International Trade Committee on Oct. 4th, 2018

[The Chair, Liberal, Mark Eyking]

Mr. Halucha.

[Paul Halucha]

Innovation Canada was set up to provide a single point of entry into public service programs. It allows companies to enter basic information and have recommendations made back to them about what programs they could qualify for. Then it makes the people who are responsible for those programs aware that these requests are coming in. So it's actually a “two-way” process.

The other thing we've done is to put in place an accelerated growth strategy process. It connects a lot of our departments behind the scenes in the back offices and allows companies to agree to have their information shared. Most of them are opting into this. If your company is done with ISED, we move them into other parts of the public service that can provide additional support.

So we're trying to make these connections, in particular for the highest-growth companies.

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

We're going to move over to the NDP now.

Ms. Ramsey, you have the floor.

[Tracey Ramsey, NDP, Essex, ON]

Thank you so much for being here. Obviously we're not in an ideal situation with these steel and aluminum tariffs, and we're struggling. My region of Windsor-Essex, and certainly Ontario, has been very hard hit. It is the SMEs that can't navigate the website and can't afford the wait times that it's taking to get people out to look at whether they're able to achieve an exemption or get the surtax. It's very difficult, and they're closing. They're sending dies to the States. They're shipping to the U.S. Once they close, the chances of their coming back again are very slim.

We are in an emergency situation in Ontario right now. Some of the programs that you represent they simply won't access, or these programs simply won't address their issues because they are in triage. They are in emergency mode right now, and they need supports on the ground.

We had the WindsorEssex Economic Development Corporation write to us here at the trade committee. They had an event in the summer attended by 250 people. I was in attendance. There were a lot of auto..., the Canadian Association of Mold Makers and automotive parts. The challenge is the way the BDC and the $800 million funding envelope was written. It doesn't include all of the codes for the NAICS. I know the WindsorEssex Economic Development Corporation and other businesses wrote specifically to the BDC, to our local office, because it includes some auto codes, but it doesn't include the cluster we have, which is under the 3335 code, which I know is very specific. We really do need an answer as to whether you've expanded into other codes, because many other sectors that simply can't access this are being impacted because of the frame in which this has been set up.

I ask these question of the BDC, if you can respond. Let us know how these requests are being worked through in a timely manner.

[François Lecavalier]

Very simply, the envelope is not the be-all and end-all of BDC's support. I will make sure that you get a response specifically on the 3335 code, but we continue to do business with every small and medium-sized business in Canada. Even if they're not technically on the list of codes, if we see that they're companies with the vision to adapt and they need help to diversify their markets and improve their efficiency, we will support them with our financing and our advisory services. I'll get back to you specifically on the line you mentioned.

[Tracey Ramsey, NDP, Essex, ON]

Thank you.

My second question is about safeguards because there have also been a lot of requests that have come before this committee. Certainly some energy safeguards have been put in place, but with regard to the non-energy tubular safeguards, we could take immediate action here to protect this sector. I have Atlas Tube in my riding. It has written specifically several times, both at the beginning of this process and once again on September 24.

Because this is something we can implement to protect, where are we at on the safeguards? This surge in offshore dumping has been incredible in this past year. We have become the bull's eye that was feared by our steel and aluminum producers. With regard to the hollow structural steel, we're over 200% in a year. We've seen this massive surge. Although there have been some attempts to address this illegal dumping, we clearly aren't doing everything we can because there's a massive surge taking place.

Could any of you speak to what efforts you're doing beyond what has already happened? Clearly that's not cutting it. We need more boots on the ground, more people, so that we can prevent this. Could anyone speak to when we can expect those non-energy safeguards to come into place?

[Paul Halucha]

I can't give you a date when it will happen, but I can tell you that job number one in moving to a decision on safeguards is to ensure that we have the analytical base needed, because, obviously, there's a trade legal process on the other side of this. The evidence base needs to be there to support the imposition of safeguards. If it's not, there are implications from that.

Getting the analysis done has been a significant focus. We have had regular meetings with industry. This is ISED, the Department of Finance and the Canada Border Services Agency working together to establish that analytical base and to work with the companies. Obviously the Minister of Finance has the lead. He completed consultations, I believe, two weeks ago, and they're working on a decision.

