Industry Committee on Jan. 29th, 2008

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you, and good morning to everyone.

My first question will be to Mr. Stewart-Patterson, and perhaps Mr. Marchi as well. You have both mentioned trade barriers and the WTO agreements, and in your presentations you've not distinguished between public services and private services.

Trade is obviously a two-way street. What would you anticipate as the impact of freer trade in services on services such as health care, the provision of water, sewage, postal services, and also cultural and artistic services support that we have in Canada for Canadian publications, films, and so on? Do you anticipate any impact in those areas?

[David Stewart-Patterson]

The short answer is that I don't expect anything in any trade agreement—bilateral, regional, or multilateral—to affect the ability of Canadian governments to deliver publicly whatever services they wish.

The only impact it has is on whether private companies have to be treated the same, whether they're domestic or foreign, if things are done as a private sector activity. It doesn't affect the ability of governments to deliver publicly whatever services they choose.

[Peggy Nash, NDP, Parkdale—High Park, ON]

So you're an advocate of a provision similar to chapter 11 under NAFTA. Is that the kind of provision...?

[David Stewart-Patterson]

Well, your question was, do I anticipate any impact on Canada's delivery of things such as health care, water and sewage, or other publicly delivered services, and I'm saying no.

[Peggy Nash, NDP, Parkdale—High Park, ON]

But under NAFTA, for example, if there is some privatization of these services, then there has to be equivalent treatment to the private sector.

[David Stewart-Patterson]

The basic principle of any trade agreement has been national treatment. You can't discriminate against companies depending on where they come from. That's all it says.

Of course, Ambassador Marchi is much better equipped to deal with the technicalities of that.

[Sergio Marchi]

If I can just complement that, the construction or the architecture that's done multilaterally on the services is quite different from how the goods and agricultural products are treated. In the first two, when the WTO, let's say, makes a decision to cut a barrier or a tariff, it applies across the board to all members of the WTO, whereas on the General Agreement on Trade in Services, when it was entered into, when it was first created, there was a fair degree of opposition from developing countries, because, quite frankly, they didn't understand the impact of this whole new services regime. So the WTO agreed that countries are able, unlike the other two market access issues, to take on commitments on individual items of their choosing; therefore governments, including our own, are completely within the bounds of the GATS to take an exception on culture or on the issue of health, which you mentioned, or a couple of those other issues.

Obviously, it makes for tougher negotiations; if you have a long list of exemptions or you're not prepared to take on commitments, other governments aren't necessarily going to open doors on areas of services that the Canadian government will want to take the offence on. So it's obviously a quid pro quo. But there is protection, legitimately so, offered to all country members of the WTO to take exceptions upon issues that they deem important for their own national reasons.

[The Chair, Conservative, James Rajotte]

Ms. Hunter wanted to comment.

[Carol Hunter]

Could I just add a supplementary comment? There's clearly a range of opinion on foreign ownership, on the delivery of private or public services, but we would argue from the cooperative sector that there needs to be at least a dialogue in Canada that engages the input of citizens, not just the business community, on the role of foreign ownership in different sectors such as health care, education, or communications.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you.

Let me just follow up with you, Ms. Hunter. You mentioned that there is a cooperative development initiative, the partnership with the federal government set to end on March 31, 2008. Have you been involved in a dialogue with the federal government? Do you know what their plans are in terms of continuing this initiative?

[Carol Hunter]

Yes, we've had many discussions with all the different parties, and we've been advised that the renewal will be under the agricultural policy framework, which, as we know, is being extended for one year until there is a consensus of all the provincial ministers to make it a multi-year renewal. So we've been advised of a renewal for one year as the APF is extended for one year.

Our greater concern, too, though, is an expansion of the CDI, because right now it is $15 million over five years, which means $3 million a year, to provide service delivery in all the provinces and territories. Under the current envelope we have a situation, for example, where the Province of Alberta received $60,000 to provide advisory service throughout all of Alberta. So it's great that it will be renewed, but our concern is that we really need an expansion. We've had no indication of an expansion.

[Peggy Nash, NDP, Parkdale—High Park, ON]

I have 30 seconds left.

[Brigitte Gagné]

I'd like to add something.

We have gotten an undertaking from the federal government that it would take the necessary steps to renew this program, in its current form, for one year. However, we haven't received any official document concerning this commitment. We don't know what the renewal action plan will look like. And I think that it is important to stress this.

[Peggy Nash, NDP, Parkdale—High Park, ON]

Thank you.

[The Chair, Conservative, James Rajotte]

Thank you, Ms. Nash. We will go to Mr. Brison.

[Scott Brison, Liberal, Kings—Hants, NS]

Thank you, Mr. Chair, and thanks to all of you for your interventions this morning.

Last week I was at the World Economic Forum in Davos, Switzerland. The focus of many sessions was on research and development and on the fact that research and development is now part of a global supply chain. No one country will control the research and development and commercialization of new technology.

One presenter said that Silicon Valley is now one IT innovation hub among many. China, India, and other locations have become competitors and collaborators in the development of technology and novel business models. Innovations no longer come from the U.S. or any country but originate increasingly in the developing world.

The reason I mention this is that there is a growing concern that Canada's policies towards China have a wide-ranging effect on the future competitiveness of our country and on the capacity for businesses to develop cutting-edge technology that will help bolster our competitiveness.

