International Trade Committee on May 11th, 2016

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you.

Mr. Aubut, as my colleague, Mr. Lebel, said, we met with representatives of the chambers of commerce in Montreal. How could you help SMEs get assistance with exporting and innovation?

[Alain Aubut]

For SMEs and what causes problems for them, there is theory and there is practice. We hear that exporting is not a problem. However, people who are on the ground, every day, tell us that customs duties on the order of 30 per cent prevent them from exporting to certain markets. When you are on the ground, every day, you have to realize this.

How can we help them? We can do it by informing them. To do that, we have to have help from the government, to facilitate or simplify the approach to take, to get access to those markets. That is another aspect.

When we talk about customs barriers in very specific areas, whether agri-food or high value-added products, we have to be able to communicate, very simply, the way for our companies to proceed, to facilitate exporting. That is more or less the message we are sending.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

I understand that you could play a role for both Québec International and the chambers of commerce. You could be a conduit for information or assistance.

[Alain Aubut]

In addition, Québec International works in the strong industries, as we said a little earlier. In Quebec City, however, there are also the insurance, financial and tourism industries. We talked about the scarcity of jobs, earlier. That affects all areas, not just high value-added services.

We must therefore be able to open up the city and give clients access to the city who may even be Canadian, not solely international. We therefore need to inform people about the measures and services already offered by the federal government.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you.

[Line Lagacé]

The companies are very aware of the fact that the government cannot be an expert in everything. Companies tell us that what they expected much more was that the government would try to target networks of experts in the different areas so they would have good support. We are very familiar with the network of international trade delegates. However, in this case, when we are talking about this kind of opening of the market, it is very difficult to develop that expertise.

The companies' expectation relates much more to support and the ability to better target the experts. For example, being able to bring in the big buyers, like Sony, in the video games field, rather than letting each company do its little bit and trying to enter that market, would probably help companies much more.

This means involving the organizations a lot that are on the ground to support the companies.

[The Chair, Liberal, Mark Eyking]

Thank you.

Your time is up, Madam Lapointe.

We're going to move over to the NDP.

Ms. Ramsey, you have five minutes.

[Tracey Ramsey, NDP, Essex, ON]

Good morning.

Thank you so much for your presentations. They all brought some cautions and some pluses to the TPP, which is something we've heard at this committee table often.

I want to say to Madame Lagacé that we had Jim Balsillie from Research in Motion in last week, and he cautioned us about the TPP being signed, saying that there would be no Canadian innovation on that type of grand scale going forward. He has grave concerns as well that probably your members share.

I'd like to go to Mr. Serinet.

It's worth repeating that 97% of Canadian exports to TPP countries are already duty free. We know this; we've heard it from many witnesses prior to you. The concern is that of the 30 chapters contained in this 6,000-page document, only six have to do with trade in the traditional sense that we hear those who are in favour of it sitting before us saying they would like to see.

It's clear that foreign corporations will have more rights in Canada under the ISDS provisions than domestic corporations. Can you speak to us a bit about that? Of the 19 people who presented yesterday, I think 19 of them said to us that they have concerns around the ISDS. Can you elaborate on that for us?

[Pierre Serinet]

Yes, of course.

I am going to repeat what I said. Already, 97 per cent of the markets are open. We are told that this agreement will give us an opportunity to access markets, but this is false. In reality, a system of rules is being put forward that favours the commercial, transnational actors, the big multinationals. Some are Canadian; many are American. They are being given rights and privileges that are absolutely unacceptable. They are being given direct access to an extranational tribunal that would be outside our own legal system, to bring action against a state when that state adopts a public policy that limits their opportunity to make profits.

At present, there are more than 700 actions. Canada is the subject of the largest number, at 39. This affects a range of issues, including minimum wage, the environment, health care measures and judicial decisions. Transnational corporations are thus being given extreme tools and powers.

Individuals, and even our own domestic corporations, do not have access to these tools to bring action against another state. We have been familiar with this system since NAFTA came into existence, and we really have to put an end to it. In my opinion, this is a lost opportunity, in terms of the negotiation and the possibility of removing this investor-state mechanism from the free trade agreements. The TPP reproduces, extends and expands this mechanism, which gives extreme power to the multinationals. It is absolutely unacceptable.

[Tracey Ramsey, NDP, Essex, ON]

I'd also like to address the Desjardins Group, Monsieur Brun and Monsieur Gagnon.

Monsieur Bourbeau was here yesterday from the Quebec Federation of Milk Producers. He brought the same message forward. He said they'd lose $400 million a year in their sector forever.

The compensation will only sustain us for a period of time. Then, where will we be going forward after that 15-year period, if the compensation even exists?

[Alain Gagnon]

Ourselves, we have confidence in industry. During the transition period, and once it is completed, mechanisms will have to be found for continuing to develop and improve the costs and establish better business plans, that will enable us to survive, once the compensation period ends. We believe that a transition period spread over 15 years will allow industry to adopt new methods.

It will probably never make up the amounts that have been allowed for finding a balance, in the treaty, but the investment period will be long enough for it to adapt.

[Tracey Ramsey, NDP, Essex, ON]

I think his concern was the same as yours around the heritage farming: would future generations take it up after seeing those losses incurred? We really don't know at this point if the compensation package will even exist, let alone what it will look like. They're actually going into consultations again with dairy and supply management folks.

You also brought up the issues of diafiltered milk, import controls, and broiler chickens. These are all direct threats as well to your clients. Can you speak to that?

[The Chair, Liberal, Mark Eyking]

It will have to be a quick answer.

[Alain Gagnon]

When industry manages to get money from the supply management system, it is always a threat. It has direct repercussions on the producers' financial situation, especially those in the new generation, who are the most heavily indebted because they are taking over the family farm.

