International Trade Committee on Jan. 30th, 2007

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Julian.

Mr. Maloney, for five minutes.

[John Maloney, Liberal, Welland, ON]

In your deck, Mr. Ambassador, you indicated that between 1996 and 2005, Canadian imports from Chile increased from $342 million Canadian to $1.7 billion Canadian. During the same period, Canadian exports increased by 10%. My calculation of the Canadian imports is roughly a 500% increase over that period, while during the same period our exports only increased 10%, so we have much to learn from your experience.

You indicated, in response to a question from Mr. Temelkovski, that the obstacles to trade with Canada deal with the mindset of small and medium-sized enterprises, in that they fear to trade in the international markets. I'd like to know what percentage of your SMEs are SMEs that trade with Canada. That's number one.

Number two, you also indicated an obstacle of financing, in that we don't have a good system of financing to promote international trade and that we need to give more incentives to our SMEs. What types of incentives does Chile give, if any?

Your third point was that Canada has to define the possibilities of trade within Chile. How would you suggest that our SMEs could educate themselves on trade and investment opportunities in Chile?

[H.E. Eugenio Ortega]

I want to begin with the last part of your question. I think it is very important that we can work together, between our institutions, to promote this international trade. It's not my job to make some of these suppositions on whether your policy in terms of foreign trade institutionally is good or not good. But we want to have an agreement in terms of working together in the methodological promotion, the foreign promotion of our exports, with your experience. We find many differences in different provinces. Different provinces have more incentives than others. I think it's important for us to have, in this term, a closer relationship with the institutions that promote exports.

We have very good relations, for instance, with EDC, Export Development Canada. We also have some institutions in Chile that are working in the agriculture sector and in the industry sector to promote exports in the small and medium-sized enterprise area. The problem we have is that perhaps we've never been at the same table as the persons who are working on this issue of how to go more quickly in the relations between Chile and Canada in exports by small and medium-sized enterprises.

I don't remember if we have had an opportunity to discuss this aspect between Chile and Canada. We have to do that in the future, because the small and medium-sized enterprises in Chile and in all countries are the most important. They give more employees labour, and they are very important for us at this moment.

On the percentage of small and medium-sized enterprises that are exporting from Chile to Canada, I don't have the number here at this moment, but it's increasing. I am sure it's increasing especially because in the different sectors.... In wine, for instance, there are many medium-sized enterprises in fruit. In vegetables, there are also medium-sized enterprises that are exporting, and also some in industry.

It's important for us especially because we have some incentives, through this institution ProChile, that is dedicated only to promoting exports of the enterprises. This institution is owned by both the state and private enterprise together, and that gives us the opportunity to work with the private sector to go to the market.

[John Maloney, Liberal, Welland, ON]

How do you define a subsidy, as opposed to the incentives that you've just described? Is there a difference?

[H.E. Eugenio Ortega]

We give and want to give incentives in terms of technical assistance, information that's very important on different markets, and where you can go to export. We have, in countries with whom we have free trade agreements, experts in their field. Here we have offices in, for example, Toronto, Montreal, and British Columbia. People are looking for new markets in these provinces. And we also want to work in different provinces, in Alberta, Saskatchewan, and Manitoba, and also the provinces in the east, because we have some possibilities.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Maloney.

[John Maloney, Liberal, Welland, ON]

I have another question.

We have an embassy in Santiago, but do we have consular offices in other parts of Chile? You just described your consular offices in Toronto and Montreal.

I could find this out, but just off the top of your head, do you know whether we do?

[H.E. Eugenio Ortega]

I think you have only two honorary consuls in Chile.

[John Maloney, Liberal, Welland, ON]

Okay, thank you.

Thank you, Mr. Chair.

[The Chair, Conservative, Leon Benoit]

The last member of the committee to ask a question today is Mr. Lemieux.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

It depends on whether I have a question....

[The Chair, Conservative, Leon Benoit]

Mr. Lemieux hasn't had a chance to ask questions yet, so he'll be the last member.

[Guy André, Bloc, Berthier—Maskinongé, QC]

Haven't we started a new round?

[The Chair, Conservative, Leon Benoit]

I'm using the discretion of the chair, just to have the last....

