International Trade Committee on Feb. 3rd, 2014

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

But how do you do a parallel system so you can say what it would be if they had not done it and what it is if they are doing it? That is the concept I'm trying to understand.

[James Maynard]

We have an audit. We have a whole audit process whereby we track what they were doing before, and then, once they use our services, the growth to market.

[Massimo Pacetti, Liberal, Saint-Léonard—Saint-Michel, QC]

Okay. Thanks.

[James Maynard]

We hire guys like Jock.

[Voices]

Oh, oh!

[The Chair, Conservative, Rob Merrifield]

Thank you very much. That was a very good round.

Mr. Hiebert, the floor is yours.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Thank you, Mr. Chair.

Thank you for being here, Mr. Finlayson and Mr. Maynard. We appreciate your time.

I want to start with Mr. Finlayson.

You talked about the 385,000 businesses in B.C. and how a small segment of them will ultimately benefit from this trade agreement. Are there certain members of your organization that will benefit more than others? Can you foresee a certain sector or category of businesses that could immediately see benefits from this trade agreement, versus some others that may not even be interested in exporting?

[Jock Finlayson]

I think the industries I see that are most interested in the Canada-EU agreement, based on the phone calls we've had and the turnout we've had at meetings where this has been discussed, would include the technology sector, broadly defined, and I think for reasons that Jim has alluded to. It wouldn't just be wireless. It would be other components of the ICT sector: some of the advanced manufacturing companies, aerospace, and optical equipment.

As for the forest industry, some tariffs remain in the EU that raise the cost of importing certain Canadian wood products, so those will be phased out over the term of CETA. That would benefit the forest products industry.

The seafood sector here in B.C. is quite an export-oriented industry. A lot of the seafood products produced here in B.C. end up being exported. For Europe, I think today there's $50 million to $60 million in trade, of exports into the EU marketplace, so there is some promise there.

Then there are the service providers. One of the things about this agreement is that it has a lot of.... Now, we don't have the final draft, but based on the technical summary, there are a lot of provisions in there that are actually related to trade in services rather than goods. We have engineering companies and technology service-producing companies that are quite interested in the EU marketplace.

There is a broad interest. It's not something that's a dominant day-to-day concern for most CEOs I work with, but it is something that they see as beneficial over time. That's why we're very supportive of this agreement.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

What steps is the B.C. Business Council taking to educate its membership on the benefits of CETA? How are you doing that?

[Jock Finlayson]

That's a very good question. We had one written piece that we did for the members before the technical summary was actually released by the federal government, to sort of alert them to what we were hearing and what we had been briefed on by federal officials. We invited guest speakers—one academic, a deputy minister from the provincial government—a while ago to come in to do a briefing for our members on CETA. Now that the technical summary has been released and we've done a bit more of our own research on it, we'll be putting together a somewhat more substantive document to share with our members, and with others, by the way. We'll distribute that out through our network to many other industry associations in the province. It won't just be our members.

There is an education job, frankly. This has not been a topic that has been top of mind, I think, for most CEOs here in British Columbia, so it is something that we do need to push. Any additional information that the Government of Canada can provide us that helps to provide more detail, such as updating that economic modelling study I mentioned that was done a few years ago, would be very helpful. That would be beneficial for the outreach work we want to do.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Okay.

We've talked a bit about the new $3-trillion European procurement market being available to Canadians. Putting on the other hat, could you anticipate what type of British Columbia government procurement the European Union companies might want to get access to that would reduce the cost to taxpayers?

[Jock Finlayson]

I haven't thought about that, but I would say that a lot of major European companies are very experienced in the project development and construction business, so they would have better access into the B.C. marketplace, as I understand it, under the terms of this agreement.

For European suppliers of equipment, technology, and computers, one could imagine the full range of goods and services from sophisticated IT systems down to paper clips, and there may very well be European companies that could come in and compete in this marketplace. If they were allowed to do business on a non-discriminatory basis, that might pose some challenges, frankly, to local suppliers that may have preferred access to their procurement marketplace. But as a taxpayer and an economist, I think it's good to have more competition, and I think we would really welcome that.

Again, we have to remember that the EU is a marketplace of 500 million people. Canada's is 35 million. To the extent that there's a reciprocal opening up of procurement opportunities, it stands to reason that we're going to gain disproportionately. But more competition in procurement at home is something that I think we should welcome and that you should welcome as policy-makers and legislators.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Yes. Thank you.

Mr. Maynard, you talked about the EDC's trade agreements, or pull facilities, as you described them. I'm familiar with them through the defence department. When I was parliamentary secretary for defence, we did a lot of work with industrial and regional benefits, but I'm less aware of how they work through EDC.

For the committee members, I'm wondering if you could elaborate on exactly what you're talking about when you refer to Deutsche Telekom maybe making a large investment in Canada. Then they have a reciprocal responsibility to...or even if there's a large purchase.... Can you explain how these benefits would work and how we can enforce them?

