International Trade Committee on Feb. 25th, 2014

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

In reverse, will the CETA help any of your competitors? They'll have easier access to this great knowledge and productivity that we have here in Canada.

[Emechete Onuoha]

Philosophically, we have an outlook which suggests that in a fair and reasonable competitive framework, where rules dominate in the international trading environment, all ships rise under the conditions of fair and reasonable rules. The short answer to your question is that yes, our competitors should benefit as well from provisions that make it easier to move talent across borders. Our competitors should benefit from eliminating particularly the tariff but also non-tariff related barriers to trade, and the free movement of commodities, people, and ideas.

On that point, I should also mention that we're in the ICT industry. The information communications technology industry is concerned about such things as the free movement of data across borders. This is an issue for us which we raise whenever we're consulted by national and subnational governments on instruments of this nature. We'd like to see the ability for data, for example, to migrate across borders in terms of supporting our business operations worldwide.

Indeed, we believe our competitors will benefit from CETA and other intelligent trading instruments worldwide, as well, in the interest of a liberalization agenda.

[The Vice-Chair, NDP, Don Davies]

Thank you, Mr. Pacetti.

Mr. Cannan, for seven minutes.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

To follow up on Mr. Pacetti's comments, the fact is this CETA agreement will make Canada one of the only G-8 countries in the world that will have an agreement, as you mentioned, a rules-based free trade agreement, with two of the largest economies, with the EU and the U.S.

I represent the riding of Kelowna—Lake Country in the Okanagan. Innovation technology is a big aspect in working with our college and university, and we have an incubator and an accelerator as well. I was really excited when I heard your comments on three patentable ideas a week, about 160 a year. I think that's very exciting out of one company. We're trying to expand that mindset across Canada. One in five jobs is based on trade.

Mr. Onuoha, in your comments you alluded to the fact that Xerox wants to work with small and medium enterprises, and the term you used was to get them “export ready”. I'm really excited about that because right now we have so many opportunities for small and medium-size businesses. Most of them that are exporting are doing so just to the United States, which continues to be our biggest ally. How do you see Xerox playing a role with the SMEs to get them export ready? How can we work as a government to work with you to see that come to fruition?

[Emechete Onuoha]

Mr. Cannan, thank you for the question.

One of the challenges we see even within our own supply chain in Canada is that there are many companies that have really promising IP and promising technologies that they can't scale up or they can't actually optimize in terms of even prototyping.

One of the things we have done, given our natural skill in terms of commercialization of research, is we have identified the capacity in our Canadian research centre to actually utilize some of our surplus research ability to help those fledgling Canadian companies actually continue the RD and E process by using our platforms and the infrastructure and capital that we've already invested in here.

An example of this is we've already initiated some work that is in partnership with the National Research Council's flagship programs, where the NRC is trying to commercialize research in a more applied scientific fashion that is more focused and market connected. We are actually the platform in tier one of the flagship research program related to printed electronics which, as you may know, Mr. Cannan, is relevant to advanced additive manufacturing, in particular, 3-D printing. My company is actually a world leader in the production of 3-D printheads, which is one of the two critical components of standard 3-D printers. Through this interaction with the NRC, we're actually using our research platform to further incubate and extend applications that have been developed by Canadian companies that don't have the capacity to scale those up. In addition to doing fundamental research and basic research at our research centre, we also have an integrated prototyping plant, as well as a supplies development manufacturing centre.

The unique feature of that structure is that all three of those components are actually housed on one compound underneath one roof. It is the most unique facility of this nature in Canada. It's one of only two or three in North America, and one of only six or seven in the world.

By virtue of having all of those attributes in the value chain located in one facility, we have the ability to present the research centre as a turnkey RD and E option, if you will, for promising companies that have technologies that can benefit from material science.

