International Trade Committee on Oct. 18th, 2012

[Jasbir Sandhu, NDP, Surrey North, BC]

Those are the numbers that I have.

I've looked at your projections with regard to what's going to happen in 2020. Your funding is being cut and the $550 million is not being renewed. Do you think the government can do more than what they've been doing to reach that goal, that projection, of $60 billion in trade?

[Dr. Vicky Sharpe]

I would say that based on the amount of effort we're seeing in Asia and other parts of the world at the moment, there is a significant effort to get people aware of Canada and how we can expand and diversify our energy exports. Forestry, agricultural products, and chemicals are all on this list, and I think that clean technology is interwoven among them. As a nation, we think we have a lot to offer, and I would say there's been a significant increase. There's the EU trade deal, which again is something that we were wanting to see happen because we're seeing investments coming from that part of the world.

There's always more to do, and it's a very competitive market. I wouldn't say we're absolutely at the top of our game, but I'd say we have built a significant platform, and I'd say that we were definitely moving in the right direction.

[The Chair, Conservative, Rob Merrifield]

It's very nice of you to compliment the government on the investment in clean technology.

Mr. Keddy, go ahead.

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

Thank you, Mr. Chairman.

Welcome to our witnesses.

I'm going to follow up a little bit on the whole idea of clean technology and the opportunities that should be there for the development of it in those industries between Canada and Japan.

Having had the great fortune to be in Japan several times, I have to tell you that when I looked at the ranking between Canada and Japan, I was a little bit surprised that Japan was further down the scale than we were, quite frankly. It's an extremely clean country. They are very conscious of everything that they consume and use. The idea that we're actually ahead of them is commendable for Canadian companies and for your industry in particular.

The other thing that obviously comes out of that is the opportunity to increase our trade in clean technologies with Japan and to have Japanese investment coming into Canada. We're in early days on a trade agreement with Japan. We've really just set up the parameters and we are engaging in a real and obvious way. On the idea that we could get foreign investment from Japan, are we starting to see some more interest in Canadian companies already, or is that something we need to build on?

[Dr. Vicky Sharpe]

Thank you.

I would say that we have begun to see some interest and I've given you one example. I can give you another one.

Three or four weeks ago, SDTC held an investor venture summit in Calgary. This is a non-advertised, invitation-only event, and we require that everybody who comes to those meetings be an investor who has money to spend. We had to cut the attendance off at 120 qualified investors. A lot came from the U.S. and Canada, but also from Asia. Japan was represented there. We had $10 billion worth of fund investments in the room looking at the clean technology companies and SDTC's portfolio.

We're still tracking the conversations that came out of that event and we hope we will turn some of those conversations into dollars. However, we were actually very surprised and very pleased, considering it is early days for us, not for the oil sands or for the natural gas players that my colleague, CAPP, talked about, but in clean technology. We think we're seeing a pretty big pick-up now in that area, so it's encouraging. Yes, there's more to do.

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

Excellent.

Not to get off of the Canada-Japan relationship, which is certainly what we're here to discuss today, but it's good to hear of the opportunities that await when we finish the negotiations, hopefully this year, with the comprehensive economic trade agreement with the EU.

One of the other questions that came up earlier from my colleague in the opposition party was the question of patents. Especially for clean technology, how essential is that patent protection or intellectual property protection? We took a number of years to finally get ACTA through the House of Commons. Now that you have a real ability to protect your proprietary information and have patent protection, are you seeing a direct correlation with an increased willingness to invest directly in clean technology companies?

[Dr. Vicky Sharpe]

The rule of law for investment in Canada is obviously so strong that investments into Canadian companies is not an issue. As they begin to partner and move out to other markets, then it is very important for these SMEs to have patent protection. They are often a single-technology company. Their livelihood is dependent upon their making sure that the one thing they build their business on is not lost.

I think there's a variable degree of protection. The rule of law in many of the Asian countries is quite strong, but the adherence to that law does not necessarily occur. Clearly, Japan is a market that has that kind of protection.

With our companies, we have undertaken a number of initiatives and we're still working on that. Singapore is one of them, where we have a touchdown base that is then moving out into Asia. Clearly the Singapore market in itself is too small.

We are seeing companies more willing to come forward and work within these protections. Obviously our partnership with EDC has enabled us to receive the great knowledge and experience that they have in the international markets in providing risk mitigation instruments, etc. It is important, and I am seeing their being more willing, but not universally across that market.

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

I have one more quick question I want to get in to Mr. Stringham while I still have some time.

Mr. Stringham, I have to say we met last summer during the Stampede week. You're dressed much more formally today. Although I'm sure—

[Greg Stringham]

That's where you have spaghetti. That's the reason.

[Some hon. members]

Oh, oh!

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

I'm telling you, the Stampede dress is much more comfortable, I'm sure.

We've got a long-trading relationship with the Japanese. We've got a mature trading relationship, I would say. When the Japanese market looks at Canada, especially the oil and gas industry, how important are things that we take for granted? I mean, for instance, the fact that we have non-conflict oil in Canada or the fact that we have a stability that's guaranteed by our supply chain, because we have a significant supply chain in Canada, which also guarantees some stability of price. We often just take that for granted. How important is it to the Japanese marketplace?

[Greg Stringham]

Particularly at this point in time, when they're looking at restructuring their entire energy portfolio, it's absolutely critical.

As you well know, when we look at Canada, we almost look at it in the North American context—Canadian first, then North American—but we have now been very much standing on a global stage as we see countries from Europe, the Middle East, and Asia looking to Canada for leadership on that aspect. It is because they see stability. It's because they see resource opportunity. It's because they see the rule of law, as was mentioned earlier, on environmental and labour issues, and others, that they feel comfortable coming and looking at us.

