International Trade Committee on May 11th, 2022

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

I call the meeting to order. This is meeting number 18 of the House of Commons Standing Committee on International Trade.

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

I would 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. For those participating via Zoom, you have interpretation options at the bottom of your screen of floor, English or French.

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

We have with us today, as an individual, Lynette Ong, professor, University of Toronto. From the Asia Pacific Foundation of Canada, we have Jeff Nankivell, president and chief executive officer. From the Canadian Sugar Institute, we have Sandra Marsden, president. From the Fédération des chambres de commerce du Québec, we have Philippe Noël, vice-president, public and economic affairs, and Mathieu Lavigne, director, public and economic affairs. From the International Coalition for Human Rights in the Philippines, we have Patricia Lisson, chairperson, and Guy-Lin Beaudoin, chair, Québec. From Nature Alu, we have Denis Mazerolle, president.

I welcome all of you.

Ms. Ong, I invite you to give us an opening statement of up to five minutes.

[Dr. Lynette Ong, Professor, University of Toronto, As an Individual]

Thank you.

Good afternoon, honourable Chair Sgro and members of the Standing Committee on International Trade. It is my great honour to testify before this important standing committee.

I am a professor of political science at the University of Toronto's Munk School of Global Affairs and Public Policy. I'm sure you've heard a great deal from other expert witnesses on trade opportunities for Canadian businesses in the Indo-Pacific. In my testimony as a political scientist, I would like to provide a broader perspective on Canada's Indo-Pacific strategy, of which I believe our trade policies should be a part.

I would like to make three major points. One, I believe our trade policies, including the ongoing trade negotiations of the Canada-ASEAN free trade agreement and the Canada-Indonesia comprehensive economic partnership agreement, should be part and parcel of the forthcoming Indo-Pacific strategy. The Indo-Pacific strategy, in my view, is as much about building partnerships with countries in the region as it is about countering China's influence. In fact, the two objectives are not mutually exclusive. They reinforce each other.

To achieve these twin objectives, I believe Canada should take a long-term perspective in its approach to the Indo-Pacific, one that focuses on bolstering local capacity and improving regional prosperity. In the pursuit of trade policies, Canada should prioritize these goals in addition to securing market access for Canadian exports to the region. If we perceive the Indo-Pacific strategy as the cornerstone of a broader statecraft of dealing with the rise of China, then I think building lasting partnerships with the Indo-Pacific nations should be made a priority. These goals are in line with the Biden administration's Indo-Pacific strategy released in February of this year.

Two, there are several ways to build lasting partnerships. In addition to securing market access, I would urge the government to prioritize measures to improve labour and environmental standards as well as digital inclusiveness. Creating pro-worker and environmentally friendly trade agreements are of pertinence to Southeast Asian countries that fall behind north Asia in terms of the level of GDP, which may lead to a compromise of these issues in pursuit of economic opportunities.

A growing proportion of trade is now taking place through digital mediums. However, in many developing countries in the Indo-Pacific, digital inclusiveness and related data security issues should not be taken for granted. They are important in improving the capacity of the Indo-Pacific nations to mitigate the adverse effects of open trade. I believe if Canada is interested in partnering with the region in the long term, we ought to think about assisting them in building mitigating capacity.

In my third and last point, I want to bring China into the picture. Minister Joly recently concluded a diplomatic visit to Indonesia and Vietnam. Even though China ranks only fourth in terms of the sources of foreign direct investment in Southeast Asia, some countries are more reliant on Chinese capital than others. Recent surveys actually suggest wide-ranging disparity in attitudes toward China in Southeast Asia. While the elites in general want to pursue a balancing strategy between the United States and China, some governments of autocratic tendency, such as that of the newly elected president, Bongbong Marcos, the son of the former dictator Ferdinand Marcos in the Philippines, are entirely pro-China.

That said, various surveys also suggest that there are palpable anti-China sentiments at the societal level throughout the region. I have argued for Canada's role in building civil society capacity to allow Southeast Asian countries to be more discerning of China's growing influence as well as to enable the citizens to provide checks and balances against the governments' investment decisions whenever necessary. In my recently published book about Malaysia, The Street and the Ballot Box, I contend that strong civil society can be instrumental in mobilizing large segments of society to bring about better political outcomes through a more robust opposition.

