International Trade Committee on Feb. 22nd, 2007

[Yuen Pau Woo]

I can't say if things have improved or not. What I can tell you is that in terms of student arrivals from Southeast Asia, those numbers have fallen off. Canada is now a very small market and a relatively insignificant destination for students from ASEAN to pursue their post-secondary education overseas. It may not be directly related to the visa question, but I suspect that the difficulty in getting visas is one factor in our lack of competitiveness in the international education market.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

So you spoke about the visas and the student arrivals and said that this has fallen, and you also mentioned earlier in your presentations that Canada has in fact fallen off the radar in terms of being in the top 10, of having those linkages across the Pacific Ocean. What are the principal causes for us to have essentially fallen from the top 10 list in Southeast Asia?

[Yuen Pau Woo]

There are two things. One is our focus on North American markets since the 1988 bilateral and then the 1994 NAFTA agreement, which was a great decision because the U.S. was growing in unprecedented terms and we benefited very greatly from that. However, it created a mindset in the Canadian business community not to look much beyond Houston, Atlanta, and Los Angeles.

Secondly, on the other side of the Pacific a similar thing was happening, where the ASEAN countries were increasing their trade among themselves and with other countries in Asia. This is a function of changing investment patterns in the world, where multinationals would set up facilities in different parts of East Asia, producing a different component of the overall product, of what we call production networks. That led to growing trade within East Asia, to some extent to the exclusion of trade outside the region.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

It's a very important point, because essentially what's we've seen...and we've had some discussions around this table about the merits of NAFTA and the Canada-U.S. free trade agreement. The point that's continually brought to this table is the fact that most family incomes have actually fallen in Canada since 1989. So in a sense what we've had is a streamlining of wealth towards the wealthiest of Canadians, but most Canadians are actually doing worse than they were prior to the signing. When we couple that with the fact that all of our eggs are in one basket--86% of our exports are going to one market--that leaves us extremely vulnerable, as we saw with the softwood sellout, where essentially we capitulated and lost thousands of jobs as a result.

So how do we address that issue? In terms of infrastructure, all three of you have talked a bit about the possibility of trade agreements, whether they're the traditional free trade agreements or ones that are more substantive and include other components as a matter of some debate. In terms of what we can do now, regardless of whether or not we're signing additional agreements, what are the needs for infrastructure, what are the needs for federal government support, for expansions in terms of staff and trade commissioner offices throughout Southeast Asia that would make a difference over the medium to long term so that we can re-establish our real presence?

I'll have another question following that, if the chair permits it, or in the next round.

[Peter Clark]

Well, building relationships in Asia tends to take longer than it does in other places, so you have to have people there to help you build the relationships. Once you make the relationships, they tend to last a long time. It's a building of trust, so you have to have people on the ground to do it, and you have to have patience, which we normally don't have. That's our American influence, I guess.

[Yuen Pau Woo]

I think there are some very quick wins that we could have. I've mentioned them already. First of all, we have to close these two agreements that are still on the table: Korea--it's not in Southeast Asia, but it's an Asian country--and Singapore.

Second, there are a number of non-merchandise trade issues that we can work on. Air services to Singapore is one, and air services to the Philippines. There are the two FIPA agreements that we're negotiating with Indonesia and Vietnam. We have to bring these to a rapid conclusion.

I think both these types of agreements promote the flow of people, including business people, which will generate opportunities, particularly in the services sector, which I believe is where Canada's competitive advantage will be in the years ahead.

[Peter Julian, NDP, Burnaby—New Westminster, BC]

Ms. Tapia.

[Carmelita Tapia]

What I was trying to say before is that the members of the bilateral organizations here can be of use to the trade commissioners in getting more accurate information, because the members of the ASEAN bilaterals here have been there, and they know their countries better than those trade commissioners do. They come from Canada, and they really don't know how to deal with people in those countries.

[The Vice-Chair, Liberal, Lui Temelkovski]

Thank you, Mr. Julian.

We'll go back to Mr. Maloney.

[John Maloney, Liberal, Welland, ON]

Well, there's a circuitous road here. Singapore is the first domino we have to close, which will lead to others. But if we can't get a deal with them, we can't get a deal with anybody. Then again, as Mr. Clark said, we shouldn't accept a bad deal.

