International Trade Committee on May 12th, 2016

[Rakesh Naidu]

It is roughly 14% of GDP.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Okay. I was under the impression that it was quite a hit higher than that, but we'll go with 14%. So you've got that juxtaposition of some who want to turtle up and protect, and others who want to move forward in balance, and that's always the role of government, to figure our how you maintain that balance.

There's tremendous opportunity, even for the auto sector, and when you talk about the small players being most at risk, I actually don't agree with that statement. I think they need the diversity of having other markets to ship into—not just the big players that are here but that global supply chain. We heard that this morning from Linamar, who are now 50 years old but started out as a small operation. A lot of the small operations have aspirations of getting bigger and trading into that global market supply line, as opposed to just being a supplier to Ford or just being a supplier to Chrysler.

So I think if you drill down deeper with some of those smaller enterprises, they're not as concerned as maybe some of the first tranche of people are saying. I know from the discussions that I had with them a couple of years ago, when we started the negotiations on TPP, they were all quite excited about being able to diversify their marketplace.

Hopefully, there's some work to be done on that side.

[The Chair, Liberal, Mark Eyking]

You have half a minute, sir.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

Kevin, on the compensation side—I hate to call it “compensation”, but it is transitionary—the big push was to make sure that the value of quota was maintained. We didn't want to see a run on quota values, because those have become leveraged to allow people to build that new barn, to expand to 200 animals. You probably didn't start with 200, but you're there now using that quota value as a lever. So it's to maintain that. It's like a milk stool. There's more than one leg or you fall over, and that's why the processor money, the marketing money, all of those things.... Rather than compensation and taking money from the government, I would look at it as transitioning into a little larger outlook than you have right now. A lot of—

[The Chair, Liberal, Mark Eyking]

Your time is way over.

[Gerry Ritz, Conservative, Battlefords—Lloydminster, SK]

All right.

[The Chair, Liberal, Mark Eyking]

Sorry, Mr. Ritz, but we have to move on.

We just have time for two four-minute slots, and we're going to go to Mr. Peterson for four minutes.

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

I don't know if you wanted to follow up on Mr. Ritz's question. I want to hear the answer myself, if you don't mind.

[Kevin Forbes]

Yes, to add to what he was saying, any good stool or chair has four legs, and the supply management system has four pillars. The federal and provincial organizations within supply management worked alongside the previous government to come up with those compensation packages, transition packages, and certainly we would like to see the government implement those in the future as this agreement's ratified.

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

Mr. Naidu, Mr. Ritz asked you about the percentage of the agricultural sector in GDP terms here in Windsor-Essex, and you said 14%. With the 28% share that automotive has, we're looking at 42%. You said you're making attempts to diversify. Obviously, that's one of your goals, one of your mandates. What are some of the other industries that may be just emerging here, that may be growing? Can they possibly benefit from having expanded markets that would result from the TPP? Have you given any assessment into that?

[Rakesh Naidu]

Yes, absolutely. Every day we work on diversification of the economy. The life sciences sector is something that we're growing into. Nutraceutical medical devices, clinical trials, and research and development are coming up strong. We're also diversifying within manufacturing. We are working increasingly in sectors such as aerospace, nuclear components, medical devices, green energy components. There are companies here that are doing pretty well in that. Food processing, which ties into agriculture, is a growing area, as are back-office operations.

Another sector that's growing significantly and will continue to prosper is logistics, warehousing, and transportation. Being a border community and with the new bridge that's going to come in soon, hopefully by 2020, we'll see a lot more options for us.

We're also working on a foreign trade zone designation for this region. We're hoping that once we have that, we'll have an increased number of warehousing and transportation companies locating here.

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

It sounds like you're doing a lot of good work, so I commend you for that. Do keep up the good work. That's great to see.

I'll go back to the agricultural sector. As you may know, we've been across the country already. We started out west. We're working our way around. We've heard from a lot of agricultural companies and agrifood companies, and they're excited, I think it's fair to say. The ones we've heard from are excited about the opportunity that the TPP presents. There are some challenges that some may have, but generally speaking they're excited about expanding into new markets, particularly for key products within different provinces. We've heard about cranberries in Quebec, and the pulse industry in western Canada.

