International Trade Committee on Feb. 24th, 2020

[Randy Hoback, Conservative, Prince Albert, SK]

Okay.

Michael, you talked about cybersecurity in the network. That's something that's really concerning right now as you go into the 5G networks.

Whenever I've been down in the United States, it's funny that when you sit down with members of the House or the Senate, the first thing they bring up is Huawei and 5G and cybersecurity. In fact, I remember that three years ago at the governors conference, all they talked about was cybersecurity, without even talking about Huawei.

Does this agreement give us the flexibility to pick whatever service provider we want for our 5G network, yet still keep that security where we need it to be?

[Michael Powell]

Well, I'm familiar with the opinions of our friends to the south.

The key thing that Canada is going to have to decide is that with the way we operate our electricity system—we move lightning through wires at the speed of light across North America—the equipment we have has to be as secure and reliable as possible.

You can read in the newspaper and in public documents on a regular basis about some of the challenges that the supply chain offers, not just for regular things, but for some of the industrial control systems that are in place. I think the key thing is that we need to make sure we're working collaboratively, not just here and in the United States, not just big companies, but also recognize that there are small operators as well that have to have access to technologies to make sure there is no weak part of the grid. The weakest part of the chain is where it's going to break.

[Randy Hoback, Conservative, Prince Albert, SK]

We met with the Japanese car producers today at their facilities here in Canada. They said that one of the hurdles they see right now in setting up a new plant for electrical vehicles or hybrids is that there's no battery manufacturer in Canada, in fact, in North America.

Do you think we have the infrastructure in place, and that it will be in place? Do the rules under the new USMCA allow that infrastructure to be placed for electric vehicles, with the charging stations, the capacity and the hybrids? Do you see that becoming standard?

[Michael Powell]

While we're concerned about the expansion of things like electricity infrastructure for EVs, it's less about trade relationships and more about some of Canada's policies internally. Things like the laws around electricity meters haven't been updated in decades, which makes it very difficult to install new electricity meters, both in homes and in businesses. We need to update those rules to make sure they're there and that we're able to do that.

That's where we'll see the real opportunity for innovative companies to come in, as well as in places like condos and apartment buildings. I think it's beyond the scope of where CUSMA is. How many are made in the United States I'm not sure, but there's a lot that Canada can do here with its own policies that will make it easier to roll out EV infrastructure for people and businesses.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Powell.

We will go to Mr. Sheehan.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you very much for your presentations. There were a lot of things for us to think about in your presentations.

I'll go to the Canadian Federation of Independent Business first.

You referenced the chapter in particular related to small and medium-sized firms and the associated opportunities. I have a two-part question.

First, how aware are small and medium-sized businesses that there is such a chapter and opportunities? Second, what actions can the Canadian government take to increase awareness?

[Corinne Pohlmann]

It's unlikely they're aware that there's a small business chapter; however, we're doing what we can in surveys to make them aware of the fact that there is a small business chapter and, more importantly, what that actually means. That's the key. It doesn't really matter if there are a bunch of words as long as there's action taking place.

I think that what the Canadian government can do is actually prove through their actions that they are serious about recognizing that some of the things that small businesses need when it comes to international trade are different from what larger businesses need.

They could be a bit more proactive in terms of getting feedback on how they could change custom processes to help them instead of, for example, creating portals whereby it's easier for them to access other government departments. Those kinds of things are going to be the best way to really communicate that to the small businesses, actually doing the things that need to get done in order for them to realize that opportunities are out there. That's not going to be as difficult as they originally thought it was going to be.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

I used to work for the local economic development corporation developing small businesses. It's a very similar story throughout time. It makes sense. I had my own small business, and as opposed to, say, Algoma Steel in my riding, which does a lot of trade and has a whole department related to exporting and importing and whatnot, your small and medium-sized businesses sometimes have just one person or a couple of people. They're so busy doing their business that a lot of times they don't have those opportunities.

