International Trade Committee on May 8th, 2007

[Ken Sunquist]

The link between security and trade has never been stronger and more difficult. Your colleagues have talked about passports and the thickening of the border, which is not a term we like to use because it's negative. But security is a big issue. It has also opened new opportunities for Canadian companies. There are some issues around ITAR and intellectual property, which is a separate topic for discussion, perhaps. You've raised an issue that troubles us, because it's much more difficult to move freely. Capital moves freely, but do people move as freely? How do you overcome that?

It's not just the big security issues. A lot of the world is unstable. Maybe there are opportunities in a certain country, but is it safe for Canadian citizens to be there? So there are consular issues and big security issues. It's not a balancing act; it's just that you have to make sure Canadians are aware of the risks of being in the international marketplace. The risks are not all economic. I don't know how better to answer that question now, other than to say it is an issue for the department to look at internally. It is one that Canadian companies ask us for advice on quite often for people who are travelling.

On how to determine success, I would term it the other way: how do companies think they're successful? Do they have more jobs? Are they more profitable? Are they running a second shift? We don't say that the success of a Canadian company is based on the fact that they've made $8 more on export sales. It may be that they have technology that allows them to expand their operations. It may be that they have investment that will allow them to continue as a sustainable company.

When we measure success, it's based on the company's perception of how they fared in the international game. It gets back to my comment that companies have changed. In the past they used to look at export sales as their measure of success. Today it's investment, franchises, joint ventures, and participation in value chains. There can be more than one measure of success, I entirely agree with you. And what are the social consequences in the community?

At the risk of going one step further than your question, I said that new globalization is around things like corporate social responsibility. Canadian companies--it's why I enjoy my job working with companies--carry Canadian values and ethics with them when they go abroad. We're finding more and more that this is an easy call for us. Canadian companies are valued internationally because of the types of companies they are and the type of people who get into the game. I find that those interested in the international game are usually the best and brightest of what we have to offer in this country.

[Peter McGovern]

Let me add that investment is also one component of our work. Cooperating with our trade partners is an important part of the work of our foreign trade commissioners. This mainly involves the provinces, because investment is a provincial mandate. Job creation is the main purpose of investment.

When I was consul general in Milan, I worked with the Ferrero Rocher company. This company, which is established in Canada, has created 600 jobs. Our embassies, as well as our consulates general, have a long list of objectives. They are working to create prosperity, but it has to be to Canada's advantage.

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

You understand, no doubt, why I put this question. We observed that in the free trade environment, in matters of international trade, some companies had grown tremendously, resulting in the loss of many jobs in Canada and Quebec. That's why it is important for the government, when it gives support to companies involved in the export business, to have expectations of favourable returns for our citizens.

You also mentioned, Mr. Sunquist, the Security and Prosperity Partnership initiative, and more specifically, the transboundary issue. We heard a few witnesses on this subject. Besides the transboundary issue, we have heard talked about harmonizing public health and environmental services. The harmonization of bilateral and trilateral trade is also being discussed.

Several witnesses raised concerns about the SPP initiative. They wanted to know what direction the SPP was taking and maintained that the movement was undemocratic. It's a fact that the SPP mostly represents big business.

I would like to hear what you have to say about this.

[Ken Sunquist]

To be honest, I'm not quite sure how to reply to the question about the population's belief that somehow companies will abrogate their Canadian roots, in the sense of a NAFTA or other free trade agreements.

I think what we're trying to do is build the small companies into medium-sized companies and medium-sized companies into world-class competitors. The question is how you do that and what are the results if you accomplish that. If we can find the means to help those companies to become globally competitive, it will stop foreign companies from invading the marketplace. It will help our companies invade foreign marketplaces. The trick is to really get those companies out there and make sure they have the right technology, the right people, and the right opportunities. That's as much as the trade commissioners can offer.

The other aspect of it, which you raised, is that I firmly believe that the companies that I see that are doing well in the international game retain that link to the community and retain the link to their values. Certainly you'll all be able to find examples otherwise, but the vast majority of companies today in Canada have found a new way of doing business.

To use an example, in Africa we have Canadian companies investing, I don't know, $7 billion to $8 billion in mining, and $3 billion in oil and gas. There are companies, particularly in Quebec on the consulting side, for which that's the major marketplace. Why are they being invited in? It's because they have a view on how companies should operate in a foreign country. They're viewed as clean. It's almost like a niche marketing. The fact is that you can be fairly certain of what you're getting from those Canadian companies and how they will interact in the community.

You pose the question, though, at the reverse end, of what the effect is in Canada on those companies, if they retain their.... I guess I can only say that I hope so and I trust so, but you're closer to that than I am.

[The Chair, Conservative, Leon Benoit]

Merci, Monsieur André.

Mr. Julian, for five minutes.

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

Thank you, Mr. Chair.

Just on Mr. André's comments around the security and prosperity partnership, I agree with his comments. I would also suggest that this is thinking inside the box, when thinking inside the box over the last 18 or 19 years has actually led to real incomes falling for most Canadians. So we need a new approach.

