Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 20 - Evidence - Meeting of December 11, 2014
OTTAWA, Thursday, December 11, 2014
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 10:28 a.m. to examine the potential for increased Canada-United States-Mexico trade and investment, including in growth areas in key resource, manufacturing and service sectors; the federal actions needed to realize any identified opportunities in these key sectors; and opportunities for deepening cooperation at the trilateral level; and 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 continuing its study of the potential for increased Canada-United States-Mexico trade and investment, including in growth areas in key resource, manufacturing and service sectors; the federal actions needed to realize any identified opportunities in these key sectors; and opportunities for deepening cooperation at the trilateral level.
I'm very pleased to welcome Mr. Derek Burney, Senior Strategic Advisor, Norton Rose Fulbright Canada. Thank you for appearing again. We had you here previously, but the bells were ringing and you very graciously agreed to come back to present in a calmer time. Otherwise, we would have had to break up your presentation. We thank you for your consideration to this committee.
We also have with us, not a new person to this committee, as he has been here consistently, Mr. Paul Davidson, President of the Association of Universities and Colleges of Canada. By video conference, we have Mr. Derek Burleton, Vice President and Deputy Chief Economist, Canada, TD Group. We anticipated another speaker, but we don't have him with us presently.
We do have a full agenda, so I will turn to Mr. Burney to start. I think all of you know how we operate. We like some opening statements, but we also like to have sufficient time for a question and answer period.
Mr. Burney, please proceed.
Derek Burney, Senior Strategic Advisor, Norton Rose Fulbright Canada LLP / S.E.N.C.R.L., s.r.l., as an individual: Thank you very much, Madam Chair, and good morning, honourable senators. I'm pleased to be with you this morning. If you don't mind, I'm going to digress a bit from your precise topic and try to explain why I think that other trade and investment priorities should be top of mind for Canada today.
Retired General David Petraeus and former World Bank President Bob Zoellick just completed a study for the Council on Foreign Relations, advocating, in effect, a rejuvenation of NAFTA with constructive ideas on how we could harness our huge energy potential more effectively and bolster economic growth with a stronger sense of partnership. I heartily endorse what they suggest, but I also agree with their subdued diagnosis of the current state of affairs. They look to the future because, like me, they see little real hope for much in the next two years.
An even more recent report by the Canadian Council of Chief Executives echoes a similar lament and asserts ''that muddling along will no longer suffice.'' This report is strong on rhetorical vision, identifies some of the problems, but skirts the most contentious disputes and is short on specific remedies.
Canada will always need to be vigilant in safeguarding our significant access to the vital U.S. market. We are essentially engaged now in defence or high maintenance on many fronts in that market. Need I mention Buy America or discriminatory beef labelling or the Windsor-Detroit bridge or the Keystone pipeline? Regrettably, there is little to suggest that Washington has the will today to resolve irritants, let alone any desire to chart new avenues for trilateral growth.
We are losing market share in the U.S. today and not gaining it elsewhere. That is the problem or challenge facing Canada. The fact that the U.S. economy is recovering is good news for all, and we will certainly be able to export more to America, but it will be proportionately less primarily because competitors like China and Mexico are taking larger shares.
We may crave a special relationship with the United States, as many countries do, but the United States is not really able or willing to reciprocate. We have learned, I have learned, the hard way that the Mulroney era, a high point of mutual trust and mutual benefit, was the exception, not the norm, and is not likely to return any time soon.
Part of the problem too, of course, has been the decline of manufacturing competitiveness in Ontario. As the Auditor General's recent report graphically illustrates, Ontario received little dividend from the massive federal-provincial bailout of U.S. automakers. More to the point, higher tax rates compelled by deficit binges will not make that province a more attractive place to invest and do business.
In our recent book, and I hope you will permit a brief promo, entitled Brave New Canada, Fen Hampson and I analyze the dramatic shift occurring in the global economy away from our traditional markets such as the United States to emerging markets, notably those in the Asia-Pacific region, where China will soon overtake the United States as the number one economy. That's the region where I believe that the opportunity for offence and for advantage beckons. We suggest that Canada adopt the Wayne Gretzky model and go where the trade and investment growth will be rather than where it has been. Geography may well determine much of our destiny, Madam Chair, but geography should not limit our focus or our ambition.
So we recommend a robust and concerted strategy that would enable us to reduce our economic vulnerability to the United States and to recalibrate and counterbalance that relationship by capturing more dynamic growth opportunities elsewhere. Excessive reliance on the United States actually breeds complacency in Canada, and that too is a real problem. We need to recognize that America is increasingly preoccupied with its own challenges and acting more exclusively in its own interest, especially on trade negotiations like the TPP.
CETA, the agreement with the European Union, once it is implemented, and the Canada-Korea Free Trade Agreement that will come into effect January 1 are steps in the right direction, but we need more — much more with China, India and Indonesia, just to name a few. A more productive relationship with Mexico may well be a priority too if we could ever find a way to resolve the silly hassle over visas.
We should emulate more closely what Australia is doing, recognize that we are very much in a catch-up mode, especially with China and India, and start negotiating more agreements to serve our interests. High profile visits are fine, but they're spasmodic. Substance comes from persistent dialogue and negotiation, and better rules that give great certainty.
In Asia, we are looking at populations that are generally younger and increasingly urban. According to The Economist, the middle class in these countries has increased seven-fold since 2000. That means many more consumers with needs and demands for commodities, products and services in which Canada can excel.
This is not just a challenge for government. Our private sector needs to adopt a greater tolerance for risk and a more creative, even audacious approach to markets with real potential. When you read that Jack Ma of Alibaba plans to import 200,000 Canadian lobsters in one day, and similarly large shipments of cherries and blueberries, you know that the way of doing business is changing as rapidly as the technologies underpinning global commerce.
Agreements negotiated by governments will open doors for increased trade and investment, but it is our business firms that have to plan, innovate and invest strategically to take advantage of new opportunities.
My question to them and to you: Do we have the will and the determination to go after the markets that beckon, or will we continue to languish in the false comfort of our North American cocoon and fall further behind?
Thank you very much.
The Chair: Thank you, Mr. Burney.
[Translation]
Paul Davidson, President, Association of Universities and Colleges of Canada: Thank you, Madam Chair. It is always a pleasure to be here.
[English]
This is my third or fourth time in front of this committee, on your excellent work on Brazil, on Asia and on India. Picking up from Mr. Burney's presentation, I know this committee is seized with the global marketplace and I'm delighted to have an opportunity to focus today on the Canada-Mexico relationship. It's timely as we mark the twentieth anniversary of NAFTA, as Canada's university presidents led a mission to Mexico in September led by Brian Stevenson, President of Lakehead University, and looking forward to February when the Three Amigos will be here in Ottawa.
Sometimes people wonder if anything happens after a Senate committee, and I can say that there has been a lot of progress since I was before you last time. International education is now seen as vital to Canada's economy. We see ourselves as a pillar in the global markets action plan. We see a new international education strategy that the government has brought forward. We see the Council of Chief Executives and Chamber of Commerce talking about the value of international experiential learning for students, and we have seen new progress on international research collaboration with last week's announcement of the government's commitment to the Canada First Research Excellence Fund. Things do happen and things do change, perhaps not as fast or as fully as some would like, but we're pleased to see the progress in this area.