[Tracey Ramsey, NDP, Essex, ON]

It has been four months since they've written. What is considered a timely process when we're in an emergency situation? I understand that your resources are limited. I would like to see more resources given to all of you at this time to deal with the flood that you're dealing with. However, it has already been four months since the request came in on that particular item, which supports over 300 very well-paying jobs in my riding in a very small town that has one in four kids living in poverty. This is critical. What is considered a timely process?

[The Chair, Liberal, Mark Eyking]

Ms. Ramsey, I'm sorry, but you are well over your time. There won't be time for a response to your statement. You've had five and a half minutes and you're going to have another round later on.

We're going to move over to the Liberals.

Madam Ludwig, you have the floor.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Thank you, Mr. Chair.

Thank you all for your presentations today. This has been very informative. I also want to commend you for the work that you have achieved in many respects in a short period of time from getting out there.

Prior to being elected, I taught international trade, so I'm very familiar with your services.

My question from an educator's perspective, but also from an MP's perspective is this. What are the lessons learned? In terms of trying to create that example and that keen awareness that Mr. Bhamjee mentioned, could I just learn from you what you have learned in terms of the challenges and opportunities, not only regarding this situation but how we are going to continually connect and try to support our SMEs?

[Ailish Campbell]

Do you want to take that?

[David Bhamjee]

I can start.

It's probably a truism in a lot of things, but repeat, repeat, repeat. You can never over-communicate, both in terms of rapidity through one channel but using a multiplicity of channels to be able to do so.

When we talk about direct reach-out to companies, we're talking about using our account managers, whether it's EDC or BDC. We also talk about leveraging our digital presence. We must not assume that companies will be able to find their way to you.

You've heard comments about this “who's who in the zoo” being a persistent challenge for Canadian companies, and it's one that requires ongoing vigilance. It isn't just a matter of reaching out to companies and then sitting there waiting to see if your telephone rings. You have to keep following up, whether you're leveraging social media to give visibility to the thing that you're taking, whether you're leveraging your account managers, your partners, or the work that we do with associations, making sure that everybody has the information available, and using a distributed network to be able to touch as many companies as possible.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

On the distributed network, are all of you working together to try to get your information through the chambers of commerce, the CBDCs, the RDCs, and the CME?

[David Bhamjee]

The simple answer is yes.

[Ailish Campbell]

I'm also pleased to say that Global Affairs Canada has the global opportunities for associations fund. We actually fund business associations, from the macro or the national, to regional and sector-specific associations, to raise awareness of trade opportunities generally, of trade missions specifically, and of our new free trade agreements.

If I could speak for our “team trade” for a moment here, what you're hearing collectively is that there's a national dialogue needed on three vectors. The first is risk and encouraging more companies to take calculated, well-thought-through risk, using the advisory services that you've seen here, and then connected, for example, to one of our 160 offices around the world.

The second piece is—and I take note of the NDP member's question—that rapid response time, anything that we can do. I'm literally looking at people who I know are practically sleeping at the office on weekends, but it's those increased resources, anything that we can do to help get those answers quickly. What I can assure you is that our senior leaders and ministers and officials are ready to do everything we can.

The third element is certainly the ongoing advocacy of this committee, with your American counterparts, because the best solution to this would be an end to these measures by the U.S. Therefore, I commend this committee and any work you're doing in the U.S., at every level, in order to impress upon our American counterparts that these actions are actually not only harmful to Canadians, but, as I think Paul talked about in terms of increased prices, also damaging to U.S. consumers. This is not good for jobs in any of our countries.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Thank you.

How much time do I have?

[The Chair, Liberal, Mark Eyking]

You have one minute.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Great.

Did you want to comment as well?

