International Trade Committee on Oct. 30th, 2020

[The Chair (Hon. Judy A. Sgro (Humber River—Black Creek, Lib.)), Liberal, Judy Sgro]

I call this meeting to order.

Apologies for the delays, but technology.... We shouldn't get mad at it, because without it we wouldn't be able to have a meeting at all. I'm sorry for the delay.

Welcome to meeting number three of the House of Commons Standing Committee on International Trade.

Today's meeting is taking place in a hybrid format, pursuant to the House order of September 23, 2020. The proceedings are available via the House of Commons website.

To ensure an orderly meeting, I have to outline a few rules.

Members and witnesses may speak in the official language of their choice. Interpretation services are available for this meeting. You have the choice, at the bottom of your screen, of floor, English or French.

For members participating in person, proceed as you usually would when the whole committee is meeting in person in a committee room, keeping in mind the directives from the Board of Internal Economy regarding masking and health protocols.

Before speaking, please wait until I recognize you by name. If you are on video conference, please click on the microphone icon to unmute yourself. If you are in the room, your microphone will be controlled as normal by the proceedings and verification officers. As a reminder, all comments by members and witnesses should be addressed through the chair. When you are not speaking, your microphone should be on mute.

We will proceed to the business of the day.

The committee will first proceed to hearing witnesses from the department, pursuant to the motion related to COVID-19 and Canada's trade, adopted by the committee on October 23, and we will reserve the last 15 minutes of the meeting for committee business.

I'll introduce our witnesses from Global Affairs Canada.

Sara Wilshaw is chief trade commissioner and assistant deputy minister, international business development, investment and innovation. With her are Christopher Thornley, director general of regional trade operations and intergovernmental relations; Duane McMullen, director general in the trade commissioner service, operations; and Kendal Hembroff, director general of trade policy and negotiations.

Ms. Wilshaw, I turn the floor over to you. Again, you have our apologies for the delay.

[Sara Wilshaw, Chief Trade Commissioner, Assistant Deputy Minister, International Business Development, Investment and Innovation, Department of Foreign Affairs, Trade and Development]

Thank you very much, Madam Chair.

Good afternoon. I am the chief trade commissioner—newly appointed a couple of weeks ago—and the assistant deputy minister responsible for our trade commissioner service at Global Affairs Canada. I'm delighted to be able to speak to you today about our efforts to support Canadian businesses in their exporting journey.

Many of you may already be familiar with the trade commissioner service, but for those who are not, I'll provide a brief introduction to our work.

The TCS is a network of international business professionals who help Canadian businesses grow through international sales, commercial partnerships and investment. We provide four key services to our Canadian clients, free of charge. These are key market insights and practical business advice, opening the door to new business opportunities globally, identifying qualified contacts, and resolving business problems in foreign markets.

We also offer programs and services aimed at helping Canadian innovators secure the international research and development partnerships that help them turn their innovations into globally successful products and services.

The TCS also plays a key role in attracting job-creating foreign direct investment to Canada, in collaboration with Invest in Canada, other government departments and provincial, territorial and municipal governments.

In 2019-2020, the Trade Commissioner Service, or TCS, served 12,000 Canadian clients from 160 locations around the world, including six regional hub offices across Canada. We provide over 50,000 services to our clients each year, and are proud of our 91% client satisfaction rate. Ninety-three per cent of our clients are small and medium-sized enterprises.

Our analysis shows that the TCS contributes to our clients' exporting 20% more in value, selling to 25% more foreign markets and exporting 11% more product varieties than non-TCS clients. Research shows also that every dollar spent by the trade commissioner service results in $26 in increased exports.

I am pleased to speak to you today about how the TCS has supported Canadians during the pandemic and what we are doing to help Canada's businesses return to growth.

Since day one of the crisis, the TCS has put its international network and expertise to work in support of Canada's overall pandemic response. Having a strong network of trade commissioners abroad enabled the Government of Canada to quickly identify and engage the right suppliers of PPE and other life-saving equipment in the first months of the pandemic.

Our trade commissioners have also been able to help Canadian companies get Canada's own COVID-related products and services more rapidly into international markets. Through the TCS's Canadian COVID-19 capabilities directory, we are highlighting products and services of over 154 export-ready Canadian companies to foreign buyers. This initiative is helping us expand our exporter base in innovative sectors, such as life sciences, while also contributing to the international fight against COVID-19.

In addition to helping Canadian businesses continue exporting during the pandemic, the TCS also shifted gears to help companies find new international sources of supply for vital inputs. Not surprisingly, our problem-solving service requests from clients increased by 49% between April and August, compared with the same period in 2019. While COVID-19 has been a shock, the TCS's long-standing commitment to innovation meant that we were actually well positioned to take on the pandemic's challenges.