I'm still at a loss as to how we get their attention. How do we get back on their radar screen, and how do we break the barriers? You've mentioned airlines, you've mentioned visas. I think these are perhaps easily doable. Perhaps I might be a little naive in that respect. Is there more we can be doing, like perhaps having more human resources, more trade people, on the ground?

[Yuen Pau Woo]

Well, these are slightly different sets of issues.

On the negotiations, there are some very specific things that are holding up the talks. I think they can be resolved. It will obviously involve give and take. All agreements are second best. Okay? There are no first-best agreements in any free trade agreement or in any multilateral talks. The parties simply have to come to terms with the domestic political constituencies in order to make those breakthroughs.

In the case of Canada, one of those constituencies is shipbuilding, and we have to find a way to address that domestic problem. The Singaporeans can't solve that for us. By the same token, the Singaporeans have to find ways of overcoming whatever hang-up they have in terms of our ask to them on the services or investment sectors.

I really want to stress that I think we can close the Singapore deal. But even if we cannot close it, there are so many other things we can do and should do so we're not seen as being focused only on one deal and have nothing else to do. Air services we can work on. Visas we can work on, perhaps by having more immigration staff, a more streamlined procedure, or a different way of processing visas. The British, for example, have outsourced some of the initial screening procedures for visa applications in China. Maybe we can do that. I don't know. We can work, obviously, on the FIPA agreements in Indonesia and Vietnam. There may be other markets where we can also pursue investment agreements. We cannot let a stalled agreement be the domino, as you say, because we can actually move forward on other dominoes in the meantime.

[John Maloney, Liberal, Welland, ON]

Those FIPA agreements have worked well in Thailand and the Philippines. Do you agree or disagree? You're smiling.

[Yuen Pau Woo]

I'm smiling only because Thailand is in a very special situation today.They have put in place some retroactive rules on foreign ownership in the services sector that may in fact contravene the FIPA we signed with them. This is being negotiated as we speak. But this is something that applies to the whole world.

Thailand, as you know, had a coup last year, and the coup is tied up in some very messy issues related to foreign ownership of Thai telecommunications assets. And the Thai government has responded with a very blunt rule to reclaim some of its foreign assets that are owned by the Singaporean government, as it turns out. There is a fear that other foreign investors in Thailand may be side-swiped.

But let me say this. The fact that we do have a FIPA with Thailand puts us in a much better position to clarify what the Thais are trying to do than if we didn't have a FIPA. This is exactly why we need to have agreements with other economies, as well.

[John Maloney, Liberal, Welland, ON]

Is the investment climate through ASEAN such that we need FIPA agreements with all the players? Are our investments secure?

[Yuen Pau Woo]

The priorities we have already mentioned: Indonesia and Vietnam, which is an up and comer. We don't have large investments there. I don't think Malaysia has an appetite for FIPAs, but that would be another market. We already have an agreement with the Philippines and Thailand. I don't think it's a priority for us to negotiate with Cambodia or Laos, certainly not Myanmar, and Brunei is too small a market to consider.

[John Maloney, Liberal, Welland, ON]

Thank you, Mr. Chair.

[The Vice-Chair, Liberal, Lui Temelkovski]

Monsieur Cardin.

[Serge Cardin, Bloc, Sherbrooke, QC]

Thank you, Mr. Chair.

Lady and gentlemen, it is a pleasure to welcome you here.

Thanks to the witnesses we receive in this committee, we feel like were are travelling all over the world. And it is always a pleasure to travel to Asia.

Mr. Woo, you listed in your report different categories of services that we could potentially export, including infrastructure development and quality of life services. These include education and health.

In terms of investment or involvement in Southeast Asia, how can we export health and education services?

[Yuen Pau Woo]

Thank you for your question.

Ms. Tapia actually mentioned those subjects. I don't disagree with her, but maybe she wants to have a chance to respond and then I can also add to it.

