Evidence of meeting #15 for International Trade in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was region.

A video is available from Parliament.

On the agenda

MPs speaking

Also speaking

Wayne Christopher Farmer  President, Canada-ASEAN Business Council
Mark Agnew  Senior Vice-President, Policy and Government Relations, Canadian Chamber of Commerce
Sonny Cho  President and Chief Executive Officer, Canada Korea Business Council
Julie Dai Trang Nguyen  Director, Canada Vietnam Society
Shane Moffatt  Head of Nature and Food Campaign, Greenpeace Canada

4:10 p.m.

Liberal

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

Welcome to meeting 15 of the House of Commons Standing Committee on International Trade.

Today's meeting is taking place in the hybrid format, pursuant to the House order of November 25, 2021. Per the directive of the Board of Internal Economy of March 10, 2022, all those attending the meeting in person must wear a mask, except for members who are at their place during proceedings.

I'd like to make a few comments for the benefit of the witnesses and members.

Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mike and please mute yourself when you're not speaking. For those participating via Zoom, you have interpretation options at the bottom of your screen of floor, English or French. I'll remind you that all comments should be addressed through the chair.

Go ahead, Mr. Hoback.

4:10 p.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

In respect of the time for the witnesses—I want to give them as much time as possible—if it's okay with the committee, I would suggest we just go to committee business quickly for a minute. I think we have an agreement on the proposals we'd like to see brought forward.

Do you want me to read them into the record?

The proposal that we'd like to see, but probably won't get, is where we take 12 MPs, one analyst and one clerk to Bangkok, Singapore, Hanoi and Jakarta. In light of the fact we probably won't get that due to the costs, plan B would be Bangkok, Hanoi, Singapore and Jakarta, but reduced to seven MPs, one analyst and one clerk.

I think there's consensus around here that this would be okay to take forward to the committee.

4:10 p.m.

Liberal

The Chair Liberal Judy Sgro

Is everybody in favour?

4:10 p.m.

Liberal

Arif Virani Liberal Parkdale—High Park, ON

Yes and, Madam Chair, I can confirm that I heard from Mr. Masse by text message. He said that it sounds very reasonable.

4:10 p.m.

Liberal

The Chair Liberal Judy Sgro

Monsieur Savard-Tremblay is okay with it.

4:10 p.m.

Liberal

Arif Virani Liberal Parkdale—High Park, ON

It's reasonable to this side as well. Thank you.

4:10 p.m.

Liberal

The Chair Liberal Judy Sgro

All right.

4:10 p.m.

Conservative

Randy Hoback Conservative Prince Albert, SK

I know you have some dates here, which we could talk about at a later meeting. I know this is time-sensitive.

4:10 p.m.

Liberal

The Chair Liberal Judy Sgro

Yes, it is.

That's great. Everybody's in favour. Thank you very much, Mr. Hoback.

Madam Clerk, you're clear with that? We'll do two submissions.

Pursuant to Standing Order 108(2) and the motion adopted by the committee on Monday, March 21, 2022, the committee is resuming its study on trade opportunities for Canadian businesses in the Indo-Pacific.

You have our apologies for being delayed. I think if you've been here before you know how votes work, so we couldn't get our meeting started. We have another one later on at the end of the meeting, so we want to get as much testimony from our great witnesses as we can.

From the Canada-ASEAN Business Council, we have Wayne Christopher Farmer, president. From the Canadian Chamber of Commerce, we have Mark Agnew, senior vice-president, policy and government relations. From the Canada Korea Business Council, we have Sonny Cho, president and chief executive officer. From the Canada Vietnam Society, we have Julie Dai Trang Nguyen, director. From Greenpeace Canada, we have Shane Moffatt, head of nature and food campaign.

Welcome to all of you.

We will start with opening remarks for five minutes, please, starting with Mr. Farmer.

4:10 p.m.

Wayne Christopher Farmer President, Canada-ASEAN Business Council

Thank you.

