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View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2013-05-06 15:33
Thank you, Mr. Chair.
It's good to be back again before committee. I'm also joined today by Nadir Patel, the department's chief financial officer, Marc Whittingham, the president and CEO of the Canadian Commercial Corporation, and our deputy minister, Simon Kennedy.
It's a pleasure for me to appear before you today and to discuss the importance of international trade to Canada. Simply put, we are a trading nation. The benefits of international trade are reflected across our great country, in our companies, in our cities, and of course in our standard of living.
View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2013-05-06 15:34
Mr. Chair, these are my personal speaking notes. They're all marked up.
View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2013-05-06 15:34
All right, thank you.
Internationally, Canada has established a reputation as a leading world-class producer of cutting-edge products, innovation, and services. I can personally attest to this from my many trips around the world. We should all be proud of the strong brand Canada has established as a partner of choice in the world. In fact, I would note that in 2010, and I believe also in 2009, FutureBrand of New York ranked Canada as the world's most respected country brand. We can be proud of that brand.
Our government understands the importance of international trade to Canada's economy. The Prime Minister has clearly indicated that trade is a priority for our government. International trade is an important piece of the government's economic action plan to create jobs, promote growth, and support long-term prosperity for Canadian workers and businesses.
In 2012 Canada's exports and imports of goods and services exceeded $1.1 trillion, or $32,000 for every person in Canada. That's approximately $3 billion each and every day. Our international trade is equivalent to over 60% of Canada's gross domestic product, and one in five jobs depends on trade. It's difficult to overstate the importance of open markets to Canada, and it is equally clear why Canada must succeed in international markets. My job, and that of my department, is to seek out new global markets and opportunities for Canadian businesses.
In my opinion, one of the most effective ways to open new markets and increase prosperity is to pursue and practise free trade. Free and open trade is an excellent driver of economic growth, employment, and opportunity. In fact, I would suggest that trade and investment are the twin engines of economic growth for the world economy. That's what drives our government's pro-trade plan, the most ambitious plan of its kind in Canadian history.
The plan recognizes that, while the United States remains Canada's closest and most important trading partner, our future economic success and prosperity will also be dependent on our ability to seek out, compete for, and secure opportunities in other markets.
We also believe that trade is a shared global interest and responsibility, and we'll continue to call on our trading partners to promote open markets and to resist protectionism and other trade-restrictive measures. This is at the core of Canada's pro-trade plan. It is a plan with results.
In seven years, our government has concluded trade agreements with nine different countries, foreign investment protection and promotion agreements with 16 countries, and 51 air transport agreements covering 74 countries. But we're not resting on our laurels; instead, we're continuing to seek new agreements and partnerships with our trading partners.
For example, as we speak, we're pursuing trade and investment opportunities in one of the most dynamic regions of the world, that being Asia, including initiatives with Japan, India, South Korea, and the Trans-Pacific Partnership. We're actively working to conclude our comprehensive economic and trade agreement with the European Union. Canada is also deepening its engagement with the countries of the Pacific Alliance. These countries and trading blocs represent some of the highest growth markets in the world, and it's essential to Canada's continued economic competitiveness that we seek to negotiate preferential terms of access. This is important because I can assure you our competitors are trying to do the same thing.
While trade agreements are important in opening doors for Canadian companies, it's also important that we support these companies in moving through those doors. That's the central role of the Canadian Trade Commissioner Service. In more than 150 cities worldwide, five regional offices, and in a growing number of leading industry associations across Canada, you can find trade commissioners helping businesses, large and small, break into and expand into new markets.
Armed with market intelligence and expert advice, trade commissioners work closely with Canadian companies to reduce the risk and the cost of doing business internationally. They connect Canadian business people with the right decision-makers abroad so that they can grow their businesses and create jobs right here at home. Last year we served almost 14,000 Canadian firms, most of them small and medium-sized enterprises.
Your committee's March 2012 report on the Canadian Trade Commissioner Service was welcomed, and its support for the service is very much appreciated. The government has responded to that report and is working diligently to implement its recommendations so as to maintain the excellent service provided to Canadian clients, and to contribute to Canada's prosperity through global commerce, investment, and innovation.
Allow me to end with a few words on our global commerce strategy, launched in 2007, which allowed Canada to put in place a framework that emphasizes a whole-of-government approach and greater engagement of small and medium-sized enterprises.
In response to a changing global economic landscape, the government announced in 2012 that it would undertake steps to refresh the global commerce strategy, or the GCS, through extensive consultations with Canadians, again with SMEs being the focus.
We've heard from many stakeholders across the country in this undertaking. In addition to meeting with provincial and municipal governments, my officials have met with more than 400 industry and business leaders across Canada.
