Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 4 - Evidence - Meeting of January 29, 2014
OTTAWA, Wednesday, January 29, 2014
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 4:20 p.m. to study security conditions and economic developments in the Asia-Pacific region, the implications for Canadian policy and interests in the region, and other related matters.
Senator A. Raynell Andreychuk (Chair) in the chair.
[English]
The Chair: The Standing Senate Committee on Foreign Affairs and International Trade is here to continue its reference to study the security conditions and economic developments in the Asia-Pacific region, the implications for Canadian policy and interests in the region, and other related matters.
I am very pleased to have before us Canadian Manufacturers & Exporters, represented by Mathew Wilson, Vice President, National Policy; and from the Canadian Federation of Agriculture, Ron Bonnett, President. Welcome to the committee. You know the drill as both of you have testified before many committees. We would certainly like to hear your opening statements about the Asia-Pacific region and how it affects your organizations and Canadian foreign policy vis-à-vis that area; and then senators may have questions.
Mr. Wilson, please proceed.
Mathew Wilson, Vice President, National Policy, Canadian Manufacturers & Exporters: Thank you very much, senators, for having me before the committee today. I am pleased to be here on behalf of the 10,000 members of Canadian Manufacturers & Exporters to discuss the opportunities in trade within the Asia-Pacific region.
CME is Canada's largest industry and trade association with offices in every province across Canada as the chair of the Canadian Manufacturing Coalition, which represents 55 sector associations, 100,000 companies and nearly 2 million employees across the country. More than 85 per cent of CME's members are SME's representing nearly every industrial sector and every export sector in all regions of the country. Collectively, our membership network accounts for an estimated 82 per cent of Canadian manufacturing production and 90 per cent of all goods and services exported.
Manufacturing is the single largest business sector in Canada. Canadian manufacturing sales reached roughly $600 billion in 2013, directly accounting for about 13 per cent of Canada's total economic activity. Manufacturers directly employ over 1.8 million Canadians in highly productive, value-added and high-paying jobs. Indirectly, they employ hundreds of thousands of additional employees in related service industries. Manufacturers' contributions are critical for the wealth generation that sustains the standard of living of each and every Canadian. Modern manufacturing is an export-intensive business. More than half of Canadian industrial production is directly exported either as part of global supply chains and integrated manufacturing or as finished consumer goods in almost every product category imaginable.
As the world economy continues to change and become more globalized, it is increasingly critical for Canadian manufacturers to diversify their customer base away from traditional economies and become even more globally competitive. As manufacturers invest further in innovation and become more agile, specialized and able to serve niche markets, the more they need to find customers, suppliers and business partners globally.
While the Canadian and U.S. markets remain the top priority for most of Canadian industry, and will continue to do so going forward, a growing share of our members are looking to take advantage of new and emerging opportunities well beyond NAFTA. The opportunities that companies are looking for are finding new markets, finding new potential investors to Canada seeking investment opportunities abroad, being able to source services from around the world and finding qualified personnel from abroad.
It is for these opportunities that CME and our members have been so supportive of the government's aggressive and comprehensive trade agenda — an agenda that must not only aim to knock down tariff barriers but also nontariff measures that restrict trade and investment as well. This is why CME fully supports a Canada-EU comprehensive economic and trade agreement and why we are pushing the government to similarly and comprehensively open new markets for Canadian value-added exporters, especially through multilateral actions such as the Trans-Pacific Partnership and ongoing bilateral efforts in Asia-Pacific including India, Japan and South Korea.
CME believes that joining the TPP, for example, is a critical step for Canadian industry as it may very well become the main instrument for further trade liberalization in the Asia-Pacific region and set the standard for future multilateral trade agreements moving forward. Today its collective marketplace represents over 650 million consumers and over $20 trillion in GDP and provides a significant opportunity for growing value-added exports and market diversification for Canadian industry.
Strategically strengthening Canada's trade and investment relationship with this region through a multilateral rules-based trade agreement is a priority in light of the growing economic importance of the region. Using a multilateral framework such as the TPP provides Canada the opportunity to elevate all countries to the same high level of ambition that Canada has in its negotiations. The TPP can also be a useful tool to further advance our interests in strengthening our bilateral trade relations with several key players within the TPP, including the United States and Mexico.
CME has been working with the government to ensure that negotiators remain focused on an ambitious high-standard regional free trade agreement that covers a wide range of areas related to trade and investment. CME is not in favour of free trade at any cost but rather a comprehensive agreement that delivers demonstrable net economic benefit for manufacturers and exporters across Canada, which are the primary drivers of our economy.
While CME and our members have identified a detailed list of specific issues for the success of the TPP and other trade agreements in the region, including streamlining the requirements under the Rules of Origin Regulations for North American manufacturers, strengthening trade remedies and improving intellectual property and investment protections, I want to focus my comments on four critical areas that we believe are essential to securing a positive outcome in trade with Asia-Pacific and ensuring growth of value-added exports into the region: specifically, government procurement policies, regulatory barriers, the movement of business professionals, and improving mechanisms to support SME exports.
First, improving access to government procurement markets is a key offensive interest that Canada should pursue through all trade negotiations. CME supports the conclusion of an agreement that ensures open, transparent, nondiscriminatory and efficient government procurement processes at both national and subnational levels. Too often, Canadian companies are restricted in accessing foreign procurement markets while at the same time foreign competitors have full access to Canada's procurement opportunities. Unlocking new procurement markets for Canadian goods and service exporters will be critical to success in trade with Asia-Pacific.
Second, the impact of regulations is far too often overlooked in international trade but is often the difference between Canadian companies selling value-added products abroad or being shut out entirely. Global countries are increasingly using regulation as a mechanism to promote local manufactures and restrict foreign competition as overt market access restrictions are not permitted under the WTO. The regulatory measures can vary widely and include everything from specific tests that must be conducted but that take months to be completed. Constantly changing regulations, changes to customs compliance and reporting requirements, and suddenly emerging health and safety standards that are created as a new product enters the market are common complaints from our member companies. Large companies can often deal with these challenges. It may be expensive but they can often overcome them if the market is right. For SME's, these regulatory barriers are often too complex and expensive to overcome. As such, trade agreements must attempt to align regulatory standards as much as possible to globally recognize industry standards. Regulations should be harmonized where feasible and testing and approval should be mutually acceptable to Canada and to the Asia-Pacific countries.
Third, the movement of business professionals in and out of Canada is a growing priority for international success. Canada's manufacturers and exporters succeed by adding value in global supply chains. A growing share of that value comes from services associated with the products they produce, from doing joint research and development, design and engineering work with international partners to providing after-sales service and ongoing assistance to customers. Their success depends on the ability of business people to travel easily to visit customers, suppliers and other business partners. The movement of business personnel plays a vital role in improving the country's international trade performance and in helping to forge the relations on which future business expansion hinges. Canadian companies and their international counterparts need an expedited process for visa processing in cases where they are required for business travel. This should cover not only general business travel but also after-sales service and other business-related activities coming into Canada.
Finally I must mention the absolute need to support small and medium-sized enterprises in going global. As I travel the country to meet with manufacturers and exporters about their business priorities, I hear from even experienced exporters that they have difficulty in navigating international waters. For companies that have never exported, the thought of selling products in China, India, Japan or even Australia is difficult to comprehend, let alone act on.
Canada's new global commerce strategy, a strategy that CME participated in creating and fully supports, as announced by Trade Minister Fast last fall, is a great start in meeting this challenge to ensure that Canada's national support mechanisms are aligned with the needs of business.
But this is only a start, and much more can be done with both the private sector and in collaboration with governments. We need to support companies and give them the tools to, first, identify international business opportunities and then come up with the strategies to act on those opportunities. Without comprehensive support and encouragement from the federal and provincial governments, as well as groups like CME, Canadian companies will not take advantage of the international market opportunities available to them and that are being created through new free trade agreements. As an example, such a program that could be introduced would be to support the hiring of international trade and business experts specifically aimed to help companies develop global business strategies and to recognize the full potential of going global.
