International Trade Committee on Feb. 24th, 2009

[The Chair, Conservative, Lee Richardson]

Great. Thank you, Mr. Silva.

I think we have time for one more. That would be Mr. Allison for five minutes, and then we're going to have to move to committee business.

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

Thank you, Mr. Chair.

I do want to thank Mr. Stewart-Patterson for mentioning the wine example. Ron and I represent probably half the wine industry in Canada, and certainly the sky was also falling in the 1980s. There were some concerns about whether we could compete globally. I think we need to remind ourselves that as Canadians, given the opportunity and a level playing field, by all means we'll compete with the best in the world, regardless of who that is. I think we looked at replant programs. We looked at trying to deal with some of the issues in the industry, and I would say that our wines are certainly up there in terms of quality. Our biggest challenges are not international. They're actually across borders between provinces. So it's kind of funny. We have a harder time moving product across Canada than we do selling internationally.

I say that in context, because I believe the government has been listening, and I believe when I talked to one of the witnesses from one of the shipbuilding unions we had in last time, he said he was optimistic. The proof will be in the pudding. We'll wait to see what happens, but we liked the measures of procurement, and we liked the measures of CCA, which my NDP friend agrees with as well.

So while it may not be perfect, I think we're heading in the right direction, and that's one of the thoughts that I think we need to continue to mention. While maybe we couldn't have competed 10 years or 15 years ago, this is a chance to get our A game on and move forward. I believe our ship industry is able to compete with the best in the world.

Just in the context of that, do you know how much shipbuilding actually represents in terms of a percentage of the deal? Do we have any context for that? I'm thinking we're not selling too many boats to Switzerland and Liechtenstein, not to diminish it at all. Do we know what kind of percentage this may represent for a free trade agreement?

[Jean-Michel Laurin]

I know we sell some boats, but in terms of proportion, they're mostly pleasure boats. I know some are in your colleague's riding, actually. But in terms of the types of ships that we're talking about here, I don't have any specifics.

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

That's fair enough, because I realize you guys don't represent the industry specifically.

I want to change gears a little bit, because I think it's important in terms of the precursor for what we're doing for free trade and things. One of my concerns has been R and D and technology and the stuff that we drive here in Canada. We spend a disproportionate or at least a comparable amount of money in R and D, and our biggest challenge is getting the R and D commercialized.

Do you have any comment for us? I mean, this is going to affect us all as we're looking for new products and new services. I have a follow-up question, but what kinds of things do we need to do to create a climate in this country to get our R and D commercialized so that we can then export these things around the world?

Obviously, lack of capital is going to be a huge issue, but aside from that, what are the things that we can do as a government to encourage the commercialization of all the great R and D we're doing around this country?

[David Stewart-Patterson]

Well, it's an interesting and well-timed question, because we actually had a session on that at the last meeting of our members in January to raise this issue. I think that is the next big policy question when it comes to how we can improve Canada's competitiveness in the long term so that we come out of this current downturn stronger than ever.

I think there are a lot of different elements to that question. Some of them deal with access to capital--not only access to loans, but also access to venture capital. Some of them deal with incentives for research and development. I think we're engaged in a discussion even within the business community now in terms of which of those levers might be more effective on a dollar-for-dollar basis. So at this point I wouldn't want to say to you that here are the one, two, or three silver bullets that would solve the commercialization issue. I think it is complex, and there are going to be quite a few pieces to the puzzle. But that is a subject we are working on actively right now.

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

Great. Well, I certainly hope our committee can look at this in the future, because I think it's one of those key things in terms of being a strong exporter, even in manufacturing, that we could do to increase our competitive advantage.

I have one more quick question, but go ahead, Mr. Laurin.

[Jean-Michel Laurin]

I just want to make a few comments in terms of your question.

When you talk about innovation—I know you're familiar with this—it's very complex, right? You have many different parties involved and it's like a fragile ecosystem that you have to let flourish.

You are asking what the government can do to help, and I know you've heard us mention this before, but one thing would be to provide refundable tax credits for companies so that even if they're in a loss position, which is the case for a lot of our members right now, there's an incentive out there for them to invest in research and development.

Also, we were quite pleased to see that the budget for the industrial research assistance program, IRAP, has been increased, because a lot of our members work very closely with IRAP in developing and commercializing new products into the market.

