International Trade Committee on April 4th, 2022

[Mark Agnew]

As much as Canadian companies are always looking for opportunities to diversify, I don't think we should be under any illusions that Russia, before its military activities started in February, was not a risk-free market, by any means. There were already a number of sanctions in place. I know it's a difficult thing for any Canadian company that's gone through this disruption, but certainly it was a market that had risk before the most recent outbreak of hostilities.

[The Chair, Liberal, Judy Sgro]

You have 40 seconds remaining, sir.

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

Mr. Agnew, this question is also for you.

In 2014, when Russia invaded Crimea, the finance minister at the time, the Honourable Ed Fast, did not provide any assistance to Canadian companies being hit by Canadian economic sanctions against Russia.

What would you recommend in this situation?

[Mark Agnew]

We are not seeking any financial assistance from the government for Canadian companies.

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Agnew.

We'll go to Mr. Sheehan, for five minutes.

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

Thank you very much to all our presenters for your testimony.

To our presenters of Ukrainian heritage, we could hear the pain in your voice. People all across Canada are with you. Whether you're Canadian or Ukrainian, we're with you.

Canada has the second-largest population of Ukrainians outside of Ukraine, after Russia. Sault Ste. Marie has a number of them, too. They're well established. A lot of them came over before IT and worked in the steel mill. It was about labour. It was about people coming to work and sharing their skills with us, so I thank them for that. The Ukrainian church in Sault Ste. Marie is well over 100 years old. We share that with you.

My question is going to continue on. The first part of it is this. Since the invasion, we have sanctioned 700 individuals and entities in Russia for this unjust and illegal war. On March 15 and March 24, we furthered that and sanctioned more Russians.

At the beginning of it, we also served notice that we were withdrawing Russia's most favoured nation trade status. They're now in the same boat, I believe, as North Korea. They share that. Canada is a trading a nation, and we continue to trade, which has resulted in a 35% tariff.

I'm going to start with Mark Agnew on the question. What other economic trade sanctions do you feel Canada could levy or consider against Russia?

[Mark Agnew]

There is a whole host of options out there. Some of the ones that have been talked about are further sanctioning Russian financial institutions. As I understand, the current sanctions package is not exhaustive in its coverage, if I can put it in those terms. That's something we've been reading about in the public commentary that may be on the table at this point.

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

To the former Ukrainian ambassador, I'd like your thoughts on that, please.

[Andriy Shevchenko]

Oil and gas is another very obvious sector to go ahead with on sanctions. Canada should have a very strong interest in that. For decades, we saw Europe being heavily dependent on Russian oil and gas, and I think it's time to stop that.

I have one more comment on the sanctions. I have a lot of sympathy for Canadian companies that might lose money because of the sanctions, but right now, as I'm talking to you, there is an air-raid siren where I am. That means that Russian rockets are flying here. They were built on the tax money that was paid by local companies in Russia. We can all pretend that we can still do business as usual, but sometimes, good contracts lead to terrible circumstances.

All the good people and the good companies should finally correct the wrong decisions of the past. I hope there will be some good decisions for Canada to substitute the losses.

I'm sorry for taking more time to answer this question.

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

Thank you for that. Please stay safe.

In 2020, Canada's trade commissioner service suggested that CUFTA had increased Ukraine's exports to Canada by 6.5%. We've been talking about the numbers, and I looked them up. Over the last few years, we've seen that CUFTA's been very successful in increasing them. How might this growth...?

One of the things when we enter into trade agreements with a certain country is that we also enjoy that country's position in their trade agreements, as well, and a lot of opportunities.

How might this projected growth be impacted by the ongoing conflict and sanctions that are being imposed right now? In what ways has the Ukrainian economy been negatively affected? Do you anticipate an increase in Canadian exports to Ukraine following Ukraine's successfully winning this unjust war? If so, in what industries will they be?

I'll start with the former ambassador.

[Andriy Shevchenko]

We will use this war to modernize our country in the future. This is our major chance to do that. I hope Canada and Canadian companies will use the major recovery and rebuilding opportunities that will come with that.

I would specifically mention again that public procurement is going to be huge. We need good Canadian companies. We need good Canadian contractors. We need good technology.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

I'm sorry. You have one second left. Thank you.

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

Thank you. Can I add that to the nine from Arif?

[Some hon. members]

Oh, oh!

[The Chair, Liberal, Judy Sgro]

We'll move on to Mr. Savard-Tremblay for three and a half minutes, please.

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

Thank you, Madam Chair.

Mr. Bouchard, I'm glad that you were able to join the meeting. Thank you for your opening statement. I hope that the connection is reliable and that you can hear everything.

I think it's important to make clear that these were necessary sanctions. In the face of such aggression against Ukraine, sanctions were unavoidable. Now, we can take a step back to see how we can make things better for companies like yours that are feeling the effects of the sanctions.

You did a good job of explaining how you had partly been a victim of the sanctions. You rely on certain companies in Russia for 30% of your business, which is pretty substantial. That's also the case for some Russian companies.

As members of the Standing Committee on International Trade, we are meeting with business leaders who are experiencing these consequences.

My question for you is what can we do to help you.

[Louis Bouchard]

Thank you for your question.

Like you, I completely agree that sanctions against Russia were necessary. At the same time, though, I want to draw your attention to the following analogy: when the Canadian government signs a free trade agreement, it provides compensation to help Canadian businesses adjust to the changes.

In the case of the sanctions against Russia, I think the Canadian government should take the same approach it does when it signs free trade agreements with countries such as the U.S., as well as France and other European countries.

The government could also provide another form of compensation, something along the lines of the emergency wage subsidy. As in our case, some companies are harder hit than others. The minimum reduction in revenue for the emergency wage subsidy was 25%. As a result of the effects of the sanctions against Russia, we are currently experiencing a drop in revenue of more than 30%, and the consequences for us are very significant. Those are two measures the government could consider to compensate Canadian businesses.

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

Given your overall situation, you are already of the view that both of those options would be very helpful to your company under the circumstances.

[Louis Bouchard]

That's correct.

I think those forms of compensation could be especially helpful to our business in terms of getting us through this crisis.

Like the members of the committee, we fully support the government's efforts to address the situation in Ukraine, but the repercussions for businesses like ours should be taken into account as well.

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

I see.

Briefly, could you explain how the sanctions directed against the banking system have affected your business?

[Louis Bouchard]

The sanctions against the banking system have had severe consequences on our business. A client couldn't pay us for services that had already been rendered in Ukraine. Just like that, we couldn't get paid.

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

I see the chair trying to get my attention. Am I out of time, Madam Chair?

[The Chair, Liberal, Judy Sgro]

You have 30 seconds.

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

All right.

The sanctions against the banking system have clearly impacted you, but why are you having logistical challenges when it comes to shipping your products?

[Louis Bouchard]

The global shipping companies have also stopped shipping and handling containers headed for or leaving Russia.