In conclusion, CME recognizes and applauds the government's leadership in helping Canadian manufacturers and exporters grow their business in global markets through market access agreements that open foreign markets on a reciprocal basis to Canada exporters. Asia-Pacific holds an enormous amount of potential for Canadian exporters in a large number of fields; however, success in these markets is similar to the ability of companies to succeed in any other markets around the world: Canada must work aggressively through FTAs to strive for a high level of ambition, similar to that displayed in the Canada-EU free trade agreement, to the ensure that value-added goods and services can be effectively exported throughout Asia-Pacific. That leads to greater production, export sales and investment levels for Canadian industry here at home.
Thank you for inviting me to appear before your committee today. I look forward to the discussion.
The Chair: We now turn to the Canadian Federation of Agriculture.
Ron Bonnett, President, Canadian Federation of Agriculture: Thank you for the invitation to appear before the committee. Many of you are likely aware that the Canadian Federation of Agriculture represents farmers right across the country, all provinces, and a number of different commodities. We actively get engaged in discussions that would encourage profitability and having a vibrant and viable sector going forward. We represent approximately 200,000 farmers from across the country.
With respect to international trade, agriculture is essential to trade for Canada, because when we look at the contribution agriculture makes, it goes far beyond just the farms. Processing, manufacturing, transportation and distribution jobs are the core of economic activity in Canada. Agriculture and agri-food are important elements of the Canadian economy, employing about 2.1 million people in rural and urban Canada and accounting for 8 per cent of the GDP.
To ensure continued success, farmers must be provided with the appropriate policy tools and framework. Government policies must recognize that Canadian agriculture operates in a global environment in addition to meeting Canada's food requirements. As such, CFA supports Canada's pursuit for opening or creating market access in our export-reliant commodities, but at the same time making sure we have a balance in those negotiates to ensure there are positive results for all farmers.
The CFA believes that the WTO, if it worked properly, would be the vehicle to reach some of these agreements. But it has been so hamstrung over the last number of years that a number of countries moved into the idea of negotiating bilateral and multilateral agreements. However, with some of the progress being made in December in Bali, we should still focus on having a multilateral deal in place.
With the commercial interest in Asia — I think the recent agreement with Europe, the ongoing agreement with the U.S. on free trade agreements — now is the time to focus on the Asian market.
This region contains several mature economies such as Japan and South Korea, as well as two of the largest developing countries: China and India. Its combined economy is second only to the European Union at $18.5 trillion. Given the significant economic growth over the last two decades, this region will be the largest economy in the world in the near future.
Asia represents significant opportunities for Canadian agriculture. With approximately 4.3 billion people, it hosts 60 per cent of the world's current human population. A large percentage of the population lives in developing countries where disposable incomes are on the rise. As the region becomes more affluent, consumption patterns are changing, with greater demands seen for animal protein and wheat.
Given these factors, we see significant opportunities for Canadian exports of meat and meat products, grains, oilseeds and pulses into Asia. Furthermore, because of the diverse cultures and cuisines in that region, opportunities for Canada to develop further markets in the region are likely.
Asia is currently Canada's biggest export market after the United States, importing almost $12 billion in agriculture and food products in 2012. The vast majority — $9 billion — went to China and Japan. Although these numbers are significant, Canada's current share of the Asian export market is small, representing only 3 per cent of total agriculture and food imports into Asia. Clearly there are tremendous opportunities for Canada to increase its presence in this region.
With respect to the Trans-Pacific Partnership, our organization believes that the negotiations are an important avenue in advancing Canadian agricultural exports into this region. Already composed of 12 Pacific Rim countries, these negotiations cover almost 40 per cent of global trade.
However, many Asia-Pacific countries are not currently part of the TPP and have expressed interest or are exploring opportunities provided by joining this agreement. This would significantly increase the scope and importance of the partnership to Canadian producers.
Another advantage of Canada and the TPP is that it would place Canadian producers on an equal footing with their counterparts in the United States, Australia and New Zealand, and their ability to access that Asian market. To expand on that a bit, one of the things we are seeing with bilateral trade agreements taking place is that if you are not part of the party, then you start to become excluded. Trying to get in there on an equal footing then becomes more and more difficult.
Canada is currently negotiating a bilateral agreement with Japan and has recently restarted long-stalled negotiations with South Korea. From our point of view, these negotiations are important to conclude for a couple of reasons. First, in the case of South Korea, Canada has been rapidly losing market share to American exports due to the fact that the U.S. and South Korea have implemented a free trade agreement which gives preferential access for American goods. Our pork industry, in particular, has suffered. Second, successfully completing an FTA with these countries would place Canada in an advantageous position should the TPP negotiations be delayed.
The negotiations with India have been moving slowly, but there is a huge market there, particularly for Canadian pulses and other grains. However, India has had a tradition as a trading partner where rules seem to change from week to week, and we need clear, consistent trade rules to ensure that we have trade market access.
There are a few key issues that need to be addressed. My co-presenter mentioned the fact that it is more than reducing tariffs and eliminating tariffs in trade agreements. Many of our trading partners have simply replaced tariffs with nontariff measures. In many instances, these barriers are as difficult to overcome as the high tariffs that were previously in place. For Canadian producers to be able to take full advantage of market opportunities, trade negotiations must ensure that nontariff measures are taken into account in trade agreements and not used to disguise trade barriers.
One other important aspect in moving into the Asian market is relationship building. Over the years, CFA has met with many Asian farm groups as a result of our association with international organizations such as the World Farmers Organization or involvement with international events that bring world farmers together. One of the things we have learned in these meeting is that building a long-term relationship is vitally important if we are going to have an ongoing relationship with Asian countries. They put great stock in personal relationships that they build with people. We would therefore encourage Canadian organizations to build long-term connections with Asian counterparts as an integral part of entering the Asian market. This could include partnerships with universities, student organizations, student exchanges, and building those ongoing relationships so that people have a feeling of comfort moving ahead.
As an example, our organization has been very involved with a farm organization in Japan. Over the last couple of years, I have been invited to speak in Japan on the issue of Trans-Pacific Partnership and the Canada-Japan Partnership, which has also led to linkages with McGill University. Those types of relationships are critical in importance.
The final thing that needs to be addressed, and this is addressed in Canada internally, is taking a look at the competitive infrastructure we have. Right now in Western Canada, we have the biggest crop of grain ever, and it's being held up because of bottlenecks between the rail system, elevators and boats loading out of Vancouver.
We have to sit back and look strategically at how to pull all the people together in the chain to ensure that we have the needed infrastructure, such as storage, shipping, transportation and inspection services. All of those things have to be in place if we are going to take advantage of the markets that are out there.
In closing, I believe that the Asian market presents some of the greatest opportunities for Canadian farmers of any market in the world. However, we have to build relationships, ensure that we have the infrastructure in place and that non-tariff barrier issues are addressed as well.
The Chair: I have been following the agriculture issues for my province of Saskatchewan, so I won't pose the questions that I would normally pose.
Mr. Wilson, you touched on a number of issues to do with access and professional expertise. The list is long and very valuable but it's also the list we hear about when we study other parts of the world. What is more unique about the Asian area that we can really drill down on?
Mr. Wilson: In terms of the four priorities and what's different, if I had to put my finger on it, as Ron did, I would say that the Asian markets tend to use non-tariff barriers better, from their perspective at blocking market access for products, than almost anywhere else in the world. Our friends to the south are pretty good at it from time to time as well, but they are very aggressive in almost every market across Asia at using NTBs to block access, whether it includes the movement of people or regulatory barriers, which Ron and I both mentioned. These are the things that tend to keep products out of the foreign market. Canada is well known as pretty much a Boy Scout in the international trade community. We don't do this kind of thing and think that's for our betterment. However, it hurts Canadian exporters when we're not playing by the same rules as other countries. That's the biggest difference we hear about from our members and their complaints quite often concern this. They are looking, in many cases, for our raw materials to produce finished products to send back to North America for sale and not so much for the finished manufactured product, whether it's food or a BlackBerry. That's the biggest difference between Asia and other markets.
