Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 3 - Evidence - April 15, 2010
OTTAWA, Thursday, April 15, 2010
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 10:34 a.m. to study the rise of China, India and Russia in the global economy and the implications for Canadian policy.
Senator A. Raynell Andreychuk (Chair) in the chair.
[Français]
The Chair: Colleagues, today we are continuing our study on the rise of China, India and Russia in the global economy and the implications for Canadian policy. Today, we will hear from Mr. Douglas Goold, senior research fellow at the Canadian International Council. Mr. Goold is a well-known journalist and commentator, and the former editor of The Globe and Mail Report on Business and Report on Business magazine. Mr. Goold has a PhD in modern history from St. John's College, University of Cambridge, and has completed two Killam post-doctoral fellowships at the University of British Columbia.
Douglas Goold, Senior Research Fellow, Canadian International Council: Thank you. I appreciate the opportunity to appear before the committee today. As I said in the brief I submitted, I think the proceedings have been excellent, and I look forward to a report that will help chart Canada's way forward with respect to the rise of China, India and Russia.
I also encourage the committee to consider looking at Brazil, the fourth of the BRIC countries identified by Goldman Sachs, and the only BRIC that is in our hemisphere.
I have just completed a study based on interviews in Canada and in India with executives of Canadian companies that do business in India. I also interviewed many officials. The executive interviews were on the record, and included questions on sensitive topics such as corruption and security. The idea was to complete a study that was timely and of value both to the business community and to policy-makers.
I examine why Canadian companies choose India, what the opportunities and challenges are, entry and growth strategies and Indian business culture. The basic question was simply, what works and what does not work in the Indian market?
I also wanted to know what Canadian executives would like government to do to help, if anything. I have just given speeches in Montreal, Toronto, Ottawa, Edmonton, Calgary and Vancouver and am pleased to report that there seems to be a remarkable amount of interest in the rise of India.
The stars now seem to be favourably aligned for Canada and India. However, the political and business history between the two countries has not been encouraging. As I mentioned in my brief, as long ago as 1973, former Prime Minister Indira Gandhi complained in a speech in Toronto about our weak economic relationship. Though that relationship is growing, it remains weak, both in terms of trade and investment.
While some argue that Canada and India are natural partners, the political history of the two countries would suggest otherwise. India and Canada were at loggerheads as far back as the 1950s, when the two countries, alongside Poland, were part of the International Commission for Supervision and Control, established to oversee the end of the war in Indochina.
More importantly, Canada felt betrayed when India carried out a nuclear test in 1974, using Canadian technology. The rift over the nuclear issue continued through India's 1998 tests and beyond.
In my view, it was a mistake to let this one issue, albeit a very important one, damage relations for so long. We should have agreed to disagree and made progress in other areas.
To this, we can add some missteps by Canadian corporations, remembered to this day in India. Corporate India got the sense that Canadian companies lacked the patience and staying power essential in the Indian market.
The committee has heard about India's vast potential, though it is important to note that much of that potential has yet to be realized. India still has a long way to go in many critical areas.
The most cited single example of business potential that I heard from Canadian executives was the extraordinary growth of the cellphone market. In the single month of December 2009, there were more than 19 million new cellphone subscribers in India.
India and China are growing rapidly at a time when, arguably, the United States is in a long-term secular decline, so Canada needs India and China.
Fortunately, as mentioned, the stars now seem to be favourably aligned. First, Prime Minister Singh is coming to Canada for the G20; the nuclear question appears to be resolved; and we are in a position to move forward on a comprehensive economic partnership agreement, CEPA, a foreign investment protection act, FIPA, and a nuclear cooperation agreement.
Second, we have lots of smart money either doing business in India or assessing the market. Examples include Research In Motion, Fairmont Hotels, Brookfield Asset Management and, reportedly, Power Corporation.
Third, Canada has expanded its presence on the ground in India, and most executives believe our representatives and Export Development Canada are doing a good job. EDC funding expanded to $1.8 billion in India in 2008.
Finally, Canada has much of what India needs in sectors such as renewable energy and infrastructure. Earlier this week, in fact, I spoke at the 2010 Telfer School of Management Indo-Canada Ottawa Business Chamber forum, which focused on infrastructure and security opportunities in India. Of course, this committee recently heard ambitious plans from India's Road Transport and Highways Minister, Kamal Nath.
Separately, I have done some work on India from a geopolitical point of view. Here, I am far less optimistic. As I wrote in an article for the National Post, I was in Mumbai in November 2009 for the first anniversary of the 26/11 terrorist bombing. There was palpable anger towards Pakistan in the air. Indians believe, with some good reason, they have been very patient towards Pakistan, so it is far from clear how India will react if there is another terrorist incident in India that originates or appears to originate in Pakistan.
