International Trade Committee on March 31st, 2009

[Claude Guimond, Bloc, Rimouski-Neigette—Témiscouata—Les Basques, QC]

The fact is that the border is causing a lot of problems. Waiting times have gone from a few minutes to a number of hours. That's a major problem. You talk a lot about the need to develop common policies and bilateral approaches with the United States, but you also have to take into account the fact that we are linked to Mexico through NAFTA. However, you didn't talk at all about Mexico in your remarks.

What do you think about NAFTA and Mexico? We know that that country is a major economic partner and that it has problems at the border with the United States.

[David Stewart-Patterson]

Indeed, Mexico is an essential partner in the North American context. NAFTA has been around for a number of years. The Canadian Council of Chief Executives operates like a secretariat for the North American Competitiveness Council. These are business people from the three countries who have given various opinions to the leaders of the three countries in the trilateral context of the Security and Prosperity Partnership of North America. We talk and work a lot with our counterparts and we've discussed matters with the three governments in an attempt to find trilateral solutions. Borders are still one of the central issues in those discussions. We currently don't know what the future holds for the trilateral process, but we hope it will continue in one form or another. We'll see what happens.

For the moment, Canada must hold bilateral discussions with the United States because the problems at the Canada-U.S. border are different, in a number of respects, from those at the U.S.-Mexican border. So we have to try to find solutions in Canada to solve our problems at the border. We can also have trilateral discussions, but first we have to focus a little more on bilateral discussions. That will produce results more quickly.

[The Chair, Conservative, Lee Richardson]

Thank you.

Mr. Julian.

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

Thank you, Mr. Chair. Thank you to our witnesses.

Mr. Patterson, it's good to see you again. We disagree on many issues, but I think there are some issues that we may find agreement on and which I'd like to explore.

First is that you may have heard, in testimony we received before the committee a few weeks ago, that the entire budget for product promotion for Canadian products in the United States—this vast market that is our biggest trading partner—is, we found out a few weeks ago, $3.4 million. That's for a market of 250 million people. It's smaller than the promotion budget for a medium-sized firm operating in the Lower Mainland. So to start off, I'd like to ask you, do you think that is lamentably low, particularly in comparison with other jurisdictions—the European Union, for example, which for only its wine industry provides a promotion budget of $125 million?

[David Stewart-Patterson]

I think there's a philosophical element there. To what extent should governments be responsible for marketing companies' products? When you're talking about a budget, you're talking about the government budget. I suspect that Canadian enterprises selling into the United States are spending considerably more than that promoting their goods and services in that market. I think for the most part, if a company wants to sell something, it's the company's responsibility to do the selling.

That said, I don't think as a country we're successful enough in expanding our base of exporters. The notion of government assistance is more important for companies that are trying to grow and break into new markets, whether in the United States or elsewhere.

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

Are you saying neither yes nor no?

[David Stewart-Patterson]

I have to speak from the perspective of large enterprises, and in that context it's important to recognize the extent to which trade flows are linked to investments. Canadian companies on the large end have become very enthusiastic investors abroad. Canada as a country is a net investor abroad now, as opposed to attracting investment here.

The two-way flow is important, but as companies invest, one of the points that was made by one of my colleagues here is that a large portion of the trade is within a sector, within supply chains within a sector, and even within individual firms that have operations on both sides of the border. I think we have to understand that the trade relationship goes much beyond the basics of not selling anything in the United States and needing to explore that market. We need to understand the broader dimensions of this and the investment flows as well as the trade flows.

[Sam Boutziouvis]

Mr. Julian, just to follow on David's comments, we were on the record and strongly supportive of the Canada-U.S. enhanced representation issue that was initiated several years ago. Are more resources required? We supported more resources being applied to the Canada-U.S. relationship.

The concern we have is that there are some ideas out there about how to raise those resources, whether from government revenues or by applying some kind of tax at the border that would be paid for by some of the people who are shipping. We're totally against that, and I'm sure David and the truckers are on the record as totally against such an initiative, which would gather money so that it could be spent to enhance the Canada-U.S. relationship but would be paid for by people who use the border. We're not in favour of that.

