Evidence of meeting #14 for Industry, Science and Technology in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was services.
A recording is available from Parliament.
Conservative
Bloc
Paule Brunelle Bloc Trois-Rivières, QC
Good morning, ladies and gentlemen. My question is directed to anybody who would care to answer it.
You're aware that an unprecedented crisis is affecting the manufacturing and forestry sectors, especially in Quebec and Ontario. In Quebec, in 2007 alone, 50,000 jobs were lost.
I'm wondering what effect this major crisis will have on service sector businesses. And I'm thinking in particular of small concerns in small communities such as the paper mill in my riding, Trois-Rivières, where quality jobs are being lost. How able are you to support the services sector and in turn the local economy?
John Anderson Director, Government Affairs and Public Policy, Canadian Co-operative Association
I'll answer part of your question.
We're currently looking at the possibility of employees buying a number of plants which have closed. We're undertaking a joint project with the Canadian Labour Congress in the Prairies. What we need to work out is whether employees, or even the entire community as a whole, can buy factories that have shut down. I think that the cooperative model might be helpful in such circumstances. In many cases, this type of solution isn't even considered. And I think that with the current situation, we have an opportunity of seeing the cooperative model as a way of dealing with plant closures.
Chair, Canadian Services Coalition
I would just like to say that while some of those sectors are going through some very difficult and trying times, it's not to segregate manufacturing, necessarily, from services.
As we quickly pointed out, that OECD report quite tangibly noted that a better service sector can improve the efficiency, the effectiveness, and the competitiveness of manufacturing. So the service sector, rather than just being a sector in and of itself, is also a barometer, if you will, of how productive and competitive the entire economy is. I think it should have an integrated policy as well, as opposed to looking at these sectors in segregated silos, if you will.
Sam Boutziouvis Vice-President, Economics and International Trade, Canadian Council of Chief Executives
I'd just add, Ms. Brunelle, that yesterday CIBC World Markets released a jobs quality report on the year 2007, reporting that the quality of jobs actually increased versus those in the previous year by a record amount not seen since 1999. In 2007, 132,000 jobs in the manufacturing sector were actually lost; however, more than 400,000 high-paying jobs, at least according to this report, were created in 2007—a 3.6% increase—versus low-paying jobs, which were obviously also cut back by about 1.2%.
So the point is that the economy seems to be able to create high-paying, good jobs in a variety of sectors, and in fact wages are rising, and have risen dramatically in the year 2007, contributing even more to this perception of a higher-quality job market in the Canadian context. This is despite the fact that you have intense pressures related to a number of reasons, a number of factors—including the dollar, global competition, and the housing crisis in the United States--that have obviously exacerbated a very difficult situation in forestry and manufacturing.
Executive Director, , Conseil canadien de la coopération
In Quebec, the Fédération québécoise des coopératives forestières is conducting a great deal of research and development in value-added sectors, in other words forest-derived products which may eventually be useful in setting up forestry cooperatives. And this is in addition to what is currently occurring in the Prairies.
Bloc
Paule Brunelle Bloc Trois-Rivières, QC
I agree that we need to create different and good quality jobs. I'd like to come back to what Mr. Stewart-Patterson said earlier. He indicated that investment in research and innovation has dropped. And in my opinion, that's a problem. Shouldn't we be lobbying the government and getting them to invest more in research and innovation?
Furthermore, my colleague referred to the difficulty attracting prestigious candidates. One example of this is in the research field where it's becoming difficult to recruit top researchers. We need high-level development research and we need to be able to offer these researchers competitive salaries. These top researchers are the equivalent of the top-scoring hockey champions: they're people that we need to pay really well. In Canada, we have to make sure we don't let our economy fall apart at the seams. So we need to work in the fields of research and innovation. I don't know whether you have an opinion on this topic.
Executive Vice-President, Canadian Council of Chief Executives
Perhaps I can address two points.
I would agree with you, and certainly one of the questions we are trying to dig deeper into is what really matters if we want businesses to invest more in research and development.
The initial stage of the project we've done with Industry Canada suggests that there may be broad policies that would help to encourage more investment across the board. Some of that, for instance, deals with tax policy and the scientific research and development tax credit, whether improving that would help across the board. But I think it's also shown already that there are very specific sectoral issues that determine research and development expenditures. I think that's probably the next stage of our work--to dig deeper into what makes a difference at the sectoral level. There are some obvious things.