Mr. Bonnett: I have one brief comment on some of the non-tariff barriers. This reinforces the need for international standards on a number of issues, whether it's low-level presence for GMOs, health of animal standards, or inspection standards. We have to have those international standards that are recognized and enforceable if we are going to be able to have predictability in trade.
[Translation]
Senator Fortin-Duplessis: First of all, Mr. Wilson, I would like to welcome you to the committee even though that was done earlier before we got started. Given your role as the Vice-President of Canadian Manufacturers & Exporters, I have a few questions for you. Our committee is conducting a special study on the trade and security ties between Canada and the Asia-Pacific region.
So I would like to hear your view on the business opportunities in Burma. The Burmese Parliament is examining a wide range of laws aimed at increasing foreign investment in a variety of industries.
Depending on what direction those reforms take, do you believe Canadian businesses belonging to your organization will have the opportunity to take part in the development of Burma's manufacturing sector? Would you advise your members to consider doing business in Burma? After that, I will have another short question for you.
[English]
Mr. Wilson: That's an excellent question, and I'm not going to give you a very good response probably from your perspective. The reality is that when companies look at market opportunities they tend to look at larger, more high-profile markets. Frankly, Burma wouldn't even fall in the top 50 countries that companies would look to unless there is a specific niche product they could export there. They would be looking at Asia-Pacific — South Korea, China, India, Australia, New Zealand, Vietnam and Singapore. Burma would fall very far down the radar. So few companies export into these markets that to get someone to look at Burma and jump in would take a special and unique opportunity.
How do we present those opportunities better to companies so they understand where the market growth is in those markets and where they can take advantage of trade and reforms in Burma and other places? How do we better present that information to companies? Right now, it's hard for companies to get hold of the information despite the best interests of the government, and they try hard. It is not the easiest thing to get that information to them. I know it's not a great response for what you were looking for, but that would be a tough market for a lot of companies to get into given the low level of participation in Asia-Pacific generally from companies.
[Translation]
Senator Fortin-Duplessis: Given that you represent manufacturers who deal with EDC, do you think it might increase the size of its staff in Jakarta, for instance, and I do not mean only in relation to Burma? You are familiar with EDC's level of involvement and its desire to help Canadian entrepreneurs, so do you think that EDC's situation will stay the same or that its staff could grow significantly?
[English]
Mr. Wilson: Were you asking specifically about EDC? That's what came through on the translation, but I don't think that's what you're asking about.
[Translation]
Senator Fortin-Duplessis: Yes, I am talking about EDC. Since your manufacturers often work with EDC to obtain loans and so forth, have you heard or do you think that EDC will increase its staff in the Asia-Pacific region, as it did in Jakarta?
[English]
Mr. Wilson: I don't know exactly what EDC's plans are for Asia-Pacific. EDC is an important tool for any product being shipped abroad. We work with EDC closely to promote these opportunities and to help them find tools to be able to export.
Our feedback from our members in the EDC services right across the country and all markets is mostly positive. We always try to push EDC to look at new and emerging markets. I would have to take a close look at their portfolio but my guess is that three-quarters of it would consist of exports to the U.S. and Western Europe. We always try to work with them to be more aggressive in some of the developing markets to support companies looking to engage in African, Asian, Central American or South American economies, where more risk is involved for the companies doing transactions. We're working with them and they're mostly fairly receptive, but they could always do more as could the government as a whole.
Senator Downe: Mr. Wilson, the government, as previous governments have done, has correctly identified the high dependency we have on the United States for our exports. Hence, we have these trade deals with as many countries as we can as quickly as we can; but the trade balance doesn't move very much.
We have identified opportunities, but I'm wondering what advice you would have for the government and this committee. What support do we need so Canadian businesses and Canadians can take advantage of these opportunities? I look, for example, at Peru, where, two and a half years after we signed the deal, the trade deficit has gone up dramatically. The Peruvian government prepared their people for the deal. Is there something missing on our side? Do you have advice on that?
Mr. Wilson: The dependency on trade with the U.S. always gets characterized as a bad thing. It's the richest market in the world. We talk a lot about Asia and everywhere else. I don't see being dependent on the U.S. as being that bad a thing. We do all right by trading with the U.S. If you remove things like automotive trade, which is completely integrated with the U.S. and has been for almost 50 years now, and if you remove the energy trade, our dependence on the U.S. really does drop if you look at the overall score. I think that often gets blown out of proportion and misunderstood as to what that dependency really is and why it's a good or bad thing. We look at it as a good thing, but we also look at the foreign markets as an opportunity to grow more export sales in new regions to grow beyond the U.S.
What tools? Our entire conversation is now with the minister's office and the bureaucracy at DFAIT. You signed a great agreement that most sectors of the Canadian economy can take advantage of. How do we now, over the next two years, get companies ready to go there? Because if we wait until that deal comes into effect, which we hope it will sooner rather than later, we will lose. It will be a one-way trade deal with everything coming into Canada, whether that's agricultural goods, manufactured goods, oil and gas, whatever it is. We are working hard to do that.
One thing we pushed for for SMEs, and there are examples across the country of these types of programs, is if we could get a cost-sharing arrangement with the government. They do it in other areas on a short-term basis. An SME is looking to export. Could the government offset 50 per cent of the cost of hiring a trade expert who could develop a business plan to grow their business over a short period of time and then, after that period of time, expect that the export business would pick up the slack where they can afford to have that person full time, for mentorship and guidance? Could we pull some private sector resources together? This is not a government problem; it's a Canada problem. We know in our membership who the leaders are in exporting, and a lot of them are SMEs or even sometimes large companies. Can we help SMEs and other companies who maybe haven't done that much exporting? Can we provide mentors so we can work with them so it's not CME or maybe a trade commissioner trying to help them but their colleague down the street who might be in a different sector? These are some of the things we are trying to work on with the government which to us are important tools. We're trying to work with the EDCs and the BDCs of the world and other groups out there to support exports, instead of having them compete against one another for the attention of exporters, to try to bring them together under a network to help exporters facilitate business opportunities and provide more intelligence for them.
We're trying to do a lot of that and working aggressively on it, but we need to do better as a country to get companies ready to take advantage of those opportunities. I couldn't agree more, and I don't think there is a shortage of opportunities for us to do better.
Senator Oh: Welcome to the committee, Mr. Wilson and Mr. Bonnett. Do you normally receive trade delegations coming here from the Asia-Pacific region?
Mr. Wilson: We have some. We are trying to do more of that. It's something we used to do a long time ago in our history. We were once the Canadian Exporters Association and worked very closely on two-way trade missions. We're starting to do much more of that. In fact, we're working with DFAIT on a series of incoming and outgoing trade missions for senior business executives both in Asia as well as across Europe. We're doing more. It's not enough, but we're doing more.
Senator Oh: Very good. I always have visiting delegations. I will contact you.
Mr. Wilson: Sounds good. I would love to work with you.
Senator Oh: For the Asia-Pacific region, I knew there are a normally a lot of investors. You mentioned you're looking for investors coming here. We do have quite a few investors who came in last year. You're talked about $2 billion U.S. investment. At the moment, a lot of them come into auto parts investment because China now has the biggest auto market in the world, so they need all the parts that they can get. They have far more autos than the U.S. now. Do you think that they are coming here not only to invest but also to ship the material here to lower the cost of manufacturing in Canada in terms of what we export to the U.S., to Europe and back to China?
