:
Good morning, everyone, and welcome.
Before I get started with this meeting, on behalf of the committee I'd like to pass on condolences to our Ontario colleagues, and of course their staff, who are going through a rough time following the tragedy in Toronto. It's going to be a rough few days, so our thoughts are with you, and we'll work together on getting everybody through this.
We're going to continue with our study today. It's our third meeting on Mercosur and the opportunities and challenges of a potential agreement with those countries. We're honoured to have with us three different stakeholders.
By video conference we have the Fisheries Council of Canada, and at the table we have the Canadian Vehicle Manufacturers' Association and Armstrong Fluid Technology.
Welcome, gentlemen. If this is your first time at a committee, we like to keep it to five minutes or under if you can, so we can have lots of room for dialogue with our MPs.
Without further ado, we're going to go right to Mr. Robert Dietrich. Welcome, sir, and you have the floor.
I'm Robert Dietrich. I'm the Chief Financial Officer of Armstrong Fluid Technology. Armstrong is a Toronto-based, family-owned, global manufacturer of heating and cooling equipment, which we call HVAC. That's the term I'll use. Throughout our 80-year history, Armstrong has introduced groundbreaking innovations that have elevated industry practice and substantially improved the quality and performance of pumping and HVAC installations around the world.
For those in the room, this building is heated and cooled through the pumping of water. Quite simply, we pump water through buildings.
With over 1,000 employees worldwide, we operate eight manufacturing facilities on four continents. Armstrong utilizes a global supply chain to ensure consistent quality and performance from our products regardless of the plant's location. This is delivered through a global IT infrastructure and standardized software applications in all of our facilities.
Like most industries, HVAC equipment markets are global, with a small number of dominant players. Armstrong's competitive advantage is built upon innovation, leading our industry in energy efficiency. Armstrong innovations include vertical in-line pumping, integrated motor control, parallel sensorless pumping, and, most recently, Internet connectivity to provide lifetime performance management. All these are industry terms and I don't expect that you would understand them; it's just to illustrate that to be competitive in a global market, you have to be innovative and you need to use technology. These innovations cut across global markets, providing us with a global brand equity.
HVAC plants in buildings such as this are one of the leading consumers of energy in the world. Reduction of this consumption is a primary goal of most countries. This is through modification of the building code or adoption of energy-efficient designs for new construction, and acceleration of replacing energy-obsolete HVAC equipment in the built environment.
Current policies and practices in Mercosur countries, Brazil and Argentina, for example, are insufficient to meet their country's stated climate objectives under the Paris accord. For Armstrong, this indicates an attractive market for retrofitting energy-obsolete HVAC equipment and is one of the drivers for our ongoing investment in Brazil.
Armstrong established a subsidiary in Brazil in 2012 and began operations in 2014. The decision to establish an assembly operation in Brazil was contentious for us, as it added significant overhead to the company. However, duties and customs clearance procedures and local content requirements outweighed our preferred approach of exporting from Canada. Four years later, we have a business with approximately $2.5 million in revenue. We have yet to receive any payback on that investment.
As previously mentioned, Brazil is an ideal market for Armstrong's focus on energy efficiency. Given the slow economic climate in new construction, it is an ideal time to be focusing on energy retrofits. Substantially all of our business in Brazil is from this source of business. Electricity rates in Brazil are higher than we experience in Ontario. This is a favourable environment to encourage energy conservation and abatement through adoption of new technologies. As we bring Brazil to a profitable operation, we will begin to develop business in Argentina with electricity rates similar to those in Canada. Given the climate tracker position of Argentina, as was mentioned earlier, energy abatement will also be attractive in that market.
Armstrong has modelled its business to benefit from freer trade in the world. We create and develop technology in Canada, often utilizing Canadian-based technology suppliers. We first introduce new products into the Canadian market, where we have a strong market position and the customer base is sophisticated. Additionally, governments, including the health care and education sectors, comprise a large segment of the Canadian building landscape and are important reference sites for us to develop international customers.
