International Trade Committee on Nov. 22nd, 2018

[Michelle Rempel, Calgary Nose Hill, CPC]

Thank you, Chair.

[The Chair, Liberal, Mark Eyking]

We're going to start off with the Liberals.

Mr. Fonseca, you have the floor.

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

Thank you very much, Mr. Chair.

Yesterday, Mr. Chair and to the witnesses, we heard the fall economic statement. It was well received by many of your groups, and we thank you for the comments you've made on the fall economic statement. I think it was in tune with what we've been hearing over the last year or so about what business has been looking for.

One investment, in terms of where we're trying to improve, is with our international trade, especially to set the stage for many of these international agreements. We're investing $44 million in our trade commissioner service.

Mr. Shantz, from your perspective—because I know you've used them with a lot of your SMEs—how would that $44 million be best spent in the trade commissioner services over the next five years? Where do you think the gaps are? What do they need to do?

[Graham Shantz]

Thank you.

Having formerly been a trade commissioner and then also having managed a section that included all of our trade commissioners in Asia, I'll let the current trade commissioner service answer on where they think the stresses are. From my own experience and just from our conversations here, historically the Canadian SMEs that don't export, that are just domestically focused, generally speaking aren't as profitable, can't pay as high wages, don't pay as many taxes, and they disappear from the landscape faster than SMEs that export do. The mystery was always why the SME that didn't export suddenly decided to export. How did Jocelyn get into the export market? Were they born global? That sometimes happens. Oftentimes it's just a matter of having the ability to trigger the awareness of an export market. Maybe it's North Dakota. Maybe it's just across the border.

A part of it is, definitely—and I would echo some of the statements here—that there needs to be coordination of the various mechanisms. Preparedness is really critical for us, as a business council, for those companies that go on trade missions that we're involved with. One thing that our council does very well, if I may be immodest, in Beijing and Shanghai is to make sure that when they want to meet local companies, we get the right companies across the table from them.

When they're coming on a trade visit sponsored by the trade commissioner service, oftentimes with provincial or federal political leadership, we have to have the right people across the table, and make sure it's the right sector and it's a good match. That sounds easy, but there are a lot of months of preparation to know who's coming on the mission with the ministers or the premiers and what sectors they are in. If it's pipe coating, is it interior or exterior? You have to know the specifics. You don't want to waste people's time. You want to have the right possible partner across the table. I would say preparedness is part of my answer to your question, assisting the trade commissioners in being well prepared and getting the right partners across the table.

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

Thank you.

I'm going to give Ms. Bamford the opportunity.

I know the trade commissioner service didn't work so well with you. We're trying to look at how we can improve the trade commissioner services, and how the funds from the fall economic statement can help your experience so that you can find success. You've found much success, but I mean find more success globally.

[Jocelyn Bamford]

I think if you're going to be hiring new people, you need to hire people who are not diplomats. You need to hire salespeople, people who can go in and get you an appointment with whoever you want to target in a foreign market.

I don't know if you've heard of a website called theomx.com. They match large companies with a supply chain that has that capability. You need those kinds of matching capabilities for people who need something but who maybe don't know about or can't resource who has that skill.

Then, there's just pairing up companies that have gaps when we have solutions. We have such great solutions in Canada. What I have found since I founded the coalition two years ago, in getting to know the businesses and what they do, is that the stuff that we develop will blow your socks off.

The other thing that would be helpful would be to take people who have patents and try to take those patents global. A lot of small and medium-sized businesses just don't have the resources to do that. If I'm going to sell something, it's going to be me selling it. If it's a new market, it's going to be me doing that.

We need assistance in making those connections with those global partners and with large companies that have a footprint and that maybe want to carry some of our products and sell them on our behalf.

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

Thank you.

Mr. Kingston, you talked about the coordinated effort between the EDC, the BDC, the TCS—

[The Chair, Liberal, Mark Eyking]

I know you're on a roll and you tried to get that one in there, but it's not going to work.

Mr. Hoback, you have the floor.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair, and thank you all for being here this afternoon.

I'm going to start off with STEP, because actually one of my first trade missions abroad was Agritechnica in Hanover. I went with STEP.

[Chris Dekker]

Yes.

[Randy Hoback, Conservative, Prince Albert, SK]

It was great, because we were able to experience the show and talk about our goods over there with Flexi-Coil at the time. We actually went on a tour afterwards and toured some different field operations, looked at different machinery from North America that was being used there, which was good and bad because we had some machinery that Morris Industries got to look at, which I didn't like. Overall it worked in the best interests and it really got our feet in the door.

It also made us aware of all the regulations in Europe, such as homologation and going through the whole process of regulatory review. Do you feel that the government could be a little more helpful in that area?

I think of PAMI, which set up a system for homologation so that companies could go there and have their product analyzed in Canada and could meet the homologation requirements before it was actually shipped overseas into Europe.

Chris, can you give us some comments on that?

[Chris Dekker]

Certainly, and thank you for the question.

Yes, our free trade agreements are primarily about access to market. It's about reducing tariffs. That's the prize, getting preferred access into these markets.

Then there are the non-tariff barriers, which include sanitary and phytosanitary issues that hopefully will be determined by science-based fact-finding, rather than politics and other trade barriers, and whatnot.

The other barrier, particularly in Europe as it relates to manufacturing and short-line agriculture manufacturing, is certification, European certification, CE, which is a difficult thing for our members to get their heads around and to actually have it applied to their products that they need to ship into Europe.

STEP is indeed partnering with a number of CE-certified institutes, both in Canada and Europe, in order to get that capacity and those resources into the hands of our manufacturers so that they at least know where to go to get that resource. Any assistance we can get from the federal government in that regard would certainly provide a better pathway for our exports into that market.