Good afternoon everyone. It's morning here in Singapore. My name is Wayne Farmer, and I'm president of the Canada-ASEAN Business Council. Thank you for the opportunity to speak today, Madam Chair and members of the Standing Committee on International Trade.

I'll give a brief background. The CABC is a private sector-led not-for-profit that was established in 2012 and headquartered here in Singapore. Our mission is to build trade and commerce between Canada and ASEAN and the 10 member states within ASEAN. We represent over 60 Canadian and ASEAN businesses trading between the two regions. We've been a very key advocate for increasing the Canada-ASEAN trade flow, recognizing the immense potential that ASEAN presents for Canada and vice versa.

We've been very active in working with Canadian governments in the ASEAN member states to get to the point where two free trade negotiations were formally launched in 2021, which are the Canada-ASEAN FTA and the Canada-Indonesia CEPA.

I also want to note that it's taken quite a lot of time to get to this point, which is the nature of these discussions. I've been involved in volunteering with this for almost 10 years—

4:10 p.m.

Liberal

The Chair Liberal Judy Sgro

Mr. Farmer, can I interrupt you for one moment?

I have to apologize to Mr. Masse. I was supposed to wait 10 minutes before starting the committee meeting. We did just start though.

4:10 p.m.

NDP

Brian Masse NDP Windsor West, ON

Thank you, Madam Chair.

You're a good chair, so I know it wasn't by intent.

4:10 p.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much.

We'll go back to Mr. Farmer, please.

4:10 p.m.

President, Canada-ASEAN Business Council

Wayne Christopher Farmer

As the president of the CABC and a Canadian who has been living in the region for almost 30 years, I want to emphasize the growing importance of ASEAN as a hub for business, trade and investment and Canada's potential gateway into the Indo-Pacific region.

As a single market with over 670 million people—I might add that about 50% of those are under the age of 30—ASEAN currently represents Canada's sixth-largest trading partner, with bilateral merchandise trade between the two regions growing steadily by about 6.4% per annum over the last two decades. Certainly, as the ASEAN economies and populations continue to grow, and their middle class grows, the rising demand for exports and services represents an increasing opportunity for Canadian businesses.

At present, however, Canada-ASEAN trade is still underperforming. This deficit needs to be addressed not only to maximize the economic benefit and market access for Canada in one of the world's fastest-growing regions, but also to provide long-term risk diversification for Canada to hedge against geopolitical and supply chain concentration risks and strengthen ties with a region fully supportive of global trade and the regulatory institutions that govern it.

According to a recent economic analysis conducted by C.D. Howe, a Canada-ASEAN FTA could see potential bilateral trade increases of up to $4.3 billion and income gains of $2.1 billion to Canada, as well as net job creation on the order of 2,000 to 3,000 jobs. While appearing modest, these are achievable numbers, not inflated goals, and they are, we believe, somewhat understated. This does not include the fact that an FTA or more formal trade framework is itself a catalyst to greater trade and custom between the two regions.

With the recent Russian invasion of Ukraine, and given some time, Canada is also ideally positioned to supply ASEAN with such necessary commodities as energy and food. Food security has increasingly become an issue as of late. Strategically, an FTA with ASEAN will also allow Canada to eventually enter the RCEP trade agreement, as an ASEAN FTA is a prerequisite for joining that.

While the strategic and economic potential is immense, so is the competition. Many of Canada's trade competitors, including the U.S., the EU and Australia, amongst others, and now the U.K., have been very proactive in ramping up their strategic engagement and trade initiatives with ASEAN. It is a hugely successful accomplishment to recent Canadian governments and to the work of Global Affairs Canada that, given our smaller current economic engagement and footprint with ASEAN compared with these nations, we are positioned where we are on ASEAN's list of priorities.

As such, the CABC and the network of Canadian businesses we represent urge Canada to continue to prioritize the negotiation and implementation of the Canada-ASEAN FTA and the Canada-Indonesia CEPA, in addition to exploring other opportunities for bilateral agreements with economies in ASEAN. A holistic approach is certainly necessary to yield long-term engagement with ASEAN. We should also ensure that we adopt a constructive and pragmatic approach during the current free trade negotiations by promoting the sharing of best practices and assisting with capacity building, understanding that this is the starting point to a much longer relationship with an opportunity to continue to upgrade and deepen our trade and diplomatic ties over time.