Mr. Wilson: Yes, I agree with that. I also think they are investing here to get closer to the domestic auto makers. A lot of the investment going into China and other places in Asia-Pacific is being done by Ford, GM and Chrysler, the traditional North American companies through their global alliances. Typically, when one of those companies goes global, they take their supply chain with them. A company like Magna has huge global exposure because they follow the supply chain that they are a part of, and their customer base, and that's likely why the Chinese, in part, Japanese and South Korean parts manufacturers are investing in Canada, the United States and Mexico. It is to make sure that they're developing the supply chain linkages they need to grow not only at home but also in these markets. It's probably a real challenge for a lot of the auto makers in terms of their auto parts production and their relationships. I agree with everything you are saying, yes.
Senator Oh: Last year, they already had at least three deals to be done. The thing is that they have the market, so they are investing here, which is a good sign. It keeps our auto industry market going when there is a slowdown.
Senator Demers: Thank you for your very clear presentation. I have two questions for whoever wishes to answer. Which Asia-Pacific countries present the best opportunities for Canadian companies to invest in, and which Asia-Pacific countries are the main sources of FDI into Canada?
Mr. Wilson: Those are tough questions. From an outward investment standpoint, I would have to look specifically at the numbers, but I would guess China would get the majority of the investment coming out of Canada because it's the one most in the news in terms of market opportunities. I would think that other markets, particularly some of the more developing markets in Asia-Pacific like Vietnam or Singapore will see a growing share of the investment. India would as well as that market continues to develop. China would be number one, I would think, by quite a ways and will probably stay there just because of the size of the market. As the demographics in China continue to shift, you will see India and other markets grow in terms of that rich middle class. India will overtake China by about 2025, so that would probably be a shift over the next 10 or so years for companies to look at where their opportunities are.
On the FDI in Canada, I would probably go with Japan in particular because of the auto makers. Honda and Toyota have significant investments in Ontario, and the parts suppliers that come along with them have significant investments as well, not only in Ontario but also in Quebec and across the country. I would guess that if you looked at the number, it might be Japan. China would probably be the fastest rising, and probably growing on the China side because they are looking aggressively at natural resources, whether that's oil and gas to export back to China for their energy supply or whether it's minerals to produce into steel and other finished products that they need. I hope that answers your question from our side. Those are probably the countries that would be the highest.
Mr. Bonnett: I think very similarly. Japan is likely one of our most important markets. Some of the investment would flow both ways between Japan and Canada.
With China, you mentioned the energy sector but there is also the fertilizer sector that China is very interested in and investments in Canada as well. So China and Japan would likely come up near the top, but I don't think we would want to overlook South Korea. If we can get by that sort of block we have right now with the U.S. already being there ahead of us, I think there is considerable potential with South Korea right now, particularly on the agricultural side.
Senator Housakos: I have a number of questions. I like both of your opinions with regard to the Asia-Pacific countries. Of course, you have the two giants, India and China, and secondary players. Do you think that the economic middle class in the Asia-Pacific centre is growing rapidly enough in order to justify the efforts that we are trying to put in as a nation to get our medium- and small-sized businesses to start orienting themselves toward those markets?
The other question coupled into that is: Why is it in your opinion that the Canadian manufacturing sector has lagged behind the sectors out of the United States, Australia, New Zealand and the EU in getting a foothold in the Asia-Pacific countries?
If you look at our numbers, they would indicate that when it comes to resource trade, big ticket items, grains or minerals — anything that is a commodity, Canada sells and we sell in boatloads. The Canadian economy has been built on the foundation of strong small- and medium-sized businesses but, unfortunately, SMEs seem to sell exclusively in North America.
Can you outline for us what has held us back in China, India and Asia-Pacific in being able to be competitive? What are the catalysts that are missing for our businesses to be able to build strong bridges, as the Americans, Australians and the EU have done?
Mr. Bonnett: There are a couple of factors. Particularly when you are looking at China, one country we overlook on the agricultural side is Australia, which has a proximity to China that they have managed to build on.
But if you are looking at some of the factors with selling more processed product into Asia, there are issues around competitiveness. Automation and labour costs, I think, are something that must be addressed. Some of our plants have not been upgraded for some time; there has not been some of the investment made. Part of that was because of uncertainties of markets. I think getting the trade agreements in place will provide some certainty of markets that will drive the investment to upgrade the plants, and I think that is critical.
One of the issues that keeps raising its head is depending which province you are in energy costs can be a major factor in the profitability of a country.
The other thing is regulation. Canada has a situation where we have municipal, provincial and federal regulations, and I think that has created a burden that we have to get around if our companies are to be competitive.
One of the things that is happening on the research side is that the Canadian Agri-food Policy Institute is looking at the whole processing sector and is trying to identify some of those core factors. We have some good examples, but we also have some examples of plants closing. I think energy, labour and investment in new equipment are the types of things that have to be addressed before we will capture those markets.
That being said, you will not capture that market if there is no certainty in the trade agreement rules that says that there is a long-term plan in place to recover the investments.
Mr. Wilson: On the first question regarding the economic middle class, India has 300 or 400 million people in what we would consider the middle class. It is bigger than the entire U.S. population, and it is still growing fairly rapidly. China has about the same number and is holding steady.
Is it worthwhile from that perspective? Yes, it is. As that middle class grows, we see they are looking for higher quality products. Price is becoming less and less of an issue. Quality and reliability are becoming more and more important to them.
We are seeing in China, for example, that they would much prefer to buy something made in Canada than made in China because of the quality that is associated with products made in Canada, Germany, the U.S. or whatever. That is what we are seeing more and more of. It is a shift that is subtle but ongoing.
Where historically those consumers would look internally, as they move away from saving and into consuming and looking globally at brands available to them, Canada's brand becomes very important in that, especially with the safety concerns around food products. The Chinese and Indian consumers are no different than Canadian consumers: They want to eat and consume things that are safe and good for them. Canada could have a significant advantage in those types of markets. It is definitely worthwhile because that will be a significant growth opportunity over the next little while.
Why are Canadian manufacturers lagging behind? That might be in part because our market is too easy. Our economy has been pretty strong for a long time. Over the last number of years, even as other world markets have dropped off, and China, India and Brazil have kind of stayed high, Canada has remind fairly stable from an economic standpoint in large part because of the economic resource development. Manufacturers have increasingly sold into those markets. The U.S. market is a lot easier for them to understand than China, Singapore or even Australia. It is the same language, almost identical culture and very close. In a lot of ways, it has been easier for companies.
I would point to the chair's home province as an example of what can be done differently. Saskatchewan has what is called the Saskatchewan Trade and Export Promotion Group. It is a step. It is largely government funded. The entire system is meant to be a catalyst to help companies go global.
You do a tour of Saskatchewan manufacturers and find out where they are exporting to. Very few are exporting to the United States or even to other provinces in Canada. They are looking at Colombia, Peru, Asia-Pacific and Eastern Europe. It is a tiny market — the second- or third-smallest market in Canada — and they are the most global companies we have. I firmly believe it is because of STEP.
We work very closely with them. Our members are members of STEP. It is a model that we have been pushing governments to examine at the provincial level to duplicate that in other markets, because it is a highly successful way to get companies to recognize the opportunities and help them walk through the necessary process.
If you have not looked at that, it is an interesting model and certainly one that works both from a manufacturing of products of raw materials and the pulses and areas that Mr. Bonnett was talking about.
Senator Housakos: In your opinion, has there been any difficulty on the part of small- and medium-sized businesses in Canada to get access to capital in order to expand in the Asia-Pacific region? Have Canadian banks been cooperative? Have there been other sources of capital available to SMEs to be able to go after those markets?
Mr. Wilson: Capital tends not to be that much of a problem. As long as you are somewhat of an established company, and chances are you have to be pretty established if you are going to be looking at those markets, capital is not a problem; they can go to their bank and get the money necessary. If that is not available, EDC has been there. We don't hear a lot about the capital side of things.