The consultation process has helped inform a refreshed GCS which will guide Canada's trade plan going forward. The updated global commerce strategy will better align the government's trade and investment resources with our objectives vis-à-vis markets that matter the most.
Through the GCS our objective is to help Canadian businesses, especially our SMEs and education service providers, to compete successfully in targeted emerging markets while maintaining our efforts to strategically advance our commercial interest in important traditional markets.
Economic action plan 2013 reaffirmed the government's commitment to refresh the global commerce strategy and to announce it in the coming months. I will continue to look to this committee for advice and ideas as the government continues to create jobs and prosperity for Canadians through deeper trade and investment ties with our key global partners.
Thank you. I look forward to our discussion today.
View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2013-05-06 15:42
Thank you for the question.
As I'm sure you've taken notice, the world economy has undergone a dramatic change. We've gone through the worst economic crisis in half a century. Markets around the world have been challenged by that crisis. Even the emerging markets, the fastest growing markets around the world, have struggled to keep up with their traditional patterns and rates of growth.
Canada is not immune to the winds of economic change blowing around the globe. We do know for a fact that trade investment, more open and freer trade and investment going forward, is going to be one of the keys not in only unleashing Canada's economy but also in allowing the global economy to recover from what has been a very difficult last five to six years.
Even as recently as this past March, our trade figures, as you know, have bounced back to a surplus. It would be a mistake to focus on any given month or even year to get a broader picture of the opportunities that exist for Canada to expand its opportunities around the globe.
My job as trade minister is to provide new opportunities for Canadian companies to be successful all around the world in selling their goods, selling their services, and selling their expertise. I can tell you from personal experience, having travelled to many of our key trading partners, having also been involved at the World Trade Organization, within APEC, and at the OECD, that Canada has opportunities to work hard to remove tariff and non-tariff barriers to allow Canadians to really benefit from growth opportunities that are all around us.
View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2013-05-06 15:46
I'm glad you mentioned the current account balance. As you know, the current account balance is not only reflective of trade balances, but it's also reflective of investment flows into and out of Canada. It's reflective of revenues generated by investment. I don't know if you're aware of this, but it's also reflective of foreign aid flows out of Canada. Last year those alone were somewhere in the order of between $4 billion and $5 billion. When you take that into account, if you were using the current account balances as your only indicator of economic success, you might have made a case, but it would be a big mistake to do that. Most economists would agree with me that it is only one of many different indicators.
The indicator I would direct you to is one which I believe determines the issue. What has Canada done in terms of economic performance, especially when it comes to job creation? As you know, since the depths of the recession in July 2009, the Canadian economy has created 900,000 new jobs. We lead the G-7 in job creation performance. I'm very proud of that record. I won't make any apologies for that record. I'm absolutely confident that as time goes on we'll continue to see very significant job creation from our government, from our economy, I should add, and also a continued focus by our government on the most fundamental issues, which allow our economy to stay healthy, such as low taxes and a highly educated workforce, making sure we're an attractive place for foreign investment.
View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2013-05-06 15:49
Mr. Davies, I'll challenge you on one point. You suggested that job creation isn't the responsibility of the trade minister. You're dead wrong, dead wrong. Both investment and trade fall under my portfolio. Trade facilitation falls under my portfolio. Providing the kinds of support for Canadian businesses, even access to capital, falls under my portfolio, and it's all related to our objectives on job creation. If you look at that indicator, clearly we're having success.
I would suggest to you that our government is getting it done. We're considered to be the best place to do business in the world over the next five years. The world has taken notice of our economic performance, and I can assure you that the investments we're making right now in terms of crafting economic framework agreements—yes, with smaller countries, as well as with larger countries like the European Union, a market of 500 million consumers; a market like Japan, a market within the Trans-Pacific Partnership, representing 785 million consumers—those are going to drive job creation, and they're going to drive long-term economic prosperity in Canada for many years to come.
View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2013-05-06 15:51
Canada has made it clear on many different occasions within international fora that we believe the World Trade Organization should remain the preeminent forum within which rules-based trading takes place around the world. Sadly, the Doha Round is stalled very badly.
There are very significant efforts being brought to bear to try to come up with a meaningful outcome at MC9 in Bali, which is coming up in December. I'm part of that effort, as are many of my counterpart colleagues from around the world. In the absence of significant progress in the Doha Round, Canada has no option but to look at opportunities to remove tariff and non-tariff barriers through other means. We're talking about bilateral agreements, which I just discussed with Mr. Davies. We're talking about regional agreements, like the Trans-Pacific Partnership. I wouldn't want to forget plurilateral agreements. For example, Canada has recently joined in an international services agreement which is looking to liberalize the trade in services internationally. I believe there are 20 or 21 partners involved in that, including the EU, the U.S., and Japan.