Okay, go ahead, Mr. André, if you'd like to take the last one.

[Guy André, Bloc, Berthier—Maskinongé, QC]

Thank you, Mr. Chair.

Your Excellency, in response to Mr. Julian's question on globalization, you told us of the success stories in terms of addressing social inequalities between the rich and the poor. You referred to the 7 per cent, the richest 20 per cent of the population and the poorest 20 per cent and talked about the income gap. You're currently looking to establish social programs, programs which will further support the most disadvantaged in society, and help create a more level playing field.

An election was held recently in Chile. A right-wing government got in. So, there is huge pressure to slash social programs, notably health care programs. There's also a lot of pressure being felt here in that regard and talk of privatizing both the health care and education sectors. Despite an increase in collective wealth, a phenomenon due to multinational corporations, there is still much talk of privatization and there are fewer and fewer social programs.

Right-wing parties are forming governments in many places throughout the world. There are certain trends becoming apparent on the world stage, especially given globalization and the existence of a number of free trade agreements. There is some level of pressure being felt worldwide and the pendulum is swinging towards the right. I know that in Latin America, there are other trends being observed.

How does Chile deal on a daily basis with the pressure being brought to bear today on the health and education systems, and a tendency to slash social programs which would normally support the disadvantaged?

[H.E. Eugenio Ortega]

That is a very important issue for us because we are globalization players; we are not standing on the sidelines. Globalization, as I pointed out, offers many opportunities but it also harbors many risks. The coalition government that took over from the military government decided that Chile had to take a pragmatic approach in both areas, that of its international role and of its social policy, which provides the ground rules for the under privileged.

For example, we clearly transformed the health system and we are currently establishing a health care system to which 60 to 70% of the population will have guaranteed access. Currently, approximately 30% of the population uses the private health sector but we are working together because the private sector potentially can provide services that are not available within the public sector.

I talked about education. We would like to have a social policy that guarantees that globalization will not increase the social disparities in Chile. That is still our [Inaudible]. I believe there is a political consensus on this, as I pointed out at the end of my presentation, and a consensus between businesses and workers. There are differences of opinion, problems and disputes, as there are anywhere, but the key is to move ahead without being dogmatic. Some are against globalization and others only believe in free trade.

We are more pragmatic. We made substantial changes to the Washington agreement that was imposed by the Word Bank and the International Monetary Fund, and that today no intelligent human being in the world would agree with. We have opened our economy but we are aware of the danger that represents. We need to work pragmatically in a complementary, not a confrontational way.

[The Chair, Conservative, Leon Benoit]

Merci, Monsieur André.

Thank you very much, Ambassador, for coming today, and for your presentation and the information you have given us in the answers to our questions. I thank you very much. I look forward to seeing you in the future.

I need to go over just a couple of quick items. We have the Conference Board of Canada before the committee on Thursday, talking about the study they completed a little while back. I will issue a news release just on that.

The one other thing to do with the committee is that we had agreed to invite the industry committee members to that committee as well. So unless there is any objection, that's what we decided and we'll just carry through on that.

Yes, Mr. Maloney.

[John Maloney, Liberal, Welland, ON]

Will we have a longer period, then? If we have two committees combined, I'm just wondering about the questioning.

[The Chair, Conservative, Leon Benoit]

No, we will have two meetings. We have one this Thursday and one next Thursday with the Conference Board.

[John Maloney, Liberal, Welland, ON]

Okay; and the industry committee, so both.

[The Chair, Conservative, Leon Benoit]

Yes. And in terms of questioning, we can actually kind of work on that before the meeting. Certainly we would like a majority of questions to go to members of the trade committee, but the industry committee members could ask as well.

So for Thursday, it's—

[Lui Temelkovski, Liberal, Oak Ridges—Markham, ON]

And the press release?

[The Chair, Conservative, Leon Benoit]

The clerk has the press release here, just announcing that this meeting is happening.

[Lui Temelkovski, Liberal, Oak Ridges—Markham, ON]

Okay, thank you.

[The Chair, Conservative, Leon Benoit]

Very good.

Again, thank you very much, Ambassador.

The meeting is adjourned.