International Trade Committee on Feb. 27th, 2007

[The Chair, Conservative, Leon Benoit]

Merci, Monsieur Cardin.

Next is Mr. Menzies for 14 minutes, except that the comment you made on my tie will lead me to cut that time in half, so it will be seven minutes.

[Some hon. members]

Oh, oh!

[Ted Menzies, Conservative, Macleod, AB]

I am sure his wife is missing the rest of the curtains.

Thank you, Mr. Chair, and thank you to our presenters. I had the pleasure of being at the dinner you hosted last week. The enthusiasm for Canada to play a larger role in trade was very evident. There was a lot of enthusiasm among all those individuals.

I take your comments as constructive criticism. Perhaps this committee should take them to heart in terms of how we get involved as members of Parliament and at a ministerial level to show these people that we do care, that we are interested.

I would like Mr. Lingenfelter to expand a little bit. We've talked all about oil and gas here, and I think there are service industries we need to talk about. Mr. Lingenfelter, I think you have a good news story that you need to tell about your involvement above and beyond the commercial aspect.

I know that Nexen is involved in helping out the people of Yemen. Something many people forget is that there is a role for SNC-Lavalin when you're involved, and for Nexen, that goes beyond the dollars and cents of trade. I'd like you to comment a bit on that good news story, and then I'll share the rest of my time with Mr. Cannan.

[Dwain Lingenfelter]

I'm the vice-president for government relations, and our department implemented a scholarship program in Yemen. We have now selected 90 students to attend university in Calgary. Once Nexen does the selection, every year 10 new students will come to Calgary and get their complete degree paid for by the company. It's one of our ways of giving back to the community.

In the long run, over a 20-year period, 200 Yemeni students could come from Yemen to Canada and learn our culture, and believe me, we learn theirs, because we spend a lot of time with these students. It's interesting to watch how our company has changed, and how the students change when they come to our Christmas parties and understand the celebration of Christmas. It's interesting that in our society in Canada we think that to be politically correct we should get rid of things like Christmas, but that is not what the Yemeni students or Yemeni families want; they want us to practise what we practise. They want to see it.

They came to my house for Christmas dinner. You watch 15 young Muslim women and men at your house at Christmastime and you talk to them about what Christianity means, for example, and they tell you stories about their religion, and we all go away much stronger and better for this.

This goes far beyond the dollars and cents. That's not to say the dollars and cents aren't important, but there's wonderful work going on that I think is the 180-degree difference to what we're trying to do in Iraq, which is to teach democracy by forcing it on people.

I think there's a much better way. Canadians can play a much bigger and more important role if we're more engaged. Our scholarship program, the clinics we build in the country, and our hospitals have given us huge opportunities to grow as a company. We just wish the Canadian government was there in Yemen to be part of this experiment, rather than waiting until it becomes a failed state. If it should become a failed state like Afghanistan or Iraq, then there's no question of money.

You don't think very much about whether we should put $100 million into Afghanistan after it's a failed state, but what about a preventative program, a wellness model for democracy, to save those countries that are trying and putting their best foot forward, as many of the countries in Africa and in the Middle East are doing at the present time?

[Ted Menzies, Conservative, Macleod, AB]

What level of presence would be required on the ground there? Do we need EDC and CCC there to help facilitate these transactions?

[Dwain Lingenfelter]

I think it's all of the above. Starting with this committee, I think you need ministers going through the country on a regular basis. They don't have to stay a long time, but they have to go and fly the flag. I would like to see an embassy or an office; all the other G-8 countries have embassies in Yemen. None of them has the investments Canada has in Yemen; we're by far the largest investor in the country, yet we're the only G-8 country not to have an embassy.

These kinds of things the Yemeni do not understand. They really don't understand it; I can't defend it, because I don't understand it.

[Ted Menzies, Conservative, Macleod, AB]

Well, Dr. Nasher is certainly a strong proponent of that cause.

