International Trade Committee on April 4th, 2022

[The Chair, Liberal, Judy Sgro]

Certainly, given the interest on the committee, if he is not able to connect, we will do our best to try to get him to come for our next meeting.

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

Okay. Of course, if he manages to connect, we will hear his testimony today.

My question is for Mr. Shevchenko.

Mr. Shevchenko, you seem very well versed on the sanctions that were imposed and you say they have been applied. Can you update us on what's been done with respect to the Russian banks?

[Andriy Shevchenko]

Well, it is very important to understand that in Russia, many sectors of the economy are used as part of the imperialistic state machine. They are part of this major threat that we are dealing with, and that refers specifically to the financial sector of Russia. There is always a major challenge of corruption, and there is a huge role of the financial sector specifically when it comes to the prosperity and safety of Putin, his environment and the oligarchs.... That's why it has been so important to specifically target the financial institutions of Russia.

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

In any event, trade between Canada and Russia is relatively minimal, all things considered.

However, we have heard that some Canadian businesses are being penalized by the banking sanctions. For example, it has happened that customers' transfer payments for services they have received could not be completed due to the sanctions.

I understand that the sanctions are necessary and required in a conflict situation like this, but do you have any thoughts on how they could be mitigated so as not to penalize Canadian and Quebec businesses?

[Andriy Shevchenko]

First, I think it's very important that Canada shows an example to the world, even when your trade with Russia is not that huge and even when the impact of your sanctions is not as huge as we would like it to be. The example that you set to the world is very important, and it goes not just to the sanctions, but also to the finance corporations and to many other fields.

On a broader scale, yes, sanctions are the way we can make the Russian economy suffer as much as possible. If we are looking for some ways to compensate, I think a modernized CUFTA is one of the many tools we should think about. We should think about and create some better, wider opportunities for our businesses in the future, once we can stop this terrible war.

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

Could you tell us more about possibly using this tool in the near future?

Imagine a company whose sales depend in part on that interaction. A large percentage of its business is linked to Russia.

As elected officials, we have a duty to meet with these companies, offer them solutions and try to help them. That's only natural. Of course, these companies were only looking to do business; they didn't want this situation.

Can you tell us a little more about how this tool can be used to mitigate fallout from these sanctions?

[Andriy Shevchenko]

First, I'm happy to say that Quebec and Quebec's companies have contributed to the success of CUFTA. Actually, you might be surprised to learn that Quebec was number one in provinces in terms of its share in trade between Canada and Ukraine.

When it comes to the sanctions and to the overall effect, look, I think we have to see the war that is happening right now as a global war. If we think about the chemical attacks that Russia has inflicted on the NATO territories, if we think about the cyber-attacks, including those in Canada, and if we think about what Russian propaganda says right now, which is that they are challenging the west and they want to fight with NATO, I think we should realize that we're dealing with a global war. That means we should prepare our businesses for that and that each of us will have to pay some price and, yes, together we have to co-operate to make sure recovery comes as soon as possible.

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

How much time do I have left, Madam Chair?

[The Chair, Liberal, Judy Sgro]

You have less than one minute.

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

I have no further questions for this round.

[The Chair, Liberal, Judy Sgro]

I understand that Mr. Bouchard is logged on.

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

I see. In that case, can I add the minute I have left to my next round? That way, we can ask Mr. Bouchard some questions.

Would that be okay with you, Madam Chair?

[The Chair, Liberal, Judy Sgro]

Yes, that's fine. We're going to do a sound check.

I'm going to suspend for a moment, while we do a sound check for Mr. Bouchard. Then he will have his five minutes to do his presentation.

[The Chair, Liberal, Judy Sgro]

Since Mr. Bouchard did not have a chance to do his opening remarks, we will go to him for five minutes and then go back to Monsieur Savard-Tremblay, who has 50 seconds remaining in his time.

Mr. Bouchard, you have five minutes, please, to speak to the committee.

[Louis Bouchard, President, STAS]

Good afternoon, Madam Chair.

I'm pleased to speak to you today about the impact of the Russian‑Ukrainian war and economic sanctions on my company, STAS, in Saguenay, Quebec.

I had prepared a document but unfortunately I can't present it to you due to technical problems.