My study on Canadian companies doing business in India concludes with a number of recommendations for government and for business. I will discuss the government aspect. First, no executives interviewed favoured an enlarged role for government, reflecting the positions taken by trade experts, Michael Hart and Fen Hampson, before this committee. However, many thought we needed a prime minister who was more proactive towards India. Second, continued improved political relations between the two countries can only help our business relationship. Third, there are huge opportunities on the civilian nuclear side, where we are behind others such as the Russians. However, to make progress, we first need to clarify the status of AECL. Last, Canada needs to develop a stronger brand in India.
As for business, businesses must be well prepared before entering the Indian market and be ready and able to make a long-term commitment, with a buy-in from their chief executive officers. Being a "suitcase banker'' or "suitcase investor'' will not work.
When I asked New Delhi-based Tarun Das, the long-term Chief Mentor Confederation of Indian Industry, for his advice on Canadian companies, he replied:
First, choose the part or parts of the country where you want to do business carefully, given how vast and varied India is. It is complicated to do business here; it is a hassle, still.
Every state in India is different from every other state. It is like dealing with 28 different countries: Food is different, culture is different, language is different, marriage ceremonies are different and religions and religious practices are different. So you need hand-holding by someone credible here.
Second, you need to focus. Do not try to take on the whole of India. These two states, these three states — where is your maximum business opportunity? Go there.
Third, you have to be patient. If you want to have a one-night stand, you can come in on your plane in the morning, have meetings, conquer India, and leave at night. It is not going to happen. If you are here for the long haul, there is a lot of money to be made and a lot of business. You need to have the stamina not of a 100 metre runner, but of a marathoner.
Mr. Das also added: "There is a very good feeling about Canada here. You should cash in on it.''
I agree. As I have outlined above, the stars are aligned for Canada and India right now. Both government and the private sector should seize the moment.
Thank you again for inviting me. I look forward to our discussion.
[Traduction]
Senator Fortin-Duplessis: Welcome, Mr. Goold.
On page 5 of your brief, you said that "most executives were pleased with the help they received from the High Commission, the Consulates, the trade officers and the EDC on the ground in India. Opinions on the value of trade missions were split.''
Could you tell us a little bit about the types of doubts executives expressed about the trade value and especially, how the Canadian government could help them to make it more effective?
[Français]
Mr. Goold: Thank you for your questions, senator. First, on the issue of relative happiness or unhappiness with the high commission and the consulates, the general sense I have from the executives — and I had 50 or 60 interviews — was that they are providing the kind of facilitation services that business people look to government for. Making contacts is a difficult thing to do in India, and they have the data, the information and the contacts with the big players like Tata Group and Reliance Industries, that I think are essential to any businessperson.
I would say the summary is so far, so good. Canada has expanded its network in India. I believe it is now the third largest network of any that Canada has abroad.
As for trade missions, we have had a huge number of them. Following Prime Minister Harper's visit in November, Premier McGuinty made a visit, followed by Premier Charest. I was just in Alberta and I know that they have had a number of trade missions, as well. From the Indian point of view, there are some complications on branding as to where Alberta and Ontario are exactly, and what their brands are and how they compare with the Canada brand. I think that is a problem.
As for the value of trade missions, it really comes down to the experience that a company may have. Of course, you can either choose to go on a trade mission or choose not to go on a trade mission. Companies that are just getting into the Indian market want to make those contacts and want to be seen with senior politicians or officials. I was told a number of stories where companies had a political figure make a critical phone call when the deal was being negotiated, and it really paid off.
Some people even mentioned that former Prime Minister Chrétien's 1996 Team Canada mission is still remembered to this day. Whether the number of deals claimed were actually new deals is another question, but it did have an impact.
Larger companies or very experienced companies in the Indian market think they can handle the contacts themselves. They have been there for a long time, in some cases decades; they do not need facilitation from government. Certainly, some view trade missions as largely photo opportunities for politicians.
The good news is that companies can either decide to go or not to go on a trade mission. It is a private sector decision. Those who find it valuable go and those that do not find it valuable either go once and do not go again or do not go in the first place.
Senator Wallin: I encourage you to do your report on Brazil and come back to talk to us. I agree wholeheartedly with your approach.
You referred to the nuclear battle with India in the 1970s with our sale of reactors, then their purchase of Russian reactors and the new deal in Washington, et cetera. Your comment comes under the context of a recommendation that we must get our act together on AECL. Would you please expand on that statement?