As I mentioned earlier, there are four areas, four lines of scientific inquiry that are deemed to be of global, competitive, strategic importance for Canada relating to health and biomedical research, as well as ICT research, and energy research going forward, and certainly material science plays a role in all of those areas.

We're leveraging our platform, and we've been in discussion with the Government of Canada and Industry Canada on these points. Two weeks ago I had the opportunity to speak with Minister Fast on some of the work we're trying to do.

This isn't theory. This is actually something we have voluntarily undertaken to do using our platform and in keeping with our objective to be a responsible corporate citizen and utilize our assets in the interests of developing the resilience and the profitable growth and export readiness of Canadian companies.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

It's very exciting news and I'm going to try to tap in with constituents and Industry Canada and NRC. I know Minister Fast is doing an outstanding job continuing to work with Canadian businesses across all the spectrum, and on February 14, along with my colleague Mr. Holder, there was some sharing the love in London, Ontario with the announcement of the contract with Saudi Arabia and Canadian businesses expanding opportunities. It's another example of our trade expansion.

Specifically with 3-D printing, I was trying to get my head around 3-D and now they're looking at 4-D printing. I was watching something on that on my iPad the other day.

That's really an interesting and exciting opportunity, specifically with CETA. They have very comprehensive labour and environmental standards in the EU and we're looking at working there.

As far as patent extension, is that something you see as a benefit to your company and also for innovation and technology as well?

[Emechete Onuoha]

Sure. The most compelling patent provisions and IP protection provisions relate to the pharmaceutical industry rather than our industry. However, because of the prolific nature of our IP production not just in the Canadian operation, but also in our other research centres in the United States, India, and France, the provisions around IP protection and any provisions around intellectual property are of significant importance to my company.

Again, one of the things that we're trying to facilitate.... As a multinational corporation we succeed when we can leverage skill and scale across our entire organization, but the propensity for us to make foreign direct investments in IP creation that might be at risk is going to be reduced. This is one of the reasons we're always so concerned about this notion of IP protection, whether it be in multilateral or plurilateral instruments or in the domestic framework. We've given testimony to your colleagues on the industry committee and submitted content to the Department of Industry as well in that regard.

IP protection provisions as they relate to a multilateral instrument like the CETA are of compelling importance, and indeed, the lifeblood of being able to commercialize and monetize the knowledge work that we do right here in Canada and at our other locations around the world.

[The Vice-Chair, NDP, Don Davies]

Thank you.

Madam Liu, for five minutes.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

I'm going to you, Mr. Van Harten, on the subject of investor-state dispute settlements.

We know that negotiations between the EU and the United States in the context of the transatlantic trade and Mexican partnership have been put on hold for three months in order to allow the different parties to proceed with public consultations on the investor-state dispute settlement process. Do you think the Canadian government should do the same?

[Dr. Gus Van Harten]

I think that's a very important point in that since investor-state arbitration was on the table for the European Union in its relations with the United States, many European officials at the national level and at the regional level have expressed concerns about assuming the fiscal risks and the regulatory constraints associated with investor-state arbitration when you're dealing with major foreign companies that are going to be covered in that way.

From the Canadian point of view, to me it couldn't be clearer that the Canadian interest is to avoid including investor-state arbitration in the CETA because of the much greater role that European companies can be expected to play in the Canadian economy. In a way, when the shoe is on the other foot with the Europeans, there has been this great deal of public concern.

What's slightly ironic about that is I was told by a European Commission official that it was Canada that asked for investor-state arbitration in the Canada-EU CETA. I don't know whether that's true or not, but if that is true, I really can't imagine what the explanation could be for that.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Yet there aren't any public consultations going on here, so that's definitely a preoccupation for us.

We know the federal government is responsible for the signature and the ratification of international treaties, but provinces had exclusive jurisdiction over certain areas. For certain exports in cases of non-execution by a province of an international treaty, is it true that the federal government could be responsible for the compensation?