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

Okay. Sorry, I'll have to cut you off, just because I have a bunch of other questions.

[Sam Boutziouvis]

Sure.

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

We also heard in testimony that essentially the government has backed off any interventions with the new administration on the WHTI, so it will come into effect in June. This is eight months before the Vancouver Olympics. We essentially have this huge challenge now with only one-quarter of Americans having passports, and at the same time the WHTI being fully implemented at a time when in the Lower Mainland of British Columbia we're trying to attract as many American tourists as possible.

Do you feel the government should have done a lot more to avoid what is becoming a tourism calamity? As well, we heard evidence from the Canadian Tourism Commission that supplementary budgets haven't been allocated to ensure Americans are aware of what the new requirements will be going back into the United States.

I'll ask a further question and then turn things over to you, Mr. Bradley. Thank you for appearing before our committee.

You mentioned the SPP. Essentially you said, charitably, that it has underwhelming results. I'd like to attack it from another standpoint. The SPP was purportedly around border issues and then became this multi-headed monster that attacked a whole series of regulations, a lot of them that protect Canadians, and sought to bring in lower standards in areas that had nothing to do with the border. At the same time as you have the SPP, we have this thickening of the border, which, as you mentioned, has not been helpful at all.

Setting the SPP aside and refocusing on border issues and the thickening of the border through measures such as you mentioned, do you feel a cabinet committee on the border is the best way to go, that the SPP has been detrimental to the border in addition to being detrimental to a whole range of other areas? Thank you.

[David Stewart-Patterson]

Do you want me to--

[David Bradley]

Which one do you want to answer first?

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

Perhaps you could answer first and then back to him.

[David Bradley]

Okay, that's fine.

I wouldn't say that SPP in itself has been detrimental to the border. I think the process, obviously, has not been able to stem the roller coaster that the U.S. has been on in terms of security measures. I think it's a case that SPP lost its focus, whether that's because it took on other things as well.... I think even on the border we were too preoccupied with notions of perimeter at a time when there was no appetite in the U.S. for the perimeter. We needed to be spending more time dealing with the nuts and bolts of what actually happens at the border. We lost that focus and moved into more philosophical types of discussions at 60,000 feet, which are important, but really weren't what SPP was set up to do in the first place.

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

So do you agree that we need to set that aside and focus on border issues?

[David Bradley]

Yes. I think one has to be careful, though. I think you have to have a bit of a broad net around what you mean about border issues, because it moves into other policy areas at times, and I wouldn't want to restrict that. Certainly for me the border and trade go hand in hand, and we need a strategy that encompasses both of those. But you're moving into other areas of social policy, and I'm really not sure exactly what you're referring to there, so maybe you can put those sorts of restrictions on it.

Yes, we need to be focusing on getting goods into the United States.

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

Thank you.

Coming back to the WHTI....

[The Chair, Conservative, Lee Richardson]

You have thirty seconds.

[David Stewart-Patterson]

I'll try to give two quick answers.

The SPP was deliberately designed to deal with the boring and the incremental, and the first year it concentrated on much more practical stuff because there was no appetite for big ideas. As time went on, the leaders--certainly the private sector, the competitiveness council--started asking for more thoughts on the strategic level, and that was the direction they were moving in.

On tourism, Canada worked very hard to get delays in the implementation of the WHTI. We did get some delays, in cooperation with our American allies. Those delays in turn have allowed some of the efforts by, for instance, the provinces and states to start developing things like enhanced drivers' licences and expanding availability of options for travellers. I am worried there won't be enough of those available in time to make a difference in terms of this year's implementation.

On the other hand, I have to say I think we are facing a tough time on the tourism industry this year, but it won't just be because of the WHTI; it's going to be because of the Canadian dollar and the state of the economy as well.

I'd go on, but I want to respect the committee's time.

[The Chair, Conservative, Lee Richardson]

Thank you.

Mr. Keddy.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

Thank you, Mr. Chairman, and welcome to our witnesses. I will be sharing my time with Mr. Cannan.

It's a good discussion here this morning, gentlemen. I think there are a couple of issues that we're still not quite reaching out and grappling with. We have a number of priorities at the border. I think every nation on the planet has a lot on their plate today, business especially, but every nation and every area.

