International Trade Committee on Nov. 22nd, 2018

[Jocelyn Bamford]

Putting in new equipment or expanding your current footprint is a nightmare. It's such a nightmare that people don't even want to do it in terms of any kind of new equipment or if they want to expand on their current footprint. It's the steps that you have to go through. For equipment, you could buy world-class equipment, but if it is only produced in another area of the world, to try to bring that in and get that certified—even if it's the only one in the world—is very difficult.

Getting new equipment or expansion streamlined would be helpful. I could spend all day talking about it.

[Brian Kingston]

The fall economic statement yesterday highlighted 23 areas where the government intends to accelerate its regulatory reform process, with a focus on agri-food, medical devices and medical equipment, and the transportation sector. That's a great place to start. Of course, there's a whole other range of regs to go after, but if the government can deliver on those 23 priority sectors and do that quickly, we'll have made a lot of headway.

[Graham Shantz]

I'll pick agri-food. The regulations are there, and I'm not an expert on which ones would be better if they were less in the way.

I think it's attitudinal. I'll give you two examples.

One is from my days in Spain when I successfully got a maker of Spanish ham to come to Canada to invest in a plant that was empty in order to produce Spanish-style ham to sell to Canada, but mainly to the U.S. I couldn't get the approvals in about five years of being here, although they could import the production from their facilities in Spain and sell it to us. It was not a food safety issue. That was just fascinating. We can import and eat it, but we can't produce it because the production method is different from what has been approved. That's an attitudinal issue.

The second one, on the outbound China side, is that we have a member who wants to do high-end beef exports and has had real difficulty with Canadian approvals to export. That, to me, is attitudinal. It's not necessarily the specific regulation.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Peterson.

As chair, if both sides are cranky with me, they say I'm doing a good job.

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

You're doing a great job, Mr. Chair.

[The Chair, Liberal, Mark Eyking]

Mr. Peterson, your time is up.

The Conservatives have the floor now.

Mr. Hoback, your colleagues are very gracious in giving you the floor, and you can continue on with your dialogue.

Go ahead, sir.

[Randy Hoback, Conservative, Prince Albert, SK]

I'll definitely do that.

I guess a continuation of surtaxes is just something we should just consider maybe removing for the sake of manufacturers.

I'll start with you, Mathew.

[Mathew Wilson]

No, we were in favour of implementing it in the first place. We know it's a problem. I think our focus right now is to improve the process to make it quicker for companies to get the refunds that they should be getting under the existing processes that are there. Right now, it's just taking too long for companies to get the money back out, the promises that were made. There's $16 billion, apparently, in taxes that will be collected. That money should be recycled back into industry, so how does that work?

We're worried. If you just start dropping tariffs, where does it end? That's the fundamental issue. We have said in front of this committee on multiple occasions, as I said, that we're for reciprocal trade. It doesn't matter whether it's the U.S., China, South Korea or Germany. It doesn't matter who it is. If we start creating imbalances in our trade approaches and how they treat our exporters versus how we're treating their exporters, it's a bad road to be going down. We agree with that equality, even though it does cause some pains. We need to fix those pain points.

[Randy Hoback, Conservative, Prince Albert, SK]

I'm going to move on to the infrastructure. We talked about that.

Chris, you and I talked about this before.

I'll use an example. In Arborfield right now we have a plant there that's trying to export alfalfa pellets, and railcars are three weeks late again, all because we've been moving oil by train. Again, if we had our pipelines built, that wouldn't be an issue, or not as much of an issue.

What do we need to see in the infrastructure that will allow our product to come from places like Saskatchewan and Manitoba, which don't have port access, and get it to the coast?

[Chris Dekker]

The Canadian brand, in addition to safe and secure when we relate to food and food products, is efficient and timely delivery and most competitive prices.

What we're finding, as you have noted, on all commodities and all exports from Saskatchewan is that we can get the deals. We can get the markets. We're in there, but delivering from Saskatchewan, a land-locked province, is getting particularly difficult.

You mentioned one example. We had alfalfa pellets that were destined for Japan. They cannot get railcars at their facility to get their product to market. That directly impacts exports. We have another example at the port in metro Vancouver where someone had a container that was left at the port, not able to get on to the ship, and the ship left without it. It was also destined for the overseas market.

That does not bode well for our Canadian brand and will impact our exports from now until that is resolved. As I mentioned in my opening comments, it's about rail and rail capacity. It's about capacity at the port, and it's about pipelines as well. All three of those are hand in glove.

[Randy Hoback, Conservative, Prince Albert, SK]

I want to go down the road with Ms. Bamford.

