Evidence of meeting #71 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 brazil.
A recording is available from Parliament.
5:10 p.m.
Conservative
5:10 p.m.
Liberal
Wayne Easter Liberal Malpeque, PE
Thank you, Mr. Chair.
To the witnesses, thank you to both of you for your presentations.
Turning to you, Mr. Baird, I would say up front that I think Canada's mining industry certainly needs to be congratulated for the amount of capital and investment that it does make around the world and for the benefits that it does draw back to Canada.
I know there is always a debate on corporate social responsibility. I've been at some of your mine sites, and we'll not get into that one. I would say that Canada's mining industry will stack up very well against any other in the world in terms of their total corporate social responsibility. I just want to say that at the beginning because I think you are to be congratulated.
You heard the discussion earlier on the Pacific Alliance. You did say in your discussion that it's up to our trade negotiators to decide. What I'm trying to decide is, just what are we negotiating?
This is not a free trade agreement. It's not an FTAA. We're not negotiating with a bloc. We're already an observer. There's been no cost benefit analysis done. Mr. Dade mentioned cost benefit analysis. I have yet to determine just what we're focusing on here and what we're trying to do. It's nice to have a nice social club among countries; its a wonderful thing. To sit down and have a beer together, to get people together and have some wine at night, a little party, it's a wonderful thing; however, there are serious trade issues that we ought to be dealing with. That's my concern.
What does the mining industry see has to come out of an agreement? We want to call it a Pacific Alliance agreement or whatever it may be. I think the FTAA would have dealt with a lot more of the areas that your needs are seen in, but that wasn't possible. What do you see has to be done—and I know you have a paper wherein you talk about major opportunities, and we will go through that in those markets, and I know they're there—to glean a benefit for Canada and for the mining industry in terms of this particular discussion?
I'll ask as well in terms of Argentina, Brazil, and Venezuela, where I think there are serious concerns about whether being in this club versus that club might have an impact on us. Do you see any impact for you and your mining industry in those other countries?
5:10 p.m.
Managing Director, Canadian Association of Mining Equipment and Services for Export
Ill take the last one first.
I'll go back to Monsieur Morin, who is concerned with how other countries might look at Canada's getting into this, that, or the other thing.
I agree with Carlo that it's not a major thing in this case, but as a person who has spent most of his life in marketing and selling that kind thing, I like to pursue opportunities. When you have an opportunity, when people are inviting you to come and talk to them, I think that's a positive thing.
Canada has to ensure that it maintains as high a profile as possible in terms of various aspects of our performance here in this country, including the mining industry. I believe that working with people is the best way to explain what's happening in Canada, what Canadian values are, and so on.
When I see a group of four countries trying to standardize things, that standardization alone would be an advantage to our exporters, even if they do it and we're outside of it. If they did it with us inside the group, with some opportunity to advance our ways of doing things, I think it would be advantageous.
To me it's not this or that; it's that we have an opportunity here, and we should go forward.
I will agree with you that there are a lot of issues on the trade side. Of course I'm not party, as you are, to this committee's deliberations as they go on. I just advance the idea that we're not doing very much on what I might call sectoral approaches to export trade and export marketing.
It's great to sign agreements with countries and then walk away and say, “Okay, let business do it”, but I think we need a little bit more consolidation of Canadian efforts when we go into these countries, particularly sector by sector, to try to actually sell things.
It's great to have agreements on paper, but you're not going to get a dollar coming back to this country until you have actually had a competent salesperson meet a competent buyer, and something actually gets sold. That's where we're slow.
5:15 p.m.
Liberal
Wayne Easter Liberal Malpeque, PE
We agree 100% on that point. In fact, I think that's what we should be looking at as a committee.
The parliamentary secretary talked about this bloc and the seventh or eighth largest trading bloc. My question would be for you, Mr. Dade. That's okay, and I can see that discussions and then coming together and setting some compatible regulatory regimes, etc., will be a help, but my concern on this negotiation, Mr. Dade, is that it really isn't a negotiation in trade. You seem to be very enthused about it, but I can't determine what the pros and cons are in terms of this discussion, from what I've seen. Can you help me?
5:15 p.m.
Senior Fellow, School of International Development and Global Studies, University of Ottawa
Certainly. Let me go over the testimony again.