In conclusion, the emerging economies in Southeast Asia often need Chinese investment to build infrastructure or to power a labour-intensive manufacturing industry, leaving them with limited options to decline any Chinese investment offers even if they were on unfavourable terms. I believe Canada, along with other western democracies, has the ability to bolster the region's capacity to engage with China on more equal footing. This deserves, I believe, a prominent place in Canada's trade policy as well as its Indo-Pacific strategy.

Thank you again for the opportunity to offer my perspectives.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

I will move to Mr. Nankivell.

[Jeff Nankivell, President and Chief Executive Officer, Asia Pacific Foundation of Canada]

Thank you for the opportunity to contribute to this important discussion.

Established in 1985 by the Asia-Pacific Foundation of Canada Act, the Asia Pacific Foundation of Canada's mandate promotes Canada's involvement in the region.

Today, as we urgently seek to diversify our export markets and our sources of supply for imports in a new era of geopolitical uncertainty, that mandate to promote engagement in Asia is surely more relevant than ever.

I know the committee has already heard from numerous witnesses that the Indo-Pacific region will be the leading source of economic growth in the world for decades to come. At APF Canada, we can supply lots of quantitative data about this growth story. There is rich material available at our website, which is asiapacific.ca.

Today I will focus my opening remarks on some qualitative aspects of the story. What makes this growth a really interesting opportunity is not so much its volume, but its nature. In an emerging market such as Vietnam, 2% of economic growth is very different from the same growth in a mature market such as the U.S.A. In mature markets, Canadian businesses seeking new customers typically have to wrestle away market share from established players with loyal customers. By contrast, every percentage point of growth in these big middle-income economies typically represents millions of households crossing an income threshold that sees them change their consumption habits.

Simply put, in these places, every year there are new households with money to spend on better education, health care, high-quality food and clothing, financial products and leisure experiences.

This is the core promise of growth in Asia for Canadians. It is the opportunity to compete in new markets for services and goods that consumers in large numbers every year are considering for the first time in their lives. Key to this consumption transformation is urbanization. By 2050, Asia's urban population will have grown from two billion to 3.3 billion. This brings not only a change in lifestyle; for these 1.3 billion new urban dwellers, most of the buildings they'll inhabit in 2050 have yet to be built, not to mention all of the new roads, shopping malls, schools and rapid transit systems they will use. All of this will need to meet ever-higher standards for reduced carbon footprint and energy efficiency, providing high value opportunities for innovative clean technologies and approaches, in which Canadians are competitive globally.

This transformation means significant opportunities in a range of areas including continued growth in our traditional commodity exports, and also growth in new areas, including higher quality agri-food and seafood products. It includes educational services, which is recruitment of more students to Canada from more places across Asia, as well as the provision of educational consulting and technology services in country in Asia. It includes clean technologies related to energy efficiency, the transition to sustainable energy systems, low-carbon construction, water management and other environmental priorities. It includes digital technologies and artificial intelligence applications in health care, finance, education, agriculture and food processing. It includes financial products for houses and saving for retirement, which is an area where Canadians are already well established in some parts of Asia through our insurance companies and asset managers and through the thought leadership of our pension funds as respected and sought-after long-term investment partners in Asia.

While there is great promise in all this, we should be under no illusions. There are fierce competitors everywhere, both international and local. There are risks of all kinds to be aware of. To be successful, we will need long-term focus, a sustained effort and investment of real resources.

In launching an Indo-Pacific strategy for Canada, the federal government needs to commit to at least three key areas of action. Number one is sustained engagement at the political leaders level with partners in Asia, with a special focus on broadening and deepening relationships with the emerging economies and middle powers of Southeast Asia. The launching of free trade negotiations with the Association of Southeast Asian Nations and Indonesia is a good start.

Number two is financial investment and regulatory support for the hard and soft infrastructure on which expanded trade depends. Pipelines are just one example. Another example is the port of Vancouver, a few kilometres from where I am now, which needs more physical capacity. It also needs zoning support for more industrial land for warehousing and logistics. That's something that requires political will in the national interest.

Number three is that new investments are needed in building the Asia knowledge and competency of Canadians from students right up through the senior ranks of our businesses, public institutions and governments. We need increased public support to equip our businesses to be alert to the risks as well as the opportunities through the trade commissioner service, Export Development Canada, Business Development Bank of Canada and the regional development agencies.

We've done detailed work in these areas at APF Canada. I'd be delighted to expand on any of them and to address other matters of interest to the committee.

Thank you for giving me the opportunity to speak to you today. I look forward to our discussion.

