Evidence of meeting #45 for International Trade in the 39th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was brazil.
A recording is available from Parliament.
12:45 p.m.
Conservative
The Chair Conservative Leon Benoit
Thank you.
Your time is up, Monsieur Cardin. You can have one short question.
12:45 p.m.
Bloc
Serge Cardin Bloc Sherbrooke, QC
Earlier, you talked about the image of the United States in South America compared to Canada's image. According to what you said, we could conclude that Canada should not align itself too closely with the policies of Mr. Bush, of the United States, if we want to retain our image in South America.
That was simply a closing observation. Thank you.
12:45 p.m.
Conservative
The Chair Conservative Leon Benoit
Thank you. Merci, Monsieur Cardin.
I am going to do something I don't do very often. I am going to ask some questions of the witnesses.
First of all, thank you very much for being here.
In your presentation, gentlemen, you stressed how successful Spain has been in South America. You said the reason they were successful is that they had a plan. Could you outline very briefly what that plan was and how they carried it out—some of the key components of the plan?
For example, was it that they signed bilaterals? Was it that they signed agreements to protect investment? Was it that they had a lot of people on the ground—trade people in various countries around South America? Just what were the key and most successful, important components of the plan?
12:45 p.m.
Board Member, International Trade Advisor, Canadian Council for the Americas
Right. Just to give a bit of a background, I think Spain went into Latin America, one could argue, because it was a defensive measure. Now, the timing was propitious for Spain. Nonetheless, it was felt that it was something they had to do. There was an urgency to it.
12:45 p.m.
Board Member, International Trade Advisor, Canadian Council for the Americas
Well, there were several reasons. One was that the green papers were coming out in Europe, and Europe was going to face something that a lot of Europeans hadn't really seen before, something called competition. I think there was a big push to get out and start competing around the world.
In the company I was at, one of the largest telecom companies in the world, in the Spanish unit between 1992 and 1995 its total sales in the foreign market went from something in the vicinity of 10% to 45%. So the mandate from on high was to go out and compete.
There was a second concept that the Spanish companies thought they were going to be vulnerable to takeovers or they were going to be gobbled up by bigger competitors, so where could they expand and where could they get bigger? And they thought they had a natural market in Latin America. It just so happened—
12:50 p.m.
Conservative
The Chair Conservative Leon Benoit
They had a natural advantage because of language and culture in some of the countries there.
12:50 p.m.
Board Member, International Trade Advisor, Canadian Council for the Americas
Because of language and the like, and culture, which is quite funny, because at that time Latin Americans probably felt a lot more favourable towards many other European countries or countries other than Spain. There was no huge love between Latin Americans and the Spaniards, at least in the minds of many Latin Americans.
It also came at a time when Spain was opening up. Remember, this is the late 1980s or early 1990s, when Latin America was going through their whole privatization and their neo-liberal opening. So the confluence of a number of factors, in the Spaniards' mind, said, this is our time to do it.
12:50 p.m.
Board Member, International Trade Advisor, Canadian Council for the Americas
There are books on it and people who are much more versed in how the Spaniards did it, but there was a complete package of fiscal, financial, trade...a whole series of policies that were implemented. I'm not versed enough to lay out chapter and verse as to what each one was. But it was also backed up by a lot of political interplay, a lot of political action, a lot of support by the government for business delegations, for chambers of commerce, etc.
It was directed, essentially out of the prime minister's office, in that it was a national goal. It was attacked in every single aspect of how they were going to get their companies involved there.
Now, it may be, because it's been a while since I was involved in that process, that a number of the measures they engaged in you probably would not be able to do anymore under the WTO, in terms of subsidizing loans, in terms of a number of things.
I raise it at the committee because I think it would be an interesting reference point if we're going to talk about Latin America and how you start from an area where you have relatively little investment and go up geometrically every year. How would that be done, and how specifically was it done in Latin America?
I know that the businesses in Latin America, partially because of the mandate, were bidding very high prices for a lot of these privatizations. In fact, in Peru, which I remember well, I think Telefonica of Spain bid a multiple of two over what the nearest competitor did. Everybody said that they were crazy to be doing that. Now everybody says Telefonica's making too much money from us.
That doesn't give a lot of specifics to answer your question, but it was a complete play of fiscal and financial support, cultural outreach, on every single level.
12:50 p.m.