Mr. Goold: As I mentioned in my remarks, in my view Canadian policy was totally mistaken. We should have agreed to disagree. The essence of diplomacy is continuing relationships even when you have differences. We had a 30- year freeze starting in 1974. Instead of moving forward in areas like education, trade and cultural exchanges, we did very little.
Fortunately, that seems to have ended. In November, it was announced that a nuclear cooperation agreement between the two countries will be finalized. We hope that will happen. During his visit here Kamal Nath was asked about this and where things stand. He said he would look into this when he got back to India. I think a current trade mission lead by Roy MacLaren and John Manley is looking at this issue.
A limited number of countries in the world have the full value chain that Canada has on the nuclear side. We have similar technology. AECL is certainly looking not particularly to sell their latest generation reactor to India, but to form a partnership with the Indians to re-establish links. AECL has set up an office in Mumbai and they have an agreement with Larsen & Toubro, one of the biggest firms in India. The opportunities and need are there. The Ontario government, in particular, is looking at this and hopes to move things forward. India has ambitious plans for nuclear energy.
As in many other areas, Canada is late to the party. We are at the end of a very long queue. As Senator Wallin mentioned, India and the U.S. have completed the 123 agreement. I understand there are problems, but I anticipate it will move ahead. India has recently made a deal with the Russians. India also has nuclear cooperation agreements with France and with Kazakhstan. At the end of the day, Canada has a big ace in the hole in that we have one of the largest uranium supplies in the world, and it is very high-grade uranium. India has thorium. I am not an expert on nuclear technology, but it is not yet clear whether thorium is a partial or full replacement for uranium.
My advice for the federal government and, in particular, the Government of Ontario is to clarify the status of AECL. It is very difficult from the Indian point of view to pursue a deal with Canada when the future of our Crown corporation is so unclear. Clarity comes first. We even have to make the fundamental decision whether we see the nuclear industry as an important one in Ontario and in Canada, or whether we will essentially abandon it.
Finally, not only do we have AECL — and people may have different views of its colourful history — but we have dozens of smaller supplier companies, mostly in Ontario, that have been waiting a long time for this nuclear cooperation agreement. They are essentially waiting for the checkered flag to fall indicating that they can do business in India. It is a big opportunity, and we should seize it.
Senator Finley: I appreciate your input. Both in your written brief and orally this morning, you talk of strengthening Canada's brand, Alberta's brand and Ontario's brand. What you mean specifically and how you think we might best strengthen that brand.
Mr. Goold: I mentioned at the end of my remarks that Mr. Das said Canada has a good reputation and good will in India. I think our profile is not nearly as high as we think it is in India and many other countries around the world. In my view, there is still too much of an outdated view of what Canada really is — Mounties, Rocky Mountains, et cetera.
We need a new brand. It is a big job to create or formulate a brand that tells the world that we are Research In Motion, a lot of wonderful high-tech companies and a forward-looking country. For example, if you ask most people in India about Research In Motion, they think it is an American company. If you ask them about Bata, which has been there since 1930s, they think it is an Indian company. Regrettably, the one company they know that is Canadian is Nortel, which is probably not the shoe we want to put forward. Working with the provinces is rather difficult in such a diverse country, but Canada needs a clear and more modern idea of who we are and present that image to the world. It is a big job.
Senator Finley: Yesterday, one witness described Canada's relationship with India from a business perspective as being at the PowerPoint stage and not at the project planning stage. You may have said or written that in contrast with the U.K. and the U.S., Canada does not have a strong track 2 relationship with Asia. Forgive me if it was not you who said that, but I think it may have been.
Are those the same things? Is there a sense that the Canada approach — not including the brand issue you discussed — is almost amateurish? How would you describe a track 2 relationship?
Mr. Goold: I did not say what you just mentioned.
Track 2 is usually associated with an informal level of diplomacy where participants try to come to agreement on various areas. I would say Canada has tried a little bit of that in Asia, but not nearly enough.
For example, I went with the Vancouver-based Asia Pacific Foundation of Canada on, essentially, a track 2 visit to Delhi in 2008. We looked at areas in which the two countries could work together — Afghanistan, energy and education. On Afghanistan, there looked like there was no chance to work together even though, surprisingly, India has a sizable presence there. India is putting $1 billion into Afghanistan. On energy, there was a real sense a lot could be done, whether concerning nuclear, renewable energy, or other areas. There is a huge energy deficit in India. On education, I noticed your last speaker, Ramesh Thakur, talked at great length about the opportunities for Canada in India similar to those taken up by Australia.
