International Trade Committee on Oct. 4th, 2018

[Patrick Hum, Senior Director, Manufacturing Industries Directorate, Manufacturing and Life Sciences Branch, Industry Sector, Department of Industry]

I'd say that we are actually seeing an incredible amount of stability and resilience within the manufacturing sector. The overall numbers are actually quite stable, in terms of sales, revenue, exports and employment.

Obviously there are a lot of companies that are experiencing difficulties, but generally, when you look at the overall macro numbers for some of these industries, things are holding up relatively well.

[The Chair, Liberal, Mark Eyking]

Thank you.

That wraps up the time. We're going to the NDP.

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

[Tracey Ramsey, NDP, Essex, ON]

Thank you.

Thank you all for your comments today. Ms. Campbell talked about our advocacy with the U.S. Obviously, as a trade committee, we've seen not only multiple stakeholders in the U.S., but also our counterparts there. The Steel Caucus, which Terry and I are members of, has visited there as well.

We have been making that effort, but I would like to propose to the committee that we send a letter to our U.S. counterpart, once again imploring them to remove the tariffs and to let them know that our position remains unchanged and that we would like to work with them in any way possible to achieve that outcome. I think that is a way that we as a committee can support to contact our direct counterpart in the U.S. I'll put that out as a proposal for the committee to discuss, to advocate for that removal.

The second thing is that there are a lot of small and medium-sized businesses that can't navigate the website. We heard from one this week, actually on Tuesday, who said they don't even have a person. They don't have the people power to allocate resources to say, “Okay, you go and investigate how we access these reliefs”. So we really need to critically address the SME situation. Forty-two thousand SMEs in Canada need help. That's where the opportunity really lies, I think, in terms of our future trade across the globe. I think that's something we really need to address. We've heard that over and over at this committee, regardless of what topic we're discussing.

The question I have, when we talk about those who are being impacted, is about the secondary list. This secondary list, which was created in an attempt to put some pressure on the U.S., is not working. It's not being very effective, from our perspective. We left the table at USMCA without getting these tariffs removed. We have a lot of people writing to the committee, such as boat manufacturers, and appliance retailers, who are being very adversely impacted and who feel they have no place in this fight that's happening right now, being on that secondary list.

I'm not sure how effective that secondary list is being, other than at killing Canadian businesses that are on that list because they are now subject to these tariffs. What I want to ask you is what you have heard from these groups, and, regarding this secondary list, what is being done to help them in the struggle they are now facing with this one-way tariff that is on?

[Paul Halucha]

The secondary list you are talking about is the consumer products portion, right? For members who may not be familiar, we had three components of the retaliation: one was around aluminum. The second was around steel products, and the third was end-use products. They were carefully selected with a view to a couple of things. One of the principles was, obviously, that they had to be important to certain U.S. districts where—

[Tracey Ramsey, NDP, Essex, ON]

I think we're aware of the policy. I think everyone's kind of aware of what that is. We know it well. What I'm asking you is, are they reaching out to you now to try to have access to your programs because they're struggling?

[Paul Halucha]

Personally, I have not had a lot of outreach from them. I think in the middle of the summer, at one point, there were questions around some of the commodity groups and whether they were beginning to be faced with price increases as a result, and I think we were asked to look at appliances. We did a set of calls with them, and effectively the answer back was that they were not seeing a large impact. It will likely happen next year. Many of those prices will be passed on.

[Tracey Ramsey, NDP, Essex, ON]

Did you hear from boat manufacturers? We've heard specifically from them here at the committee, and they've written to us.

[Patrick Hum]

Sorry, on the boat manufacturers, they were originally worried about submitting information with regard to the initial retaliatory consultations. We definitely do know their situation.

[The Chair, Liberal, Mark Eyking]

Mr. Bhamjee, you had a—

Sorry, I think the other witness wants to say—

[Tracey Ramsey, NDP, Essex, ON]

Okay, I just want to ask what their request to you was, if you've heard from them, Mr. Hum. Can you speak to what they're requesting from you in that correspondence?

[Patrick Hum]

These were the initial retaliatory consultations. They were certainly well aware of the impact that could happen in terms of the contracts that had been put in place prior to the retaliation. We certainly have a good sense of their issues and concerns about being able to bring in product from the United States. I think we are taking that into consideration in how best to address their particular needs.

I should add that when we're dealing with the boat manufacturers, their issues are perhaps a little bit different, or completely different, from those of some of the other companies and sectors on the list, whether some of the food processors or others. There's no one-size-fits-all, but we're certainly looking through the tools we have, whether duty remission, duty relief, or any of those others, to see what can be done and to support Canadian businesses.

[The Chair, Liberal, Mark Eyking]

Thank you.

We'll go to the last MP, and that's Mr. Peterson.

You got the wrap-up, mister.

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

Thank you, Mr. Chair.

Thank you to the witnesses for being here.

Before I get into my questioning, I'd like to take a step back and look at these section 232 tariffs. Their foundation or premise is that somehow Canada is a threat to American national security. I think I speak for everyone here when I say that this is offensive on one level and that it also couldn't be further from the truth. We need to take stock of what's going on and realize that this is an irrational decision by the U.S. administration, and we're trying our best to deal with it in that context of irrationality. I commend you for the good work you've been doing, given that environment.