With regard to the Canada-U.S.-Mexico relationship, I would like to describe it as a lopsided triangle, particularly with regard to the education sector. We have strong links with the U.S. by reasons of geography and history, and Mexico has strong relationships with the U.S., but the Canada-Mexico link is quite weak and we need to strengthen it. There are opportunities for increased student mobility in both directions between Canada and Mexico and increased opportunities for taking research to scale with Mexico.
Like Mr. Burney, I would note that the visa issue is a concern. Security issues are of interest to us. We also need a real focused approach by the Government of Canada on the Canada-Mexico relationship with regard to international education.
While we have been making some progress, Canada's universities have been actively inserting ourselves into conversations that the Americans and the Mexicans are having. We see real opportunities for deepening and expanding our education and research cooperation in two-way graduate and doctoral student mobility through existing programs with a view to scaling up. We also want to take a sectoral approach to the research that is under way — the huge opportunities in energy research around extraction, use of water and corporate social responsibility. There are promising linkages happening now that can be scaled up.
Interestingly, another area of increasing activity is around access to higher education for Aboriginal youth. There is a working group of four Canadian university presidents working with Mexican counterparts on how to improve access and success for Aboriginal students in both countries, and again, it's some unlikely places where you look for that action. Brian Stevenson from Lakehead, Ralph Nilson from Vancouver Island, Mike Mahon from Lethbridge and Vianne Timmons from Regina. The first three were all active in the mission to Mexico in September 2014.
The fourth area where there is real potential is with regard to training of English-as-a-second-language teachers. The Government of Mexico sends 7,500 ESL students to the U.S. We have the best ESL training in the world. We should be getting more of those students here.
What do we need to do to move forward? We need a coordinated and timely response to ensure that Canada can capture the opportunities before us. We do look to how the U.S.-Mexico relationship has evolved. Their major program, Bilateral Forum on Higher Education, Innovation, and Research, was launched last year. Their ambition? One hundred thousand students from the U.S. to Mexico and 50,000 students in the other direction. That's an ambitious program we would like to emulate and one that Mexicans have spoken to us about in relation to next February's leader summit. Is there a way that Canada's government can act on its commitments from last year to increase student mobility?
Last month at the Pacific Alliance, Mexico's ambassador to Canada challenged Canada to send 10,000 students to Mexico. Where are we now? Five hundred a year. We've got a distance to go.
It is timely to move forward. In the international education strategy, Mexico has been identified as a priority country. We have the leaders' summit coming up the February. Just to remind you, at the last leader's summit, Prime Minister Harper committed to increase student exchanges, opportunities for joint research and examine joint needs of the workforce.
Really, the opportunity before us today is how we move from this discussion to one of accelerated action. Thanks for the opportunity.
The Chair: I will now turn to Mr. Burleton by video conference.
Derek Burleton, Vice President and Deputy Chief Economist (Canada), TD Bank Group: Good morning, Madam Chair. Thank you for the opportunity to be involved in this very important event. I speak with two hats on, one of them being as a representative of TD Bank Group. We have a large investment in the United States. We're now the eighth largest financial institution in the U.S., very prominent along the Eastern Seaboard. We've put a big part of our strategy on the success of the U.S. and the North American economy through that. That's the first hat.
The second hat is speaking to you as a macroeconomist. My focus is on the Canadian economy, but what happens internationally is obviously key to what happens in Canada.
On that note, I think as a representative of TD Bank, there's no doubt there are still some ongoing challenges. There is no doubt about it. The NAFTA was a huge step forward, but through Beyond the Border we recognized some ongoing potential barriers that are holding back further integration, economic success; and despite that, we've made a large play.
We've had an enormous amount of success in the U.S., some ongoing concerns and challenges. As a banker, we still face a lot of movement of executives and people across the border. We are able to secure visas, but sometimes they can be very much delayed. When you look at the fact that it has been 20 years since NAFTA was put into place, the TN list of professionals can be outdated and that can have an impact on some of the people that we send back and forth at the border. That's a concern. General delays are an ongoing worry.
The biggest thing as a banker, and being a representative, is some of the misalignment in regulation. When you think of NAFTA, you tend to think of goods exports crossing the border, but services are a very important export as well. We're facing a real challenge in terms of how the regulatory landscape is unfolding in the United States through Dodd-Frank. Regulations are changing up here in Canada as well, but nothing compared to the United States. So that creates enormous challenges from a TD Bank success point.
I heard a statistic yesterday that about 80 ongoing exams happen each day from a regulatory perspective, affecting some part of TD Bank Group, so the regulatory costs are massive at the moment.
Those are just a couple of things.
From a general economist perspective, I can't argue with Mr. Burney. Clearly, as an economist, we've been talking for some time as have many, including the Bank of Canada, about the need to diversity our trade ties, being too much reliant on the United States, being delighted on the progress in terms of expanding relationships around the world. At the same time, I've been speaking out of the other side of my mouth saying we need to nurture ongoing relationships in North America, particularly with the United States. The recent shifts in the economy underscore why that will be important.
Are we at a bit of a turning point where North America steps up and becomes an even more important part of the world economy? Some long-term forecasts peg Mexico as being the eighth largest economy over the next decade. The growth has been weak of late. It's likely to pick up.
The United States is a head and shoulder above other major advanced economies in terms of growth at the moment. That's likely to be the case over the next couple of years.
At the same time, Asia is slowing down, emerging markets are slowing and they are no longer the growth miracle. Some of this focus, coming back to the Gretzky analogy, may be a little backward looking. In terms of North America and the United States, it may become a really important part of the growth environment, much more than it has been in the last several years. That's something we need to be mindful of and take advantage of however best we can.
When you have a very deep trade relationship, any kind of incremental improvement in lowering costs and delays at the border can have fairly sizeable advantages.
Mr. Burney makes great points. The political will may not be there in the United States, but to the extent we can continue to make these improvements, take a lot of pilot programs that are under way with Beyond the Border and expand them as quickly as possible, I do think we can see some very big and important changes in general.
In summary, I'm optimistic about the North American economic outlook. Canada will get pulled along by an improving U.S. relationship. The lower Canadian dollar will make us more competitive and that has been a huge issue in the last five or six years. We have a Canadian dollar that will probably fall further, and I wouldn't be surprised to the see it hit 80 cents U.S. over the next few years. That will help us with our market share issue in the United States. So even without major changes, I think we can see an improving U.S. export performance to the extent that we can benefit from an improving relationship with Mexico, which will in turn get pulled along by the U.S. We can benefit as a region.
Lastly, to the extent that North America succeeds, it will certainly help the bank and allow us to continue to build our businesses, particularly in the United States.
I will stop there. Thank you very much for the opportunity.
The Chair: We've had three very interesting and challenging submissions here and you have produced a long list of questioners. I will ask that the questions be short so we can get all of you in, if that is possible, in the time allocated.
