International Trade Committee on Feb. 16th, 2017

[Gord Johns, NDP, Courtenay—Alberni, BC]

Thank you, Mr. Chair.

First, I want to commend you on one thing you said in your speech that really struck home with me—namely, that you'll add a focus in the strategy on SMEs owned by underrepresented groups like women and indigenous Canadians. That was supported today by the Canadian Chamber of Commerce. In their “Ten Ways to Build a Canada that Wins”, they identified that there's great untapped potential among aboriginal entrepreneurs, many of whom face unique challenges in attracting capital for their businesses. The chamber is calling on Ottawa for special help for indigenous entrepreneurs.

You talked about partnering and critical partner organizations. I appreciate your identifying them, but I talked to some of those organizations. The Aboriginal Women's Business Entrepreneurship Network of Canada, for example, gets about $400,000 a year for funding to serve the most marginalized entrepreneurs in the country. There's also the Aboriginal Tourism Association of Canada. You and I were there, Minister, at the tourism meeting of all the tourism ministers across Canada. We heard their call for long-term stable funding and new investment in that area. They've received $4 million so far and their ask is $13 million. We've seen tourism grow. When people are looking for tourism, for cultural tourism in particular, it's gone from one in seven people seeking a cultural experience to one in three. We know that every dollar spent in tourism will have a high return with aboriginal entrepreneurs.

We also read in Maclean's magazine that Canada is missing out on $27.7 billion annually because of its underutilized indigenous workforce. A lot of indigenous people are entrepreneurs. I think this is a very important place for investment. Aboriginal Tourism B.C. applied for $4 million over four years in 2016 and they were declined. They're looking for long-term stable funding. They're a very successful organization. They had a program where they were an incubator for over 20 businesses a year. Really, they're a landmark in B.C. of how you can do it. When we take away funding from organizations that have been great partners, it's really disappointing.

Minister, maybe you can break down—

[The Chair, Liberal, Mark Eyking]

It will have to be quick.

[Gord Johns, NDP, Courtenay—Alberni, BC]

—your commitment. Where are you going to spend this money? What does the strategy look like, and are you going to engage the all-party entrepreneur caucus in those discussions?

[Bardish Chagger, Liberal, Waterloo, ON]

I'll consider that an invitation to have the all-party caucus as part of those conversations.

You know me well enough to know that I welcome any constructive feedback, and I will definitely take it into consideration. When we are making decisions, we are making them together. You know that is my way; it's nothing new. We've worked together. You travelled with me when we met with ministers of tourism across the country. You were part of those conversations, because it mattered.

[Gord Johns, NDP, Courtenay—Alberni, BC]

Agreed.

[Bardish Chagger, Liberal, Waterloo, ON]

There was an action and there was a means to it, because I wanted you to hear it. We're not putting up roadblocks. We're saying let's work together so we can achieve success.

[Gord Johns, NDP, Courtenay—Alberni, BC]

I just want to know that there is going to be long-term, stable funding and new funding and increased funding for this commitment that you've made to aboriginal entrepreneurs.

[Bardish Chagger, Liberal, Waterloo, ON]

We were just in Yukon, and do you know what we did? We invested in that community because we know that there is not only success but also more potential there.

When we're talking about indigenous tourism, we're talking about authentic experiences to ensure that there are sustainable opportunities for those communities to create the opportunities and those jobs. When we did the women entrepreneurs conference, we worked with the BDC to have a fund devoted to women. That is not something we spoke about; that is a commitment and there is action and we are—

[Gord Johns, NDP, Courtenay—Alberni, BC]

The $400,000 a year is not a commitment, so we need more.

[The Chair, Liberal, Mark Eyking]

Okay, time is up and we'll go to the final—

[Bardish Chagger, Liberal, Waterloo, ON]

There's $50 million in there.

Did we use up all our time? Sorry.

[The Chair, Liberal, Mark Eyking]

We're moving over to the Liberals, and it looks as though we're going to have time for every member to have a say here.

We're moving over to Mr. Peterson to finish it up today.

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

Thanks, Minister, for being here. We do appreciate your time and your enlightening us on the CanExport program, of course, as well as some other questions that were above and beyond the CanExport program. We're happy to hear that information as well.