The reason I am so excited about that initiative is that Canada is one of the world leaders in the sale of services. We're the fourth largest exporter of engineering services in the world. We're only a population of 34 million in a world population of 7 billion, and we're the fourth largest exporter of engineering expertise in the world. We're that way across many other sectors of the services market. However, we're prevented from taking maximum advantage of those opportunities because of non-tariff barriers in many parts of the world. We're hoping to eliminate, or certainly reduce, those barriers because we know Canada can really benefit from it going forward.
Finding ways to refresh the WTO is a significant challenge for the world's economy. When the Uruguay Round was finalized, there was great optimism that the next round, which was the Doha Round, would lead to a very significant step forward in further trade liberalization around the world. Sadly, what we've seen from many of the key players in the global economy is that there has been a lack of flexibility. These are my own words. This is my own assessment. There's a lack of flexibility in moving forward, because we have different groupings. We have least developed countries looking for outcomes that will serve their interests. There are developing economies looking for certain outcomes. There are the developed economies like Canada, the U.S., the EU, and Japan, which also are looking for certain outcomes.
As we look toward Bali, one of the key things we can do to facilitate trade around the world is to agree on a set of measures under trade facilitation that would remove things such as barriers within customs measures. That would allow us to leverage the strengths of economies by eliminating the barriers we have at the border. Many of those are artificial. Many of them, quite frankly, are essentially there to prevent trade from happening and to protect local economies. We in Canada have been a very strong voice against protectionism in the global economy. We believe protectionism is toxic to the economic recovery that all of us are hoping for in the global economy.
I hope that helps you to divine what our government is hoping to achieve within the larger multilateral context.
View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2013-05-06 15:56
I will say it has been frustrating for us as a government to see from time to time measures taken by our American cousins that appear to fly in the face of the spirit in which Canada and the United States have collaborated.
As you know, not long ago we agreed upon a set of measures under our border vision initiative as well as our Regulatory Cooperation Council initiative, all intended to do the following: to move security to the perimeter of our two countries, to thin out the border, and to collaborate and cooperate on how we do business so we can do it more cost-efficiently. Again, it's about trade facilitation.
When you see new fees being proposed at the border, those who are promoting them clearly see them as a quick fix for some immediate fiscal challenges. We have impressed upon our counterparts in the United States that the best job creator is free and uninhibited trade between Canada and the United States. There's no better job creator than trade between our two countries.
The more we can do to allow that trade to happen in an unencumbered way, the more we're going to drive prosperity on both sides of our border. When a fee is imposed on the American side of the border, it impacts jobs and businesses not only on our side of the border, but also on the American side of the border because of the highly integrated nature of our two economies.
Parts flow across our border many times before a final product has been assembled. Whatever we can do to remove barriers is a very significant step forward to achieving greater levels of trade and doing so more efficiently.
View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2013-05-06 15:59
I can certainly assure you that we have done a comprehensive analysis of what Canada can expect to gain from being a member of the Trans-Pacific Partnership and what the expectations would be of our membership within that group of trading nations.
As you know, these assessments are done by officials within my department. They are also done by my team within the department. We, of course, were able to determine that there was a very significant benefit to Canada being at the table.
We had discussions with all of the existing partners. They obviously wanted to determine the level of ambition that Canada would bring to the table in terms of trade liberalization. I did remind them, Mr. Easter, that Canada is one of the most liberalized economies in the world and that they could expect Canada to be a very productive and helpful partner at the negotiating table.
I can tell you that in the last two rounds in which we have engaged, even the nine partners that were there very much appreciated how well prepared Canadian negotiators were and how easily they integrated into the process.
View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2013-05-06 16:01
As you know, those are confidential reviews—
View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2013-05-06 16:02
—and evaluations that cover a wide range of issues, and the scope of that assessment is broad. We want to make sure we get it right for Canadians. We want to make sure there is value in any trade agreement we enter into.
View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2013-05-06 16:04
Let me answer your first question, and that is on CETA. As we speak, our negotiators remain engaged in Brussels bridging the remaining very small handful of issues. These are difficult discussions, but our negotiators are finding creative ways of bridging the outstanding gaps.
However, I want to be very clear on this, Mr. Easter. Our conclusion of these negotiations will not be driven primarily by a calendar or a timetable. It will be driven by the quality of the deal. We have made it clear to Canadians throughout our negotiations that we will only conclude negotiations if we can say to Canadians that it is in Canada's best interests. That is the standard our government has set. It is the standard we will meet. That is the standard that also applies to South Korea.
You were quite correct in stating that those negotiations were started back in 2005. By 2007, as you know, the whole BSE crisis was in full bloom. Korea had closed its market to our beef, and they were not moving. It took this government to actually solve that issue, which we were able to resolve about a year and a half ago with the Koreans. We now have full access to their market. Until we were able to resolve that issue, it was very difficult to move forward in trying to find additional ways of deepening our trade relationship.
