International Trade Committee on Feb. 27th, 2007

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

We hear oftentimes that trade missions are not worth it. What's your opinion?

[Dwain Lingenfelter]

The trade missions that don't work are the ones that say, “Nexen, do you have any deals that you have signed, and can we come and be part of the photo-op?” That's ridiculous. In those cases, we don't need any help. We already have the deal.

What we need is the front-end work, where a company like SNC–Lavalin is going to a country in the Middle East or in Africa for the first time, where there's risk and potential, but no deal is even in the offing. Those are the kinds of places where members of Parliament and the Prime Minister make the difference.

The idea of going and signing a bunch of contracts is the opposite of what business development is all about. If you can go there and sign a deal, believe me it has nothing to do with the trip. Those deals will have been worked on for five and, in some cases, ten years.

The public has every right to be skeptical about photo-op trade missions. This is my view. What trade missions should be is front-end work.

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

In terms of trade figures, oftentimes trade figures are not correctly portrayed because our products go via the States or other countries. I see this as being a problem not only with Canada but with other countries as well. The figures are not really the exact figures. Is there anything that can be done to streamline them, to reflect a true export or import?

[Paul Mariamo]

It's very tough to do that when the world is becoming one entity. Really, there are almost no more borders anywhere.

If you look at it from the point of view of what the trade is, it's basically what's behind this trade that we do. We do services. SNC–Lavalin is over there to create wealth for our employees, who come and spend money here and create jobs here indirectly.

When we go there and do a project of a billion dollars, we also buy indirectly from Canada. In buying from Canada, we promote Canadian products. Manufacturing there does not appear as part of trade, although it's being manufactured here to achieve part of the whole deal.

It's very hard to streamline or to put a figure on. I don't know how to do those things. I don't know what to say more than that, really, but there are indirect advantages that are really tremendous and that we cannot measure directly.

The honourable member before asked the same question, about what kind of trade we have. I don't know how to answer that.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Temelkovski.

Monsieur André for five minutes.

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

Good afternoon. I am happy to hear what you have to say. I have a few questions to ask about the Canada-Arab Business Council. Your role is to promote investment in Arab countries, etc. Do you think that prejudice or fear, on the part of contractors, is preventing companies from entering into a business relationship because of mistrust, cultural difference or lack of knowledge about how things operate there?

Also, your mandate has brought you to identify areas in which more investments could be made. There are business opportunities, and you have given us an example. I would like to hear what you have to say about other opportunities, perhaps in the manufacturing sector, which is currently experiencing some difficult times in Quebec. Would there be any opportunities for Canada in that area? What type of opportunities are available and what kind of business relationship is possible? I imagine that you would say... You have identified sectors where investment is possible but there is apparently a limit to what can be done. You seem to be saying that it is time for our governments to make an appearance in that part of the world. It is important because culture plays a major role in those countries. The political side of things is becoming more important and could help to strengthen business relations. I imagine that you have lobbied the government to move in that direction. Have you done so? Are they listening? Why are things not moving?

[Dwain Lingenfelter]

Maybe I could comment, but David and Paul will probably want to comment as well.

We've lobbied, and we've lobbied hard. The one hurdle we haven't gotten over with our lobbying—and this has been the case for a number of years—is that we can do way more with the same amount of money in the pot. If you're going to open an office in one country, you have to close one somewhere else.

Again, what I would like to think is that in the corporate world, what you talk about is building. As you grow, you expand your spending. It's not logical that the staff in Foreign Affairs, every budget, is being told that if they're going to open an office here, then they have to close one over there. What we should be asking is how fast they can grow. Based on how fast the trade increases, their budget will go up accordingly. But that isn't the way the Government of Canada has looked at this.

The government doesn't look at it as an investment. It's almost like a social program. There's this much, and you can spread it around the world however you want. But there's usually no reward for being successful. That's a fundamental issue that has to change if Foreign Affairs is going to have the budget it needs to do what business is requesting. That's a hurdle and a lobby effort that we have not succeeded in up to this point.

The budget has to increase and you have to reward success. If an operation is growing in a region, then that budget should automatically be increased to reflect that. Why? Because the return on that investment is coming back to the Canadian taxpayers very directly, and that return is measurable.

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

Are companies still afraid to invest, are there still preconceived ideas? Do you feel that there is still a lot to be done in terms of promoting awareness?

[Dwain Lingenfelter]

Yes, for sure. The CNN factor about the Middle East is real. You have many companies thinking that if they go the Middle East, they're going to be threatened, or it will be very difficult.

