International Trade Committee on May 8th, 2007

[The Chair, Conservative, Leon Benoit]

Go ahead, Mr. Sunquist.

[Ken Sunquist]

Mr. Julian, I'd want to look at the statistics. I can't dispute you...I just don't have that here. But on the diversifying of markets, I think that's exactly what we're trying to do. We recognize that the U.S. is the most important market. We recognize overwhelmingly--as Mr. Cardin was talking about with the small and medium-sized enterprises--that many Canadians regard the U.S. as their backyard, so we have a volume of companies to serve the U.S. You look at other issues such as the automotive pact and that, which have led the way in terms of two-way trade, so I'm sure you're never going to get too far away from 86% or 80%. Most of the countries in the world would value a partner that close and with that big an appetite.

I think your point on diversifying markets is key. We've done market plans for the U.S., Mexico, Brazil, China, and India, and we're under way on Europe. These plans look at what sectors offer the best opportunities in those markets. We're going to the company level to try to interest them. When I referred to our electronic client relationship--what we call our trio system--it's how you pull those who are doing well: if they're doing well in Boston, can they be doing well in Toulouse.

It also gets into the question that is in the Ten Steps to a Better Trade Policy; it gets into the value chain. For instance, if you were selling to Airbus ten years ago, you went to Toulouse, France. That's where you had to go. You took a trade mission there. Today if you want to do the avionics, you may be going to Honeywell in the States because they are the first-line producer. So it's changing the nature of where you go and what you do. These value chains make a big, big difference to the services we can offer, or should offer, for the future and how companies play into it. You're looking at importing from China to manufacture something here that you export to Europe or the States. The old rules of two-way trade balances no longer make as much sense as they used to.

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

You mentioned market plans. Now, these are being drawn up this year. Would you be making them available to the committee once they are completed?

[Ken Sunquist]

Yes.

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

Terrific.

I'd like to continue on with--.

[Ken Sunquist]

I was just going to say that we would make this available through Mr. Emerson, or the parliamentary secretary Mr. Menzies, I guess.

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

Thank you

With respect to trade commissioners, first, I'm interested in the quality of our trade commissioners. What is their profile, their background? I'm sure you have statistics on their education and relative ages. On their linguistic competency, do they they speak English, French, and other languages? To what extent are they trilingual, quadrilingual? Second is the issue of the quantity of trade commissioners. Given the size and scope of the Canadian economy and the necessity to diversify our exports, it strikes me that 250 full-time trade commissioners, 350 overseas, is far below the numbers we'd actually require.

I would like you to answer both those questions: the quality, and whether it is realistic to say that we should be substantially investing in more on-the-ground trade commissioners in countries where we want to broaden our market access.

[Ken Sunquist]

Thank you.

I have two comments. First, I can provide you with a good demographic picture of the trade commissioner service. I'll supply it through the chair or the clerk.

Second, in the last few years we have tended to recruit people who have some industry experience rather than those coming right out of university. About 60% of our new employees have post-graduate degrees, and about 60% have lived or worked abroad. As the ethnic makeup of our country changes, we're finding more and more people who have language abilities. So I would argue that there is a far more professional group in the service than when I first arrived 30 years ago.

The education and linguistic levels have gone up, but what is most rewarding for me is that the trade commissioner service, Foreign Affairs and International Trade, is clearly seen as an employer of choice for people who want to do that kind of work overseas with the best and brightest of our economic people.

This year I think 3,300 people have applied for the 50 or 60 openings we have. In fact, it takes more time to interview all the people.... We're not going to interview 3,000; we'll interview several hundred. So we're quite pleased that the quality seems to be edging up.

The second question is the numbers. The problem, purely and simply, is cost. If you look at the average cost of having a Canada-based trade commissioner or foreign service officer abroad, it's somewhere in the range of $350,000, on average. You have housing, education for children, salary, and all those things. So it makes a real difference. Those are difficult things you play with. That's why I look at redeployment and where I can move people.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Julian.

We'll go now to the five-minute round, starting with the official opposition and Mr. Temelkovski.

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

Thank you very much, Mr. Chair, and thanks to all of you.

Mr. Sunquist, you mentioned you've been with the department for 30 years or so. If you look at the past 30 years, take into consideration the growth that has happened, and apply the same growth without any increases for the next 20 years, where do you see Canadian trade going? What infrastructure is necessary inside Canada and globally for us to be competitive and maybe leaders in world trade?