In Quebec, the pharmaceutical sector is very strong as a driver of research and development, but there are specific issues on that front dealing with intellectual property rights and with regulatory approval processes that are within government's control that clearly would make a difference if governments want to encourage more.
Conservative
Conservative
Colin Carrie Conservative Oshawa, ON
Thank you very much, Mr. Chair.
I want to thank all the witnesses for being here today. I want to say how pleased I am that we are doing this study on the service sector.
You mentioned, Mr. Patterson, that there was a bias against the service sector. It almost appears to me that it's worse than that; it's almost like you've been ignored. Nobody has really looked at this before. I'm really pleased that we as a committee recognize the importance of your sector.
You talk about trade liberalization and how important it is. In Canada we have this great opportunity to start exporting our services. Mr. Marchi also mentioned.... Do you have some specific, concrete recommendations, not only on what the government can do looking at foreign markets and where we should go, but also about the interprovincial trade barriers? I hear in Canada that seems to be an issue as well.
Could you comment on those two things?
January 29th, 2008 / 11:50 a.m.
Chair, Canadian Services Coalition
Is that addressed to my colleague?
Executive Vice-President, Canadian Council of Chief Executives
All right. Perhaps I can start then.
In terms of the international arena, we have to be aware that for services, on the one hand, it's been harder to get international agreements in terms of opening up market access and so on. On the other hand, it's also an area in which trade rules can sometimes be difficult. It's hard for rules to interfere with the market, and I think we've seen that most clearly in areas like information technology and communications technologies, where we've seen massive shifts of jobs around the world because a lot of that work can be done just about anywhere, as long as you have people with the right talent. That mobility of services work is both a risk and an opportunity for Canada.
I think we've seen examples where Canada has had one investment and has become kind of a global centre of research in areas like software development, for instance. On the other hand, we've also seen examples of that kind of work being increasingly created in other parts of the world, including in parts of the world we used to think of as developing economies—the Chinas and Indias. I think they're much more than that now. I think that is a competitive challenge we have to recognize.
So yes, there are things we can and should do to improve market access. On the other hand, we have to be aware of both the opportunities to expand our own successes and the opportunities that are open to others to compete with us as we kind of think about how to move forward globally.
Chair, Canadian Services Coalition
I would also agree with your opening observation that services have been a bit of a hidden gem, and that probably goes for many other countries as well. Sometimes, from a public perspective, we're still seeing the old, more traditional economy—not to lessen the importance of that sector. But services also are very much about the transition the Canadian economy has gone through. Notwithstanding the fact that we have a lot of quality services to offer, roughly 13% of our exports are services-driven, whereas in fact domestic statistics show that services are the key drivers of our national economy. Of that 13%, some 60% flows to the United States.
So the first thing I would say is that we obviously have to open up and diversify our markets globally. That's why we stress, as one of the recommendations, that concluding the Doha development agenda, which is currently taking place at the multilateral trade negotiations level at the WTO, is very important for us. Many of those markets still face huge obstacles, particularly, but not exclusively, developing-country markets that have been much slower to liberalize their services regimes. Even when you have countries taking on commitments in the services area, Canadian companies, like others, also face non-tariff barriers, like licensing problems or having to partner with domestic partners. So you still have to continue to move that boulder forward. That's why we put a lot of emphasis on the government sparing no effort to conclude the multilateral WTO trade talks.
More specifically, the services, also in the WTO—and I had some experience on the ground there, and it was the same thing during my time as ambassador to the WTO.... Mainly there are three market access negotiations currently: agriculture, industrial, and services. Again, services, notwithstanding the huge economic numbers and statistics, both in developed and developing countries, from a process and political point of view, lag far behind the other two sectors. So even at the WTO we have to ensure parity, at least, of those three market access negotiations.
Domestically, as you said, there are different quality standards province by province, different consumer standards, different licensing standards, and different procurement standards. What we have to do internationally we also have to practise here at home. That's why it's important that the government continue to work with the provincial governments in terms of ensuring that those barriers domestically come down, and come down aggressively.
Conservative
Vice-President, Economics and International Trade, Canadian Council of Chief Executives
Just to add to Mr. Marchi's point, yes, at the WTO we need a deal. But we need to also utilize all the instruments we have at our disposal to open up markets and to promote investment from the Canadian side in all these other potential emerging markets where we could export our services. We should pursue foreign investment protection promotion arrangements; promote new tax agreements or re-invigorate tax agreements that need to be renegotiated; promote science and technology agreements, of which we have a few; and promote regulatory cooperation agreements.
Thank you.
Conservative
