International Trade Committee on May 10th, 2016

[The Chair, Liberal, Mark Eyking]

Thank you. That wraps up the Liberals' time.

Now we're going to move on to the NDP. Madam Ramsey, you have five minutes.

[Tracey Ramsey, NDP, Essex, ON]

Thank you.

Thank you for your presentations this morning.

Mr. Pyun, I want to ask a couple of questions. Of course, Bombardier is an amazing Canadian success story. You mentioned that we have 24,000 good-paying jobs here in Canada, and I know those are jobs that communities rely upon, that Canadians rely upon.

We've heard from the auto sector and from other manufacturers here. We had Ford Motor Company here saying they don't feel the TPP is a good deal. We have had labour representatives from many manufacturing organizations with the same message.

A concern that they have around the regional value chains is that they could be threatened by a move to lower-waged economies, such as Vietnam. We know that they make 52¢ an hour in Vietnam. You mentioned the opportunities to have plants in those countries. Our concern is that the jobs would move with them, right down the supply chain. It's cheaper to manufacture in those countries, but we don't want to see those jobs leave Canada.

Do you think that the TPP could create new jobs in Canada for Bombardier, or secure existing jobs?

[Pierre Seïn Pyun]

For a global company like Bombardier competing against other global companies, we do believe strongly in developing global value chains. For us, it's not a zero-sum game for our operations here in Canada. When we invest in different countries, I think what we're trying to achieve is a network of operations where we can leverage the competitive—

[Tracey Ramsey, NDP, Essex, ON]

But would it increase jobs here in Canada?

[Pierre Seïn Pyun]

It could increase jobs here in Canada because in the last few years, since the beginning of the financial crisis in 2007 and the global recession in 2008, despite the fact that we had earlier announced a workforce reduction plan, we're still a net creator of employment. Unfortunately, when we create jobs at Bombardier, we don't issue press releases.

[Tracey Ramsey, NDP, Essex, ON]

You should.

[Pierre Seïn Pyun]

Maybe we should, yes. It's a good point.

It's more gradual. What I'm saying is it's not a zero-sum game. It's about becoming more competitive. We can leverage the competitive strength of different jurisdictions, and—

[Tracey Ramsey, NDP, Essex, ON]

That is interesting. I think you probably have a lot to offer Canadian SMEs. They come before us and say that they're unable to do that in a real way and that there are challenges, so I think you probably have some mentoring to do with smaller businesses.

[Pierre Seïn Pyun]

—they benefit our Canadian operations, because we do have competitive strengths here. I think that in the higher spots in the value chains, such as R and D and engineering work, there's a lot that Canada can do, and our operations here are already doing this.

[Tracey Ramsey, NDP, Essex, ON]

From our perspective, we don't want to see any more jobs lost in Canada. That was the sense of my question.

I'm going to move on to Madame Labrie.

I want to say what a fascinating sector you bring to us. It's certainly the first time we've heard about this at this table. I know that my colleague was asking about what countries you might export to or invest in, but you mentioned that you have partnerships. My question is similar. Would this create jobs in Canada? How many employees do you have currently at Enerkem in Canada?

[Marie-Hélène Labrie]

We're an SME and we now have 200 employees in Quebec and Alberta. We see this as an opportunity to grow our manufacturing sector in Canada, because our model is based on prefabricating the key equipment in Canada for our international plants.

In that sense, this does not create jobs only at Enerkem. All the projects are being developed from Canada because the headquarters are in Montreal, but it's also throughout the value chain in managing procurement and developing all the engineering that is done for those plants.

It's a matter of creating more high-quality jobs here, but it also creates jobs in our manufacturing sector.

[Tracey Ramsey, NDP, Essex, ON]

What are the tariffs that are currently applied to the Canadian biofuels that are exported to the TPP countries?

[Marie-Hélène Labrie]

I don't have the details on all the tariffs, but I was addressing the tariffs on exported goods, manufactured goods. In some of those countries there are tariffs, so it's not as easy to export these manufactured, prefabricated modules to develop facilities outside. It's really different from one country to another.

[Tracey Ramsey, NDP, Essex, ON]

Are there any non-tariff barriers that exist? Are there any harmonization issues? We hear about phytosanitary requirements from agriculture and different industries. What are your non-tariff barriers that would exist even with the implementation of the TPP?

[Marie-Hélène Labrie]

I mentioned the U.S. earlier. Biofuels can move from one country to another easily; however, we have non-tariff barriers in the sense that they have an advanced biofuels RFS, a renewable fuel standard. They have tax incentives and they have accelerated depreciation that we don't have access to here for biofuels. Our accelerated depreciation for clean energy is only for electricity production. It excludes biofuels in Canada. They have that. They also have loan guarantee programs.

