Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 11 - Evidence, June 2, 2009
OTTAWA, Tuesday, June 2, 2009
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 6:08 p.m. to continue its study on the rise of China, India and Russia in the global economy and the implications for Canadian policy.
Senator Consiglio Di Nino (Chair) in the chair.
[English]
The Chair: I see a quorum. I call the meeting to order, first with official apologies to our witnesses today for the tardiness of this meeting. As you know, when the Senate is sitting, committees cannot sit without specific permission. We did get permission about five minutes ago. Otherwise, we would have had to postpone what I am sure will be a very interesting discussion.
I would like to welcome all of you to the meeting of the Standing Senate Committee on Foreign Affairs and International Trade. The committee is continuing its special study on the rise of China, India and Russia in the global economy and the implications for Canadian policy.
Appearing before the committee today from the Canadian Council of Chief Executives, CCCE, once again, with a double welcome, is David Stewart-Patterson, Executive Vice-President; and Sam Boutziouvis, Vice-President, Economics and International Trade.
The Canadian Council of Chief Executives is a not-for-profit, non-partisan organization composed of the chief executive officers of Canada's leading enterprises. Welcome to the Senate. I believe Mr. Stewart-Patterson will be starting us off. We will listen to the two of you for a few minutes and then have time for questions from senators.
David Stewart-Patterson, Executive Vice-President, Canadian Council of Chief Executives: Thank you. I know your study is addressing three of our major trading partners, but if I may, I will address my initial comments to just one of those, that being India, simply because that is a country with which we have actually been engaged extensively as an organization over the past few years.
In particular, I want to highlight some of the work we have been doing with our colleagues at the Confederation of Indian Industry, CII, in laying the groundwork for what I am hoping is evolving as a comprehensive effort to expand our bilateral relationship. Essentially, this got underway in 2005 when our respective prime ministers asked the private sector to offer thoughts on where we might take the bilateral relationship and specifically raised the idea of an India-Canada CEO round table. That came to pass, and we started to see real progress on this front in 2007 when our organization took a CEO mission to India, to New Delhi and Mumbai, during which we held the first India-Canada CEO Roundtable.
At that point, we were talking in general terms. We were participants at the round table that called for closer bilateral commercial ties but put the first specific on the table and said that we should have ambitious five-year targets for both trade and investment.
We then had the second India-Canada CEO Roundtable in June of 2007 focusing on investment promotion and the potential for enhanced private-sector exchanges. It was at this meeting that our respective trade ministers provided advice for the first time, specifically on the idea of a free trade agreement between our two countries.
CCCE and CII began by looking at the bilateral trade context, exchanging ideas on potential recommendations and circulating draft documents, both among participants in the CEO round table and also experts in various fields.
That resulted in a report in September 2008 from the round table participants but endorsed by both of our organizations — I believe we provided a copy of that report from September 2008 to the committee earlier — which basically concluded that the time has come for Canada and India to move into a new era of cooperation, and we should move quickly to accelerate the growing ties between our countries.
It recommended that existing bilateral agreements and understandings should be augmented, if necessary, and then combined into a single, modern, high-quality, comprehensive economic agreement.
Given the broad scope to bolster and deepen our partnership and to cooperate more closely, they encouraged trade ministers to begin negotiations as quickly as possible.
In November of last year, the Speech from the Throne signalled Canada's government's interest in pursuing new economic agreements in Asia generally, and that was followed up in January 2009 by India and Canada agreeing to initiate exploratory discussions toward what is now being labelled as a comprehensive economic partnership agreement.
India's Commerce and Industry Minister Kamal Nath and Canada's Minister of International Trade Stockwell Day said that the goal at this point was to try to take our relationship to the next level. As the round table participants recommended previously, the ministers asked that their officials begin talks on the parameters of a comprehensive trade agreement.
Now, of course, the elections in India are over. We are hopeful that our countries can actually begin these discussions as quickly as possible, that we can implement the foreign investment promotion and protection agreement, FIPA, that has already been agreed to and, of course, wrap up negotiations on the civilian nuclear cooperation agreement.
How far we go in this comprehensive effort will obviously be determined by the commitment of leaders not just in the business community but across political and non-governmental communities as well. Certainly, if we want to move anywhere quickly, we will need continued support at the highest levels, particularly by our respective prime ministers. To that end, we are suggesting that bilateral summits be held on a regular basis to maintain and add momentum and to deal with any concerns or opportunities that inevitably crop up during this type of negotiation. We suggest that the first of these summits be held as quickly as possible.
