International Trade Committee on Feb. 16th, 2022

[Dan Muys, Conservative, Flamborough—Glanbrook, ON]

Thank you, Madam Chair, and thank you on behalf of my colleague who is having surgery today. We wish him the best.

Because he had only a few seconds on the question from my colleague Mr. Hoback, I will take the opportunity to allow Mr. Waschuk to elaborate further on the potential, the great potential, for growth in trade on that farm equipment and energy production equipment.

I know you only had a few seconds. If you could elaborate further, I think that would be helpful as we look at the trade agreement.

[Roman Waschuk]

If you look at the current [Technical difficulty—Editor] there's been a shift to value-added stuff coming from Canada, which is even stuff like Canadian-processed pet food, which is very popular in Ukraine. I think helping Ukraine make more of its own resources, which Mr. Potoczny was talking about, is key.

Sometimes business cycles don't help. We had a major Canadian company partnering with Ukraine's state oil and gas company, but just at a time when natural gas prices in Europe cratered, so they ended up walking away because it didn't appear to make sense to them at the time. Right now, with prices where they are now, I think you're going to see renewed interest as soon as geopolitical risk declines.

Again, Ukraine is stereotypically known as a bread basket. It has nearly doubled its grains production over the last 20 years, and there is probably scope for another 50% to 80% increase in the next 10 years. In terms of getting part of that action in terms of things like grain storage, logistics, port handling equipment, these are things where Canadian companies need that export financing to be competitive with their international peers in getting contracts.

Those are definitely areas where I can see more being done.

[Dan Muys, Conservative, Flamborough—Glanbrook, ON]

Thank you.

I have a question for Ihor, from the Ukrainian Canadian Congress.

I know that you spoke a little in your presentation about the EDC and the risk ranking system. The congress provided a submission to the public consultations on CUFTA that were done in March of 2020. Maybe you can elaborate a bit further on that risk rating system and how that can be reflected better to encourage Canadian investment in Ukraine.

[Ihor Michalchyshyn]

I don't know the intricacies of it, but I know it has been the biggest point of concern raised with us and with the chamber and others that the EDC process prior to the current Russian escalation was seemingly inexplicable, did not seem to respond to any of the market statistics that were being shown in terms of the kind of [Technical difficulty—Editor]. We have spoken many times to ministers, to EDC directly, seeking a clarity on how—

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

I have a point of order, Madam Chair.

The sound cut out and prevented the interpreter from doing the job at hand.

[The Chair, Liberal, Judy Sgro]

Could you repeat your last couple of sentences, sir?

[Ihor Michalchyshyn]

We have met many times with EDC to learn about how they make these risk assessments and have not had a satisfactory answer to how the calculations are made. We would like more pressure put on them to explain themselves in terms of how they make these calculations.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Sheehan, please.

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

Thank you very much, Madam Chair.

I didn't have an opportunity to speak about the Ukrainian connection from Sault Ste. Marie and northern Ontario. I'll drill down to my particular riding because I didn't have enough time last time. Sault Ste. Marie is one of very many similar communities across Canada where the Ukrainian population of people migrated to work at the steel mill well over 100 years ago. In 2017, the Ukrainian church and community centre celebrated its 100th anniversary. I remember speaking in Parliament, where I quoted a local news article and it was called “the church that perogies built”. It really has been a very proud community.

If you look at Thunder Bay and other areas as well you can see a lot of that movement. I'm talking about the people-to-people relationships that some people have talked about and how important they are in the industry. The steel plant is still here today and the Ukrainian people are still working here today, but when you walk into the steel plant it's like walking through a spaceship with a lot of [Technical difficulty—Editor] and computer industries. There is also a lot of IT presence in Sault Ste. Marie. We're seeing a lot of back and forth, people-to-people relationships.

How do we take advantage more of these joint ventures, sharing of IT resources, people and such?

I'll start with the Canada-Ukraine Chamber of Commerce to first really guide us on how we can take advantage of that.

[Zenon Potoczny]

First of all, it's nice that you mentioned that territory, because I know that, in that territory of northern Ontario, Thunder Bay and Parry Sound, they are getting some Ukrainian investors opening plants and [Technical difficulty—Editor] in Ontario in that region.

There was a person who came from Ukraine here many years ago who lived in Alberta and then moved to Thunder Bay and Parry Sound. He took it upon himself to approach these people. We worked with him just to help him with some contacts and stuff, but it was people-to-people contacts, people-to-people work.

Again, I think that, in the immigration area, we have to open much more. If we don't want to do totally visa-free travel for everybody, somehow we have to look at business people. We have to look at people who want to come to Canada to see the territory, meet people, shake their hands, discuss and do deals. It's very difficult to do business deals over Zoom and telephone conversations. That's one thing that we have to absolutely do.

Again, when it comes to investing in Ukraine or doing some more business in Ukraine, there's a great procurement portal called ProZorro in Ukraine, which is basically for procurement work in Ukraine. There are billions of dollars put on that portal that everybody from across the world can bid on. Very few Canadian companies are bidding. I hear of people winning $6-million, $2-million, $3-million contracts. There are contracts of hundreds of millions of dollars for infrastructure, huge contracts.

