International Trade Committee on Dec. 1st, 2011

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

You talked about wanting to consult Canadian businesses in India and other stakeholders. Do they take the same approach? Who are they trying to satisfy? Who can we as parliamentarians influence on their side of the negotiating table to come to a satisfactory agreement?

[Don Stephenson]

On the Indian side, there appears to be a fairly well-organized and defined procedure for consultation with business, and it involves the two principal business associations: the CII, the Confederation of Indian Industry, and the FICCI. It's the Federation of Indian.... I'll get back to you on that.

But in respect of those two principal associations, there is a very strong and direct consultation procedure with respect to each of their negotiations. There would actually be someone in the CII and someone in FICCI who would be tracking the Canada-India negotiations and briefing their members on the negotiations, analogous to our consultations with the Canadian Manufacturers and Exporters association, the chambers of commerce, or the Council of Chief Executives. But it's a very well-established procedure and, as I understand it, very detailed briefs and very transparent discussions with respect to the details of the deal.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

So you're saying that, other than the negotiators, the stakeholders would be the ones to talk to, and these would be the key stakeholders trying to leverage that.

[Don Stephenson]

Yes.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

How about non-tariff barriers? Those are often seen as greater obstacles to free trade than the tariffs. What type of non-tariff barriers are we facing and how can we address them?

[Don Stephenson]

They will be addressed in the negotiations. That's typical of our approach in negotiations. We will look for opportunities to establish fast-track mechanisms for dealing with the resolution of issues, for disputes in the area of sanitary-phytosanitary rules and technical barriers to trade. Because we have a large agricultural trade with India, we tend to have quite a number of sanitary and phytosanitary issues or disputes at any given time.

When the minister was in India three weeks ago, he met with his colleague on the agricultural side in India and pressed first of all on a number of specific SPS issues, the irritants in existing trade, but also on establishing a priority for addressing these issues in parallel with the negotiations. Because it will be critically important for the Canadian exporters, when we get to the end of the negotiations, to know that not just has the tariff been eliminated, but the technical barriers that they're having difficulty with have also been addressed, so that the access they're getting in the negotiation is real and they're actually going to get into the market.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Madam Péclet.

[Ève Péclet, NDP, La Pointe-de-l'Île, QC]

I am going to share my time with my colleague Mr. Blanchette.

Right now, we have no idea what's going to be on the table. But I am dumbfounded by the fact that every time the government signs a free-trade agreement with whatever country, exports go down. So we know right now that there is a negative trade balance. It has never been as problematic as it is now. I was telling you about strategies to keep jobs and you were telling me about companies being competitive. Those are not two separate ideas.

Some say that the NDP is against free trade, which is not true. Give me one free-trade agreement from which small businesses in my riding can benefit, and I am going to sign it. That's the only point I wanted to make. No free-trade agreement ever benefits small and medium-sized businesses, at least not at the moment.

I am going to let my colleague ask his question.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Thank you to our guests.

I would like to talk more about the job issue. Something you said puzzled me. Among other things, you said that you are going to focus first on companies that are already doing business with India.

Have you made short-term, medium-term and long-term projections as to which sectors will be better off or worse off, the places where jobs will be created and how will this be broken down?

[Don Stephenson]

Let me try to answer the various parts of that question. I would have to check this first, but I think that our free-trade agreement with the U.S. and NAFTA have been very positive for Canada. I might have to check the figures to be able to give you an accurate answer.

I think that Mr. Santerre's remarks on being competitive were meant to show that Canadian banks are still competing with their counterparts in other countries by buying some services from India. Even CGI has 2,500 employees in India for the same reasons. Some tasks can be done more efficiently by companies in India and why not take advantage of that?

I feel the real challenge is getting small and medium-sized enterprises involved in international trade. I was explaining just now that the support service we provide to businesses, the Canadian Trade Commissioner Service, is mainly for small and medium-sized businesses, because companies like SNC-Lavalin and Bombardier don't need us as much. Those companies have a presence and they have the resources to be wherever they want.

[Denis Blanchette, NDP, Louis-Hébert, QC]

At the moment, we are under the impression that those negotiations are actually an opportunity to promote the major companies that you mentioned. Your framework shows some types of services, capital and raw materials. But it is for the short term, since India needs a lot of construction to be done. I have great respect for India's potential. In my view, India can be for services what China was for manufacturing.

That is why I was talking about projections earlier. In 10 or 15 years, will we no longer be exporters of minerals and grains?

[Don Stephenson]

No, because I also said that one of India's interests in Canada is access to technology. Very small Canadian businesses that are already active in the Indian market can provide the technology.

I think that our challenge at the Canadian Trade Commissioner Service is to help small and medium-sized businesses. However, the outcome of the negotiations and projections on the possible spinoffs of an agreement don't just focus on the activities of large companies.

In addition, when large Canadian corporations are in a market, they need suppliers. So they bring small and medium-sized Canadian businesses with them.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Cannan.

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

Thank you, Mr. Chair.

Thanks to our witnesses.

As one of the longer-term committee members here, I know the impact of the discussions. Maybe some of my colleagues around the table haven't had a chance to be privy to some of the information, but the fact is that one in five Canadian jobs relies on trade. That's 60% of our GDP. We are a trading nation.

I think it's important that you speak with some of your constituents and your businesses to understand.

It's important that all of us here maximize our natural resources. We're a country that's so rich in resources. We're blessed as a nation. World leaders would love to be in Canada's position. We have the greatest country in the world.