Ministers should continue to engage directly, meeting regularly amongst themselves, but also continuing to engage the business communities in both countries. After a very successful visit by Minister Day to India in January, we are hoping India's new Commerce and Industry Minister will be able to visit Canada soon.
We would also like to see the CEO round table process continue. Certainly, as an organization, we are prepared to continue to offer our advice to our governments, elected officials and to appointed officials whenever that may be helpful.
We believe that both Canada and India would benefit from an agreement that would eliminate tariffs on a substantial majority of goods that move between us. Certainly, exporters and importers would benefit directly from the opportunity to strengthen supply chains between our two countries and essentially diversify our export markets. If we can get into serious negotiations on the trade front, that will raise awareness of the possibilities that may arise in other areas.
I would like to wrap up by describing what we see as the potential scope for a comprehensive agreement. Obviously, we would start by trying to eliminate duties on substantially all trade and non-agricultural products within 10 years. We have to recognize that there are opportunities perhaps in the agricultural sector but also extreme sensitivities, both in our country and particularly in India where, of course, farming is a subsistence activity for an awful lot of people. We need to work toward reciprocal but flexible commitments to simplify things such as rules of origin. We need a binding dispute resolution mechanism. We should look for a flexible mechanism to deal with eliminating non-tariff barriers. Finally, we need more transparency in customs rules and procedures and certainly enforceable rights and obligations in other regulatory areas.
Expanded trade and services between Canada and India should build on what is already being done multilaterally at the World Trade Organization and certainly compatible with the WTO's general agreement on trade and services. Progressively liberalized but broad in scope should be the goal on the services side. We need progress on the mutual recognition of such things as professional qualifications and greater transparency on the regulatory front.
A future economic agreement could incorporate the foreign investment promotion and protection agreement that we have already negotiated to essentially create an investment chapter perhaps within that broader agreement to strengthen its provisions.
In short, what we have put on the table, if I can summarize, goes well beyond the scope of a traditional free trade agreement. We have concluded that what we need now is a more holistic approach to the bilateral relationship if we are to really realize the full benefits that we could achieve through a stronger bilateral approach.
Areas of cooperation that we should look at include science and technology, education, energy and the environment and various sectoral initiatives as well. I think we can look at culture, security, infrastructure, competition policy, intellectual property, double taxation, totalization, visa matters, standards testing, labelling and certification procedures, trade facilitation, greater engagement in public-private partnerships and public procurement, of course, which is a hot topic these days between Canada and the United States.
There is a potential here for greater cooperation across a very wide range of issues. To summarize, neither our council nor our counterparts at the Confederation of Indian Industry see that the Canada-India relationship is limited to an economic proposition. We have a potential here for a much broader partnership.
I close by suggesting that the current global recession, in my view, makes it more important than ever for our two countries to move forward together. The fact is that both Canada and India have been more fortunate than most in avoiding the worst impacts of the current global downturn. All the more reason, then, for us to set an example for the world by leading the way toward greater cooperation and openness rather than following others down the short-sighted and counterproductive path of protectionism.
I hope our governments move quickly to consider and act on the recommendations that have been put forward by our two business communities and that they move directly into negotiations without any unnecessary delays for further joint studies. We think those studies have basically been done.
We see great potential to serve the interests of people across both of our great countries, and certainly we as an organization will continue to work in any way we can to help India and Canada realize our full potential in the years ahead. I welcome your questions.
The Chair: Thank you, Mr. Stewart-Patterson. Before we go to question, Mr. Boutziouvis, do you wish to make any comments?
Sam Boutziouvis, Vice-President, Economics and International Trade, Canadian Council of Chief Executives: I will wait for questions. Thank you.
The Chair: As a personal comment, India has been one of my favourite destinations for a number of years. I have been there several times, including this past January when I attended the Vibrant Gujarat conference, with which I am sure you gentlemen are familiar. It was quite an eye-opener. I have very few disagreements with your comments.