[Randy Hoback, Conservative, Prince Albert, SK]

Mathew, you talked about not reinventing the wheel, using the associations that are there and giving them appropriate funding. One of the best tools that the ambassadors had when we were in the Ukraine was the Friday beer night, where all the Canadian companies came in and had a beer. We learned more about what was going on in the Ukrainian marketplace from each other than what any bureaucrat could tell us at that point in time.

I think it's different now, but at the time, EDC was promoting Ukraine quite heavily, saying there was a billion dollars. We were pretty excited about it until we realized we didn't qualify for one cent of it. We weren't in an appropriate sector. Hopefully they have some flexibility to recognize new sectors and throw money at that.

I want to go to Graham Shantz. I'll use an example of one of the things we're seeing out west, because I don't think they'll mind me sharing it. Bourgault Industries last week laid off 8% of their employees because of a competitiveness factor. The reality is that they have plants located both in Canada and in the U.S., and because of the tariffs, the surtaxes on steel coming out of the U.S., because of the aggressiveness towards steel not coming in from Asia, it's creating a scenario where they're no longer competitive, so they cut back. They're looking for savings, cost savings.

Actually, we're starting to see that happening in a lot of the manufacturing sector. They're saying they can't compete now because it's just too expensive; their input costs are just too high. What do you see as a solution for the dumping of steel coming out of China and Asian markets? What's the balance? We can't allow them to dump it into Canada, yet in the same breath, we do require that steel. What is a way to find balance? How do you work with the Chinese to get that balance?

[Graham Shantz]

It's probably the fundamental question for the global economy and it's hitting right home in Saskatchewan. There's a very important dinner between the two principal actors, the U.S. and China, coming up in Buenos Aires on the margin of the G20, between President Trump and President Xi Jinping, where they say they want to try to solve the trade dispute they're having and I would hope they do.

There are layoffs in Saskatchewan and there are crops being plowed under in the U.S. Midwest, directly because of the trade dispute. I'm certainly watching with great interest, as are our members. Whether that gets resolved and how it gets resolved will have real effects on the Canadian economy.

[Randy Hoback, Conservative, Prince Albert, SK]

Again coming back to the surtax on American products coming across, I know it was reactionary from us that we had to kick back. Because they put a tariff on our steel, we have to do the same thing. Now we're feeling the results of that. Definitely the manufacturing sector is feeling the results when they can't get exemptions quickly enough.

I'll use the example of Ram Industries. They won an exemption for a certain type of steel they can't get in Canada for their cylinders. They've been waiting and waiting and can't get it, so what's going to happen is that they'll start laying off people because they're losing contracts.

Maybe we're better off just saying, you know what, it's not worth it. Let's get rid of that surtax. Let's make our jurisdiction the low-cost producer, the most competitive area, and if the U.S. wants to charge their customers more for products they import, so be it. Do you agree with that?

[The Chair, Liberal, Mark Eyking]

Mr. Hoback, we're going to have to leave that as a statement because you don't have time for a question.

[Randy Hoback, Conservative, Prince Albert, SK]

You're talking more than they are.

[Voices]

Oh, oh!

[The Chair, Liberal, Mark Eyking]

It's 5:15 now. We're going to move to Mr. Peterson.

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

Thank you, Mr. Chair. I'll try to be as brief as I can.

Thank you, everyone, for being with us. It's nice to see those of you who are here again and it's nice to see some of the new ones too.

There's a great consensus forming around this table, I think, that one of the basic fundamental things we should be doing as a government, generally speaking, is to coordinate our efforts, so that there's that coordination, whether we refer to it as an “export concierge” or just giving tools to our agencies that are meant to help export. I think there was consensus on that.

That makes me want to ask Mr. Dekker about STEP, because to me STEP seems to be the solution in some aspects. You said that Saskatchewan's population is only about 1.2 million, so by necessity it's a trading province. We're lucky that 10% of this committee is from Saskatchewan. That's great. We're punching above our weight on this committee, which is amazing. Canada's population in the world is small, too, so I think the same sort of premise exists.

As a federal government, what can we steal from you to copy that system? Is it even appropriate to do so?

[Chris Dekker]

The coordination of effort is critical. That's what the STEP model is between the province and industry. As I mentioned, some 22 years ago the province of the day decided that it needed to get closer to the industry it served, so all of our programs and services are designed and delivered by the industry to the industry. Also, it's membership based, so if you want those services, you have to join as a member of STEP. It's a small fraction, but it still is what we call “skin in the game”. There's great interest from industry in our programs and services because of that.

I was chatting with Mathew about our model. We get a call perhaps once a year from a province that is saying, “We understand the success of that model, so how do we emulate that?” The governance model is actually really simple. It's the political will that is required in order to set up something like that, because once you give up that function to industry, you give up some control. That's where a lot of models and wishes fall afoul. We're prepared to assist in any jurisdiction to set up similar models if it's required. All it requires is a phone call.

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

Thank you. Everyone's nodding, so I'm going to assume that people agree unless they say otherwise. That's good.

I'm a member of the Newmarket Chamber of Commerce, which is one of my local chambers. I reach out to businesses all I can. I was a member of that chamber before I was a member of Parliament, so I know how hard these people work and what the importance is of all these issues we're raising today. They came out with a newsletter today, as they do after any provincial or federal event, such as a budget or something like that, praising in some regard the fall economic statement. One of the things they liked was this approach that there's going to be a regulatory review on red tape or regulation, whatever you want to call it.

I want to ask everyone about this. If there's one regulation that you could get rid of to help your business, what would it be? Some of you represent a lot of businesses.

[A voice]

No pressure.

[Voices]

Oh, oh!

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

I'll start with Jocelyn, because she speaks for one company and one industry.