International Trade Committee on Feb. 13th, 2008

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Khan, and thank you, Monsieur Cardin.

We'll go next to Mr. Julian.

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

Thank you, Mr. Chair, and thank you to the witnesses for coming forward today. They were very interesting presentations.

I'd like to start with you, Ms. Healy. You referred to the structure of what we know of the South Korea-Canada free trade agreement, and that it's basically a NAFTA template. We know that since the start of the process of implementation of the Canada-U.S. Free Trade Agreement, most Canadian family incomes have fallen, or the incomes of about two-thirds of Canadian families, according to StatsCan; and that the average debt load of the average Canadian family over the last 20 years has more than doubled.

I'm wondering to what extent the CLC has studies about the gutting of our manufacturing sector that's taken place at the same time, and what the impact would be of continuing with the same types of deals you mentioned. You prefaced your remarks by talking about the Korean deal, with your concern being that it would essentially be raw resources we'd be exporting, along with a lot of manufacturing jobs.

To what extent has the CLC studied the question of what's happened to manufacturing and good, family-sustaining jobs over the past 20 years?

[Dr. Teresa Healy]

We have quite a few studies that we'd be happy to share with you and the committee, if you would like to see them.

We have been very concerned for many years about resource dependency, a path that we are seeing reinforced in deals since NAFTA, and since CUFTA actually, and to this point in time resulting in low value-added exports. We've been concerned that income inequality has accompanied this model of development. So we see, on the one hand, the manufacturing sector being under stress and incredible strain, and on the other hand we see resource dependency, as I said, with low value-added exports. We see a surrendering of the policy space at the same moment. So it's a package; it's an approach.

I think what we should see here is that it's a model of development in which we have given over very important policy space to these agreements and to these sorts of U.S.-driven international treaties.

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

Could you share with the committee these studies that the CLC has done?

[Dr. Teresa Healy]

I'd be happy to.

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

Terrific, thank you very much.

I don't have a lot of time, so I'll move on to Mr. Moynahan. You're quite right to be concerned about the possible impacts of a free trade agreement with South Korea. We certainly saw with Liechtenstein and the European Free Trade Association that they were able to out-negotiate our negotiators, and our ship-building industry is going to be profoundly hurt as a result.

I wanted to ask you and Mr. Westcott and Mr. Khan about the alternative--that is, rather than rushing ahead with a poorly crafted agreement, we should be looking at substantial investments in product promotion overseas. Canada does a very poor job at that. We invest about a dollar for every $100 the Australians invest in promoting products and services abroad.

I'd like to hear from you to what extent the federal government has supported the mouldmakers in exporting overseas. Have you received any sort of promotional budget, any sort of concrete federal government support?

I'd like to ask Mr. Westcott and Mr. Khan the same questions.

[Dan Moynahan]

Regretfully, no, we have not really received any support. The only support that's available to our industry is the research and development program, and that's what we rely on for support.

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

So you haven't received a penny.

Are you aware to what extent the Korean mouldmaking sector has received government support?

[Dan Moynahan]

I don't have a dollar value, but at the provincial level right now, we are doing a study on Canada-China and what the actual differences are when you compare apples with apples. I'll share that with your committee when the study comes out in March.

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

The beginning of March or late March?

[Dan Moynahan]

Late March.

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

Late March. Hopefully we'll be sitting then.

Thank you very much.

Mr. Westcott.

[Jan Westcott]

No, we have not accessed any government funds.

Over the past ten years, I would say, we have focused mainly on scenarios in which we see an opportunity to go and open up a market. You can't spend promotion dollars until you have created conditions that are reasonable for people to make those investments. Our relationship has been one of identifying those potential markets, and then asking the government to help us to eliminate potential barriers and to create circumstances in which it would make sense to go and make those investments.

From time to time, and certainly not recently, we have gone to the Government of Canada and said we believe a country that's a member of the WTO is not meeting their international obligations, and asked the governmnet to help us make sure that they meet their international obligations so that the platform or the climate is available to us to go and make those investments. We have been pleased with the response we've had. We're not always successful. You have to go and push the button and do things.

The point I would make is that we don't believe you should sit and wait for somebody to come and identify opportunities for you. You have to go out and do that yourselves, and we've tried to do that.

Is there a potential to try to use promotional dollars? Perhaps. Often when you get promotional dollars from the government, there are other conditions or strings, and we'd have to look at those at that point in time.

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

Are you aware of how much the American bourbon industry and the Irish and Scottish whiskey industries are subsidized for promotional support?

What's the Canadian sales value of spirit products right now in South Korea?

[Jan Westcott]

It ranges a little bit, but there are between $500,000 and $800,000 a year of exports into Korea. Korean imports of similar products into Canada would be $200,000 to $300,000, so we have a significant trade surplus with Korean spirits.

[C.J. Helie]

There is potentially significant new opportunity for us as well.

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

Are you aware to what extent the other industries and other countries are provided with that trade promotional support? We've seen a real discrepancy between what Canada offers and what other countries are doing—the U.S., the European Union, and Australia. We're just outclassed right around the world. That has been a common theme coming out of these hearings.

[Jan Westcott]

I certainly don't believe that the Irish and the U.K. governments are directly subsidizing. I know that they have broad programs to promote British and Irish goods, as does Canada, and we do participate in those kinds of activities. Canada adopted some time ago a branding strategy that sees quality, reliability and integrity of source, particularly of food products, and we are strong supporters of that and active participants in those kinds of programs.

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

Thank you.

Mr. Khan, have you received any federal government funding?

[Steve Khan]

No, we have not for our international efforts. We have been in the fortunate situation of having the South Koreans discover our projects and our company and come to us to provide us capital to expand our business. But from a Canadian perspective, mining companies like ours do receive tax benefits for developing mining projects in our own country. Those come through the flow-through shares funding initiatives, but they are not for our international activities, because at this point for us they have not been a necessity.

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

Thank you.

Ms. Lamoureux, do you have an answer to the last question?

[The Chair, Conservative, Lee Richardson]

Sorry, we're pushing it over eight. Maybe we can catch you up in the next round.

We'll go to Mr. Allison.

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

Thank you, Mr. Chair.

I want to thank our witnesses for being here today.

I'll be splitting my time with Mr. Miller, so I'll try to get three and a half or four minutes.

Mr. Westcott, I appreciate that you are in the exporting industry, so I have a couple of questions for you.

You talked in your brief about WTO not necessarily working for you in terms of the tariffs. Has that situation been rectified or is that something once again you're hoping will be rectified through an FTA? That would be my first question.

[Jan Westcott]

We are specifically looking to the FTA to help us overcome that 20% tariff into Korea. That would be a specific outcome of a successful conclusion.

Do you want to add something?

[C.J. Helie]

I would just add that we have very little faith that the Doha Round would deliver anything similar.