International Trade Committee on Feb. 16th, 2022

[The Chair, Liberal, Judy Sgro]

Mr. Masse, go ahead, please. You have two minutes.

[Brian Masse, NDP, Windsor West, ON]

Thanks.

I'll let Mr. Roche complete his thoughts there.

[Michel Roche]

I was just interrupted, which broke the flow of the discussion to some extent.

That said, the market costs are the same, but the costs of producing gas in Russia are much lower than the costs here.

[Brian Masse, NDP, Windsor West, ON]

Is that historical with regard to that, or is that more recent with regard to those costs?

[Michel Roche]

These are very recent figures. As I said, I've been looking at this issue, especially in the past two years. I don't know the historical costs, but one thing is for sure. The oil sands and their extraction are the worst polluters in the world today.

[Brian Masse, NDP, Windsor West, ON]

Thank you.

[The Chair, Liberal, Judy Sgro]

Go ahead, Mr. Hoback.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

Thank you to the witnesses.

I'll start with you, Mr. Potoczny, with regard to something I'm kind of curious about. When I was with Flexicoil and Case New Holland, we were doing business in Ukraine selling farm machinery. I was actually in charge of the Ukrainian market for a small period of time. One of the big issues we had was getting currency out of Ukraine and then getting EDC to actually back something. There would be all this money allocated to Ukraine—they'd say it would be $60 million or $80 million—but whenever we tried to apply for it or utilize that, it just wasn't available for this project or that project.

Has any of that improved these days?

[Zenon Potoczny]

Certainly on the EDC side it has not improved. That's why I keep on saying that we have to do something with EDC so that this does improve.

On the transfer of funds from Ukraine to Canada, absolutely there is no problem. There are no issues. Everything is done properly. Dividends are paid out to Canada. We have many members who do business in Ukraine and who have a transfer of funds without any problem. That absolutely has improved.

We have lots of work to do with EDC.

[Randy Hoback, Conservative, Prince Albert, SK]

Okay.

I want to go to you, Mr. McMillan. Do you want to comment on what Mr. Roche just said about Canadian natural gas?

[Tim McMillan]

Thank you for the opportunity.

Unfortunately, I find Mr. Roche's comments very troubling. He is comparing natural gas in Russia to Canadian Athabasca oil sands, and I believe, or I understand, that he was thinking that the natural gas that would be flowing through the Quebec facility would be coming from the Athabasca oil sands. If Mr. Roche had a role in that approval process, I think this is very troubling for Canada, because obviously no natural gas comes out of the oil sands [Technical difficulty—Editor] that they produce petroleum, gasoline and diesel fuel.

Our natural gas comes from northeast British Columbia and from southern Alberta, but has no relationship to the oil sands whatsoever. The way he conflated those two is quite troubling.

[Randy Hoback, Conservative, Prince Albert, SK]

The comment I would also have is that he was talking about the cost of production in Russia versus here in Canada. Let's bring in the entire cost we have here in Canada with regard to environmental review and the regulatory process to make sure that we have the best, safest, greenest natural gas in the world. How is that compared to Russia?

[Tim McMillan]

On the matter of producing gas by drilling and developing a resource responsibly and producing it, we will compete head-to-head with anywhere in the world.

Now, he is correct that Russia does not have high environmental and safety standards. They do not worry about the venting and flaring like Canada does. If there's a premium for Canadian gas, it is only because of our high environmental standards [Inaudible—Editor], but we're happy to compete with anyone in the world.

[Wilson Miao, Liberal, Richmond Centre, BC]

Madam Chair, can I raise a point of order?

I just want to remind everyone that we're here to discuss Ukraine and Canada in relation to trade.

[Randy Hoback, Conservative, Prince Albert, SK]

Actually, I'll tie it all together right now.

When I was doing business in Ukraine, we always looked for opportunities where Canadian companies could work with Ukrainian companies and export from both countries, taking components from both sides. Natural gas is a key component in a lot of the manufacturing processing of plastics and other items, and in providing a safer, greener power than, let's say, diesel. That's where Canadian natural gas going into Ukraine would be a lot cleaner and nicer for the environment that the stuff coming out of Russia.