For example, helping more businesses grow their international sales through e-commerce has been a TCS priority in recent years. The expertise and capabilities we've developed in this area have enabled us to respond to the surge in interest in e-commerce resulting from the pandemic.

We've also long recognized the potential for digital modernization to enable us to deliver higher-value services, expand our client base and increase efficiency. Major overhauls to our online presence, digital tools, and service in the last year have positioned us to meet today's demand for more digital services and for more service and program delivery via virtual platforms. Indeed, services and programs across the trade commissioner service are adapting to meet the needs of Canadian businesses in today's context, while still advancing long-standing diversification and inclusive trade priorities.

The TCS has successfully transitioned from supporting traditional in-person business meetings to facilitating more virtual events, webinars and trade missions. For example, the trade commissioner service is continuing to promote Canada's women exporters by coordinating a virtual trade mission to South Korea. This mission will support first-time and experienced Canadian exporters and women entrepreneurs in their expansion to the South Korean market.

In response to restrictions on travel and in-person meetings, we have adjusted our popular CanExport-SME program to help SMEs cover the costs of attending virtual trade shows, engaging in e-commerce, and pursuing other activities needed to enter new markets in an increasingly “contactless” business world.

Despite COVID-19, we have also continued to expand the Canadian technology accelerator program, or CTA, with new programs established in Mexico City and Berlin. CTAs have quickly adapted to the realities of COVID-19. They continue serving high-potential Canadian tech firms through virtual programming, and will do so in the months ahead.

Canada is a trading nation. Goods and services exports are equivalent to 32% of Canada's GDP, and imports to 33%. One in six jobs is related to exports. Canada's recovery and long-term prosperity will depend on renewing our international trade, with an emphasis on continuing to diversify where we export, who exports and what we export. It will also depend on ensuring that Canada continues to attract job-creating FDI.

The TCS will remain focused on helping Canadian businesses increase their resiliency and maximize their recovery by diversifying into new overseas markets, particularly those made more accessible by agreements like CETA and the CPTPP.

Building on over 20 years of experience with the Business Women in International Trade (BWIT) initiative, the TCS will also continue helping exporters of all sizes and ownerships—including women, indigenous, visible minority, LGBTQ2 and youth exporters—expand into global markets. We will also continue positioning the TCS to better help the trade-driven scale-up of our firms in new and emerging sectors, such as digital and clean-tech.

Supporting scale-up for firms in these sectors will also mean continuing to help them find the right international partnerships to drive innovation, R and D, and commercialization. In partnership with Invest in Canada and others, we will also continue to position Canada as an attractive destination for the FDI that we'll need to reach our job creation and growth objectives.

The TCS has continued to learn, adapt, and apply new approaches and technology to serve clients through our 125-year history, and we plan on doing the same for the next 125 years.

Thank you again for the opportunity to join you today. I look forward to your questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. Wilshaw.

Again, congratulations and good luck on your new appointment.

We'll move on to our speakers list.

For six minutes, we have Mr. Hoback.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Madam Chair.

Thank you again, Ms. Wilshaw, and congratulations on your appointment.

I also want to congratulate Ailish Campbell, who is moving on to be the ambassador to the EU. I think that's a great move. I enjoyed working with her, and I look forward to working with you also.

I'm a big fan of trade commissioners. Whenever I travel, I always try to make sure I stop in and visit with them wherever I go. I've had some great briefings and some great discussions with your trade commissioners.

As I look at COVID-19 and I look at the new travel arrangements or the lack of travel that businesses are going to be able to do, and as I look at the structural changes now created by COVID-19, I wonder about our trade commissioner services and whether they're prepared for this type of new reality. Have you looked at what they should have for resources going forward, whether it's an increase in funding or maybe reallocation of resources from one area to another?

I think you are going to be the face of a lot of businesses in a lot of countries now because these businesses can't travel. I'm curious as to how you are going to handle that.

[Sara Wilshaw]

It could certainly be said that our trade commissioners really turned themselves on a dime in this process. I really don't know what more they could have done to help our clients or to continue services during the pandemic. As it was, our service delivery did not stop, even as some of our own trade commissioners were being evacuated. They continued to serve clients by helping them to adapt and adjust and, in some cases, to find new opportunities.

We regularly evaluate the location of our services and the needs of our clients. We actually have an ongoing assessment of whether we are in the right place at the right time to support our clients and their needs. I do think that we will always be very careful and efficient with our allocations to make sure we are using them in the most efficient way and in the markets where our clients need us.