As you know, since that time we've had ongoing discussions with the Korean leadership as to how we might be able to continue to deepen that trade and investment relationship. They've gone through a transition of government over the last number of months. They've actually completely retooled their trade portfolio. They've included a number of other disciplines in that portfolio. It's taking some time to even find out who would be my counterpart who can actually receive instructions, or provide instructions to negotiators in terms of what can be achieved within a trade agreement negotiation with Canada.
I'm confident that we'll be able to find a way of securing the kind of outcome Canadians expect us to get. Canadians will not accept us selling out Canada's economy. You know that. I would also remind you, Mr. Easter, that over the 13 years your government was in place, you were able to secure only three free trade agreements, and they were all tiny ones—
View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2013-05-06 16:07
—and we're now engaged in very significant negotiations with Japan, the EU, and TPP.
View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2013-05-06 16:08
Thank you for that question.
A lot of people whom I meet assume that the trade minister is engaged in trade policy and trade framework agreement negotiations and that's it. In fact, trade is much bigger than that. I would mention trade promotion.
In my opening remarks I mentioned the Canadian Trade Commissioner Service, which I referred to as one of Canada's best kept secrets, because many Canadian businesses, especially small and medium-size enterprises, don't yet know the value that the trade commissioner represents in providing support to Canadian businesses that want to penetrate new markets around the world.
As you know, through your study of the Canadian Trade Commissioner Service, our trade commissioners on the ground in many of those new and emerging markets can provide our Canadian businesses with intelligence on the regulatory context in which they'll be doing business, the legal framework, and the business environment. They can point Canadian businesses to a roster of trustworthy partners which they may want to partner with to improve their prospects of success. The Canadian Trade Commissioner Service is part of our trade promotion tool kit.
I should also mention that one of the biggest challenges Canadian businesses have is access to capital for them to expand into new markets. That's where Export Development Canada comes in. This is an organization, an agency of the government, that provides support for Canadian companies that are looking for financial support, especially where there are gaps in the traditional private sector, for example, the private banks. Often EDC can step into that gap and provide the kind of financial and insurance support that our Canadian companies need to do that.
I should also mention our Canadian Commercial Corporation, which focuses on government-to-government procurement relationships. This is also a tool that we use to allow Canadian companies to explore new markets around the world.
For example, if you have a Canadian company that hasn't yet exported a defence product to a foreign government, that foreign government may say they don't know this company and don't yet have the assurance that they can deliver under their contract. So the CCC steps in, and because they're essentially an agency of the government, the purchaser has the confidence that the goods will be delivered as stipulated under the contract. Again, we're able to facilitate and expand opportunities for Canadian businesses to be successful around the world.
I would be remiss if I didn't mention trade missions. I think all of you are aware that I, as well as some of my parliamentary colleagues, lead trade missions around the world. These are our key markets, the ones we want to see our Canadian companies engaged in. We'll take a number of companies along, often 20 to 30, and these trade missions have a sector-specific focus. We don't want 10 to 15 different sectors represented, where we don't have the scale to be able to make a difference in that foreign market.
Our trade commissioners on the ground will arrange face-to-face meetings with prospective partners in that new market. They can also help to open doors to key decision-makers in that market. I think if you check with those who have taken advantage of our trade missions around the world, you'll find an overwhelmingly positive response has come back. We provide this valuable service, teaming up the services of our Trade Commissioner Service with some of us who are elected officials, to lead these trade missions where Canadian companies can experience what it's like to be on the ground and forge new trade opportunities.
Finally, I'll talk about trade facilitation. This is another thing that I do, more at the multilateral or plurilateral level. I'm engaged at the World Trade Organization and other plurilateral forums, such as APEC and the OECD, where we have regular discussions about how we can get rid of red tape, paperwork that is an artificial means of inhibiting trade, which would serve countries around the world. Some of the work that has been done shows that trade facilitation, the elimination of many of these barriers, would benefit the least developed countries in the world the most.
These are some opportunities we have to go beyond just trade policy and do some real things for Canadian businesses and grow prosperity here at home.
View Ed Fast Profile
CPC (BC)
View Ed Fast Profile
2013-05-06 16:14
When we're looking at what's in Canada's best interest, we're looking at a number of different things. First of all, are we opening up new opportunities across all sectors of our economy? Are we opening up opportunities across all regions of our economy?
We want to make sure that our core values and our core interests are not in any way compromised when we forge new investment and trade agreements around the world.
We want to make sure that, at the end of the day, the tools that we're adopting and putting into place are actually driving economic prosperity long term in Canada.
These aren't quick fixes. Mr. Easter mentioned that he felt that trade wasn't being generated by the initiatives we've undertaken. The reality is these initiatives take 5, 10, 15, 20 years to actually take root and bear fruit.
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