Senator Downe: Mr. Burney, you talked about the Canadian private sector, the business community. What assistance does that community need from the government? It seems to me that on trade, the government is signing these deals, but when you look at the trade imbalance, two or three or then years down the road, other countries seem better prepared to take advantage of those trade deals.
You talked about complacency dealing with the United States — geographic and language — and it's still a challenge for many businesses, but it's a lot easier than going to South Korea. However, the United States, for example, has a host of programs. You would be familiar with them. They're direct access where their embassies be will identify an opportunity in oil in Azerbaijan, for example, and people can get a conference call with American officials on the ground there. We seem to be falling behind with our business community taking advantage of the doors that have been opened.
What should the government be doing to assist that business community that they're not now doing?
Mr. Burney: I have no complaint about the manner in which our embassies provide support directly and indirectly to Canadian exporters. I see the flaw being on the part of the business community more than on the part of the government. Let me give one anecdote to make my point.
I used to run a company called CAE. We opened a joint flight training centre in Dubai in 2002 in order to train pilots with Emirates Airlines. I was back in Dubai two years ago. I met the fellow that opened our centre. They started with 6 simulators. They now have 14 and are putting in an annex for 12 more and he has a separate one in Kuwait, one in Oman and one in Saudi Arabia. I said to him, ''This is spectacular, but how come there aren't more Canadian companies here being as successful as you are?'' He said, ''Well, Derek, you know the way they are. They come over, they kick the tires and if they can't get an immediate deal overnight, they go home and we never see them again.'' He said, ''Do you know how long it took me to get into Saudi Arabia?'' I said, ''No, I can imagine a long time.'' He said, ''Five years — five years of repeated visits, sipping a lot of tea and finally you get an agreement.''
It takes persistence. It takes time. You have to take the long view. Our companies don't like the long view, our banks included, if I may say so.
And just to correct the record, our global trade, our exports, according to the Bank of Canada, have dropped from 4.5 per cent to 2.5 per cent. That is a problem.
You can say that the United States is clipping right along at 3 per cent and that's great and that's robust and that's better than Europe, and it certainly is, but the ASEAN countries along, 500 million, 600 million people, have had 5 per cent average growth rates over the last 14 years. We look at China slumping down to 7 per cent or 8 per cent. We could take advantage of that slump.
The basic point I made though, senator, was don't think that big, high-level visits are the answer to countries like those in Asia-Pacific. They need persistent attention in the same way as the countries in the Middle East do if you want to have success.
We should be negotiating agreements with China. We've had a study sitting on the shelf for two years about the comparability of the two economies. Look what the Australians did a few weeks ago. They concluded a free trade agreement with China. They took a big risk. Of course there are going to be bigger risks there than there are with North America. This is a cozy market — a comfortable, cozy cocoon. That's the advantage of it but it's also the problem.
I would advocate the best thing our government could be doing is negotiating more agreements. Negotiate more and more certainty in terms of access for both our exporters and our investors in China and in India. Conclude the agreement with Japan and get on with other agreements with Thailand and other countries in that region that are showing strong growth.
As I said, I'm looking at the long view. The demography is in our advantage. These populations are becoming urban and they're much younger. That means there will be demand for consumer goods and the kind of services in which we can excel.
But if we continue to focus on maintaining our reasonably good access to the United States market because it's easier, then I don't know. I worry. We're way behind. New Zealand is selling more to China than Canada is. Think about that.
Senator Downe: That's a significant point.
My next question is to Mr. Davidson. Mr. Burney mentioned Australia. The Australians are very aggressive. Again, they are a role model in their education. The last time I was in China almost all the interpreters spoke with an Australian accent. They seem much more aggressive. We seem to have universities going off maybe two or three together, one will go to India and you will hear McGill is here and Queen's is here. There is no overall coordination it seems, from where I'm sitting, on attracting these students.
The community college in Prince Edward Island, for example, where I'm from, told me Australian officials were there three times urging them to sign a joint agreement. Finally, the third time, they signed it. It means you can go to college in Prince Edward Island for two years and then you can go to Australia to finish your training. They were very aggressive and very persistent.
I know education is a provincial responsibility, but is there any way your national association can include all those colleges and universities and do an effective Canada selling job?
Mr. Davidson: We have actually made that a priority over the last five years. We have a national consortium that includes the universities, the colleges, the public education system and the language schools where we share information, strategy and tactics on how to pursue the fastest growth markets. Our emphasis in the last few years has actually been on India, China and Brazil, and I've really enjoyed the opportunity to be in front of this committee to talk about the successes there.
You asked me about Asia and Australia, and I'll get to that in a moment, but just to give one small indicator, a few years back we had about 500 students from Brazil. We now have 7,500 students from Brazil. The second largest number of Brazilian students is at Thunder Bay, Ontario, at Lakehead University. Mr. Burney is the chancellor there, which is why I draw that to his attention.
They are practising kitchen table diplomacy because they're staying in home stays and they're building connections, their parents are visiting and their parents are investing in Thunder Bay. It's a phenomenal success. We can do that in other countries with focused and concerted effort.
Coming to the question of Australia, we have great admiration for the strategy Australia has pursued, which includes working right from kindergarten-aged students through to post-secondary with a focus on Asia, with government-funded scholarships for Australian students to go to Asia and for the opportunity to bring Asian students to Australia. We can do that. We've got the vehicles and we've got the mechanisms. We need the resources.
I have often heard from people around this table, ''I go to India and I see Australia there all the time,'' or ''I see the U.K. there all the time.'' The U.K. spends more to market higher education in Delhi than Canada does in the entire world.
Mr. Burney: It may not be all bad for us vis-à-vis Australia. I did another joint venture at CAE with China Southern Airlines. When I talked to the general in charge of the company, I said, ''I'm very happy to do a joint venture with you, but I'm a little surprised because you're currently training your pilots in Australia. Why is it you want to do a joint venture with Canadians?'' He looked at me and said, ''Because I want them to learn English.''
Senator Johnson: I couldn't agree more with the things both Mr. Burney and Mr. Davidson are saying. We're 20 years out from NAFTA and we've had exceptional years since Mulroney and onward. I've been Chair of the Canada-United States Inter-Parliamentary Group and I bring that up simply because we've been trying to rebuild the relationship with our legislative associates, which has been crumbling over the last couple of years and I think it's because of exactly the kind of thing you're saying in terms of our relationship.
Other than what you've been talking about in terms of reaching out and we have to do these other deals, et cetera, what do you think we should be doing in terms of the United States? What should we legislators, and in terms of our study, be doing in addition to what we have already?
Can we also address the issue of the TPP and the Republicans controlling the U.S. Senate now and what that will mean going forward with some of these trade deals with the EU and Canada-Mexico?
Mr. Burney: First, I heartily endorse what you are doing in terms of the interparliamentary activity because with a very weak U.S. administration, such as we now have, and with a change in the power structure in Congress in the next two years, I would redouble your efforts to get to know many of the key players who will now be on the Senate side. I can't say more than that.