In conclusion, ASEAN is a region of significant growth, with a long queue of parties who want access. The time certainly is now for Canada to commit as a long-term trading partner to ASEAN and secure its presence in the Indo-Pacific. The CABC and its members stand ready to support Canada's efforts to increase regional trade with ASEAN, and hold a lot of optimism for the future of Canada-ASEAN trade and relations.

Given the limited time, I have outlined more analysis and recommendations in the briefing note we have submitted for the committee's consideration. I would very much welcome more discussion and any questions that you have subsequent to this. I'd be happy to follow up with that.

Thank you for the opportunity to make a few remarks.

4:15 p.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much, Mr. Farmer.

We'll now move on to Mr. Agnew.

Welcome back to the committee.

4:15 p.m.

Mark Agnew Senior Vice-President, Policy and Government Relations, Canadian Chamber of Commerce

Thank you very much, Chair, for having me back.

I think this is certainly a timely study, given the government's work currently on the Indo-Pacific strategy, upon which I'm going to be focusing my remarks for the next few minutes.

The first area that I want to mention is around trade policy. We have a number of initiatives that are ongoing in the region, and certainly they hold potential for opening new market access opportunities. These include recently announced initiatives such as our negotiations with ASEAN and Indonesia but also the potential for CPTPP expansion and opening opportunities in underutilized markets for Canadian businesses such as Taiwan.

I think it's important to go into these discussions, certainly, with a clear set of priorities. That's something we hear about regularly from our members. Some of the priorities that I would encourage this committee to think about in its recommendations would be, first, around tariff liberalization to ensure that our exports are remaining cost-competitive; having robust digital trade chapters that ensure the protection of cross-border data flows and that data localization does not become a condition for doing business in these markets; and enhancing regulatory dialogues to ensure that non-tariff measures such as SPS regulations in the agriculture sector do not become barriers to trade.

Also in the context of CPTPP specifically, we encourage the government to maintain the high standards of the agreement and not water down its provisions when it's looking at potential accession countries in the negotiation process.

The second area in the Indo-Pacific strategy in the Indo-Pacific region, of course, is China. Although the government has committed to delivering an “Indo-Pacific strategy”, the elements that pertain to China will certainly be quite critical for the Canadian business community. I think it's important to be clear-eyed not only, of course, about the size of the market but also the geopolitical challenges posed by China. How we engage with China needs to be balanced intelligently and certainly anchored, also, around co-operation with our allies in engaging with Beijing.

The third consideration goes back to what I said a moment ago around focus. The reality is that we live in a world of finite resources, both financially for the government and also with the bandwidth of human resources to deliver upon a foreign policy agenda. It would not be realistic to expect that our country can make a push in all sectors and in all countries in the region equally. We need to be judicious about how we go about selecting markets of focus and the priority sectors we are pursuing in those countries.

The fourth and final area I want to mention is around the role of non-governmental entities in bolstering trade relationships through the region in on-the-ground connections. Businesses are the ones that engage in commerce at the end of the day rather than governments. In doing so, they play an important part in the Canadian footprint in the region. I think government should see trade missions and other activities that facilitate those connections as part of a broader set of foreign policy tools at our disposal.

I know that when I travel abroad on behalf of the Canadian Chamber of Commerce, I represent not only my organization but also what foreign nationals perceive about Canada and Canadians. Therefore, a strong industry-government collaboration, I think, is mutually reinforcing.

Thank you for your attention, and I look forward to your questions.

4:15 p.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much.

We move to Mr. Cho.

4:15 p.m.

Sonny Cho President and Chief Executive Officer, Canada Korea Business Council

Thank you, Madam Chair. I'd like to thank the committee for this opportunity to provide comments on the business and trade opportunities with South Korea.

