International Trade Committee on Feb. 8th, 2018

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

That's good, and that's a good segue. It seems to be in line with what Mr. Wilson said was one of the three objectives of the CME when you analyze FTAs. One of them was to make sure there are value-added exports, not just resources or commodities, and Ms. Citeau seems to be agreeing with that sentiment. Can you, Mr. Wilson, elaborate on why that's important and how it will create jobs?

[Mathew Wilson]

We have a history. Looking back through all of our trade agreements, we can see that, aside from the Canada-U.S. FTA, most of our trade agreements have resulted in an increase in raw materials, primarily natural resources. The real value, however, comes from what you do with natural resources. Our country is founded on turning natural resources—whether it's mining, agrifood, or forestry—into things and exporting them back to people around the world. That's critical—it's how we built our country. That's where the wealth comes from. It's where all the higher-paying jobs and the innovation come from.

These sectors, especially some of the ones based on our primary industries—agrifood, mining, forestry—have some of the greatest opportunities for growth globally. We are world leaders in these areas for a reason. We've been doing them for a long time, and doing them really well, but the companies often aren't export-oriented. Claire mentioned a lot of numbers on agrifood and they're all really impressive. However, about 25% of Canada's manufacturing output is in agrifood, but it accounts for only 8% of our exports.

To me, that's a real opportunity for us. We have a brand. We create high-quality, safe food, but we don't export enough of it around the world. That, to me, is the real opportunity we should be focusing our resources on. We should be helping our companies go global because this could create a lot more wealth for Canada.

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

These agreements, and the improved agreement—specifically the Pacific Alliance—would certainly provide that opportunity. The opportunity is there, but what else do we need to do to encourage participants to take advantage of that opportunity?

That's open to anyone.

[Phil Cancilla]

I think Mr. Wilson raised a good point. In the mining industry, the size of the companies we're talking about is typically 35 to 100 people, and they don't have the resources, so they need to be educated on how to export. That's one of the things that MSTA does, it shows them how to export.

Bringing an innovation to market takes too much time, and there's a lot of risk involved. We have to cut down that risk. Some of the inventors of Canadian products have told me that they've been working on their ideas for 15 years, and that's a long time. They may have a good idea, but they don't have the money or resources to bring it to market.

I think we want to encourage these inventors, and we want to encourage innovation in all the industries, but we have to somehow bring down the risk and make it a partnership between industry, government, and the universities. Bring them all together so that we have the think tanks, the money, and the means of doing it.

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

Perfect.

[Claire Citeau]

I'd like to answer your question.

I think it's important that these free trade agreements actually work, and for that to happen, we need to ensure they are ratified. We understand the CPTPP will be signed next month in Chile, and it's important that it gets ratified for it to become law so that exporters can benefit from the provisions that will come into force.

Another example is the CETA. A number of outstanding issues for the sector remain. These need to work. These non-tariff barriers need to be addressed, both for the grain and meat sector.

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

Thank you.

I think I'm out of time, Mr. Chair.

[The Chair, Liberal, Mark Eyking]

We're going over to the NDP.

Ms. Ramsey, you have the floor for five minutes.

[Tracey Ramsey, NDP, Essex, ON]

Thank you so much to our presenters.

You've raised a number of really interesting things that I think we need to look at as a country. One of them is some of the domestic supports and policy pieces that you were speaking about, Mr. Wilson, and the need in our country for policies to cover our major sectors.

If we had a manufacturing policy in Canada at this point that incorporated some of the things you've mentioned, we could be strengthened against what we're facing in NAFTA. Really, this is the way forward in the future because, as you said, the doors are opening in these FTAs, but not everyone is able to go through those doors and see some significant gain.

Could you speak to the importance of a manufacturing policy overall to maybe incorporate some of those ideas that you've mentioned?

[Mathew Wilson]

The two go hand in hand. I think we often get stuck looking at domestic issues and export issues in two different silos, and that's why, in our comments, we try to talk about how they're connected.

If you look at really successful export-oriented countries—Germany, South Korea, Japan, and the U.S.—they combine the two together. They have an industrial strategy that really is tied into an export strategy. They do everything possible tied to their domestic strengths in a “team Japan” way, so to speak, to make sure they're benefiting and supporting exporters.

We just don't have a good history of doing that in Canada. Maybe we do it a little bit in the aerospace sector, but, aside from that, we don't really do much of that in Canada at all.

We need to look at it as a continuum, because that's the way businesses look at it. They're creating a product and have the risk of the original R and D, commercialization, and that whole process. We have supports there, which could be improved, but then we don't look at how that connects on the export side.

It's an excellent point you make, and we need a deeper understanding of what it could look like in Canada to tie an economic development strategy and export strategy together. I know there are people talking about it, including Minister Champagne, whose office is looking at that. It is a critical piece. If we're going to be successful, we need a tie-together strategy that helps companies right from the early stages of innovation through to export and gets them going internationally and not just staying at home in their local city, which is typically what they do.