However, I must be very clear: they're not just looking at Canada. There is a window of opportunity for us to get into this and have that relationship deepened, but Australia is very aggressive and the Middle East is not going to see that move away. We have to stand on what we have as our strong foundation, but it will not be enough to simply say we get the guaranteed arrangements. We need to work hard to make sure that happens commercially as well as with governments to ensure stability and a relationship exist at that level as well.

As you well know, in Asian countries the government-to-government relationship is the umbrella that they look for to allow the commercial work to happen underneath.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Easter, you have seven minutes.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Mr. Chair.

Relative to the Stampede, Mr. Stringham, I don't know if you've ever seen Mr. Keddy answer questions in question period, but now I know why he doesn't answer properly. He must have been kicked by a horse there at the Stampede or something.

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

You're my friend.

[Wayne Easter, Liberal, Malpeque, PE]

Anyway, on the natural gas issue, we in eastern Canada.... What did you say?

[The Chair, Conservative, Rob Merrifield]

That's very speculative of you, but carry on.

[Wayne Easter, Liberal, Malpeque, PE]

On the east coast, we would certainly like to see natural gas come to that part of the world as well. I'm from Prince Edward Island.

In terms of shipping natural gas into Japan, I looked at your map here, and I agree with you. There are tremendous opportunities in Japan with their energy restructuring, but is there already a pipeline to get natural gas to that area to ship out in tankers?

[Greg Stringham]

There's a small pipeline and right-of-way there, and it's used for natural gas. As you well know, there's also a rail line there that moves in. You wouldn't move natural gas by rail, but there is a right-of-way. It goes up to Kitimat and to Prince Rupert right now.

[Wayne Easter, Liberal, Malpeque, PE]

Then there's no need for new pipeline development in terms of pipeline capacity to move natural gas in that direction?

[Greg Stringham]

There's a small pipeline, but it is not sufficient to deal with all of the projects that are listed on the bottom of that map page. It could probably deal with the smallest one, which is a first nations partnership project. That's one of the ones that are moving ahead most quickly right now.

To meet the needs of Japan as well as the needs for the supply that we have in Canada, there would need to be expansions, and pipeline companies have proposed to expand on that simple right-of-way to get to Kitimat or Prince Rupert harbour.

[Wayne Easter, Liberal, Malpeque, PE]

In terms of shipping natural gas into Japan, are there tariff rates? What are the restrictions now for moving energy or natural gas specifically into Japan? Is there a tariff rate structure? What has to be negotiated in an FTA with Japan to make it possible to be competitive with natural gas coming from wherever else?

[Greg Stringham]

As I understand it—and I'm not a detail person on the tariff side of things, but I did look at it—I don't believe there are tariffs on liquefied natural gas itself. There are on some of the byproducts and smaller commodities that ship as chemicals, but for liquefied natural gas, all we want to entrench in a free trade agreement is something that ensures those tariffs would not come in the future and would remain as open as they are today.

[Wayne Easter, Liberal, Malpeque, PE]

Thanks a lot.

Ms. Sharpe or Ms. Thaker, on the line of questioning from the NDP first, we know the funding that went towards your organization. We are worried that the federal government's urge to cut everything, sometimes without substantive research, could have an impact in the future. We will just put on the record that we believe that whatever the government does in terms of its deficit reduction and sometimes misplaced spending, we see investment in clean energy as the right thing to do.

In terms of that, to make it possible for your industry to be in the Japanese market, what needs to be done to add value and create jobs at home? Trade for trade's sake is one thing. Trade agreements are important, and they open up opportunities. What needs to be done to make it possible, from a company side in Canada, for us to develop that clean energy and clean technology?

You say in your conclusion here that Canada's clean technology sector leads global innovation. In my experience, Canadians are great as innovators. We are, but we're damned poor at commercialization, so how do we get to the commercialization point? What needs to be done from the government's perspective, in the trade agreement and beyond the trade agreement, to make it possible to develop companies and have success in that marketplace?

[Dr. Vicky Sharpe]

Thank you.

While I would agree that historically Canada has not reaped the kinds of returns it needs because we are great IP creators but we don't commercialize as well, I believe the Jenkins review from last year looked at the value derived for Canadians from the research dollars the government spends.

To be clear, we were part of that study, but we're not a research organization. Our business is to take, develop, demonstrate, and deploy clean technologies, so we believe we are actually, if you like, in the sweet spot of ensuring we do commercialize clean energy and clean technologies. In terms of attraction of international capital as well as the performance of our companies, I don't have the job creation numbers to hand, unfortunately, but we are seeing that happening. We are really beginning to build a very successful platform from which to lever out into the export markets.

In terms of what needs to happen within Canada—I believe that was part of your question—I think there's a risk aversion that sits within the investment community. I think there's a risk aversion that sits within some of the industries, although not all of them. Some of them are really what I call “technology play” companies, such as we see in the oil sands. That's a pure technology play. There are many other industries in which there's been, I think, a hesitancy to buy domestic technologies just because there's been a hesitancy to place that capital.

We now believe there's actually quite a lot of capital in these companies, both Canadian and international, that are based on these shores. I think we need to do a better job of getting industry to step up to the plate. It can't all be done by the government. It isn't all their job. I think that industry needs to say that we can't be complacent. As my colleague at CAPP said, we have a window, we have to be competitive, and we have to seize it. I don't know how you actually do anything about that from a committee deliberation perspective, but we'd like to see industry step up a bit more.