Armstrong is a strong proponent of Canada's policy of entering into multiple multilateral trade agreements. The benefits for a company of our size are numerous. It enables access to a global supply chain, with the attendant advantages of longer production runs, standardizing on designs, accessing centres of excellence, and attractive competitive costs. It lowers duties and accelerates customs clearance.
It encourages the rationalization of standards and building and electrical codes. It enhances protection of intellectual property and normalizes dispute mechanisms. It often leads to more efficient capital markets, cross-border banking services, and better opportunities to manage customer credit and lower credit risk.
In particular, Armstrong is supportive of negotiations to establish a trade agreement with Mercosur. This will provide us with opportunities to broaden our product offering in Brazil, for example, without having to expand our facilities. We also expect that Brazilian firms could join our global supply chain, reducing our reliance on India and China. Today we import some motors from Brazil from a company called WEG, which is one of the largest motor suppliers in the world. It would also enable us to better support an expansion into other Mercosur countries, leveraging the investment we have already made in other Spanish-speaking countries, such as Mexico and Colombia.
Those are my brief opening comments, and I'd be happy to answer any questions.
:
Thank you, Mr. Chairman.
Good morning, honourable members.
The members of the CVMA are supportive of fair and balanced trade opportunities. To achieve this, we submit the following as key provisions necessary to create the proper foundation for free and open trade in automotive goods: first, that there be no differentiated outcomes between Canada and the U.S. with respect to automotive trade, with FTAs that are favourable to the industry and to our economy; second, free trade agreement rules of origin must fully consider and align with our strong dependence and ongoing reliance on sourcing within North America; and third, currency disciplines are required to ensure that market access provisions in the final agreement are not undermined by a country's inclination to manipulate its currency, given the intersection of trade and finance.
The CVMA appreciates government's continued focus on the NAFTA negotiations, as indeed, these are central to Canada's automotive manufacturing footprint. NAFTA must remain the number one focus. The high level of consultation with the industry as part of the NAFTA negotiations has been, and is, very helpful, and we would in fact recommend that it be a model that is to be extended to all FTAs that Canada pursues.
Trade agreements have a significant role in determining where companies invest and where jobs are created, maintained, or lost. As complex as these trade agreements can be, they have traditionally been focused on reducing tariffs. The reality, however, is that some nations—for example, Japan and now Korea—don't have any automotive import tariffs. Instead, they maintain a long-standing industrial strategy that uses other non-tariff protectionist measures or barriers to protect their markets from vehicle imports regardless of trade agreements. They have a strategy to keep their automotive market largely to themselves, while also tooling up their factories for vehicle exports to North America.
Trade agreements help them reduce our auto tariffs to accelerate a one-way flow of exported vehicles, while protecting their jobs at home. As we sign trade agreements that unilaterally bring down Canada's remaining auto tariffs, we essentially hand an incentive worth hundreds of millions of dollars annually to automobile importers who produce nothing here. They don't use our Canadian auto suppliers and they don't generate Canadian production jobs.
In Canada, when we sign trade agreements that incentivize more access to our rich and lucrative Canadian auto-buying market for Korean and Japanese vehicle exporters that do not manufacture in Canada, it reduces the incentive for auto manufacturers that do produce and employ people here. I'll say that again. When we sign agreements that give hundreds of millions of dollars of new incentives for car companies that do not produce any vehicles or manufacturing jobs here, that reduces the incentive for our manufacturers to keep producing here and keep employing here.
That is your policy. Despite all the intentions and efforts, that is what Canada is doing with the CPTPP. Like CPTPP, Mercosur represents a potential opportunity for increased Canadian vehicle exports, but also represents significant market access challenges to broadly apply protectionist domestic policies in those countries.