My name is Sonny Cho, CEO at the Canada Korea Business Council. We work mostly with the Canadian SMEs in the technology and manufacturing sectors across Canada. Some of the activities we're involved in are hosting forums to educate and motivate Canadian SMEs to explore the South Korean market. We host technology tours to Korean SMEs to showcase Canada's leadership in advanced technologies and try to facilitate joint ventures.

We also support government missions to and from Korea to promote trade and investment. Some members of our CKBC lead their own private business missions to arrange B2B meetings and facilitate business deals.

Why Korea? Korea has about 52 million in population, $1.8 trillion U.S. in GDP, and it is one of the top 10 economies in the world. It's ranked number five in R and D expenditure. Canada is actually at number 13. Canada and Korea have had a free trade agreement since 2015.

Just recently Korea has been trying to become less dependent on China. It currently imports about 25%. It has suffered substantially in recent years with China's retaliation. It is building more plants in the U.S., India, and ASEAN countries. Now we're beginning to get a few in Canada in the semiconductor and EV sectors.

Some of the opportunity sectors for Canadian companies in South Korea are in automotive, aerospace, ICT, autonomous vehicles, artificial intelligence, cybersecurity, energy and clean technologies, defence, communications systems and radars, ocean technologies, medical devices, life sciences, and agriculture and food.

You've probably seen in the media some of the recent deals with Canada were Li-Cycle with LG Chem and LG Energy Solution; Stellantis and LG Energy Solution; GM Canada with POSCO; and Naver's investment in Wattpad in Waterloo.

One area where I think we can improve especially is in commercial branding. Koreans love Canada and Canadians, but they don't give us too much business. Most foreigners can't name what commercial products Canada makes. More Canada branding programs are needed, and we need to support some of the service providers who are involved in facilitating exports, joint ventures and foreign direct investment.

Frequency and consistency with a long-term view are critical for success. Face-to-face meetings, sharing meals, these are the universal culture. We should be doing more of that now that we're getting out of the pandemic.

Many Canadian SMEs are not very knowledgeable about South Korea and are reluctant to invest time and resources to penetrate the Korean market. Most SMEs are still very comfortable just selling to the U.S., the U.K., the western EU and Australia.

We're not taking advantage of the Korean Canadian experts who are living in Canada. Actually, the Korean government is the one taking advantage of the Korean diaspora around the world. It supports its chapters and conferences annually, trying to help export their goods over to other countries. I think Canada should get involved in taking advantage of our multicultural diaspora communities, which are very active in international trade.

We need to improve our competitiveness. Canada's contribution to Korea's imports is only 0.87%. China and Japan are the top exporters to Korea. It is understandable since they are its closest neighbours, but other western countries do much better than Canada. The U.S. is at 12%. Germany is at 4.5%. Australia is at 3.85%. The Netherlands is at 1.5%. They export from two to 15 times more than Canada to South Korea. We need to study and understand why we are behind other countries.

The trade commissioner service and the EDC do a great job in helping many Canadian companies, but I think there are limits to what the public sector can do. There's a gap to be bridged. I think the private sector can do a better job in recruiting and persuading Canadian SMEs to sell to South Korea. More Canadian SMEs need to travel to Korea and Asia to understand the markets and build relationships.

Building relationships with major Korean companies can open up a lot of opportunities and provide access to China, India and other Indo-Pacific markets. There are lots of good government programs, but directing SMEs to take advantage of these programs and be adventurous is still a challenge.

In closing, we've had good—

4:25 p.m.

Liberal

The Chair Liberal Judy Sgro

I have to interrupt you.

I'm sorry, Mr. Cho. You'll have to insert your last comments into your answers to the committee members.

4:25 p.m.

President and Chief Executive Officer, Canada Korea Business Council

Sonny Cho

We're doing good work with the Canadian embassy and CanCham Korea, and we look forward to sharing more ideas and thoughts with the Canadian government in the near future.

Thank you.

4:25 p.m.

