International Trade Committee on May 8th, 2007

[Ken Sunquist]

As you know, we closed four consulates late last year and early this year. We've looked at other posts that could be closed. Instead of saying “closed”, it would be better to say, “how would you do the job better?” So we're taking a look at that. There is no list that says we're going to close 19 posts. There is a list of, as I said, 168 posts that we are re-evaluating.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

That sounds fair.

How much time do I have?

[The Chair, Conservative, Leon Benoit]

You have two minutes.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

Okay, fantastic.

I have a couple of questions about the Auditor General's report. I know we were talking about machinery of government. There were a couple of key recommendations she made in a report with respect to a comprehensive human resources plan to deal with staffing.

That plan should have been prepared--or at least in your response you indicated--by the spring of 2007. It seems to be roughly around the same timeline. Do you have that plan? What's the status of that plan? Is that report being prepared?

[Ken Sunquist]

I'm the assistant deputy minister for trade, and we have an assistant deputy minister for human resources, but our two deputies, Len Edwards and Marie-Lucie Morin, held the executive committee retreat two weeks ago. At the top of the priorities was to look at what we can do quickly to make a difference.

I think over the next few weeks, to the end of June, we have very definite timelines, not just on HR, but on many other issues: administration processes, human resources, mission issues, representation abroad. I think the focus is we have to make real changes within the next few weeks.

[Navdeep Bains, Liberal, Mississauga—Brampton South, ON]

You believe the department should have a comprehensive human resources plan prepared or at least finalized in the next few weeks. Is that a safe assumption?

[Ken Sunquist]

That's a fair statement. By the end of March each branch had to have a human resources plan, and the department now has a human resources plan. We have to implement the parts that can be done now.

[The Chair, Conservative, Leon Benoit]

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

We go now to the Bloc Québécois, Monsieur Cardin, for seven minutes.

[Serge Cardin, Bloc, Sherbrooke, QC]

Thank you, Mr. Chairman.

Good morning, ladies and gentlemen. I'm delighted that you could join us. We should have started earlier, so we will try to make up for lost time.

Currently, the committee is examining Canadian trade and investment policy, particularly as regards international trade. In order to achieve wealth and experience economic growth, Canada must sell the products that it manufactures and produces. I will not elaborate on the philosophical underpinnings of marketing, but the fact remains that ultimately, everybody wants to sell, but nobody wants to buy.

You represent foreign businesses. You say that the world has changed significantly. The approach taken is no longer the same. Currently, investors, business people and companies operating abroad do not all share the same status. We only have a general idea of how major companies operate.

Nonetheless, what type of assistance would a medium-sized business need from departments? What foreign market opportunities can they expect to encounter?

[Ken Sunquist]

Merci.

You have put this in the right context: companies of different sizes, what do they need, what can they expect? Clearly, a larger company needs one level of support and the SMEs need something else, but all of them are looking for local market knowledge and intelligence, contacts.

The global value chain could say that a company may want technology from Japan, investment from Europe, and export to the United States. So the way we would touch that company may be very different, depending on the market. In the past, we used to talk only about helping that company export, but now we talk about how we can build the company with investment, with technology, with our services.

But it comes down to the number one issue, our focus groups, our questionnaires, client surveys. It's always market knowledge, people on the ground, the more people on the ground, the more assistance. That's what they want. So it's a complex issue, market by market, size of company and sector.

But as more companies move into the service side it has an even larger implication, because in the past it was easy to talk about raw materials, manufacturing, which are still priorities, but more and more we're seeing the service companies. In the past we used to see companies that would need two years of manufacturing before they could export. Today, some companies start looking at the overseas market from day one.

So when they look at our people, I like to refer to it as Canada's largest international consulting firm, with more points of service abroad than any other private sector company. We have people on the ground who work for them to help them with contacts, with intelligence, with language, with whatever they need in that marketplace. So we work with those companies as their consultant, I guess is the best way to put it. But there's a difference between how we'd find it in Europe and some of the markets of Asia.

