International Trade Committee on Nov. 20th, 2012

[Vikram Khurana]

There are big families and it's a novel product.

Those are the kinds of real-life impacts that can be brought to bear due to our agreements or potential agreements.

In terms of my comments about single units, the export friendliness of Canadian financial institutions is lacking. Commercial banks do not understand international export rules as well as they should. In a lot of ways, BDC is out of step with EDC. While EDC does a tremendous job—I agree with Baljit—in promoting Canadian exports and the trade commissioner is out there pushing exports domestically, we cannot get any financing for exporting to anywhere in the world, let alone India.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Yes, and very quickly, I don't know how many lemons we would need for those lobsters, but anyway, that will help our agriculture sector.

[Voices]

Oh, oh!

[The Chair, Conservative, Rob Merrifield]

We don't grow lemons, but....

[Devinder Shory, Conservative, Calgary Northeast, AB]

Quickly, I want to hear your views. I believe all of you know that we just finalized negotiations on FIPA. What will be the effect on the investment sector once that foreign investment protection agreement is enforced? Would it encourage some investors?

[The Chair, Conservative, Rob Merrifield]

We'll allow one quick answer from someone.

[Vikram Khurana]

It is a building block towards an FTA. I think it's a must-have. I think it not only creates transparency but also protects our investments in that country and reduces barriers, both tariff and non-tariff, in the longer term.

[The Chair, Conservative, Rob Merrifield]

Thank you.

Mr. Easter, you have seven minutes.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you, Chair.

On the FIPA, I would agree with you. It's a building block. It's necessary to have both an economic trade agreement and a FIPA if it's going to work.

Maybe this is a question for Gerald. First, on the FIPA, we've seen on the Department of Foreign Affairs website that there is a foreign investment protection agreement with India. Now it's not there that there isn't.... Is there one or isn't there?

[An hon. member]

It's not signed yet.

[Devinder Shory, Conservative, Calgary Northeast, AB]

It's not signed yet.

[Wayne Easter, Liberal, Malpeque, PE]

It's not signed yet. Then why did you have it up there that it was?

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

It's being negotiated—

[Wayne Easter, Liberal, Malpeque, PE]

I see. I know that the government would never put up false information, but—

[The Chair, Conservative, Rob Merrifield]

Let's focus on the other end of the table. We'll grill Gerald later.

[Wayne Easter, Liberal, Malpeque, PE]

So it's negotiated but not signed. All right.

From my neck of the woods, Mr. Khurana, obviously we need more weddings in India, because I come from fishing country, and so does Gerald.

[An hon. member]

[Inaudible—Editor]...Alberta beef—

[Wayne Easter, Liberal, Malpeque, PE]

I know that the regional development agencies, ACOA being one, do pretty good work in terms of at least getting in the market, opening up contacts, etc., as do EDC, CCC, and the trade commissioners. Are you saying in your remarks, though, that there's not enough coordination between the various government bodies and agencies that may go into that market to be well focused on what our approach should be in a market?

[Vikram Khurana]

That's exactly what I'm saying, Mr. Easter.

I guess, within the ACOA realm, that they have to cater to four competing provinces. We don't have a single rep for Atlantic Canada, unlike Ontario or Quebec, for example, that could be the local point of presence. BDC does not have an export business development policy that caters to exporters.

Last but not least, I think there's a great amount of ambiguity in the international documentation, such as letters of credit and so on, that frequently changes hands in the processing of transactions. Plus, there's a general risk aversion with respect to emerging markets.

[Wayne Easter, Liberal, Malpeque, PE]

Thank you. That's good for us to know.

Mr. Pyun, you said something along the lines of there being a lack of predictability with public tenders. How do you see a free trade agreement basically dealing with some of those issues? When you look at an economic trade agreement, you're often looking at tariffs and investment protection and so on, but how do you get around some of these other real problems in India in terms of, as you said, public tendering and lack of predictability?

I understand that the bureaucracy is even worse than Ottawa's, if it's possible. How do you get around that?

[Pierre Seïn Pyun]

To your point, I think that maybe not all the issues can be addressed by a free trade agreement, but I think the Canadian model, so to speak, of an ambitious free trade agreement would include commitments with respect to government procurement. For instance, in the negotiation with Europe, I think a government procurement chapter is being envisaged. In the NAFTA, there is a government procurement chapter, if I'm not mistaken.

I think public tenders could be covered by such a chapter, and there could be some discipline in relation to fairness and transparency included in such a chapter. But I understand that it's been a bit of a challenge to try to get those so-called new generation issues included in the negotiations with India.

[Wayne Easter, Liberal, Malpeque, PE]

I think you indicated in your response to one of the questions—and this was quite a while ago—that you had to basically assemble your rail products, your railcars, there. Is it one of the bigger obstacles in China and India that they demand a local production component?

[Pierre Seïn Pyun]

To clarify, we don't see that as a major obstacle, because this is the reality of our business in the rail sector. We're seeing offset requirements and local content requirements in virtually all the markets in which we do business, including in the U.S., with its Buy American policy. We have invested in the U.S. to be able to meet the Buy American requirements.

We have adapted well to this reality. Actually, if we compare ourselves with our competitors, our readiness to localize would be one of our comparative advantages, as long as the investment makes sense, of course, in light of the pipeline of forthcoming projects. But to understand those requirements and, linked to that, to make the right decisions in regard to investing in the country—and then all the challenges that come with investing, hiring employees, and training, of course, and so on and so forth—we had to go through those processes and challenges in the Indian market.

[Wayne Easter, Liberal, Malpeque, PE]

Would you expect, then, that in any trade agreement with India reciprocal measures would be in place and that we would require the same in Canada in terms of the assembly of Indian products coming into this country?

[Pierre Seïn Pyun]

I think our view is that in any negotiation the outcome has to be balanced and there should be some level of reciprocity. Now, as for applying this principle to specific industries, sectors, and chapters, I think you have to see what offensive and defensive interests we have at stake. India is not currently....They have some companies manufacturing rolling stocks and rail equipment, but on the global stage, India and Indian companies are not among our competitors. The Japanese would be, and the Germans and the French, but not India at this point in time.