We're the trade committee, and I think we can't talk about international trade in Canada without talking about small and medium-sized enterprises and about exports, because they do go hand in hand. As some of our witnesses have alluded a number of times, when we're examining certain trade agreements, the agreement merely opens the door. It's up to the businesses to go through that open door. I see the role of your department as perhaps being to encourage businesses and to make sure they have the tools to go through the doors that are being opened by these trade agreements. Do you see it the same way?

[Bardish Chagger, Liberal, Waterloo, ON]

I do. I believe we have the opportunity to communicate and share that information.

I just need to take 30 seconds—excuse me, Mr. Peterson—if I can, on an earlier point. When it comes to the commitment we've made with the BDC, we're talking about a $50-million fund. Never in the history of this country has there been a commitment like that, and we are going to see under-represented groups, such as women, succeed in business and have access to capital that they have spoken about but have never seen action on. We're talking about concrete action.

When it comes to export markets, we not only want them to succeed but also need to help them succeed. The federal government has a role to play, and that's why when we are on the international stage we are creating those opportunities. We're leveraging those opportunities with people who come to the country through tourism to allow them to see what kinds of conditions we have in this country and to confirm to them that their country wants to do business with our country, and that allows our SMEs to succeed.

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

Excellent, and that's a great point. We're a trading nation, without doubt. I think most of our exports—close to 90%—go to the U.S. Almost one-third go to Europe. I suspect and I hope that we'll see that number grow once we're able to capitalize on the CETA agreement and help our small and medium-sized enterprises tap into that.

That's why I think the CanExport program and the unprecedented $50-million commitment will play such significant roles in that.

It's about informing, advising, and communicating with regard to the programs that are available to our entrepreneurs and to our small and medium-sized enterprises, but I think it's also about making sure that the administrative burden is as small as it can be.

Would you agree with that and could you expand on that program?

[Bardish Chagger, Liberal, Waterloo, ON]

That's something we hear time and time again. We know that the entrepreneur is the accountant, the general manager, and the marketer, and they do every single job when it comes to being the entrepreneur or the small business owner. That's why we need to make sure that when they are accessing programs and services, it's easier for them. That's why we're saying that they need not only online access but also people to speak to. That means that if they make a phone call, somebody is getting back to them with the answer and not deferring it. That's why we need the government working better together.

Twelve per cent of SMEs export. That number has to go up, and for us to actually create the conditions for growth and to grow our economy, we have to consider export markets. That's why a government that recognizes the importance of the tourism industry—and the backbone of the tourism industry is SMEs—is so crucial, because we're talking about export dollars. Those are dollars from outside of Canada coming into the Canadian economy and actually creating the growth instead of having the same dollars shuffled from one to the other.

That's why we're taking this very seriously. We're talking about 2017 being Canada's 150th. We're talking about 2018 being Canada-China, because we know that market has huge potential that will allow our businesses to grow. Instead of having a one-year plan, the Prime Minister of this government is talking about 5, 10, 15 years down the road so that we can actually provide the support Canadians want us to create. We're not talking about the next election. We're talking about programs and services that work for Canadians and a federal government that works for Canadians, because we take this very seriously.

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

I think the program is a testament to that attitude. I appreciate the program, and I look forward to seeing it fully implemented. Keep up the good work.

To you and your ministry officials, thank you for being here. We appreciated your time.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Peterson.

That wraps up our session, and a very good session it was, Minister. There was good dialogue back and forth.

I appreciate your coming. Maybe you could come back again.

Thank you very much.

[Bardish Chagger, Liberal, Waterloo, ON]

Thank you.

[The Chair, Liberal, Mark Eyking]

We're going to suspend for a minute. We're going to have the high commissioner step up to the table.

[The Chair, Liberal, Mark Eyking]

Welcome, High Commissioner. It's good to see you here. Thank you for coming.

You may know that our committee, over the last year, has travelled all across Canada talking to Canadians and to many ambassadors and high commissioners about the TPP agreement. We know there's some uncertainty right now about it, but we still see that it's very valued information that we collected. It could bode well for other agreements that may fall into place.

We will be wrapping up our report over the next few days. We're very glad you're here to give us the perspective of TPP and also the perspective of the relationship between our country and your country. I had the pleasure of being in your country a few years ago. It's a very beautiful country. It's a nice place.

Without further ado, I'm going to give you the floor. Then we'll have some dialogue with the members of Parliament.

Go ahead.

