International Trade Committee on Feb. 11th, 2008

[George MacPherson]

We've had really no support to protect the industry to move it forward. And that's been the problem.

I made the example of the St. Lawrence Seaway as well. If you look at the St. Lawrence, the St. Lawrence is longer than the Atlantic Ocean is wide. And yet Quebec is struggling in the shipbuilding industry and heavy manufacturing. British Columbia is struggling. Ontario is struggling. You've watched shipyards close across the country. It's absolutely criminal, and it should not be happening.

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

I want to come to the issue of import duties. It's not directly related to Canada-South Korea, but it's still important as policy.

In B.C. we have three ferries that were built in Germany. I'd like you to tell us how many lost jobs that resulted in.

Of course I know the shipyard workers have been calling for the import duties to go back to British Columbia shipyards. What kind of an impact would having that infusion of money make?

[George MacPherson]

I guess your question is centred around the four ferries that are currently under construction in Germany and what that duty money would mean to British Columbia.

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

Yes.

[George MacPherson]

I'm not sure if the Government of Canada could actually direct that money to British Columbia, but if it could it would go directly into the infrastructure in the B.C. economy for the shipyards themselves, which would start the tooling process, which would enhance the apprenticeship programs, and it would start bringing people back into the industry.

There is still a lot of commercial work within Canada that has to be done. Everybody is talking about the large naval contracts that are coming out, and there are billions of dollars coming out that are going to be going somewhere.

Joint support ships are either going to go to Marystown, Newfoundland, or they're going to come to Vancouver. We'd certainly like to see them in Vancouver, but as long as they're built in Canada that's what's important.

For the money to come back into the industry in British Columbia, it would make a tremendous difference for our industry, for the infrastructure, to start the tooling process and revitalize the shipyards and to get them back up and running.

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

Okay, thank you.

I'd like to ask all four of you a question that has come up at previous meetings of the international trade committee. We essentially have a lot of difficulties with the Canada-South Korea trade deal. One repeated theme that has come up from people who have presented before us is the lack of on-the-ground federal government support for trade promotion, product promotion in countries like South Korea.

I will be starting with Mr. Haynal.

Could you just tell us to what extent the federal government supports your trade product promotion abroad, and how does that compare with your competitors from other countries?

[George Haynal]

That's an extremely interesting question. Each company or each segment of the economy may answer that in a different way, because different corporations need different kinds of support internationally, if I may say that.

Bombardier, as I was saying, is physically present in 60 countries, so we have a resident presence in many major markets. We have our own representatives there, our own incorporated companies in these settings. So the kind of support we need may not be the same kind of support as a smaller enterprise or a more specialized enterprise would need.

That being said, we are in a business that has an extraordinarily high level of public sector involvement in it. It is rare, though not unique, that a private enterprise would buy a railway car. It's becoming more common, but very largely public transit, in particular, is a public enterprise. So we're dealing with governments all the time. Often, state airlines or airlines that are in some fashion part of a highly regulated environment also have a high degree of state oversight.

All of this is to say that the kind of support we need and that our competitors deploy is at the political level, if I can put it that way. It is not necessarily that provided by trade commissioners, though that support we appreciate enormously, and we do appreciate enormously, as well, the diplomatic presence that is on the ground. But often we need our customers to know that Canada is proud of us, as France is proud of its Airbus or its ALSTOM, and it makes an extraordinary difference.

I'll leave it at that.

[Patrick McGuinness]

Through the Department of Agriculture and Agri-Food, we have CAFI, which has introduced some changes. If we want a generic marketing campaign, Agriculture and Agri-Food Canada will put in 50% of the cost if the provinces put in 25% of the cost and industry puts in 25%.

We have a very significant shell-on shrimp program in China right now. Canada is the number one producer. We produce about 60% of the cold-water shrimp in the world. We joined with Norway and Greenland to do a generic promotion in the retail stores in China. As I mentioned earlier, we target middle-class consumers, which is expanding in China. Also, the China westernized retail trade, Carrefour, and all that sort of stuff is expanding greatly. So we're targeting that type of market.

As I say, we have the three countries' partnerships, and then in Canada we have Agriculture and Agri-Food Canada. Say, for example, we're paying 60% of that generic marketing program of the total program, then Agriculture and Agri-Food Canada will put in 50% of our costs.

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

How much is that?

[Patrick McGuinness]

Right now the total program is in excess of $1 million a year. We're moving into the third year of it.

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

So it would be half a million dollars, then, that the federal government puts in.

[Patrick McGuinness]

Yes.

To answer your question, we see opportunities in Korea, particularly for a shell-on shrimp product and also a cooked-and-peeled product.

If in fact there was free trade, and it looked like a 0% tariff, as opposed to 27%, I would see a good bit of receptivity with respect to Agriculture and Agri-Food Canada working with us on a project. That's provided the industry is prepared to put up at least 25%, and if the provinces don't come in, then 50%. It's there, and it's a good program. And it's a program that I can see being linked into....

If Canada is going to proceed with respect to free trade agreements with what I call not traditional markets, such as the European Union, the United States, and so forth, but in new markets and new opportunities, it would be a nice idea to tie in those types of programs with those types of initiatives.

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

Thank you for your generosity, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

It has been 12 minutes now. I have been pretty generous, but we may not get to Mr. Julian's motion.

Mr. Allison.

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

I would like to thank everyone for presenting.

I'm going to split my time with my colleague, Mr. Shipley, so I'll probably have a chance for only one intervention.

I'm going to direct my questions to you, Mr. Haynal.

