International Trade Committee on Oct. 20th, 2011

[The Chair, Conservative, Rob Merrifield]

That's a very good point.

Madame Péclet.

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

Thank you, Mr. Chairman. My question is for Mr. Laurin.

These last years, the employment rate in the manufacturing sector has fallen back dramatically. I would be unable to tell you between what year and what year this occurred, but we do know that it dropped from around 70% to approximately 30%. The manufacturing sector is going through a difficult period, and this has been the case for several years now. We could use as examples Northern Quebec and Ontario.

I would like to know how this service helps stimulate and protect the manufacturing sector, especially in Canada, with regard to employment rates. Furthermore, are you concerned that not enough is being done to allow the manufacturing sector to come alive again?

[Jean-Michel Laurin]

That is a very good question.

Yes, the manufacturing sector has been hit by major job losses these last years because of the rise of the dollar. We must compete with a volatile dollar that has experienced much appreciation. There is ever fiercer competition, not only within our main market, that of the United States, but also throughout the world. Canadian companies must be competitive. We must convince foreign businesses to invest more in Canada. When the dollar is strong and when we are so dependent on the American market, it is certainly not easy.

However, even if major job losses have occurred, I would like to deliver a message with regard to the manufacturing sector. Despite everything, numerous plants have opened and industrial production has resumed since the recession, even if this activity has not been as vigorous as one would have hoped. I believe that the future of the Canadian economy is dependent upon the manufacturing sector. Two thirds of Canadian exports are attributable to products that are manufactured in Canada, but a large portion of the value of these products can be attributed to related services. We often see services industries create jobs. Often, this is due to the fact that they are supporting manufacturers that are successful abroad.

Canada’s Trade commissioner service plays an essential role, and not only in assisting Canadian companies in finding new export markets. I would say that at present the majority of our members are looking for new clients because their American clients are not importing as much as before. However, the service also has a very important role to play in attracting investment to Canada and I believe that the trade commissioners are doing a good job at this. They must however ramp up their efforts in view of seeking out more foreign businesses interested in investing in plants and operations here in Canada.

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

Even if my colleagues opposite will perhaps say that I am yet again brandishing my NDP label, I support my colleague in saying that the New Democratic Party is not opposed to free trade.

There are several reasons that explain why the manufacturing sector has declined. I am not an economist and I could not rhyme off all the reasons to you. I do however know that one of the reasons is the growing number of treaties. For example, there was NAFTA under Mulroney. Since the Mulroney era, Canada has continued to engage itself in free trade agreements, such that labour is migrating towards other countries, notably Mexico and the United States.

Given the government’s new leanings, targeting the negotiation of an ever greater number of free trade agreements, do you not fear that the number of jobs in the manufacturing sector in Canada will decline even further? How will the Trade commissioner service of Canada be able to allow Canadian companies to recover from this crisis given that they will probably see their profits decline markedly?

[The Chair, Conservative, Rob Merrifield]

Mr. Laurin.

[Jean-Michel Laurin]

That is a very good question. NAFTA is probably one of the main, if not the main, reason why the manufacturing sector experienced phenomenal growth during the 1990s. I believe that this created a lot of jobs in Canada. Clearly, the dollar’s appreciation forced businesses to somewhat revise their strategy. One cannot compete based solely on costs. We must find ways to differentiate ourselves. I believe that, with regard to the negotiation of the Free Trade Agreement, we have today seen several examples relating to players saying that there is no market or that the Canadian market is not large enough to sustain their business and that they must be able to sell their products on foreign markets. To that extent…

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

But around 90% of them are SMEs. I am not very familiar with the companies of the individual in question, but these are most probably no longer SMEs today. I am talking of the SMEs in Canada that account for 90% of its economic activity. We are not talking about the large corporations that make billions of dollars of profit every year.

[The Chair, Conservative, Rob Merrifield]

Her time has gone, but we'll entertain answers now.

[Jean-Michel Laurin]

If I might respond, I would say that the entrepreneurs represented here are SME owners. They need to sell their products abroad. Their situation is similar to that of several large businesses that, all told, are telling us that they produce for the world market and not just for the Canadian market and that they must have free trade agreements that remove trade barriers and obstacles. It is of course essential that Canada’s strategic interests be defended in the context of these agreements. Historically, however, I would say that our free trade agreements have served the interests of business and of Canadian workers well.

[The Chair, Conservative, Rob Merrifield]

We want to thank you very much for coming in and giving us your expertise and personal experiences with the trade commissioner service.

I thank the committee for their questions. Our time has gone, so thank you.

The meeting is adjourned.