In that sense, this is what I was addressing in my remarks.

[The Chair, Liberal, Mark Eyking]

You're right on time, Ms. Ramsey.

We're going to move over to the Liberals. Mr. Peterson, you have five minutes.

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

Thank you very much, Mr. Chair.

Thank you very much, ladies and gentlemen, for participating in our discussions today.

Mr. Pyun, I sometimes take the GO train to Union station from my riding in Newmarket—Aurora. It's a Bombardier train. I also take the Q400 aircraft to return to Ottawa. Of course,

your company plays a big role in our nation's economy, and it's great to hear how big and how global a footprint you have.

I have just a few questions.

Obviously you're committed to a global market. What markets within the TPP would be the most inviting for you, the most low-hanging fruit, if you were able to tap into those right away?

[Pierre Seïn Pyun]

I was saying that it's a diverse group of countries and that in most of these countries we are already quite active. I tried in my opening remarks to give you a sense of that.

It's hard to pin down a country. Certainly the NAFTA countries remain very important markets for us. After Europe, the U.S. remains for us overall the second-largest market, and it is the largest market for aviation for us. In Mexico, we see a lot of prospects for rail projects and for more aircraft. As for the other TPP countries, we're very present in Australia, and there are a lot of rail projects coming up, as well as aerospace opportunities. It's really across the board.

It's hard to really pin down just a couple of countries as presenting more opportunities than others. I think it's the whole region, really, but there are also very important economies that are currently not part of the TPP. To the extent that the TPP can serve as a template for trans-Pacific trade and that more countries can join, I think this is very much welcome. However, it should not prevent Canada, I think, from pursuing other trade agreements in the region, including with China and with India, because these are big pieces as well.

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

Thank you.

Madam Labrie, I find what you're doing actually fascinating. You're making energy from waste, which I think is fantastic. It shows great innovation, and I think it shows how innovative Canadian companies can tap into otherwise unmet markets.

Let me understand what your position is with regard to the TPP.

Are you saying that absent the TPP, you wouldn't be able to tap into these markets that are so essential to your company's growth and success?

[Marie-Hélène Labrie]

No, I don't think that we necessarily would not have access to those markets. What I'm saying is that it will facilitate the access by, on the one hand, reducing tariffs if we want to export the final product, and also in terms of investing and building facilities there. We manufacture our key equipment and modules in Canada, and in shipping those, we sometimes end up being limited. In that sense, it offers much more opportunity for growth and for creating jobs in Canada in order to grow and expand Enerkem, which is today a Canadian company that wants to expand and become an international company.

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

Let me just try to get my head around your operations or your value chain and supply chain.

Let's say you have a new customer in Australia. What would be built in Canada and what would be built in Australia? Would you build the components in Canada, ship them to Australia, and build a facility to assemble them in Australia? How does it work?

[Marie-Hélène Labrie]

There are really two ways to address a market in Australia.

We could decide to ship the final product that we produce here. For example, in Alberta we convert the garbage, the non-recyclable and non-compostable garbage, from the city of Edmonton into bioethanol and biomethanol. We could decide to ship some of those products to Australia.

The model also is that we can decide to invest in Australia and build our facility, i.e., export our technology and get technology licensing revenues but also get equipment sales revenue and be a partner. In that sense, we would be manufacturing the core components here in Canada, because this is where we build our infrastructure. Also, for IP reasons, we want to maintain the core here. We would be exporting the core equipment there and maybe locally building the rest that is not really the core.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Peterson.

We're going to start the second round.

Madam Ludwig, you have five minutes. Please go ahead.

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

Thank you.

Thank you very much for your presentations. It's nice to see the diversity in here.

My first question is to Madame Labrie.

With your company, as my colleague has mentioned, it's one of the few times we've heard this before the committee. To me it's a significant shift of witnesses, because a lot of what we hear in terms of opposition to trade agreements has been in relation to the environment. We're looking at the potential to build prefab components in Canada and export the core components and also the technology. Does it offer the potential to offer a cleaner environment for the member countries within a trade agreement?

[Marie-Hélène Labrie]

Is your question whether this will help these countries? Yes, definitely.

I think we have here an example of a Canadian clean-tech company that can export its technology and help these countries meet their greenhouse gas emissions performance in the context of COP21. Many of the countries have to increase their greenhouse gas emissions, so not only can we do that in Canada, but we can enable these countries to achieve their targets.