International Trade Committee on Feb. 16th, 2016

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Thank you for that. We're good at mining here, but what you're saying in essence is that we export that to other countries.

[Susan Bincoletto]

Yes. We go and invest abroad. We actually do two things. One, we create wealth in Canada through our investment abroad. Also, we create sustainable economic development in those countries that are reliant on extractive production.

On R and D, we're very good in terms of putting money into R and D, but we're not that good on commercialization. That's not export related, but we know that we need a strong foundation in innovation and competitiveness in order to then jump into the export world. You must have good products, good services, and low prices. You also must have innovative products that are of interest to new markets. To do that, we need a solid industrial policy that will allow this to flourish.

Something we're looking at more closely, I think, is how to be better integrated with the domestic side so that we can then grow our firms and get them to export on a more solid footing.

I think I'm done. No? I'm not done?

[The Chair, Liberal, Mark Eyking]

You can go ahead and finish up.

[Dave Van Kesteren, Conservative, Chatham-Kent—Leamington, ON]

Keep going.

[Susan Bincoletto]

Keep going? You like my story.

We haven't been very good at adopting technology, and I think it's something that companies need to do more of. The question then will become, what is the role of governments versus the role of the private sector to actually do something about that? Trade is becoming more domestic than it used to be. You need a strong structure of the industry. We have a lot of SMEs. They aren't growing quickly enough. We know that size does matter in terms of their capacity to export. We need to look at how domestic policies are developed in order to then push.

My world is how, when we have somebody who has the potential, do we get them to where they want to be internationally. We provide the contacts. We provide the know-how in terms of the cultural differences and how to do business there. But if we don't have that nucleus of companies that are willing to play, it's very difficult for us to do our job. It depends on the sector, but ultimately it's the firms. I always say that it's the mindset of the firms that also matters. You know, some companies like to stay medium, and they don't aspire to go beyond that. What can be done to get them to that level as well?

There are a number of sectors. The most services we provide to our trade commissioners are in aerospace, ICT, and in the extractive sector. Again, it depends on the market, but there is a handful of sectors where exports really do matter for companies. We then have to go into the firm and ask what really makes that firm a successful exporter long term, not just a one-time exporter but in a consistent way.

[The Chair, Liberal, Mark Eyking]

Thank you. Good information, good question.

We'll move to the NDP now. You have three minutes.

[Tracey Ramsey, NDP, Essex, ON]

Thank you.

I have a couple more questions about a potential free trade agreement with China.

First, the Automotive Parts Manufacturers’ Association has requested that Canada seek a commitment from China to establish auto assembly facilities in Canada as part of a possible FTA between the two countries. How would a possible free trade agreement affect Canada's manufacturing sector generally, and manufacturers of auto parts specifically?

[Kirsten Hillman]

I think the answer to that question is that it's really too soon to answer a question like that, in the sense that every free trade agreement is different and the market access conditions provided in that agreement are different. The market access conditions are both tariff reductions and the rules of origin that apply to that treaty.

In Canada our auto and auto parts sector is largely North American-based. In free trade agreements that are bilateral with non-North American countries, we take certain approaches. If the United States or Mexico are in it, we take different approaches. There are many variables in place.

We are really far back from being able to answer that kind of question with specificity.

[Tracey Ramsey, NDP, Essex, ON]

Has Global Affairs Canada conducted an economic analysis to assess the benefits and costs of a Canada-China FTA?

[Kirsten Hillman]

No. We are in the process of consulting, or starting consultations, with companies, with Canadians, with provinces, with others, civil society. That is information we use before we go down a road like that.

[Tracey Ramsey, NDP, Essex, ON]

Going back to autos, do you think there are specific safeguards that Canada should include in a possible FTA with China to protect manufacturers and manufacturing jobs in Canada?

[Kirsten Hillman]

Sure, and we do, in almost all, if not all.... I don't want to say “all”, because I'd have to look at all of our FTAs, but a very common and I think probably universal feature we have in an FTA with an auto manufacturing country is called an “automotive safeguard”. An automotive safeguard is a rule by which if there are import surges that are caused through the implementation of the FTA that damage our domestic industry, we have the power to put our tariff back in place. An evidence-based assessment is done to determine whether or not the FTA is having this effect on our auto industry. If it is demonstrated through domestic processes that it is, then we are entitled to put the tariff back on.