I want to thank you for your presentation on Bombardier. Certainly I've been aware of the company and what you have done over the years. I'm familiar with your commercials, where your guy gets off the safari and is going to get eaten by lions before he gets back on and all that, but I really didn't have a good idea of the size and scope in terms of the people you employ. I appreciate that understanding today.

You're in many countries, both with rail and planes. You talked about some 21, with aerospace. I'm assuming we don't have free trade agreements with all those countries. Is that correct?

We had RIM here last week, and certainly they're in countries where we haven't had free trade agreements. Obviously you've been able to work around the difficulties. But what types of issues have you experienced as a result of being in countries where we don't have those agreements in place? Are there a lot of non-tariff barriers? As the tariffs are high, you've had to move in capacity to build there. How have you been able to get around some of these things?

[George Haynal]

Well, we live with what is on the ground. In other words, we have established in many markets where we have to establish in order to sell. So we are local producers. In some cases that is a natural outflow of the expertise and the comparative advantage that's present in that market, but obviously it is a preoccupation that we have to get around rules rather than being able to take advantage of a level playing field.

The term “level playing field” is a reasonably hackneyed one. Everyone uses it, but actually it's a reality. It would be much more efficient to do business if the rules were constant, clear, and consistent. We operate in an imperfect world.

I could give you a much longer and elaborate and country-by-country response, but that is the essence of it.

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

Do you feel that a free trade agreement with Korea would help you access other Asian markets--again, you guys are fairly entrepreneurial and are already doing things--or would it just level the playing field? There's that term again.

At any rate, if we were able to strike a deal, would that provide any leverage for your company in other Asian markets?

[George Haynal]

I don't know about other Asian markets, but Korea is a big market. It's home to an important set of competitors--one in particular, I should say.

If in global markets we are operating on rules that provide them with the same disciplines we have, then we can compete. I mean, this company is not the largest producer of rail equipment in the world because we happen to be nice. We do compete. We are competitive. The easier that competition becomes, the more successful we will be. I would say that's the essence of the story.

If you had a hearing on other free trade agreements and did me the honour of calling me again, in all likelihood I would say the same thing. I think free trade--or freer trade, or disciplined trade, or whatever term you wish to give it--that provides no favours but clear, transparent, and consistent rules is a huge advantage to the Canadian economy. Their absence is a big hindrance, particularly since the United States, our major market, has them.

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

Thank you, Mr. Haynal.

[The Chair, Conservative, Lee Richardson]

Mr. Shipley.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chairman.

Thank you so much for the varying discussions we've had. My background is in rural Canada, in agriculture, so I want to focus a bit on that. We have certainly the Fisheries Council of Canada with regard to fish and seafood, which--I didn't know until today--is the largest-traded product around the world. So now we're talking about that part and about agriculture, which is the second-largest industry in this country. It's interesting that particularly beef and pork and many of our agriculture commodities are exported.

To Mr. McGuinness, you've been part of the fish council. If we're looking at beef, for example, they can likely increase their trade by tenfold. I'm looking to see, in terms of pork, what it would do. But in terms of what you're talking about--and we are surrounded by three coasts, so fishing is a very significant part, obviously--do you see how this would help us in a significant way in getting into other Asian markets?

Secondly, I think we need to be clear that Canada is an exporting nation. I think we all agree with that. We also have to understand, I think, that free trade agreements only need to be made when they're good for Canada. We also know that we fall under the umbrella of WTO, which, because of its structure, has a number of inabilities to produce results. I think that's part of the reason why we see a number of free trade agreements happening around the world.

I'll just leave it at this one: do you see it helping us get into other markets if the agreement should go forward?

[Patrick McGuinness]

My response would be somewhat along the lines of Mr. Haynal's in the sense that Korea for us is a very strong and important emerging new market. There's no question that Korea is also an exporter, and exports to the Asian markets. The major market in the area is Japan.

As you say, if the business expands beyond $47 million, into the hundred millions and so forth, there's no question that this is a catalyst for countries to work together--just as for many years we've had significant exports into Denmark and now we're working with Danish companies in terms of breaking into the Chinese market, because they also had investments in terms of marketing offices in China.

So as you develop more of a continuous, reliable business relationship and expand it beyond, say, moving $15 million worth of lobsters up to $100 million worth of lobsters, that then is a basis for developing relationships with the Korean infrastructure in terms of distributions exporters and seeing how we can partner with them in terms of other markets in that area.

There's no question in my mind that once you expand to a critical mass in an area, then that can be a centre from which to expand. Right now in terms of our markets we have big sales into the United States, Europe, and Japan. So we have those relationships in Japan, but everybody's exporting into Japan because that's the major seafood market. What we have to do is expand our exports into, for example, Singapore, which is then also very much a distribution centre for the ASEAN countries and things of that nature.

So you're quite right, it opens up that opportunity to explore, just what you're talking about.

[The Chair, Conservative, Lee Richardson]

Mr. Haynal, did you have a short comment?

[George Haynal]

I have one supplementary comment, Mr. Chairman. Thank you for allowing me 30 seconds.

With respect to other countries, a great danger of not having liberalized access to markets like Korea is, as I said, that the United States does--and increasingly, it's going to do so. So what we thought was a very special relationship with the United States that was concluded under the Canada-U.S. Free Trade Agreement may become a lot less special, and the access we have may become more tenuous as a result, as others have similar or even more privileged access, in some cases, to our core international market.

[The Chair, Conservative, Lee Richardson]

Thank you.

Just before we move to round two, I have a question for Mr. McGuinness, because it came up again in Mr. Allison's question. You said in your brief that trading of fish was the largest trading market in the world.