We're in a bit of hand-to-hand combat with the Americans on the trade front for the next couple of years. Whatever you as parliamentarians can do with your colleagues in the United States to get the message across in terms of the disadvantages of some of their actions vis-à-vis Canada would be helpful.
There was an encouraging signal today saying that the Congress has directed the Secretary of Agriculture to fix the labelling issue, which we won, as you know, three times at the WTO, yet the Americans ignore the ruling. I would encourage that.
TPP is an example of how we could be doing more together and it's also a concern because if NAFTA were living up to what it was intended to be, it would have been a template for Canada, Mexico and the United States not only in TPP but in the negotiations with Europe. It's because the Americans have insisted on going their own way on all of these trade negotiations that Canada and Mexico are left to basically fend for ourselves.
We're in a very self-centred, self-interest world these days, partly because the United States has been hurting. Their economy has been hurting, so they're not in a mood to share the spoils of a successful trade agreement the way they would have been in the past.
I wouldn't say I'm a skeptic, but I'm very wary of the TPP negotiation for the simple reason that it smacks of the American hub and spoke approach to trade negotiations. We all know who the hub is, and then they negotiate bilateral agreements with all of the participants, but there's no umbrella under which they all fall. We should be very wary about that. We should ensure that whatever comes out of TPP is universally applied and not selectively applied, so that the Americans get an advantage over the rest of us with some of the countries there.
That's what they tried to do with NAFTA. Canada was not automatically a member of NAFTA. The Americans and Mexicans both, as I told my colleague, wanted to do a bilateral. They didn't want Canada in that agreement. It was only because we basically forced ourselves to the table that we got in.
The same thing happened to us on the TPP. We were not welcomed in TPP for the longest time. We had to basically bang down the door in order to get there. That's not the spirit of North America that I live in.
Mr. Davidson: I would defer to Mr. Burney on the Canada-U.S. relationship, other than to say, many people use the Gretzky analogy of where the puck is going. The other analogy that I like to use is that this is a contact sport, and we have to have contact at all levels: government to government, legislature to legislature, student to student, and researcher to researcher. We have to up our game.
Senator Johnson: Thank you, chair. I'll have to stop now, unfortunately.
Senator Eaton: Mr. Burney, when you talk about hub and spoke, for instance, on CETA, was Canada the stalking horse for the U.S.?
Mr. Burney: I'm sure glad we got there first. If you want to call this a stocking horse, I'll take that as a compliment. I think the Americans were very surprised that we were successful with Europe before they were. They don't normally like that.
Senator Eaton: They are still negotiating with Europe.
Mr. Burney: They have begun, but they're a long way from home on any negotiation because keep in mind that this president does not have any negotiating authority from Congress; it's called the fast track authority in the United States. They now call it the Trade Promotion Authority. He doesn't have that.
I'm sorry. I should have responded to Senator Johnson a bit more completely on that point. There are a lot of indications that the Republicans may give the President the authority that his own party won't give him to negotiate TPP, for instance, or the Transatlantic Trade Agreement.
Senator Eaton: Could we be the stocking horse on TPP again?
Mr. Burney: I think we're on the inside looking carefully at what's unfolding, which is better than being on the outside looking in. We're not a stalking horse. The Americans have their own agenda with us and we all know what it is. They're trying to pick off one player at a time in order to get a deal. That's their approach. The big stumbling block at the moment in TPP is Japan. The Americans and the Japanese had to suspend their negotiations because Japan is having an election. Watch that. Watch what happens between the United States and Japan because if they make progress, then TPP has a shot, but only if Congress gives the President the authority to conclude a trade agreement without amendment by the congressional approval. That's the Catch-22 issue at play here. I don't know yet whether the Republicans are in a mood to give this President anything in the next two years unless they get a lot in return. You're seeing it play out today in the budget hassle that's going on.
[Translation]
Senator Fortin-Duplessis: Thank you very much, Madam Chair. I would like to thank our three witnesses for their presentations.
Mr. Burney, I have a great deal of respect for you, because I knew you when I was an MP in the other chamber. It was not easy for you to negotiate the first free trade agreement between Canada and the United States, and you made it a success.
You recently expressed the regret that, after NAFTA was broadened to include Mexico, a hemispheric free trade agreement had never been reached.
Do you think it would be necessary to undertake negotiations for a hemispheric agreement rather than a renewal of the trilateral cooperation?
[English]
Mr. Burney: Thank you very much. Senator, you're absolutely right. We had hoped, as I think I implied in my earlier comments, that NAFTA would be a template for negotiating additional agreements in our hemisphere, if not a comprehensive one, then on a selective basis.
Again, and I'm going to sound like a broken record when I say this, but the Americans decided to go their own way. They started negotiation with Chile in the first instance, and that left Canada and Mexico sitting in the box. Now the Americans weren't initially successful with Chile, so Canada actually snuck in ahead of them and got a deal with Chile. We did the same with Colombia and Central America. So what you've seen is a steady fragmentation of agreements throughout the hemisphere, rather than a comprehensive one.
I have to acknowledge, given all the good things being said about Brazil, the biggest obstacle, other than the United States, to a comprehensive hemispheric trade agreement is Brazil. We often call Brazil the United States of South America for good reason. The Brazilians would like to have a trade agreement in South America where they are the hub and all the others are spokes.
So I would have to be candid in saying that I don't see the prospects of a comprehensive hemispheric trade agreement as being very promising, but I would certainly hope that under a new administration that there might be more of a spirit to invigorate and update the North American Free Trade Agreement, which would then lend itself to improvements in other agreements in the hemisphere.
The Chair: We will now turn to Senator Smith.
Senator D. Smith: Let me say at the outset that we thought we had an excellent big picture overview from Derek Burney. It was very interesting in terms of Canada and foreign trade. It's almost a separate topic from the specific one that is in front of us, but in a nutshell I agree with you. We still have to go after the United States for more business opportunities. We can't be singing the old song, ''I'm putting all my eggs in one basket.'' It's like you were saying with China. I was first there 40 years ago when Mao was alive. I've been back many times and the changes I've seen in my lifetime are unbelievable, and what you say about them passing the States is true. It's happening and it's going to happen; there's no doubt about it.
To get down to the specific item before us and the one that includes Mexico, you did raise a couple issues there, like the visa issue, for example. There's no simple answer there, although this 10-year visa, once you get it you can use it for 10 years, which is a good thing. But some people — I'm being frank and candid — given the high crime rate in Mexico, the horror stories that we keep hearing about and the degree of corruption, some people are wondering about anybody being able to come up with without a visa. Would I be shocked if once they did that people just started going for refugee status and hanging around for a long time? Yes, sort of. But is there some reasonable way that we are not going to have that stuff happening? Do you think this 10-year visa thing solves it to some extent for serious business people coming up here rather than the ones we don't want coming up?
Mr. Burney: Oh, yes. There are two things that are favourable, as far as I'm concerned. The 10-year visa for business is obviously a step in the right direction. Also, I think we fixed the refugee concern you flagged, senator. I don't claim to be an expert on visas from Mexico, but my understanding is that we now have the capacity to return refugees to Mexico because we are no longer regarded as a place where they would be in dire straits. I think we've fixed those two. But when a Mexican ambassador to Canada expresses publicly his concern, which is a diplomatic term, about the visa situation, then there's got to be a problem that needs attention. I can't say much more than that.
