International Trade Committee on Feb. 10th, 2009

[The Chair, Conservative, Lee Richardson]

Thanks, Mr. Cannan.

That completes our first round. I understand that Mr. Beck and Mr. Sunquist have to move on. You're welcome to stay, of course, but I think we're probably going to shift gears.

Mr. Brison.

[Scott Brison, Liberal, Kings—Hants, NS]

I think some members of the committee still have some general questions, because we're kind of mixing this up.

[The Chair, Conservative, Lee Richardson]

Yes, we are.

[Scott Brison, Liberal, Kings—Hants, NS]

I know my colleague Mr. Silva has a general question.

[The Chair, Conservative, Lee Richardson]

Mr. Sunquist has indicated that he is prepared to stay. I know Mr. Beck has to move on.

If you're prepared to stay, we'll continue as we are. We're going to move to five-minute rounds and begin with Mr. Silva.

[Mario Silva, Liberal, Davenport, ON]

Thank you very much, Mr. Chair.

Thank you very much for being here and for your fine presentations. We very much appreciate the work that has been done by trade commissions, which are so vital and important to the success of Canada and to how we position ourselves internationally.

Allow me to ask some general questions.

There was a great emphasis on the BRIC countries, and I just want to know, to that end, what has been done in terms of the work as of late. Have there been additional trade commissioners in those countries? Have you put more emphasis?

I don't see Russia mentioned here, but Mongolia is, which is not part of the BRIC. Anyway, there are new offices that you said you're opening in China, Brazil, and India. How many offices do we have? What has been the increase in growth?

Also, has there been a decline in the last little while in terms of the number of trade commissioner posts? Have there been any offices closed, or have you just been expanding?

[Ken Sunquist]

On a constant basis, we're looking at where we should be. So from time to time there may be closures, and from time to time there may be openings.

Using Mongolia as an example, there are 29 Canadian mining companies active there, plus telecommunications, plus airlines, so the time had come and it was announced by Minister Emerson and by the Prime Minister last year that we'd be opening in Mongolia. Minister Day just was in India and has opened two of our new offices there, and we'll be opening a third one shortly. We're just in the process of opening six new trade offices in China.

With the offices in China, instead of being on the coast, because everybody is in Beijing, Shanghai, and Guangzhou, the question is, how do you get to the interior, leapfrogging? So now it's the Wuhans and Chongqings, and the others like that. We're also being innovative in the sense that some of these offices are being opened with only locally engaged staff and not Canadian-based staff, because they have the language, they have the networks, they know the people, yet they work directly for a Canada-based officer out of another post.

So we're trying different models to see what works best.

[Mario Silva, Liberal, Davenport, ON]

And in Brazil?

[Ken Sunquist]

In Brazil, we're opening two new offices, in Recife and Pôrto Alegre. In Mexico, we're opening a couple of new offices.

But we're also adding people. For instance, in Panama we didn't have a resident trade officer, but as you start to move down the path of air negotiations, free trade agreements, or whatever, it's obvious that Panama is playing a different role. So in fact this summer we put our first Canada-based trade officer into Panama.

At the same time, we take a look at where markets are contracting or stalled. Do we need as many people in that market as we used to have?

On a yearly basis, we do reallocation among posts, but generally speaking, with the global commerce strategy, we have $50 million a year, roughly, and that's turned into a number of officers abroad. We have increased numbers on the trade side.

[Mario Silva, Liberal, Davenport, ON]

There seems to be a lot more focus on investment, as opposed to traditional export businesses. Is that because of the growth of the mining industries as well?

[Ken Sunquist]

We obviously measure what we're doing and who we're doing it for. About 60% of our total staff time is spent on traditional trade or exports, because small and medium-sized companies are our clientele and that's what a lot of them are doing. At the same time, the growth has been on two-way investment--trying to attract investment into Canada, but also helping Canadian companies that have problems or need assistance as they are doing outward investment for various reasons. A mine is a great example. You have to be there, so you have to invest in it for those who don't have access to it.

But even on the services side, how do you get into Japan for technology in telecommunications? You need an office there. I wouldn't say we've completely pulled out of one line of business and gone into another; we do what's needed in that market.

[The Chair, Conservative, Lee Richardson]

Mr. Brison.

[Scott Brison, Liberal, Kings—Hants, NS]

I will just refocus on EFTA and shipbuilding. They are actually related to the industry department, but I'm certain that you've looked at them.

I'm hearing from the shipbuilding industry that they're looking for a refinancing and a change in the rules around the structured finance facility, and accelerated capital cost allowance to let domestic buyers qualify for both simultaneously, and a more vigorous government procurement program around defence, coast guard, and other government departments acquiring vessels.

Have you looked at these in terms of their being trade-action-proof, and would they all be fine in terms of EFTA and other trade agreements? Have you discussed with your industry colleagues the importance of these in achieving support from the shipbuilding industry to move forward with EFTA?

[David Plunkett]

Your question is focused more on the remit of Industry Canada. We had hoped to have somebody here with us, but I learned a couple of minutes ago that they are not going to be here with us. We will do what we can, but we may have to pass on this and get back to you.