Senator Finley: This is a huge country with a mammoth population. You have not mentioned Bombardier in your list of companies that are active in India. Surely, for mass transit, both on the ground and in the air, I am thinking of Bombardier, in terms of both aircraft and rail cars. Are you aware of any endeavour by Canadian companies to exploit this potential market? Has much been done in this respect?
Mr. Goold: I was just at an infrastructure conference two days ago. There was a representative there from SNC- Lavalin, but not, as far as I know, from Bombardier. Certainly that company is the best example. If anyone has been in Delhi in the last little while, they would see that most of the city is being torn up because they are expanding their underground system. When they are finished in 2018, it will be larger than the underground system in London. I believe that Bombardier is providing the coaches for those subways. That, I think, is probably the single best example of what you are talking about.
For infrastructure, as you have heard as members of this committee, the eleventh five-year plan of the Government of India, running from 2007 to 2012, has allocated the staggering sum of $514 billion — an almost incomprehensible number.
Senator Smith: In your comments, you referred to a meeting that you had recently where "no executives interviewed favoured an enlarged role for government'' You referred to the Prime Minister being there, but not government per se.
We are all familiar with the EDC numbers, and the $1.8 billion is a good number, and we are familiar with the consular services and what they do. They are all swamped with immigration in India, but that is a different group of personnel. I, for one, have always been a big Team Canada supporter. I went with Mr. Chrétien to China. We had 300 business executives on that trip, and it was greatly successful.
One of our witnesses yesterday, an excellent witness, threw out an excellent idea. He suggested that it would be highly desirable if our various levels of government considered setting up a public-private India fund to encourage ventures in India. He referred to the Singapore sovereign fund that put $400 million into Bangalore software.
While I am totally supportive of all these government activities in terms of getting into the investment category, I suspect that would fall into the category that you felt none of those people with whom you met would be thinking along that line, because once you do it for one country, you will have a long line-up at the door. Do you have any thoughts on that idea that was suggested yesterday?
Mr. Goold: That is an important area. I have heard and read the testimony about the public-private India fund. If private investors want to step up to the plate, they can vote on behalf of that concept.
Senator Smith: No one has any problem with private investing.
Mr. Goold: Right. I guess if the government thought it was money well spent, it could work out an arrangement.
One thing that Canada does not do that gives other countries a leg up in a country like India is form consortia. The example that I have heard is that Malaysia gets a huge percentage of the highway deals, and they do it by presenting a package to the Indian government. You could do the same thing with mass transit such as the subway, where it takes a huge number of players to produce the final product. We tend not to do that. It is still worth looking at. If you get the private support for it, the government would then have to decide whether or not it was in its interest to match it.
Senator Smith: But do you just do it for one country?
Mr. Goold: Yes. It is a certain set of circumstances for a certain set of opportunities in country X that may not be duplicated in country Y. It does not necessarily follow that the circumstances and the timing and opportunities are as great in another country.
Senator Smith: In the subway category, are you familiar with the Bombardier plant in Gujarat?
Mr. Goold: Yes.
Senator Di Nino: Welcome, Mr. Goold. It is good to see you again.
I do not have much argument with your presentation; I thought it was very good. You have given us some additional fodder for some of the issues with which we have been dealing. However, it is important to put on the record that India today is not what India was 10 years ago. The obstacles in the way of Canadian businesses and the regulatory issues and protectionism and some of the other challenges that that business faces have changed.
My first question deals with the comment you made about the stars aligning. In the last couple of years, we have had not only the Prime Minister but also more than a dozen visits by ministers and premiers, et cetera, precisely to help align those stars. Are we going about that the right way?
Mr. Goold: With visiting India?
Senator Di Nino: Yes.
Mr. Goold: I was shown a list that itemized an astronomical number of visits. If you take all the provincial and federal ministers, it is a long list over the last three or four years.
I think there are two problems, one of which we cannot easily solve, namely the fact that the provinces are doing one thing, and the federal government is doing something else. They get this barrage of nonstop people coming through and are not quite sure of the role as the Minister for X in Saskatchewan or wherever they are from.
The second problem, and maybe it is in the nature of minority governments, is that a minister is there one day and not there the next. I think there is a lack of follow through. In India, making that commitment and that bond and following up on it is particularly important. Often, that is lacking. You send a delegation, and they do not follow through on either what has been promised or what they are planning to do, and they are never heard from again. Some of these delegations have a good effect, but there is that lack of follow-up.