Let me give you an example. Argentina continues to apply a 35% tariff, the maximum common external tariff allowed in Mercosur, to passenger cars. Until December 2017, tariff rates for vehicle imports to Brazil were 30%. Details remain forthcoming regarding Brazil's new Rota 2030 program, which is designed to replace the country's Inovar-Auto incentive program. The Inovar-Auto program came under WTO criticism as it unfairly favoured automakers with plants in Brazil. Brazil is now finalizing the new Rota 2030 program, which we understand is a 12-year incentive program that will offer millions in annual tax credits for automakers and auto parts manufacturers doing business in the country.
It doesn't stop there. Non-tariff barriers, including complex federal and state tax regimes, import licensing requirements, and complex legal and custom procedures, are creating significant challenges for countries exporting vehicles to existing Mercosur member countries. This is illustrated by the marked decrease in the value of Canadian vehicle exports to key Mercosur markets since 2014. For instance, Argentina went from $1.8 million in value down to $623,000. In Brazil, the market went from just over $23 million to $235,000 in 2017.
Acceptance and recognition of technical and safety standards pursuant to the Canadian motor vehicle safety standards and the federal vehicle safety standards in the United States, to which they are aligned, will also be critical to access Mercosur markets. Alignment with and recognition of North American regulatory standards, which are underpinned by scientific evidence and rigorous compliance requirements, would encourage more automotive trade and create new supply chains between the North American trade bloc and Mercosur countries.
In summary, it is paramount that both existing and future non-tariff barriers are addressed to achieve reciprocal market access for the Canadian industry. Companies expend significant resources in both time and dollars to address non-tariff barriers, often with very limited results. Related to this, dispute settlement mechanisms need to be rigorous, time-efficient, and legally binding. The members of the CVMA provide quality middle-class jobs for tens of thousands of Canadians. It is very important that Canada demonstrates its commitment to the automotive manufacturing sector by achieving trade outcomes that do not reduce the incentive to keep producing and employing here in this country.
Thank you very much, Mr. Chairman. I would be pleased to answer any questions the members may have.
:
Good morning, and thank you for the opportunity to present. Since I am based in Ottawa, I apologize for having to do this by video conference. Other business brought me to Toronto today.
We submitted a letter, and I believe that may have been circulated to the committee, but I will highlight elements from our submission.
First I would like to start by telling you a little about the Fisheries Council of Canada and the fisheries sector. FCC has been the national voice for Canada's commercial fisheries since 1915, and our members include small, medium-, and larger-sized companies, as well as indigenous enterprises that harvest our fish on Canada's three coasts and in our inland waters. Our member companies process the fish and seafood, and FCC members are proud to be key employers in their community, providing jobs and an economic base for other local businesses.
Like any other renewable resource, sustainability is of paramount importance to us, and I'm proud to say that Canada is among the leaders in the world in terms of third party certification. This contrasts with the fact that only about 10% of the world's fisheries are certified.
The Canadian seafood industry creates 80,000 direct jobs annually, mainly in coastal and rural communities, and exports $7 billion of product to 139 countries annually. The largest export markets for Canadian seafood products are the United States at 63%, China at 14%, the European Union at 7%, and Japan at 5%. As such, the sector is extremely supportive of free trade.
Getting to the specifics of your study, the Mercosur bloc countries currently represent more of an import source rather than an export market for us. We export $3 million annually, but we import $39 million, for a net trade deficit of $36 million. Virtually all of our exports to Mercosur are to Brazil, and most of the imports from Mercosur come from Argentina. In the grand scheme of things, the two-way trade with Mercosur at $42 million is a mere drop in the bucket in terms of our total fish and seafood two-way trade globally, which is at roughly $11 billion.
However, there are two aspects that suggest there could be some significant export opportunities for us. One, Mercosur tariffs on fish and seafood range as high as 32%, so elimination of those tariffs could create some opportunities for Canada.
Two, and perhaps more importantly, Mercosur countries, which have a combined population of 260 million people, eat very little fish and seafood. Brazil's per capita consumption is just over 10.5 kilograms per year, Uruguay is at 7.5, Argentina is at just under six, and Paraguay is at just under four kilograms per year. By comparison, Canadian per capita consumption of fish and seafood is just over 22 kilograms per year. Even one additional kilogram in per capita consumption in Mercosur would equate to about 260,000 tonnes of fish and seafood annually. That equates to about 24% of our annual landings, which is a significant volume with just a small increase in per capita consumption.
