International Trade Committee on May 30th, 2022

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

I call the meeting to order.

Good morning, everyone, those online and those in person. It's always great to see people in person. It reminds us that we're all human beings.

This is meeting number 19 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 November 25, 2021.

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 places during proceedings.

I'd like to make a few comments for the benefit of 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 are not speaking.

For those participating via Zoom, you have interpretation options at the bottom of your screen of floor, English or French audio. I would remind everyone that all comments should be addressed through me as the chair.

Pursuant to Standing Order 81(4), the committee is considering main estimates 2022-23, vote 1 under Canadian Commercial Corporation and vote 1 under Invest in Canada Hub, which were referred to the committee on March 1, 2022.

We have with us today, from the Department of Foreign Affairs, Trade and Development, Sara Wilshaw, chief trade commissioner and assistant deputy minister, international business development, investment and innovation; Bruce Christie, assistant deputy minister and chief trade negotiator; Arun Alexander, associate assistant deputy minister, trade policy and negotiations; Annie Boyer, director general and deputy chief financial officer, financial planning and management; Jay Allen, director general, trade negotiations; Doug Forsyth, director general, market access; Eric Walsh, director general, North America strategy bureau; Weldon Epp, director general, trade and diplomacy North Asia; Emmanuel Kamarianakis, director general, investment and innovation. From Investment in Canada Hub, we have Katie Curran, interim chief executive officer.

Welcome to everyone.

Ms. Wilshaw, I invite you to make an opening statement of up to five minutes, if you wish.

Please go ahead.

[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. I am happy to be here with everyone today.

I want to acknowledge that I am speaking from the traditional and unceded territory of the Algonquin Anishinabe people.

I would also like to note that we're meeting at a time when the Russian illegal invasion of Ukraine is a really grave threat to world peace, and it's obviously well known that Canada stands with Ukraine and condemns the unjustifiable invasion, which has challenged the rules-based international order. This violence has devastated the Ukrainian people, has forced many to flee their homes and has disrupted economies and global supply chains.

The consequences of Russia's actions have extended well beyond Ukraine's borders and have serious repercussions around the world for human rights, global food security and energy security.

Since Russia's illegal invasion of Ukraine, Canada has responded with sanctions on more than 1,450 individuals and entities under the Special Economic Measures Act. These sanctions—many implemented with Canada's allies and partners—have a strong impact on the Russian economy, and they are a powerful symbol of Canada's commitment to Ukraine's sovereignty and territorial integrity, and to the international rules-based order.

Canada also implemented many other economic measures against Russia. We expanded export control restrictions; cancelled valid permits to prevent military, strategic and dual-use items from going to Russia; revoked Russia's most favoured nation trading status; and denied Russia access to Canadian ports and airspace.

Here at home, while the COVID-19 pandemic has affected the global trade landscape and the Canadian economy, the good news is that Canadian trade and the economy rebounded strongly in 2021. We've started to rebuild from the pandemic, with GDP rising by almost 5% in 2021. Our imports and exports combined rose by almost 14% to reach a record $1.5 trillion. Exports increased even more, growing by an unprecedented 18% to reach $766 billion, another record.

More exports to the United States, thanks to CUSMA, helped drive some of that growth. Since the agreement was signed in 2020, Canada-U.S. trade has grown almost 17%. We have a thriving bilateral trade and economic relationship with the United States, underscored by a recent visit to Canada by United States trade representative Katherine Tai.

To keep this momentum going with the U.S. and other countries around the world, the Canadian government is supporting businesses as they start up, scale up and export into new markets. Our free trade agreements are crucial for businesses looking to diversify their export markets, and we have made lots of progress on those trade agreements.

March was a particularly busy month. We relaunched negotiations with India for a comprehensive economic partnership agreement. We held the first round of negotiations towards a Canada-Indonesia comprehensive economic partnership agreement to secure our access to the large export market in Southeast Asia.

When the U.K.'s secretary of state for international trade, Anne-Marie Trevelyan, visited in March, negotiations were launched for a bilateral free trade agreement with the U.K.

The Government of Canada is also working hard to expand the benefits of CPTPP into new economies, beginning with the U.K., and started the accession process for that last June.

We expect to hold the first round of negotiations this summer towards a free trade agreement with ASEAN, working closely with all Canadian exporters to help them to take advantage of these free trade agreements and the preferential access that we have, now covering 1.5 billion people around the world.

Our work didn't stop, of course, with free trade agreements. We also have a mission to help create the conditions for Canadian businesses to pursue opportunities abroad and grow here at home. All of this support is particularly important for the small businesses that had to stop exporting during the pandemic. There is no doubt that COVID-19 brought significant disruption to international trade and forced businesses to adapt and put a strain on the international supply chain.

