International Trade Committee on Feb. 10th, 2009

[Ed Holder, Conservative, London West, ON]

Okay.

[Stewart Beck]

That's in the OECD.

In the types of programs I described with India and China, we have money allocated that allows us to connect. Just to give you an example of a typical project, two research institutions in Montreal, with Pratt & Whitney, together with a research institution in India, are developing biofuels for the next generation engine for regional aircraft. This allows a more focused commercialization of R and D that's being done at the university level. It tries to direct our researchers to work with companies so that we get a product at the end of the pipeline. In this case, and I talked about the leverage, we put the seed money in--because it's a competition, people know the money is there--and we leverage that with other organizations. Pratt & Whitney will put money into that arrangement.

The Quebec government may be putting money into that arrangement as well, because they have money that's associated with India. They can't do it directly with India because of the nature of the relationship. The Indian government prefers to work binational; they don't work with sub-national governments. So both Ontario and Quebec--and Alberta, for that matter--have money in the India program, and that helps us leverage up these projects. You end up with international research working on a specific product that will come out to the benefit of a Canadian company.

[Ed Holder, Conservative, London West, ON]

Thank you, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Holder.

We're going to move now to Mr. Guimond. Oh, unless you want to begin, Monsieur Cardin.

[Serge Cardin, Bloc, Sherbrooke, QC]

That is what we were intending to do.

[The Chair, Conservative, Lee Richardson]

Just start.

[Serge Cardin, Bloc, Sherbrooke, QC]

Thank you, Mr. Chairman. I will be brief, in order to leave some time for my colleague.

You have a significant number of trade commissioners in various parts of the world. The figure you gave was 700, if I am not mistaken. You say that you want to focus on the multilateral track, but at the same time you are engaged in a frantic race on the bilateral track. Other than the United States, which has just brought in a new political order, what is the state of our trade with countries with which we do not currently have an agreement, as well as with those we do have an agreement with?

What is the status of negotiations with the European Union, which could lead to a free trade agreement?

With respect to the shipbuilding industry, it is a fact that Norway has received a lot of subsidies. We also know that the 15-year period may be a precedent, but it might also have been a precedent to completely exclude the shipbuilding industry.

What plans does Industry Canada have to make the shipbuilding industry competitive, not including procurement?

[Ken Sunquist]

I think Mr. Plunkett will answer this one in his role as the lead negotiator on EFTA and on Canada-EU.

[David Plunkett]

Just to deal with the first question, as of right now we have FTAs in force with the U.S. and Mexico through NAFTA, and with Israel, Chile, and Costa Rica. We have concluded the EFTA, Peru, Colombia, and Jordan, so there are another four that gradually will work their way to this committee and into Parliament.

We have ongoing negotiations with Korea, with Panama, with the Dominican Republic, with the Caribbean community--the so-called CARICOM, with Singapore, and with the Central American four, which are Guatemala, Honduras, Nicaragua, and El Salvador. I'll come back to the EU, which has 27 member states.

[Serge Cardin, Bloc, Sherbrooke, QC]

I was not asking about negotiations with all of these countries. Instead, I am interested in knowing to what extent we currently trade with the countries we have an agreement with, as well as with those with which we do not have an agreement.

Right now, you are using my time to answer my colleague's questions.

[Ken Sunquist]

I think we certainly owe you a response. Through the clerk, we'll get back to you with a good breakdown of that. But if you take the U.S., depending on the year, it's somewhere between 75% and 80%. Since we have a free trade agreement there, it's a very small percentage elsewhere.

But let us get back to you, because I think that's a good question, and one that we have not—

[Serge Cardin, Bloc, Sherbrooke, QC]

I did not include the United States.

[Ken Sunquist]

Yes.

[Serge Cardin, Bloc, Sherbrooke, QC]

I basically only talked about the European Union and the shipbuilding industry.

[David Plunkett]

The other thing to keep in mind, which was touched upon by both Ken and Stewart, is that when you talk about agreements, you have to remember that we also have other agreements in place, such as on foreign investment protection, science and technology, and the air negotiations. So if you're talking about agreements, there is a whole range of tools that we use, as was mentioned, to assist Canadian business across the country.

On the EU, if you go back to the Canada-EU summit in October of last year, you will see that the Prime Minister and Mr. Sarkozy and Barroso announced that we would be looking to obtain our mandates to launch negotiations for comprehensive trade negotiations sometime as early as possible in 2009.