[Her Excellency Aminahtun Binti Hj. A. Karim, High Commissioner for Malaysia to Canada, High Commission for Malaysia]

Thank you, Mr. Chair.

Honourable members of the House of Commons Standing Committee on International Trade, at the outset I wish to congratulate Canada on the approval of the CETA and the SPA by the European Parliament today. I am sure this is an important milestone for Canada and the EU in your continuing efforts for progressive free trade.

I'm honoured to be invited to make a statement to the committee on behalf of the Malaysian government regarding the TPP agreement. First and foremost, let me take this opportunity to highlight that Malaysia and Canada have long enjoyed warm and cordial relations. This year is particularly significant as we commemorate the 60th anniversary of Malaysia-Canada diplomatic relations.

I wish to reiterate that we share important historical linkages through our common membership in the Commonwealth. Canada is also a dialogue partner of ASEAN, and this year we commemorate 40 years of that relationship. We also are partners in APEC, and of course, we closely interact in other multilateral platforms.

Key focus areas in our bilateral ties are trade, investment, defence, and security co-operation, to name a few. In this regard, we value Canada as an important trade and investment partner. Total bilateral trade between Malaysia and Canada for the period January to November 2016 was $1.52 billion Canadian. In 2015, Canada was Malaysia's 27th largest trading partner.

Our investment in the Canadian market is mainly in the oil and gas sector. The $36-billion potential investment by Petronas, our national oil corporation, in British Columbia is touted as the largest foreign direct investment in Canada. Certainly this investment will be a catalyst for enhanced trade and commercial relations between our two countries. We were delighted with the approval, with conditions, by the Canadian government on September 27, 2016, for Petronas to proceed with the project. Petronas is presently undertaking a review on whether to proceed.

As any open economy highly dependent on international trade and FDI, Malaysia embraces free trade, much like Canada. Therefore, the TPP offers an excellent platform to realize the creation of a huge market, as it encompasses some of the biggest economies in the Asia-Pacific region.

TPP is different from other FTAs in that it is more comprehensive and encompasses a wider scope, such as government procurement, environment, government-owned companies, and intellectual rights. Consultations by our MITI with various stakeholders have also revealed an increasing need by Malaysia's companies for more open markets and trade facilitation. The TPP agreement motion was tabled in the Malaysian Parliament in January 2016, which enabled our lawmakers to deliberate on the pros and cons of the TPP to our country. The TPP agreement motion was passed with a majority support of 127 against 84, resulting in Malaysia signing the agreement with Canada and other TPP members last February in Auckland.

Many Malaysian products are of world standard and are able to compete at a global level. Malaysian companies are also increasingly becoming international investors and require a level of transparency and predictability that can only be guaranteed effectively through binding agreements like FTAs.

There is also interest from foreign companies in non-TPP countries that are increasingly exploring Malaysia as a base for their operations to enjoy the benefits of the TPP agreement. In addition, there are Malaysian companies that export to the U.S. and Canada that are increasingly interested in seeing the implementation of the agreement.

The TPP agreement will allow Malaysia to continue to be an integral part of the deepening economic integration taking place within the Asia-Pacific region. It will also enable us to engage in a more concrete way with major trading partners such as Canada, the U.S., Mexico, and Peru, with which we currently do not have FTAs.

As a member of the TPP, Malaysia will also be able to participate as an important link in the whole regional supply chain. Almost 4,000 tariffs within this market will be abolished. This includes our main exports, namely, electrical and electronics, chemical and petrochemical, wood-based products, food, rubber-based products, and textiles.

In the long run, Malaysia believes the TPP will bring benefits of the lower cost of goods and more efficient production by taking advantage of the competition and economies of scale. The successful conclusion of the TPP will form an unprecedented market of 793 million people with a combined GDP of $27.5 trillion U.S. This far surpasses the limited domestic market of 29.5 million people and a GDP of $300 billion U.S. in Malaysia.

With the TPP, we aim to open up new market opportunities and horizons for Malaysians to take advantage of the international marketplace. In short, the TPP will provide an opportunity for Malaysia to be a seamless market with preferential access far beyond our population. It will provide investment opportunities regionally and globally.

With regard to Malaysia and Canada, it will certainly enhance trade and economic relations between our two countries, as we currently do not have any bilateral FTA. The TPP agreement would also introduce a new dimension to regional trade and investment between countries.