We all know about the crime rate in Mexico and the drug rate, and the Americans get the full brunt of both, but Canadian tourists don't seem to have gotten the message because they're still flocking to Mexico in droves. I'm not sure that that's a factor in the visa issue. If it is, then I would have to assume that our security folks, in combination with the Americans, have as good a handle on it as they should.
Senator D. Smith: I would like to believe that if we do this deal, it's going to have a good, positive impact on trade between Canada and Mexico, but when we've done it with other countries, it usually doesn't, much. I want to hope that it will. Are there any specific areas that you think have potential?
Mr. Burney: Well, I just start with the premise that if you have a free trade agreement with a country, you should move as quickly as you possibly can to free movement of people. Otherwise, it makes no sense. As our colleague from TD pointed out, part of the problem with NAFTA is that we haven't updated the list of business representatives that can cross the border without a lot of hassle. I mean, I get hassled going into the U.S. now, much more than I ever used to. The whole system has gotten constipated — too much bureaucracy, too many rules, too many regulations that nobody has thought through how contrary they are to the more fundamental agreements between our two countries.
Senator Ataullahjan: Mr. Burney, it's interesting that you said that Canada needs to catch up, because that's exactly what we heard in the other study that we are doing on Asia-Pacific. How exactly are we falling behind, and what can we do to level the playing field?
Mr. Burney: Read my book.
Mr. Davidson: Two weeks before Christmas.
Mr. Burney: It makes a great present. Seriously, senator, we do suggest that we should emulate, not completely but to some extent, what the Australians have done.
If you permit, Madam Chair, it's not just a question of trade and investment. We have to adopt a strategic focus on this region that encompasses all of the levers of foreign policy, including security. This is what Australia is doing. They announced a free trade agreement with China, and the very next day they concluded a security agreement with India. Now, that's chutzpah. They're playing the two Asian giants skillfully in that manner, and I take my hat off to the Australians. They know what they're doing and why.
Now, they're in a different region of the world. We're sitting here at the top of North America in the protective cocoon of the United States, and we don't think about security. We don't worry about security. Our focus is on the Atlantic and on NATO. We don't pay any attention to the Pacific. I think the Asia-Pacific has more potential for conflict down the road than most other regions in the world. If we want to be a player in that region, we have to make shifts not just to our trade and investment strategy but to our security strategy as well. We've got to negotiate agreements. We've got to be a consistent player in the network of associations that operate in that region. You can't do it by visiting once every two years. That's not the way to do it.
Senator Ataullahjan: That's another thing I wanted to ask you about. You just brought in this very interesting concept. Are companies losing ground because we're not aware? The cultural awareness of how these countries do business is a slower pace. It's building relationships. Are companies not understanding that?
Mr. Burney: Well, some of them do, and if you read my book, we give you five examples —
Senator Ataullahjan: I think I should get that book.
Mr. Burney: I can get some. Seriously, though, we give you examples of five Canadian companies that are globally successful. I wish I could say we had 50; we do not have 50.
Senator Johnson: Five? Is that all?
Mr. Burney: I said I wish we could have 50 in my book. We have five. There aren't that many, but the ones we have do have excellent lessons for companies that want to emulate them.
In Quebec, they have an outfit called QC100. It's an excellent outfit. Small- and medium-sized business operators are being mentored by the big boys — big persons, sorry — in Quebec in terms of how you succeed globally. We need something like that on a national scale. Our successful companies — our banks, insurance companies, aircraft companies — all of the companies that are globally successful, they should be mentoring some of the executives in the smaller companies so we break out of the cocoon culture that we've had in this country far too long.
I could go on, but time is short.
The Chair: Supplementary to that, Mr. Burleton, how have you succeeded in banking? When I was somewhere near Mr. Burney's age, banking had difficulty getting into the United States, and you now have. What was the key there, other than your own personal business acumen?
Mr. Burleton: Well, the financial crisis certainly helped because it made a lot of U.S. banks very cheap. That is unrelated to some of the issues of NAFTA. You could argue that NAFTA has contributed, albeit limited, to some of the success of bigger Canadian players. I think the financial crisis opened the door, with the fact our banks were healthy through the crisis. That was probably the big thing.
I completely agree with Mr. Burney in saying that we need to broaden our trade ties. We're missing the boat. I agree that Australia has been doing the right things. Is there any way that we can do both? I do think some of the growth momentum is shifting back.
I come back to the stat that he very correctly cited about Canada's penetration in the U.S. market having fallen from 4.5 to 2.5 per cent. I think we're at the bottom, frankly, so perhaps we can ride some of the boat going forward and in addition knock down, at least incrementally, some of these ongoing barriers so that we can succeed in both the bigger plays and some of the small- and medium-sized enterprises behind that.
I'll give you an example. Auto assembly is in decline. I don't see that changing. You've got auto parts, though, which is growing very rapidly at the moment. They're making inroads into strengthening there and getting into the U.S. and Mexican supply chain. I see more of that happening. A lot of the industrial companies that have made it this far through the crisis, through the strengthening of the dollar from 65 to parity, are pretty lean. I see some opportunities there.
I think the point is that I share concerns about productivity and competitiveness still, but maybe not so much negative and I see some potential to grow our businesses in the United States.
In banking, maybe we've hit a peak. I think we've made public the fact that we aren't going to be aggressive in expanding further, but to the extent our clients do better, we're going to benefit as a banking institution in North America.
Senator Eaton: Mr. Burney, you were talking about living in a pleasant cocoon here, looking at the U.S. I find it stunning. I agree with you that Canadian business has not picked up the very strong signals that the Obama administration has been sending since the beginning. Do you think he came into office feeling that way about trade, or is it something we did that set off this basic indifference to us?
Mr. Burney: When I was a diplomat, I wasn't able to answer questions like that, but I'm no longer a diplomat. In fact, I'm too old to be a senator, so I can say any damn thing I want.
I think it was a lack of experience. A very close democratic friend of mine pointed out that the limitations of the CV were beginning to catch up. I don't think it's malice. I don't think it's anything other than inexperience and a total dedication to his base.
If you look at the part of the Democratic Party that the President is closest to, the labour unions on the one hand, the environmentalists and Hollywood celebrities on the other, I think his attitudes to Canada have been conditioned heavily by that. The reason I'm hesitant about getting the TPP authority is because, as I said, his own party is not in favour of free trade agreements as a general principle.
What has happened in Washington since I left is that not only has it become more polarized, but it has become so on the edges. There is not much of a middle in the politics of America anymore.
Canada is not alone. I can't identify a country anywhere in the world that is enjoying good relations — an ally in particular — with the United States. Everybody is a bit worried about the internal preoccupation of the United States and the pullback from global leadership that we're seeing in the United States, which is giving rise to the crises we're seeing, whether it's in Ukraine, the Middle East or Asia.