[Translation]
Senator Fortin-Duplessis: According to a recent study, India is the second most attractive country, after China, for investments. A survey by a public relations firm, Development Counsellors International, among American CEOs indicates that, out of 281 respondents, 53.1 per cent said that China was the most trade-oriented country, India ranking second with 45 per cent of the votes. They were followed by Mexico with 30.1 per cent, the United Kingdom with 25.4 per cent, and Canada with 22 per cent.
Those who voted for India said, in 65 per cent of cases, that is was because of the quality, quantity and cheap cost of labour in this country. Economic performance and attractive manufacturing costs were also considered major assets of Indian economy.
Although you said this market was important for companies in the areas of science and technology and intellectual property, could you tell us how Canadian companies can take advantage of India's favorable economic climate? I would also like you to describe the nature of Canadian investments.
[English]
Mr. Stewart-Patterson: First, we have to recognize that we are starting from a very small base. India accounts for less than 1 per cent of Canada's direct investment abroad, at this point. However, there is great potential to expand on that relationship.
You have mentioned some of the strengths that India offers in terms of the quality of its labour force. From a Canadian perspective, the fact that there is some commonality of language obviously makes it an easier place for Canadians to move into and establish partnerships.
Again, both China and India get a great deal of attention simply because of the size and dynamism of their economies. India does have some downsides in that respect; it is perhaps more heavily regulated and not as closely linked into the global economy. On the other hand, that, in fact, has helped it in the recent downturn; it has not been quite as badly affected as some other developing markets.
Mr. Boutziouvis, do you want to add anything in particular in terms of specific potential for Canadian companies?
Mr. Boutziouvis: Importantly, more than 50 per cent of the population is under 25 years of age. Therefore, the demographic reality associated with investing in India over the long term — and I think that Canadian businesses do go into India decidedly with a medium-to long-term perspective — is that, for the foreseeable future, there will be an abundant supply of labour but also a market place with a growing middle class to be able to take advantage of an India that is transitioning toward a knowledge-based economy; particularly in information and communication technology, pharmaceuticals and so many other areas.
One of the key challenges we see that needs to be faced, especially in India with the new Singh government with the stronger minority, is the need to move quickly with greater education and training efforts inside India in order to further build on what is largely deemed to be an excellent workforce, especially in the IT sector.
Senator Andreychuk: I want to thank you for your presentation where you have highlighted that political will is what will be necessary to get more involvement and cooperation within India. I think that is true in any trade, but it is especially true in India due to the complexity.
Some people in India, in the business sector, that say that after the appetite with the United States, Canada is not as significant to India to invest the time that it will take to negotiate all the elements that go into a trade agreement. Have you investigated to find out whether there is the political will from the side of India? Are they sufficiently aware of the opportunities that may come to them out of this?
Mr. Stewart-Patterson: If I may, one of the benefits of the way that we approached this project is that the starting point was for the business communities of our two countries to get together and discuss where we see the mutual benefits and opportunities. It was our reports to our respective governments that triggered the government interest. Certainly, our feedback from our private-sector counterparts has been that, yes, the Indian government is strongly interested in pursuing this.
Obviously, when you compare Canada to the United States, we are smaller. We do not have the same scale of benefit to offer. On the other hand, with India, as with our current discussions with the European Union, the Indian government sees benefits — and certainly the Indian community sees benefits — in working closely with Canada now and perhaps more quickly because that might help establish a pattern for them in subsequent discussions with the United States.
We have the potential to move more quickly and to reach agreement on a number of fronts. In that way, we might perhaps set an example that they can benefit from in negotiations with other partners — the United States and beyond.
As an organization, we have traditionally been very strong supporters of multilateral negotiations, but the reality is that those talks under the WTO have run into severe blockages in recent years. Many countries — Canada and India included — are looking for ways to move forward on a bilateral basis, because we can do it faster, in the hopes that the things we work out on a bilateral basis can be expanded into regional and, eventually, multilateral, worldwide approaches.
Senator Andreychuk: A subset to that is we have the federal-provincial constant challenge. India, of course, has the many states that have a role to play. Is our complexity of systems an advantage to us, or does it just make the trade negotiations that much more difficult?
Mr. Boutziouvis: We have had a couple of champions on the provincial front who have contributed to the federal push with respect to the Canada-India relationship.
In particular, Premier Charest has done an excellent job supporting the efforts of the private sector in Canada to promote the Canada-India relationship. He was present in the second CEO round table, which was held in Montreal in June 2007. He has an excellent relationship with former Minister of Commerce and Industry Kamal Nath.
