International Trade Committee on May 11th, 2016

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

Thank you.

I also have a question for Mr. Tétrault.

According to Global Affairs Canada, the TPP will eliminate customs duties on aerospace products in TPP member countries. Since the Asia-Pacific region is supposed to be responsible for about half of the growth in air traffic over the next 20 years, removing customs duties in this area would lead to an increased number of business opportunities for world-class aerospace companies in Quebec. Is that true?

[Éric Tétrault]

Yes.

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

Should the coming into force of the TPP lead to an increase in direct foreign investments by TPP countries in the Quebec aerospace industry?

[Éric Tétrault]

Yes, but it's no problem for our industry to be able to import such technologies from Asia and the Pacific. The important thing is that we have equal access to market. I am fully confident in Bombardier's knowledge and ability to be able to import their own technologies in the Asia-Pacific region.

That said, it's one thing for us to have such agreements that can put Bombardier in a good position to be able to export, but there is a lot more to it. It's not only about free trade. It's about Canada's position versus Iran, let's say. The Americans and the Russians were better prepared than we were to take advantage of those markets. They've been there for the last year and a half. For diplomatic reasons—and I'm not an expert—Canada was slower to lift the ban on Iran. That really didn't help Bombardier.

Free trade is one thing, but we have to have a global initiative from the government. You have to be able to put Bombardier in a position where it can compete.

[The Chair, Liberal, Mark Eyking]

Thank you.

That ends the first round. We're going to start the second round with the Liberals.

Madam Ludwig, you're first up, for five minutes.

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

Good morning. Thank you very much for your presentations.

I represent a riding that has maple syrup, berries, fish, dairy, services, and confectionery in very small communities. I hear the message loud and clear. The first thing is that we need to do better at preparing companies for export, but would you say that we also need to do a better job of preparing businesses to do business within Canada?

[David Boissonneault]

The Canadian market definitely remains a major market. In recent years, we, the Éleveurs de porcs du Québec, have developed a strong enough marketing strategy for our products to find their way back on the shelves of grocery stores in Quebec, Canada and the United States. It must be mentioned that the United States accounts for almost 50% of our export market share.

You are right, we need to be masters in our own house before taking on the world. We do have a good foundation here. We also have ample resources, which ensures that our industry can expand to every corner of the world. It can set itself apart from other suppliers. So we have to seize the opportunities.

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

Just adding to that, then, I think we have a good network within Canada for business, and certainly looking at the international market.

I'll tell you an example. I often hear people say the greatest competition is the company next door, whereas in terms of trade training, we often would argue that sometimes your greatest competition is your greatest ally. Is there a network within Quebec that's working not only within the province nationally but internationally for co-production, co-marketing, co-distribution?

[David Boissonneault]

In the pork sector, we work a lot as an industry. We have developed a strategic plan, called our Table filière, which we introduced in 2014. Our marketing is also done collectively. We bring together all the products and we meet the requests of our processors. I wouldn't say that our coordination is perfect, but we strive to be as coordinated as possible, to be effective and to quickly address requests. Just think of the issue of ractopamine screening. Our system allows us to respond quickly to such requests. Again, in various ways, we work as an industry, either in terms of markets, competitiveness, or the health and welfare of our animals. We have global strategies.

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

Thank you.

[Éric Tétrault]

I'll try to answer your question as well.

Yes, commerce has been a north-south thing historically for Quebec and Canada, but we have to be able to do east-west as well. I thought this country was built on the east-west railway.

I'll answer in a sentence. Yes, it's more difficult for some of our manufacturers to do business in Edmonton than in Washington.

That is not normal. I see two reasons for it, and they are two challenges for us.

First of all—and you're all aware of this in the commission—inner protectionism is hurting us, and we need to work as much on that as on opening boundaries throughout the world.

Second, I would say that knowledge about business opportunities between Quebec and other provinces is very low. For example, let's go back to Alberta. These guys are great food producers, but they're not food transformers. In Quebec, we're food transformers. There should be lots of business between Quebec and Alberta.

We're missing a lot of opportunities within this country. Fortunately, I speak for Quebec; I don't speak for Canada this morning. We consider Canada as being an export destination as well, but the numbers are not so great. We export lots more to the United States than in the rest of the country. To me that's not normal.