You mentioned earlier that more and more information is posted on the Internet, and a lot of people from small communities can access this 24/7. Is this going to impact the way we do business in the next 20 years? Will it be more knowledge-based and accessible on your belt, as opposed to travelling to faraway places to get a few pieces of information or meet somebody in person?

[Ken Sunquist]

I think your questions form the basis of the committee meeting, but they also form the basis of my everyday job, to try to look at where we're going to be in five or ten years--that's what I have to worry about--although I think we've got a pretty good service today.

First of all, the Internet only gives you information; it doesn't give you intelligence. You can get lots of information, but you need people out there who can get out, dig the information out, find the opportunities. So yes, it will be more knowledge-based, but that's what our service will become. It will be much more knowledge-based in five years than it is today.

The second part of that is that when we look to the future, it's clear the composition of the Canadian economy is changing. Mr. Julian mentioned some of the shifts from commodities. When I joined 30 years ago, my first posting was Jamaica, and I worried about fish and commodities to Jamaica. By the time I got to a place like Indonesia, it was infrastructure projects and everything else. My postings have been Jamaica, Yugoslavia, United States, Korea, China, and Indonesia. While I've changed, it's clear that Canadian companies and the demands have changed even faster. Twenty years ago, they wanted much more handholding; today they want value-added real results more quickly, because these are expensive.

But business is still done by people getting into the marketplace. You cannot do business long-distance in most of Asia. You can make the connections, but you still have to go face to face at some point. I think this is overlooked in an electronic age. Many of my young officers are really good behind a computer, but still you need that interaction with the buyers, the joint-venture partners, the innovative people in a community.

So the change for the trade commissioner service, the change for international trade in general, is toward knowledge-based. It's toward a playing field that becomes more level, because whether it's WTO or free trade agreements or whatever, it will be more and more of a level playing field and it's going to be how you get into that market, how you get access to it. Many of the access questions these days concern regulations rather than barriers.

Your question had 15 sub-questions, every one of them key to where we'll be in five years' time if we don't address them.

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

In terms of the mechanics of it, in the last six months we've seen that the United States has required Canadians to have a passport, and six months later we see posters at the airports telling flyers they require passports. But it's six months after the fact. Do you see these kinds of mechanisms alleviated? How do you see our foreign trade department communicating these sorts of requirements and/or capacity? Because the way I see it, it will be growing fast and furiously in the next 20 years.

[Ken Sunquist]

You used the example of the passports and the border. Clearly, if 16,000 of our clients are heavily involved in the U.S. marketplace and access is a big issue, this gets to Foreign Affairs and International Trade. My colleague is the assistant deputy minister for the U.S. I'm on his committee looking at the western hemisphere travel initiative because this is a huge stumbling block for a lot of Canadians.

So we have to look at whether to have alternate means of identification or get more people to have passports. It's a very simple thing, but it's time-consuming. But it's clear that whether it's in the U.S. or whether it's in China or whether it's in the U.K., you have to have people-to-people contacts. So how do we get people from your community into those marketplaces, and how do we offer them services?

The new globalization issues are things like corporate social responsibility. It's things like the knowledge of other countries and their needs, and you can only do that by going and being part of it. So I find your comment that it's getting faster is very true. We no longer can take two months to reply to a letter. You've got 24 hours to reply to the e-mail. Things are spinning very quickly, and Canadian companies, to be globally competitive, have to be part of that game. So how do governments facilitate, how do governments assist, and how do governments compete?

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Temelkovski. Your time is up.

We'll go to Mr. Lemieux, for five minutes.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Thank you.

I wanted to ask a question about consultation with business and non-governmental organizations. I'll just start on the business side.

How do you interact with businesses? Do you seek them out? Do they seek you out? What sorts of mechanisms are used to do that consultation?

[Ken Sunquist]

It's regular. It's daily; it's weekly. For instance, the Canadian Manufacturers and Exporters or the Canadian Chamber of Commerce we see on a regular basis. Do they seek us out? Do we seek them out? I guess my comment would be, as in my opening remarks, that our clients are their members. So in fact we have a common need.

Yes, we seek them out when we look at a global commerce strategy and at what the needs are. They seek us out when they see problems or when they want to do something in a specific country. For instance, right now there's a lot of pressure on government to do things with respect to India. It's missions. Mr. Menzies led a mission. Minister Emerson was there.