We're starting to work with the Canadian embassy to let companies in Canada, through the chamber of commerce and other connections, know that there's this huge opportunity. Yes, it's a little bit complicated; it's mainly in Ukrainian, but it's easy to translate to English or French to help these companies work.

Again, people-to-people contacts and more work on some of these ideas.... They are there, but not too many people know about them. We have to raise awareness.

[The Chair, Liberal, Judy Sgro]

Thank you very much, sir.

We will move on to Mr. Savard-Tremblay for a minute and a half, please.

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

Thank you, Madam Chair.

Mr. Roche, your comments have been very thought‑provoking, and that's good. It's important to have an informed debate of this nature.

At the start of your remarks, you said that trade was good and that we should push for the modernization of the agreement with Ukraine. However, trade should be mutually beneficial and shouldn't isolate any partner. Could you expand on that?

[Michel Roche]

According to a study conducted by the Centre for Economics and Business Research in the United States, this conflict would cost about $40 billion a year. That's $280 billion over six years. That's far worse than many free trade agreements can bring in.

That's why I'm saying that we must resolve this conflict. How? We know that Russia isn't suffering as a result of the sanctions imposed since 2014. One sign is that it turned to China. In the past five years, trade between Russia and China has doubled. It now exceeds $145 billion.

I wonder whether it's good for us and for Ukraine that Russia is embracing China, with which it's starting—

[The Chair, Liberal, Judy Sgro]

Thank you very much, Mr. Roche.

We will move on to Mr. Masse for a minute and a half.

[Brian Masse, NDP, Windsor West, ON]

Thank you, Madam Chair.

I'll go really quickly to Mr. Potoczny.

With regard to the chamber activities, do you have a mentor program or a linkage program for industries that are interested in working together?

[Zenon Potoczny]

Yes, we have a mentor program for university students. We take them to work here at the chamber. We also line them up with companies they're interested in. We have certain sectors that we have a specific person responsible for, so we can guide them to that person, and that person will help them by mentoring their work with specific companies within the area.

[Brian Masse, NDP, Windsor West, ON]

Are there any government programs that support this initiative, or are you just basically on your own?

[Zenon Potoczny]

Basically, we're doing all of this on our own. As Mr. Waschuk mentioned, we were involved in CUTIS, the Canada-Ukraine trade and investment support project, which was sponsored by the Canadian government. But this mentoring program and the things we do here in Canada are all from the membership fees that we collect.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We move on to Mr. Patzer for three minutes.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Thank you very much.

Mr. Waschuk, I think there is one question we haven't really touched on yet. What's going to be the impact if there are any economic or trade sanctions imposed on Russia? What's going to happen to trade in the region? Are there risks? Are there benefits? What would that mean for this particular trade arrangement?

[Roman Waschuk]

One thing I'd flag is that, ironically, Ukraine is the country that's already been buffeted by the indirect effects of what's been going on. For example, the government's had to pony up $600 million in an insurance fund because airlines were reluctant to fly into airspace because of the threat of conflict. Even though everybody's talking about sanctioning Russia, in fact it's Ukraine that's been hit first by the indirect impact.

There is still trade between Russia and Ukraine. It is primarily in the energy sector. Ukraine has reduced its trade with Russia by about three-quarters. A lot of that's been redirected to the European Union, with which they have a very active free trade agreement.

Will Russia's sanctions have an impact? They will, but not half the impact that Russia's overall boa constrictor-like trade policy approach to Ukraine is having right now.

[Jeremy Patzer, Conservative, Cypress Hills—Grasslands, SK]

Thank you.

Do any of the other witnesses want to just comment quickly on the potential for upgrading and continuing to get more up-to-date farm equipment, but also farming practices to help tap into the growing potential that Ukraine has? I think that would be an important topic to further elaborate on, if anybody wants to touch that one.

[Roman Waschuk]

I think we have very similar arid land practices. We have the introduction of no-till technologies into Ukraine that would be extremely helpful in its southern regions...improving dairy production and processing techniques as well.... Those are areas where we certainly could be helpful.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We go to Mr. Arya for three minutes.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Madam Chair.

Mr. Waschuk, we heard quite a bit about natural gas here. Outside of committee, too, I hear people saying we have to cancel the new Nord Stream 2. The same people also continue to say we should ban the entire Russian dependence on natural gas by Europe. Here we have witnesses saying Canadian gas is available to service Ukraine and Europe.

Mr. Potoczny says that Ukraine has its own natural gas deposit that has to be developed. My understanding is that Ukraine is earning a couple of billion dollars or more on the transfer of natural gas through its territory to Europe.

Tell me, what is feasible with respect to natural gas? In five to 10 years' time, is it practical to ban natural gas, because Ukraine is already earning money out of it? What do you say on all this natural gas talk?