Premier Dalton McGuinty has gone on missions to India at least twice, and Premier Campbell has been over, as well. Therefore, by and large, we do not see a problem on the provincial front. To the question of whether there are issues with provincial areas of competence that the Indian business community has raised with us and are referred to in the report, the answer is yes. However, I firmly believe that we can get through them because the Council of the Federation has issued, on more than one occasion, public support for proceeding with some type of enhanced arrangement with India.
We believe the provinces will be on board for the most part.
Senator Andreychuk: Is that true on the Indian side, also?
Mr. Boutziouvis: The Confederation of Indian Industry has not issued any warning or caveat about provincial involvement.
It would depend on areas of competence and responsibility in those areas. Thus far, we have not heard any caveats on that front.
The Chair: Gentlemen, from my knowledge, your organization has been one of the few that has recognized the real value of the diaspora communities in our country as that relates to investment and trade.
In your opinion, are we maximizing that value in Canada? Is there something more that we should be doing?
Mr. Stewart-Patterson: The easy answer to that is that we can always do more. The reality is that our tradition as a country of welcoming immigrants from around the world is becoming an increasingly important competitive advantage within a global economy, within an economy where companies that operate worldwide are recruiting and building up management teams that are multicultural in nature as well.
In terms of Canada's ability to attract investment from anywhere in the world in the years ahead, the nature of our communities is an increasingly big plus in that competition for investment.
On the question of whether we are making as good a use as we could of that resource within our communities, we clearly are not. If we look at the economic figures on how new immigrants fare within our economic system, they are not moving into the mainstream as quickly as they should be.
A whole range of issues is involved in that. We have talked about some of the issues here in terms of credential recognition and assessment. We know what many of those issues are. Various levels of government are working to address those, but we still have a way to go before we can confidently say that we are making the best possible use of the people we have here in our communities.
Mr. Boutziouvis: The report was written in such a way, and Mr. Stewart-Patterson made his testimony and comments in such a way, as to emphasize the need to raise awareness from the top down. That is one of the biggest areas where the federal government, in particular, can make an impact. That way, we can take advantage of the incredible, robust nature of the diaspora, which is a competitive advantage with respect to the Canadian context.
We need to raise awareness within Canada. We need leadership from the top. We need our prime ministers to meet. An invitation is out for Prime Minister Singh to visit Canada at the earliest opportunity. It is great that he will continue in his leadership role in India for the next several years in a stronger position. We certainly hope Prime Minister Singh will answer that invitation to visit Canada at the earliest opportunity.
Senator Dawson: The CCCE has been here before. We recognize that you have been proposing that there be political will. The three P's — the political will, the private will and the provincial will — whether it is Mr. Charest, Mr. McGuinty or the Maritime gateway community that has gone to India to say that the Atlantic Gateway is better for you than the Pacific Gateway, will the combination of those three P's help us on rules of origin and dispute settlement? Do you think there is enough collective will to say that we will sit down at a table?
Much of the dispute settlements and rules of origin are applied provincially; they are not jurisdictions that we, the all-consuming federal government, can say that we will do it by ourselves and will solve it. We need the cooperation of our provinces. We need the cooperation of our big industries that are the ones that are the private side of the image we are trying to develop and the growth we are trying to have in India.
I know you have always been optimistic, but how would you compare our chances of succeeding on rules of origin and dispute settlements with India? You have admitted that on the world-trade side and the multilateral side, we have not been doing well. We have had problems with many states. Why should we be optimistic about India?
Mr. Stewart-Patterson: No matter how sticky an issue may be, it is much easier to work out one-on-one than among a hundred at a time. That is why we see many countries, not just Canada, turn to the bilateral process.
Senator Dawson: It is not one-on-one when you talk about the provinces, the private enterprise and the federal will.
Mr. Stewart-Patterson: No, but that is the other thing; as we move beyond the traditional notion of a free trade agreement in terms of the Canada-U.S. deal in the 1980s and start to talk about this much broader range of issues, there is recognition that you have to bring, in Canada's context, the provincial level of government into the discussions.
We have seen that happen explicitly on the Canada-European Union discussions, where one of the preconditions for the European Union being interested in launching negotiations was that they wanted assurance that the provinces would be involved and in a position to make commitments. One of the things that they are most interested in is the opening up of government procurement. They want to ensure that happens at the sub-national level.