In terms of other trade issues, of greater importance to Canada's fisheries sector are the successful renegotiation of NAFTA, full implementation of CETA, ratification and implementation of the CPTPP, and free trade negotiations with China.
In short, a free trade agreement with Mercosur could hold some potential for the fisheries sector, but it's currently not a big priority for us. If negotiations were successful, some market development for fish and seafood would be needed to encourage more consumption and to build a supply chain in Mercosur.
One final point I'd like to make in terms of negotiations is that an important element for us is sanitary and phytosanitary measures. The approach taken in the CPTPP is quite favourable. We like the rules and the measures that were put in that trade deal. If that could be modelled for negotiations with Mercosur, that would be good.
With that, I welcome any questions the committee might have.
:
Actually, we ship very little. We roughly peaked in 2014 when these programs went into place. When I say Canadian exports, it's roughly about 23,000 vehicles, and that dropped precipitously in 2015, and further in 2016, for instance. We're now down to virtually zero exports. We're talking about probably fewer than 10 vehicles.
One of the key things here has been that Brazilians are facing a 40% to 50% tax on car imports. The reduction or exemption, for instance, of what we call the “industrial product tax” is something that would be very welcome and would help us in that regard. That's a clear example of the heavy taxation that takes place on vehicles coming into that country from abroad.
You have multiple layers of fees, multiple layers in terms of import licensing, and so forth, not to mention the fact that when you bring in a vehicle to one of the Mercosur countries, let's say, under the CET tax of 35%, and you ship that vehicle within the Mercosur to countries, it's duplicated again. You pay that again as it enters the other market. This cascading effect takes place over and over again. It's clearly all one way in terms of what we have coming into Canada, but it's very small at this point in time.
The Holy Grail, as you may know, Mr. Carrie, is to get a global product mandate for our plants here in Canada. Ford, for instance, has the Ford Edge that has that mandate. The people I work with work daily to try to keep the mandates that we have here, but also to expand them to global mandates if we possibly can. That's the key here: how can we open up these markets, get rid of these non-tariff barriers, or at least deal with them, and then put into place appropriate dispute settlement mechanisms that are efficient in that they're legally binding? The timing and the agility of those settlement dispute mechanisms are absolutely critical.
Also importantly, and this is what was so good about why we supported CETA to the extent that we did, was we struck an agreement with two mature markets. We struck an agreement that acknowledged and actually integrated the fact that we are an integrated industry with the U.S. and put in place derogations or placeholders, if you will, so that when the U.S. did get an agreement with Europe, then we could definitely use accumulated content under the NAFTA, for instance, to meet the requirements of the CETA.
That's what is so critical. We have to negotiate for autos on the basis of the integrated industry and on the basis of the integrated market in North America. We have to trade as a bloc, negotiate as a bloc, and open those markets along the lines that I've suggested.
:
First off, in our industry, as I mentioned, we are so highly integrated on a North American basis that NAFTA is the absolute priority. We've said this to the and we've said this to this committee, as an example, as well. That's what we need to settle first.
Again, speaking for our industry, if we don't have and we can't use our integrated supply chains to produce efficiently and competitively, then we won't be here. We will do like other companies do, where, as I mentioned, they use free trade agreements to lower the tariffs into this country, bolster their domestic industries, and increase their capacities to ship abroad. Why wouldn't we do that as well, particularly when we are in one of the highest-cost jurisdictions in the world to produce?
That's why we take the position we do, but we are still also very supportive of opening up as many markets broadly across the globe as we can because of the potential opportunities that do exist, not just for industry but for all sectors, whether small or medium businesses. Again, I think for any business, if they can get a global mandate and be able to produce products that will meet the requirements of the markets that they intend to ship to, then that's a good thing. But for our industry, we have some very deep concerns about getting NAFTA right first and then dealing with these other issues.