Senator Di Nino: You are suggesting that maybe they should be joint federal-provincial missions as opposed to separate ones.
Mr. Goold: It is certainly an idea if the provinces would agree to it. At a minimum, there needs to be coordination. We just had three large delegations — the Prime Minister, the Premier of Ontario and the Premier of Quebec. If you look at it from the other end of the telescope, they have this barrage of Canadians of indeterminate backgrounds coming and making various offers. There needs to be greater coordination.
Senator Di Nino: What benefit could we find from the large Indian diaspora; particularly the large group of Canadians of Indian background — there are some who are actually still Indians — in the business of the professional Canadian environment. From what you have found, are they a beneficial resource?
Mr. Goold: That is a good question. In the 2006 census, South Asians surpassed the Chinese as the largest ethnic group, with more than 1 million out of 34 million in Canada.
There are some problems with the diaspora, to be candid. It is split largely between two cities, Toronto and Vancouver. It is split within itself. Most of the Indo-Canadians are from Gujarat or from the Punjab, and there are splits within it, and we have not one, not two, but three different lobbying groups: the Indo-Canada Chamber of Commerce, the Indo-Canada Business Council and the Canada India Foundation. I think there needs to be more coordination.
Second, although the potential is there, there needs to be more research done. When I was in India I was asked about what work has been done on the diaspora, and the answer is not very much. The Centre for the Study of Democracy at Queen's University with the Walter and Duncan Gordon Foundation has done some work on which they hope to follow up. Whether it is done by this committee or another, it is an area that needs to be looked at.
Finally, it is a community with tremendous potential because it is the largest per capita Indian diaspora in the West. By comparison, the American diaspora is far more powerful. To give a specific example, one reason that the nuclear 123 agreement came together was because of pressure from the U.S. Indian diaspora.
Senator Jaffer: Mr. Goold, I enjoyed listening to you. If someone else said what you have, our committee would probably not take it as credible. I enjoyed your comments very much.
Mr. Goold: Thank you.
Senator Jaffer: Do you know of a country other than the U.S, perhaps Australia or New Zealand, that has better practices for trade with India?
Mr. Goold: I cannot specifically answer on trade, but Canada does less well than some others. In testimony two sessions ago there were a few fleeting references to the work of the Germans, for example. All German companies are members of the German chamber of commerce and they have a big presence in India. That, certainly, is a model.
Ramesh Thakur discussed how other countries are doing much better on the education front. One of my colleagues at the Canadian International Council, Ryan Touhey, wrote a study comparing what Canada has done to what the U.S., U.K. and Australia have done. We are far behind the successes of those countries. Regrettably, of course, Australia, after doing such a wonderful marketing job, is now doing far less well because of some unfortunate incidents involving Indian students.
We have not been in the forefront and I think we need to look at the best examples of countries elsewhere and what they are doing in India that we are not doing.
Senator Jaffer: If you were to prepare a shopping list of the first things we should be doing, I gather that one of them would be a more concerted effort, at least within the provincial and federal governments, and I am not talking about that, but what immediate things should we be doing?
Mr. Goold: I mentioned the role of the Prime Minister, which is probably the most frequently mentioned thing by executives. It was no particular criticism of the current Prime Minister; it was just a sense that you need ongoing engagement from the highest level. The examples given were Tony Blair helping to sell Airbuses in India and French President Sarkozyy, who has been active on the nuclear side.
I will also cite the amount of money that other countries are willing to put into their efforts. The scientific and technical arrangement that we have involves a very small amount of money. It used to be $6.7 million over five years, and I think that might have been renewed, but it is really peanuts. If we want to ramp up our efforts in a country like India, we have to be willing to pay for it, and I do not think that we have done that.
Those are two things; engagement from the Prime Minister and more money spent on science and technology. Finally, I would say greater coordination on the education side which, as a previous witness said, is one of the largest export businesses in Australia.
Senator Jaffer: We have had a gap in our relationship with India. In the Nehru days, there was a very good relationship with Canada. However, since then there has been this gap. Do you think we need to learn how to work with India?
Mr. Goold: I think so. I asked executives and officials about business culture. The first thing we need to do is get India on our radar screen, and the second thing we need to do is understand the country.
One problem is that in the popular mind, and to some extent even in the political and business mind, when people think of India they think of a large, hot, poverty stricken country with huge inequalities and a fairly slow pace of business and popular life. That, if it ever was true, is certainly no longer true. We have to see India for what it is today.