[The Chair, Liberal, Judy Sgro]

Thank you very much, sir.

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

[Sandra Marsden, President, Canadian Sugar Institute]

Thank you, honourable Chair and members of the committee.

It is a pleasure today to present the Canadian sugar industry's perspective on trade opportunities in the Indo-Pacific.

The Canadian Sugar Institute's members represent refined sugar production in four provinces in Canada, including cane sugar refining at major ports in B.C., Ontario and Quebec, and sugar beet processing in Alberta. The industry also has two sugar-containing product processing facilities in Ontario.

The CSI supports Government of Canada initiatives to diversify and grow export markets for sugar and for food products containing sugar. We consistently advocate for the reduction of tariff and non-tariff barriers in high value markets, while strongly supporting the continued advancement of multilateral liberalization. This is particularly important in our sector, where global and regional trade are characterized by a high degree of government intervention that distorts production and trade.

Canada’s sugar industry, in contrast, operates under world market conditions without subsidies and prohibitive tariff walls. Relative to countries in the ASEAN, India and many other protected markets, our market is open with only a modest tariff of about 6%. This contrasts, for example, with tariffs of 94% on sugar in Thailand, 95% in Indonesia and 100% in India. Given these massive tariff and non-tariff barriers on sugar in these regions and the dominance of Thailand and India in global and regional sugar production, there has been no opportunity for Canada to export refined sugar to these countries.

In this context, the future prospects for achieving meaningful export gains are very limited for sugar. For this reason, we don't support the elimination of our modest refined sugar tariff. It is small by international standards, but it provides some insulation against foreign trade distorting policies.

On the other hand, there may be long-term opportunity for the processed food industry, which our industry relies on as suppliers. We contribute in a major way to investment in food processing in Canada, accounting for about 25% of total food manufacturing, and representing about $22 billion in revenue and close to $10 billion in exports. In fact, about 40% of Canada’s sugar production is exported in food products.

While the United States is the most important export market for our customers—for the food processors that use our sugar—diversification is also important. In that context, the potential for further growth and value-added food products is important to our industry.

Currently, imports into Canada significantly outweigh exports for the vast majority of food products containing sugar, as well as processed foods overall. While opening markets to Canadian agricultural commodities is important, it is also essential to address the trade imbalance in value-added processed foods.

Key priorities for us for negotiations with Indonesia, ASEAN and India include continued advancement of Canada's long-standing position that refining confers origin to raw sugar. This rule of origin is essential in recognizing that 90% of Canada's refined sugar depends on the Canadian refinery industry for Canadian consumers and food processors.

We'd like to eliminate foreign tariffs on sugar and foods containing sugar, given the substantial imbalance in tariff protection in these economies. In most cases, Canada’s import tariffs are duty-free, or very small, while tariffs in these potential markets are disproportionately high or prohibitive.

Another priority is to address the trade imbalance in value-added processed foods. It is important that negotiating outcomes address the significant and complex array of non-tariff measures that prevent Canada from exporting value-added processed foods to these countries.

Briefly, and specifically in the context of the ASEAN negotiation, as mentioned, market access prospects are limited for Canadian sugar, and products that are high in sugar, given Thailand’s surplus production and dominance in the region and trade distorting policies. This dominance threatens to divert more refined sugar products to Canada without any offsetting export opportunity. For food products containing sugar, a comprehensive negotiation that substantially reduces tariff and non-tariff barriers could provide long-term opportunity as the market develops and demand grows for packaged foods and beverages.

With respect to—

[The Chair, Liberal, Judy Sgro]

I'm sorry to interrupt, Ms. Marsden. The five minutes are up and we need to allow time for our members.

Next we'll have Reverend Lisson and Major Beaudoin for five minutes, please.

[Reverend Patricia Lisson, Chairperson, Canada, International Coalition for Human Rights in the Philippines]

Thank you for the invitation to present at this committee this afternoon.

The Canadian and Quebec chapters of the International Coalition for Human Rights in the Philippines have carried out multiple human rights missions in the north in Luzon and the south in Mindanao among indigenous peoples affected by mining activities.

Canada's share of mining in the world is considerable. According to the Department of Natural Resources, nearly half of the world's mining companies are headquartered in Canada. Canadian companies own 15% of mining in the Philippines. The Philippines attracts foreign mining interests, as it ranks the 50th most mineral-rich country with approximately $1 trillion in untapped minerals.

