Evidence of meeting #70 for International Trade in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was foreign.
A recording is available from Parliament.
Director, International Policy, Canadian Chamber of Commerce
I'm sorry, I don't quite understand the question.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
Well, as far as working in expanding investment into India right now, we have ongoing negotiations, but as I said, it could be stalled because of the election next May.
Do you see anything else we can do to have incremental-increase incentives if there's objection to a FIPA? What are other incentives for Canadian businesses so they have some protection, and certainty while they invest into a foreign country?
Director, International Policy, Canadian Chamber of Commerce
I think increased political engagement, or in fact sustaining the level of political engagement that we have seen so far, would be first. Export Development Canada and the trade commissioner service have rapidly expanded in the market over the past couple of years. We would like to see that continued.
Obviously a trade agreement is really only about opening up legal market access. That's not sufficient to take advantage of those opportunities. We need to use the whole tool kit available to help Canadian companies seize opportunities there.
Speaking to the issue of stability, our colleague Mr. Van Harten mentioned commercial risk insurance. EDC, for instance, provides some of these tools as well.
So there are ways of mitigating some of these risks in the meantime; FIPA would be merely a contributing tool as well.
Liberal
Wayne Easter Liberal Malpeque, PE
Thank you, Mr. Chair.
Mr. Van Harten, you mentioned that it is difficult to determine what we're actually dealing with without looking at a text. Well, we have the same problem. We have the same problem on every trade agreement that we're dealing with, including the Canada-European trade agreement.
It's a real concern. We are parliamentarians, and we have not seen any texts, only what we've seen leaked out from some other countries. It does indeed make it extremely difficult. Not many people are going to basically oppose the theory of a trade agreement. That seems to be what we're dealing with here at the moment.
I know from previous information you've provided us, and from previous statements you've made, that you do have fairly substantive concerns about FIPAs and how they can impact a country. I think you said that no Canadian investor has ever recovered money in terms of our protection abroad, but we have had a substantive number of cases go the other way within Canadian territory.
This really is my question to you: how do we better protect Canada's interests in terms of these agreements, especially as it relates to FIPAs?
Associate Professor, Osgoode Hall Law School, York University, As an Individual
I would suggest that many of our FIPAs don't raise the issue to the same degree as the FIPAs do—and I'll mention the FIPA with China—with major countries or the CETA with Europe, because they just really don't cover very much investment in Canada. So I would suggest perhaps that when a treaty is of such significance, exposing Canada to the risks and liabilities, that you allow for more elaborate processes of study and assessment from different perspectives, beyond the usual trade lawyers and negotiators, in order to really assess properly the consequences for the country based on the text that's available before it's finalized by the Government of Canada. That would just be a suggestion.
A more substantive suggestion, as I've always advocated, is that from a Canadian point of view, I think we'd benefit from a rules-based process, one based on the rule of law, but that depends on having a fair and independent process. Therefore, there are very strong reasons for shifting from investor-state arbitration to a proper judicial process that has the safeguards of independence and the requirements of openness, procedural fairness, and so on, that other international courts and tribunals have. I would hope that this would be something, almost regardless of political stripe—and maybe I'm being too hopeful—Canadians could get behind and support.
Liberal
Wayne Easter Liberal Malpeque, PE
Thank you very much.
Mr. Vidler, there a number of things in your remarks that I do want to go into, but if we're going down this road, have you ever been at a political meeting, or are you a member of any political party? If so, which one?
Director, International Policy, Canadian Chamber of Commerce
I have been a member of two parties in my life—
Director, International Policy, Canadian Chamber of Commerce
They are the Liberals and the Conservatives, and I won't tell you which one I am in right now.
Liberal
Wayne Easter Liberal Malpeque, PE
Mr. Chair, I made that point, and I did it in jest, because I really do think what happened here is out of line.
Conservative
Liberal
Wayne Easter Liberal Malpeque, PE
You talked on page 4 about Canada's capabilities in areas of extreme need for India, including energy, infrastructure, agriculture, etc., and you mentioned some of the leading countries that are involved in India. How does the chamber see the benefits of this trade agreement and involvement with India coming back to Canada? One of my concerns is that we're not adding enough value in Canada and that we're maybe not creating enough jobs in Canada. Your remarks here imply to me—and maybe I'm wrong on this—that there may be a return on investment for investors in those companies, who are not necessarily Canadian investors. How do you see the benefits, I guess, of the involvements of those companies you've outlined accruing back to Canada?