I can tell you that we've operated in Yemen since 1993, and we have never lost one day of production. We lose way more production days in the Gulf of Mexico because of hurricanes, or in northern Saskatchewan or northern Alberta because of minus 40-degree weather. In Yemen, with all of its issues and problems and challenges, we have never lost a day of production because of violence.

When I tell people that, they ask how that can be possible, because it's a fragile country and maybe we're going to get kidnapped or whatever. We have a thousand employees there. We've never had anyone kidnapped, we've never had anyone killed, and we've never lost one day of production. These are the kinds of messages that we don't get out enough, because we watch TV and we see Afghanistan night after night.

I sometimes wonder how it can be news that there was a bombing in Iraq. After 1,000 days or 2,000 days of saying that every day, how is that news? But that's the drumbeat of what the Middle East is all about, and it's not accurate in any sense of the word. It's very narrow to those two specific countries.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. André.

Mr. Allison, for five minutes.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

Thank you, Mr. Chair.

I thank our witnesses for being here today.

I'm a small-businessman. One of the reasons I got involved in politics was that while I realize we have had some great growth here in Canada over the last thirteen years, I believe we've had a ton of missed opportunities as well. That's been my biggest frustration as a small-business person. I look around and realize that even though the fridge or the glass of water is half full, we could have a lot more as a country.

You've indicated some of those things today, in terms of missed opportunities and where we are, whether it's trading, etc. I look at places like Australia, where they're there on a number of different fronts, with basically the same type of country configuration. They seem to be doing more, being more proactive.

I will agree only in this instance with my colleague from the NDP. We shouldn't just be counting on our resources. We should be looking at more value-added inputs that we can send out. As a country, I think we've done some of those things.

I've heard it mentioned by a couple of the witnesses, Mr. Lingenfelter, and you also talked about “Advantage Canada”. In terms of the reference, what exactly were you referring to, in terms of how that could be helpful as we move forward?

[Dwain Lingenfelter]

The minister referred to a couple of items in the speech he gave. There was a reference, I believe, to bilateral agreements creating centres of excellence and responding to the needs of business. What permeates from this document is a shift from doing social programs by giving aid to doing social programs by building economy. That's what I like about the document.

I really believe that the way you prevent a failed state is by building strong business relationships, building the economy, creating employment, and giving each family in that country an investment and a reason that they should be involved in the economy. This document, while not perfect, goes some distance from saying we need another $500 million in aid to give to this country, to saying that, no, what is needed there is to build the economy and the infrastructure so that people have an investment in their future.

Again, this document is just that, a document, because it's not implemented. What will be the truth of it—

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

The true test of it, sure.

[Dwain Lingenfelter]

—is whether in ten years we can look back and say all of us were part of making this successful.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

That leads me into my second question. We had other witnesses here, and we talked about the pre-emptive sort of diplomacy, whether it's sending aid versus building infrastructure or whatever, as you said.

What are a couple of examples? We did talk about other embassies or consulates as a possibility, but certainly that's not the extent of what you're talking about. Would it be actually trying to help countries build infrastructure? Is that the suggestion? How can we be involved up front so that we have these relationships and help build these countries, as opposed to trying to deal with them after the fact?

[Dwain Lingenfelter]

My view is that they go together. Encourage another fifty Canadian companies to invest in this region of the world and they can create another 15,000, 20,000, or name however many thousands of jobs. You're getting a return on this investment because Canadian companies are making money, and you can take a portion of that money, as a Canadian government, and invest it directly into infrastructure, whether it's airports, port authorities, or whatever. There's a synergy between the investment that's being made on the private side, a return on that investment to the coffers of Ottawa or the province, and it's going back and giving back to the country.

What doesn't make a lot of sense is that we say to an almost failed state in the Middle East or Africa that they are $500 million in debt and we're going to forgive it. So what? At the end of the day, if you don't build the economy, you don't create jobs, and you don't build a future that's controlled by the local people, you haven't accomplished very much, because in ten years the debt will be back again and you'll be called on to deal with it.

[Dean Allison, Conservative, Niagara West—Glanbrook, ON]

In other words, working with. And once again, what you suggested earlier was building government-to-government relations so our businesses have an easier time, whether it be through bilateral agreements, etc.

That leads me to my third question, because I'm almost out of time. We noticed the top ten things, and you mentioned that in your opening remarks, what we're doing or what we're involved in, in investment.