These challenges have compelled us to reflect on how we make our economy more resilient for the future, and that's where some of our trade tool kit comes in, which includes things like the trade commissioner service, or TCS. As the chief trade commissioner I am very proud to say that we have more than 160 offices worldwide, providing on-the-ground support, expert market knowledge and local contacts to take Canadian companies global.

Given that innovation plays a pretty vital role in our economy, we are very pleased to see that the TCS CanExport program received $35 million over five years in the 2022 budget. This will help Canadian businesses to protect their intellectual property assets as they pursue those new opportunities abroad.

We are promoting Canada also as a destination of choice for international investment. Invest in Canada's interim CEO, Katie Curran, is here today and will tell you all about the work her organization is doing to bring investment here.

However, I would highlight a figure that speaks volumes on what we have been able to accomplish, even during these challenging times. The OECD recently reported that international investment in Canada was up 158% in 2021 from the year before. New and enduring partnerships remain vital to restoring supply chains that are both efficient and resilient in the postpandemic world.

We've taken the lead within the WTO, as well, to promote a rules-based, predictable trading environment. It's one that supports long-term supply chain resiliency and can help us build back better with like-minded economies—

[The Chair, Liberal, Judy Sgro]

Thank you very much, Ms. Wilshaw.

I'm sorry to cut you off.

[Sara Wilshaw]

Not at all. I'm happy to answer questions.

[The Chair, Liberal, Judy Sgro]

The members always have lots of questions, since we have you with us. Thank you so much for that.

I'll open the floor for questions.

Go ahead, Mr. Baldinelli.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you, Chair, and good morning, everyone.

It's important that we study the supplementary estimates. In Canada's parliamentary system, the federal government must seek Parliament's authority in order to spend taxpayers' money, and one of Parliament's fundamental roles is to review, approve and hold the government to account for its spending.

First and foremost, thank you to the officials present today. I believe we have nearly 10 witnesses with us. I'm disappointed that, unfortunately, we have only one hour of time dedicated to the study of these estimates and we were unable to have our Minister of International Trade, Export Promotion, Small Business and Economic Development come forward to appear.

What I find disappointing, Madam Chair, is the fact that today is May 30 and tomorrow, regardless of what we do today, these will be deemed adopted anyway. It's late that we're at this point, examining the spending of two organizations that account for $47 million. From my standpoint, that's disappointing.

I'd like to first talk about Invest in Canada's promotional efforts. I'm reviewing some of the briefing notes prepared by our staff. There is mention that promotional efforts have “reached over 54 million business decision-makers in over five countries and increased investor interest in Canada by 90%”.

What are the metrics used to measure investor interest?

[Sara Wilshaw]

Madam Chair, if you will allow me, I'll turn to my colleague Katie Curran for the answer to that question.

[The Chair, Liberal, Judy Sgro]

Yes, please do.

[Katie Curran, Interim Chief Executive Officer, Invest in Canada Hub]

I appreciate the opportunity to be here today to speak about the results of Invest in Canada.

Part of our promotional efforts includes content series campaigns and promotional campaigns. In non-pandemic times, it includes international events. For our content series campaigns and our promotional activities, we use research and testing after the waves of these campaigns, so that we're able to see what the interest was of the viewers before and after they viewed the campaigns. We saw a 90% increase in their interest in investing in Canada after they saw the campaigns.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Would one of the metrics not be the direct sum of investment flowing into Canada as a result of the work and promotional activities that you undertake on behalf of Canada?

[Katie Curran]

Yes, it would. We see, though, that investments have a very long runway before they land in Canada. Investors often take 12, 18 or 24 months before they come to these decisions, so we will see investments that come from promotional campaigns in years to come. That being said, in the past year, we saw record investments come into Canada and some really significant investments in areas that are a key focus for our economy and for our recovery.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

What would some of those key areas of interest and promotion be currently, coming out of this pandemic?

[Katie Curran]

One of the big areas of focus is on mines to mobility, which is the EV battery supply chain. In March, there was a significant investment that was facilitated by Invest in Canada and our partners across various levels of government. That investment, which is publicly available now, was a joint venture between Stellantis and LG Energy Solution. It's a $5-billion investment that has the ability to create around 3,000 jobs for Canadians. This is in battery manufacturing, which is a key component that Canada did not previously have the capacity to do, so it's very important to fulfill that EV battery supply chain.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Mr. Curran, if I can follow up, when you're speaking to the investment community on an international level, do they tell you some of the limitations that Canada has in terms of its potential in the investment field? For example, you'll see an investment by Hyundai of $5 billion into Georgia, and recently General Motors made a huge investment of billions of dollars into Michigan. We hear things from groups such as the manufacturers association of Canada about how there's not enough serviceable land in Canada available for industries to come forward with and make those investments.

