International Trade Committee on Nov. 17th, 2010

[The Chair, Conservative, Lee Richardson]

With quorum, we're going to begin.

I have a couple of quick housekeeping items to take care of before we begin. I'll beg the indulgence of our witnesses. They're both used to this, in this case, so that's good.

First, I will ask the committee to consider an operational budget request. This would be for Bill C-46, an act to amend the free trade agreement between Canada and Panama. In the event we have witnesses from across the country, there will be requests for recovery of expenses. I think the clerk has circulated a budget that will contain any need for financing, so we don't have to go back each time.

May I ask someone to move that motion?

Mr. Cannis moves that the committee adopt the motion to provide expenses for witnesses on Bill C-46 to the tune of about $33,000.

(Motion agreed to)

Thank you.

The other one is a quick one. I need authorization for the clerk to purchase gifts for those we will visit in Europe. That is:

That the Standing Committee on International Trade be authorized to purchase up to $600 in gifts to be presented to foreign hosts during the trip to London, United Kingdom; Strasbourg, France; Budapest, Hungary; and Rome, Italy.

Mr. Cannis.

[John Cannis, Liberal, Scarborough Centre, ON]

Mr. Chairman, I'm giving my approval. I know $600 sounds like a lot, but there are a lot of visits and a lot of people. I don't want people here to say “$600!” It's $600 spread through many visits, many people, Mr. Chairman.

I support it.

[The Chair, Conservative, Lee Richardson]

That's okay with you.

[John Cannis, Liberal, Scarborough Centre, ON]

That is very much okay.

[The Chair, Conservative, Lee Richardson]

Perfect. I think it's unanimous.

(Motion agreed to)

Thank you.

We will continue with Bill C-46. We have two sets of witnesses coming today.

I'm going to wrap it up at about 5:15 to return to EU business. I hope by that time to have briefing books for everybody. I think by now you should have all received your tickets, travel arrangements, etc. We can discuss that further at 5:15, for those who have any questions.

Now let us proceed to the matters of the day, that is, to Bill C-46, an act to amend the free trade agreement between Canada and the Republic of Panama. This was a reference to the committee from the House of Commons.

We have, as our first witnesses today, returning to the committee, Andrew Casey, who is the vice-president of public affairs and international trade for the Forest Products Association of Canada; and my old friend, Robert Blackburn, who's now senior vice-president, SNC-Lavalin International.

Welcome back. I've asked that you both begin with brief statements, and then we'll proceed to questions. I think we'll go for about 40 minutes today.

Mr. Casey, would you like to begin?

[Andrew Casey, Vice-President, Public Affairs and International Trade, Forest Products Association of Canada]

Thank you, Mr. Chairman.

I see a number of new faces around the table at this meeting, so by way of a brief introduction, Forest Products Association of Canada is the national voice for Canada's wood, pulp, and paper producers. It's an industry in Canada that accounts for about 12% of Canada's manufacturing GDP. We directly employ 230,000 Canadians and we are the economic lifeblood for over 200 communities from coast to coast in this country.

I almost have to check myself now. This is the third or fourth time I've been invited to appear before this committee, and I have to make sure that my ego doesn't get too out of control and realize that it's not about me. I may be an interesting witness, but as I'm sure the committee has been finding out, every time one of these free trade deals gets signed or is sort of in the process of being negotiated, Forest Products pop up. The reason for that is that an enormous portion of what we produce in Canada is sent abroad. In fact, we're the number one forest products exporting nation in the world. We send about $24 billion worth of our product annually to markets outside of this country. Obviously, the lion's share of that goes to the U.S., but we're also very active in other markets around the world, specifically in Europe and Asia.

That's sort of a brief introduction. I've also bored this committee before, but maybe I'll spend a little bit of time saying that this industry, as many parliamentarians are more than familiar with, has faced some very challenging times over the past couple of years. We're emerging from those challenges, and one of the keys, as we look forward to ensuring a strong, stable industry in this country that will continue to support the jobs that we support, is to expand and diversify existing and new markets around the world. It's in that context that these types of free trade agreements are extremely important to the industry.

I'm sure you've already been given some sense of the numbers involved here, and they're not big. If you look at a $24 billion export industry, in our case, we are looking at a marketplace in Panama of only about $120 million worth of imports. Of that, we only have about $8 million, and that's broken down into two primary products: paper, which is the bulk of it, about $6 million; and about $2 million worth of wood products. That's a fairly insignificant number when you put it up against the $24 billion, but it's a very significant number for probably two mills in this country. I don't know which ones they are, but I do know that wood products come out of B.C. and the paper products that we ship to Panama come out of Quebec. I would guess, without knowing it, that they probably come from one or two mills. For those particular mills, this is a very important deal. And I'd like to remind parliamentarians that this is an important part of all these free trade deals. While they may not seem big on the surface, they are very important to a number of specific regions and specific mills.