Would you say there's a prime product or a product that will most benefit from TPP, or is most poised to tap into the expanded markets here in Ontario, either on the greenhouse side or on the agricultural side?

[George Gilvesy]

If I can comment on ours, it would be all three of our products. I think that's because of the quality, the food safety, and traceability aspects. From our investigations over there, we've seen a great desire for imports there. The foreign competition that we would see there would be from Holland. Holland has a tremendous greenhouse sector. But they're doing it, and if they're doing it, there's no reason that we can't do it. I would say that all three of our main commodities have opportunities on that basis.

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

Gary or Kevin?

[Gary Martin]

Basically, it's any product that Japan or Vietnam would import. If you think about it, they have high tariffs, and without an agreement there's no way to police what tariffs they would put on it. They can put whatever they want, as there would be no countervailing issues with it. If you think about pork, soybeans, anything that you can think of that would go into Japan would benefit from the TPP, because there would be an agreement to go against if they wanted to increase the tariffs.

[The Chair, Liberal, Mark Eyking]

We're going to wrap it up.

Mr. Hoback, you have four minutes. Go ahead, sir.

[Randy Hoback, Conservative, Prince Albert, SK]

Good afternoon, gentlemen.

Rakesh—and I hope you don't mind my calling you by your first name—I see that you go out and promote your community and the region. I definitely see the challenges that you have, yet I also see the opportunities that you have because of your location. What are the challenges or issues that companies have locating here in this region? What do they say of any fix or change that would make it more attractive to locate here?

[Rakesh Naidu]

There are a few challenges. The world cost of energy comes up as almost number one. We also have issues where we don't have enough incentives compared with some of the jurisdictions we compete with. That's second. We compete with low-cost countries such as Mexico, where the cost of labour is significantly lower than what we have.

I would say those are the major ones that usually come up on a daily basis: the cost of energy, the cost of labour, and lack of aggressive incentives.

[Randy Hoback, Conservative, Prince Albert, SK]

I'm a new company and, when I'm looking at this region, what are the things you would sell me on to say, “You should locate here”? Why should I locate here? What are the things that would be in your pitch?

[Rakesh Naidu]

I'd pitch access to market. We are right next door to one of the largest markets, the U.S.

There's also the competitiveness of our supply base here, especially if you're a company in manufacturing. You'll be tapping the supply chain close by and reducing your costs of bringing in products and raw materials. That whole supply chain exists here.

I'd also pitch the research and innovation capabilities that are in the region, the newer cities that we have in the region, and the skill sets of our labour. It is extremely rare to find the high level of skill sets that we have, and this is a global problem. In this region we have some issues there, as well, but in terms of the existing talent pools that we have, they are some of the best in the world. We've been doing this for decades now.

[Randy Hoback, Conservative, Prince Albert, SK]

Have you gone to the automakers, such as Honda, Toyota, and Hyundai, and made the pitch to them, saying, “We understand that the Big 3 here are no longer the Big 3.” They're leaving the region for one reason or another. What are you doing to bring the other ones in to fill that void?

[Rakesh Naidu]

The ones that you mentioned are not the ones, but there are others that we have gone after such as European OEMs as recently as the last few months. This is public knowledge. We have aggressively pursued European OEMs as well as some Chinese OEMs.

[Randy Hoback, Conservative, Prince Albert, SK]

How much does the TPP and CETA impact their decision in coming here?

[Rakesh Naidu]

To be honest, when we were discussing it with them, it did not come up, but in subsequent discussions, it is something that has been brought up as a concern by our local OEMs. That is definitely going to be something that we'll be taking note of.

[Randy Hoback, Conservative, Prince Albert, SK]

I understand that.

Your local OEMs will be benefiting from these other groups coming in and replacing what's leaving. They'll just be supplying somebody different. Wouldn't that be a benefit to them?