[François Lecavalier]

If you would allow me, on the lessons learned, we focused our steel and aluminum work on companies that want to expand internationally, want to improve their competitiveness through new technology and equipment. The lesson learned is that this is not only for the steel and aluminum sector; we need to do that for our 55,000 clients across the board, because the one thing we know is that Canadian SMEs lack in competitiveness compared to their U.S. counterparts, and also internationally. We need to continue working with every SME, in every sector, beyond steel and aluminum, to help them.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

You. I certainly couldn't agree more. Your approach as team Canada, and reaching out so deeply into the business community, is absolutely critical because of, as Ms. Campbell mentioned, this situation of uncertainty. Businesses have a hard time planning and projecting in an environment of uncertainty, so we're pleased to see that a deal has been struck and I'm very pleased to hear of the work that you're all doing.

[The Chair, Liberal, Mark Eyking]

Thank you, Ms. Ludwig.

Right now I'm going to break for 10 minutes so everybody can grab a sandwich. Then we're going to come back for the second round.

I'll suspend for five to 10 minutes.

[The Chair, Liberal, Mark Eyking]

Welcome, everyone. We are going to start our second round. The first round went well. We're going to keep to five-minute slots.

Liberals are first up, for five minutes. Mr. Sheehan, you have the floor.

[Terry Sheehan, Sault Ste. Marie, Lib.]

Thank you very much, Mr. Chair. I just want to thank all of the witnesses who have been so deeply immersed in supporting our steel industry and workers. We heard testimony last week from Algoma Steel in my riding, and from Tenaris in my riding and Calgary, saying that they were thankful for the swift and forceful response.

Kalyan Ghosh mentioned that Algoma Steel has applied for the strategic innovation fund. I have several questions for Paul Halucha on this. Without getting into details that you cannot get into, is there uptake from other steel and aluminum players? Algoma Steel employs many people, and it's 40% of the GDP of Sault Ste. Marie. If Algoma Steel hurts, a lot of times the smaller SMEs hurt as well.

What's the uptake on SIF? Is there a special carve-out of money for SIF? What is the importance of supporting the larger players through the SIF program as it relates to SMEs as well?

[Paul Halucha]

The key thing we need to remember in all of this is that the focus of the U.S. policy as stated is to enable American plants to reopen. That has been the focus, in particular on the steel side but also the aluminum side.

From day one, their target has been Canadian and other competitive producers, so it's no surprise that we calibrated our support to focus on the companies that would be most impacted. If those companies lost their competitive advantage, that in turn would have significant impacts.

Firstly, it would effectively be the same as the U.S. policy succeeding, and secondly, every one of those large plants is in an ecosystem of small and medium-sized companies that depend on their market relationship with them—either selling to them or buying from them. The steel industry basically has about three commodity markets: they sell into oil and gas, they support construction, and then they support the auto industry. Obviously, as Ailish said a moment ago, a key part of a successful free trade agreement was actually maintaining our strong auto footprint in Canada. Steel and aluminum are intimately linked into that ecosystem.

The carve-out is $250 million. That was what was announced, and it was designed to focus on those large providers. To answer the earlier question, that was why we put the limit at 200 employees or above in terms of the size and $10 million or above for the project. I believe that is actually the standard SIF size project for any capital investment.

The take-up has been very good. We didn't announce on July 1 and then disappear for the summer. We actively engaged with those companies. We've administered a number of round tables in Hamilton. I've been to regular and ongoing discussions with all of the companies that are putting in applications. Our turnaround time in responding to their questions—both on the statement of interest and now in the application stage, which is where most of them are—has been less than 24 hours.

We have made this our top priority because we recognize that SMEs are definitely bleeding as a result of this, and that has been a consequence of the tariffs. Some of the larger companies are losing millions of dollars every day and tens of millions every month. The amount they're paying out in the tariffs is extraordinary. If they don't make their capital investments this year, if they don't invest in innovation, and if they don't invest for the future of their companies, it becomes very easy to get into a downward spiral. They don't invest this year, then they don't invest next year, and so on.

Again, going back to the objectives of the U.S. policy, it is to have those companies effectively not be competitive and then sooner or later not exist, enabling that business to be repatriated to the U.S market.

We have made it a principle and our primordial focus to ensure that we support those companies.

[The Chair, Liberal, Mark Eyking]

Mr. Sheehan, you have half a minute.