[Dwain Lingenfelter]

I'm sure all of you have heard the story from Ambassador Nasher, who is a wonderful person and a great emissary for his country.

[The Chair, Conservative, Leon Benoit]

Mr. Cannan, you have about three minutes.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair, and thank you, guests, for sharing a little bit about your experiences of living in another country and about cultural education through diplomacy. I really support that effort.

The ultimate goal of this committee is to deliver a report to the House by the end of next month on how we can enhance Canada's trade policy and identify some of the opportunities and challenges in underdeveloped trade in areas where we can open some doors.

One of the comments we've heard from a few other witnesses is that we don't need to take such a complicated approach to these agreements. Could you enlighten us on how we might be able to simplify the process so we can get some short-term FIPAs and steps in the right direction? What's holding up the progress to date?

[Dwain Lingenfelter]

I'll ask Paul to comment on this, but I would start off by saying that North Africa is a good example. I think the bilaterals the U.S. is doing are very simplified models that just solve a problem. They're not looking at a huge trade agreement that will take five or 10 years to negotiate. They're quite straightforward and simple and cover off maybe only five or six or 10 problems.

The one other point I'd like to make before I turn the mike over to Paul is that this issue of lack of Canadian representation at the political level has become worse over the last five years. It's not anyone's fault, except to say that when there are elections on the horizon--and having spent 23 years in politics, I know this--obviously many things get set aside.

I know that with a minority government it is very difficult for members of Parliament to travel, for obvious political reasons, and we may, as Canadians, need to face this for some period of time, which only tells us that we have to find a way around it. You can't stay in Ottawa or in your constituency and ignore the rest of the world if we're going to continue to build the economy. I'm not saying it's because of one party or the other; I think it's the situation we're in, and the problem is getting worse and worse. First of all, no one wants to be on what might be determined as a political junket in the media. No one wants to be away when the House has a vote, but believe me, that's not helping us in the international world that we work in. In your report, I would like us to find a way to speak very directly to that issue and try to solve it.

[The Chair, Conservative, Leon Benoit]

Mr. Cannan, you can have a very short question and a very short answer.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Paul, could you touch on how you would see simplifying the process?

[Paul Mariamo]

I'd like to stress one thing, first, if I was misunderstood. The embassies help us. They're not that well staffed, but we get full support from wherever they are. I just want to point this out.

On bilateral agreements, business in the Middle East is not easily done unless you have a good personal relationship with them. You have to visit them often and have coffee with them and eventually you'll get the business. It doesn't come in the North American way where you make and you sign the deal.

The same thing happens with the politicians. You have to establish a relationship with them, the Prime Minister with the leader of that country. Be close to him, befriend him--in order for him to lobby for, and win, Canadian business.

If you see an opportunity for a bilateral agreement, such as sectors where you can provide engineering know-how or whatever, elaborate on those, build on this relationship where you would do a technology transfer between Canada and the UAE, for example, or in the oil field or education. Choose a couple of topics where others haven't excelled.

We've been doing business there. I know some universities have opened in Qatar. Qatar has announced a major investment in education to copy Dubai in a way. Education is an area that Dubai has not touched yet.

Why don't we push something like that in bilateral agreements with Qatar to start with and expand on that eventually? Experience that first with one of those bilateral agreements, with one country or with the GCC overall. As Mr. Hutton said, we have to do it with the GCC now. We can go from there for more kinds of free trade agreements.

I don't know if I answered your question properly, but that's the way I see it. I don't see it happening in one shot. We have to first build a relationship with the government itself. Maybe we have to have the government, the Prime Minister, there for a few years to establish this relationship. Still, we need to do something. It is still the Prime Minister of Canada who represents Canada. It doesn't matter which party he represents, he still represents Canada. If he establishes a relationship, we will have it for the long-term.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Mariamo.

Your time is up, Mr. Cannan.

Mr. Julian, for eight minutes or so. Go ahead.

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

I like your tie, Mr. Chair. I want to be on the record on that.

[Some hon. members]

Hear, hear!

