International Trade Committee on Nov. 22nd, 2011

[The Chair, Conservative, Rob Merrifield]

I want to thank the witnesses for coming. This is our continuing study on the EU-Canada free trade agreement, CETA. Thank you for taking part in these proceedings.

We have two witnesses in the first hour. From ARKTOS Developments Ltd. we have Bruce Seligman. Thank you for being here. And from the European Union Chamber of Commerce in Toronto we have Mr. Fisker.

I believe the floor is yours, Mr. Fisker. We'll hear your presentation, go to the next presentation, and then open it up to questions and answers.

[Anders Fisker, Chair, Danish Canadian Chamber of Commerce, EUCOCIT Board Director representing Denmark, European Union Chamber of Commerce in Toronto (EUCOCIT)]

That sounds good. Thank you very much, and thank you for asking us to be here.

Ladies and gentlemen, I'm Anders Fisker. I'm the board director of EUCOCIT, the European Union Chamber of Commerce in Toronto. I'm also chairman of the Danish Canadian Chamber of Commerce.

EUCOCIT is a not-for-profit volunteer association dedicated to promoting bilateral trade and investment between Canada and the EU. EUCOCIT events and activities provide outstanding networking and marketing opportunities for companies looking to build awareness of their products and services to business leaders, decision-makers, and potential buyers in Toronto and throughout Canada.

With the strength of 27 active member countries and associate members--and we're still growing--through their Toronto-based chambers of commerce and business associations we promote all events and news to an average of 10,000 members. Our associate members include the Canada Europe Roundtable for Business, the International Economic Forum of the Americas, the Ontario Chamber of Commerce, and the Greater Toronto Marketing Alliance. In Europe we have a partnership with EUROCHAMBRES, the association of European chambers of commerce and industry, with 19 million enterprises and 2,000 regional chambers in Europe. We work closely with the European Services Forum and the Centre for European Policy Studies to promote a strong and prosperous relationship between Canada and the EU.

EUCOCIT was incorporated on March 7, 1995, with the following objectives: to promote commercial, industrial, financial, scientific, and other economic exchanges of all types between Canada and the European Union; to coordinate the activities of the various chambers of commerce and similar associations established in Ontario whose purpose is to foster economic exchanges between Canada and member states of the European Union; to organize meetings and events in furtherance of the above goals; to perform services in connection with the above goals, with or without remuneration; to collect, manage, and disseminate information and other forms of communication in connection with the above; and to serve the collective interests of its members.

EUCOCIT’s current main activities include the promotion of bilateral trade and investment between Canada and the EU; organization of events and activities providing networking and marketing opportunities for companies looking to build awareness of their products and services to business leaders, decision-makers, and potential buyers in Toronto and throughout Canada; the creation of partnerships with organizations like CERT, the Ontario Chamber of Commerce, the GTMA, and EUROCHAMBRES, in order to organize joint events and inform and promote each other's activities. There are biweekly news updates on the European Union’s business and political events to keep the Canadian business community informed, and other publications to facilitate introductions and enhance trade and investments.

In the presentation I've made that's been given to the interpreters I include some completed projects from the time of the announcements of the CETA negotiations until now. Starting in March 2009, we have had 34 meetings with EUCOCIT and other parties I have listed. I think it would be too much to name them individually, so I will mention a couple of them.

The newest one will be on November 29. We will have a meeting with Maurice Bitran, Ontario chief negotiator on the CETA, in Toronto.

We have had several meetings with Steve Verheul, the Canadian chief negotiator, and Jason Langrish of CERT. Jason is in India right now on the new potential free trade agreement there. We have met with several ministers. We had the ambassador in Ottawa for the EU delegation.

In July 2010 we had a private meeting at the GTMA boardroom between the EUCOCIT board--27 directors of the individual chambers--and the Honourable Peter Van Loan when he was Minister of International Trade. I have to say there has been a really positive dialogue among all parties--political, financial, etc.--in all the meetings we have had. Hopefully they will lead to a very positive conclusion. So it has been very interesting and really good.

Another example is that in February 2011 we had a seminar, “Export to Europe Effectively and Successfully, with EMA—the Export Market Access Program”, at which we had the speaker, Louie Di Palma, the director for SME programs of the Ontario Chamber of Commerce, in partnership with the Department of Foreign Affairs and International Trade.

We had another one in April 2011, a presentation with Dr. Nout Wellink, president of the Dutch bank the Nederlandsche Bank, and as special guests, Bank of Canada governor Mark Carney and Amanda Lang, the host of The Lang & O'Leary Exchange, in partnership with the Canadian Netherlands Business and Professional Association and the Belgian Canadian Business Chamber.