And finally, as my colleague Sam indicated before, we need more supports for businesses that want to go out there and grow in export markets. Our international trade department plays a significant role in that, and I definitely think they deserve to have more resources to do their job.

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

I have one last quick question.

What are your thoughts on the government's direction to try to make us one of the lowest tax jurisdictions in the world from a business point of view? Do you see an inflow of businesses? I almost think this may be a rhetorical question, but do you see a shift of head offices coming to Canada in the next few years, given our health care, etc., given the direction the government is trying to head in terms of a low tax jurisdiction? I mean, we're going to be lower than the United States, which is pretty incredible.

Do you see that having some effect?

[David Stewart-Patterson]

There's no question it will have some effect. I think what we have to recognize, again, is that there's more than one dimension to that--for example, the corporate tax side, in terms of the effective tax rate on investment, which gets affected by things like provincial sales taxes versus value-added taxes. It would have a huge impact here in Ontario if Ontario would harmonize or go the Quebec route on value-added taxes.

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

Yes.

[David Stewart-Patterson]

We also have to recognize, when you talk about head-office activity or research activity, that when you're getting into higher-income individuals, the personal tax structure may have as much influence as the corporate tax structure.

The other element that's important to mention here, of course, is that you can make Canada a very attractive jurisdiction from a tax point of view, but if people and goods can't move smoothly back and forth between Canada and the United States, that's going to be a huge negative in the equation. Because any business that's going to operate globally from a Canadian base is going to involve both people and goods moving across the border between Canada and the United States--integrated supply chains and just the normal functions of the management and executive teams of a company operating internationally.

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

All right. Thank you.

[Jean-Michel Laurin]

Can I add something very quickly?

Just to answer your question on head office, one thing we didn't really talk about today is the impact of this proposed free trade agreement with EFTA. Also, if we talk about Europe in the broader sense, this could really help attract plants to Canada, in some cases probably North American head offices, because Canada would enjoy a significant or better market access into Europe, and that's an advantage. If you're considering where to put a plant or put an office, in the U.S. or in Canada, that's certainly a benefit to putting it in Canada--you have privileged market access into Europe.

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

Thank you.

[David Stewart-Patterson]

If I may, that was the point I was making about the potential for Canada-EU discussions to be a bridge across the Atlantic, where Canada could play a key role.

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

Perfect, thanks.

[Sam Boutziouvis]

The Americans don't have a FTA with EFTA. We will have that, subject to approval, of course; and then hopefully we'll have a deal with the EU, which will make it very attractive for EU enterprises to invest in Canada as a base for a North American platform.

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

Perfect. Let's go clause by clause.

[The Chair, Conservative, Lee Richardson]

There you go.

Shall we deem clause 1 passed?

[Some hon. members]

Oh, oh!

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

That got Peter's attention.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Allison.

Thank you to our witnesses today from the Canadian Manufacturers and Exporters, Jean-Michel Laurin, and from the Canadian Council of Chief Executives, David Stewart-Patterson and Sam Boutziouvis. Thank you again for coming. I do appreciate it.

If I could ask the committee, we'll just take a couple of minutes to bid farewell to our witnesses with our thanks today, and we'll reconvene in three minutes to discuss some business.

[The Chair, Conservative, Lee Richardson]

We have two motions we need to deal with. Some have been withdrawn for the day. The motions we're going to deal with include one with regard to a working lunch with a delegation from the European Union.

We have a visiting delegation coming from the European Union, which has asked to meet with the committee. Our suggestion, which I think we discussed briefly at committee, is that our meeting on March 5 start at 10 o'clock rather than 9 o'clock, and that it go till noon. That would be for the purpose of having our committee business from 10 till 11, and then from 11 to 12 we would have somewhat of an informal meeting of the committee with the delegation from the European Union. At 12 o'clock we would adjourn the meeting and proceed to the parliamentary restaurant, where we would host our guests for lunch.

Monsieur Cardin, we're working on getting some translation for you there. I hope it can be worked out.

That's the general notion of what we've worked on with our colleagues from the European Union.

As well, for the convenience of everyone, we will move the meeting to the Centre Block for that day. We will go to Room 253-D on March 5 to accommodate everyone.

With that, we have distributed a proposed motion on a working lunch with a delegation from the European Union.

Mr. Holder, would you like to make that motion?

[Ed Holder, Conservative, London West, ON]

I'd be pleased to move that motion.

[The Chair, Conservative, Lee Richardson]

Perhaps you could read it.