Evidence of meeting #28 for International Trade in the 41st Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was exports.
A recording is available from Parliament.
Conservative
Russ Hiebert Conservative South Surrey—White Rock—Cloverdale, BC
How does your trade compare to your competitors, is what I'm asking.
President and Chief Executive Officer, Aerospace Industries Association of Canada
It compares well with our competitors, but it depends on the jurisdiction you're talking about.
When you talk about mature jurisdictions like the EU and the United States, we certainly do compare well. When you talk about emerging economies and new entries like Russia and China, and the like, they're increasing theirs substantially more than we are because they're new. The other thing they're doing is putting a tremendous amount of state and country money into the development of their aerospace industries. They're seeing an increase in their exports to a higher degree than we are, but it doesn't mean that we're in any less of a position.
Conservative
Russ Hiebert Conservative South Surrey—White Rock—Cloverdale, BC
You mentioned in your testimony that trade with Korea dropped dramatically after the U.S.-Korea free trade agreement. Can you explain what it was precisely that explained that drop? Was it simply a reduction in tariffs that made the U.S. more competitive? What was it?
President and Chief Executive Officer, Aerospace Industries Association of Canada
You enter into bilateral agreements for two reasons, really. One is if there is somebody who currently has an agreement, then you're levelling the playing field for yourself. The second reason is if somebody doesn't have an agreement there, you're getting yourself an advantage.
What we saw when the EU and the United States signed their free trade agreement, our exports did drop, and we suspect they went directly to the EU and the United States because they get preferential treatment into that marketplace.
What our signing the free trade agreement did was level the playing field for us, so now we have opportunity. We fully expect that over the next several years we'll not only make that up, but we should see about a 30% growth.
Conservative
Russ Hiebert Conservative South Surrey—White Rock—Cloverdale, BC
Okay.
I have just a few minutes.
Mr. Quick and Mr. Cameron, would you comment briefly—perhaps in a few seconds—are you in favour of economic diplomacy using our embassies and consulates to do business, or, like one of the other witnesses we had today, are you skeptical of this approach?
President and Chief Executive Officer, Aerospace Industries Association of Canada
We're absolutely in favour.
Conservative
As an Individual
Well, I think it's a real shame that the Canadian government has decided to sell off its beautiful properties in Rome and in Paris that are in fact essential if you're trying to do business on a large scale. If you have Bombardier coming to Paris, you should be able to have the French President visit you in the wonderful first-class residence. It's the same thing in Italy. It's a huge mistake for economic diplomacy to sell off those assets.
Conservative
Russ Hiebert Conservative South Surrey—White Rock—Cloverdale, BC
Apart from real estate though, do you like the merger or the mixing of business and politics, or are you not in favour of that?
As an Individual
I think the mixture of exports and industry is better than the mix that was decided upon by the Liberals when they merged foreign trade and external affairs. I prefer the arrangement of industry with commerce, which it was for many years. I think that's a better merger.
Conservative
Russ Hiebert Conservative South Surrey—White Rock—Cloverdale, BC
Mr. Cameron, I'm going to draw you back to an article you wrote about 10 years ago. It's called “All Debt Is Not Made Equal”. You make some comments in there that I find quite interesting. You refer to foreign owners and foreign investors as “absentee landlords”. You're quite negative about the prospect of foreign companies owning assets in Canada. It makes me wonder how you feel about Canadian companies owning assets in other jurisdictions. Are your views reciprocal?
As an Individual
I worry about it. I worry about the behaviour of some of our mining companies abroad, for instance, and the kind of labour relations practices they've been carrying out.
Conservative
Russ Hiebert Conservative South Surrey—White Rock—Cloverdale, BC
Apart from labour relations, is it appropriate for Canadian companies to own assets in other countries and reap the profits from those other countries?
As an Individual
If they are respecting the laws of the other countries and participating as good citizens, of course we'd favour that. What concerns me is Ford Canada, which developed an export market in Cuba and then was told by the U.S. Department of State that it could no longer export to Cuba. It's the extraterritoriality of American trade law as it applies to American companies in Canada that is the problem. The problem is not Canadian foreign investment abroad, unless the Canadian government is going to start ordering our companies around. The problem does arise in Canada, and has arisen with American-owned companies, in which their export capacity has been limited by the American legislation.