When you leave areas out such as sub-national government procurement, you end up with a situation the same as the one we are facing today with the United States. Because it got left out, now it is a problem. It is a problem we have to deal with in isolation.
Again, the advantage of discussions that cover a broad range of issues is that you can then, as a country, sit back and decide what trade-offs you are willing to make. Whereas, if you are trying to negotiate a single issue in isolation, you might say, "This tilts too much one way, so we cannot do a deal. If you can give us something here, we can give you a little something there." That is how a broad deal gets done.
Senator Dawson: You are confident that in the case of India, the three P's are strong enough — because we have spent a great deal of time negotiating on certain agreements and gone nowhere. If the stars are aligned, are you telling me that you think this is an opportunity that is easier than others?
Mr. Stewart-Patterson: The reality is no one can know whether a negotiation will be successful. We have to talk about our respective interests and work through what the trade-offs might be. It is important that our governments, at both the federal and provincial level — and our private sector because we got this ball rolling — have all agreed that there is potential here. These are issues that we should discuss, and these are issues worth negotiating. It is worth the time to see if we can do a deal.
That in itself is a positive sign that all three P's are aligned. Now we just have to all do our respective homework, sit down and see what type of a deal we can work out.
Senator Wallin: On the same topic, as I look at your very optimistic list of all the areas you want to see, such as science, energy, environment and others, Senator Dawson pointed out, and others, that we did not have a whole lot of luck with the Americans on this one. What gives you the optimism?
Given the protectionist mindset in the U.S. and their turning inward, is that giving us sort of a window? Or are you just more optimistic in general because we have learned from our mistakes and learned to negotiate better than we did the last time?
Mr. Stewart-Patterson: I do not know.
Senator Wallin: It is a multiple choice.
Mr. Stewart-Patterson: You have raised the situation we are facing with the rise of protectionism not only in the United States but in countries around the world. That is providing a new sense of urgency for us to explore any potential avenue to move matters in the other direction.
Everyone who looks at the situation logically says that protectionism is self-defeating and counterproductive, yet it seems incredibly hard to battle the political momentum that seems to infuse much of protectionist measures. Where we have a government in India that has been re-elected with a stronger mandate and is more outwardly oriented, and where we are coming face to face with some of the more difficult aspects of our relationship with our major trading partner to the south, there is an incentive on both sides to say that we should let the two of us see what we can work out, not only for our mutual benefit on a bilateral basis but perhaps setting an example of what might be done elsewhere as well.
Senator Wallin: Is that a legitimate argument that there is a window now, given what we see stateside — "Buy American," et cetera — that if not now, maybe never?
Mr. Stewart-Patterson: I do not think it is a window in that sense. It is more an added sense of urgency. Because of what is happening around the world in terms of the downturn and the rise of protectionism, we have to seize any opportunity that does arise that opens up any possibilities that come up and run with it as best we can.
Mr. Boutziouvis: The report that underpins the testimony of today was released in early September 2008, just on the cusp of when we went into this major tailspin. Be that as it may, the business communities had spoken jointly saying, "Let us proceed as far as we can and as comprehensively as we can in a number of areas." In the case of the most recent issue that we had with the United States about government procurement and "Buy American," the report on the India front makes it clear that we could be a little more modest with our objectives because India needs to sign the WTO government procurement agreement first. Let us dial up, increase transparency and get the Indian government to sign onto that agreement, after which we will see what we can do.
We have a science and technology agreement with India, so let us see what else we can do with it. In the case of investment, for example, Canada's foreign investment promotion and protection agreement is scrubbed legally and ready to go, but the Indian and the Canadian business leaders sent us a signal to promote investment more and get into the civil nuclear cooperation. The Indian private and public sectors asked us to bring our investment dollars to invest in infrastructure because we have an expertise.
The report responds to the joint effort of both business communities, and that is why this is a very important opportunity given that the business community signed off on the report jointly.
Senator Wallin: You have raised this issue and Minister Day has been clear about it. He took private-sector people with him on the trip. The whole notion of nuclear energy is out there and is an important priority. However, the World Bank says that India is not an easy place to do business and ranks it about one hundred and twenty-second. It is said that it is easier to do business in Nigeria. We have seen acts of terrorism in Mumbai, and there is still much fraud and corruption, et cetera. Those two pictures together would give some people, in the days of skittish capital, cause to hesitate. Are you telling us that they are still keen to do business there?