I also have the opportunity to be the parliamentary secretary for Minister Joly on the regional economic development agencies. One of the things that I'm trying to wrap my head around is how we can develop and use Export Development Canada, or places like FedNor, or FedDev—I'm not going to name off all the other regional economic development agencies across this country—to play more of a substantive role in inbound and outbound trade missions, in particular with the United States.

What are your thoughts on that?

[Corinne Pohlmann]

Organizations like EDC and the trade commissioner service for that matter are not well known either among small companies. In fact, when they do learn about them, they often feel like they're not really meant for them and that they're meant for bigger companies. We're constantly educating them ourselves to say, “No, actually, they're meant for you.”

Again, I think it goes back to finding ways to make it easier. I'll give you an example. When you go to the Government of Canada website it's very difficult to find anything specific to small businesses. It's very much focused on Canadians, which makes sense, but it's something that allows them to understand that there's a piece where they can go to get information that they need. It's not easy to navigate. That's where it starts.

There are things that CBSA can do that are a little bit more focused on the information the businesses need to import or export. Even though they're more involved in the importing side, that's where small businesses go to get information. They go to the border folks. They need to also be able to have a more consistent message around what you need to do in order to export effectively.

Ultimately, they've talked about a single window for years. It is the idea that as a small business that wants to get involved in trade, you go to one place and you get all the information you need from all the different government departments. That still doesn't exist. Businesses have to figure out whether they have to talk to CFIA or the USDA or....

That's where these types of agreements can start working together,. It's not only figuring things out on the Canadian side, but it's linking those to the American side, so you can deal with all of those other government departments in one spot instead of having to figure out which ones you have to deal with.

That's what is really going to help small businesses get more involved in trade.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

It's twofold. More education and training and outreach as well.

[Corinne Pohlmann]

Yes, and simplifying the processes.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

On simplifying the processes, the fact is that one of the things Minister Freeland noted was that the paperwork that needs to be done by all businesses in terms of crossing the border is significantly reduced with the new agreement. Hopefully, that will spur more activity as well.

[Corinne Pohlmann]

That would be good.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

It's said, depending on what stat you look at, that 75% to 90% of Canadians live within about 160 kilometres of the United States. It's not surprising, looking at your stats, that the United States is the number one place for imports and exports for this country.

I have a question for the retail folks as well.

What exactly can the government do to help support the retail industry? It's sort of the same question but more drilled down in particulars. I think about where the dollar is now. It's such a great opportunity for our American cousins to shop for various things, whether it is physically coming across into border towns like Sault Ste. Marie and into Canada or doing it online. What advice would you have for us?

[Jason McLinton]

Have a visitor rebate program. Canada is the only OECD country that does not have a visitor rebate program. Essentially, think about Europe and the VAT program and other countries. Japan has a really good model that we're looking closely at where consumers can go, shop and get their taxes refunded directly at point of sale.

I think Canada absolutely needs a visitor rebate program in order to encourage more people to visit Canada, exactly as you've suggested. It wouldn't just benefit retailers. It would benefit others when people need somewhere to stay and something to eat when they're here. Canada absolutely needs a visitor rebate program.

If I may touch on your other question, small and medium-sized retailers come to the Retail Council of Canada for information. They trust us. We represent over 45,000 storefronts across the country and even some retailers that people might think are—quote, unquote—large retailers. Depending on the business model and in the case of franchise models, which happens all the time, these are all small businesses across the country. As I said, we represent 45,000 storefronts. They come to the Retail Council for this kind of information because, number one, they trust us and, number two, we can put it in language that is meaningful to that sector, to retailers.

My thinking, if I were to advise government on how to get the word the word out, is to work with industry associations such as the Retail Council of Canada.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Okay. Very good.

How much time do I have left?

[The Chair, Liberal, Judy Sgro]

You have 30 seconds.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Okay.