We're either on the verge of some larger problems or we have an opportunity to settle some very big issues that we already have, and I wonder if we can't hopefully take this as an opportunity. Maybe the slowdown in trade would allow us to go back to a discussion—and I just want some quick comments on this—on a perimeter in North America again. It was an idea that always intrigued me. I've been listening to the discussion here that it was too big an idea at the wrong time, but maybe it's the right idea at the right time.

Quite frankly, I'd say the majority of our companies—anyone who's dealing with Homeland Security or crossing the border today—have fenced compounds. Most of them have secure operations. There's no reason, especially for a number of products—and the first one I would think of is softwood lumber. We realize we have to wait for a turn in the economy before that market really recovers, but certainly there's no threat to softwood lumber. You have your phytosanitary work done, it should be able to leave the mill and cross the border. If they want to stop to check the driver and his papers, fine, but they don't need to check the load.

I'm a little concerned that we're talking about doing pre-clearance on our side of the border instead of doing pre-clearance at the manufacturer, whether that's the sawmill or the factory or wherever it is. I'd just like to have a comment on that.

[David Bradley]

I think you referred to some comments I made with respect to perimeter clearance. First, let me say that were we able to reach that point, obviously we would support it.

I think, though, we need to better define as Canadians what we mean by perimeter clearance. Over the years lots of people have said to me that they have it in Europe and it works there. Well, they also have a joint parliament, and I don't see the United States sharing power with Canada. So we need to define if we're talking about a commercial border, those sorts of things, and maybe those things are sellable.

I also agree that as bad as things are today, it's going to be an even more competitive world when we start to come out of this. As a country we need to take this opportunity now to ensure—whether it's on the tax side, through the supply chain, whatever the case may be—that we're able to compete and gain more than our fair share in the economy that emerges from this crisis.

So I agree with you on that, but again I think we need to go with specifics to the United States about what we're talking about and not platitudes. We need to have a plan. It has to have specific tasks in it and specific things that need to get done.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

I just have a comment, and then I'm going to turn the rest of the questions over to Mr. Cannan.

A comment was made by Mr. Laurin, I believe, on manufacturing. I crossed the border for 21 years with goods, and I can tell you the first tractor trailerload that we ever put across in 1976 was a heck of a lot easier than the last one I put across in 1998. There's no comparison. The border has become thicker. But our argument with our American partners was always that we do build things together, that there's always an advantage in it for them. If you have phytosanitary issues, if you have trade issues, if you have security issues, it's beneficial for them. I think that's the sound argument that we can make every time, that it benefits both of us. It's not what benefits us, because the Americans will look at it and want to know what benefits them, and I don't think that's a point that we can ever, ever forget. So I think those points on trade with Ontario, trade with Manitoba, and what they mean to those individual manufacturers or states is one that we should never overlook.

I know Ron has an acronym that he wants to put on the table.

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

Thank you, Mr. Keddy, and thank you, Mr. Chair.

To our witnesses, thank you; again, great discussion. I truly believe this isn't a partisan issue. It affects not only Canadians but North Americans from all walks of life.

Representing a constituency in British Columbia, I know the importance of those three borders. Mr. Julian alluded to the Olympics in 2010. We've had a lot of discussions with PNWER, the Pacific Northwest Economic Region, and working with our Canada-U.S. committees. We continue to work in British Columbia with the enhanced driver's licence, and in Ontario. There's still some push-back from the security and privacy issues, but we're trying to find other ways. We are in integrated supply chains. The manufacturing association of Campion boats and just-in-time manufacturers rely on ground transportation to get through on a daily basis.

In terms of being pragmatic and practical, Mr. Bradley, I like your idea about coming up with some sort of solution. When constituents come to me with complaints, I say, “Great, but I don't have all the answers. What's the solution?”

You talked about a smart border accord. We were just coming up with some ideas for SMART as an acronym for, perhaps, “secure moving and rapid trade”, or “saving money and reducing threat”, something along those lines.

How do we bring everybody together here? What's your vision for us as a committee, when we travel down next month to meet with our counterparts, in terms of helping to move this from a concept to reality?