[The Chair, Liberal, Mark Eyking]

Thank you.

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

Mr. Peterson, you have five minutes.

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

Thank you, Mr. Chair.

Thank you to everyone for being here today, and thank you for your instructive presentations.

I have a few questions. My first question is for Mr. Brun or Mr. Gagnon.

You mentioned the agri-food sector and the agricultural sector. I realize, Monsieur Gagnon, that's your speciality, but are there other sectors that Desjardins sees as benefiting from the TPP. Is there a way to leverage any benefits that might be present in the TPP into those sectors?

[Bernard Brun]

In fact, that is one of the aspects that we examined. We have to look back at the structure of the Desjardins Group, which is a financial cooperative. It is wise to remember that, of the major Canadian financial institutions, Desjardins is, ultimately, the only one that is 100 per cent Canadian owned. Our market is here, in Canada.

The other aspects relate more to supporting our client companies that operate in various industries. Obviously, if they benefit from a free trade agreement, they are going to expand their business. There is an opening, and there will be benefits for them. Otherwise, the agricultural sector is really where we see dangers.

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

Thank you for that clarification.

Monsieur Aubut and Madame Lagacé, I understand there are some similarities in your positions. You think that the TPP would be beneficial, but it seems to me that it would only be one tool, and you seem to also focus on the need for a robust innovation strategy to be able to effectively leverage the tool that the TPP might be. Can you elaborate on that? As well, are there ways to improve the innovation component, absent the TPP? Is there a way to tap into innovation and access new markets in that manner without the TPP?

[Line Lagacé]

Certainly innovation is an issue for us, whether in relation to the TPP or to the tools that we put in place for our companies. At present, a company's positioning is primarily a result of its ability to position its service or produce well and to be innovative, whether in terms of pure management or of marketing.

Obviously, in the range of services that can support a company, innovation is in the forefront. We are behind, in this regard, in Quebec and in Canada as a whole. All of the actions taken when it comes to innovation are in the forefront, whether they involve marketing strategy or incorporating a digital strategy so that our SMEs are up to date.

We also have to understand that our industrial fabric is composed of small businesses. I do not recall the exact figure, but nearly 80 per cent of them have 20 or fewer employees. That is an enormous percentage. If a company is to be able to position itself, it has no choice but to do it through an innovation process so that it can structure the process properly. In order for companies to be able to expedite that process, they need programs to guide them and they need to be supported, both financially and in terms of expertise.

[Alain Aubut]

On the question of the exporting process, 97 per cent of information transfers are not to small businesses. The big corporations have internal resources to work on this way of exporting, but SMEs do not have these internal competencies and resources. We are often told that this curbs exporting and innovation. That is why we talk about communication and informing these companies, including through our channels, about ways of doing things to facilitate access for them.

There are laws, regulations and treaties, of course, but on the other side, there are SMEs. Communication does not always flow between them, because the resources do not exist. That is why we believe the program can help them, as long as it is properly communicated.

[Pierre Serinet]

What I find interesting in the discussion is that there are calls for an active policy, an industrial policy and innovation, but that does not have very much to do with trade agreements, given that the markets are already open. In the last ten years, under the Conservatives, there was a laissez-faire approach when it came to an active policy for innovation and industry.

The agreements will limit the ability to adopt policies like that. The TPP agreements and free trade with the European Union, for example, prevent focusing on results, that is, basing investments on maintaining expertise here, on creating jobs, and on certain segments of the labour force.

An active innovation policy must have that freedom to legislate and regulate. Free trade agreements, as we know them, limit that ability. I agree with my colleagues that we need an active industrial policy when it comes to innovation, but the agreements limit that ability, and that is why we reject the TPP agreement.

[The Chair, Liberal, Mark Eyking]

We'll have to wrap it up and move on. That ends our first round, and we're going to start a second round with the Liberals.

Madam Ludwig, please go ahead. You have five minutes.

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

Good morning. Thank you so much for your excellent presentations. They were quite diverse, although with somewhat of a common theme.

In 1999 I started working in export trade, specifically in the area of trade training, so I know the points that have been mentioned here are quite significant.

You had mentioned that 98% of businesses are SMEs. That is not unique to Quebec. We've heard that from across the country. In terms of the themes that have been mentioned, we're definitely starting to see some common themes. How do you think we can best support these small businesses, increase their awareness of the trade policies, and help them work with corporate social development, which Desjardins has done so well with and for which you have been receiving awards? How to we bring that all up together to create a stronger community and a stronger country?

[Alain Aubut]

For our part, we do an enormous amount of work to raise awareness of foreign markets, because Quebec, and, ultimately, Canada, are too small a market, in a context of globalization. Recently, Simons, which is a major retailer, explained the issues involved in globalization, particularly in relation to taxes on e-commerce.

Our role consists in raising people's awareness. It is not up to us to develop the methods. Rather, it is up to the departments and governments to provide the information and enable companies to access it. We are a conduit for information and awareness.

We are told there are a lot of tariff barriers, even though that is not what we hear on the ground. This indicates a lack of information. Governments need to provide that information and tell us how we can manage to export our products as efficiently as possible.

[Alain Gagnon]

In our sector, agri-food, we are privileged. Given the unique character of agriculture and the complexity of international regulations, there have been structures in place for several years to guide entrepreneurs. We need only think of the Groupe Export agroalimentaire, in Quebec, the food research institutes, or the Canadian Food Inspection Agency, which as a role to play in all this.

In reality, a cranberry producer today can export their product to the international markets, even if the product was harvested on a family farm. That is one example, and I know there are examples in other sectors, but that is the kind of support that SMEs need in order for each of them to enter the markets.