[Randy Hoback, Conservative, Prince Albert, SK]

At the start of the pandemic, I know that our trade commissioners basically got pulled into a variety of things, from logistics to getting people home, and I get that. I think any government, I don't care who's in charge, would have been put in that situation, and they would have stepped in and done their work.

I am now concerned as we look at many of our embassies abroad from which those folks have now come back as they've been evacuated. We're looking at Canadians not travelling as much. What do we need for resources in those embassies? I want to make sure that our trade commissioner services aren't being dragged into areas that are not theirs, areas that belong to somebody else. I get why you got put into those areas at the beginning of the pandemic, but now we have to get back to focusing on Canadian businesses.

Do you sense that happening and do you have any concerns there?

[Sara Wilshaw]

No, as a matter of fact, as you rightly point out, our trade commissioners have been working very closely with clients. They've never stopped serving their clients. The focus we have had...although it is true that we did pivot some of our efforts towards sourcing, which is not a typical service of the trade commissioner service. We have actually managed to create some success out of that as well, and we've also spent some time identifying excellent Canadian companies that can supply goods and services in the space of PPE and critical medical technologies for others.

I think that we're in the right line of business, and I think we are doing the best we can for our clients and will continue to do so, even remotely. I can tell you that some of the trade commissioners who were evacuated from certain posts due to the context on the ground have continued to work remotely. We have trade commissioners normally posted in India who are serving clients from Vancouver, and we have trade commissioners who are normally in other locations serving their clients and continuing to work and stay in touch with their contacts remotely.

We'll continue to keep an eye on what our clients need and we will continue to work to serve them most efficiently with the resources that were allocated.

[Randy Hoback, Conservative, Prince Albert, SK]

Where I get concerned is that—

[The Chair, Liberal, Judy Sgro]

Keep it very short, Mr. Hoback.

[Randy Hoback, Conservative, Prince Albert, SK]

I'll be very short. I wish I had more time.

Businesses in Canada can do a Zoom call, but having trade commissioners who should be in India instead doing Zoom calls in Canada is not necessarily providing the value other than the expertise they learned when they were in India. That may be okay for a short term, but in the long term, we have to get them back in the field. What is the game plan to do exactly that, and how do we do that safely?

[Sara Wilshaw]

The department is looking very closely at where our staff are and, of course, there is a certain duty of care that we are required to manage. Where we were required to have a duty of care to our employees who required an evacuation, we are managing to get them back into a lot of those countries; there are very few they are not able to enter. It certainly does depend on the public health situation in individual countries, but they are continuing to serve clients and doing so quite effectively.

Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. Wilshaw.

Ms. Bendayan, go ahead.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you very much, Madam Chair.

I'd like to thank the witness and, of course, congratulate her on her appointment as ADM. I also look forward to working with her.

My first question is a bit broad with respect to the state of play of our supply chains. As I'm sure you're aware, Canada did sign onto a number of joint statements and agreements early on in the pandemic. One of the first was signed in March in order to keep supply chains open. What is your view of the supply chains that Canadian exporters and Canadian businesses are relying on at the moment?

[Sara Wilshaw]

Indeed, international supply chains were affected and there were certainly some disruptions and some trade restrictions on the movement of people and, in some cases, of goods. Also, as you rightly mentioned, there were certain discussions in international fora with respect to trying to keep those vital supply chains open.

In fact, international supply chains have actually held up reasonably well during the global pandemic. Our chief economist's office has looked into some of this and can say that there's actually little evidence of large-scale reshoring of supply chains. Doing so, we think, would actually reduce competitiveness going forward. Our preferred approach, of course, is to increase the resiliency of supply chains through co-operation and to improve transparency.

If I may turn to my colleague Kendal Hembroff, who is working with the minister on the WTO proposals in the Ottawa Group, I think she may have something to add here.

Thank you.

[Kendal Hembroff, Director General, Trade Policy and Negotiations, Department of Foreign Affairs, Trade and Development]

Sure.

I'm happy to expand a bit in terms of what the impact has been of the various international engagements Canada has undertaken since the start of the pandemic to try to keep supply chains open. That has taken a number of different forms. We've led a number of international—

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

Excuse me, Madam Chair.

Interpretation services are signalling that Ms. Hembroff needs to move closer to her microphone for the interpretation to work.

[Kendal Hembroff]

All right. I will do my best.

Canada has led on a number of international statements, whether at APEC, the G20 or the WTO, with a view to encouraging other countries to keep their supply chains open and not impose trade restrictions. Our department has been tracking, since the beginning of the pandemic, the number of trade restrictions that countries have imposed, ranging from outright export bans to other types of trade restrictions. Well over 200 trade restrictions have been imposed by different countries around the world since the beginning of March. The vast majority of those have not been notified to the WTO, so there has been a lack of transparency, which obviously impacts Canadian business to a very significant extent.