Mr. Stewart-Patterson: Many things make people nervous around the world these days. During a synchronized global downturn, we come to realize how much we are connected and that nowhere is completely safe.
India, similar to many other destinations, has clear risks, but it also has clear pluses. Any individual company will look at its opportunities and the potential upside and downside to make decisions accordingly. India has many important strengths, whether that is in terms of the quality of its labour force or its dedication to the rule of law. Those strengths make it a good bet for Canada as a partner, and we should seek to expand those relationships.
We need to be realistic about how far and how fast we can move forward. At the same time, we have to recognize that, in many cases, we already have a substantial base on which we are trying to build across a broad range of issues.
Mr. Boutziouvis: In the case of this sector, the window of opportunity exists, and we should try to close it as quickly as possible. The Americans and the Indian government negotiated their bilateral deal. As soon as the U.S.-India deal was signed, Canada endorsed it and struck a dialogue. All reports suggest that we are ready to close this deal, which we should do as quickly as possible. Some companies, such as SNC-Lavalin Group Inc., have synergies with a nascent Indian nuclear power sector that could exceed a $100-billion investment over the next 10 to 20 years. We should not close the door on this opportunity. Frankly speaking, we need to do this deal in order to proceed with moving on the economic partnership agreement, EPA.
Mr. Stewart-Patterson: If I may, this is an example of how issues tie together. On the one hand, there is a window of economic opportunity for something in which Canada has expertise and demonstrated capacity. However, it is also an issue that we, as a country, want to see addressed in terms of climate change, for example. Nuclear power is one of those zero emission options for enabling fast-growing countries such as India to expand their standard of living without adding to the rise in emissions of greenhouse gases.
A convergence of interests exists in some of these sectors.
Senator Wallin: Those are great answers.
Senator Stollery: On the business of bilaterals and multilaterals, it should be on the record that most trade negotiators and specialists would say that bilaterals are practically useless. Essentially, the negotiators agree on everything that was not a problem and the things they cannot agree on, usually agricultural and cultural, they send to a dispute-settlement mechanism. In Canada, we have a great deal of experience with dispute-settlement mechanisms, in particular the softwood lumber dispute, which has cost about $400 million in legal fees to date.
Senator Grafstein: It has cost $1.2 billion.
Senator Stollery: The Honourable Donald S. Macdonald pointed out in his report 25 years ago that the most difficult things to negotiate are culture and agriculture; and the Doha Round is very much about agriculture, and it is difficult.
I have a figure that I heard on the weekend by the chief economist of Goldman Sachs in London and author of the BRIC report, Mr. Jim O'Neil. He said that by the year 2050, it is projected that India will have a GDP of about $35 trillion, which is $5 trillion more than the EU and only $5 trillion less than the U.S.
Your organization has appeared before the committee several times before. When we mentioned that we should diversify our trade, your organization did not seem to be interested. Another interesting fact is that the Chinese contribution to global domestic demand, global growth and GDP is forecasted to be greater than the EU and the U.S. combined. Are these figures not leeched into the organization? Have you changed your minds and think that perhaps it is time for Canada to begin looking at these gigantic emerging markets?
Mr. Stewart-Patterson: My first point is that we devoted so much time to the Canada-U.S. relationship not simply because of its sheer size. It is the fact that our economies have grown highly integrated, which means that the Canada-U.S. partnership enables Canadian companies to sell to the rest of the world. Much of what we sell to the rest of the world does not get made within our borders. The supply chain is across borders within North America. We are part of the North American export engine, and we receive our share of it directly and indirectly.
The second point is on the importance of other major trading partners. We have devoted a great deal of time to trying to make things happen on a multilateral basis because that would be the best of all. Having acknowledged that is not going anywhere currently, we also must look at the other opportunities out there. Never has there been any question that a market such as China or India has huge potential for us, but we are starting from a small base.
We are doing as much trade with India in a year as we do in about three days with the United States, which is all the more reason why we have to try to build up that share. At the same time, we have to recognize that even rapid growth in that relationship will only put a dent in the Canada-U.S. relationship at a modest pace.