What other types of businesses or opportunities do you see for Canadian businesses in the area? Are we talking about services as a possibility? I notice we've talked about cars and manufacturers. Are there other opportunities there that you believe we could be looking at?

[Paul Mariamo]

I can see the environment being a major issue now. We can do a lot of services there. The governments there are becoming more mature, more environmentally alert. So there is more business for the environment, for example, where we can service them. We have companies in the environment business and agriculture. In countries like the GCC, where the desert covers most of the country, we can maybe help them provide some different agricultural products, help them with our technologies, and stuff like this. We're really not that active in the gulf. Yes, we are in the oil and gas sector. Yes, we're in some kinds of services, but not that heavily in service, such as in hospitals, in education,

On the second question you asked, I think Dwain gave an example a minute ago of educating people from Yemen. Those people eventually will become leaders in those countries, so they will remember Canada and they will give jobs to Canada. If we want to invest, invest in the future, don't invest in the past. Let's invest in the future. That's a perfect example of where we can invest in people for the future, giving them education. If there were a number who lived in Canada for a few years, they'll go back and indirectly they will cherish Canada, they will favour Canada, they will give contracts to Canada. I've experienced that with a couple of companies in the Middle East.

So we can do stuff like this, for example, and gain business from the environment to all kinds of...they're going through privatization and restructuring. They need to know how to do this. The social impact on people when they do this kind of thing, privatization and restructuring, they're not used to it. Everything is provided by the government.

Now they're going more to private business, so that's where we have experience that can help them. We can do the management, as we're doing now for GCCIA, trying to help them with the interconnections they're doing. They don't have this experience, what the impact is if they're going to restructure into private organizations, what's going to happen; restructuring of the industry itself, what's going to happen, how many losses they will have. There is no unemployment insurance there.

For example, I lived in Egypt for many years. Electric companies in Egypt have 10,000, 15,000, 20,000 employees. They need less than that, but they have them. It's the indirect social benefits or unemployment insurance. Give them a job, give them £150 or £200 to live on, instead of being on the street. If you promote this kind of business, to become self-sustained economies, they will get away from terrorism, from fanaticism; they will start looking at money, at business, and getting better.

So education is one thing I think we can invest in. Restructuring, privatization, proper guidance of things, government relations, whatever, but first you have to build this trust with them, which we don't have, and we have to behave as a G-8 country, honestly. We really have to behave as a G-8 country. We're the only G-8 country with a surplus. We don't behave like that. Spain is surpassing us. Other countries are surpassing us. We're left behind. We need to move as a G-8 country. We need to prove ourselves as a G-8 country, not only in name. We have a surplus, as Dwain said. Let's invest this extra surplus to generate money for Canada, to generate income for Canada, to generate employment for Canada.

We should be investing in those areas, and not in places where money is no object.

[The Chair, Conservative, Leon Benoit]

Mr. Hutton, I see you'd like to answer.

Mr. Allison, your time is more than up, but go ahead with a short comment, if you could.

[David Hutton]

Thank you, Mr. Chairman.

On the question of small business, one of the things that certainly impressed me was the number of Canadian franchises that moved into the Middle East. For example, Second Cup opened its first franchise outside of Canada in Dubai. A Canadian company called FIDEL had a clothing line, produced in Montreal, that was doing very well. Fruits & Passion and probably a dozen Canadian franchises have moved into that region.

On the issue of fear and concern about doing business, which I think is very fundamental, that's something we collectively have a responsibility to try to overcome. When some of the organizations were considering doing business, I was asked to speak to their boards on some of the concerns they had for their employees.

Even Foreign Affairs travel advisories can have an impact if they're not targeted and very specific. We might be actively promoting participation in a trade show in Dubai, but if there's a general advisory out for the region, it might force some business people not to travel because of perceived risk or even liability issues.

Finally, I honestly think we're at the cusp of something that could be very significant. I see a real momentum. It's possible that maybe even by this fall we could see the initiation of more negotiations with the GCC, whether they're on double taxation, foreign investment protection, or perhaps even free trade.

If the trade committee travelled to the region with so much under way, maybe even the opening of new embassies, what a powerful message that could send to the region about a collective commitment by Canada to increase our business.

I think in this coming year we really are poised to do something significant, or perhaps we'll miss that opportunity again.

Thank you.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Hutton.

Mr. Julian.

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

Thank you, Mr. Chair.

I'm going to put three questions out to you, and you can answer them collectively or individually.