This deal will get rid of up to about a 15% tariff on our products. It'll make us competitive with our main competitor, which happens to be, in this particular case, the U.S. They tend to supply the rest of the products to the Panama market. They've recently signed a free trade agreement with Panama, so this at least keeps our pace with them and allows us to compete with them. For that, we are very supportive of this deal. We were very supportive of the government continuing to sign and look for new free trade agreements in other markets, and it certainly will help to solidify our export potential going forward, and an important part of the industry going forward.

I thank you, Mr. Chairman, and thanks to the committee for the time.

As always, I am prepared to answer your questions in French, if you wish. Thank you.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Casey.

I'll now turn to Robert Blackburn, senior vice-president, SNC-Lavalin International.

Mr. Blackburn.

[Robert Blackburn, Senior Vice-President, SNC-Lavalin International, SNC-Lavalin Inc.]

Thanks, Chairman.

Thank you for inviting us to this committee. I think Andrew has made the case for why free trade agreements like this are important to Canadian business. I would say they're particularly important at a time like this, when we're seeing the vulnerability of our uni-market south of the border. With the intensified security and the border thickening and economic slowdown, we can see the importance of other markets.

There are some new people whom I haven't seen around this table before, so let me say that SNC-Lavalin doesn't have as many employees as Andrew spoke about in his industry. We have about 22,000 people worldwide. We're currently implementing—getting actually paid for now—about 9,500 projects in 100 countries. We are an engineering and construction company; 15% of our total revenues last year were in Africa, 10% in the Middle East, 9% in Europe, 5% in Latin America, and 4% in the United States. As you can see, we're already well diversified internationally.

When I looked at your bill, I was interested to see that it looked as though it was all goods being dealt with. So I went to the agreement itself, and it covers services quite thoroughly and provides for the temporary entry of business people, which is a very important factor. It's a thorny problem for us constantly, getting business people with whom we're negotiating--and to whom we want to show something we've done in Canada--a Canadian visa. It's a time-consuming and burdensome process. This isn't going to help that, but I can't help mentioning it.

We've worked in Panama since 1975 and have completed 18 projects there in a number of areas, mostly in the power sector and mostly supported by the development banks or—really, the most interesting project—by CIDA, which was working with the six Central American countries to build a regional power grid to get the most efficiency out of their power assets. This is something we're working on in east Africa and have done in the Middle East, in former Yugoslavia, and now we're working in Central Asia as well; that is, a way of maximizing efficiency of power grids.

We see a lot of opportunities in Panama: in the power sector, obviously, where we've been working, and in all kinds of infrastructure—roads, water, sanitation—and in institutional strengthening, notably in the mining sector.

I don't know whether you noticed, but about two weeks ago it was announced that we would lead a consortium—we have 70% of it—to build a $4 billion copper mine in Panama, owned by Inmet, a Canadian mining company. We're going to build it and all of the surrounding facilities. It's about half mine and half surrounding infrastructure, including ports and roads and things. There will be a second phase too, building the concentrator, which is almost another billion dollars.

We succeeded in doing that without the free trade agreement, but the free trade agreement will provide a good framework for further business.

Basically, in Latin America, a region of government concentration, a number of these free trade deals are emerging. We have one in Peru; there's now one in Colombia, in Panama, and Chile. This really facilitates Canadian businesses, including ours. It provides an increasingly secure framework for doing business in Latin America, so we welcome it.

One thing I'll mention is that we have a business approach whose initials are LRDI, which is for “local resources development initiative”. When we go in on a project like this, we use local labour and train thousands of workers and work to develop and mentor local businesses also. This is something that's part of this contract as well. We're doing it now in Madagascar on the Ambatovy project, and it's what we've done in South Africa and Mozambique on our smelters, which we built there for BHP, the famous BHP Billiton that didn't buy Potash. This is a local development. We don't take a lot of our own people in; we use local partners and develop local partners, labour, and suppliers as an intricate part of the project.

Thanks very much. I'm happy to take questions in any language except Spanish.

[The Chair, Conservative, Lee Richardson]

Thank you.

We're going to start with questions.

It's not that it's an entirely new committee; it's just coincidental today that we have a few absences. I want to welcome the Honourable Gurbax Malhi to the committee today, who's replacing the Liberal critic, Martha Hall Findlay; and my old friend Louis Plamondon, the dean of the House, representing today his colleague Claude Guimond for the Bloc Québécois. And—oh my gosh—we have Malcolm Allen here representing Mr. Julian, which will be to the delight, no doubt, of Mr. Casey; and Lois Brown, representing our own Ron Cannan.

