International Trade Committee on Feb. 10th, 2009

[Stewart Beck]

Okay.

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

Do you have any idea?

[Ken Sunquist]

Our budget for the total commerce is about $180 million. That would all be around that promotion publicity, so I would have to take it back from there a long way. That's why I'll have to segregate it for you.

Going back to that one question on tracking NGOs, if you look at where we're looking for free trade agreements and using your example of Colombia, we have a very large development program focused on peace and security programming activities. We have global peace and security funds. We have CIDA funds. We have many different issues to try to promote both prosperity and human rights.

Back to “buy American”, Minister Day and Ambassador Wilson are both actively engaged in this. You're correct, the conference between the House and the Senate now has to happen. We're taking a look at the results, what it's going to look like when it's signed by the President and what the impacts will be sector by sector, if any. In some areas we're not sure there will be a large impact. In others I think Ambassador Wilson and Minister Day have been at the forefront of fighting for Canadian issues here.

All of these deserve a lot more.

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

Just on that, Mr. Sunquist, so there is a working group within the department now that is looking at negotiating a managed trade or a sectoral trade strategy around iron and steel?

[Ken Sunquist]

No. What we have is we're continuing to press hard for as free and open a market as we can have.

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

So you're saying there is no plan B. This worries me. Plan A fails and there's no plan B in place?

[Ken Sunquist]

There are plan Bs in the sense that from current ministers and previous ministers there are very strong reactions to what happens in certain hypothetical eventualities. That would be a fair comment.

Is there a working group looking at if you fail on this particular one...?

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

Well, we failed, that's a given. We signed off on it.

[Ken Sunquist]

Well, I'm not sure that it's a given.

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

Do I have another minute?

[The Chair, Conservative, Lee Richardson]

You have another seven seconds.

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

Okay, thank you.

Just on EFTA, very quickly, has economic assessment on the shipbuilding industry been done?

[David Plunkett]

We spent an enormous amount of time over the last decade consulting with the industry to make sure that we had a full sense of what the impact could be for reducing tariffs. We sat down with individual companies, we sat down with associations, we sat down with stakeholders representing the full range of interests to get a hands-on assessment of what the impact is going to be. If what you're asking is whether we did an economic model, filled in forms, the answer is no.

[The Chair, Conservative, Lee Richardson]

Okay, we're going to leave it at that for now.

I notice we're being joined by several of your colleagues. Maybe I'll just take one minute to explain what our difficulty today was.

We had normally scheduled to have all our witnesses speak at once. There seemed to be some confusion here today. I think we have covered off earlier comments, so for those of you who have just come in, we have just moved to questions so that everybody can get questions on. I asked our members, generally, to have the first round of questioning more directed to the broader department, and as we proceed after ten o'clock now, that we might focus more on EFTA, which is not to restrict anybody. We haven't even finished the first round yet.

With that, we're going to proceed with questioning. This is the last of the seven-minute round, and we're going to start with Mr. Allison.

You're going to share your time, I take it, with—

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

Mr. Cannan, yes.

[The Chair, Conservative, Lee Richardson]

You have seven minutes.

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

Thank you, Mr. Chair.

I thank the witnesses for being here.

My thoughts are on some of the comments you made, Mr. Beck, about R and D, in terms of taking it to market. I love to see a study that says that. I think it's a tremendous opportunity, as Canadians, getting the technology to market and commercializing it. I think we miss out on that.

We could spend all day just talking about this issue. Talk to us a bit about some of the challenges we have, as Canadians, in the ability to commercialize. Once again, I understand the high levels of R and D. It seems to me that foreign companies, maybe through partnerships, are taking better advantage of what our research produces than we are in Canadian companies. So my question revolves around whether it is a question of capital, meaning we just don't have enough venture capital available. Certainly we have private equity firms. Is the cost of capital, once again, too great to get the ideas to market? Is it an awareness issue?

It's great to see that we're partnering with other companies in joint ventures, other countries. And as I said, again, I think this would be a great topic for this committee to study as a whole—and I'll make a recommendation that we do—because there's so much potential there that we're missing out on. And once again, in the three and a half minutes, how do you cover all these things off?

What are some of the things we can do as Canadian companies to be more aware? Is it capital? What are those things that you see as drivers in order to help us commercialize all the great R and D work we do in this country?

[Stewart Beck]

This is pretty close to my heart; I work on this quite a bit.