Don't get me wrong; I'm not happy about the situation. I would like to see more robust American global leadership, both on trade and on security issues. I just don't see it coming anytime soon.
Senator Eaton: You were talking about watching the U.S. and Japan —
Mr. Burney: On TPP, yes.
Senator Eaton: — on TPP. What if he does not go ahead and work it out with Japan? Does that mean the rest of us can't work it out with Japan?
Mr. Burney: Part of the problem with Japan is they don't know which horse to ride. They don't know whether they will get what they want with the United States and then use that as a template, as an entry into TPP. I'm not involved, but I'm sure that's the debate we're having with the Japanese on a regular basis.
From my standpoint, what I've expressed to the Japanese ambassador is that it makes more sense for Japan to move swiftly with Canada to reinforce their objectives with the TPP than to sit back and see what happens with TPP before they conclude with Canada. That's my view. I haven't been able to convince the Japanese that that should be their view.
Keep in mind, please, that a lot of countries around the world, like Canada, are mesmerized by their relationship with the United States to the point where they can't see beyond it, above it or around it. It's a problem for Mexico, Canada, Japan and many countries. We're not alone.
Senator Dawson: Sorry I was late.
I'll ask you a question that I've asked you before, Mr. Davidson, about provincial involvement and cooperation in the promotion of student exchange with, in this case, Mexico. We've talked about other countries in the past.
You've talked about having a Canadian coalition. We know that the Quebec and Ontario governments both have offices in Mexico. Do they cooperate in promoting this exchange? If we were to recommend things, what could we recommend to improve that?
Mr. Davidson: It's a great question. One of the benefits of the field that I'm working in and promoting is that there's a high degree of cooperation amongst universities, colleges and the whole education sector. There's a recognition on the part of almost all provinces that when you look at educational exchange and research collaboration, people think first of country. They don't think of province, region or city. The first thought is about country. So there's considerable goodwill and cooperation in the Canada brand.
At various points in the last five years, there has been unanimity on that and an opportunity to move forward fast. With changes in governments and elections it's hard to get all 14 jurisdictions aligned at once, but generally speaking there's a recognition that you need to brand Canada first and then your specific part of the country.
A number of provinces have supplemented initiatives with scholarships as well, so there are linkages that can be formed.
Again, for those seeking a method to do this, we have focused on research exchange and research collaboration, which quite frankly can be a pure federal play.
Senator Dawson: As you know, and I mentioned it here, Madam Marois — not that I'm not happy that she was defeated — when she was in Mexico last year, announced that she was going to be insisting on the promotion and the increase of student exchanges. I hope the new premier will build on that.
Just a little comment: Mr. Burney, it's $8.99 for your book on Kindle. If people don't want to pay $27, the Kindle edition is available.
The Chair: Mr. Davidson, last comment.
Mr. Davidson: To Senator Dawson's point about attracting students to Canada, we've done very well over the last few years. We're well on our way to doubling the number of international students. They contribute about $8.4 billion a year to Canada's economy. This is money going into the pockets of moms and dads in communities across in the country.
Where we're turning our attention when we think about the next five years is how to get Canadians abroad. There has been virtually no change in the number of young Canadians going abroad in the last decade. We released a study this week that points it out. We need to find mechanisms that get young people to develop a cultural mobility where it's natural to get on a plane, to learn a third and fourth language and to think about the economic opportunities in other parts of the world. There are lessons to be learned from Australia, the Germans and others.
We think of ourselves as the most open global trading nation in the world. You might be surprised to learn that American university students study abroad at the rate of twice that of Canadian students, and that is not acceptable in the 21st century.
There are members of senior departments of education across the country that take great pride in saying 80 per cent of our students can get all of their education from kindergarten to post-doctorate within 80 kilometres of home. That would be great in 1950. The students in universities today will be employed when Canada celebrates its bicentennial.
Mr. Burney: So get your universities to make a foreign semester a compulsory part of your degree, which is what the American universities are doing.
Mr. Davidson: They never have and they never will. There are questions on access. One of the differences between the Canadian and American systems is the size of the private endowments of universities, which allow them to offset the costs for students.
The Chair: I still have two senators who have not asked questions, so I'm quickly going to turn to them.
Senator Oh: My question is for Mr. Burney. You are so well versed on international trade.
Mr. Burney: It's a function of age, senator.
Senator Oh: The constant stance against the Keystone pipelines from the U.S., especially by President Obama, is something that could seriously impact trade relations with the U.S. How do you foresee this playing out in the future for Canada-U.S. trade and the President's position on the spirit of NAFTA?
Mr. Burney: Boy, how long have we got? First, I have to say that I'm a director of TransCanada Pipelines, so you can assume from that that my opinion is accurate.
I just wanted to see if you were listening.
Absolutely it undermines the relationship, right across the board. Absolutely it violates the spirit of NAFTA, and we should be contemplating action in that vein. What do I mean by that? Should the President, as he's indicating repeatedly, veto this pipeline on whatever grounds — he's going to have to make them up, as he's been making up most of his statements of late — that would be a serious breach of NAFTA, a provision in NAFTA which the Americans wanted, which was unfettered trade in energy across our border. So absolutely it's undermining the quality, the fabric and the spirit of our existing relationship.
That is why, senator, if we cannot get our act together in this country to build pipelines east, west, south, north, whatever way, in order to export our resources beyond the United States, we're going to be a smaller cocoon than we are today.
Senator Demers: Mr. Burney, I lived in the States from 1980 until the beginning of 2000 and three of my kids are American. I looked upon the United States as a powerhouse. I don't know if it's under Mr. Obama's watch as President, but it's not the same country the United States used to be. We seem to be going in different directions. Does that affect our future relationships with other countries? I heard you mention that you're concerned about security in Asia, and if we don't look at it, maybe it will hit us soon. How do you see that, sir?
Mr. Burney: Let me say I cheered for you more strongly when you were in Canada than when you were down there, just as an opener.
Senator Demers: I'll buy your book because of Gretzky.
Mr. Burney: Seriously, senator, you put your finger on the real problem. The changes taking place in America are not taking place in Canada. Thank goodness the American economy tends to work regardless of government. Almost anybody you talk to will tell you that the current situation in Washington is dysfunctional. That's the most popular term you hear. I think Americans have become very cynical about government being able to do anything. That's a worrying phenomenon because the more they give up on the notion that government can do good or do well, the more they're going to cut themselves off from foreign engagement of any kind because it will become a ''me'' generation even more than it has been.
I think the financial crisis hit the Americans, as our bank colleague said, much harder than it hit Canada. They're still recovering from that. If you visit the United States today, as I'm sure you do, they're cities are hurting. This is a country that's still hurting from the savage downfall from 2008-09.
Detroit is now in bankruptcy — Ontario is going to be next — but at least they're moving out of bankruptcy and may provide a model of sorts for Ontario down the road.
There is a change occurring in the United States politically and economically. You hear about inequalities in the United States. You don't hear that much about inequality in Canada. We have been able to maintain a more balanced system of economic growth for our society as a whole. They have not and they're beginning to pay the price. That's why you're seeing more violence, that's why you're seeing polarization of politics, and that's why you're seeing increasing trends towards disengagement from the world. It would take a courageous President of the United States today to embark on any major global initiative because there would be very little support for it.