Vice-Chairman, Canadian Council for the Americas
It was not pure arm-twisting by the prime minister or the Spanish crown to the companies. It was with support to convince them to support it. It was the need also of Spain to support the former colonies, if you want to put it that way. The cultural relations are very strong, and there are a large number of Spanish descendants in Latin America, so they felt it was a bit of a responsibility of Spain to help Latin America come out of the problems that they experienced during the 1980s and the beginning of the 1990s.
12:50 p.m.
Board Member, International Trade Advisor, Canadian Council for the Americas
I lived through that, and I know that when we were doing projects there was very close collaboration with the government. It was as if it were an extension of the company; it was hand in glove. You know, there was constant contact: Where are you going? What do you need for your programs? It was a deep embedding.
12:50 p.m.
Conservative
The Chair Conservative Leon Benoit
Looking at Canada now, where we are in terms of our trade with South America not doing particularly well, how important do you feel it is for the Canadian government to have more offices, more people on the ground in various countries in South America? How important do you believe that is? Is it important?
12:55 p.m.
Vice-Chairman, Canadian Council for the Americas
Yes, it is important, because the entire effort is about trying to bring the countries and Canada closer in their trade, and not exclusively in their trade but also their knowledge of each other and understanding of each other, which is very important for the purpose of identifying opportunities. The experience has been that those offices have done a very good job, but they have been limited as to the span and the support they have been able to provide to some.
12:55 p.m.
Conservative
12:55 p.m.
Board Member, International Trade Advisor, Canadian Council for the Americas
Yes, I think there is uniform unanimity on that. Some people involved in exporting have said, for example, that EDC does a very good job, but it is not geared towards the SMEs. That may be something the committee may want to look into, in terms of the financial and program support for the SMEs that EDC might give to the larger companies.
The other thing is that, if I remember correctly--and I don't remember specifics--I think Spain also used its political muscle to help Latin American countries in international issues. As we know, there are any number of ways in which one country can help another politically in international fora and the like.
12:55 p.m.
Conservative
The Chair Conservative Leon Benoit
Thank you.
Mr. Richardson, did you have one question you wanted to ask?
12:55 p.m.
Conservative
Lee Richardson Conservative Calgary Centre, AB
Thank you.
I have been very impressed with the answers of the witnesses today, and their broad knowledge of Latin America.
Slightly off topic, Mr. Chairman, I would like to beg the indulgence of the committee. Can you give us, in a nutshell, what is going to happen in Cuba in the next year or two?
12:55 p.m.
Board Member, International Trade Advisor, Canadian Council for the Americas
Yes. I actually wrote a piece on that last August in The Globe and Mail. This is an interesting antidote to Chavez, to a certain extent. What I have said is—and it is not private inside information—Raul Castro is an admirer of China and Vietnam, and actually convinced his brother to go along, saying, “Look at what you can do economically; this is where the world is moving.” Supposedly when they got back, he tried to push his brother to do something, with Fidel saying, “Democracy is the stepsister of economic globalization. That is not something that I really want.”
Raul has made a number of statements in meetings recently that, not just economically but politically, there needs to be more room for different opinions. I'm not going to say it is a full-scale clarion call for pluralism and the like, but he is saying things you would not have heard before.
So that's where I think he wants to go. Now, he is 75. How long will he hold on, and what will happen in the transition? We'll wait and see. Clearly, when Fidel dies, I think Raul will stay in power. Once he gets his power consolidated, which he may have done by now, I think that's where he wants to go. What will happen five years down the road? We'll wait and see. That's another area, theoretically, we're—
12:55 p.m.
Vice-Chairman, Canadian Council for the Americas
It's also very important, the fact that the Cuban immigration that went into the U.S. was an immigration of cultured and rich people, and they have had tremendous success in the U.S. It's not an immigrant group that has stayed at low levels; it has moved up academically and in the business world. There are significant amounts of money sitting in Miami, waiting for the opportunity to invest in Cuba.
The moment that Cuba opens up, there is going to be a flourishing in the economy, because there is a sentimental reinvestment that is going to take place in Cuba. There are a lot of companies. There is still a building in Havana that has “Bank of Nova Scotia” engraved on it. There are a lot of companies that are looking at Cuba as being the start in the Caribbean, and hopefully it will come back to being that if the conditions are given for foreign investment. There are large amounts of money to go into Cuba from second- or third-generation Cuban émigrés.
12:55 p.m.
Conservative
12:55 p.m.
NDP
Peter Julian NDP Burnaby—New Westminster, BC
I have a short question.
One of the fastest growing components of Canada is the Spanish-speaking population. We have a significant Portuguese-speaking population. How do we get them involved to ensure that we have stronger links with Latin America?