:
Yes. I've spent my whole career in Canadian-based, internationally oriented technology companies, and the model is the same in all of them. That is that Canada benefits from having the head offices, from having the technology development jobs, and from creating value through the application of technology. It drives the education sector or takes advantage of our excellent education sector.
Brazil, for example, is one of the largest markets in the world. From our point of view, it's a “cooling” market—in other words, it's hot, and they have a lot of air conditioning. They waste a lot of energy because they use inefficient equipment. That's a golden opportunity for a company like ours. It's the same if you go to India or to southern China or the Asia Pacific.
I am a great proponent, as is our company, of eliminating some of the non-tariff barrier areas that restrict trade. We'd love to export from our plant in Toronto, but if we need to because of distance and logistics, then we will manufacture or assemble in those markets with Canadian technology. I think that's so important to understand. Yes, manufacturing jobs in our industry could be important, but it's the technology that drives the value.
:
To achieve that reciprocity, particularly in those countries where they don't have tariffs.... As I mentioned, they have industrial strategies that are focused on things like non-tariff barriers.
Japan and Korea have been so astute at putting in place non-tariff barriers as part of their strategies that they've essentially kept out vehicle imports from any auto-producing country around the world. The Europeans have made some small progress there on premium-type vehicles. But generally, the non-tariff barriers are so far-reaching and broadly applied—everything from taxes, to ensuring that you must use their test procedures and their test facilities, to local zoning laws that would prevent you, for instance, in our business from establishing a dealer network to service the vehicles you would bring into that country. It has the effect of keeping the import numbers so low that it no longer becomes viable, from a business perspective, to continue to try to enter that market. Japan and Korea, for instance, are the lowest of any other OECD countries in the world in terms of auto imports into their countries.
It's the combination of all these things—taxes, permitting, local zoning laws, etc. These are the things that ultimately make it extremely difficult to bring in new vehicles to that market, particularly when you're trying to break into a market where the vehicle category, the size...smaller-size vehicles really don't have the margins that some of these premium vehicles have, to be able to absorb some of the costs. That's what makes it very difficult.
Clearly, it's a constantly changing market, or environment as well, a regulatory environment. You could send a shipment of vehicles into a country only to have it change something whilst you're in transit. Those vehicles will sit on the dock until such time as you overcome the new requirements or you deal with their inspections and whatnot, which are specific to their own country. We just can't afford to do that. And it's not just us. I think any manufacturer that incurs that type of cost on such a small volume of vehicles would be in the same position.
:
Keeping our existing manufacturing footprint is the key. Because we are one of the highest-cost jurisdictions, if not the highest-cost jurisdiction, in the world, keeping the costs down is pretty critical. We could be doing everything we possibly can, but if it's just simply too expensive to produce here, then we undermine all that.
The co-operation that exists between Ontario, where 96% of the auto industry exists, and the federal government is absolutely critical. The co-operation that takes place on the innovation and technology development side is absolutely critical.
We talk about all these other countries that see the auto industry as a key economic keystone of their economies. All of them put in place strategies, incentives, and supports that far exceed ours in many respects, and they constantly.... It's dynamic. It's not static. We have to continually reassess, continually reposition ourselves relative to these other countries that see such economic benefit from the auto industry.
We have some of that in place now. The federal government, whether this government or previous governments, has made some great progress in terms of incentives and so forth, but it has to be something that is current and it has to be responsive.
:
Thanks. I appreciate that.
Thank you, gentlemen, for being here this morning.
Mr. Dietrich, I used to work for a company called Flexi-coil, which was bought out by New Holland and they were bought out by Case New Holland. We were selling seeding equipment into South America, into Argentina and Brazil. Your story sounds so familiar. It really is amazing that nothing has changed. This was back in the early 2000s, and it's the same scenario. We always looked at those marketplaces and we just drooled, but nobody was able to really make it work unless they actually did what you did and actually located down there.