[Tracey Ramsey, NDP, Essex, ON]

You also raised an interesting point about sectoral agreements.

Ms. Citeau, I think we understand well the benefit of trade and the critical importance of trade for agriculture. I don't think anyone disputes that. To have access to those markets in a meaningful way to address some of the regulatory concerns and the clarity and things that we know and we continue to hear agriculture calling for.... I think an agriculture policy may be able to domestically address these issues and strengthen our position in trade agreements.

What we're seeing now is that these things are kind of at odds with one another. In trade agreements where there's a great benefit to one sector, it's often to the detriment of another, which I think is really unfortunate, because I don't think we should be pitted against each other. I think we should be trying to elevate everyone and making sure that everyone is receiving that.

I wonder if each of you individually could speak a little bit to the challenges you see there and the opportunities you see to be able to support each other. Are sectoral agreements something that you're talking about in your sectors?

[Claire Citeau]

I'll let you go first.

[Mathew Wilson]

I'm happy to, but I've been talking.

I think it is important, and let's use South Korea and the dispute between pork producers and auto manufacturers. It wasn't helpful for anyone on either side. We need to figure out ways to structure agreements and sometimes maybe the best way to do it is through sectoral agreements. In the CPTPP, from what I understand, they have taken several side agreements that look specifically at sectors and the specific problems they have within those sectors. So you have an overall framework, but also a sub-framework that can help on some of those sectoral issues. Our point on this agreement or any other agreement is you can't exclude parts of the economy from participating in a free trade agreement, whether it's agriculture, mining, auto, aerospace, it doesn't matter. If the agreement doesn't open the markets for every part of the economy, there's no point in doing the agreement at all. It's got to help everyone.

I think in the past we have gotten into this trade-off game between one sector or another. To me, it's just not that helpful. I think we need to find ways to work around those differences within Canada. If that's through having a broader framework of a trade agreement with subagreements that help certain sectors on certain issues, that would be fine. We'd certainly support something like that, but the big thing for us is not excluding sectors from trade agreements. You just can't. You can't sign an agreement and say it's good for everyone but you because you don't qualify for some reason, which frankly has been the case in the past sometimes; that's not good enough.

[The Chair, Liberal, Mark Eyking]

We have time for one more MP.

Mr. Dhaliwal, you're the wrap-up guy.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Thank you very much.

Welcome to the presenters.

Mr. Wilson, you have covered the need to have an environment and policies in place that will help the export of the manufacturing industry. One key component is the transportation infrastructure and ports. I come from British Columbia, and Pam is here. It affects us, as well.

Would you be able to tell us what focus we should have on those issues?

[Mathew Wilson]

You can't move anything, it doesn't matter what it is, without effective transportation networks, whether that's inside a city or across the country. Certainly one of our focuses has been on Industrie 2030, and our bigger picture of growing the manufacturing sector is to have better international trade connections.

Unfortunately I find that we tend to invest in a lot of things to get stuff into the country and not enough to get stuff out. China is a good example. In B.C. where boatload after boatload of stuff is coming from China, how many of those boats go back empty? I'm guessing the majority. We're not that well connected to get the stuff out, especially stuff from central Canada. That goes for both sides; whether it's through Halifax or Vancouver, the big ports for international exports are not that great.

We do have a lot of great facilities, but I think we can do a lot better in making those national connections. That's where those big national infrastructure funds, I think $50 billion....We've been pushing to get more of that put toward trade infrastructure rather than other infrastructure, which is also important, but we need the focus on trade infrastructure as well.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Ms. Citeau, do you have comments?

[Claire Citeau]

This will be handled by our members directly, so I'm happy to pass this on for them to follow up with you and the committee.

[Phil Cancilla]

A lot of our manufacturing in the mining industry is not near the ports, and the exporters have a problem getting.... We're shipping to the coast, as Mr. Wilson mentioned, so making that more efficient would be a lifesaver in a lot of cases. A lot of these companies that I'm thinking of in Saskatoon, in Timmins, and this type of place, want to get their stuff out of the country, but it's not that easy, and it's expensive.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Where particularly would you like to see the improvements made?

[Phil Cancilla]

What specific thing? The price. Make it more economical to do it. That means probably we need to work more together as a team and try to bundle things together that are going to similar countries, and getting them into those ships that are empty after they bring stuff here.

There's no common place that we can go to find out how to bundle things together to make a bulk shipment that's going to a similar country.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

You're looking for dry ports where they can be bundled?

[Phil Cancilla]

There could be an index: these ships will be leaving the country in the next six months. They're coming in, so we know they'll be leaving.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Yes.

Mr. Wilson, did you have something to add?

[Mathew Wilson]

The only thing I was going to add was that we talk about Halifax or Vancouver or Montreal as the big international ports. The biggest international port is in Windsor. We tend to forget that.