This comes back to the questions I was asking you in the last round. What on-the-ground resources do we have right now within the GCC--the number of trade commissioners? I understand we have embassies in Saudi Arabia, Kuwait, and the UAE, but I presume they're fairly small and not adequately resourced. Aside from that, there doesn't seem to be much presence. So what is the staffing component, and how could we or should we enlarge that staffing component, particularly trade commissioners?

Second, my sense is that when you're talking about building relationships you're not talking about one-offs. You mentioned the Australian example, where there is an ongoing effort every week to have a presence in the region, and on a quarterly basis a ministerial or parliamentary committee goes into the region.

When we talk about the time factor in building relationships, what would be realistic and effective at the same time, in terms of the investments Canada needs to make?

My third question is mostly for Mr. Mariamo and deals with people of Arab origin living in Canada.

The fastest growing population group in my riding is of Arab origin. At what point should we ask Arab Canadians to become involved in the relationship between Canada and the Gulf Cooperation Council? Do they have a role to play? Can the government do something to help Canadians of Arab origin to take part in establishing these relationships?

[David Hutton]

I'll try to sketch out our presence on the ground.

As my colleague said, we have embassies in Saudi Arabia, Kuwait, and the United Arab Emirates. Saudi Arabia is responsible for Yemen, Oman, and Bahrain. Kuwait is responsible for Qatar, and the UAE is responsible for the UAE. We have a consulate in Dubai, as well as an embassy in Abu Dhabi in the United Arab Emirates. There are two Canadian-based trade commissioners in that consulate. That's an addition of one, I'm happy to report, plus there are two locally engaged trade officers. In Abu Dhabi there is one, so that's a complement of five trade commissioners. I believe there is one Canadian-based trade commissioner in Kuwait and one locally engaged. In Riyad there are two Canadian-based and I'll hazard a guess at three locally engaged. So that's a significant number of people. But I can assure you they are going flat-out.

Where would I suggest that people be redeployed? I think you certainly could strengthen some of those offices. A significant number of trade exhibitions are taking place in Dubai. As my colleagues would argue, Qatar is a very obvious one, as is Yemen, in terms of support.

I'll be candid now that I'm no longer with the government. We may need to decide again which embassy should be responsible for which country, simply because the logistics of travel have changed so much. For example, Nexen has an office in Dubai, so there's a relationship there. But these are issues that are very complicated because they have a lot of different political aspects as well.

[Paul Mariamo]

SNC-Lavalin has a number of employees who speak various languages. I believe that at least 50 different languages are spoken by SNC-Lavalin employees. That makes things quite a bit easier. It isn't simply a matter of speaking Arabic or Chinese or some other language; in order to understand other people, we must also be familiar with their cultures and values, so that we know how to approach them, how to communicate with them.

For example, one day, when I was with CAE, we entertained Egyptian clients. We arrived late for lunch and we saw that all that was left were ham sandwiches. I immediately realized that they don't eat ham. That is the type of thing that we have to be careful of.

When you deal with people from the Arab or the Chinese community and you speak their language, it makes things easier. You are better able to understand their environment and what happens there, particularly when people have a hard time expressing themselves in English, French, or another language. You can make your point much more effectively.

For some time now, in Arab countries, particularly in the Gulf, education has been provided in English and people there speak English quite well. Many of them also speak French. Our business with them is conducted mostly in English. There are few technical terms in Arabic. But you still have an advantage if you understand the Arab language. It helps you to see what is happening there, how people think, what motivates them, etc. It is important for the government to work along those lines, as we have been doing it as a matter of course within our company. We try to assign employees who speak the language of the country to make things easier for the clients, to better understand their culture, but also to provide better support for those who are sent to work there.

For example, when we want to send someone to China, it is preferable to ask a Chinese employee to go, because it will be easier for him. The same applies to Arab employees who are sent to work in Egypt. As to the UAE, everyone wants to work there, because life is wonderful, but the situation does not apply to other countries. If we send a Muslim to Saudi Arabia, he will have no problems, but if we send a European, a Canadian or a Christian Arab there with his family for two or three years, they will have a hard time of it. If they only go for two weeks or a month, it will be no problem, but if they stay longer they will find it difficult. That is why we need the right mix of people to manage and help businesses, the government, and Canada as a whole.

I don't know if that answers your question, but I think that is what must be done. Culture is important. It is one of the things that must be considered.

[The Chair, Conservative, Leon Benoit]

Thank you very much.

We will now go to Mr. Maloney.