Plus, on the geopolitical side of things, if Europe didn't have to rely on Russia for natural gas, Russia wouldn't have to be leaning on Ukraine to transfer that gas through Ukraine into Europe. That's really what's kind of in the background of what's going on here. That's why the gas picture becomes so relevant in this picture of a trade agreement.

With regard to looking forward, when we look at the opportunities in Ukraine with this new trade agreement, where do you see the most benefit? Where do you see the synergies happening?

Maybe I'll go to you, Mr. Waschuk. I'm wondering what things you identified when you were ambassador where you said, hey, we have a trade agreement, but we need to do better in this area or that area. Do you see those areas actually getting better? I know that EDC is a huge problem with regard to Ukraine.

I probably have no time to get an answer to that.

[The Chair, Liberal, Judy Sgro]

You don't.

Sir, could you possibly not give us too long an answer?

[Roman Waschuk]

Actually, farm equipment and energy production equipment are among the leading areas where I think we again need to be way more aggressive. Ukrainian agriculture is booming. It is the world's third-largest producer of wheat and fourth-largest producer of corn, and the U.S. and Europe are cleaning our clocks on farm equipment and supplies.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Miao, please, for four minutes.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you, Madam Chair.

I'll address the following question to Mr. Michalchyshyn on the modernization of the Canada-Ukraine Free Trade Agreement, but before I start, please allow me to express my sympathy for the Ukrainian people here and abroad during this difficult situation.

We heard from Global Affairs Canada officials earlier this week that the Canada-Ukraine Free Trade Agreement was always meant to be modernized, as a two-year review clause was incorporated into the original agreement. How is the first free trade agreement perceived by your organization, and what would be the area of priority in its modernization?

[Ihor Michalchyshyn]

Thank you for your expression of sympathy. It has been a very challenging and stressful time for people in the community here.

I think we've seen, as has been noted, the success of the first version of the agreement. Challenges such as COVID and others notwithstanding, there is intense desire and interest from business people on both sides to grow and expand. There are many barriers, and this modernization process is a good one to identify the barriers and to think strategically about how to overcome them.

Again, I won't go into details of our recommendations, but there are certainly key sectors that stand out as the best examples, and many more to come.

Also, focusing on the people-to-people ties really allows, as others have said, Ukrainians to participate fully by being here, once it's again safe to do so in a post-COVID environment.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you.

We've heard from officials that trade between Canada and Ukraine grew but also diversified following the entry into force of the agreement.

What was the impact of the diversification for Canadian businesses? What other sectors could benefit from a stronger free trade agreement?

[Ihor Michalchyshyn]

If that's a question for me, I'm not the trade expert who has all those answers, but I know, for example, our organization has many responses and inquiries from the cultural, film co-production sector, as well as the energy sector. Those are the ones that are growing and I'd be happy to turn it over to the chamber, which might have more detailed analysis on that.

[Zenon Potoczny]

Thank you.

One of the areas in which we have tried working very hard with Alberta energy regulators is to help Ukrainians modify some of the issues of licensing, of auctions of the properties. We have done a lot of work. Mr. Waschuk knows of some of that work.

The energy sector has changed quite a bit in Ukraine, and Ukraine has a lot of possibilities. Unfortunately, again, Russia occupied Crimea and took the best reserves of gas possible all around Crimea, because now they're saying these are all their territorial waters. However, just in Ukraine, on the land of Ukraine, there are huge possibilities for natural gas, huge possibilities for oil, but we need to open and help the investors from Canada, and I can't forget the EDC, with the help of guarantees and the help of insurance.

We can do much more just in the energy sector. Actually, Ukraine can be a major exporter to the European Union. There's really no need to buy it from all over the world, because it's right there, but it's just not utilized and not worked on.

[Wilson Miao, Liberal, Richmond Centre, BC]

Thank you very much.

[The Chair, Liberal, Judy Sgro]

We'll go on Mr. Muys for four minutes, please.