We had a really interesting one with the TD group—the EU financial crisis and its impact on Canada was the topic—with Derek Burleton, vice-president and deputy chief economist. Normally we have about 40 to 60 people in our meetings; on that day we had more than 100.

Just after that, on November 2, we had the pleasure of hosting seven members of the European Parliament in Toronto; they had been visiting in Ottawa prior to coming to us. We had a one-hour business meeting and then we had a cocktail reception and we heard about the latest activities. I have to say that Mr. Vital Moreira, the chairman, made a very good point at the end of his speech, and that was, “You can trust us.”

On November 29, EUCOCIT, in partnership with the delegation of the European Union to Canada and DFAIT, will present a CETA update with Maurice Bitran, Ontario CETA chief negotiator from the Ontario Ministry for Economic Development and Trade, and Maurizio Cellini, counsellor and head of the Economic and Commercial Section of the delegation of the European Union to Canada, plus speakers from the private sector.

In addition, EUCOCIT has developed a website linked to all the European chambers in the GTA. We promote all European events, business, arts, culture, etc. in the GTA and we provide information and links to Europe.

Now I would like to give the EUCOCIT position on CETA. We feel that CETA is the biggest free trade deal, and more, with the biggest market in the world—500 million people, representing high-end and quality buyers, summing up a higher monetary outcome than any other markets—and the biggest new trading opportunity for Canada, potentially creating lessened dependence in our trade reliance upon the United States of America.

We're convinced that the Canadian business industry is becoming more aware and interested in the details and benefits of the CETA agreement as negotiations develop, but we are lacking much information on what is being negotiated, which discourages some companies from participating and becoming involved.

EUCOCIT has promoted and will continue to promote news and seminars on the CETA between Canada and the EU on an ongoing basis. The Europeans are still dealing with Canada's proposal for a negative-list trade approach, through which all sectors and services would be liberalized except for those explicitly excluded in the agreement. In the past they have been more comfortable with a positive-list system, in which only those sectors and services actually cited in the agreement would be affected.

Discussion regarding government procurement and product tariffs has created no surprises. It is expected that about 98% of all duties will disappear once the agreement comes into force. There remain numerous outstanding differences about product standards, and questions regarding which agencies in Canada and Europe will be authorized to issue necessary approvals.

However, intense negotiations are still needed to resolve disputes over rules of origin for goods, especially those in the automotive sector. Canada seeks an agreement that reflects the reality of North American-wide sourcing. On the European side, they are more focused on agriculture and fish. As well, there are concerns over wine and spirits, which make up a large share of EU agricultural exports to Canada.

That leads into the issue of geographic indicators related to cheese and other products, such as Champagne and Parma. Canada needs to ensure that those terms comply with existing copyright and trademark legislation.

Public sector procurement is a high European priority, in particular access for urban transit systems and power-generating equipment. As a result, for the first time Canada's ten provinces and three territories are involved in the planning sessions but are not at the negotiation table.

The EU crisis means that EU companies will look for opportunity in other markets; the CETA will push them to trade and invest with Canada. The EU's ability to project itself in such traditional stomping grounds as Africa means it will increasingly turn to Canadian resources. Finally, if countries leave the euro zone, they will be those that Canada doesn't trade with much anyway.

Besides, the U.K., Poland, Sweden, and Denmark don't use the euro and are part of that agreement. Don't let the euro concerns deter what is a huge opportunity. There are still plenty of healthy parts in Europe with which Canadians can do business, and all these places have wealthy consumers. EU support for the CETA remains very strong, and it is a top trade policy priority, which the delegation mentioned when it was here.

On specifics, in public procurement the EUCOCIT supports an open, transparent, and reciprocal agreement in the CETA. This will deliver huge opportunities for Canadian firms in the massive EU procurement market in particular. Open procurement also stimulates competition and increases choice, which will lower costs for taxpayers and make available new technologies that spur innovation and productivity.

We have a number of points on the IPR. Those negotiations will also help us in our relationship with the U.S. and our efforts to enter into trans-Pacific partnership talks.

On tariffs, there will be some tariffs and other non-tariff areas—food products, in addition to a number of items that we have.

We have a few messages for today's hearing.

The EU pharmaceutical IPR proposals are win-win proposals, and we have a number of things here. The country I come from, Denmark, spends less per capita than Canada on drugs but has better IPRs than Canada. This is because Denmark uses pricing arrangements with companies to realize economies; these are a direct and effective cost method, as opposed to indirect and ineffective methods, such as IPR.

At the end, we would like to say that we hope to see a positive conclusion to the CETA negotiations in the first quarter of 2012. EUCOCIT will continue leading the way to explain how this will influence Canadian business going into this vital market.