[Carmen Sylvain, Director General, Bilateral Commercial Relations: Europe, Africa and the Middle East, Department of Foreign Affairs and International Trade]

There are differences, for example, even in the three areas of my region. If you're looking at the Middle East, for example, contacts are extremely important in terms of doing business where markets are not necessarily established for us. In other areas, for example Africa, intelligence on the opportunities--because many Canadian companies don't have a presence in Africa--becomes all the more important. Again in Africa, troubleshooting in countries where governance may be an issue is something that Canadian companies will require. So it varies very much from one region to the next. In Europe, again, intelligence and information on how value chains come together are also important.

[Peter McGovern, Director General, Bilateral Commercial Relations: Asia and Americas, Department of Foreign Affairs and International Trade]

If I could just add to that, in the case of an SME, the CEO is often responsible for marketing and finances. When the CEO of a small business travels, efficiency is of the utmost importance. It's quite a different matter for large companies such as SNC-Lavalin or Bombardier, who have detailed knowledge of the local markets and who are working toward a very specific goal. When the CEO of an SME is away on business for one week, his or her absence could be detrimental to the company. The week therefore has to be planned efficiently and effectively, particularly in the case of difficult markets such as India.

The support of our trade commissioners is critical to ensure that information about the local markets is accurate and that business people are not wasting their time during these trips. After one week, people should be in a position to decide whether or not they wish to do business in a given market. This is one practical, albeit important service provided by our network throughout the world.

[Serge Cardin, Bloc, Sherbrooke, QC]

So then, you claim to be consultants who help people with export issues and perhaps also with setting up a business abroad.

How do you evaluate your performance or your success? Do you strictly go by the financial performance of the companies that you advise?

[The Chair, Conservative, Leon Benoit]

Mr. Sunquist, we'll need a very brief answer.

[Ken Sunquist]

Minister Emerson has stressed performance measurement as being the key to how we can do redeployment and how we can decide what services are best offered. So in fact the success of the Canadian company is what we measure our success against, in a way. We can't make a sale, so sometimes we can just provide the information and get them to that point. But it is clear that in looking at the large or small companies, there are very different types of success. Troubleshooting might involve market access, opening the doors, whereas smaller companies might need something quite different.

We do client surveys, and this makes a difference in what services we offer where. We do focus-group testing. We continually go out to companies, and we have a new electronic service called “trio”, an electronic client relationship management service, which will mean going electronically to companies and asking how we can improve our service. We'll do that continually.

[The Chair, Conservative, Leon Benoit]

Thank you, Monsieur Cardin.

We'll go to the government side now, to Mr. Cannan, for seven minutes.

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

Thank you, Mr. Chair.

Thanks to our witnesses.

I appreciate the opportunity. As you mentioned, we've been working for the last several months with the committee, and we've got this Ten Steps to a Better Trade Policy report, of which I'm supportive of the majority of the recommendations.

One of the issues that has come up from several of the witnesses, and to which our member opposite here from the Liberal Party alluded, is resources. In your comments, Mr. Sunquist, you mentioned the global supply chain and trying to redeploy, and looking at trying to maximize our existing resources.

I guess my question would be more about where we are today and about looking at the number of people who are on the ground. Do you think, in order to facilitate their building a better trade relationship with other countries, this lack of resources is a new phenomenon or a symptom of a lack of vision of previous governments?

[A voice]

Where did that come from?

[Ken Sunquist]

That's a good question.

The question is on resources. Regardless of the government in power, you will always find trade commissioners saying they would like more. Is it realistic to expect governments to continually give you more without results, without a careful look internally? I don't think any government today would do that.

You referred to your colleague opposite, and the list of posts, and as I said, we continually look at the posts. Yes, there is a list of about 19 right now, but those are not posts to be closed. Every year we take a look at what posts are out there and where they fit. We continually do that.

I guess the argument would be that resources should be redeployable as time changes. Yes, we would like to always continue at a high level everywhere, but it just doesn't make sense. There are countries where, from time to time, due to instability or other things.... Let me use an example. There are a couple of countries in South America where there used to be terrific posts. We had three, four Canadians at them. Well, the instability there kind of drove it downwards, so we only needed to have one or two Canadians. As the economy comes back, we'll ramp back up as well.

I think the real issue that has been addressed is one of flexibility rather than just being traditional and staying in the same place all the time.

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

Thanks.

To expound on that last comment, I agree that the markets are evolving around the world and we need to have that flexibility to move the resources wherever we see we can be most effective and efficient.