Do we have enough offices there? Well, the Canada-India Business Council and the Indo-Canada Chamber of Commerce are coming to us, but we're going to them, too. This is a case in which we have the same objectives, so we take advantage of it.

It's structured on some occasions, it's true. We have all sorts of committees. The international business development committee reports to a colleague of mine. So we have formal means, but I would say that on a daily basis, it's informal.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

Okay, and then when—

[Ken Sunquist]

I should just mention that there's one other thing we have. Our department and our deputy has started something called our executive outreach plan. So every one of our senior managers, from a director general to the assistant deputy minister to the deputy minister is allocated a different part of Canada. Our attempt will be to get out to meet with individual companies and the provinces to talk about what they need, as opposed to what we're doing. We're out there to get their input and see how we can overcome their problems.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

You're doing that by looking at Canada and dividing it into regions, as opposed to, perhaps, looking at markets and saying, of potential markets, looking forward, here are some of our priorities. And now who wants to do business in these markets and what are your hurdles?

[Ken Sunquist]

We do both. I talk about the market plans. Let me just use an example, because some of you may be going there. In the Gulf Cooperation Council states--Dubai, Abu Dhabi--the growth has been tremendous. We took a look at this, and we felt that actually health care was an area, from owning hospitals to health care. It's all around services. We have 6,000 Canadians living in Dubai. We led a mission out there just a few months ago and took Canadian companies that are interested in the health care sector. We'll see how we perform there.

It's sector and it's market. On the consultations, we actually go after companies in sectors that we believe offer promise.

[Pierre Lemieux, Conservative, Glengarry—Prescott—Russell, ON]

With industry, you're listening to industry; you're consulting with industry. How do you translate that into, perhaps, meetings or exchanges of information with either companies in other countries or with their ministries? How do you actually translate that?

[Ken Sunquist]

We have 140 missions abroad. I think that's in 80-some countries, on the trade side. Our senior trade commissioners meet regularly with senior officials of other countries simply to find out if we have any market access issues, problems, or regulatory issues. We try to meet quite often with their export development agencies in order to have some synergies.

For instance, if Canadian companies are looking at sourcing, maybe AUSTRADE, in Australia, will have a better inkling of all the Australian companies that might be partners. For instance, the UK, Australia, New Zealand, Canada, and the U.S. meet on a regular basis. I just finished a meeting with my counterparts, my colleagues, taking a look at it.

Obviously, there are some things we don't talk about, and some things we guard.

[Carmen Sylvain]

I'd just like to mention a very practical example of how we consult and how the information gets back out. Very recently we organized, in cooperation with the Canada-Arab Business Council, a conference on doing business in the Middle East and North Africa. We took advantage of the fact that we had our heads of mission from every one of those countries in Ottawa to have a meeting of heads of mission, and we also invited the heads of missions of those countries posted here in Canada. The Canada-Arab Business Council invited members of the business community who were either already involved in the region or who potentially would be interested in being involved. The heads of missions here and heads of missions abroad were able to talk about the opportunities, the investment climate, and some of the challenges. Those with experience were able to describe their experience and provide advice to others. That's being factored into a report. Our heads of mission then went back, spoke with their trade commissioners, and talked about the particular interest of Canadian companies and what they needed to be working on and that kind of thing. The heads of missions of those countries could also inform their government.

There is something else that Mr. Sunquist has been doing much more actively, since I've been there anyway, from what I've seen, and that is hosting a series of round tables. When he sees a country or a region in which there is particular or emerging opportunity, he will take the initiative of inviting a select number of Canadian companies that are either active or have a potential interest. Doing so is very efficient, and it identifies what the barriers are and what we need to be doing to address those barriers, and then we will act on that.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Lemieux.

We'll go now to Mr. André.

Go ahead, please, Mr. André. I apologize for missing you once again.

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

Thank you very much, Mr. Benoit. Isn't it remarkable how mistakes are always made by one side, and never by the other.

Good afternoon et welcome. I'm glad to have the opportunity to discuss this topic with you.

Mr. Sunquist, what are your relations with the Security and Prosperity Partnership of North America? As you know, the SPP initiative brings together entrepreneurs from Canada, Mexico and the United States.

On another note, how do you measure the success of a company abroad? Do you only weigh economic considerations, that is whether or not a company is generating huge profits for its shareholders, or do you consider societal outcomes and the impact on employment in Quebec and Canada?