This is the second kick at the NAFTA can. Just as we benefited from being in the North American integration group that goes beyond simply having free trade agreements, we will benefit from a similar agreement with alliance countries. It's not just regulatory convergence harmonization. It's agreements on the movement of people, a more advanced agenda than we've seen in North America, that will make us more competitive with Asia. It's working to have a single stock market, the ability to produce financial instruments in trade. It's a common position or a common move to engage exporters and to engage China. The Pacific Alliance countries are working together in terms of outreach to China, to Korea, to Indonesia, to present the bloc as an investment alternative. They've opened a joint office in Turkey, combining resources to do this.
Again, you have to think of this as another kick at the NAFTA can. Just as we've benefited from being in NAFTA by things that go beyond the free trade agreement we do the same thing with this group.
In terms of exactly what we'll be agreeing to, there's a list of priority items and what they've done. This is what we'll be negotiating when we go in with the group: movement of people, export investment promotion, financial integration, government procurement, harmonization of technical standards, agrifood, pharmaceuticals, cosmetics, sanitary certificates through the Pan American Health Organization, cooperation in education, being able to finish a degree in any one of the four countries, a single window for trade, value chains. There's a very clear list with very specific details as to what Canada will have to negotiate.
It's our agenda with the United States. We don't always have a clear agenda with the Americans and Mexicans. We deal with issues in a pragmatic way as they come up to allow us to take advantage of the free trade agreement to prosper and to compete, and that's what we'll be doing here.
5:15 p.m.
Conservative
5:15 p.m.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
Thank you to our witnesses, and thanks for the great history lesson.
Following up on Mr. Easter's comment, I know the concern was whether this was just filling in time. You talked about that in other committees. You also commented about the Canadian alliance, so it's been quite successful, I think. Maybe the Pacific Alliance will be as successful as that. I'm cautiously optimistic. It's a great opportunity to hear from you two individuals on your perspective, representing a variety of experience.
Mr. Dade, if you could clarify, you mentioned how important this is compared to the European Union. Should our committee recommend to the government to seek to join the alliance as soon as possible for Canadian industry to take advantage of the alliance?
5:15 p.m.
Senior Fellow, School of International Development and Global Studies, University of Ottawa
Yes, I think we have everything to gain and nothing to lose. There will be a process of negotiation, more information will be provided, and further hearings can be held. We have an opportunity to not repeat the mistake with the Trans-Pacific Partnership where we had an opportunity to get in when it was only Chile, New Zealand, Brunei Darussalam, and I think Singapore. Instead, when the U.S. came in, the U.S. beat us up before they let us in. We have an opportunity to avoid that mistake again. That is fundamentally important in terms of the group.
5:20 p.m.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
You mentioned visa-free travel. Do you think that's going to be a deal breaker, an issue the groups can't work through, or in the supplemental should the government be proactive in developing a strategy to help free the movement of people? It's one of the challenges it seems the membership in the Pacific Alliance is identifying.
5:20 p.m.
Senior Fellow, School of International Development and Global Studies, University of Ottawa
It will not be an issue. Mexico has negotiated with the alliance about the movement of people, so there is room to negotiate and trade on things that have been accomplished.
On the movement of people, let me quickly go to a couple of issues. There are two issues with the movement of people that always come up in Canada. One is that if we do anything in terms of letting people into North America, we run into issues with the Americans. The other is security concerns.
On issues with the United States, the history is instructive. Early on the government tried to lift visas on central Europeans. The bureaucrats and policy community in Ottawa said it couldn't be done. The Prime Minister went to Washington, and I'm told by friends in D.C. that he raised the issue in a conversation with George Bush. The response by the U.S. President was, “Well, Stephen, I think that's a great idea. You should go ahead and do it. It would make things easier for us in the States.” This was a completely different message from the one he got in Washington. We lifted the visas. The U.S. didn't complain. Obviously, there were issues later with refugees, but we've since dealt with them.
With regard to Mexico, the government was told the only way to stem abuses of the refugee system was to impose visas. A bunch of us said, “No, there are alternatives.” People in Mexico said, “No, there are alternatives.” You can take the 30 million Mexicans who already have 10-year U.S. visas and let them come to Canada. Mexico does it. Other countries do it. It would obviate it or avoid the problems on the political side in Mexico, and it would also avoid the economic problems in Quebec from the damage to the tourism industry and people moving over. So we can do a lot more visas than we're told.