I spent the summer talking to some of the manufacturers in my riding who are impacted by this. A couple of themes arose from those discussions. There isn't the ability for a lot of Canadian end-product users in building supply products and manufacturers in my riding to buy Canadian for their inputs. Their inputs come from the U.S., and a lot of their customers are in the U.S. The 10% tariff quickly becomes a 20% tariff. That obviously eats away at their margins, which are nowhere near that 20% range. It becomes a very untenable position.

That said, there's also some confusion, I think, at the border about how to classify certain things crossing the border. Part of it is that there has been no real industry for dealing with how you classify products crossing the U.S. border. There's just never been the need to do it. They're dealing with their customs brokers and duty officers. Frankly, it's a confusing field out there.

The third issue, and it's an important one, is that they know there are programs out there. One of the manufacturers in my riding has about 110 or 120 employees. It's been around for about 30 years. It's a family-owned business. I even worked there one summer and use some of their products. The confusion is that we know there are programs out there, but how can we access them? This isn't a small company with two or three people. These guys do have resources they can put at it. One of their vice-presidents spent a day or two a week trying to figure it out, and he just couldn't navigate through it. He just couldn't. He reached out to me and asked for any assistance my office could give on tapping into what's there. Guys like him are saying, “We agree with the retaliatory tariffs. It was necessary. It had to be done. Unfortunately, we're getting the short end of the stick. How can you help us out?”

If I can take anything away today...and I think it's the same for any of my colleagues, who I know represent their ridings very effectively and care very deeply about their constituents. I'm wondering what I can say to someone about who I can put them in touch with—i.e., “Here: we're going to help you get through this. Here's who you need to talk to. Here's what's available. Hopefully we can help you, the best that we can.”

Is there one-stop shopping for that? It just seems to me that if this gentleman had trouble navigating it, there must be dozens or hundreds of other companies in the same boat.

[François Lecavalier]

I mean, we all work together, but I would suggest this. We have, as I mentioned, 123 offices across the country, and potentially one in your riding. Let's say it's an SME and it comes to BDC. We work daily with the EDC and the trade commissioner's service, and of course we work with our colleagues in the department. We will make sure that it gets put in touch with the right people.

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

The BDC and the EDC are both very active in my riding. They had one of their round tables, which I was happy to be at it, reaching out.

So I can send him to the BDC contact and that's one-stop shopping for him?

[François Lecavalier]

We'll make it as one-stop as we can make it, but I guarantee you that they'll get pointed in the right direction.

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

Okay. That's all he's looking for, I think, so I appreciate that.

[Paul Halucha]

A couple of the points you raised were specific to the duties. Those you won't find at BDC. Companies need to go to Canada Border Services Agency for the duty drawback program. You described a scenario where a company is importing a commodity into Canada for the purposes of export, and that's what duty drawback is intended to deal with. They would be eligible to get that money returned to them. That's important.

The second point is around the remissions process. You noted that in some circumstances you could have companies that are not able to source in Canada. That's precisely what the remissions process is in place for. For company-specific decisions, there's a form on the Department of Finance's website. That provides the information.

In terms of innovation programming, just very broadly, all of us here are in the innovation game from one element or another. That has all been organized through the Innovation Canada website.

I think as a follow-up to the committee, if the chair would permit, I would send you some of the information around that website. It is designed exactly to deal with the challenge of not having to navigate all of our systems. It basically allows for some intake of information, and then it makes recommendations back to entrepreneurs. It wires the follow-up into our system so that program people are getting information that tells them, “There's somebody interested, and you may want to reach out.”

I will provide that information to the committee.

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

Thank you. That would be helpful.

[David Bhamjee]

Can I can add something to the question of the one-stop shop? I thank my colleague from BDC. They're an excellent point of contact.

I'd like to share with the committee something that we have been making a diligent effort to do over the past number of years. We're making sure, for example, that an EDC account manager in markets knows who their BDC equivalent is, and knows not just who they are, but what the core competencies of that organization are. We're not just saying “call BDC”; we're able to do so in a manner that is informed and is actually sending them to the person who will be best equipped to deal with.

Similarly, with the trade commissioner service, making sure of what one another do turns a referral from just a “call so-and-so” to something that's more active and more informed. That's a big improvement that's been made over the past little while. It's something that obviously can continue to be improved upon. It helps you mitigate the fact that there isn't one specific place to go to.

We do education work amongst ourselves so that our folks in the field are very well versed as to what one another can do.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Peterson.

That wraps up our rounds of dialogue with MPs.

Thank you for coming, witnesses. I think one of the biggest things I like hearing is that you're firing on all cylinders and working together for Canadians and companies.

Before I close the meeting, Ms. Ramsey has an idea regarding the letter to the Ways and Means Subcommittee on Trade. Simon has agreed to put something together. If it's the will of the committee, he'll put something together in the next few days and you'll see it in your box. If everybody is good to go with it, we won't have to wait 10 or 15 days to get it out. We'll do it. Sound good?

Thank you again.

Have a good weekend. We're adjourned