All this is respectfully submitted.

[The Chair, Conservative, Rob Merrifield]

Thank you very much. You may be able to get into more of this in the question-and-answer part of the meeting.

Mr. Seligman, the floor is yours.

[Bruce Seligman, President, Domestic Sales (Canada), ARKTOS Developments Ltd]

Thank you very much.

Good morning, ladies and gentlemen. I'm Bruce Seligman, the president and founder of ARKTOS Developments Ltd. ADL is a 100% owned and operated Canadian company based in British Columbia that has a well-established sales record and considerable potential for growth.

ADL has developed the unique and world-leading ARKTOS craft for severe amphibious conditions. It has no direct competitor in the world.

The ARKTOS craft was originally developed for eight major oil companies, operating in the Arctic in the 1980s, as a lifeboat that could operate from offshore drilling structures 365 days per year, especially in mixed ice and water conditions.

The development of this initial stage was supported significantly by the Canadian government, through a grant from the Department of Industry, Trade and Commerce, and by the Canadian Coast Guard for developing the first production ARKTOS craft for the Polar 8 icebreaker program, had it actually come to fruition.

In the 1990s, ADL continued to refine the ARKTOS amphibious craft as a lifeboat and was selling and supporting ARKTOS seismic survey craft in China for their oil industry.

From 1988 to today, ADL has generated over $35 million in sales of ARKTOS craft. ADL has also generated about $6 million in revenue for servicing those craft.

Most of these craft are operating in the Alaskan Beaufort Sea and in the Kazakhstan sector of the Caspian Sea. Of special interest to this meeting is that 93% of all ADL craft sales were made for export. As a result of these sales, ADL has kept skilled workers and engineers employed full time for that entire period.

Although the crafts' final destination was Kazakhstan, most of the negotiations and payments came from the European Union consortium, based in the Netherlands, which included Italy, France, and England. So I have had quite a lot of dealings with the EU through a consortium that was actually operating in Kazakhstan.

Today ADL is negotiating sales in new sectors, such as military, civilian disaster response, and search and rescue. Oil spill response is a particular interest after the Deepwater Horizon incident. At this point, the main negotiations for these ARKTOS oil spill response craft have been with Russia, Brazil, and China. In fact, I go back to Brazil at the weekend.

Civilian disaster response in the E.U. constitutes a significant potential new market for ADL. Some examples of interest in disaster response in the EU that have been discussed and that we've worked on are amphibious firefighting craft for the River Thames in England; ice tender craft for pilot vessels in Finland, which are for taking the pilots out to the craft in ice conditions; and rescue craft for the coast of Scotland. However, these craft are useful for many other duties, such as where logistics are required amphibiously in shallow water, mud, muskeg, and so on, where neither vehicles nor boats can operate. Tidal zones are very important.

At this time, ADL is also developing a smaller, air-transportable ARKTOS craft that will be useful for quick response in emergency situations worldwide, including in the EU. This craft is similar to the craft ADL is proposing for Canada's AOPS--Arctic offshore patrol ships--and the Canadian Coast Guard's planned new icebreaker, the John G. Diefenbaker.

As ADL moves into direct marketing in the EU, the CETA agreement would definitely help ADL in developing more sales and jobs for Canada by reducing or eliminating trade barriers such as tariffs, standards, temporary visas, regulations, and the need for protection of IP rights and procurement rules, etc.

We have to move service engineers around the world for servicing the craft, and that funnily enough happens to be a big problem, getting these visas, and certainly it would be a big help not to have to battle that all the time. I'm hoping that will be an outcome of the CETA.

Thank you very much. This is pretty specific compared to Anders.

[The Chair, Conservative, Rob Merrifield]

That's fine. We need all perspectives.

We'll now turn to questions and answers. We'll start with Mr. Masse.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Thank you, gentlemen, for appearing. Although you're very specific, we might need your services if we buy the F-35s.

I do want to go to how you wrapped up, with regard to visitor visas, and maybe just to outline a little bit where you think there could be some crossover. In this agreement they're partly looking at some of the different occupational bridging that can be done for standards, for engineers, perhaps, and others. What qualifications and credentials? Where do you think there could be some gains there?