You don't have much time to answer this, but I am fully aware that the supply chains affected by this, particularly the small and medium-sized enterprises, will be benefiting once we get down to full tariff-free free trade. I think we're at about 99%. We're striving to get that 1% figured out over the next little bit of time. Hopefully, now that we have some rules of engagement going forward on dispute resolution—I'm making more of a statement here, but I'm seeing a lot of nodding heads—we can get to 100%.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Sheehan.

Mr. Savard-Tremblay.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you all for being here and telling us about the issues facing you and the groups you represent.

My first question is for the Retail Council of Canada representative.

We know that one of the biggest challenges for retailers these days—and please correct me if I'm wrong—seems to be digital trade. Not only is it a major challenge in and of itself, but it also poses a significant problem for retail, at least retail in its traditional form, as we knew it in the 1990s and 2000s.

I'm not sure whether you examined that part of the agreement. We heard from people in digital trade who told us that the sector would be more liberalized and that, at the end of the day, the digital giants may have an easier ride than they do now.

Do you see that as a risk or, at the very least, a challenge?

[Jason McLinton]

You'll have to forgive me, Monsieur Savard-Tremblay.

By "digital trade", you mean "e-commerce", right?

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Yes.

[Jason McLinton]

Our members are highly competitive in the online space. Retailers in Canada are very good in that space, and the ones who are particularly good are those who understand the intersection between the bricks and mortar operations and those online. You will have Canadian consumers come in, look for a product, touch and feel it, and then go online to buy it, or they'll do the opposite. They'll go online and then come into the store to look and touch and feel and then make that purchase.

I don't want my comments about de minimis, then, in any way to confuse that point, that our members are highly competitive in that space. What I'm talking about, when I talk about de minimis, is overseas online operators having a tax advantage and a duty advantage that a similar Canadian retailer would not have. That is why we're very supportive of the way the negotiating team landed, in terms of the de minimis threshold. Our members are highly competitive in the online space.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you.

My next question is for the Canadian Federation of Independent Business representatives.

Clearly, access for small and medium-size businesses was a big promise of NAFTA, the outgoing agreement, if you will.

It was also one of its big successes. I remember hearing Mr. Parizeau and Mr. Landry go on about what a coup it was for small and medium-size businesses, in Quebec at least, to have gained access to the U.S. market.

You mentioned the separate chapter, but what the agreement essentially does is recognize the importance of small and medium-size businesses, something that is undeniable. You also had a good few recommendations to go along with the ratification of the agreement.

Is there anything really novel or innovative in the agreement, other than the fact that it contains a distinct chapter recognizing the importance of small and medium-size businesses?

[Corinne Pohlmann]

Yes. The small business chapter in this agreement is very important. It's only the second or third agreement now. The small business chapter first appeared in the Trans-Pacific Partnership agreement, and this one has adopted it at this scale. The reason it's important is that it recognizes the differences small businesses have in international trade.

When you look at the details, you see that it's non-binding. It's only looking at how to better communicate and share information. It's the principle behind it that's really important. Recognizing that small businesses are important in the international trade sphere, that, I think, is key.

I'd love to see innovation, or I guess some additions, happen, not just in that chapter, but throughout the agreement, in areas that are important for small businesses and which I mentioned earlier.

Dealing with trade facilitation is really the biggest issue. It's the way you deal with the regulations, with customs processes. These are the areas that are the most important for smaller companies.

Duties are important, and everybody wants to make...but at least you can understand them. It's the unexpected what we call non-tariff trade barriers that make the biggest difference in a small business. Making sure, when we're looking at ways to reduce customs processes and reduce regulations, that we're thinking about the impacts upon the small companies—they are different from those upon large companies—is the area in which I hope this will go further.

By including this chapter, I hope that when we're discussing how to address the regulatory barriers and how to make trade easier, we're thinking about the issues in the context of small companies, because their challenges are very different.