To go back to the question about EDC, we do hear occasionally about getting accounts receivable, insurance and things like that. It is not specific to Asia; it is more general. Once you get outside of the developed economies, you hear the odd problem about that, but for the most part that is not the issue.
It is more about understanding what the opportunities are and what steps are necessary to take advantage of them. I am more convinced than ever that Canadian companies are not as exposed as they need to be to what the opportunities are and where they need to go for the help they need to take those next steps. It is not an issue specific to one region of the country. The only place I don't see that type of comment coming to me from my members is in Saskatchewan, in large part because STEP is there helping them a lot more than anywhere else in the country.
The Chair: We have almost run out of time. This may be a good point to end on — a good note for my province. Thank you.
I should tell you that we have had STEP before us for some of our other studies. We have looked at that model and suggested that it should be a model for some other provinces. I appreciate that you have underscored that and the fact of the focus on the small-and medium-sized enterprises so that they can start taking the risk and seeing the world slightly differently than across the border only.
What you have contributed to our study has been extremely helpful to set the stage as we dig deeper into some of the issues and opportunities for Canadians, the Canadian government and Canadian businesses.
Thank you for coming today. It has been extremely helpful.
On our second panel, we are pleased to have witnesses who come before us on a regular basis as we study certain countries. They are extremely valuable to our studies. They understand what we are looking for and their input has been valuable in the past. Mr. Davidson presented for our reports on Brazil and Turkey. I hope you saw your comments resonating through our report that education is very important.
Before us today are Mr. Paul Davidson, President, Association of Universities and Colleges of Canada; and Ms. Runte, President and Vice Chancellor, Carleton University. Welcome to the committee. I understand there is an agreement that Mr. Davidson will start first. As usual, we will have questions after. Welcome to the committee.
[Translation]
Paul Davidson, President, Association of Universities and Colleges of Canada: Madam Chair, thank you for inviting me to be here today. It is always nice to appear before a Senate committee.
[English]
Let me echo your comments, Senator Andreychuk. Contributions from the upper chamber are really important to Canada's public policy debates and this committee in particular has done some extraordinary work. The last time I was before this committee we were talking about Brazil. At the time, I mentioned that there were only 50 Brazilian students studying in Canada, but as a result of the work of government, colleges and universities working together, I can report that today there are 4,000 students from Brazil studying in Canada and getting internship experiences. The work of this committee has really made a difference in advancing the concept of an international education strategy for Canada.
Let me turn to the subject at hand today which is the committee's study on the Asia-Pacific.
[Translation]
After reading the notes, I realized that you have been well-informed by qualified experts on the region. And I think the importance of international education and cooperation as they relate to research has already been discussed.
[English]
I will leave a few short messages with you before Ms. Runte speaks, after which I look forward to questions. I want to echo the views of Kevin Lynch, Dominic Barton and others about the historic scale of change and pace of change taking place in the Asian region. It is something that Canadians need to be much more sensitized to; and there is work for us all to do in that regard.
I am pleased to recognize that the Government of Canada has taken some steps through free trade negotiations with India, the TPP, ongoing work with Korea and Japan and an increasing frequency of high-level visits, including that of the Governor General to the region in recognition of the growing importance of Asia. I had the privilege of being with the Governor General on his visit to Vietnam, Singapore and Malaysia. In each of the discussions, the importance of higher education, innovation and trade were woven through our meetings.
Canada's universities are actively advancing our engagement with Asia and building links to develop our relationships further and faster on an institution-to-institution and a country-to-country basis. At the same time, we have been working nationally with the Canadian Council of Chief Executives, the Canadian Chamber of Commerce and the Asia-Pacific Foundation of Canada to sensitize Canadians to the scope and scale of change underway in Asia and what we need to be prepared for Asia in the 21st century.
When we speak about an international education strategy for Canada, we talk about attracting students to Canada, sending students abroad and ensuring that we can collaborate internationally in research projects at scale. I am pleased that Minister Fast recently recognized that the international sector in Canada contributes $8 billion to Canada's economy. I want to be clear that is not only to universities but also to the landlords who rent the rooms and the shops that sell groceries to the students. It also reflects the visits from parents, and I will come back to that in a moment.
Not only does it contribute $8 billion to Canada's economy, which is larger than the export of softwood lumber, it contributes 86,000 jobs across the country. In particular, it's the largest service export to China. When we talk about the China-Canada relationship, the international flow of students is one of the most important aspects of that relationship. It is the fourth largest service export to India. Asia as a region is the largest source of international students in Canada and about 40 per cent of those international students studying in Canada come from Asia.
They are contributing to Canada economically in communities across the country, but they are also contributing by enriching the learning experience of Canadian students. If you go into any classroom in Canada now, students can have an international experience through the presence of international students. We need to continue to attract the best and brightest in the face of aggressive international competition. We have made some good progress, but our competitors are moving very quickly.
Some of the recent developments, the Canadian Experience Class and the Ph.D. stream for federal skilled workers, are helpful tools, but if I may steal a phrase from the most recent Throne Speech, we need to seize the moment because competition is intensifying.
The second area we have talked about in the past is sending Canadians abroad. I will capture this in the context of building Canadians' Asian competencies. At Canadian universities, there are over 80 programs that teach Asian languages, history, culture and business practise to Canadian students, but we need to find new opportunities to get young Canadians abroad. China has recently set a goal of hosting 500,000 international students by 2020. We need Canadian students to be part of that number. Canada and China have publicly committed, Prime Minister Harper and his counterpart, to increase the two-way flow of students between Canada and China to 100,000 students by 2017. We have a long way to go before we meet that mark.
In August 2012, the expert panel on international education strategy called for a new program to increase outbound student mobility by 50,000 per year. That might be an interesting sesquicentennial project. The recently announced international education strategy is an important step, but Canada's universities also look forward to the Budget 2013 commitment to do more as fiscal capacity permits.
We have talked about inbound and outbound students. Let us talk about international research collaboration. People are looking forward to Sochi. It's going to be an interesting few weeks. It is perhaps less known that in the last 10 years, Canada has made huge strides in our international competitiveness in the research field. In fact, the world's leading researchers place Canada in the top five. That would not have been said 10 years ago. All parties can take pride in the investments made to get us there. Our researchers are more likely than researchers in other countries to co-author their work internationally. We are approaching the podium in terms of international research. We are punching above our weight, but we need to do more. This creates opportunities to collaborate with Asian power houses such as Japan, Singapore, India and China and to go beyond goodwill to deep engagement. At present, Canada does not have a suitable vehicle to pursue international research collaboration at scale.
Let me conclude by saying that Canada's universities are actively building linkages, establishing partnerships and developing the people-to-people relationships that are so important to Canada's relations in Asia. Canada's universities are building the competencies of Canadian students to interact effectively with Asia. Canada's universities remain under-leveraged assets that can deepen our bilateral relationships and move further faster. Canada's universities are key partners in seizing the opportunities presented by the Pacific century. Thank you very much.
The Chair: Thank you, Mr. Davidson. We will turn to Ms. Runte.
[Translation]
Roseann O'Reilly Runte, President and Vice-Chancellor, Carleton University: Madam Chair, thank you for inviting me to appear before the committee today.
In Canada today, there are about 250,000 foreign students. Conversely, only 45,000 Canadian students are studying abroad, and half of those are studying in the U.S.
The Canadian government has said, and rightfully so, that Canada should increase the number of Canadian students studying abroad and the number of international students in Canada. It said it would like to double that number. So how do we do that?
[English]
There are excellent reasons to augment the numbers: international understanding, the global role of Canada, the possibility of importing good ideas, best practices, establishing joint ventures and the development of strong ties with future leaders of other nations and corporations. Canada has a relatively small population and must develop international markets to expand trade.