It's an ecosystem. If you unpack it there are different dimensions in the ecosystem, and part of it is cultural. I hate to say this, in a way, but part of it is how we have grown up, how we've approached the academic environment. We are number one in the OECD in publicly funded R and D because we spend a lot of money in the university environment. We have some very good academics who work there. It's not part of their natural inclination to take their products to market. It's not driven in that way.

I spent the first four years of my career in Silicon Valley, and you see a completely different culture and approach to risk and technology. University professors at Stanford, Berkeley, and places like that think of doing the research, but they also think about how to commercialize it and make money from it. So part of that is culture. You have to unpack that. It changes with time. It changes with the type of people. It changes with the education system, with business schools. There are a variety of things involved.

The second area that is really important in a research and development space is money, as we know. Venture capital in Canada has essentially disappeared. A real issue we have to face, as an economy, is how we bring money into that particular space. Private venture capital is really struggling.

There are ways we've been looking at doing this. We're looking at ways we can encourage more venture capital from outside the country to support the companies, whether that is the U.S. or European or Asian foreign venture capital.

At the end of the day--and again, it's the nature of our country--there is value in clusters. If you take a look at Toronto and the hospital system there, we're getting some wonderful technology coming out of that. There is wonderful technology in Montreal, in the digital media space, because of the cluster advantage. It is the same thing in Vancouver. We have those clusters. We have to be able to connect them better. As part of what we do from the investment attraction perspective, we have to be able to say what's happening in Canada, why it's happening, and to support that cluster. Because it's not just the university ecosystem; it's the private sector ecosystem as well as the support system that goes with it. These are the types of things we are trying to look at.

To follow up on Mr. Guimond's question, it is how we connect internationally. We cannot do it alone in this environment today. You have to develop those partnerships globally to build those products. You can't take something from the workbench to a finished product to the market now. One company can't do that by itself. They have to be able to connect to the larger ecosystem.

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

Thanks. There's a lot more, but we're out of time.

[The Chair, Conservative, Lee Richardson]

Go ahead, Ron.

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

Thank you, Mr. Chair.

Thanks to our officials.

I want to follow up, Mr. Beck. If we have any constituents, local manufacturers, who want to expand outside of Canada, what's the best way they can tap into your department's knowledge and expertise?

[Stewart Beck]

If it's a constituent, the first place to start would be our regional office. As Ken mentioned, we have 17 regional offices across the country. They're a conduit into our network. Again, it would be a question of working with them and deciding the best market to go to, depending on their product.

As an example, in the automotive industry, tool and die makers are an important part of that ecosystem. It's good for tool and die makers to take a look at diversifying into other industries. We've been working with some of them, and a logical place is the aerospace industry. Mexico would a place for them to not only capitalize on an automotive opportunity but also on an aerospace opportunity. You really have to work with the company.

We encourage them to work with our regional office first, because that's how you connect to the international network abroad.

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

Great.

Mr. Sunquist, you commented in your opening comments about how other countries are busy negotiating bilateral trade agreements and that EFTA is the first trade agreement countries have basically signed in a decade.

We are a trading nation. We're known as a free and fair trading nation. From your perspective, is this a factor for other potential trading partners considering entering into negotiations with Canada? Do you think other countries still believe we are serious about doing business?

[Ken Sunquist]

David and I could answer that very quickly, and the answer would be yes, and yes, in the sense that I hate the old stereotype, but we punch above our weight in many things. Canada and Canadian companies are extremely active internationally for the simple reason that for most companies the market here is too small to allow them to reach their full potential.

Let me use an example. Two years ago our posts around the world would say oil and gas was a sector—whether it was Indonesia, whether it was India, or wherever—but nobody from Alberta wanted to do any work internationally because they were busy 120% of the time with what was there. If you look today, our two regional offices in Edmonton and Calgary are incredibly busy helping Canadian companies do work, whether it's in Oklahoma, Indonesia, or wherever. So in fact we have Canadian companies that have technology, they have management skills, they have products, they have services, and they're really active out there.

In return, we need to make sure that we have the market access for them, which is where David's group is working. We have to have the tools to help them get out there, which is Stewart's group. And we have to have that network of people who bring the opportunities home to companies.

So Canadian companies are serious overseas, and I think Canada is seen as a serious competitor in most places around the world.

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

Thank you very much.