To have a good trade agreement, there has to be a win-win on both sides. There has to be a win for the Brazilians or the Mercosur countries and for us. You talked about componentry. Is there componentry in Brazil or in the Mercosur countries—not just Brazil—that would actually take your product here in Canada and make it more competitive internationally? Say I took this component and had better access to it from Brazil, at a cheaper price, and then brought it into Canada and finished the product here and shipped it out. Or I could take your components down to Brazil and then sell them into other Mercosur countries or into other countries outside of Mercosur.
Do you see that potentially happening here? That's the only win-win I can really see.
When we look at competitiveness, when we look at the aggregate, you talked about how you have provincial programs, municipal programs, and all variety of people adding costs to your production. How do you take companies such as yours and now put them in the global marketplace and compete with Brazilian companies with different standards and different regulations? Everything is different. The labour standards are different. We said this with Mexico, but in the same breath, Mexican standards came up and joined North American. It actually was a win-win-win in a lot of ways. If you look at where Mexico was 40 years ago and you look at where Mexico is today, it has made vast improvements. Some people may not be happy with where they are at today and might want to see better, but it is different and it is better than what it was.
How do you go into a market like Mercosur? I kind of view Mercosur as being a little different from Pacific Alliance. Pacific Alliance is a pro-trade bloc. Mercosur, to me, started that way but turned into a protectionist bloc. How would you see this?
:
Thank you, Mr. Chairman and honourable members, for inviting me to appear before this committee.
As noted, my name is Martine Irman, and it's a pleasure to speak to you today regarding my appointment to the position of Chair of Export Development Canada's board of directors. It was an absolute honour to be chosen for this distinguished position, and although only a few months have passed since I started in this role, I can already say that the experience has been both enlightening and invaluable.
I come to EDC from the world of commercial and investment banking. I'm currently vice-chair and head of global enterprise banking at TD Securities, and senior vice-president of TD Bank Group. In this role I'm responsible for enterprise-wide banking initiatives at TD Securities, and I'm the lead executive for ensuring that senior client relationship management is seamless across the firm's key global businesses, namely, global markets, international, and corporate and investment banking.
I'm also a member of TD Securities' supervisory committee, and I play a key role in terms of the firm's strategy, as well as its leadership team.
I've been with TD Securities for over 25 years. I've held various executive positions over that time. I'm also a proud graduate of the University of Western Ontario. I have a Bachelor of Arts degree in economics and financial studies. I've also completed the advance management program at the Wharton School of Business at the University of Pennsylvania, and I hold the Institute of Corporate Directors qualification from the University of Toronto's Rotman School of Management.
[Translation]
This is undoubtedly a whole host of titles and qualifications.
[English]
Too fast? I can go slow.
[Translation]
This is undoubtedly a whole host of titles and qualifications. I had to work very hard to acquire them, and I am very proud of them. But to present myself properly, I must explain to the committee some of the values that are important to me.
Throughout my career, I have made a point of investing in the community and giving back to it. I owe this guiding principle to my parents, who taught it to me at a young age. I am currently on the board of directors of the YMCA of Greater Toronto, and I am co-founder and co-chair of the board of a United Way organization, Women Gaining Ground.
[English]
As someone who has built their career in a male-dominated profession, I am also very sympathetic to the cause of equity in the workplace. I am proud to be the second woman chair of Export Development Canada in its 75-year history.
I am fully committed to doing what I can to pave the way for more women to reach positions like this one, both within EDC and elsewhere in the corporate world. I'm also someone who believes in continuous learning and development, which, as you can guess, is a big reason why I stand before you today.
I first learned of EDC while working in the private sector, and it was from that vantage point that I recognized the kind of value-add that EDC could offer to Canadian exporters and financial partners alike. Now, after only a few months in my new appointment, I've already developed a greater appreciation for the unique role this organization plays in the Canadian economy. First, there's the corporate mandate to directly or indirectly support and develop Canada's export trade and Canada's capacity to engage in that trade and respond to international business opportunities.