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

Thank you very much for coming here today.

What I find particularly intriguing is the emphasis on the percentage of manufactured goods we're exporting to that region. That's a fundamental problem. As I know you're aware, as traders internationally, we tend to export our raw materials--whether it's raw logs or oil and gas--and as a result of that we're seeing a basic erosion in family income for most Canadian families.

We have to address that. One of the ways is by diversifying our markets. The other is by increasing the manufacturing component of our exports.

I'd like to come back to you, Mr. Hutton, to begin. You mentioned a 250% increase in trade with the United Arab Emirates over four years. How did you achieve that, and what were the resources you had on the ground in order to do that?

[David Hutton]

I think I should say immediately that I didn't achieve it. Canadian business is leading very much on this. What's taking place in Dubai and in the United Arab Emirates is something relatively unique. They have set out to diversify their economy in virtually every sector. One of the ways they are doing that is to make it a transportation hub, an entrepôt for this $1.5 billion market, which includes the subcontinent, even Russia.

One of my favourite stories is about an ATV agent who had a snowmobile shipped from North America by accident and was bemoaning the frustration and the inconvenience of having to ship it back. He decided to put it in his showroom just as a draw and came out the next day to see two customers arguing over who had the right to buy it. He didn't even have a price on it. Now he sells a couple of dozen snowmobiles out of Dubai every year.

We actually ran a fur show with the Canadian fur auction in Dubai very successfully.

This is an extraordinary environment. Dubai has become an exhibition centre, so it's like Germany in many ways. Huge shows take place, which have grown exponentially in their trade centre. Canadians started to come. It was a very efficient way for them to be introduced to the market, and, quite honestly, successful Canadians brought other Canadians along. I can't emphasize more the point that my colleagues have made. One thing leads to another in a snowball effect, and that's what we have.

The issue that's been brought up by the honourable members this morning—and I'm speaking personally, if you'll allow me—is a very critical one. We have an education job to do. We have to educate Canada that this is a very important place for Canada and a place for Canadians to do business and to build relationships, not only economic but social. We have to convince our press and our public that there is a cost to doing business, that when an MP or a minister or a government official travels to these countries, the return on that airfare is enormous, and you are playing a critical role in the business development.

I don't think any other country in the world is as hard as we are on our politicians and ministers for basically doing a very onerous job: flying in a short period of time halfway around the world and meeting a couple of hundred people or more. That is a personal comment.

I'll illustrate, if I can, the point that I think you are raising. At one of these exhibitions, there was a company, InterHealth Canada, that came and established a hospital in Abu Dhabi. It was an extremely successful contract. This hospital, the first accredited to Canadian standards outside of Canada, which was successfully drawing Emiratis to stay in UAE instead of going to clinics such as the Mayo Clinic and others, was staffed with Canadian doctors. There were over 300 medical staff there. At one of the trade shows, there was a Canadian company from Toronto, which was selling surgical gowns and medical clothing that doctors and nurses wear. It turned out that it was doing $1 million in business in the UAE, based on a contract, first of all, with the Sheikh Khalifa hospital, but then with others, because his garments were used by the Canadian doctors in Canada and could be washed 100 to 150 times, whereas the garments from the subcontinent, where you would expect to get them, deteriorated after five or ten washes. The last thing you would have thought was that a Canadian garment manufacturer of something as simple as a doctor's gown would have been that successful.

The same is true on the education side. The Southern Alberta Institute of Technology received a contract in the UAE to do some training for the oil industry. One of the things that came out of that contract was an award to an Alberta company to make a simulator for an oil operation. That was a $1 million contract.

The issue that we have to support is that this is an aggregate. It is a collective effort, and our companies seem to be extremely competitive. Perhaps where we are not competitive is government to government, which is the point that has been made this morning.

Thank you.

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

I thank you for those comments. You also said it should have been a 500% increase. Coming back to that and the specifics of why we're able to achieve.... I realize it's beyond you. It's staffing. It's the businesses that are doing business in the United Arab Emirates, but what was in place and what did you need in order to look from a 250% to a 500% increase? What was missing?

