International Trade Committee on May 15th, 2014

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

How many resources do you put toward trade commissioners, and where? We can't be everywhere. Canada does have limited resources like every other country, but I think Canada, due to a limited population.... How do you prioritize it? Is it for potential, or where you've already been?

We talk about the U.S. Have we reached a saturation point with the U.S.? Will more trade commissioners bring in more trade? The idea would be that trade commissioners would bring in more trade, but it hasn't done that, so do we need to double the number of trade commissioners? Do we need to have specialized trade commissioners, where their focus is only on certain industries or certain sectors? That's the part that I'm having a bit of difficulty understanding.

[Cam Vidler]

I think there are a few parameters that we could look at. We could look at the increase in service demands. The trade commissioner service, I understand, uses a fairly sophisticated customer relations management system that looks at where the service requests are coming from, looks at other parameters such as satisfaction of the trade commissioner service clients, and areas where perhaps we're not seeing as much satisfaction, or areas where we would need more focus of the trade commissioners.

I think there are obviously the new trade development needs that we have in emerging markets, but there's also a need to defend markets that we're already involved in, and looking at, for instance—

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

It's not an easy question, I know that. But to simplify it, do we add additional resources to the EU where we just signed an agreement, and we're going to sign a formalized agreement? Or do we add resources to the U.S., which is just a natural trading partner? Or do we add more resources to countries that are going to be potentially coming forward, as with TPP? I know it's not an easy question, but you do have to make choices or priorities.

[Cam Vidler]

Certainly. I think we need to make sure we are strengthening across the board in all of those markets, and probably with more of a focus, though, on the emerging markets, where we expect more trade growth in the future and where the business climate is more difficult for business.

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

The other question was on this. You alluded to the fact that we need a financial institution that provides more services for export, I believe you said. The institution that I think would fit that criteria would be EDC. But you went on to say it should provide guarantees, it should provide other things. I don't have your brief, so I couldn't list all the items, but can you expand on what you were referring to?

[Cam Vidler]

I'd be happy to expand on that and make the clear distinction between what Export Development Canada does and what a development finance institution would do.

The development finance institution would be looking not so much at financing exports, but financing private sector investments or growth in developing markets. The products that they provide—loans, risk guarantees, equity—are similar, in fact, to the products that EDC currently provides. However, the EDC provides those products on a commercial basis. Under the OECD principles, it has a certain band in which the pricing of its financial products can be. That prevents it from taking on a role of stimulating projects that are essential to development in developing countries that are nonetheless, from a commercial perspective, perhaps too risky.

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

Can you give me an example?

[Cam Vidler]

You could look at an infrastructure project in, say, a market like Senegal, where private investors may look at an opportunity. There's clearly a growing population. There are clearly people who would be using these projects, but political risks or counterparty risks with local partners are such that a company, whether it's an investor like a pension plan or whether it's an engineering company, would not be able to take on those risks. The project would otherwise not happen. Right now, you have organization—

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

Why can't EDC provide the funds or guarantee the funds?

[Cam Vidler]

Because they would also have to price their risk at a point that would probably be prohibitive for the involvement of a private company.

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

So you're asking for an institute that—

[The Chair, Conservative, Rob Merrifield]

Time is gone.

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

—is going to be taking out loans at a riskier level than anybody else would?

[Cam Vidler]

Mr. Chair, can I respond to that very quickly?

[The Chair, Conservative, Rob Merrifield]

Yes, go ahead.

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

I didn't mean to use all the time.

[The Chair, Conservative, Rob Merrifield]

It happens.

Go ahead.

[Cam Vidler]

I appreciate the points you're making there. I would just like to point out that this is not an uncommon practice at all. If you look at the International Financial Corporation as an arm of the World Bank, which Canada supports, it currently does that. If you look at the Overseas Private Investment Corporation in the United States, it currently does that.

In fact, all G-7 countries have an institution that provides that kind of concessional loan to stimulate projects in developing countries. Canada does not have those tools right now. All we're asking for is for Canada to basically step up to the standards that other countries have met.

[The Chair, Conservative, Rob Merrifield]

Okay. Very good.

Mr. Hiebert.

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

Hi. Thank you again for being with us.

I was wondering if you could elaborate on this comparison between our current approach to economic diplomacy as it's laid out in the GMAP versus what the Liberals did in the past under Jean Chrétien and his Team Canada missions. What are your thoughts? How would you compare the two initiatives?

[Cam Vidler]

I don't think that we have a fundamentally different approach between the two governments. If we look at the so-called Team Canada, where Canada was going, the Prime Minister would go with a large delegation and try to bring the best of what Canada has. I'd like to reference, and I do in the report, the 2012 mission that the Prime Minister led to China. I don't want to get into semantics, but that was a team of leading Canadians who went there to basically show the Chinese leadership and Chinese business community that Canada was very serious about our relationship. If you look at the progress that the economic relationship had almost immediately after that trip, I think it bears out the merits of that kind of approach.

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

In your remarks, you made the suggestion that SMEs could penetrate these foreign markets by working with larger companies. Could you explain the nature of that relationship? How would that work? Certainly if they're competitors, that might be awkward. Have you seen examples of joint ventures or smaller companies taking advantage of the supply chain relations that these larger companies currently have?

[Cam Vidler]

Yes. I think we could take a look at the aerospace sector, for instance. We have in the Montreal area, for instance, a cluster of suppliers that work with leading manufacturers, companies like Bombardier, like Pratt & Whitney. Because they're co-located, because they use the same business practices, and because they speak the same language, it makes it much easier for those small and medium-sized enterprises to supply that company as that company takes on some of the risks of entering a new market than it is for that SME to split off from that supply chain and try to penetrate a new supply chain in a market like China.

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

Fair enough.

In your document, you highlight a difference between a country brand and a made-in brand. I see that Canada has a fairly strong country brand. I think we're listed second after Switzerland, but we don't have as much of a strong made-in brand.

Could you elaborate for the committee the significance of that difference and what would need to be done to address that difference?

[Cam Vidler]

I think the significance comes through in that report.

We give everybody a very warm and fuzzy feeling, as Canadians. As this committee has travelled, you've obviously experienced those feelings and seen how Canada can command a lot of respect when it travels around the world. But if you ask leading businesses abroad which countries they think of when they think of innovation, when they think of business partners with leading expertise, when they think of the highest quality products, Canada doesn't come up, unfortunately.

Prior to this, I worked at the Canada-India Business Council. We took a survey in India of the business community and asked them about their perceptions of technologies from different countries. We asked about mobile technology. As you may know, BlackBerry has one of the highest market shares in India, and Canada should be very proud of that. We asked which countries they knew of as leading countries for mobile technology. Canada finished seventh or eighth, behind Australia for instance. Perhaps I've never seen the product, but I'm not aware of an Australian mobile technology that was succeeding in India. I think that's the gap we're talking about here.

I think it matters. When we're competing for attention in these markets, we're certainly not the only country that is trying to build these relationships. While our resources and all of these assets will help us get attention, we also need to be competing, essentially, with the reputations of countries like Germany and Sweden for their technological expertise, as those countries that we're targeting are looking to move up the value chain. Our ability to get access to leading government decision-makers, to leading business executives, depends very much on that perception.