In a time when international trade is only becoming more complex and more competitive, I find that EDC is an invaluable tool for Canadian companies of all sizes. The reality we see day to day, from small companies of five employees to large, anchored companies with thousands of employees, is that the global economic environment is changing fast. It's being driven by a number of potent forces, such as the global rise of protectionism, the changing political landscape in the EU, new free trade agreements, changes to existing agreements, the surge of emerging markets like China and India, climate change, and e-commerce, to name a few.
[Translation]
The only certainty we have about the future is that there will be change. It is the responsibility of Export Development Canada, or EDC, and its partners in Canada's trading ecosystem to stay abreast of these developments and keep Canadian businesses informed and equipped to adapt to change.
[English]
EDC is important for these reasons now, but I've also seen how in difficult times the corporation has been able to step up in a big way for Canadian business. The most relevant example that sticks in my memory is during the 2008-09 financial crisis, when EDC stepped up to the plate and was able to provide financing to struggling companies that the private sector banks simply could not.
It is my view that Canadian exporters need a stable and reliable source of financing and trade expertise. EDC has played this role for nearly 75 years. This is what I've learned about EDC through my career, and especially in the last five months as board chair.
I, of course, recognize that for the sake of this committee, there's much more to discuss about EDC than the 30,000-foot view I have just given you. Given that I've only been chair for the last five months, on the more nuanced issues regarding the corporation, I'll provide as much input as I can to this committee, but in some instances I might defer to my colleagues, Benoit and David, who will undoubtedly give you more details as required.
[Translation]
That said, I look forward to speaking with the members of the committee to discuss any issues that may be of interest to them.
[English]
I thank you for your time, Mr. Chair, and I look forward to your questions.
[Translation]
Thank you for your attention.
:
Thank you very much, Mr. Chair, and thank you all for joining us today.
Ms. Irman, I had a chance to meet with the Ottawa liaison committee of the Canadian Chamber of Commerce yesterday. We were talking about what's going on in trade and competitiveness, and all that stuff. You also, from your day job, have this great vantage point for viewing capital markets, what's going on around the world. I don't think we differ a whole lot from our counterparts, the Libs, on trade deals. We all support these kinds of things. I need you to talk a bit about competitiveness at home here, and where we're at.
Some of the challenges that the Canadian Chamber of Commerce mentioned were excessive regulations, a whole bunch of additional taxes coming on carbon, all these things that affect our competitiveness at home, which makes it more difficult. Obviously, EDC has done very well, turning back a lot of money to the Canadian government because of Canadians doing well. Just talk a bit in the context of some of the challenges that we have.
Obviously, we need to continue to pursue trade deals. I think that makes tons of sense. We can agree on that. I think we may disagree with the party opposite about how competitive we actually are in terms of what's going on in the global market, specifically as it relates to the U.S., which has just gone through major tax reform. There seems to be this large sucking sound of money as it moves into the U.S. versus some of our markets. You have a 30,000-foot view, as you said. Talk to us a bit about some of the challenges we face here in Canada.
:
I will preface my reply by stating that I have been involved with the Canadian Chamber of Commerce. I was on its board for four years, and I reluctantly left that position. I appreciate the incredible value that the chamber movement offers, representing, I believe, 200,000 organizations across Canada.
With respect to the competitive question, I'll just give you the view I formed while dealing in the international trade movement, both internationally and domestically, with the SMEs. I think there's an opportunity for EDC as it grows—and it has a fairly aggressive corporate plan—to be better known to the Canadian community, the SME base. They have a strategy behind that. I think there's always an element of global pressure from other countries, but specifically to Canada and the role that EDC can play, to be better known. If you look at its corporate plan, it has a strategy. Last year it touched just under 10,000 customers, up from 7,500. I think a lot of it is around awareness of opportunities, awareness of trade transactions, and being able to use them.