[David Hutton]

I'll use the example of Australia because I think there are some parallels, although there are others I could draw on, but they're the same distance away, the same kind of economy, and so on. I'm not sure what their trade figures were, but they were significantly more than ours. In their approach, there was probably a minister coming through the UAE on a weekly basis, I would say--certainly a trade committee such as your own, or a minister of trade on a semi-annual, or even quarterly basis. I won't say they were in the face of the UAE because they were often there for other reasons, sometimes just in transit to Europe, but it showed a government and business commitment that I think allowed them to leverage enormously.

We have a lot of things at play. Obviously, our operations in Afghanistan are very significant, but a lot of the purchasing we do is done in Dubai. When we responded to the tragedy in Pakistan, we did our purchasing in Dubai. We've been able to leverage some of that, for example, to bring in Canadian meat and food products simply because we had the power of the Canadian military to place these orders.

The interesting thing--and I'm going on too long, and I apologize, Mr. Chairman--in these countries, certainly in Yemen, but also in the UAE and others, is if we're not in the very central core of it, we're in the second ring. You may have Britain, the United States, the European Union, and France in that core, but around the second ring you have Canada. You don't find that in very many places, yet we do not act as though we're in that core position. We just simply don't have that presence. It's an anomaly.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Julian.

Now to the second round.

For five minutes, Mr. Temelkovski.

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

Thank you very much, Mr. Chair.

Thank you to all the presenters.

I find it interesting how much emphasis you place on visiting, political travel, and being present in these countries. We, as a committee, haven't travelled anywhere and yet we're a committee of international trade. I welcome your comments and will continue to work on making sure we travel. I understand the importance of travel.

I have done some trade shows in Chicago, Detroit, and Toronto. I have some colleagues who have gone to Germany, Taiwan, China, and so on, and the support they receive from our Canadian partners or government officials in those countries is very important to us. Not having somebody there, how would one be able to understand the landscape and the business landscape? What are some of the levers or associations that one can build on? What are we doing to sensitize or have the local population understand us more?

[The Chair, Conservative, Leon Benoit]

Who would like to answer that?

[Dwain Lingenfelter]

I think it's a good point. When it comes to travel, I always look back to what we do in our normal lives. As members of Parliament, you understand totally how important it is to know the people on the main street in your hometowns. Really, you can extend that example to the main street in Yemen or the main street in Dubai. If you're not there and somebody else is, you're going to lose.

When we talk about it being a very simple exercise in human nature, international trade is a very simple art. It's how often you are there, what you are offering, and whether they need your service. But in my company, being involved in international trade, if I sat in Calgary and waited for people to come, we wouldn't do any business and I'd lose my job—and I should lose my job because I'm not doing the work that's required to be in international business development.

The committee needs to become like that. Regardless of the critics, part of your role is teaching the public. We can help in that, but we have to be able not only to defend what you're doing, but to celebrate the successes that members of Parliament and the ministers have, or that the Prime Minister has when he goes and makes these kinds of visits.

Just as a final comment on Yemen, two years ago, I think, we invited the three ambassadors or three representatives—you, David, David Viveash, who was then the ambassador to Libya, and Graham Rush—to come to Yemen. With them, two MPs came along, one Liberal and one Conservative. We went to meet the President of Yemen. The reason we got to see the President of Yemen was that we had two members of Parliament with us. When we went to the room, the Liberals were in government and the representative sat by the President. Our friend from the Conservative caucus from Calgary was sitting at the back of the room, and President Salih asked where the other member of Parliament was. We said he was in opposition, and the President said, “No, he's an elected member. He comes and sits on the other side of me.” That just spoke volumes.

This wasn't a high-level minister or the Prime Minister. These were two backbench members of Parliament. So I think you shouldn't underestimate the impact that each one of you has both in educating the public and your colleagues, but also in doing many of these missions and helping business get business.