Conservative
Russ Hiebert Conservative South Surrey—White Rock—Cloverdale, BC
Are you still opposed to all foreign investment in Canada because of this absentee landlord comparison?
As an Individual
I'm skeptical of foreign ownership—not investment—ownership. When a company such as U.S. Steel buys Stelco, becomes the owner, closes the factory, and puts 3,000 families into the street—no more work. It goes against the obligations it signed with the Conservative government. That's what I'm concerned about.
Conservative
Russ Hiebert Conservative South Surrey—White Rock—Cloverdale, BC
I'm close to being out of time, but in this article you—
Conservative
Russ Hiebert Conservative South Surrey—White Rock—Cloverdale, BC
—equate foreign investment with foreign ownership. You don't distinguish them; you say they're the same. Are you opposed to foreign investment as foreign ownership?
As an Individual
I distinguish between foreign investment and foreign ownership. I worked in the Department of Finance. We make those kinds of distinctions.
Conservative
The Chair Conservative Rob Merrifield
That's very good. Thank you very much.
Mr. Donnelly, we will split the time we have left, so we'll go about three and half minutes each. Go ahead.
NDP
Fin Donnelly NDP New Westminster—Coquitlam, BC
Thanks, Mr. Chair.
Mr. Duncan, a November 2013 Bank of Montreal note prepared by chief economist Doug Porter demonstrated a pretty stark reality for exports in Canada. In his words “there is energy (doing just fine) and there is everything else (doing anything but fine)”.
The note shows that in 2013 energy exports saw a $63.6-billion surplus while the basket of all other goods in Canada saw a deficit of $72.9 billion. Worse, this huge gap has been growing since 2004.
What do you believe the Canadian government needs to do to address this significant imbalance in exports and generate a diversified and balanced economy beyond just the energy sector?
As an Individual
Canada needs to develop industrial strategies that allow Canadian small and medium business to grow. It needs to have access to serious moneys so they can do research and development. It needs to have access to green policies.
What's important in B.C. is I remember the pulp and paper industry went into Europe. The Europeans said our paper is made by these processes which are not green enough. The Canadian industry went with the U.S. industry. We tried to get the Europeans to change their policy to allow our production, which was not green production...to allow those products in. We failed. Why didn't we have a program that allowed us to transition to green so we could get into that market? Green was the future.
We need policies to help companies transition into green. We need a better transport policy than we have. Look at our situation with our exports to the U.S. Look at what's going on right now with not being able to get our grain to market. Look at what happened in Lac-Mégantic with our deregulated train system.
We have serious transportation problems within Canada. We have problems with access to research and development, and we have trouble with assisting companies to move to green standards, the highest standards in the world, which is the kind all our companies should aspire to.
NDP
Fin Donnelly NDP New Westminster—Coquitlam, BC
I have just a short amount of time to ask you my last question.
In your opening remarks, you talked about sunk costs.
In an article in December 2013 regarding the GMAP, you talked about that as well. For countries trying to enter new markets abroad, you state:
Do not expect to be told where the serious money that needs to be invested in order to break into new markets abroad is going to come from. These “sunk costs”...can take years to recoup, and many companies give up and go home when the returns do not arrive in a short-term frame.
Can you just talk a little bit about sunk costs in the time remaining? You talk about three-quarters of a million per firm. Can you talk about that?
As an Individual
Well, if we want to go seriously into the Middle East, where there's a lot of oil money and there's a lot of markets, the first thing we have to have is an Arabic capacity. If you're a small manufacturer with 10 people operating in Burnaby, B.C., and you want to go to Egypt or you want to go to Bahrain, or some of these other markets, you have to have language capacities and that's expensive. You have to hire staff, or you have to translate the material. You have to be prepared to access those markets, and that's not easy. You also have to have a travel budget. You have to be able to go and visit these countries, and that's expensive.