On security, the chart shows homicide rates per 100,000 from the UN Office on Drugs and Crime. You can see that in terms of the crime issue, we're really not looking at much on the alliance. Or you can look at the capitals of the alliance and Canada and homicide rates, and you can see that if Washington, D.C., were tossed in, how the countries in the alliance would fall. This data also comes from the UN Office on Drugs and Crime.
The interesting issue on the crime and security front is that we already have visa-free travel with countries that have worse crime and security issues than those in the alliance. If you take a look at this data, this comes from The Atlantic; they run some numbers. Looking at homicide by firearm—this is different from overall homicide rates—of Pacific Alliance countries versus cities in the U.S. , if you're worried about visa-free travel with the alliance, don't go to Miami., stay out of Portland, and whatever you do, don't cross the border into Buffalo.
The real issue for Canada is that we have visa-free travel with Detroit. In terms of a danger to Canada from visa-free travel, I can't think of anything worse than a second bridge between Windsor and Detroit. You have a city with a homicide rate.... That's the firearm homicide rate, but the actual homicide rate is 55 per 100,000. You have a city where on any corner you can buy an AK-47 with a high-capacity magazine clip, and our response to this clear and present security threat to Canadians is to build a second bridge.
The security issues are overplayed. If you're coming from the alliance, you're going to have to.... You've been to Bogotá. You pass through three levels of security going through the airport, two more levels than you need to get into Canada. The thought that this is going to lead to security problems in Canada, compared to what we already face, is.... When you actually look at the facts, when you look at reality instead of perception, it's not an issue. It's moving qualified business people.
In this country we haven't managed to implement the APEC visa. Twenty-one countries, the economies in the Asia-Pacific economic group, have implemented the visa. We haven't. This is an issue we have to move on.
5:25 p.m.
Conservative
Ron Cannan Conservative Kelowna—Lake Country, BC
Thank you for putting it into perspective. I'm down to my last minute, so I have a question for Mr. Baird.
Madam Papillon mentioned that she reads the newspaper. Well, we read the newspaper as well. It reminded me of the quote by Mark Twain that if you don't read the newspaper, you're uninformed, and if you read the newspaper, you're misinformed. I worked for the Thomson newspapers group for four and a half years, so I know it can be true at times.
But specifically for the mining industry, perhaps you could summarize this. You mentioned briefly the multi-billion-dollar industry. In my riding there's Jeff Stibbard from JDS mining. There's the founder of Dia Met, Chuck Fipke, and some of the biggest mining companies working out of British Columbia. Maybe you could expand a little bit and inform the committee of the opportunities for the mining sector from the Pacific Alliance.
5:25 p.m.
Managing Director, Canadian Association of Mining Equipment and Services for Export
Well, specifically for trade they're great, because mining is growing faster and faster in emerging countries. Just look at Africa, for example. You just have to look at how Canadian mining companies alone are betting with their money. The balance sheet assets of Canadian mining companies outside of Canada are worth $215 billion. We have $20 billion of that in Mexico, $19 billion of that in Chile, and it goes on around the world.
There are huge opportunities. Why? There is hardly a year when there is negative growth in the need for mined commodities in the world. The prices go up and down because there is always a relationship between supply and demand, obviously. With commodities, if that balance changes by 1%, the price can change by 10% or even more. Don't look at the prices; look at the demand that is going up and up. Canada is in such a wonderful position domestically seeing as we have all of these resources that the world needs, and our mining industry around the world is the most dominant industry in the world and has great potential.
5:25 p.m.
Conservative
The Chair Conservative Rob Merrifield
Thank you.
You must be talking about the prices from early this morning compared to the prices this afternoon for some of those commodities.
Go ahead, Mr. Davies. I will give you two minutes, and then we'll finish off the meeting.
5:25 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
Thank you, Mr. Chairman.
I promised you, Mr. Dade, that I would give you a chance to expand on this.