You talked about bringing new technologies into Canada and taking advantage of those technologies to become more efficient, only to have red tape placed in front of you so that you can't move forward.

Where's the incentive now to take on these new technologies?

[Jocelyn Bamford]

One of our members brought in a new piece of equipment, and it sat on their shop floor for 18 months. They were trying to get approval. If you know that it's going to be painful to bring it in, there is no incentive to do it. We need to be able to streamline new equipment, especially if you're bringing in new equipment that's going to streamline your processes and make them more efficient or make you be able to reduce your production time.

There's no incentive, and we need incentives to bring that in.

[Randy Hoback, Conservative, Prince Albert, SK]

To you, Mr. Kingston, one of the things they brought in with this economic update was accelerated depreciation of 100%. In the grain sector, I found it really interesting that they brought it in on tractors and combines. We don't build tractors and combines.

Why would you do accelerated depreciation on products that you're bringing in from the U.S. ? Why wouldn't you allow it on seeding equipment, which we make plenty of in western Canada, sprayers, swathers and stuff like that? Is this not just reactionary to the reality that we're uncompetitive, they really don't have a plan, and they're just grasping at straws to see what they can do?

[Brian Kingston]

On the tax front, the ideal outcome would have been a comprehensive review of the tax system to ensure that Canada has one of the most competitive systems in the world. If you look at our combined statutory corporate tax rate, it still sits above the OECD average, so to say that we're tax competitive now because of yesterday isn't true. There's a lot of work to be done on that front.

However, yesterday's announcement was helpful simply because U.S. tax reform for Canadian companies adds serious disadvantage to the U.S., because the U.S. allowed for 100% immediate expensing for machinery and equipment. We've matched that, which gets rid of that incentive for the industry where we think we're most at risk. It's a temporary measure, but I think it stems the bleeding, and it's important.

[Randy Hoback, Conservative, Prince Albert, SK]

We wouldn't do it if the U.S. hadn't done it first.

[Brian Kingston]

The immediate expensing...? No, this was a reaction to—

[Randy Hoback, Conservative, Prince Albert, SK]

There never has been a vision from this government to say this is how we're going to become more competitive. Everything has been ad hoc—you saw this yesterday—and actually reactionary to what's happening in other markets. Is that fair to say?

[Brian Kingston]

That's fair to say, yes.

[The Chair, Liberal, Mark Eyking]

Sorry, Mr. Hoback. We'll have to wrap it up at that point and go over to the NDP.

Ms. Ramsey, you have three minutes. Go ahead.

[Tracey Ramsey, NDP, Essex, ON]

It's going to be quick. We've talked a lot about things that we can do, but I'd like to also talk about trade agreements and going forward. In the USMCA there is a small portion of it titled “Cooperation to Increase Trade and Investment Opportunities for SMEs”. I wonder if you can comment on this language. Also, what should be included in future trade agreements to help support SMEs?

That is for anyone.

[Mathew Wilson]

My light went on, so I guess it's me.

We were very happy to see that language on the folks in SMEs in the agreement, but let's not get lost in technical agreements. They really don't matter to SMEs at all. No company is reading these. I don't want to read them, and I'm paid to read this type of stuff.

I don't think it matters that much. It's how the government supports SMEs, the actions we are talking about today and whether or not those support mechanisms are there or not that will actually drive change.

On the agreements themselves, we've signed something like 14 FTAs now, as a country with different markets around the world. Only a handful of them have ever actually seen an increase. You mentioned CETA earlier. South Korea is another one where we saw massive trade deficits increasing with them because we just weren't ready and able to compete.

You can put all the language you want in there about supporting SMEs, but if you don't have the actual support, it doesn't matter that much. I think the steps taken yesterday are a good first step in terms of addressing some of those resource gaps the SMEs have. Now we have to work to actually implement them in a meaningful way that will work for those SMEs.

Again, just saying something or even throwing a bunch of money at a problem doesn't fix the problem. You actually have to have something that works for those SMEs. That's really where we need to turn our attention now.

[Brian Kingston]

Could I just add to that? Our ultimate goal here should be that we want SMEs to turn into large companies.

[Tracey Ramsey, NDP, Essex, ON]

Of course.

[Brian Kingston]

We want to support SMEs. We're a small business economy and they're critical to our economy, but the fact of the matter is that only 2.3% of our exporting companies are large businesses and they're responsible for 60% of exports. Let's find ways to grow those SMEs into global champions. That should be our ultimate goal.

[Jocelyn Bamford]

My concern is that some of the people see success and then they get out of Dodge. We're taking our best and brightest and they are going where they will have a more competitive landscape.

Taking it back to having a competitive landscape is fundamental to be able to compete, scale up and grow.