At Carleton University, we started a program called "Born Global." We say you don't have to wait 10 years with your business before you take it overseas. If you take your business to North Bay, after six months you have probably sold widgets to all your friends and neighbours and there is nobody left to sell to. On the other hand, if your roommate at Carleton University came from Beijing or Delhi, then you could set up a company with someone that you know, that you are friends with and that you are comfortable with, and you could begin as an international enterprise. Employers across the country have said they prefer employees with international experience and expertise.
In our "Born Global" program, in the last 24 months, 12 students from abroad have launched businesses through the TIM program, and 11 companies were founded by those students in the Lead to Win program. Students from Canada, Cambodia, Ecuador, Russia, Israel, India, Ethiopia, Brazil and China were partners in businesses. Teams of students created successful enterprises, including AUMNET, NiteRoll, Syncrodata, and one company is setting out to compete with Google right now.
What can we do to encourage more students to embrace internationalization and globalization from day one at the university and day one in their businesses as they grow up? First, we look at why Canadians do not go abroad to study. The first reason, when we ask our students, is funding. The second is language of study, knowledge of opportunity, understanding the importance of going abroad, safety and security, credit transfer concerns.
Some federal programs have provided small stipends to students who do internships, who volunteer or who study abroad. The Province of Ontario had a program that funded scholarships for students who wanted to go to India. That program has been terminated. Funding students in a small way is a direct and positive way to provide an incentive to students to study abroad. The programs need to be augmented. If students have the incentive, it has been demonstrated that they will go.
Short programs, like Carleton's Spring Break — volunteering abroad — offer students who need to work all summer and can't afford to go abroad for a longer period of time the opportunity to have an international experience in a short term. Students say it has changed their lives. If we can't do more, let us at least start with something small.
We need to encourage Canadians to learn other languages. The Asia-Pacific Foundation did a poll that said that two out of three Canadians believe that China will be more important as an economic partner than the U.S. and Canada within 10 years. At the same time, we know that very few Canadians are studying Chinese. Our international business program requires students to spend a year abroad. Our students that went to China last year came back, and they have written their own rap poems in Chinese, which they performed to standing ovations to the Chinese delegation here in Ottawa. It shows me that we have a myth in Canada that we can't learn languages and we can't do these things.
[Translation]
We can do it in two, three, four or five languages. We are not the only ones; other countries are doing it. And we can do it.
[English]
Universities could each develop a website with a list of alumni who have studied abroad, and the information from these websites could be put together in a national website so that students wishing to go abroad can see which Canadians have gone abroad, where they have gone and the experience they have had. It would provide them encouragement.
In China, where I was a couple of months ago, the government announced that they are requiring every faculty member who wants to get tenure in a university to spend at least one year abroad. That is a national requirement. We wouldn't be able to do something like that in Canada, but I think we do our very best to discourage people from going abroad.
To bring students to Canada from abroad, we need to remove impediments. The first is funding. In Ontario, not only do university students receive no funding when we bring a student in from abroad, so they have to pay the full cost, but the Government of Ontario charges us a fee of $700 for every foreign student that comes abroad. That gets added to the tuition. It makes us less attractive. If we wish to increase the number of foreign students, we should provide an economic benefit. A number of the international programs like the Commonwealth Scholarship and the Ontario-India Fellowship Plan have been reduced or removed, and that causes a problem.
However, the Mitacs funding that goes to graduate students has been increased and we are pleased about that and hope the government continues increasing it and supporting the students. It is a step in the right direction.
We need to brand Canada. We need to brand through social media and provide national platforms, accessible and user-friendly information. The days of trade fairs are not of today. Today is social media, and we have to really push for that.
We should allow universities to once again provide advice to international students. We have been told we are not allowed to provide any advice. Should we say anything, we must have a staff member who has taken a course from Foreign Affairs at a cost of about $10,000 and it lasts about a year. We should be able to provide basic information to tell students where to go to get a visa and things like that, but we are not able to say anything.
Also, when we tell students to access the government website, it says to call a number, and it's a Canadian number, not an international number.
We should support a program that I noticed the Government of South Korea doing. It could be really exciting, both for international students coming to Canada and for Canadian students going abroad. The Government of South Korea has built student housing in California. They paid the universities to build student housing, and they said that in the housing one room would be free for an American student and in the other room would be a Korean student who had come to the university.
That guaranteed that the Korean students learned English, and it provided free housing for the American students, so the universities were very happy. It could be done abroad so that our Canadian students would have a residence in another country, especially countries where we know a lot of students should learn the language. We could also do the same on our campuses to invite international students to come to Canada and provide them housing. It would be a way of welcoming them, which wouldn't be very expensive.
I think we should expand our horizons and support joint initiatives. When I say "brand Canada," we all know Canada is the friendly country, but how can we distinguish ourselves in the field of education from some of the other countries? If you look, the United States, Australia and Great Britain are to a large extent making money from foreign students. It's a business; it's the university as an enterprise.
If we step back from that and say that the university is a partner with the institutions in the other country and that we are working with them, we can create sustainable long-term relationships that will do Canada more good in the long run. For example, I would not be very happy if Harvard University opened a campus in Ottawa and creamed off the best students in Ottawa and said, "We are here to save you poor Canadians." So I don't think that if I went to Mumbai and did the same thing that the University of Mumbai would be happy.
Instead I went to them and said, "What programs don't you have?" They don't have an MBA program and they would like it. If we would offer it on their campus, they would provide the space and recruit the students to our specifications. So we would have no infrastructure costs and a steady stream of students coming in. In exchange, we provide Ph.D. training for their faculty. At the end of five years, it will be a joint program offered by the two countries in Mumbai. We will have the students always there, but we'll be working with the other institution. In the long term, we will be friends and colleagues and sharing good research and information.
There are ways that we can encourage Canada to continue being a friend to nations in the world and still win in the international recruitment arena.
The Chair: I've already extended my regrets to the two witnesses before us that I have to absent myself for another urgent meeting, but Senator Downe will be taking over. I just didn't want the senators to think I was leaving for any inappropriate reason.
I want to thank both of you for the work you do and the thinking that you do that expands our horizons on the art of the possibilities of foreign policy.
[Translation]
Senator Dawson: I, too, would like to apologize, Madam Chair. It is a bit of a disruptive day. I have to leave a bit early.
My question has two parts. Mr. Davidson, you talked about the increase in Brazilian students and the thousands of students coming from Asia. How are they spread out across the country, in terms of regions? You do not have to give me details, just the geographic distribution for the Brazilian students and the Asian students.
We are in a competitive environment, especially since education is a provincial responsibility, with shared jurisdiction at the post-secondary level. We are competing with the Germans. Their goal is to have 350,000 international students and hundreds of thousands of Germans studying abroad. They are using a national program to do that.
Given our status as a confederation, the fact that we have shared jurisdiction in this area, to some extent, weakens our ability to promote Canada abroad. I know the Inter-Parliamentary Union engages in bilateral promotion. We tell them we want their students to come here and ours to go there. But we have to make sure the provinces have a program that can support students who study abroad and those who come here to study because Canada is losing its ability to play a role federally.
How can we work together with the provinces to promote Canada as a destination and convince Université Laval, for example, that forcing students to go abroad is a good idea?
[English]
Mr. Davidson: Excellent questions. I will address the first regarding the distribution of international students. The distribution is quite broad across the country. To give the Brazilian example, certainly the large research-intensive universities have a considerable number of international students, but so too do smaller institutions across the country. The distribution is determined on the basis of the international students' interests; they apply and they are accepted where they apply, so it's of benefit in communities large and small across the country. In terms of Brazil, there is a very keen interest in studying in French, so the number of Brazilian students studying in Quebec is large.