I'm quoting from an article you wrote in which you said, speaking about Latin America:
Mr. Harper will find little interest in the usual lectures from Canada. In fact, he may get pointed rebukes about our irresponsibility in refusing to adopt what these countries view as common-sense policies on charging royalties for mining and oil projects. There’ll also be questions about our capability to be a serious partner in the region.
Can you explain in more detail this critique of Latin American countries concerning our policies on royalties? What did you mean by that?
5:25 p.m.
Senior Fellow, School of International Development and Global Studies, University of Ottawa
The Latin American countries, as we've mentioned, have more progressive social agendas, and a different history and a different neighbourhood context in terms of royalties.
Responding to this as well as to the needs for investment in basic development, basic education, and basic health care has made them take a more aggressive approach in terms of royalties.
I actually got this, believe it or not, by talking to Jeff Rubin, the CIBC World Markets economist. He's famous for saying that the best friend the Canadian oil patch has is Hugo Chavez. Why? Every time Hugo Chavez raises royalty rates in Venezuela, the Government of Alberta should sidle up to the industry and say, “Boy, that pendejo down in Venezuela has really gotten you again. He raised rates by 15%. We're your friends and we're only going to raise them by 5%.”
There is great room for arbitrage with this, and we simply haven't engaged in it. There is criticism that more could be done in this regard.
I'm sure my friend—
5:25 p.m.
NDP
Don Davies NDP Vancouver Kingsway, BC
I think we should be prepared to give Mr. Baird a chance to talk.
5:25 p.m.
Senior Fellow, School of International Development and Global Studies, University of Ottawa
—will offer a different view, but coming from academia, I have to have something that's progressive.
5:25 p.m.
Conservative
The Chair Conservative Rob Merrifield
Make it very short because his time has gone, and I'm going to give two minutes to the last questioner.
5:25 p.m.
Managing Director, Canadian Association of Mining Equipment and Services for Export
I just wanted to point out that with what was announced in Quebec last week, things are moving in that direction.
5:25 p.m.
Conservative
5:25 p.m.
Conservative
Devinder Shory Conservative Calgary Northeast, AB
Thank you, Mr. Chair, for being kind.
I have a quick question for Mr. Dade.
In your presentation you said that the Pacific Alliance is on track in negotiations with the ASEAN bloc of 600 million people. Can you tell me about the risks of not joining the Pacific Alliance? Is it beneficial to Canada to sit on the sidelines?
5:25 p.m.
Senior Fellow, School of International Development and Global Studies, University of Ottawa
I was afraid someone was going to bring that up. If I have to retract one thing I've written, it's that.
Indonesia has moved the Association of Southeast Asian Nations to begin negotiations with the Pacific Alliance. That process is going to take some time. ASEAN is almost as slow as the OAS, but it's an indication of where the bloc is heading.
5:30 p.m.
Conservative
Devinder Shory Conservative Calgary Northeast, AB
Another thing is it seems from here that their priority is to open markets in Asia and that Canada also has the same priority. Again, would it be a door-opener or at least helpful to open the doors for Canada in Asian markets?
5:30 p.m.
Senior Fellow, School of International Development and Global Studies, University of Ottawa
Yes, it certainly makes us more attractive. Together we would be not the world's ninth largest economy but something like the seventh or the fifth, so that is much more attractive.
Also, let me note that with the European free trade agreement.... This is something I meant to mention. The free trade agreements the government has signed have been extremely important, but they get defensive. They have prevented us from losing market share in countries.
The first thing that happened after we signed the agreement with Colombia was what? The U.S. wheat growers association issued a press release yelling and screaming that they were about to lose $100 million a year in sales because Canada had an agreement that made Canadian wheat cheaper.
It was the same thing in Central America with potatoes, Mr. Easter. Every year the U.S. potato association says they're doing great in Central America, and they have higher than normal market share, and that will remain in place until Canada signs a free trade agreement and things go back to normal.
The FTA with the EU will do the same thing. If the U.S. signs an agreement, we're in a world of trouble. Signing the agreement with Europe is important to keep us from losing market share, but it won't help us to grow. It won't give us new opportunities. It's a defensive move.
5:30 p.m.
Conservative
The Chair Conservative Rob Merrifield
Thank you very much.
Now that you're talking potatoes, I think it's becoming clearer to Mr. Easter.
We want to thank you for your presentation and your time here.
With that, we will adjourn.