[Bruce Seligman]

We have the problem of the service engineers who go around and service the vehicles. There are a lot of good engineers and mechanics in all these countries, but the problem is that there are specific things with the craft. We don't need to put service techs permanently into an area; we need to move them around all the time. So it's always this temporary visa. One can battle and get people into a foreign country if they're going to stay there for a year or five years or something, but when you're moving them in and out every few months that becomes a problem. There has been a lot of red tape, not with the EU, but Kazakhstan is a continual nightmare, for instance. We in fact have two engineers there right now; they'll be coming back at the end of the week, I hope.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

Mr. Fisker, we have right now quite a deficit with the EU in terms of trade. We had witnesses from the Chamber of Commerce the other day, and I was kind of surprised by their testimony. They talked about having some winners and losers with regard to the deal once it was struck, and we need to help or at least identify assistance for those who are going to have a new world order through no fault of their own, whose business plans are going to be turned upside down. But they couldn't identify those industries. Perhaps you can take a stab at that.

I know the auto industry is one that's of concern that's been identified. That's what we did with the last major trade deal. We destroyed the Auto Pact and turned ourselves from number two in the world down to number eight in the world now in terms of automotive manufacturing.

Can you shed some light on those that might have some trouble and what we can do to assist them?

[Anders Fisker]

I think in most cases we'll be looking at a win-win situation rather than winners and losers.

[Brian Masse, NDP, Windsor West, ON]

So you think every single industry is going to actually benefit from this arrangement?

[Anders Fisker]

No, but I don't have a specific industry where I would be knowledgeable to give advice on that.

[Brian Masse, NDP, Windsor West, ON]

This seems to be the recurring problem we're faced with in analyzing what to do here. Would you agree, though, that there's a responsibility? If government is going to intervene right now in a successful business model that you have out there by creating conditions that are different from when you actually invested and developed that model, would you say there's at least a responsibility for the government to provide some type of leadership to assist them to change?

[Anders Fisker]

Yes.

[Brian Masse, NDP, Windsor West, ON]

Those are all the questions I have.

[The Chair, Conservative, Rob Merrifield]

Mr. Keddy.

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

Thank you, Mr. Chairman. I'm going to be splitting my time with Mr. Holder.

Welcome to our witnesses.

Welcome to ARKTOS; it's great to have you here. I met with some of your representatives here a couple of weeks ago. Previous to that I didn't know you guys existed. It's always a pleasure to see a Canadian success story, and it's nice to see that the work we're doing with the pro-trade agenda is actually breaking down barriers and opening doors for you folks around the world.

I have two quick questions, one for ARKTOS. You did mention the elimination of tariffs and standards, in direct marketing in the European Union. I assume you mean the recognition of standards, so our standards would be recognized in the EU as well as the EU standards being recognized in Canada—reciprocity, if you will. Can you just give a quick answer? Is that what you were looking at there?

[Bruce Seligman]

For regulations and things, we're pretty much dictated to, funnily enough, in England by the International Maritime Organization, the IMO. Most countries rely on IMO for their regulations and the spinoffs, but it's certainly going to be good not to have to fight regulations in every country and to try to relearn. I'm funnily enough just working on a project with Gazprom in Russia. They have their Russian maritime survey in St. Petersburg, but I think they're leaning again back towards IMO, which is into Europe. I think it's more than just the EU members. I think there are a lot of people from our point of view, which is very specific for the evacuation craft and for marine industries.

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

Thank you kindly.

I have a question for Mr. Fisker.

With regard to the opportunities for European businesses working in Canada and Canadian businesses working in the EU, there's always been one little phytosanitary certificate that I find most troublesome in the EU, and that's the phytosanitary certificate that governs pine-borne nematodes. I'm just wondering if you guys have looked at this and what that has prevented. You know, for 500 years Canada shipped green lumber with bark and needles on it into the EU, and all of a sudden back in the late 1980s doing that became a problem because of the pine-borne nematode that's resident in our materials. However, it's only in bark. So there's no reason we shouldn't be able to ship green lumber into the EU, as long as it's sawn from debarked logs. Have you guys looked at that and the potential for market in the European Union?

[Anders Fisker]

We have not at EUCOCIT.

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

That's my only question.

Mr. Holder.

[Ed Holder, Conservative, London West, ON]

Thank you very much.

I'd like to thank our guests for being here this morning.

Mr. Seligman, I'll speak to you in just moment, if I might.

Mr. Fisker, was EUCOCIT formed expressly so that Canadian businesses could work with European businesses specifically in relation to CETA, or did it precede CETA?

[Anders Fisker]

It preceded CETA. It was formed in 1995.

[Ed Holder, Conservative, London West, ON]

At that time what was its broader purpose?

[Anders Fisker]

The purpose was really to give the European Community a stronger focal point so it would be recognized as one rather than as 27 different Chambers of Commerce and business associations that people would have to deal with, and we would be the voice in Toronto for the European side.

[Ed Holder, Conservative, London West, ON]

How do you measure your results or your efforts as a success as they relate to cross-business with both Canada and CETA?