I will briefly introduce my company. STAS is a provider of high-tech equipment and solutions to the global aluminum industry. We're headquartered in Quebec and we have a subsidiary in France. Before COVID‑19, we had 220 employees and sales of over C$60 million. We are active in 40 countries with extended service points and global suppliers.

Over the past 30 years, we've delivered over 2,000 pieces of equipment and completed tens of thousands of projects around the world. We have a presence [Technical difficulty] in all sectors of the aluminum industry, including carbon, electrolysis, casting centre, secondary processing and recycling.

Things are different today. In Canada, STAS has been significantly affected by the pandemic. Our sales are down over 40%. Our total sales are now $35 million, including $10 million in Russia, which receives 85% of our exports.

We have a global footprint in North America, South America, Africa, Europe, Asia, the Middle East, Australia and New Zealand. We regularly monitor all global projects in the aluminum industry. For the past 20 years or so, we've been active in the Middle East, India, China, Saudi Arabia and Russia, which I will come back to later.

We have a diverse, specialized workforce. More than 120 people work at STAS in Quebec.

This crisis, this war, is having a very significant impact on us. Here are the main factors involved.

First, Russia was our only stable market during the COVID‑19 health crisis, and this led us to look more to that market.

Second, the crisis was unforeseeable and it came out of nowhere. We carry out our projects over an 18- to 24-month period. We had already made commitments to our Russian customers a long time ago.

Third, the banking sanctions are now keeping our client from paying us for work we've already completed.

Fourth, it's impossible for us to ship equipment we've already assembled because of the ban on cargo shipping between most Western nations and Russia.

The final factor relates to supervising construction projects in Russia. It's now very dangerous for us to send skilled labour to Russia to do the work needed to install our machinery and equipment.

We believe that the impact of this crisis on labour and production will be felt by our company for two to three years. So we're dealing with a very significant crisis. We've determined that financial impact of us shutting down Russian projects is approximately C$4.4 million. We stand to lose several years of growth and diversification.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Bouchard, for your time. The committee is very anxious to ask you lots of questions.

Mr. Savard-Tremblay, we are going to add your 50 seconds to round two, as you requested.

Mr. Martel, go ahead for five minutes, please.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

I thank the witnesses for being with us.

Mr. Bouchard, I'm glad that you were able to resolve your Internet connection issues, because you're the president of a large company in my constituency. Of course, what's happening to your business in Russia is unfortunate. Now we have an even better understanding of the risks that entrepreneurs take every day.

Mr. Bouchard, how important are your activities in Russia to the viability of your business and your workers?

[Louis Bouchard]

Thank you for your question, Mr. Martel.

As I said, our activities in Russia are very important to us. We've been working in the Russian market for over 15 years, and the Russian‑Ukrainian war and the sanctions that were imposed are going to have major consequences on our company's operations.

We believe it could affect about 20 obs.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Mr. Bouchard, I'd like to know if you have made efforts to diversify your activities geographically and run less risk.

[Louis Bouchard]

Mr. Martel, STAS is a global company. As I said, we do business on five continents and we serve a global market.

The current situation can be attributed to the COVID‑19 health crisis, which shut down all markets. Russia is the only one of our markets that continued to operate during the critical period of the last two years.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

Mr. Bouchard, do you know of any other companies like yours that are in the same situation?

[Louis Bouchard]

We know of very few companies in this situation, because the market for exporting to Russia and Ukraine from Canada is very minimal. To my knowledge, only a few companies are affected. That said, those that are have been significantly affected.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

My next question is for Mr. Agnew.

Mr. Agnew, you represent a huge number of Canadian businesses. Do you know of any companies experiencing the same issue as Mr. Bouchard's company?

[Mark Agnew]

Without getting into specifics in a public forum, there certainly have been a number of companies that have had issues, both those with an investment presence in Russia and those who have been doing business there. Certainly, seeking payments in the current context has been difficult. Without knowing the future pathway of sanctions, we anticipate that, as time goes on, it will become more difficult for Canadian companies to receive payments from Russian counterparts if they were to decide to keep doing business in that market.

[Richard Martel, Conservative, Chicoutimi—Le Fjord, QC]

In that case, Mr. Agnew, what are you saying to your members who do business with Russia?