tell us on a regular basis that this is an issue.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Businesses in the regions tend to transport goods to Quebec City and Montreal by truck.

How can rail transportation be improved when it's a CN monopoly? Can Transport Canada get involved?

[Maxime Lavoie]

I imagine that Transport Canada could be very helpful, because the railway belongs to the company that operates it. Currently, the only company that serves the Saguenay—Lac-Saint-Jean region is the company that owns the rail line. I imagine that's also the case in other regions. The only company that can provide service in those regions is the company that owns the railway track.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

So there would have to be good infrastructure, if the railway [ Inaudible—Editor ].

[Maxime Lavoie]

Yes, we would need new infrastructure or access to new markets so other companies can use the railway. That's how it works in road transportation. Roads are used by all carriers.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go to Mr. Sidhu for six minutes, please.

[Maninder Sidhu, Liberal, Brampton East, ON]

Thank you, Madam Chair, and thanks to our witnesses for being here today.

My question is for Mr. Nowlan.

You mentioned in your opening remarks about the Atlantic trade and investment growth strategy and how it's helped over 150 projects.

Can you maybe give members of this committee some examples of successful businesses that have participated in this program? What kinds of services has ACOA has provided to them?