With respect to your second question regarding the jurisdictional realities, the government and successive governments have been strategic in this regard in recognizing that the economic impact of international students is a trade matter that is within the federal domain; it contributes, for example, $8 billion to Canada's economy. So that's one avenue to pursue.
Second, one of the reasons I refer to the research opportunities that are available for international students is that the research field has been primarily the role of the federal government. So that gives another opportunity for the federal government to play a substantive role.
While we're mindful of the jurisdictional realities in this country, we need to be mindful that, in terms of global marketing efforts, students and their parents abroad think first of a country and not a part of a country or a particular jurisdiction within a country. Then they think of a program of study, and then they think of an institution. We need to meet our customers in a way in which they will respond effectively.
Turning to the question of the balance of students and the role of Germany, I appreciate that you have seen that the coalition agreement that has set a goal of doubling the number of international students that Germany would receive. It has also set a goal of making sure that half of German students will have an international experience. We are nowhere near that in Canada. Fewer than 3 per cent of Canadian students have an international experience. That gives you a sense of the distance we have to go in meeting that.
Finally, with regard to the concept of reciprocity, the Brazilians are asking where the Canadians are. When are they coming? Frankly, the number of Canadians studying in Brazil is more in the order of magnitude of where Brazil was a few years ago in Canada: in the dozens and hundreds as opposed to the thousands. There are opportunities through Canada's International Education Strategy and additional resources to increase that number dramatically.
[Translation]
Senator Dawson: Did you have anything to add, Ms. O'Reilly?
Ms. Runte: Mr. Davidson pretty well covered everything. At the federal level, we can indeed encourage students who study abroad. There have been scholarships and programs to support students who work or volunteer abroad. Those are national programs. We can give financial support to students who go abroad as part of research programs, work programs and the Commonwealth scholarship program, among others.
Senator Fortin-Duplessis: I am delighted that you are with us today, especially as we discuss the important issue of studying abroad.
It is a fact that the Asia-Pacific region has undergone a profound economic transformation in recent years and is now home to some of the world's biggest and fastest-growing economies. So that reality attracts Canadian students.
Ms. Runte, as a follow-up to Senator Dawson's question, how many students from the Asia-Pacific region come to Canada to study? You mentioned the number of international students, but are you able to tell us how many come from the Asia-Pacific region, specifically?
Ms. Runte: With me, I have the number of Canadian students studying in China; the figure for this year is 3,400. I do not have the number of Chinese students studying in Canada, but I can find out.
Mr. Davidson: Nearly 33,000 Chinese students are studying in Canada and 3,000 Canadians students are studying in China.
Ms. Runte: The ratio is 1 to 10.
Mr. Davidson: That illustrates the challenge we face.
Senator Fortin-Duplessis: Do you have the figures for the other countries in the Asia-Pacific region?
Ms. Runte: I do not have them with me, but they are available.
Senator Fortin-Duplessis: Would it be possible to forward that information to the clerk?
Ms. Runte: Yes.
Mr. Davidson: Yes, absolutely.
Senator Fortin-Duplessis: Do international students who come to Canada favour certain areas of study? Medicine or engineering, for instance?
Ms. Runte: It depends on the country. Generally speaking, the areas that Asian students favour are engineering, business and science.
Senator Fortin-Duplessis: And what areas interest Canadian students who go to Asia? Is it to learn the language, or are they interested in other areas?
Ms. Runte: From Carleton University's perspective, there are two aspects to that. On one hand, we have business students who realize that if they want to build a business or work in a senior position at a large company, they need to not only speak the language, but also understand the Chinese business culture. So we have students who go for that reason. On the other hand, we have students who are interested in learning the language in order to expand their knowledge.
[English]
Senator Oh: Thank you for coming here today.
I happen to sit on the board of Sheridan College, whose operating budget is about 25 per cent to 27 per cent from international students. They pay a higher fee so this is an important source for the institution to expand. Of course, we have students coming from India and China. With the Canadian dollar dipping, we are looking for even more numbers to come. Do you agree that all the students coming here in the future is good for Canada's long-term trade and political diplomacy?
Ms. Runte: It's very good for us to open our doors and bring people from other countries. One day, they will be presidents of companies and provide jobs for other Canadians. Some day they will have to choose where they will locate a factory or whatever. They will feel comfortable doing business with Canada. Some of them will be presidents of countries, and they will be our good partners. On an individual basis, if you know and appreciate another country and another culture, then at least you will wish to work with them, understand them and appreciate their values. I think it's very important that people around the world understand how our government works and what democratic values we have.
Mr. Davidson: If I might add to that, one of the key elements of Canada's value proposition is that we offer a world-class education and solid research environment in a safe, multicultural environment. That is a huge asset for Canada and a model for the world. It's something that will help bring students to Canada. I am delighted to hear about the success of Sheridan and your engagement with it. We've spoken of the immediate economic benefits of this kind of engagement, but there are also long-term benefits, and I am looking at Senator Verner. As a former minister responsible for CIDA, she would have met leaders of countries and civil societies around the world who got their education in Canada, at Laval University or the University of Montreal and right across the country. This is a lasting legacy that Canada has created and one that we need to renew.
There was a reference made recently to the Australia in the Asian Century White Paper. They are recreating the Colombo plan as an anniversary engagement to increase the number of scholars flowing between Australia and Asia. These opportunities are real and present. As we spoke about Brazil last time, the opportunities are fleeting because you can only go to meetings so many times before you get serious and real about substantive engagement.
We were talking about levels of investment before. We welcome the new international education strategy. Its total budget is $5 million a year and spread over several countries. We can do more and we can do better.
Ms. Runte: The other thing is advancing knowledge. When you bring together people from different cultural backgrounds to do research together, new ideas and ways of looking at the world will come forward. The minister of education in India gave a paper at UNESCO. He said that if American and Canadian scientists had met with Indian and Chinese scientists sooner, the chaos theory would have been invented many years earlier.
Senator Oh: You did mention that there are 30,000 students from China here.
Mr. Davidson: That is right.
Senator Oh: I think there are close to 60,000. We're going to increase that number to about 100,000.
Mr. Davidson: That is right. We'd like to make sure that it's a balanced relationship because at this point, there are about 10 times as many Chinese coming to Canada, which is great for Canada, but we need to get 10 times as many Canadian students abroad.
Senator Ataullahjan: Thank you for your presentation.
It's interesting that you talk about having a balanced relationship. I was at a meeting before I came here. The numbers of Chinese students here came up, and it was 40,000 here and you have almost 4,000 Canadian students in China.
Do you feel that language skills play a role in that? A lot of them come to learn English, but it's harder for Canadians to learn Chinese and go to their universities. Does that play a role?
Also, what methods do Canadian students use to find out about programs or educational institutions abroad, and are these easily accessible?
Ms. Runte: Language is definitely a factor in sending Canadians abroad. When Canadians feel comfortable speaking a language, they will visit another country more easily, so it's definitely a factor. By supporting language study from an early age and the study of more than one language, we will be able to increase the number of Canadians going abroad.
The fact that Canadians don't go abroad as often is also partly because they don't know about the programs. There is information inside the universities; each university has an international office that tells students what programs they could take abroad. But when a student wants to go abroad, they will have to give up their part-time job. They will have to finance that year abroad. Even if the tuition abroad is not too expensive, it is still a major cost factor for those students. So cost and language are two of the biggest issues.
Knowledge of what programs exist abroad is done inside each university, but I have seen a wonderful website for all of Canada. It shows where Canadian students are studying abroad and in what countries. It's a lovely website, so you can find the information easily.
Senator Housakos: I have a question you might be able to answer. I have been told that one of the reasons for the large discrepancy between Canadian students studying abroad compared to foreign students studying in Canadian universities is that Canadian universities discourage their student body from going abroad because they don't want to lose the resources of having those students in their universities and receiving the funding from provincial governments from having them there. Is that true?