Let me assure you that in the course of the negotiations, particularly since I first took on the job in the fall of 2006, we worked very closely with Industry Canada. When we were consulting throughout the process, we worked very closely with them. When we held large sessions with various industries we had Industry Canada representatives involved. I can assure you that we and Industry Canada representatives were fully aware of the industry's issues and concerns as this process was unfolding.

Let me ask Marvin to dive a bit deeper into this as best as he can, given that this is outside our departmental remit.

[The Chair, Conservative, Lee Richardson]

Before you go ahead, let me introduce Marvin Hildebrand, director of bilateral market access.

[Marvin Hildebrand, Director, Bilateral Market Access, Department of Foreign Affairs and International Trade]

Thank you, Mr. Chairman.

With respect to the structured financing facility, many of you will be aware that this policy was renewed in June 2007 for a three-year period, with a funding level of $50 million, so that is part of the government's approach to the shipbuilding industry at this time.

The question of combining capital cost allowance with the other element of the structured financing facility has been raised on different occasions by various groups or individuals. To the extent that it involves tax measures, this would fall within the purview of the Department of Finance. So between the Department of Industry and the Department of Finance, we as officials from DFAIT would not be directly involved, but certainly they would be well aware of the interest in doing that.

Also back in 2007 the government announced more than $8 billion in procurement initiatives of ships that will be built in Canada by Canadian shipyards. Certainly the agreement under discussion here this morning, the Canada-EFTA FTA, does not affect in any way the government's ability to pursue its procurement program.

As David mentioned, and you may have already touched on some of these, the agreement itself provides unprecedented provisions in terms of the shipbuilding industry, or the ship industry in terms of the phase-out period for tariffs. As was mentioned, these were negotiated after extremely close and extensive consultations with the industry involving other government departments as well.

Just to be a bit more specific, never in our previous FTA history have we obtained a phase-out period of 15 years for a Canadian industrial product. The longest we had ever obtained in terms of a Canadian phase-out period would have been 10 years. So for the most sensitive products, there's a 15-year phase-out with a three-year bridge period, and for all other sensitive products related to the ship industry, a 10-year phase-out period with a three-year bridge period.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Hildebrand.

We're going to move now to Mr. Harris for five minutes.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Thank you, Mr. Chairman.

I'm sure there was a question earlier about how much Canada is spending abroad to promote Canadian products. I'm sure the committee, particularly those from forest-dependent provinces, will know that there's about $20 million to $25 million currently spreading the theme that Canadian wood is good, but there's another $50 million, I believe, in the economic action plan in this current budget to promote wood products, new wood innovations, new use of pine-beetle-infested or damaged wood, for example.

I'm thankful the Liberals have indicated they're going to support the economic action plan. We would hope that those who have an interest in the forest industry in the other parties would support it as well, because we'll get that $50 million out around the world telling other countries, other people, that Canadian wood products, Canadian forest innovation, is leading edge. We're going to go a long way to bring the forest industry back to life again.

So that was for the benefit of some of our colleagues here.

I'm interested in a comment, and I guess it was Mr. Beck who talked about investment and about science and technology as a key driver in trade investment. So I'm wondering, from an international trade investment viewpoint, can you give me a specific example in the area of science and technology where the government has made an investment? And what kind of investment specifically was made on even one project, so I would have an understanding of how the government would spend money investing in science and technology, for example?

[Stewart Beck]

I think the point was more that science and technology is an attractor of investment. We gave examples, and I talked earlier about having clusters in a knowledge-based industry. So if we're talking pharmaceuticals, for example, we can market the cluster arrangements we have in places like Montreal, Toronto, and Vancouver to companies because we have the talent, the educational infrastructure, and the physical labs and infrastructure. CFI has put money into different things. So we use that as a way to attract the big pharma companies in Switzerland or Germany, or even small companies, to set up operations in Canada. As part of our marketing program, we invest some of our marketing money in promoting the science and technology attributes we have here in Canada.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

The investment then is in the marketing and promotion of Canadian science and technology from your department's perspective.

[Stewart Beck]

Yes, because the actual investment in the infrastructure is being done by different organizations that have been fed through the science and technology strategy, for example. So CFI is investing in R and D infrastructure. Genome Canada is investing in the life sciences sector--proteomics, and genomics. Sustainable Development Technology Canada is investing money in clean technology and sustainable development technology.

So lots of money has been invested by the government in specific areas. It's our job to promote that so multinationals or companies in other countries realize we have that type of capacity in Canada. It makes it easier for us to do that from an attractive perspective.

[Dick Harris, Conservative, Cariboo—Prince George, BC]

Thank you very much.

I'll share my time with Mr. Holden.

[The Chair, Conservative, Lee Richardson]

I think you have a minute and a half.

[Ed Holder, Conservative, London West, ON]

Thank you very much.

This question is to Mr. Beck. I was struck by your comments. You said that Honda Canada invested more in research in Canada than Canadian firms do. In my city of London, Ontario--the tenth-largest city in Canada, for those who don't know--our University of Western Ontario is very big into research and development.

Your comment that we ranked out of the top 15 in taking ideas to market concerns me. I'd like to know what our ranking is, please, and what's our plan to move up in the rankings?

[Stewart Beck]

I believe we're number 16.