The way we can continue to keep that quality of life is to expand our trading opportunities, as Mr. Easter said. I'll defend Minister Fast, who has been doing a fantastic job as our trade minister, working with the Prime Minister and President Obama. The U.S. is going through their silly season with their elections coming up so we have to respect that. That's their democratic process.

Taking that into consideration, could you share with the committee why it's so important that we diversity our markets when we've been so reliant on the United States? Also, what has NAFTA done for Canada? As well, what will other trading opportunities do for small, medium, and large businesses across Canada?

Thank you.

[Don Stephenson]

We all have a favourite statistic about why trade is important to Canada. My favourite is that Canada represents 0.5% of world population and 2.6% of world trade. The difference between the two numbers is our high standard of living. Another way to say it is that we make twice as much as we can buy. Not geographically, but in terms of market, we're a small industrialized country, and we need global markets to succeed.

Although I'm no longer responsible for the rest of trade policy--just the India negotiations--the U.S. market is the context for the India negotiations as well. It's clear that in Canada job one in trade is still the United States. It still represents something like 72% of our merchandise trade, but less than 10 years ago it was 87%. The number I cite is the share of our exports. The number is in decline and continues to fall. That's due to a number of things. Our dollar has strengthened and has made us a little less competitive, and other countries have become more competitive in the American market.

So the happy news is that the share that's represented by new markets is also growing. But our trade in the U.S. is flat in real terms. Even though it is still job one in Canadian trade policy, that's why job two, which is diversification of markets, is more and more important all the time. Canadian business made this decision in 2005-06, when the numbers began to shift fairly dramatically. For the best exposé on the numbers, I would recommend Peter Hall, the chief economist at Export Development Canada, who can provide some very interesting numbers and analysis with respect to how Canadian business is diversifying markets.

The job I'm part of is the diversification of markets. It's job two, but it's pretty important.

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

Thank you very much.

Just as a little background specifically on India--

[The Chair, Conservative, Rob Merrifield]

Very quickly.

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

--I know that it has significant potential. I recently had a chance to meet the High Commissioner. I highly recommend to the clerk that we have the High Commissioner come as a witness when appropriate to share a little of the opportunities for Canadian businesses in working together to help both countries.

Just as we worked with Colombia, we know that a rising tide lifts all boats. They have a lot of issues with child poverty and things like that too. I would ask you if this is an opportunity for both countries to increase their productivity with a bilateral.

[The Chair, Conservative, Rob Merrifield]

I'm allowing just a very quick answer.

[Don Stephenson]

Yes, absolutely, and I guess I do believe that a rising tide lifts all boats, and if you improve the economic opportunities available to Indians, some of the other socio-economic indicators will also improve. Certainly it's good for Canadian business, because if you want to be competitive, you have to compete. Competing in the explosive growth markets—India, China, and others—is critically important.

[The Chair, Conservative, Rob Merrifield]

Mr. Ravignat.

Just talk: you wanted to touch the microphone.

[Voices]

Oh, oh!

[Mathieu Ravignat, NDP, Pontiac, QC]

I did, desperately, but I didn't.

To add very quickly to our discussion on jobs, an important thing to point out is that it's not so much the number of jobs created through trade, but also the kinds of jobs that are created in Canada and the kinds of jobs that are kept in Canada. My colleague's point was that since we have had various trade agreements, a lot of the manufacturing sector in our country has been hit hard, and I think that's a legitimate concern we have. If we allow more of the manufacturing jobs--as well as the service jobs--to go to India through this trade agreement, then the question is whether or not we can keep the level of wealth we have in this country, and particularly the strength of our middle class. I'll just put that aside. That's kind of the perspective we're coming from.

In June 2010, India and Canada came to some agreements on nuclear energy and nuclear power. In the past, Canada has contributed technology to India when it has dealt with nuclear energy, so my question to you is about how that agreement is going to affect the trade negotiations in the future and what our stance on India's nuclear energy program is going to be. I won't talk about nuclear arms programs; I'll just talk about the nuclear energy programs.

[Don Stephenson]

I'm going to deal with the smallest part of that question, and that is the potential for a Canada-India partnership in the nuclear field. I'll let Luc handle the rest.

Canadian business interests have indicated that after the administrative arrangement is concluded with India there will be very significant opportunities to implement the nuclear cooperation agreement in two areas: the sale of uranium to India, and partnerships on the development of technology, particularly, as I understand it, the CANDU technology that was introduced in India. There was very little contact between the Canadian and Indian industries for a long period of time, so the technology has been further developed on both sides independently.

Canadian industry holds the view that there is a significant opportunity for working together to develop the next generation of technology by using the best practice on both sides. This might result in a huge export potential for global markets, particularly in smaller developing countries. That's what I've heard on the trade-potential side of nuclear, but with respect to the agreement, let me punt.

[Luc Santerre]

I would just add that the agreement, as the member would know, is strictly in the civilian sector. Indeed, it has not yet been implemented. Canada and India are still negotiating what are called the appropriate arrangements for implementation, That's about the tracking of material both ways by the two parties.

We're hoping that those negotiations can conclude quickly and that trade can begin. India certainly has an appetite for our uranium, which is the best in the world in terms of grade. There is an interest because there is a kinship in terms of the use of heavy water technology. Canada and India are the two countries that best know this technology, so there is a great potential for working in each other's markets, and in third markets, as Don indicated.