There was also a great concern there and excitement about the development of “clean tech”—clean technology—and a belief that the capacity to partner with the Chinas and the Indias of the world to develop those technologies will be very important to Canada. There is a belief that this is the fastest growing area of the 21st century economy, with companies such as Kleiner Perkins, out of Silicon Valley, focusing almost all their efforts and capital on this area.

I would like some insight from some of you on the importance of Sino-Canadian relationships in trade and in research and development, and also on your perspective on their development of clean tech and environmental technologies, particularly as we enter a globally carbon-constrained economy.

[Sergio Marchi]

If I may lead the parade—

[Sam Boutziouvis]

As chair of the Canada China Business Council.

[Sergio Marchi]

—wearing another hat, which isn't on the table today, I certainly would echo the comments that laboratories now know no borders and that those genius discoveries can come as quickly from a laboratory somewhere in China or in India as they can from our own country or the United States. Clearly that means that the emerging markets have already emerged, certainly in the case of an India and a China.

On your question on China, it is clear that China is obviously very important to Canada. It has already pole-vaulted to being our second largest trading partner. In fact, in our largest market, the United States, our greatest competitor is China. So while the United States will continue to impact positively on our economic wealth generation, nothing is forever. The whole gospel of diversification is even more important today than it used to be, in the last 10, 20, or 30 years—that is to say, to ensure the engagement of a country such as China—and not only because of bilateral economic considerations: I think in the case of China and India, their economic impact is felt around the global stage and also politically.

It means you not only should have a bilateral strategy; when you look to a country such as China, we should also be thinking how we can partner with them multilaterally.

On the issue of the environment, there is a lot of debate about how quickly or slowly the Chinese are moving. But if you look at their latest five-year plan, it is the first occasion that the Chinese have talked about priorities that speak as we do of quality-of-life issues. I think their top political priority and concern is the huge gap that is being created between people living in the cities and those in the countryside—the rich versus the poor, if I can put it that crudely. As a way of bridging that prosperity gap they are trying to improve the air and water quality, trying to improve the quality of health services to their people, trying to improve the education. Obviously, if that prosperity gap continues to grow, it potentially is a source of huge instability, and I would go so far as to say not only instability for China but in fact for the international community.

So I think they mean business on the environment and in those other areas. This provides yet another area for us to share our story and our experience and our expertise, not as a lecture but as a way of engaging the Chinese in how we have built our public and private sector areas of priorities.

[David Stewart-Patterson]

I can perhaps just add a couple of comments on the environmental aspect of that.

First of all, it's important to recognize that when we talk about research, it's really the broader process of innovation. It's not just finding new discoveries, new ideas; it's actually putting them into place.

We've also seen that within Canada we've been able to develop a strong consensus in the business community that technology is the development of new environmental technologies, and their active deployment is going to be critical to Canada making progress on the issue of climate change.

Furthermore, if, as world citizens, we're going to have an impact on climate change, we have to make sure that all major emitting countries are part of the effort, and that obviously has to include China.

On the other hand, that also creates a huge market opportunity. If we do a good job of stimulating the investment we need to do our part in environmental technologies at home, it creates a huge export opportunity in countries like China, which have to do even more.

[The Chair, Conservative, James Rajotte]

Thank you. I'm sorry, we're over time here, but we will come back to this, I'm sure.

Thank you, Mr. Brison.

We'll go now to Mr. Stanton, please.

[Bruce Stanton, Conservative, Simcoe North, ON]

Thank you, Mr. Chair.

Thank you to our panel this morning for the insights into this study we're doing on the service sector. I have to say, it's been very intriguing to watch how this has evolved over our last several meetings. You've added some more insights that are going to be very helpful for us.

I want to direct my first question to Mr. Marchi. In your presentation you talked about some of the benefits the service sector has brought to the economy here in Canada in terms of enabling it. One of the things you mentioned there was quality of life, but you didn't expand on that. I wonder if you could take a minute to expand on that notion.

You mentioned telecommunications and assisting and helping the manufacturing sector to be more competitive, and then you finished off with quality of life. What were you thinking there?

[Sergio Marchi]

I was thinking that my time was running out so I might as well throw that in and bootleg it.

[Bruce Stanton, Conservative, Simcoe North, ON]

I'd love to hear more about that.

[Sergio Marchi]

I talked about the quality of life in the sense of the co-relationship between the quality of a service sector and how it can improve the competitiveness of the manufacturing sector. And then I went one step further to have us think also, as we step back and look at our country, that the quality of services is also directly tied to the quality of life that one citizen or one country has. The more developed your services are, I think the far superior the quality of life, whether you talk about telecommunications, whether you talk about financial services, or whether it's in the delivery of health-related services.

For example, one of the biggest service areas they are finding in developing countries is in the whole tourism and travel area. I think tourism is about 35% of developing countries' services markets because of the great tourism.

What they're now finding is that telecommunications in how you market your tourism and financial services in terms of currency exchanges are obviously complementary services that create a stronger and more aggressive travel and tourism sector. And as you develop that as part of your economic jewel in the crown, it obviously raises the whole level of foreign investment going into that country, and hopefully those economic boats in the various harbours of that country will rise.

So I think the quality of people's lives are directly or indirectly manifested by the kinds of services that facilitate that life from Monday to Sunday.