International Trade Committee on April 19th, 2018

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

No, never.

[The Chair, Liberal, Mark Eyking]

I'm sorry. Maybe you can hold that question for later.

Ms. Ramsey, you have the floor for five minutes.

[Tracey Ramsey, NDP, Essex, ON]

I'll pick up on your line of questioning to Mr. Galimberti.

Looking at these trade deals, it's high risk and very little or no reward for our steel industry, which is struggling under global dumping. We have a lot of global dumping, and we've become a target as a country. That's very worrisome for us because this has been a backbone sector for us to be able to supply steel for our own country, our infrastructure, and everything that we have going on.

Can you speak a little further about the anti-dumping cases that already exist with some of the Mercosur countries? Also, can you dig a little more deeply into that domestic, parallel policy that you were talking about and the importance of that to your sector?

[Joseph Galimberti]

I mentioned that there were some orders in place specifically with Brazilian steel, carbon sheet, hot rolled. It's a range of products. Decisions have been in place for a while now. I believe they were put in place and have since been reviewed, and they continue to be appropriate.

I talked about improvements to the trade remedy system, and I think that those are important. Dumping the subsidy is evolving globally. There is tremendous pressure as a result of global overcapacity in large part from the Asian jurisdiction and Chinese jurisdictions, predominantly, like Taiwan. They've built capacity far in excess of what their domestic demand requires.

We're making sure that we have the appropriate enforcement tools, investigative resources at CBSA and capacity at the CITT, to make sure that we're doing investigations quickly and coming to fair results. We should aim to determine rates of dumping and subsidy that are accurate, that are appropriate, and that preserve market conditions.

[Tracey Ramsey, NDP, Essex, ON]

Could you also comment on GHGs and the fact that Canadian steel is produced at such a higher level of environmental standards of being clean steel than the overproduction and the dumping that's coming from other countries? Could you speak a little bit to that in terms of Mercosur countries and where you see a threat or a potential amount of that kind of dirtier steel, if you will, coming into the country?

[Joseph Galimberti]

Let's say there's steel facility A in Hamilton and steel facility B outside of Rio. Let's just make the assumption that those are apples-to-apples steel facilities. The Canadian steel, if it's used in Canada, is still going to be far better from the GHG perspective because we have much readier access to the fundamental inputs associated with steel. There is iron ore in Brazil, but we have iron ore very close in Quebec and Labrador. We have metallurgical coal very close, and we have clean transportation links. We have a largely renewable power grid. All of those things combined make our steel quite environmentally responsible. There is also, obviously, no shipping to end market from a Canadian perspective.

There's also something from a regulatory responsibility perspective. You can make the assumption that those facilities are apples to apples, but I don't think that's something that should be casually done. Environment Canada can come and have a look at any of our producers. We regulate our behaviour on a provincial, municipal, and federal level, know our emissions standards, and are very clear about how environmentally responsibly we are behaving.

If you take a look at global steel, when that kind of material shows up in bulk on a dock, you know that it is on dock but you don't really know anything else about how it was produced. You can say what it is, but you really can't say how it got there. If you want to be environmentally responsible, it's probably not the best way to build one's infrastructure.

[Tracey Ramsey, NDP, Essex, ON]

My next question is to Ms. Saad. You mentioned in your presentation that you were discussing labour laws and democracy. It's clear to us that there have been some violations from some of the Mercosur countries. They've been suspended at different moments in time for human rights, democracy, and things that are going on.

Could you speak a little more about how you think Canadian entry into Mercosur would somehow improve labour laws or the democracy that you're trying to advance in Mercosur countries?

[Paola Saad]

I can only speak for Brazil. Right now, I'm sure everyone knows that Brazil is going through what I'm going to call a political crisis in some ways. Our past president was impeached; our past president went to jail. We have the vice-president in power now, and there will be elections this year.

The good thing about that is that people are taking democracy into their hands, things are changing, and people are going to jail. It's moving. The best thing that can happen with all of that is that the population is moving away from government in terms of expectation. Right now, you don't have everyone waiting for the election in October, which is what happened four years ago. Everyone was waiting for the whole year. Everything stopped because of the elections.

Right now, the businesses are saying, “You know what, we can't wait for government because anything can happen any second—it's so volatile right now.” The businesses are taking ownership of what they need to do to go ahead and not depend on government.

To answer your question, if anything, democracy in Brazil is getting better.

[The Chair, Liberal, Mark Eyking]

Thanks very much.

We're quite over time.

We're going to move over to the Liberals and Mr. Fonseca, who is no stranger to Portuguese Brazil.