This puts a premium on Canada having our own strategic focus. Of course we have to pay attention to the United States — every second of every minute of every hour of every day. That is part of our DNA, but we have to do more than that.
The Chair: I want to thank all of our witnesses.
Mr. Burleton, in appearing via video conference you were perhaps at a disadvantage to engage in this, but your input was extremely important, as well as your perspectives on trade with the U.S.
As usual, Mr. Davidson, you contribute immensely to our studies from the education perspective, and I'm sure you've seen some of your comments echoed in our reports.
Mr. Burney, you're provocative, as usual, but you're also very informative and extremely helpful in your comments for our report. You've made us think not just on our study of the United States, Mexico and Canada, but you put it in a proper perspective of Canada's trade throughout the world. That has been extremely helpful. Given your years of experience in the diplomatic field, in your trade negotiations and now in giving advice not only through the companies you've worked with but to many students and many organizations, I wish to extend a special thank you for having taken the time to come back a second time. I hope you found it worthwhile and I hope all of the witnesses have. Thank you.
Honourable senators, we are very pleased in this second part of our meeting today to continue the study on 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 that the deputy chair indicated that we should have one further witness, and that is His Excellency Hau Do Suan, Ambassador to Canada, from the Republic of the Union of Myanmar.
We thank you very much for coming forward and contributing to our study. As we've indicated, we are looking at Asia-Pacific economic and security issues, and we have singled out several countries that we believe need more study from a parliamentary point of view. From time to time we appreciate having the ambassadors come and give us their point of view on behalf of their country.
Welcome to the Foreign Affairs Committee. I know there are many things you want to cover, but perhaps you could cover the most important points. We have a written submission that we will circulate, and if we can leave some time for questions it would be greatly appreciated.
Your Excellency, welcome to the committee and the floor is yours.
H. E. Hau Do Suan, Ambassador, Embassy of the Republic of the Union of Myanmar: Thank you very much, Madam Chair.
First, I would like to express my sincere thanks to the committee for inviting me today and giving me the opportunity to present to the Standing Senate Committee on Foreign Affairs and International Trade on the current developments in Myanmar. I am greatly honoured and pleased to be here today because, if I am not mistaken, I am the first Myanmar ambassador to appear before a Canadian parliamentary committee.
We thank you, Madam Chair, and members of the committee for attaching importance to Canada's relation with Myanmar. We always value your friendship, understanding and support to the people of Myanmar.
I am confident that our discussion today will contribute to a better understanding of the situation in my country at this historic and critical time of transition to democracy and socio-economic reforms.
Madam Chair, as you are well aware, the Government of Myanmar, led by President U Thein Sein, is advancing on the path of peaceful democratic transition that started just over three years ago by setting in motion waves of political and economic reforms.
The first wave was peaceful transformation from the military government to a multi-party democratic system. Today, over 60 political parties have registered. An all-inclusive political system was established, bringing in all stakeholders in the process through national reconciliation. The first wave of reform has brought about the culture of dialogue, national reconciliation, release of political prisoners, providing greater political space and freedom of media, the right to peaceful assembly and freedom of association.
It was followed by the second wave, unleashing a wide range of economic and social reforms, along with promoting good governance and private sector development.
Today, we are launching the third wave of reform, focusing on laying down a firm foundation for a new democratic state and to deliver benefits to the people by fulfilling their socio-economic needs.
Peace and stability are prerequisites for political stability and socio-economic development of the country. Therefore, strengthening national reconciliation is an integral part of our reform process. We are working together with all ethnic armed groups to reach a nationwide ceasefire agreement. We are confident that we are now getting closer to achieving a comprehensive and lasting peace. We are also working on a draft framework for political dialogue which will pave the way for bringing an end to the six-decade-long conflict in the country. This dialogue will also be a historic forum for discussion of all issues of state, including constitutional amendments.
Significant progress has also been made in the promotion and protection of human rights in my country. A series of presidential amnesties have been granted. Political prisoners have been released. The Myanmar National Human Rights Commission has been reconstituted, with a view to functioning as an independent entity. We have also been cooperating closely with the United Nations on human rights issues.
Press and media freedom is one of the most visible outcomes of the reforms. Press censorship has been abolished. Numerous private newspapers and journals are published and circulated every day. A new media law has been adopted to promote greater media freedom.
Madam Chair, let me now turn briefly to the economic reform process that we have been undertaking. We are striving to transform our economy from an agricultural-based economy to an industrial one. At the same time, we have been focusing our attention on poverty reduction and rural development. We have been able to achieve a steady economic growth of 5.6, 7.3 and 8.7 per cent in the past three consecutive years.
Myanmar's dramatic political and economic reforms have also opened up great opportunities for business and investments in Myanmar. We are inviting foreign investments for capital and technological know-how and to create employment. A new foreign investment law was recently promulgated.
Myanmar is also known for its abundant natural resources and relatively cheap labour force. It is located between the two huge consumer markets of China and India. Myanmar is also a member of ASEAN; therefore, Myanmar now sits in the midst of more than 2 billion people of the most dynamic markets in the world today.
We are also promoting responsible investments with an aim to building investor confidence. We are taking steps to become a member of Extractive Industries Transparency Initiative, EITI. The concept of corporate social responsibility, CSR, is now widely accepted among investors in Myanmar. According to the Economist Corporate Network's recent study on Asia economic outlook 2014, Myanmar is the fourth most preferred investment destination in Asia, after China, Indonesia and India.
Madam Chair, we are greatly encouraged by the dramatic turns of our bilateral relations following Myanmar's reform process. The year 2012 in particular has ushered in a new era of relationship between our two countries. We have seen exchanges of two foreign ministers from Canada, as well as from Myanmar, the same year, after 54 years of diplomatic relations. The Honourable Ed Fast's visit also opened a new chapter in trade and commercial relations and a Canadian trade commissioner was appointed in 2012 as well. Subsequently, Canada suspended economic sanctions imposed against Myanmar in the same year. The first ever Canadian envoy, a resident ambassador, was appointed subsequently. There were also parliamentary exchanges between the two countries.
Myanmar's ASEAN chairmanship this year has also given us opportunities to further strengthen bilateral cooperation between our two countries. Canada's decision to cancel Myanmar's debt and recent announcement to granting of GSP to Myanmar products are significant developments in our relations. We also hope that the confirmation of Myanmar as a country of focus for Canada's international development will enable Myanmar to benefit from more Canadian assistance in its efforts to alleviate poverty and promote economic development.
In recent years, a growing number of Canadian companies and organizations have been exploring business opportunities in Myanmar. The investment so far from Canada has amounted to Can$46.07 million, representing 0.10 per cent of the total FDI. I would like to encourage more Canadian investment in areas where Canada has a comparative advantage, such as extractive industries, infrastructure, agriculture, value-added and high-tech industries and capital intensive industries.
