Canada-China Relations Committee on Jan. 30th, 2020

[Rob Oliphant, Liberal, Don Valley West, ON]

Thank you for this and your work.

I want to ask about the concept of trade diversification, both trade diversification toward the People's Republic of China, and trade diversification away from the People's Republic of China, and whether or not there is a move in the government—this is not part of the work I do—on how we help Canadian industries buffer various geopolitical issues that are going on.

It would seem to me that we've looked towards China for increased trade and investment because of certain factors in the world, and that we've looked at other parts of the world because of the complicated relationship with China right now. Is there a shift in government direction? Is there a move? This relates obviously to the United States. It relates to Canada-Europe and it relates to TPP and to how that is shaping your work and what it is you may be looking for this committee to offer advice on.

[Duane McMullen]

Mr. Chair, in terms of trade diversification, the government has no policy of trade diversification away from China. We would like to grow our trade with China.

As we've heard from many of the questions, there members have concerns about how we increase our canola trade, how we increase our trade in forest products and how we increase our trade in all ranges of commodities and products and services. Our policy is to try to increase that trade. By so doing, our trade will be diversified.

As for individual companies, when we talk to them from a trade commissioner service perspective and we look at their global strategy, we encourage diversification as a general principle for them, because the data is very clear that companies that are more diversified in their trade are more successful. They pay better wages. They grow faster. They are less like to fail in a downturn.

A company with very diversified sets of markets does much better. One goal of our policy and our efforts is to help companies reap those benefits of diversification by helping them to do that in whichever market they are interested.

[Rob Oliphant, Liberal, Don Valley West, ON]

Last year, I met with the president of the B.C. cherry growers, in looking at the growing market for B.C. cherries in Asia and the comparative advantage we have because of the different growing season we have compared to other markets. They did say they had a concern about whether or not they were having all their cherries in one basket and whether they should be looking around.

Is this something your department does? Does it help a specific industry like that look at advantages? Also, are you exercising any cautionary advice for them with respect to China?

[Fred Gorrell]

Thank you. It's a really good question. I would say that having cherries, eggs or whatever in one basket is never good. Our industry is aware of that, and we're aware of it too.

Just to complement or supplement my colleague's comments, we obviously want to grow our industry and market in China, but we are also looking at other markets in the region, with diversification in emerging markets. We could look at expanding still in Japan, Vietnam, Indonesia, Malaysia, etc. We very much are doing that as well. Part of that is to manage the risk. If we do have all of the cherries in one basket, that is a problem. We do that at Agriculture and Agri-Food Canada, working with Global Affairs and all of our embassies abroad.

We do look at where we can maximize the opportunities for cherries and other products, but at the end of the day, it's the industry's choice of where they want to go. They will give us what they think are their priorities. We work with the other governments to do that, but at the end of the day, they will decide where to put their products.

[Rob Oliphant, Liberal, Don Valley West, ON]

In the last four and a half years, have we expanded our trade footprint in China in terms of our investment, and in human resources or engagement? Is that something we have done? Is it bearing fruit, to use that theme?

[François Rivest]

Yes, we have added resources on the trade commissioner service side. We've added some 25 resources in the past two years. We have three consulates on the mainland in addition to the embassy, and 10 trade offices were expanded over the years. It has certainly helped increase the number of Canadian businesses going to China and helped to open doors for them. Our trade, if you look the past 10 years, has gone up significantly with China for both large companies and SMEs.

[The Chair, Liberal, Geoff Regan]

Thank you very much, Mr. Oliphant.

Mr. Williamson.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Thank you, Mr. Chairman.

Thanks to everyone for appearing this morning.

Just as a point of clarification, could you give us the number for the actual trade deficit? I know you provided the numbers for imports and exports, but what number do you have for our trade deficit with the PRC?

[François Rivest]

Looking at 2018 numbers, our exports were $27.6 billion. Our imports were $75.6 billion. The total trade is $103 billion.

[John Williamson, Conservative, New Brunswick Southwest, NB]

So what is the trade deficit?

[François Rivest]

The deficit will be the difference between $75 billion and $27 billion.

[John Williamson, Conservative, New Brunswick Southwest, NB]

I get $48 billion. Is that...?

[A voice]

Yes, it's $48 billion.

[John Williamson, Conservative, New Brunswick Southwest, NB]

I know it's simple math, but they were questions—

[François Rivest]

I apologize, Mr. Chairman. I don't have a calculator.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Long math: thank heavens we don't always need a machine for that.

Mr. McMullen, you were saying that it's the policy of the Government of Canada to increase our trade with China. Do I understand that correctly?

[Duane McMullen]

We have no policy to decrease our trade with China.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Okay.

[Duane McMullen]

We are trying to grow our trade with every market.

[John Williamson, Conservative, New Brunswick Southwest, NB]

On the trade side, is it business as usual with China, even with everything that's happening right now with the detention and the WTO and...? You know the picture.

[François Rivest]

Yes. As we've talked about, there has been a chilling, with increased scrutiny at border points. It's not across the board; it's anecdotal. Some Canadian businesses are still doing well. Even within sectors the experiences are different. Business people are looking at what's happening in China and reassessing their risk appetite for China.

[John Williamson, Conservative, New Brunswick Southwest, NB]

But what about the Government of Canada?

[François Rivest]

We have resources. China is our second-largest and third-largest market. It will continue to grow and continue to be a huge and very important market for Canada. We cannot decouple from the growth of China.

[John Williamson, Conservative, New Brunswick Southwest, NB]

Yes. You said it's the second and the third. What's the—

[François Rivest]

It's the second country, and it's the third if you count the EU as one market.