In my community of Niagara, in certain areas, their industrial lands are already full. Are you hearing some of those challenges, and what is it that we can do to highlight initiatives to challenge and tackle those challenges?

[Katie Curran]

Right now, we're hearing a lot about opportunities in Canada. We are hearing investors who are excited about what our value propositions are and things like our wealth of talent, our ability to access markets through our free trade agreements—

[The Chair, Liberal, Judy Sgro]

There is a point of order.

[Chris Lewis, Conservative, Essex, ON]

It was coming through in French.

[The Chair, Liberal, Judy Sgro]

Can we check the interpretation, please?

Mr. Baldinelli, can you start again, please? You have 50 seconds left.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Ms. Curran, could you follow up and provide some of the actions that can be taken to enhance some of those challenges that you're hearing that international investors face when coming to Canada?

[Katie Curran]

I was highlighting some of the feedback that we hear from investors about the opportunities they see in Canada and how we have the wealth of talent and the access to consumers through our free trade agreement. I think we're at a point where investors are seeing lots of opportunities in Canada, and they see the ability to make committed investments that will create good jobs for Canadians.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Thank you, Mr. Baldinelli.

Mr. Arya is next, please, for six minutes.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Madam Chair.

Madam Chair, at the outset, I would like to place on record my disappointment that the chief executive officer of the Canadian Commercial Corporation is not here. I have a number of questions, and I think he or she would have been the right person to address them to.

With no disrespect to Ms. Sara Wilshaw, what she stated in her opening statement is mostly known to us. I would have preferred to hear from these two corporations. I'm happy that Ms. Katie Curran is here. If she had made an opening statement, we could have gotten an overview of what the Invest in Canada organization is doing, and I would have expected the same thing from the Canadian Commercial Corporation.

For example, CCC is a very interesting and very underutilized agency of the Government of Canada. People may not know that, for U.S. defence acquisition or purchases, Canadian companies are considered to be U.S. domestic corporations, and CCC can help a lot of small and medium-sized businesses get business there.

On the operational side of CCC, if I remember what Ms. Wilshaw stated, Canadian export is $766 billion, and the amount of contracts CCC has signed is just around $1.5 billion. It's not even that, it's $1.35 billion. That is too small. We have been signing free trade agreements across the world. We need Canadians to start exporting to other parts of the world, because those markets are new and because we want to increase small and medium-sized enterprises for export. CCC must play an active role in promoting these exports into new markets, whether they are non-Western countries in Europe or countries in Africa or Asia. I don't see that.

CCC has been in existence for a long, long time, and even now, they're just doing $1.35 billion. It's not even a drop in the bucket. Even their targets.... I'm looking at their corporate plan. The target for next year does not go up even by 10%. I think it's less than 5%, and every year it is less than 5%. It is pathetic. I'm sorry to use this language, but a corporation growth rate.... When we want exponential growth rate in exports from Canadian businesses, the growth rate that CCC is projecting, even to 2025-26, is not even 10% of what they're doing today.

Another thing is that they mentioned that they helped 221 small and medium-sized firms out of 300 exports. It's a good thing, but I would like to know the number of contracts that the CCC did for these 221 SMEs and how many of the total contracts they've signed are outside of the U.S.

As for the U.S. and western Europe, we don't need organizations like CCC to make a breakthrough in these mature markets. We need CCC to hold hands with Canadian exporters when they tap into the new markets in Asia, Africa and other places.

I'm disappointed on that front, Madam Chair. I wish they were here, as I had questions for them. In any case, I'm glad that Ms. Katie Curran is here.

Ms. Curran, I was reading through your departmental plan. It was mentioned that the pandemic reduced FDI. I can understand that. It was reduced by about 50%, but what is the trend you have been seeing in the last, say, seven or 10 years? What is the trend you are seeing in the growth of foreign direct investment in Canada? I know that Canadian companies are aggressively investing in other parts of the world. Canadian pension funds, Canadian corporations and private corporations are doing it.

What is the trend we are seeing in the growth of foreign direct investments in Canada?

[The Chair, Liberal, Judy Sgro]

I'm afraid you will have to give us that answer in 50 seconds, Ms. Curran.

[Katie Curran]

I can do that.

With the exception of the year of the pandemic, when there was a decline, we have seen growth in foreign direct investment into Canada. Just today, we saw the numbers come out from Statistics Canada on Q1 of 2022. We saw that there was 25% more than Q4 in 2021 and a 48% increase over the 10-year quarterly average, so we're seeing substantial growth in this area for Canada.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll move on to Monsieur Savard-Tremblay for six minutes, please.