Go ahead, sir.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

[Member speaks in Portuguese]

It's a pleasure to have you two here.

First, thank you for what you do for business and for promoting trade for Canada. I know that in Mississauga, in my riding, we have our economic development department, and they were down in Brazil numerous times. They were able to be successful, but it took many trips over many years before we landed a company, Biolab Pharma. They came in with about a $57-million investment into Canada.

How do you see the commitment of Mercosur countries—maybe Brazil in particular to you, Ms. Saad—in opening up the markets in this liberalization? What would a potential agreement do to help in terms of bringing more business to Canada and vice versa in terms of our trade down there?

[Paola Saad]

If the Mercosur negotiations include harmonizations of rules and models, that would help Brazilian companies coming here a lot. Biolab actually did the opening for Biolab here, and they have a research facility here. The reason is that it's much easier and faster to get all the permits and the trials to be accepted in Brazil. We need more of that harmonization of the rules and models, and that will help Brazilian companies come up here and bring more FDI into Canada. That is the key for bringing those businesses here to Canada.

We already have, for example, Gerdau, which is a steel company. We have 3G that's here, as well as Labatt and Vale. We have a lot of Brazilian companies that have invested in Canada and believe in Canada. I have done a few FDI missions, and I see that Brazilian companies want to expand for the same reason Canada wants to expand now, because they don't want to put all their eggs in one basket.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

If that were to happen with the Mercosur countries, and let's take Brazil because that's what you know best, what sectors do you see in terms of increased growth? In some areas, we're pretty anemic and there's very little trade happening. What potential do you see? What would this agreement bring in terms of potential growth?

[Paola Saad]

Mainly the oil and gas and science and technology. They're the two main sectors that I see moving, as well as infrastructure. If they could even bring infrastructure building models, like the Canadian public-private partnership, and build those models in Brazil, that exchange of knowledge and of rules and regulations would also facilitate this harmonization in Mercosur between Brazil and Canada.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

I'm glad you bring up infrastructure when it comes to infrastructure, in general, but also trade infrastructure. Are the Mercosur countries ready for increased growth in that trade, their ports, their—

[Paola Saad]

Infrastructure does not stop. Right now, they have Marcio A. Francesquine with the infrastructure forum in Brazil. That was highly successful with the Government of San Paulo. Our minister of planning, Dyogo Oliveira, was here also to talk about infrastructure. Between May 29 and 30 the government is having an international infrastructure forum, and we're putting together a mission to go to this forum. There are lots of opportunities, not only at the federal level but also at the municipal and provincial levels. Those opportunities are going to be presented. We already have Brookfield Asset Management, Ivanhoé Cambridge, Cadillac Fairview Corporation, and they are doing really well.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

You see a really great opportunity. In terms of the politics in the Mercosur countries, there are times where there are changes in leadership, as you're saying, but there's also some instability and strife. They can be very passionate down there when it comes to their politics.

How do you see this agreement? Would this bring the stability that is needed for increased trade?

[Paola Saad]

I think it's a step toward that. I think once the agreement is certified it will go on by itself and people will see what's missing and try to piece that together. Once we have the first step, it will grow and if they're able to achieve the tariff changes and the harmonization, it will be a party for Canadian companies, especially SMEs. The big guys don't need us. The SMEs need us. They need the help and the information.

[The Chair, Liberal, Mark Eyking]

Thank you very much.

I'm going to move over to Mr. Peterson. You have the floor.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you, Mr. Chair.

Thank you both for being here today.

Ms. Saad, I want to start off by looking at the case of Venezuela. Venezuela was, of course, suspended from the organization. Do you see the Mercosur and free trade agreements, perhaps in general, as a way of ensuring that the member states of any of these agreements respect democratic values? Do you see that as an important role and perhaps that's an extra value of a free trade agreement?

[Paola Saad]

Yes, I do see that as an important role, especially because Mercosur has free trade agreements with other countries as well, like New Zealand and Israel, and I believe, Peru, Colombia, Bolivia, and Egypt. They have other free trade agreements they have to honour. I think they are keeping their eye out for any violations. We all know that standards are different and with the change of governments especially. There is not a government left anymore that would give money to Venezuela. I believe, yes, we'll be much better, and Canada will make Brazil more accountable as well.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

That was my follow-up point. With Canada joining the agreement, do you think that would help strengthen that agreement?

[Paola Saad]

Yes, I do.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you for that.

You mentioned in your brief opening remarks that Canada accepts a lot of foreign students from Brazil.

[Paola Saad]

It's the top destination.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

What numbers are we looking at?