In addition to extensive trade liberalization in goods and services, TPP was further intended to promote fair competition, develop the digital economy, govern the role of state-owned enterprises in the global economy, promote free investment movement, enhance enforcement of intellectual property, and harmonize legal and regulatory issues.

At the same time, TPP is also the first FTA that has a dedicated chapter on SMEs. This provides numerous opportunities for Malaysian SMEs, especially when it comes to knowledge sharing and collaboration with SMEs from other TPP countries. This will allow deeper integration of SMEs in the regional and global supply chains.

We also recognize that TPP is not just about trade. It will also help improve Malaysia's competitiveness and governance through the adoption of international standards, for example, in halal requirements, as well as best practices in areas such as labour and environment.

Malaysia sees the TPP as a balanced agreement beneficial to all its members. However, we acknowledge that the future of the TPP after the U.S. withdrawal would very much depend on further consultation and collective decision-making by the remaining TPP agreement members, including Malaysia. The entry into force of the TPP agreement under the present conditions cannot take place without U.S. participation.

Going ahead without the U.S. is an option, but this would require an amendment to the clause on entry into force in the text of the signed agreement. In this regard, TPP agreement chief negotiators from the other 11 countries, including Malaysia, would need to be in constant communication with each other to consider all available options before deciding the best way forward.

During the meeting of the 12 leaders of the TPP agreement countries in Lima, Peru, on November 19, 2016, all leaders reaffirmed their commitment towards the realization of the agreement because of the benefits it will bring to their respective economies and the region, particularly in boosting trade and investment, as well as further enhancing the internationalization of small and medium-sized enterprises.

Going forward, Malaysia remains hopeful that the agreement will be implemented as agreed to in Auckland on February 4, 2016, as it is an important undertaking in an open economy that will deepen co-operation in the Asia-Pacific region. Should the TPP agreement fail to enter into force, Malaysia would see it as a missed opportunity.

As expressed by our Minister of International Trade and Industry at the World Economic Forum in Davos recently, should the TPP agreement fail to materialize, Malaysia's focus would be to enhance the economic integration of ASEAN in the context of the ASEAN economic community's “Blueprint 2025”. We would also be pushing for the timely conclusion of the regional comprehensive economic partnership, or RCEP, as well as pursuing bilateral FTAs with TPP members with whom we don't have any preferential trading arrangement.

As regards Canada, we welcome the statement by Minister Freeland, who was then Minister of International Trade, that Canada will conduct a feasibility study on an ASEAN-Canada FTA. We hope that the study will find that such an agreement would be beneficial to both Canada and ASEAN. As of now, ASEAN has existing FTAs with China, South Korea, New Zealand, India, and Japan.

In the meantime, Malaysia will continue to monitor closely developments in U.S. trade policies. With or without the TPP agreement, Malaysia will continue to amend various laws and regulations that have been identified, to make them relevant in current times. We hope to table them in parliament this year. The changes to these laws are not merely to comply with the TPP agreement but also are part of Malaysia's internal domestic review in order to strengthen and update legislation, as well as to meet international obligations.

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you, Your Excellency, for a very detailed report on your country's perspective on the TPP.

Due to the time constraints, we're going to give each party four minutes.

We're going to start with Mr. Ritz.

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

Thank you, Mr. Chair.

Thank you, Excellency, for a very comprehensive overview. You've answered a lot of my questions, but I have a few more.

Certainly, I agree with you that multilateral trade agreements are by far the best. There's always a better ambition for the outcome. I also take solace in the fact that you say moving forward without the U.S. is an option. I've agreed with that since we saw the electoral challenges, I'll say, in the United States, with both the Democrats and Republicans saying they would tear it up, that they wouldn't go there. That's unfortunate. It's a missed opportunity on their part.

I think that with the geopolitical situation in the area—we had the ambassador from Vietnam here the other day talking about the stabilizing effect of the TPP against some of the other countries in the area—it needs to be done. There is a meeting coming up in Chile in the middle of March for countries of the TPP to get together and talk about what the options are post-U.S. election. You will be attending that, I imagine, or someone will be.

[Aminahtun Binti Hj A Karim]

Thank you.

Yes. I understand that we do have someone from the negotiating team of the minister of international trade who will be there, plus our ambassador to Chile, of course.