Senator Stollery: We have the figures. It has been obvious to us that our trade with the U.S. has dropped. I do not know where it is now. It was 86; it is probably closer to 70 now with the bankruptcies and all of the problems south of the border. It has been obvious for some time that our trade with the U.S. has been declining at an alarming rate. We had the agricultural producers here last week talking about non-tariff barriers being used against them. They are desperate to find new markets outside. No one would argue that Canada's trade with the U.S. will ever be anything but important.
However, it seems to me that your association has changed its mind.
Mr. Boutziouvis: The Business Council on National Issues, before the Canadian Council of Chief Executives, was very interested in an enhanced relationship with Europe. We have been trying very hard to persuade our Japanese counterparts on the need for an enhanced economic partnership arrangement with Japan for the last 15 years. After three decades of exchanges back and forth with India, a confluence of events over the past five or six years, including changes to our status with India with respect to the sector we were discussing, helped bring together our private sectors to make a series of recommendations on the India relationship.
With all due respect, it is not that we have not been interested; an extraordinary confluence of events occurred on the Europe and India files. This brings us to 2008-09, where we are possibly facing the prospect of launching an enhanced economic partnership arrangement with Europe. We are also possibly launching something significant with India later this year or next year.
To bring the point home, our number-one trading relationship is the United States. We would be happy to come back to the committee to talk to you about the Canada-U.S. relationship. We have been talking about a five-point plan for the Canada-U.S. relationship since the early days after 9/11. We would love to speak to you about that in more detail, but we are here today to speak about India.
The Chair: We may invite you to do that.
Senator Segal: I am told by Indian business people — not the polite embassy officials and other officials who come before us — privately that they do not take Canadians very seriously. They think we are late; we do not do much; we talk more than we act. I think they would argue that if we looked at your 150 CEOs, the number amongst them who have decided to make serious investment or business intelligence activity in India is not very large and that smaller countries are doing a better job.
I do not disagree with anything in your recommendations. However, we may only be talking to ourselves if the business community itself is not engaged in making the case to its shareholders that it is prepared to make investments to build in a country where you need depth and time. Would you care to offer any reflection on that?
Mr. Stewart-Patterson: This whole process was launched by cooperation between the Canadian and Indian business communities. This started as a private-sector venture. We recognize that we need to be moving faster and trying harder on the Canadian side.
Senator Segal: Of your membership, would 10 per cent of them have some interest in investment in India? Do you have any sense of what that figure might be?
Mr. Stewart-Patterson: How many participants did we have on that first mission?
Mr. Boutziouvis: Eighteen members participated on the first mission in March 2007. The follow-up round table we had in Montreal had approximately 20 from each side.
You are absolutely correct. This is a follow-up point to the previous senator's opening question. It is not only about India with respect to the United States. Many countries have been knocking on India's door for the better part of a decade. We are late to the game. The private sector, the public sector and the non-governmental sector are all late to the game. We have to move.
That is why the report is written in such a way that it must be awareness raising. It is, in effect, a piece that must raise our level as soon as possible. It is basically a push for the Canadian private sector to recognize India for its potential in a realistic way.
The Chair: Six or seven months ago, I met with the India Calling delegation that came with two or three senior cabinet ministers. I spoke at the conference. That representation is an indication that there is more interest today from India and Indian businesses. Two dozen or more Indian business leaders came to that conference. Maybe you can make a brief comment on that.
Mr. Boutziouvis: As with many countries, it requires championing — a public-sector champion and a private-sector champion — when there is an interest in another country. We happen to have those in both of our countries.
Again, it was a fortuitous confluence of events. In the case of the India Calling conference, I believe you were visited by India's Minister of Science who was absolutely outstanding. Minister Kamal Nath is another champion, and hopefully the new Minister of Commerce and Industry will be also; hopefully, Prime Minister Singh will visit his child who is resident in Canada and attending school here, another automatic champion for Canada.
It is same thing on the Canadian front: We have our organization and the Canadian Chamber of Commerce pushing as hard as we can with respect to the relationship with India; we have Minister Stockwell Day who is a champion, and Minister Lawrence Cannon has been there. The building blocks are there to champion the initiative from the top, and that is what we need.
The Chair: I will invite Senator Segal to the Indo-Canada Chamber of Commerce annual gala on Saturday evening in Toronto, which I will be attending. We can talk about this with some of our colleagues.
Senator Grafstein: I want to congratulate you; better late than never. We have been on this wicket for some time. I want to congratulate you that your organization is finally taking a leadership role. I agree with you that business should lead here.