We have really tried to make the case internationally that any measures countries may need to undertake in response to the pandemic be targeted, proportionate, transparent and consistent with WTO rules. More recently, in the context of the Ottawa Group on WTO reform, which Canada leads, we've been working very closely with like-minded WTO members to try to see what we can do in terms of encouraging the further openness of supply chains.

That includes, for example, the work we're doing right now on trade and health to look at whether there are ways in which we can promote more open trade on a variety of medical and health-related products.

[Rachel Bendayan, Liberal, Outremont, QC]

Thank you very much.

To pick up a bit on that, one of the things that I am obviously very concerned about, and that the government is concerned about in general, is that the pandemic is being used as an excuse to turn inward by many countries, and we are seeing an increase in protectionist tendencies.

I appreciate, Ms. Wilshaw, that you're new to the post. Perhaps you or your colleagues could let us know what officials are hearing at your level from other countries. I certainly know about Canada's leadership role in the Ottawa Group and at the WTO. What other measures do you see Canada taking in order to ensure that we continue to have a rules-based international trading system?

[Sara Wilshaw]

In this case, the rules-based international order is something that our clients certainly rely upon to ensure a level playing field.

I would turn to Kendal to elaborate on how that supports...and what kinds of conversations have been going on internationally with regard to that.

[Kendal Hembroff]

Sure.

As I think members will be aware, Canada has a wide network of international trade agreements—14 agreements with 51 countries. We have tried to leverage those agreements during the pandemic to be able to work with countries with which we have those agreements in place in order to continue to support Canadian business.

For example, when ministers of CPTPP countries met late this summer, we released a statement encouraging the importance of keeping supply chains open. We are also working very closely with the European Union in the context of CETA to ensure that the agreement also continues to support businesses in both Canada and the European Union. Then, of course, we are negotiating a number of other international trade agreements that hopefully will support Canadian companies during the economic recovery.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Savard-Tremblay, you have six minutes.

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

Good afternoon. Thank you for your presentation.

You talked about digital. We know for sure that we can no longer rely on trade fairs or face-to-face meetings because of the worldwide situation in which we have found ourselves since March. Digital is therefore becoming a necessity; one might almost say that it has become an absolute necessity.

Quebec assists businesses with that type of approach. You talked about federal assistance in your presentation, but I'd like to know what type of assistance is provided and how it is organized.

Could you give us some concrete examples, please?

[Sara Wilshaw]

Thank you. I would be very pleased to speak a bit more about what we have done to go contact-free. Of course, we ourselves are also offering virtually our programs and services normally delivered in person, but I think you are asking more about how we are helping our clients to move in that direction.

We do have a number of offerings for them, including virtual trade missions. We have changed the Canadian technology accelerators and made them virtual. In fact, that has resulted in opening up and lowering the barrier to entry for a number of Canadian companies. If we think about a virtual trade mission, we see that companies that normally might not have had the resources or the time to travel to South Korea are able to join a virtual trade mission much more easily.

We think of a young woman entrepreneur who perhaps has children and is unable to get away for a week or 10 days to travel with the minister. Although we lose some of those corridor conversations and face-to-face interactions, of course, at the same time these kinds of services are open to a much broader audience, and we're very proud of that.

Two nights ago, on Wednesday, the minister launched the virtual trade mission to Korea, with 157 participants, I think. I can get the exact number. I can't think of an example at any time in the past when that number of companies might have been able to participate.

I have just been informed that it was 170. I can't think of a time in the past when we would have taken 170 companies on a trade mission. Certainly, that is a very good example.

I might also just talk in terms of specific supports to our companies and the money that we actually have available to help them. That is through the CanExport program, which normally provides over $33 million a year to Canadian SMEs, innovators and others. Since the start of the pandemic, the CanExport program has provided over $20 million to more than 500 Canadian companies looking to diversify their export market. They allow these folks to access all kinds of new services, including hiring folks to help them with their online and digital programs and to access e-commerce platforms, IP assistance, cybersecurity assistance and a number of other things.

The gentleman who manages that program for us is here with us today, and that is Christopher Thornley. If I may, I'll pass it to him to just talk about the specifics of that program and some examples.

[Christopher Thornley, Director General, Regional Trade Operations and Intergovernmental Relations, Department of Foreign Affairs, Trade and Development]

Thank you.

Thank you, Madam Chair.

As Madame Wilshaw mentioned, we've been able to serve many companies, even though the program was originally designed around travel and the ability to—

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

Excuse me, Madam Chair, I am being notified again about the need to come closer to the microphone, because the interpretation services cannot do their job.