Since the summit we have been working with the European Commission on what is referred to as a “scoping exercise”, trying to map out the scope, the breadth, and perimeter of what could potentially be negotiated in an agreement, should it be launched. We've made a lot of headway in the last little while, and we are hoping that this part of the process will be concluded shortly.

Ideally, what we would like to see at the next Canada-EU summit is a formal launch of negotiations with the European Union, but there are still a number of steps before that. We first have to conclude the scoping exercise we're involved in, normally referred to as an “exploratory process”, which we do with every trading partner. Basically you sit down and try to determine what would be part of a negotiation and what would be excluded. Then once we have a sense of what the lay of the land could be in a negotiation, we will then have to go and seek a formal mandate from cabinet, whereupon the negotiations would proceed.

So we are working our way on a step-by-step basis. This is essentially the same process that we would do with all of our trading partners. We are dealing with the European Union, because they have, as I said earlier, 27 member states. Anything you do with them is usually a bit more complicated than dealing with an individual country.

So it's just a process that's working its way through. But for the moment, we are—

[Serge Cardin, Bloc, Sherbrooke, QC]

Mr. Plunkett, thank you very much. I think I understood your answer.

Is there any time left for my colleague, Mr. Chairman?

[The Chair, Conservative, Lee Richardson]

Sorry.

[Serge Cardin, Bloc, Sherbrooke, QC]

Is there any time remaining for my colleague?

[The Chair, Conservative, Lee Richardson]

Yes, go ahead. A quick one, Monsieur Guimond.

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

Thank you, Mr. Chairman. I would like to put a very practical question to Mr. Beck.

In your presentation, you said that Canadian firms have access to adequate financing. I mentioned earlier that I live in Rimouski, which is a rural area. Where I live, 25 to 30 per cent of the population do not have access to high-speed Internet, including many small- and medium-sized businesses.

Do you have a strategy aiming at providing small businesses everywhere with additional tools—tools as practical as access to high-speed Internet—so that they can get on line and market their products all over the globe?

[Stewart Beck]

I understand the importance of having that type of facility, but I don't think it falls within the mandate of our department to work with that. I know our colleagues at Industry Canada have done quite a bit of work in providing high-speed Internet across the country. I don't know what the situation is in Rimouski, unfortunately. Certainly I take your point. It's fundamental in this globalized world to have the types of communication tools that will make a company more competitive.

One of the new programs that's being offered by BDC, the Business Development Bank of Canada, is a market expansion loan. A market expansion loan is offered at very favourable rates and it will help a company expand their business domestically and, ideally, internationally. I would say the restrictions on that loan are quite flexible. I would encourage your constituents to go to the local BDC office and discuss the market expansion loan with them, because that will help them build the capacity they need to do more work domestically and internationally. That's a form of instrument that will be quite supportive to them.

[Ken Sunquist]

I'd like to add to that.

You raised a very good question about the geographic and sectoral impacts of SMEs and how they get into the game.

Minister Day has a small and medium-sized enterprise advisory committee. It's completely comprised of companies that are small to medium-sized at best, and it addresses many issues that could be a problem or a restriction. One by one we figure out which ones go to our department, but those that are not necessarily for our department are referred tothe Department of Finance, Industry Canada, other departments, or provincially--we have a very good relationship there too. It's an important aspect; you raised the right issue.

[Stewart Beck]

I'll add that the minister's SME advisory board recommended the market expansion loan. They worked on it for a year through EDC and BDC, which resulted in a product that addressed a problem with SMEs. If you take a look, it's almost like a credit card, but at a very reasonable rate for a company.

[The Chair, Conservative, Lee Richardson]

Thank you.

Mr. Keddy.

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

Thank you, and I welcome our witnesses.

I have a couple of quick questions on EFTA.

I think the discussion about shipbuilding is important. It has certainly been one of the contentious issues in the EFTA agreement. What we seldom hear in the discussion is the fact that for many years Canada had an overcapacity in shipbuilding. Some of that overcapacity is gone now, but that certainly affected the industry. Of course that was compounded by the fact that much of our foreign competition--in particular, Norway--had certainly subsidized their industry.

So I think we need a little bit of an update, because there have been significant changes both in Canada--there's not nearly as much overcapacity as there was ten years ago--and in Norway. I think it's been three or four years now since the Norwegian subsidy system was removed.

That's my first question.