The Philippine government has also made investing particularly easy. The Mining Law of 1995, aimed at foreign mining investors, was introduced as the country struggled with the national debt accumulated during the Marcos dictatorship and a decline in mining operations in the early 1990s. The law also reflected the pursuit of rapid privatization and free-market economies promoted by the World Bank and the Asian Development Bank.

In the House of Commons during question period on May 3, a Liberal MP asked a question of a Liberal minister and, without paraphrasing them, it is clear that they agreed that the Philippines is an El Dorado for Canadian investors wishing to do business there. However, our experience is that the Philippines is first and foremost an El Dorado of human rights abuses. Therefore, we must invest with caution in this country if we do not want to contribute directly or indirectly to human rights abuses, especially in the mining sector.

We have seen this with our own eyes working with the Igorot and Lumad peoples. Powerful commercial and political actors circumvent the requirement of free, prior and informed consent. This principle is regularly manipulated through corruption and intimidation, as indicated in several independent studies submitted to the United Nations High Commissioner on Human Rights, Michelle Bachelet.

[Guy-Lin Beaudoin, Chair, Québec, International Coalition for Human Rights in the Philippines]

Madam Chairperson, distinguished members of the Committee, in our view, the Canadian government must consider the precarious human rights situation in the Philippines. Launching accusations or being baselessly accused of communist affiliation undermines both civil society and the opposition. In the eyes of the Philippine state, this means carte blanche.

In addition, defenders of the ancestral domain, both Lumads and those who aim to protect the environment, figure prominently among the victims of extrajudicial killings. Defenders are in Mindanao, Negros, the Cordillera region, Palawan and Bataan province. Out of more than 227 victims of extrajudicial executions, half of them opposed mining projects, and a third were First Peoples of the Philippines.

In recent years, virulent rhetoric among the highest government officials, ranging from the president, to the army chief, to the Philippine National Police chief, caused deep and pervasive and damage. Some statements have reached the level of incitement to violence. This rhetoric ranges from degrading and sexually charged comments against women human rights defenders and politicians, including rape jokes; to inflammatory statements calling for the bombing of indigenous peoples who oppose development and mining activities; to messages that encourage extreme violence by calling for the beheading of civil society actors, warning journalists that they are not safe from assassination.

The UN High Commissioner for Human Rights, Michelle Bachelet, noted sources of this rhetoric in her report. Canadian and Quebec chapters of the International Coalition for Human Rights in the Philippines noted the same in three of their reports.

I will now present our recommendations.

First, we recommend that, in all its negotiations and before making any investments, the Canadian government and Export Development Canada take into account human rights issues and First Peoples' rights issues associated with Canadian mining projects in the Philippines. It would be prudent for them to do the necessary due diligence before investing taxpayers' money in companies that may directly or indirectly violate human rights.

We also think it is important for the government to establish a committee and conduct independent policy reviews before investing in companies. In all the contracts EDC concludes with companies operating in the Philippines, include provisions to protect human rights, the environment and the principle of free, prior and informed consent.

[The Chair, Liberal, Judy Sgro]

Thank you very much, sir. My apologies for having to interrupt.

We will go to Mr. Noël, please.

[Philippe Noël, Vice-President, Public and Economic Affairs, Fédération des chambres de commerce du Québec]

Good afternoon.

My name is Philippe Noël and I am vice-president of public and economic affairs for the Fédération des chambres de commerce du Québec. With me is my colleague Mathieu Lavigne, director of public and economic affairs.

The Fédération des chambres de commerce du Québec, or FCCQ, includes 130 chambers of commerce and 1,100 corporate members in every sector of the economy, throughout all regions in Quebec.

Government support of our companies' success in global markets is a vital issue for us. The future of our economy depends on the ability of our companies to export their products and to face increasingly fierce competition, both in our domestic market and abroad. Indo-Pacific countries, which stretch from Central Asia to East Asia, across the Indian Ocean and Oceania, include China, Japan, India, Australia, as well as the Association of Southeast Asian Nations, or ASEAN, which we'll talk about shortly.

In fact, the federal government and ASEAN have agreed to proceed with negotiations for a free trade agreement in November 2021. Signing such an agreement would be another step towards diversifying export markets for Quebecois companies.