Ms. Runte: I would say that's not true. If a student goes abroad, they will not drop out of school. They will come back and finish their education.
We want students with high retention rates. That year abroad improves our retention rate. Students who participate in international programs, in general, have a higher retention and graduation rate. When they're away, we don't get their tuition but we don't have any costs either. We can take extra students from elsewhere and fill it in, so financing is not an issue.
Senator Housakos: Why is it that compared to Americans, Europeans and Asians, Canadians do not take on the interesting experience of going abroad to study?
Ms. Runte: American students do not go abroad, either.
Senator Housakos: But they do at a higher rate than Canadians do.
Ms. Runte: In proportion to the number of international students that go to the States, very few Americans go abroad.
I was chair of the American Council's Commission for International Education for five years when I was in the States a few years ago. The same discussion that we're having, they were having.
Senator Housakos: These youth mobility agreements that we are high on — and we've signed a ton with a ton of countries — I've gone through a list recently. Regardless of who in the world we have signed them with, they seem to be very one-sided. Are they useful in your opinion? What can we do to tweak those youth mobility agreements so we can have a more balanced result?
Ms. Runte: What kind of agreements?
Senator Housakos: Youth mobility.
Mr. Davidson: I think they're a useful tool. There is an element of scale. How do we ramp these up to be significant and how do we promote the idea among Canadian young people that this is an important thing to do?
We have been very encouraged that the Canadian Council of Chief Executives, the Chamber of Commerce and others have started to send signals to students that having an international experience is a competitive advantage. That is a helpful thing.
But you are right: With the existing mobility agreements, we get a large number of students from Europe and other countries wishing to come to spend time in Canada, but we have not had the same level of Canadian students wishing to be outbound.
There are a variety of challenges around the cost, as Dr. Runte has mentioned. There is concern about the interruption of studies. As a parent of a university student, there is pressure for students to complete quickly and on time, and the idea of taking a year off or going somewhere else is foreign to some parents. So we need to create that culture where it's an expectation and is seen as a competitive advantage.
Ms. Runte: There is something interesting that I have noticed happening; namely, students are coming to university a little earlier because we no longer have grade 13. When they finish university, they are taking a break year to study abroad. This ends up getting counted against the universities because if your graduates aren't employed within six months of graduation, you are counted as not having succeeded, even if they went to get a wonderful experience abroad. So we would hope that in the next survey of students, we would accept that an experience abroad would be a worthwhile thing.
Senator Demers: Just to touch a little bit on Senator Housakos' question, three of my four children are Americans and live in the States.
Ms. Runte: What about the fourth?
Senator Demers: She's staying; she married a Canadian. My job took me to the States for 24-plus years.
One thing I understood from them — and it's so interesting what you're talking about today; it's an eye opener — is that the Americans really protect and really don't want their younger people to go abroad, as Senator Housakos was saying. They want to keep them in their country to build them and to work — university, whatever — and to bring them into staying in their country.
I think I had heard the same thing about Canada, but obviously you're more expert than we are. Why is it that we don't seem to have that exchange? Is it because, when they go abroad, they don't have security or a means of guaranteed jobs? Are they not treated or guided in a better way, and they prefer to stay in their country? What would be your answer on that?
Ms. Runte: When I was a student in college, I wanted to go abroad. I really wanted to practice my French, and my mother said: C'est dangereux la France. Si jamais — Her fear was security.
I do not know exactly why people don't go. It's easier to stay home. If people see an advantage, if it becomes easy and if it's facilitated, they will go. If people know it's a key to getting jobs, they will start doing it.
In my first year at my university, we said to our students and said: "There are two things you can do that will make you have a job when other people don't, because we know that when you graduate, you want jobs. One is to go out and volunteer. We have this co-curricular record, so you can analyze every one of your volunteer experiences and say what you learned and what skills you gained. You can get a letter of recommendation from those people. The other is to go abroad; get an international experience. Those are two things that will set you apart from every other graduate who doesn't do that. If there are two people with A's going for a job interview and you have that, maybe you will get the job."
Interesting enough, I would say that 100 per cent of our students are volunteering. It happened almost overnight. Easy sale. More students are going abroad, especially for the small, short programs. With the longer programs, it's harder. We do not have wealthy students at my university. We have students from families who work very hard. They also have jobs and work their way through college. For them, it is a financial thing. Most of them would love to go.
Senator Ataullahjan: Over the summer, I travelled in the Balkans. One thing that came up is that young people nowadays invariably live in three different countries. They go to university, they work and then they go back to the countries they came from. Do you find that that most young students live in country one initially, another when they go to university and a third when they graduate? Those are the figures that we were told — young people today will live in three different countries.
Mr. Davidson: One of the great advantages of Canada is that it's a hub for international talent to come together.
I have a slightly different take on your question. For example, through Mitacs, a terrific program that the government has invested in, students from India, China and Brazil are coming to Canada and spending a summer together building businesses, doing research and staying together. It opens the doors to their next step. With top talent, we are talking about very mobile, global citizens who could go anywhere. They learn about the excellent research infrastructure and opportunities in Canada and then they connect to their next international experience. These very talented students can work anywhere in the world. Part of our challenge is to ensure that we attract many such students, get them into Canada early in their careers, and hope to hold onto them as long as we can. Whether it is country of origin, country of study or country of first research assignment, those students are very mobile.
I will pick up on Ms. Runte's comments about how we create that culture of mobility. It is hugely important to us. We talked about how few Canadian students study abroad. There are also very few students who leave their province of origin. There are few opportunities for Canadians to study in another province. Think about this as we come up to 2017 — the need to create a generation of young people that are comfortable getting on planes, comfortable with language and comfortable in different cultures. This is not just an optimist, idealist vision. This is something that our chief executives are saying they need and they need in spades. How, as a country, can business, government, the university sector and the social sector work together to create that global citizen we need in the 21st century?
Ms. Runte: May I end with that horrible word "money"? I believe it is a motivating and helpful factor. When I left Victoria University, I left a scholarship for students to present papers at international conferences. It is endowed so students can do this every year. Every year, five students get to go to international conferences and present papers. I get letters from those students saying that they would never have been able to do that. This is a leg up for their career in Canada and a leg up everywhere. They would not have been able to do it if someone had not let them have some money — just a few thousand dollars to go to a conference.
The easiest and simplest way to tell them that it is a good thing is to put out some dollars and a value to say that we can help you and it will happen.
[Translation]
Senator Robichaud: You said there was a definite advantage for students who do a stint abroad, either to study or volunteer.
After they get home, what are their chances of finding a job? The concern is that, by leaving the country for a period of time, they will fall out of touch with the situation here and their classmates will land the jobs they would have liked to have.
Ms. Runte: I am not aware of any specific data showing that those who have been successful abroad are successful once they return to Canada. I can say that those who were successful abroad were able to choose when they wanted to return and what they wanted to do once they were back.
In my view, it is an experience like no other and the students do very well. And what they learn while abroad is useful here in Canada and continues to be useful.
The network they are building today is an international one. A local network is good, but is no longer enough. Even Canada's small businesses need international connections.
Senator Robichaud: But young people have to understand what you are saying in order to take advantage of the opportunity and have that exposure.
Ms. Runte: Absolutely. Yes, they have to understand that. I am very hopeful because not that long ago, students were not encouraged to study abroad. Canada did not express a desire to host international students. We have begun the discussion; people will hear what is being said and something will happen.
There are ways of doing things. People hear the message, understand it and act more quickly. But we have to start somewhere. We are off to a good start and that is good. We can applaud ourselves for understanding how important the matter is. But others, too, have to recognize it.
[English]
The Deputy Chair: On behalf of committee members, I want to thank our witnesses today not only for their presentations but also for their compliments at the beginning of the presentations about the work of this committee, as well as their patience in answering all the questions in great detail.
Colleagues, we will meet at 8:30 in the morning.
(The committee adjourned.)