Liberal

The Chair Liberal Judy Sgro

Thank you very much.

We'll now have Ms. Nguyen for five minutes, please.

4:25 p.m.

Julie Dai Trang Nguyen Director, Canada Vietnam Society

Good afternoon.

On behalf of the Canada Vietnam Society, I would like to thank the House of Commons Standing Committee on International Trade for inviting me to speak as a witness. The Canada Vietnam Society is a non-profit organization with a mission to build a strong Vietnamese Canadian community to promote trade, education and people-to-people links for the benefit of all Canadians. Our society has member associations, which include the Canada-Vietnam Trade Council, student associations and cultural and sport groups across Canada.

My opening statement will focus on the importance of Vietnam for Canadian businesses, not only in ASEAN but in the Indo-Pacific overall.

My first point is that Vietnam matters to Canada because Vietnam has been Canada's largest trading partner in ASEAN since 2015. Bilateral trade between Canada and Vietnam was $9 billion in 2020. That's up from $8 billion in 2019, despite the pandemic.

Trade diversification is important to Canada. Canada needs to build strong relationships with other Asian countries beyond China. ASEAN is an important trading bloc of 10 nations. It has a total population of 660 million and a combined GDP of $5 trillion, representing the world's fifth-largest economy. ASEAN is Canada's sixth-largest trading partner. In 2020, Canadian trade with ASEAN was $33 billion.

ASEAN is at the centre of Asia's regional security. Within ASEAN, Vietnam is not only an important trading partner but also an important security partner as Canada considers its Indo-Pacific strategy. Vietnam and Canada are both committed to multilateralism, global security and combatting climate change.

From a war-torn and impoverished nation in 1975, Vietnam became a lower middle-income country in 2010. With a current population of 100 million, Vietnam's economy grew an average of 7% for five years after 2015. While most of the world's economy shrank during the pandemic, Vietnam's economy grew an average of almost 3% over the last two years. Vietnam is expected to be an upper middle-income country by 2030, and a high-income developed country by 2045. Canadian companies stand to benefit in the education, technological, agricultural, clean energy and aerospace industries, among others.

Here is my second point. Canada should consider tapping into Vietnam's network of free trade agreements. Vietnam has 15 free trade agreements in force, including with the European Union, the United Kingdom and the Regional Comprehensive Economic Partnership, or RCEP for short. The RCEP consists of 10 ASEAN nations, plus Australia, China, Japan, New Zealand and South Korea. Taken together, Vietnam's free trade agreements encompass 60 economies that represent 90% of the worlds GDP.

Here is my third point. Canada and Vietnam have had a long-standing diplomatic relationship since 1973. Next year marks the 50th anniversary of that relationship. Both are members of the United Nations, la Francophonie and the CPTPP. The Canada-Vietnam partnership agreement was signed by both governments in 2017. In 2019, Vietnam became one of the top five source countries for international students in Canada.

Canada opened a military attaché office in Vietnam in 2020. Last January, the Canada-Vietnam joint economic committee was established. Earlier this month, Canada's foreign affairs minister made an official visit to Vietnam and discussed, among other issues, the launching of the Canada-ASEAN free trade negotiations.

Vietnam plays a major role in the Indo-Pacific region. The United States, Japan and India have already recognized this reality. This is why they have strong relationships and partnerships with Vietnam.

In closing, I urge you to consider—

4:30 p.m.

Bloc

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

Madam Chair, there is no more interpretation.

4:30 p.m.

Liberal

The Chair Liberal Judy Sgro

Ms. Nguyen, your time is finished. Thank you very much.

Is the translation all right now?

Okay. Thank you.

Mr. Moffatt, you have five minutes, please.

4:30 p.m.

Shane Moffatt Head of Nature and Food Campaign, Greenpeace Canada

Thank you, Chair.

It's a pleasure to be able to speak with you today. I very much appreciate the opportunity.

I'm speaking from Tkaronto on the traditional territories of the Haudenosaunee, the Anishinabe, the Huron-Wendat, the Chippewas and the Mississaugas of the Credit.