I'll come back to the issue of the trade commissioners. You mentioned, Mr. Sunquist, that it's about $350,000 per trade commissioner, roughly. Right? How, then, does the department do the evaluation as to whether or not the potential for building Canadian exports, hopefully value-added exports, or the existing market would justify additional trade commissioners?

[Ken Sunquist]

That's exactly it. We take a look at the costs in any post, for both our Canada-based and the locally engaged, the mixture that you would have there. We have what's called a Canadian commercial interest list--we're in the process of changing it right now--which takes 22 indicators from the past that show why a market might be good or bad, and we list 150 markets there and try to judge from there where your payback is going to be larger. It really is an investment by you. It's Parliament investing funds.

Now, having said that--

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

Would you be able to table that? I know it's being revised, but would you for the existing 22 criteria?

[Ken Sunquist]

We could clean up the list for the purpose of giving it to you.

We take a look at the countries and what the opportunities might be. Having said that, deciding whether adding a fourth person in New York is better than putting in a first one in Kazakhstan is where the value judgment comes in. At some point in time, maybe you can do, in absolute numbers, more in New York than you could do in Kazakhstan, but on the other hand how do you knock on the door or kick open the door to get in and get companies in? So that's when you decide to put one or two people into Kazakhstan. Maybe on a straight value for dollars it might not be quite at the top, but we know that in the long term, there are more prospects for that. So we try to make that value judgment.

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

But you use more subjective criteria than objective criteria, from what I see.

[Ken Sunquist]

We start with the objective, and then at the margins there is a subjective nature to it, obviously. There has to be.

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

Okay. Further to that, we talked about trade commissioners, but there's also the whole issue of support, promotion, promotional budget or promotional support on the ground, particularly given that Canada as a country is well perceived in most countries around the world. I'm interested in knowing to what extent there is support, to what extent there are advertising budgets and trade show budgets to enhance the on-the-ground work that a trade commissioner would be doing.

My last question is with regard to the whole support by the department for diaspora-type organizations that exist. Canada-Philippines, for example, has many Canadians of Filipino origin, but then there are also Canadians living in the Philippines. To what extent is there a tie-in between organizations both in Canada and overseas, in order to enhance Canada's profile in those countries?

[Ken Sunquist]

Thank you for giving me the opportunity to comment on the first part, which is that our department is not a program department. That is one of the issues: over a long period of time, our program funding has gone down. I can tell you that the total program amount on the trade side is only around $10 million to $11 million. That's outside of people. About $6 million of that is spent on what we call our client service fund, which is helping the trade commissioners in the regions. It's not very much when you look at the number of posts. I could give you how much each post gets, if you wish.

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

That's ten to eleven million dollars for the entire planet per year?

[Ken Sunquist]

Yes. That's in program dollars on the trade and investment side. On the diaspora, I think that's the change I was trying to get at in my statement. The world has changed, and Canada has changed. I think what we're trying to do is both recruit new people and also have a much more active working relationship with the different groups within Canada that retain relationships with their countries of origin.

[The Chair, Conservative, Leon Benoit]

Okay, Mr. Julian, your time is up. Our time with the witnesses is up.

Thank you all very much for coming today and for helping us start this study on the machinery of government and on how various departments and agencies work together when it comes to trade. I'm sure we will hear from you again. Thank you very much.

We will suspend for a minute or two, and then we'll get right back to the rest of the committee business starting with the travel budget. Thank you.

[The Chair, Conservative, Leon Benoit]

Let's reconvene.

We will first deal with the issue of the travel budget. You have in front of you a copy of a motion for travel and to approve the budget. Is there any discussion?

[Ted Menzies, Conservative, Macleod, AB]

Do you want someone to move it?

[The Chair, Conservative, Leon Benoit]

Sure.

[Ted Menzies, Conservative, Macleod, AB]

I will move it.

(Motion agreed to) [See Minutes of Proceedings]

[The Chair, Conservative, Leon Benoit]

All right. We will now go to the last order of business on the agenda, as far as I know. There is another possibility.

We have a motion. At the last meeting, we'd started dealing with a motion brought forward by the Bloc.

Monsieur Cardin, would you like to kick off our discussion on this today?

[Serge Cardin, Bloc, Sherbrooke, QC]

Yes, Mr. Chairman.

Mr. Julian's amendment was also tabled last week. At what point exactly are we starting?

[The Chair, Conservative, Leon Benoit]

Yes, we will start, if it's acceptable. We ended with Mr. Julian putting forth some amendments. We'd asked that these amendments be included in the text for discussion, and they are included.

If we could first go to the discussion on Mr. Julian's amendments, you'll see the amendments before you. Is there any discussion on this?

Yes, Mr. Julian.

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

Mr. Chairman, I would like to clarify Mr. Cardin's excellent motion. We hope that it will be supported by the four parties represented here.

Mr. Menzies spoke of tabling a motion that will deal with prosperity. However, I hope that Mr. Cardin's motion will be adopted, along with the amendment.

[The Chair, Conservative, Leon Benoit]

Okay, Mr. Julian.

Is there any other discussion?

Mr. Menzies.