[Dr. Gus Van Harten]

Yes, it's a very odd situation in that the federal government may conclude a treaty without the provinces having ratified it. The treaty may then be interpreted by these arbitrators as having been violated by a province, but then it's not entirely clear who should bear the cost of the award. Is it the provincial government that made the decision that's been found to have been unlawful by these arbitrators, or is it the federal government that concluded the treaty?

We have a very strange situation coming out of one of the recent NAFTA decisions. It's a couple of years old. It's a Mobil Oil case where a regulatory board in Newfoundland and Labrador put in place research and development expenditure requirements, and NAFTA exemptions for the relevant legislation were interpreted very narrowly by two of the three arbitrators. In the end, the arbitrators have indicated they will order the federal government—or they'll order Canada, presumably the federal government—to pay compensation to the investor to make up for the R and D expenditure costs that are applied by the provincial level going forward for decades, which is just a very odd situation.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

For the case on the side of Europe, would it be the European Union, or would it be the individual countries that are part of the European Union that would pay in the case of litigation?

[Dr. Gus Van Harten]

The last I heard several months ago is that this is still under discussion in Europe, and the European Commission has indeed committed to the member states that it will not finalize the CETA until it's resolved politically, especially in the European Council in discussions with the European Parliament and the European Commission who is going to bear the fiscal liability. In Canada we haven't faced a multi-billion-dollar award yet. It's when the multi-billion-dollar award comes that no one's going to want to pay that. I think it's sensible from a Canadian point of view as well as a European point of view to work that out in advance.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Mr. Onuoha, we are very proud to have the Xerox Research Centre in Mississauga, and it's great news it's one of your highest performing R and D centres.

Do you have any idea of what kind of expansion of R and D would take place in Canada as a result of CETA?

[Emechete Onuoha]

It's hard to pinpoint precisely the relationship between foreign direct investment at that centre and the CETA arrangement.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Would you be able to give us any specific information on how much and when that would be up in the air?

[Emechete Onuoha]

In terms of a monetary amount, it would be premature to do so at this point. What I can comment on is the objective of eliminating some of the rigidities associated with the free movement of our talent, particularly as you may be familiar with the intra-corporate transfer provisions of the CETA, which is a critical success factor for us.

The ability for us to move talented individuals from wherever they exist in the world.... Many of them exist among the 28 EU member states. Our ability to move Canadians into the European market and Europeans into the Canadian market for the purposes of 12-month exchanges and interaction with a minimal amount of rigidities associated with that mobility is a critical success factor for us. It really is, although I can't put a specific number on it at this point.

[The Vice-Chair, NDP, Don Davies]

I'm sorry, Mr. Onuoha. There has been a point of order raised.

Mr. O'Toole.

[Erin O'Toole, Conservative, Durham, ON]

I would like him to finish.

Are you finished your remarks?

[Emechete Onuoha]

I'll just conclude by saying that although I can't put a numeric figure on the proposed expansion, we do know that the demonstration of a culture of ambition, and the incentive or the intention to create conditions for more investment demonstrated by the government and the trade agenda here in Canada strengthens our case that Canada should be perceived as a favoured destination for foreign direct investment.

[The Vice-Chair, NDP, Don Davies]

Thank you, Mr. Onuoha.

Mr. O'Toole, do you have a point of order?

[Erin O'Toole, Conservative, Durham, ON]

Yes, Mr. Chair.

In the honourable member's question, she made a statement that there has been no public consultations on CETA. I'd like the record to be corrected in that regard because certainly not only have there been public consultations through hearings here in Ottawa, but the committee actually travelled to both Halifax and Vancouver to hear from members of the public and stakeholders in a public consultation which she claimed did not take place.

It's just a clarification.

[The Vice-Chair, NDP, Don Davies]

Fair enough, thank you. I think I would regard that more as a point of debate, not a point of order, but your position has been noted.

[Erin O'Toole, Conservative, Durham, ON]

It's a point of order for the purposes of the record.