I'm optimistic that the competitive landscape, yes, is competitive, increasingly so, but I do think there's more to be done in terms of branding and awareness with respect to being known across the Canadian landscape by those clients.
With that, maybe I can turn to Benoit, if you would like to add anything.
Congratulations, Ms. Irman, on your new post; and to your team, welcome.
You bring a wealth of experience from the private sector and you work with the chamber, etc.
We've heard many witnesses come in and talk about how they've kind of moved into different markets. Some of them have brought up EDC, but very few. Most bring up the private sector. They talk about work with their private banks, etc. Scotiabank has a big presence in South America; TD in the United States. What's EDC's value proposition? Why, as a business, would I go to EDC and not TD or Scotiabank, where they have a presence in the market I'm looking at?
:
I'll again address it relative to an EDC hat and not a TD hat, since I'm here representing EDC.
I think EDC has a unique value proposition. It's very focused. It's focused on bringing exporters out of Canada to the rest of the world, and vice versa, in terms of bringing people into Canada and looking at supply chain initiatives. In terms of how they assess the opportunities—and, correct me if I'm wrong, but they are in 19 jurisdictions outside of North America, and growing, with Sydney being the most recent one—it is in a very thorough fashion. I've known this from my private sector days in dealing with EDC. It's thorough, it's assessed, it's looked-at risk, it's forward-looking. Their risk profile, in terms of where they are in different geographies, is very much unique to EDC and, I think, very different from the other financial institutions you mentioned.
David, would you like to add something?
:
My next question is around the organization, if it takes a passive or active approach to these trade agreements.
We've now signed with CETA, and we have the CPTPP. When you look at those, and to capitalize on those opportunities, we've strategized here and talked about how we can get more Canadian companies engaged, how they can get in there. Through your analysis, do you say, listen, here are some tremendous opportunities in Europe, in Asia, or in Mercosur's case, in South America? Then do you go out to the market actively and tap companies and say, listen, this is really good for you and maybe you'd like to come in and hear what our analysis is, or do wait for them to walk in the door and say, hey, we're looking for some help?
:
I know that the government has an agenda. We work very well with our minister in terms of the SPA process, and there's very much a focus around women entrepreneurs, first nations and indigenous women, and how we give them access.
I think I'll do the combined bank experience and EDC. I know I'm speaking here on behalf of EDC.
I go back to the fundamentals, which are awareness—helping them be aware that they can become exporters—and helping them along the way. In some aspects, young entrepreneurs, women—not just young—have a different means of communication. We need to be digital ready. We need to have access, and not just the traditional forms of access, where you have it in person and you go to a meeting or you listen to a chief economist or to the Canadian Chamber of Commerce or other sources of conversation. We need to also be able to reach out to them such that they can appreciate what is there for them and how to do it.
In terms of new development of the client strategy that the corporation has in mind, a lot is around digital outreach. It's around targeting people who would not otherwise know that they can be exporters and then walking them through the educational process as well as the facilitation process.
That's a bit of the top-of-the-house answer.
Here's my other question.
I represent the riding of Rivière-des-Mille-Îles, which includes the cities of Deux-Montagnes, Saint-Eustache, Boisbriand and Rosemère. There is Mirabel in the north, where Bombardier, Bell Helicopter and several suppliers in the aerospace and aeronautics industries are located.
As my colleague said, we visited Singapore, where the aerospace industry has a strong presence.
What are you doing to help the aerospace industry to open up more markets abroad?
:
Thank you for your question.
I would like to talk briefly about two things we do. First, we support supply chains. By offering our services to major integrators, we make sure to include the smallest companies in their supply chain, whether in Canada or abroad.
Secondly, we have a guarantee program with the banks. So if a company in your riding wanted to sell its products to a French company, it would need financial support. We give a guarantee to the banker for this company, which allows the costs of the contract to be covered. It's a very effective way for us to help smaller businesses, like the ones in your riding.
To give you an idea, last year, these guarantees were evaluated at around a billion dollars.