In 2018, the FCCQ produced a detailed brief to outline its expectations on the free-trade agreement. We presented our point of view on this issue. This is an additional opportunity for us to diversify our markets in Quebec, on top of other international trade agreements our companies participate in. Moreover, the size, diversity and growth of markets covered by this agreement attest to the important business opportunities these markets represent. Privileged access to these emerging markets gives reason to be optimistic about such an agreement.

Since 2020, the Indo-Pacific has become Quebec's second-largest international export market. Quebec's export profile is diversified. In total, this large market represents 12% of our exports, valued at $10.4 billion. It is also a market where Quebec has experienced its strongest growth over the past 10 years, with development reaching nearly 74%, due especially to the efficiency of our logistics hub and the Port of Montreal. This, among other things, allows us to quickly reach markets in Quebec and Canada, as well as the American Midwest.

There are also trade agreements such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership and the Canada-Korea Free Trade Agreement.

The aerospace industry accounts for more than a quarter of exports to ASEAN, while other important sectors of Quebec's economy, such as agri-food, industrial machinery, iron and steel, computer and electronic equipment and forest industry products account for a significant share of exports to these countries.

We have a number of expectations regarding international agreements, particularly regarding governments.

First, reducing tariff and non-tariff barriers to Canadian exports is a must. This includes establishing simple and effective rules of origin and reducing technical barriers to trade, namely through better regulatory and customs cooperation.

Second, we must maintain supply management for our agri-food sector.

Third, it is important to have better environmental cooperation.

Fourth, we need to ensure that we establish rules on investment protection and dispute settlement.

Fifth, facilitate the admission and temporary stay of business travellers and skilled workers.

There is also a need to regulate e-commerce and ensure data protection. Many cybersecurity problems still exist, as we have seen in recent months. In fact, the FCCQ recently published a study on this.

Finally, we need to support the internationalization of SMEs and better promote business opportunities arising from new trade agreements.

Larger companies are generally more knowledgeable about global trade issues and have more capacity to act and react quickly to a new trade agreement.

Our exchanges with SMEs and chambers of commerce revealed certain gaps in information and awareness of the issues related to new trade agreements. Left uninformed, these companies may miss opportunities arising from these agreements or be surprised by the arrival of new competitors in their traditional markets.

In closing, we encourage the federal government to work closely with Quebec to integrate their export support services properly and, most importantly, improve communication about services offered to businesses. For example, by systematically referencing federal and provincial services that meet their needs, exporters better understand the full range of services available.

The FCCQ reiterates that the success of trade agreements will depend on the ability of companies to take advantage of new open markets and face new competitors.

Thank you. We are ready to answer your questions.

[The Chair, Liberal, Judy Sgro]

Thank you very much, sir.

We will now go to Mr. Mazerolle, please, for five minutes.

[Denis Mazerolle, President, Nature Alu]

Madam Chair, members of the Committee, good afternoon.

I am Denis Mazerolle, president of Nature Alu.

Thank you for the opportunity to share with you the challenges of Nature Alu, a new company located in Saguenay, Quebec.

First, I'll explain what we do. Nature Alu buys primary aluminum from Aluminerie Alouette, located in Sept-Îles, through its supplier, Albecour, and purifies it to a level of 99.99% or more using its innovative process designed entirely in Saguenay-Lac-Saint-Jean. The purified aluminum is destined for export to specialized high-tech markets, such as lithium ion batteries, aluminum-air batteries, electrolytic capacitors, specialty alloys, specialty paints, quantum computers, semiconductors and 3D printing.

Before talking about Nature Alu's challenges, I must briefly explain the price structure of aluminum. It is based on the LME price, the London Metal Exchange, which is announced daily. However, the LME is not the only factor dictating price when we buy or sell aluminum. In our case, when we buy aluminum from our supplier, a market premium is added to the LME price. This market premium is established for a given market: in North America, it is called the Midwest premium; in Europe, there is the Metal Bulletin premium; in Asia, it is the MJP, or Main Japanese Port premium.

For aluminum bought here in North America, we pay the LME price plus the Midwest premium. Then we process and purify it, adding value based on purity level and shaping.

The LME price fluctuates significantly, but that's not the real problem. The problem is that the market premium varies from market to market. In our case, we pay the Midwest premium, which is the most expensive. When we want to sell our product in Asia, the premium is much lower. So we are at a significant disadvantage in terms of aluminum pricing.