People who have been going there for 20 years say it changes every six months. There is a huge entrepreneurial spirit in India. Everyone, even the dispossessed and the poorest, is making something or selling something. There is a huge amount of dynamism. When you are in a country like that, you really get a sense that the world is changing as we look on. I do not think that we have enough of that sense here. We need to understand the India of 2010 and move forward now that, as I have said, the stars seem more aligned than they have been for a very long time.
[Traduction]
Senator Nolin: Mr. Goold, I would like to come back to the question of education. In your brief — thank you for the quality of this brief — ou refer to a long-term commitment as being critically important and it seems obvious to me that involvement in education is likely to bring about a long-term relationship of that kind. We are familiar with the efforts already made by Canadian universities with their Indian counterparts, but we do not think that is enough.
What can we do to strengthen ties between universities and science and technology organizations? We have an agreement with them and the government has just increased funding for science and technology in the budget. So we have universities and science and technology organizations, Canadian research centres, on the one hand, and their Indian partners on the other. What else should we be doing?
[Français]
Mr. Goold: That is a big question. One of the complications in education is that we have split jurisdiction in Canada, with education being a provincial responsibility.
I just returned from speaking in Edmonton. I did not know until my visit that the University of Alberta has a number of arrangements with educational organizations in India. Grant MacEwan College in Alberta has connections, and so do a large number of business schools such as the Schulich Business School in Toronto.
On education, there are many benefits. There are economic benefits and the fact that if, for example, an Indian student is educated here and returns to India, he or she becomes the best ambassador we could hope for. There is lots of potential. Whether on the research side or through student exchanges or through closer ties between think tanks, much can be done.
When you began your remarks, you talked about the need for a long-term commitment. I mentioned elliptically that a number of years ago there were some less than happy corporate experiences. The moral of the story was that a number of the companies that were there, seemingly with a long-term commitment, left. That has been remembered to this day. Out of all the lessons for business, that would probably be number one.
Senator Nolin: On the level of education, the Australians seem to be more advanced than we are. What are they doing that we should do?
Mr. Goold: I must confess that I am not an expert on what Australia is doing. Dr. Thakur lived in Australia and gave you some ideas on that. Much of it is marketing and a realization that the world is changing and that India is an important country, a country with which Australia, an Asian country after all, has to develop closer bonds.
Senator Nolin: To your knowledge, what is specifically in our universities in terms of programs that could be helpful for the Indian students? That is probably part of the marketing strategies, but, to your knowledge, what do we have to offer?
Mr. Goold: First, we have good business schools. There are some business links. As I mentioned, the Schulich school in Toronto is offering courses there and has a relationship with an Indian institution.
[Traduction]
Senator Robichaud: Mr. Goold, you talked about Australia's marketing strategy that made them very successful in India. In your answer to Senator Nolin's question, you said that you were not an expert on that strategy.
Do you know what the broad strokes of the strategy are? Do you know, if we have no strategy, how can we compare ourselves with what they did?
[Français]
Mr. Goold: If we have a strategy, perhaps someone could tell us what it is. Australia has an advantage, as it is part of Asia or on the periphery of Asia. The current government, from what I know of it, has been promoting the Asian component of its foreign policy enormously. For example, I believe that the Prime Minister, who speaks Mandarin, can go to Beijing and, by speaking Mandarin, get a hearing that few others could get and even be critical of the Chinese government on human rights in Tibet, or on whatever. We do not have those advantages, and we do we need a strategy.
The Chair: As I recall, about 20 years ago, Australia made a conscious decision to put its emphasis on Asia Pacific, its neighbourhood, particularly in trade and commerce. They began opening more embassies and closing others strategically. I believe they have somewhat reassessed that in the last number of years, but it was a function of a market that needed to be explored but also their neighbourhood, if I may call it that, perhaps as we did in our hemisphere.
Mr. Goold: The bottom line of all of this, and I think Kamal Nath said it as well, is that Canada, from the Indian perspective, is too NAFTA-centric, and we need to look out to more of the rest of the world.
I do not want to give a long lecture on our relationship with the United States but we have a thickened border, which this committee has heard about. We have buy-American provisions, and we have, according to some, a kind of secular decline in the United States. I do not think it will happen in our lifetime, but the big arrow appears to be pointing down in terms of American weight as a global power.
The more Canada looks to the BRIC countries and maybe even countries like Indonesia, the more we will prosper. That is a lesson we can take from a country like Australia.
Senator Robichaud: This committee could look into some kind of a strategy and put down the basic components in a proposal to the government and to businesses. Would that be a good starting point?