Director, International Policy, Canadian Chamber of Commerce
In some cases, they do stimulate direct exports. For instance, there would be Bombardier's operations there, and there is a lot of local manufacturing in India, but it would be using a lot of imported parts from other markets, including Canada, which supports Canadian jobs here.
If I could use one example, actually—and I think my colleague Ailish Campbell touched on this earlier—there are a lot of different types of value-added. I think oftentimes we conflate manufacturing with value-added, and look at the resource sector as something that does not provide value-added, or look at, as you said, foreign investment in another country not providing value-added in Canada. You have to take a look at the entire supply chain.
I'll use one example to illustrate this. There is Scotiabank, for instance. If you are in Scotiabank's main building in Toronto, and you look out the window there's a nondescript building across the street. That building is full of their international team. So as Scotiabank expands its international operations, it supports high-paying jobs here in Canada as well. I guess the point I'd like to make is that exports can be stimulated by directly investing abroad, as can a lot of value-added that may not show up in your trade statistics.
Liberal
Wayne Easter Liberal Malpeque, PE
Let me turn to Mr. Bubber.
You outlined in your remarks that India's 5% foreign-ownership limit on domestic private sector banks prevents banks from Canada expanding there. Why, from your perspective, does India have that limit?
Conservative
Conservative
Devinder Shory Conservative Calgary Northeast, AB
Thank you, Mr. Chair.
Thank you to our witnesses for being here today.
Mr. Vidler, I was skimming through the submission you provided us today. I want to thank you, first of all, for your support and reinforcing the fact that it's a win-win situation, an opportunity we cannot afford to lose.
When I was going through some of the paragraphs, I saw that you talked about the challenges and that you called it a “complex market”. You mentioned the different business culture there and that you need to have long-term commitment, etc. At the same time the World Bank has ranked India 132nd out of 185 countries in the ease of doing business and has also ranked India as 184th in the world in terms of enforcement of contracts.
How can these problems of doing business in India be overcome?
Director, International Policy, Canadian Chamber of Commerce
That's a very important point. It's one of the first things that comes up when you talk to Canadian businesses that are doing business, or looking at doing business, in India.
There are a lot of different ways we can address that. Let's look at it at a collective level policy-wise here in Canada. I don't want to keep bringing up the same organizations, but I really think they are indispensable: Export Development Canada and the trade commissioner service. Much of the ability to avoid some of these risks has to do with building proper local relationships with the right people, and the organizations I just mentioned can assist with those activities. Export Development Canada can also provide risk protection insurance. It is a cost you will face as a business, but such insurance will allow you to protect yourself against certain volatility that may happen in an uncertain regulatory environment.
I would mention the FIPA as well, as a mechanism through which we can reduce the uncertainty there. I appreciate the points that Professor Van Harten and Mr. Davies mentioned. We don't want to get into the issue of reforming the international dispute settlement system, but if I can just make one or two points about the value of a FIPA. Responding to some of the criticisms of it here, there is typically—and Mr. Van Harten can correct me if I'm wrong—an ability for both the investor and the government to appoint members of that arbitration committee. It is not being selected by the company or an entirely different institution. There's input to ensure that both countries are picking what they see as impartial arbitrators.
There's also an obligation on the part of the governments that sign these agreements to properly instruct their regulators and their legislators about what would and wouldn't comply with an international investment treaty obligation. Ultimately, there is a trade-off. It does limit your policy space as a government, but I think you have to balance that against the need to credibly show that you will protect a foreign investor's investment. A foreign investor doesn't vote in your country. How can you persuade him that you are going to keep that investment secure? That's how a FIPA can help us deal with some of the concerns about the business climate and environment in India.
Conservative
Devinder Shory Conservative Calgary Northeast, AB
We had a witness before you from the Canadian Council of Chief Executives. Ms. Campbell told us that they primarily represent the larger business community. In your submission it's written here that:For new entrants, especially smaller businesses, amassing sufficient resources to cover the costs of travelling, understanding local markets and maintaining a presence on the ground is no simple feat.
You have said that our SME presence in India is growing as well. How as a government can we make sure to address those concerns? How do we help the SMEs to enter those markets and get the benefits we all need to have?