I'll explain what caused this premium variation problem. First, Canadian aluminum exported to the United States was hit by a 10% tariff under Section 232 of the American Trade Expansion Act. As soon as this tax was imposed, the Midwest premium increased by 10%. This created a huge gap between the Midwest premium in North America and other market premiums in Europe and Asia. In September 2020, this tax was abolished for Canadian aluminum producers, but the Midwest premium remained at a very high level, meaning 10% higher than the others. It has not returned to its normal value, which was about $100 higher than other market premiums. The level of inflation means a difference of nearly $800 between aluminum bought here in Quebec or Canada and the same aluminum bought in Asia. Recently, we did the math, and it was $770.

The disadvantage for Nature Alu is that it buys its aluminum at a very high price, processes it then exports it to Asia, a market where aluminum is worth much less. This distortion, introduced into the Midwest premium through the imposition of a tariff under Section 232 of the Trade Expansion Act, is effectively crippling processed exports to Europe and Asia. All aluminum exporters have the same problem as we do. Nature Alu is unable to export its processed products to Europe and Asia because of the gap between the Midwest premium and other market premiums.

Nature Alu asks the Government of Canada to use the money collected through its countermeasures to the American tariffs imposed under Section 232 of the Trade Expansion Act to help Nature Alu export its processed products to Europe and Asia. This assistance would reduce the effect of the gap and correct the distortion introduced in the Midwest premium...

[The Chair, Liberal, Judy Sgro]

I'm sorry to interrupt you, Mr. Mazerolle, but it's important for committee members to get a chance to clarify and ask some questions. Thank you very much.

Mr. Martel.

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

Thank you...

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

Just before we start the round of questions, Madam Chair, I have something to ask you. We know there's a vote coming up in the House. Can we agree that we're going to stay here until the vote, out of respect for the witnesses, since it's already going to be a very short meeting?

[The Chair, Liberal, Judy Sgro]

Once the bells start to ring, if there's unanimous consent of the committee, we can continue until we actually have to vote. We can vote from here, if that's the will of the committee.

Is everybody okay with that?

[Some hon. members]

Agreed.

[The Chair, Liberal, Judy Sgro]

Good. Thank you.

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

Thank you, Madam Chair.

I thank the witnesses for being with us today.

Mr. Mazerolle, it is a pleasure to see you today.

We have heard a lot about Nature Alu and the potential of your high purity aluminum. I'm thinking of specialty alloys, for instance.

Could you tell me more about how your product stands out internationally and how it could benefit Canada?

[Denis Mazerolle]

When we created Nature Alu, our goal was to become part of the energy transition through high-purity aluminum. High-purity aluminum is found in lithium ion batteries, aluminum-air batteries and electrolytic capacitors, which are widely used in electric cars. This is one of the market segments we wanted to break into.

High-purity aluminum produced at Nature Alu has the lowest carbon footprint in the world. Our competition comes mainly from China, where aluminum smelters operate using coal-fired electricity. Purification processes used in China are energy intensive compared to ours. As a result, the carbon footprint of Nature Alu's aluminum is 20 times smaller than the carbon footprint of the same product made in China using energy from coal. That's an advantage we have.

The supply chain also matters. We've talked to people who would like to choose suppliers that don't necessarily come from China or Russia. Today, the majority of high-purity aluminum comes from those countries. People are looking to diversify their supply chain and Nature Alu is an option for them, provided we can offer a competitive price.

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

What export opportunities do you think there are for your product in Asia, particularly in the ASEAN countries?

[Denis Mazerolle]

These countries manufacture a lot of electronic components. There are also semiconductors, which can be made from high‑purity aluminum. We think that the opportunities in these countries will increase greatly in the future. Many electronic components and capacitors will be produced in these countries, and Nature Alu could be a major supplier.

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

I know that you have done a small contract with India in the past but, as you were saying earlier, your company isn't really competitive in that market.

This brings me to the famous Midwest premium, which you say puts you at a huge disadvantage in the market. You would like the government to do something about this 10% increase. You feel that this premium is far too high and is a barrier for you.

[Denis Mazerolle]

In September 2020, when the aluminum tax was abolished, people thought that the situation was settled for Canada, but it isn't settled for the exporters, who still have to buy their aluminum by paying this 10% surplus, which is still in the price.

We are really at a disadvantage and would like to be compensated so that the situation can go back to the way it was before the imposition of section 232 of the Trade Expansion Act, when the gap was about $100 between Asia and North America. If we get back to those levels, we'll be able to buy our raw material at a competitive price and make competitive offers to customers in those markets.