[James Maynard]

Yes, certainly. I don't understand all of the details. I can only speak as someone who deals as a partner with EDC.

Basically, they will go in and negotiate a debt facility with some of these large multinationals. In return, as part of the agreement, there is a commitment to provide dollar-for-dollar pull for Canadian products into that organization. If it's a $100-million facility, the commitment would be $100 million of Canadian goods and services on a best-efforts basis.

I think we could do more to drive the leverage from those agreements in terms of taking out the term “best efforts”. That would be a good place to start. We could start to negotiate networks in terms of who the contacts are and how we can actually start to engage companies into that process and hold accountability to their performance....

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Before we go on any further, I want to use the chair's prerogative to ask the Business Council of British Columbia a question.

In your testimony, Mr. Finlayson, you referred to the TPP. Tomorrow we have a full day of hearings on the TPP as well, because we're having a joint study. I don't want to put you on the spot at all, but if there's anything you'd like to add with regard to the TPP, any comments with regard to that potential for this area of the country, I think the committee would be interested in hearing it.

[Jock Finlayson]

Thank you, Mr. Chair.

I should be clear that because B.C. is on the Pacific Ocean and we're Canada's Pacific gateway, according to many, we've been quite keenly interested in the process leading up to the TPP. We were very much pushing for Canada to be at the table prior to the decision that we would actually be there.

It's a big deal from a Canadian point of view because of course you have the U.S. there, and you have a number of the rapidly growing Asian markets. It's going to be a more complicated process, I think, than the Canada-EU agreement, because you have countries that are much more disparate in terms of their levels of economic development and maybe their environmental and labour standards. When we're dealing with the Europeans, we have I think a somewhat more common platform.

The Canada-EU agreement is obviously much further along. Our view, I would say, is that if we can't get over the finish line with Europe, it seems to me that it would be quite difficult to envisage that Canada could successfully be part of an emerging TPP agreement. That's why, in our written testimony, we noted that concluding the Canada-EU agreement will help to set the stage, I think, for Canada to credibly be part of the TPP process. We are supportive of it. Obviously we don't have as much information on it at this point in time, but we've communicated with government officials on a number of occasions.

Our province seems very supportive of the TPP, so we are looking forward to getting more information on that. But we're full-square behind it, based on what we know today.

[The Chair, Conservative, Rob Merrifield]

Sure, if you are just looking at trade agreements being tariff-free zones, if you want to look at it that way, I know they get much more comprehensive than that, particularly CETA, but if we were to look at our crystal ball, it would be fair to say that the TPP would be more advantageous for this part of the country than CETA.

[Jock Finlayson]

There's no question. We have a bigger commercial interest, a bigger trade flow.

[The Chair, Conservative, Rob Merrifield]

Which of your businesses would be the most impacted?

[Jock Finlayson]

With respect to the TPP, right across the spectrum of resource industries, everything from energy, forestry, mining, a lot of the same industries we mentioned in connection with Canada-EU. We have a lot of B.C. companies involved in selling services into TPP markets, so it is very broad.

[Jasbir Sandhu, NDP, Surrey North, BC]

Thank you, Mr. Chair, and thank you to both of the witnesses for being here this morning.

There are a number of factors that are required to facilitate trade domestically. We need infrastructure to get our products to port and rail facilities. We need these products to arrive on time at these facilities.

Mr. Finlayson, could you describe the state of infrastructure domestically here in Canada?

[Jock Finlayson]

I'm more familiar with my own province. I would say one of our competitive strengths here is we have good infrastructure to support trade. We have Canada's largest port. We have a second port up in Prince Rupert. We've made major investments not only to expand port capacity, but also to improve the efficiency of port operations.

If you had the CEO of Port Metro Vancouver here, he could throw a chart up for you that shows the efficiency gains they've had through improved management, and investment in technology and better systems.

We're actually winning business from other west coast ports to the south coming into B.C. That's obviously for the shipment of western Canadian primarily resource goods into overseas markets, but it's also on the receiving end of imports of products that are then shipped elsewhere in Canada. We're well positioned, frankly, in terms of physical infrastructure to support trade.

The bigger challenge is whether enough of our companies are able to take advantage of global market opportunities. Do they have the management capacity? Do they have the access to capital? Do they have the knowledge and information needed to do business? That's where the challenge is more than on the physical infrastructure side.

[Jasbir Sandhu, NDP, Surrey North, BC]

How are your members being served by the railway companies?

[Jock Finlayson]

You would get a variety of views on that. There is some concern. I have been reading in the newspaper about not enough railcars being available for some of the bulk commodity producers.

The CEO of the Forest Products Association of Canada had a letter in The Globe and Mail a couple of days ago, in which he was quite critical of one of the major railway companies. I can't say too much about it. We have the railway companies as members, but we also have the large resource and shipping industries. There doesn't seem to be enough capacity in the industry to support the growth in trade flows for all the different industries that rely on rail. It's definitely an area of concern at the moment.

[The Chair, Conservative, Rob Merrifield]

Mr. Holder, please.