[The Chair, Liberal, Mark Eyking]

Time is up, so we're going to move on and split some time, I think. Who's up first?

Go ahead, Mr. Lebel.

[Denis Lebel, Conservative, Lac-Saint-Jean, QC]

I will introduce my question by first saying that it is not the government that decides what the global market trends and consumer habits will be. No government is able to decide to sell less lumber or fewer cars. The supply and demand on the markets determine that. We have a number of national strategies in which business people participate. Respect for jurisdictions is one of the many important aspects for us. In Canada, we are working with the provinces and territories, which have their own strategies. We are there to oversee everything, but in compliance with the respective jurisdictions.

Mr. Tétrault, over the past couple of days, we have been repeatedly hearing that nothing is being done in commercialization to help our exporters.

Could you tell me what your organization does to support Quebec exporters?

[Éric Tétrault]

We work hard on the ground with them. Over the past year, they were able to recognize that, in the innovation chain, from research work to the commercialization of processes, Quebec manufacturers are weak. There is also marketing,

all the marketing issues around it.

Historically, we are manufacturers, not sellers. This is explained by the fact that most Quebec manufacturers, since they have not exported in the past and were happy with the local market, have not always had to market their initiatives. You will probably not like this part of my answer, but I think we should let time do its work.

Furthermore, if we do not pick up the pace, if we do not have more mentoring programs and if organizations like ours do not properly handle them, we'll miss the opportunities that come our way. We have a few years; we thought we had 10 years or so to prepare. Suddenly, with the signing of those agreements, we have a national emergency.

We are ready to do so, we are ready to go, but we must recognize the weaknesses facing Quebec right now.

[Denis Lebel, Conservative, Lac-Saint-Jean, QC]

In terms of the circumstances, Mr. Dufour stated that it was difficult to sell certain products in countries that do not know the products. In Quebec, companies did not have that vision.

[Éric Tétrault]

I could even give you an example. I love examples. In the Lower St. Lawrence, I saw a 73-year-old entrepreneur who owns all the technology he needs to make artificial bridges, bridge replacements, in four days. I think he is sitting on a fortune, but he's just not interested in commercializing it. He wants to sell his business and move on.

All of Quebec is like that. It is an unparalleled, world-class inventor, but it is not interested in making money with its invention, in innovating and exporting abroad.

That in a nutshell is Quebec's problem.

[Randy Hoback, Conservative, Prince Albert, SK]

Actually, I think that's a Canadian problem. As you look at the generations getting older, who's going to come in and buy these companies?

You talked about Buy American and the threats that presents. That's one of the issues, I think, in bilateral agreements that are of concern in enforcing that agreement. In a multilateral agreement like TPP, you've got eleven countries standing behind you.

In the example of country of origin labelling in the beef and pork sector, Canada and Mexico were able to use the WTO and also use each other to get resolution in that dispute. How important is the multilateral settlement? A lot of people say that we don't need them, that we have bilateral trade agreements with all these countries, so we don't need a multilateral one.

[Éric Tétrault]

Sorry, I didn't get your question at the end.

[Randy Hoback, Conservative, Prince Albert, SK]

Oh, it's the translation, I guess.

I just used the example of the importance of.... You brought up Buy American.

[Éric Tétrault]

Yes.

[Randy Hoback, Conservative, Prince Albert, SK]

You used the example of how a multilateral system gives you the ability to enforce a bilateral agreement or that bilateral agreements are sometimes enforced, especially when you've got a David and Goliath situation between Canada and the U.S. I used the example of country of origin labelling. When we had issues with pork and beef going to the U.S., Mexico and Canada were able to pair up and actually get results in that situation.

[Éric Tétrault]

Yes.

[Randy Hoback, Conservative, Prince Albert, SK]

Can you just briefly explain why a multilateral agreement like TPP is important for countries like Canada?

[Éric Tétrault]

Well, I'm not sure it's going to do the job. I mean, let's be honest, it's not going to be the end of protectionism in the United States, certainly not in the next two years, because of the political context. We have to be aware of that.

[Randy Hoback, Conservative, Prince Albert, SK]

But you're going to have more results with a multilateral agreement with eleven countries, as opposed to just Canada versus the U.S.A.