Mr. Goold: That would be an excellent starting point. Much of the testimony that you heard has been first rate. It is good timing for all the BRIC countries. There is an awareness of what I said about our relationship with the United States, though critically important, is maybe not quite what it was. Canada needs to look out to the world. Putting together a strategy for what the government should do and maybe even suggestions for the role of the private sector would be valuable.
[Traduction]
Senator Fortin-Duplessis: Mr. Goold, we do not seem to be able to find a way for the World Trade Organization to conclude the Doha negotiations. The breakdown of the negotiations in Geneva resulted in countries entering into bilateral negotiations.
In less than four years, our government has opened the doors to Canadian companies by negotiating new free trade agreements with India, Colombia, Peru, Jordan, Panama and the European Free Trade Association countries of Iceland, Norway, Switzerland and Liechtenstein.
Are these bilateral agreements less beneficial than a more open international trade system?
[Français]
Mr. Goold: Senator, you point out the obvious flaw in international trade agreements. We have Doha on the one hand, which is multilateral. On the other hand, while saying they believe in multilateralism, everyone is doing their own set of trade negotiations.
If I look at the research and interview s I did, I was somewhat surprised when I asked executives what they would like the Canadian or the provincial governments to do; very few cited a free trade agreement or a CEPA. Those who did support it said it would be a good symbol of the fact that the two countries are moving ahead together, less for the content and more for the symbolic content.
The CCCE and the Confederation of Indian industries have been doing a number of round tables both here and in India and have recommended a free trade agreement. Research is being done on that and the plan is that we will move forward. Canada is too small a player to determine whether Doha succeeds or not. Therefore, to the extent that we are concluding agreements with various countries, India should be towards the top of the list, even if it is more a symbol of a closer relationship than something that will actually deliver greatly enhanced trade.
I add that my understanding of a CEPA is that it is a broad agreement that includes the service sector and investments, and so to that extent it would be something that could help us move forward in our economic relationship. Yes, I think it is a good idea.
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Senator Fortin-Duplessis: Mr. Goold, do you think that the Canadian dollar, which is very strong at the moment, makes international trade more difficult, despite the goodwill we have to conclude the agreements.
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Mr. Goold: Certainly, if you are an exporter a strong Canadian dollar is a problem. It is something that we do not really have a great deal of control over. The good news is that Canada has been more successful economically than any other member of the G8 and that is pushing our currency up at a time when commodities are doing quite well. It is not good for exporters but it is probably good for the image of Canada in the world to have such a strong currency.
Senator Di Nino: In your presentation you talked about a long-term commitment, a regional focus, and an entry strategy. Are joint ventures and partnerships within Indian companies encouraged? Are there roadblocks? What has your experience been in looking at these things?
Mr. Goold: Most Canadian companies do set up a joint venture arrangement with an Indian partner, and obviously what everyone said is you have to do your due diligence about who that partner will be. There have been a number of bad experiences. This is an area where government can help and has helped, whether it is the EDC representatives, the trade commissioners, people at the High Commission in Delhi, or consular officials around the rest of India. They can also tell you, probably informally, who you should not be talking to.
The other model of course is a wholly owned subsidiary. If you look at a big company like McCain Foods, which has been very successful in India, that is the sort of arrangement they have. However, for small- and medium-sized companies, the usual path is a joint venture with an Indian partner.
Senator Di Nino: I would like to ask you another question on a region of India that has not received much attention for a number of different reasons and that is Gujarat. I happen to believe that it is probably the engine of the Indian economy right now. Have you had any experience with that region? What are your thoughts on it?
Mr. Goold: I would simply say that when a state within India is held up as the best example of a welcoming business environment and a free enterprise attitude, Gujarat is the state that is usually mentioned. It seems to be a favoured destination of business people. Beyond that, I do not know it well enough to comment further.
The Chair: Mr. Goold, thank you for coming and sharing your experiences and your reflections on conducting trade with India and other issues touching on it. It is very helpful in our work, which you can tell from the questions. We appreciate your presence here today.
Mr. Goold: Thank you so much.
The Chair: Senators, we have circulated two budgets. One budget relates to our general reference. The other is a small budget with respect to our continuing study on China, India and Russia. Both budgets are for the same amount of money.
Are there any questions or can those budgets be accepted?
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Senator Robichaud: We are talking about $10,000. Are we going to give up the trip to India, as we did with Russia and China? Are we planning on submitting another budget later in the year?
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The Chair: We met as a steering committee and these are the general budget requests. We left the issue of a trip to a separate budget. We will present that budget after finishing with our witnesses. We have some two to three weeks left.