Greenpeace is a global campaigning organization with a mission to maintain life on earth in all its diversity. We comprise 26 independent regional organizations, with a presence in over 55 countries around Europe, Africa, the Americas, Asia and the Pacific. These include an incredible team of people working on the ground with Greenpeace Indonesia as well as Greenpeace Canada, where we were founded over 50 years ago. Since then, we have invested significant resources in exposing the risky commodities driving deforestation and human rights violations around the world.

Palm oil, unsurprisingly, comes in near the top of the list. Palm oil is made from the fruit of oil palm trees, which come from west Africa originally but were brought to Southeast Asia in the 1960s. It's found in many of the products that we use every day—shampoo, bread, toothpaste, chocolate and even laundry detergent. Palm oil is grown in many tropical countries, although Indonesia is by far the largest producer in the world.

Palm oil can be produced sustainably, but a lot of it isn't. The problem lies with where and how it is grown. To make way for palm oil plantations, huge areas of rainforest are torn down by bulldozers or burned to the ground. Most Indonesian oil palm plantations are on the islands of Sumatra and Borneo, where forest destruction has pushed all three species of orangutan to critically endangered status. Borneo has lost nearly 150,000 orangutans over the last 16 years. In Indonesia the palm oil industry is estimated to have caused 2.3 million hectares of deforestation between 1995 and 2015.

Deforestation is also a major contributor to climate change. Clearing forests releases enormous amounts of carbon. With fewer trees, less carbon dioxide is then removed from the atmosphere. Oil palm plantations need dry land, so companies drain the forests and peatlands, making it very flammable. Our analysis revealed that between one million and two million hectares of Indonesia's peatland burned between 2015 and 2018.

More than 900,000 people in Indonesia suffered acute respiratory infections due to smoke haze from those 2019 fires. The Dayak people, one of Borneo's original inhabitants, rely heavily on the forests for their livelihood. Now their culture and way of life are threatened.

When we talk about risky commodities, however, it's not just palm oil. Rubber was among the top five exports from Indonesia to Canada in 2019. Rubber plantations have also been connected to deforestation and indigenous rights violations.

Wood pulp was the third-largest export from Canada to Indonesia in 2019. This is a key component in writing paper, which is, interestingly, one of Indonesia's largest exports to Canada—the fifth-largest that year. What's more, the largest wood pulp producer in Canada, Paper Excellence, is said to be owned by the Indonesian family business behind the Sinar Mas palm oil and pulp wood empire. Sinar Mas has a long track record of deforestation and social conflict. The logging industry in Canada is itself already under pressure for “some of the worst forestry in the world”, responsible for a tremendous loss of biodiversity and massive greenhouse gas emissions from unsustainable logging.

Both Greenpeace Canada and Greenpeace Indonesia have significant concerns with the proposed Canada-Indonesia trade agreement. Almost 50,000 Canadians have already voiced their opposition. We have identified three priorities for any deal.

First, we need more transparency. The draft text should be shared with the public. Independent impact assessments should be conducted with the involvement of civil society.

Second, the public deserves to know how any deal will align with the government's commitments under the United Nations Declaration on the Rights of Indigenous Peoples, the Convention on Biological Diversity, the Paris Agreement and the most recent Glasgow leaders' declaration to end deforestation. Clear goals embedded in the treaty text and annual progress reporting are essential.

Third, any deal should distinguish between goods based on how they are produced, and guarantee traceability of all products. This requires enforceable guarantees that Canadian forest products are not originating without the free, prior and informed consent of indigenous peoples, or originating in threatened species' habitat. The same goes for Indonesian products like palm oil originating from deforestation or linked to human rights abuses.

In conclusion, we need to see a Canada-Indonesia deal that truly reflects the most urgent global issues that require co-operation to resolve—climate change, the biodiversity crisis, rampant social inequalities and the concentration of resources in the hands of a wealthy few. Transparency and public oversight are the best ways to achieve this.

Thank you very much.