Something in your comments, going along that same vein of questioning, kind of piqued my interest. On using technology, you talked about a virtual trade commission. Could you expand a little bit more on that?

[Ken Sunquist]

We have officers, as I said, in 140 places around the world who have knowledge of that market. The issue is that Canadian companies sitting in Calgary or Moose Jaw or Rimouski want information, and they're not quite sure where to go. If you just go online and hit Chile, well, you might get chili sauce, chili powder, or chili pepper, but you don't get a lot about what the market in Chile is like.

So we started a system of government online and expanded it from there to a virtual trade commissioner, which is a 24/7 type of thing. We're funnelling information from our posts so that people can pick the pre-travel information. What are the sectoral opportunities? What are the constraints? Who are the people who can help them?

A company that gets onto the virtual trade commissioner will know who the trade commissioner is, they can use the system to get through with their questions, they get all of the market information we can get from many sources in the Canadian government and from newspapers abroad. So the virtual trade commissioner is a shortcut for companies to instant knowledge on the market they're interested in. Now, if they want to go to the next step, they use that system to get to the trade commissioner in the mission.

So it's a first step, but it's a personalized website. You put in which countries you're interested in, what sectors you're interested in, and that information is available just to you.

That's what the virtual trade commissioner is. It's a system that is working well, especially when you have companies that have always gone to Buffalo or Boston or Seattle, and you try to get them into Dallas, or you try to leapfrog into South America or into Asia or into Europe. They can start to see the benefits of a global system.

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

That's excellent use of that technology.

From your observations and what we've heard to date, we've tried to make some recommendations on how we can improve our business strategy in the international trade market. From an efficiency perspective, how do you see that we can make the machinery of government more efficient?

[Ken Sunquist]

A few years ago we had organizations such as Team Canada Inc., where we tried to organizationally bring other government departments together. It seems now that other government departments are interested in particular markets. Instead of this broad-brush “we're interested in exports”, people are interested in different parts. Maybe they're interested in exports in Europe, or maybe they're interested in market access issues in Asia.

So we're finding a breakdown of this overall system into very specialized groups. We know there are probably about ten government departments that are interested in the U.S. marketplace. We do this through this enhanced representation. There's a grouping, and they meet regularly.

When we talk about market plans, developing a market plan for Europe or developing plans for China and India, we get the government departments that are interested in this, that are interested in putting in resources, and that, more importantly, are interested in putting in their ideas and priorities. In fact, we're experimenting with different pilot projects, as I'll call them. The government online trade services is one; we have six or seven different departments. Enhanced representation is another; we have several there.

We're finding that the team approach involves the provinces, it involves the private sector, and it involves the federal government. We're finding that these regional trade networks are best. For instance, we know that in Alberta it's best, because the provincial government, the federal government, and all of our partners are putting time, effort, and people into working on it.

We have some other examples that don't work so well because the same commitment hasn't been made to it, but I think that's true at the federal government level too. It's a commitment to international issues, and not every department will have the same degree of interest worldwide.

[The Chair, Conservative, Leon Benoit]

Thank you, Mr. Sunquist.

Thank you, Mr. Cannan.

Mr. Julian, for seven minutes.

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

Thank you very much, Mr. Chair.

I want to address the issue of the prosperity gap that was mentioned very clearly in the trade committee report. Mr. Menzies speaks on it quite often. In fact, Mr. Menzies took five committee meetings to talk about the prosperity gap. He seems obsessed with the issue.

The reality is that most Canadian families are earning less since we started the free trade process, starting with the Canada-U.S. Free Trade Agreement in 1989, going through to NAFTA. If we look at Statistics Canada figures, about 80% of Canadian families have either seen stagnation or they've seen their real incomes actually fall.

One of the chief contributory factors to that, many observers believe, is related to the fact that we're exporting raw resources. We're exporting our oil and gas, exporting our raw logs rather than exporting manufactured products, value-added products.

I have two questions. One is related to thinking outside the box; we have to diversity our markets. It is reckless to have 86% of our exports going to one market. It means that market determines what goes in and what doesn't. We saw that with the softwood sellout. What effort is devoted to diversifying our market, and how much is manufacturing capacity and value-added production part of the overall thrust of international trade?

And Mr. Menzies I'm sure will want to ask a question on the prosperity gap later on.