This study has been going on since November of 2007 and therefore, I think we need to bring some closure to the broad reference and then determine how we proceed to finish the complete study.
Senator Robichaud: If I remember well, there were provisions made for a trip to India in a previous budget.
The Chair: Yes, and that is being held in abeyance at the moment.
Senator Di Nino: Madam Chair, maybe you could help me because I am a little mixed up. What you presented to us are extracts from the Journals of the Senate for Tuesday, March 16, about motions that, if I read this correctly, says "adopted.''
The Chair: I think that is the reference.
Senator Di Nino: Is that just the reference?
The Chair: Right.
Senator Di Nino: I thought we had already approved them and they are coming back again. I will move that the two budgets be approved, Madam Chair.
The Chair: Is it agreed?
Senator Smith: I do see one trip. Can you tell us about that trip?
The Chair: That is a general budget item that is generally put into all the committee budgets should there be a conference that someone may need to attend. We have put that in as a possibility, but it is not a particular conference. It is the line budget, should there be one, that is germane to our study at which someone may wish to represent the committee.
Senator Nolin: On the question of the trip to India, would we have the time to do it before the report?
The Chair: Right now, the way that it appears is that we have asked our researcher to start writing the report on the three countries. We will finish the witnesses and, if we can bring this to a close as a broad report, we can then point out what needs to be done yet, say on the India study, where we then could bring a reference for that point that may entail the travel.
Senator Jaffer: Senator Di Nino may have briefed you on this: This morning it came up in Internal Economy Committee that travel for this committee to India could become the exception because we have gone to China and Russia. Someone else who said it; this committee may have to apply to travel. From my understanding, international travel is not yet agreed by Internal Economy, not that will not have international travel.
I feel uncomfortable that having visited China and Russia, we have not been to India. That is not a good way to do a study, especially when we heard this amazing speaker this morning speak about how Indians feel about a number of issues. I do not think it is a good way to proceed. It is not right that we have not gone to India, especially when we have gone to China. I have great concerns about that situation.
Coming from an Indian background, I understand the competition between those two countries. I do not think it bodes us well to have gone to China and not to have gone to India, and to report on a study on India, China and Russia.
Senator Di Nino: My own recollection is that it was a point made by one of the members as opposed to having been discussed in the sense that it may have appeared to have been given some weight. I do agree, though, that a decision on the issue of foreign travel was not reached at the committee this morning.
The Chair: It has not been reached in this committee, either. We are asking for the general budget of $10,000 to continue all of the issues, which is the general budget that all committees have, and it is $10,000 for each of our references.
One of the issues that was not in the budget is whether we had sufficient capacity for proper translations, because we have had that issue in the past. I have been assured that between the Library of Parliament and the translation people that the capacity now is within the translation services, so we do not need another line budget item for editing. That is why we have the $10,000 each.
Senator Banks: I am not a member of the committee, or perhaps I am, in Senator Mahovlich's stead. I want to make sure that I understood you to say that you were going to present a report and then go to India?
The Chair: No, I said that is one of the suggestions and that is somehow or other to bring termination to the long study. We have to determine if we travel, when we travel, and how we complete the study. The steering committee has started that discussion.
Can we go to the two budget items?
Senator Jaffer: Can I get a clarification? Today at the Internal Economy Committee, Senator Nolin, the issue of translation came up. If I understood it clearly, it was said that the translations were good. You were happy with the translations. It was the nuances that were not correct.
Senator Nolin: Yes.
Senator Banks: Translation good; interpretation bad?
Senator Nolin: It is the same problem. In some paragraphs of the French version, it was evident to French Canadians that it was a translation from the English. We had to twist it a little bit to make it more French; but the translation was good, much better than it used to be.
The Chair: That has been a concern and we have been monitoring it.
Senator Nolin: That is why the role of an editor is important.
The Chair: Exactly, and I have been assured that the editor's role is within the capacity of the Senate and we do not have to put it in as a line item.
Is it agreed on the budget?
Hon. Senators: Agreed.
The Chair: I have one further issue. Today is the day that we have indicated a day of mourning for the losses in Poland. President Kaczynski of Poland and the First Lady and numerous political, military and civil society leaders were killed as they were going to commemorate the Katyn massacre, some of whom Senator Nolin and I and others know. I am seeking approval to send a letter of condolence as chair on behalf of the committee through the Polish embassy here in Ottawa. Is there concurrence to composing such a letter?
Hon. Senators: Agreed.
Senator Di Nino: I move that be the responsibility of the steering committee.
The Chair: Agreed?
Hon. Senators: Agreed.
(The committee adjourned.)