Let me start. I fully agree with her assessment that education and health services are export opportunities for Canada and ASEAN, and by that in the education sector we mean two things. The first of course is the traditional idea of bringing students from ASEAN to Canada for ESL, but more particularly for post-secondary studies. That is a function of the reputation of our universities. It's a function of the marketing effort. It's a function of the visa processing ability of our posts in those countries. We have a very small share of the ASEAN market currently. There is a lot of room for growth, but the education opportunity also presents itself in a different way, which is not simply to bring students over but to deliver training programs in ASEAN itself.

There is a growing trend among foreign universities, in Australia in particular, not simply to bring students to Canberra, or Brisbane, or Adelaide, but to actually set up facilities in Malaysia and to deliver those training services in situ. Monash University, for example, has built a full-fledged campus in Kuala Lumpur in Malaysia, where they provide a couple of years of training for local students at much lower cost and then bring them to Melbourne for the final one or two years of study. They obviously are able to tap a much larger market by having a local presence, because they can lower the cost of education delivery. Canada and Canadian universities are very slow in pursuing this kind of new generation approach to the export of education services.

On medical services, the opportunity is basically a one-way opportunity. There is very little prospect for bringing patients over from Southeast Asia for treatment in Canada for a variety of reasons to do with our health care system and also with the cost of providing medical services. But we have tremendous expertise in medical care and dental care that we can export by establishing facilities in Southeast Asia, and we already know of a Montreal-based company that has set up a chain of dental clinics in Vietnam. I believe this is owned by a Vietnamese Canadian who is, I presume, a trained dentist and has set up these facilities in partnership with some Singaporean companies. The demand for health care is explosive in Southeast Asia. We have a good reputation. We can benefit by delivering those services in Asia.

[Serge Cardin, Bloc, Sherbrooke, QC]

Do you wish to add something, Madam Tapia?

[Carmelita Tapia]

Ground presence is really very important in order for Canadian companies to flourish in ASEAN countries. They should be able to partner with the ASEAN businesses there, so Canadian businesses can get a foothold.

[Serge Cardin, Bloc, Sherbrooke, QC]

You say that in the areas of health and education, there could be problems with Canada and Quebec. You are talking about integrating to trade, free-trade and globalization the principle that health and education are marketable products and that we can compete with other countries in these areas.

In Quebec and Canada, health and education are in the public sector. Asia, in whole or in part, is an important and interesting market. This is why intense pressures may be exerted in order for health and education to become marketable like other goods and services. Under these circumstances and according to WTO rules, Canada and Quebec would have to allow health and education companies to operate on their territories.

Do you believe Southeast Asia may be considering this?

[Yuen Pau Woo]

Starting with health, I'm not a WTO expert. Mr. Clark may be able to address the broader implications for global trade rules. But what I've discussed concerning the opportunities for the export of health services has no impact, I believe, on the public health care system in Canada. We are not talking about bringing sick people from Asia to provide them with services in this country. Rather, we're talking about taking medical expertise, dental expertise, physiotherapy maybe, sports medicine, that kind of expertise in Canada, and providing it in countries that already have the provision for private delivery of health care. That's their system; it's not our system. And throughout Southeast Asia there is an appetite for private delivery of health and health-related services. We have expertise in this country in those areas. It makes sense to encourage our companies who have that expertise to try to develop it overseas.

In the area of education, there already is a thriving market in the provision of education services to foreign nationals. As you know, they pay quite a large premium over domestic students, over Canadian students. In many cases, the foreign student fees make it possible for universities and colleges to reinvest, to expand their facilities, to make sure they get the best teachers. There has to be a balance between the number of foreign students that we take in and the number of places we reserve for Canadians. But on balance, having foreign students not only enriches the budget and the bottom line of the universities; it enriches the education experience of Canadian students. I would be very sorry to see a more restrictive approach to foreign students on any grounds.

[The Vice-Chair, Liberal, Lui Temelkovski]

Mr. Clark.

[Peter Clark]

Mr. Cardin, I think it could potentially cause problems in consistency if we were pushing to have other people open up their health and education services when we want to keep ours on the restricted list. When I look at medical opportunities, though, in Southeast Asia, Thailand is becoming a centre for medical tourism. And we have well-developed medical technology industries in Canada from which we could export the equipment and the expertise to facilitate the development of these centres.

Your concern is, at the end of the day, perhaps manageable, but initially it would cause problems of inconsistency.