We're going to start off today with Mr. Silva for the Liberal Party.

Mr. Silva.

[Mario Silva, Liberal, Davenport, ON]

Thank you.

Thank you, Mr. Casey and Mr. Blackburn, for being here.

I realize, Mr. Blackburn, that you don't take questions in Spanish, but half of Latin America is Portuguese-speaking. Do you also take questions in Portuguese?

[Robert Blackburn]

No, but we've made a lot of investment in Brazil in the last little while. We have 2,000 people in Brazil now.

[Mario Silva, Liberal, Davenport, ON]

That's one of the questions I wanted.... First of all, I think SNC is one of our marquee companies of which we're very proud. We're losing some of them, unfortunately. But SNC certainly carries the brand across the world in a very positive way for Canada.

You said you do 5% of your business in Latin America. I know there are many investments in Brazil, particularly with the new subway system. Are you bidding on that? Are you going to be getting it? And also, there's the fast train system in São Paulo.

[Robert Blackburn]

Of the two investments we've made in Brazil in the last four years, one was for their main mining engineering company in Belo Horizonte and the other is a power company in São Paulo. But our construction group has just made a joint venture with a major Brazilian construction company. We're really focusing on Brazil right now, because they have the World Cup and the Olympics both coming up in, I think, 2014 and.... I think the next World Cup is there, so there's a terrific amount of infrastructure to be built there.

I don't know about that light rail system you're talking about, but there's a ton of stuff to be done, and we're determined to be part of it.

[Mario Silva, Liberal, Davenport, ON]

Okay.

So you would agree that we should pursue a free trade agreement with Brazil.

[Robert Blackburn]

Of course, if it is doable.

[Mario Silva, Liberal, Davenport, ON]

I've been pushing for that, so I ask the question.

I want to get back to the issue of Panama and overall free trade agreements. Both you and Mr. Casey have made some good arguments, and I think overall we have, from our party's perspective, been very supportive of these trade agreements, because we see that there is a framework for further business, as you said, and I think it's a very positive thing as well.

But we also want to know—and maybe you could explain to members of the committee—whether, where there have already been free trade agreements, it has been easier for you as SNC or as the forestry products industry to go into those particular countries. I'm speaking of the agreements with Chile and Israel and all the other agreements there have been in the last little while. Have these actually helped overall in terms of getting further access?

[Andrew Casey]

I'll try to avoid the obvious softwood lumber discussion.

I think it's still early days for most of those deals for us, for sure. We were already present in those marketplaces, so they weren't exactly frontier markets for us. Certainly what we would expect to have happen as the tariffs come down is that the agreements will make our companies more competitive and will open up probably new potential for the companies. But I would suggest that it's probably too early for most of those deals.

[Mario Silva, Liberal, Davenport, ON]

Okay.

Mr. Blackburn?

[Robert Blackburn]

Like the forest products industry, we were in most of these markets already—not in Israel, actually. A deal like this warms up relationships between governments and provides agreed frameworks for doing business, so it's helpful in a generic kind of way. I can't trace specific advantages.

I see you're having Canada Revenue Agency people here next. It's helpful to have trade treaties, tax treaties, and investment protection agreements as well associated with these things. I'd be glad to see movement of people. It would be great if we could get our immigration and our border controls to do something specific that would second these trade agreements. How are you going to do business with people if you treat them like potential refugees or criminals when they try to visit your country? That's the biggest challenge we have.

[Mario Silva, Liberal, Davenport, ON]

Just on that issue of visas, I know that some countries have been extremely frustrated in terms of getting the visas. Maybe what we should do, particularly for countries with which we do have trade agreements, is to set up a framework. Maybe part of the framework could be a note between both countries that they would give a two- or four-year visa extension to those doing business, because I think business leaders sometimes get very frustrated at having to constantly get these renewed for a longer term. I think in some cases it could even be up to 10 years, but that's certainly something I think you're advocating for.

[Robert Blackburn]

Yes. You would have received...but maybe your staff didn't give it to you. About last May, we circulated a report we had done on business visas and the need for business visa facilitation. We had seven of the main business associations in the country--chief executives, CME, CCC, Canada-China, Canada-India—all behind this need for business visa priority treatment simplification.

In India and Mexico it now exists. They have a list of trusted companies in India and in Mexico that get 24-hour to 48-hour service. For the rest of the world it's still...who knows?

[Mario Silva, Liberal, Davenport, ON]

In your report, did you also specify how many years it should be for?

[Robert Blackburn]

No, but multiple-entry visas obviously make sense, and we're working with Immigration, with Minister Kenney, right now to see what progress can be made on this. It's very important.

[Mario Silva, Liberal, Davenport, ON]

Thank you very much.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Silva. You're doing well today.

Monsieur Laforest.