That's one tool, but we've used many tools.

[Tracey Ramsey, NDP, Essex, ON]

I have one more question.

Has China asked Canada to build a new oil pipeline to the west coast and to remove restrictions on acquisitions of Canadian companies by Chinese state-owned enterprises as part of a possible FTA?

[Kirsten Hillman]

Not to my knowledge. Not to me. How's that?

[The Chair, Liberal, Mark Eyking]

I would like to wrap this up in 10 minutes. For those members who didn't ask a question, you can now add some quick questions and maybe we can get some quick answers. We're not going to go to six minutes and then six minutes.

If the Liberals agree, we'll just go with this. For the ones who didn't ask a question, you're free to go ahead. For anybody else who thinks they didn't get something done here, get it out there and we'll try to wrap it up in 10 minutes.

Ms. Ludwig.

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

Thank you so much for your informative presentation. As an instructor and professor of export trade, it's great to hear your talking points and your perspectives.

I have a couple of questions and I'll be fast with them. One is regarding the $50-million investment to support companies exploring new markets. How will the funding be prioritized regarding sectors, regions, diversity and export markets, environmental protection, and size of companies?

[Susan Bincoletto]

It was just launched by Minister Freeland on January 5 and she did a really great job to get the excitement going. We already have 700 live applications. Some 200 have been approved or are in the process of being approved. In the next three weeks there will be a lot of attention paid and a lot of awareness. It is on a first-come, first-served basis at this point.

We will, with the luxury of time and data, be looking at which have been the firms and sectors that have been the most interested in applying and for which markets, and what is the average value for which activities. We need a little bit more time because it's only been less than a month. We will then have to have a conversation with the minister to see whether this is something that needs to be tweaked. As we proceed, we will hear about the positive and the negative.

Again, it's early. Clearly, it is something that could become more strategic, should there be a willingness, once the trade strategy that the minister has been tasked to develop makes use of this tool, the CanExport program. It's still in the early days.

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

I have one more question.

Some reports suggest that 75% of new Canadian exporters are not exporting in their second year. I know from working with colleges and universities that have worked directly with local businesses that they have helped them to get export-ready.

Will part of that funding...? Is there a plan or any conversation at this point where colleges and universities may be involved? When you consider that many of our new exporters, or wannabe exporters, are small businesses that are very involved on the domestic side and stretch themselves thinly to go on the export side, they often don't do their research because they often don't know what to research. The Canada Business Network in the past has been an excellent service. I know the funding there has been reduced.

Is there a plan or conversation about some of those services that may be renewed?

[Susan Bincoletto]

We're having ongoing conversations with a number of our federal colleagues, including Innovation, Science, and Economic Development because they are the ones that are the closest to us in terms of the microeconomic environment.

You're absolutely right that many businesses succeed only in the first year and then stop exporting. We need to look at what characterizes them and what the characteristics are of those who have been exporting over five years and then see how we can perhaps tailor better programs to that community.

Again, we are in the early days. We wanted to get people excited about the opportunity to do things that they wouldn't have otherwise done in the absence of this program and to seek opportunities where they wouldn't have gone before. This is normally to the U.S. because it's the easiest market to go into.

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

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you for your question and answer. I'll go to Mr. Ritz, then Mr. Fonseca, and then we're going to go to Mr. Hoback to finish up. But we'll just keep it at two minutes, so boom, boom, boom.

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

Just one quick point to make. There's a lot of discussion today about social licence, both at home and for our customers abroad. Canada has an excellent story to tell on the environmental footprint, labour standards, all of those types of things. You know the old saying, a high tide floats all boats.

How important is that when you're having discussions with countries? I know both in China and India, whenever I was there, I talked about all of our food production on clean land, clean air, clean water. It's huge.

Does that enter into your dialogue, your narrative, as you're talking to other potential buyers?

[Susan Bincoletto]

Yes, it definitely does. It's a brand for Canada to have good corporate responsibility in terms of how companies behave, but also the whole suite of things that we do well, food security being one, is something that we should be advertising a lot more.

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

Absolutely. Thank you.

That was it.

[The Chair, Liberal, Mark Eyking]

Mr. Fonseca.