If you analyze any history of trade between countries that have not traded, you need institutions. What institutions have been established other than this exchange between CEOs?
Mr. Stewart-Patterson: We will come back to the question of political leadership.
Senator Grafstein: Not political leadership. I am talking private leadership. I know what the political leadership is. I want to focus on the private.
Mr. Stewart-Patterson: We started with the India-Canada CEO Roundtable process. We are suggesting that should essentially continue on an institutional basis. It is not only the private sector meeting on a bilateral basis face to face regularly; it also needs to involve the ministers of trade, as they have been involved to date, and receiving attention and support from the prime ministerial level.
Those are the consultative aspects. Then as you build up a commercial relationship and other relationships, you get more visits back and forth as more people get involved and excited.
Senator Grafstein: Let me cut to the chase. There is a whole network of institutions in Canada. You have mentioned the Canadian Chamber of Commerce and the board of trade. We have heard from the chair about the Indo-China business community. The Indo-business community is represented across Canada. They are growing and getting wealthier very quickly. Have you set up a framework to ensure that those organizations are twinned with their sister organizations? It is not only for the CEOs to make a deal. Most of the stuff in China does not happen with the big CEOs; it is happening with small and intermediate businesses.
Have you come up with a strategy about twinning these organizations to develop not only political will but also business will to get deals done?
Mr. Boutziouvis: In the run up to the meetings and the mission, we extended invitations to the Canadian Chamber of Commerce, the Canadian Manufacturers and Exporters and to the Canada-India Business Council. We do not normally extend invitations to the Canada-India Business Council on missions such as that, but, exactly to your point, we did so to build bridges. We thought it would be important to bring in the chair of that organization to be a representative of both Canadian and Indian business as a bilateral business group.
Senator Grafstein: What organization is that?
Mr. Boutziouvis: The Canada-India Business Council.
To your point about business groups, I said earlier that the diaspora is robust and dynamic. It is also dispersed. We could use some consolidation. We could use getting together a bit more. You are absolutely right. We need to bring all the groups together. They do go over. Our premiers go over with their own missions. Can our premiers get together and go over together? We can do many things to raise our profile and raise the awareness not only within Canada but also in India.
The Chair: Thank you for that. In closing, a couple of our colleagues wanted to ask questions dealing with two issues. First, do we have sufficient resources domestically and in India, in your opinion, to be able to facilitate additional investment and trade? Second, is Export Development Canada, EDC, a value-added component to the relationship with the two countries?
Mr. Boutziouvis: There is no question, senator, that the Export Development Canada is doing a fantastic job on the India front. They are to be highly commended for predicting and forecasting the importance of India to the Canadian private sector.
In addition, on the mission and in our CEO round table, the head of Export Development Canada, Mr. Siegel, participated in our round tables. There are never enough resources, senator, for the trade front. As someone who focuses on the international file, there are never enough resources; we need more.
Minister Day and the department have done a great job in promoting the India relationship. They have opened offices there recently. The footprint is expanding. Could there be more done? Absolutely. The Department of Foreign Affairs and International Trade deserves more resources.
The Chair: Gentlemen, to both of you, once again, we appreciated your presence here this evening. Your clear and forthright answers will be very useful in adding value and wisdom to our deliberations. We look forward to the next time we will ask you to appear before us. We are always very pleased when you come here. Thank you again.
We will now go into an in camera meeting to deal with the EDC report. First, Senator Segal has a potential conflict that he wishes to put on the record.
Senator Segal: Thank you, chair.
At this point, I simply wish to declare that I have a faint but potential conflict of interest. Although I am not related to that Siegel fellow who works at the EDC in any way, shape or form — nor was I related to any of the Segals up in the gallery today from the Warden School of Finance; I want to make that perfectly clear. They were at the Warden School of Finance, but they did not have good enough marks to get into Queen's. I think the record is clear on that.
I would like let the record show that I will absent myself from the remainder of the meetings so as to avoid any potential or feint conflict with respect to the EDC.
The Chair: Honourable senators, I would like to put officially on the record that Senator Segal has declared a private interest with respect to Export Development Canada. In accordance with rule 32.1, the declaration shall be recorded in the minutes of proceedings of the committee.
We will now go in camera for two minutes.
(The committee continued in camera.)