Madam Chair, we have made remarkable progress over the past three and a half years since embarking on a far-reaching reform process. Myanmar's success in peaceful transformation was even lauded as a model in the world today.
Despite all these achievements, there remain many daunting challenges. We are fully aware of these challenges and are determined to continue our efforts to building a democratic state.
Myanmar is changing in the right direction. We are laying a solid foundation for a democratic state where we can live in harmony, peace and prosperity. We understand that it is the primary responsibility of the people of Myanmar to materialize their aspirations of democracy, peace and prosperity.
I would like to conclude, Madam Chair, by expressing our appreciation to the government and people of Canada for your support and assistance given to the people of Myanmar in our democratic reform process. We also value the bond of friendship and cooperative relationship with Canada. I am confident that, based on the existing firm foundation of bilateral ties, we will be able to further consolidate our relationship in the coming years.
I thank you, Madam Chair.
The Chair: Thank you, Your Excellency.
I have a number of questioners. I am going to start with Senator Ataullahjan.
Senator Ataullahjan: Thank you, Your Excellency, for being here.
As part of its reforms, Myanmar is looking to implement human rights legislation that complies with international conventions. Can you elaborate on some of the work you're doing with the UN on human rights issues?
Mr. Suan: We have been, as I mentioned, cooperating closely with the United Nations Human Rights Council, also in Geneva. As to the ratification and the signing of human rights conventions, we have been a party to quite a number of human rights conventions, like CEDAW and the rights of the child, and we're now looking into other human rights conventions as well.
As you know, we have been very cooperative with the Human Rights Council in Geneva, and we have been receiving visits of the special rapporteur on human rights. The new human rights special rapporteur concluded her visit to Myanmar last month and has presented her report to the general assembly. We have also been receiving for a number of years the special advisers of the Secretary-General regarding national reconciliation as well as for the promotion and protection of human rights.
Now we are discussing with the Human Rights Council in Geneva the establishment in the country of an office of the United Nations High Commissioner for Human Rights. It is an ongoing negotiation, and we hope that we'll be able to conclude mutually agreeable terms and conditions for the establishment of a UN agency office in Myanmar.
The Chair: I will turn to Senator Fortin-Duplessis for the next question.
[Translation]
Senator Fortin-Duplessis: Thank you, Madam Chair. Your Excellency, could you please tell us more about your country's economic situation? What are the realistic prospects for economic growth?
[English]
Mr. Suan: As you know, I mentioned that we have achieved impressive economic GDP growth in the last three consecutive years, but we are still a least developed country and one of the poorest in Asia, so the potential for economic development is there. The potential is great, but we have to be realistic. There are so many constraints because we have practised a centralized economy for almost half a century. The market economy that we have now introduced is just three years old, so we have to be realistic. With the opening up of the economy, the investment coming in and the lifting of sanctions by Western countries — the U.S., Canada and the EU — we hope we'll be able to achieve a good start.
In terms of foreign investment, right now, the total foreign investment in the country is $50 billion. Particularly in the service sector, we have opened up our banking system and recently granted nine foreign banks the ability to operate in the country. We have a floating currency now, and the currency with the market rate is quite stable. From a micro-economic point of view, we can stabilize inflation and unemployment. We can achieve financial monetary stability, but we need quite a lot of investment coming in as well as capital.
One of the most important drawbacks for the country is human resources development. We need to train our people, especially the young generation. Consequently, we need to upgrade the education system and the health care system for the social sector.
Seventy per cent of the population lives in rural areas, and the livelihood of that 70 per cent of the population depends on agriculture, so agricultural development is at the top of the agenda in our economic strategy.
The task for us is multi-faceted. As a least developed country, with a long history of a centralized economy and one-party military government, the task is daunting. We need time and patience as well as the capacity and capability to develop our country economically.
[Translation]
Senator Fortin-Duplessis: Your Excellency, thank you for answering that difficult question.
[English]
Senator Johnson: Welcome to our committee. It's nice to see you today.
Ambassador, many observers have noted that the reforms in your country have been stalling and ethnic tensions continue be a major challenge. Can you tell us about the state of the ongoing reforms in your country that are happening now? Are there any substantial ones due to take place before the elections of 2015?
Mr. Suan: There have been words about the retraction of reform in Myanmar. That is not the case. We have been undertaking reform. If we look at the situation of the country, first, with respect to political reform, we now have quite a strong Parliament. The state is working quite effectively, although we are a very young democracy. The parliamentary system is only three years old. It is very dynamic, and we now are able to have an all-inclusive dynamic political system in our country.
From the economic side, we have been able to lay down quite a strong foundation for a market economy. The market is open, investments are coming in, and we have been able to stabilize the micro-economic situation in the country.
Another important thing is the peace process. Myanmar has the longest history of internal armed conflict in the country. Right now, we have about 16 strong, armed ethnic groups, out of which we have reached peace agreements with 14. Only two remain outside of the peace agreement. We are trying very hard to get a nation-wide peace agreement. From then on, we are going to have the political dialogue, which will include all the issues pertaining to the future of the country, including the amendment of our Constitution.
As to the constitutional amendment, a review of the Constitution is in the process. We have invited the public to give advice and suggestions for the amendment of the Constitution, and we have received over 300,000 submissions. We have formed a parliamentary committee to look at all of this, and they have made the suggestion and submitted that to the Union Parliament, which is the combined Parliament of the country. The Parliament is now debating the suggestion for the amendment of the Constitution. We hope that the Parliament will be able to proceed in good time, definitely before the election that will happen around the end of 2015.
We have been making preparations for the elections at the end of 2015. We now have about 67 registered political parties, and it will be quite a challenging election. Although some are minor and small parties, we have a multi-ethnic society and a multi-religious society. We have over a dozen very strong ethnic armed groups.
The situation is still fluid, but I can say that there's no turning back for us. Nobody is willing to turn back regarding this political process — the government, the people, as well as the military. We have been under one-party autocratic administration for half a century, so I can assure you that we'll never turn back.
The process in the eyes of other people might appear slow, but we are grateful that so far we can proceed with our reform process peacefully and without bloodshed.
Just imagine one example: The existing 16 armed groups, for example, one group, the Wa group, they are an over 15,000 strong army. Just imagine the size. This is just one.
The Chair: Is there another question?
Senator Oh: Your Excellency, it was nice to see you last year at Rideau Hall when you were presenting your credentials.
Burma is sandwiched between India and China, two super powers. How is the relationship among all the countries? What can Canada do to get into your economic market and what can Canada do to help the Burmese in this situation?
Mr. Suan: Thank you.
As you know, China and India are neighbours that are given by nature. We have been maintaining very good relationships with China and India. You might remember that the famous five principles of peaceful coexistence, the main pillar of international relations today, were first formulated by the Prime Ministers of Myanmar, China and India in the 1950s.
Since then, our interests with these two great and large neighbours have always been intertwined in political terms, in economic terms, as well as in security terms. We will always maintain friendly and good relationships with these two countries. History and our experience tell us that it is incumbent upon Myanmar, as well as with those two countries, to maintain a good relationship amongst ourselves.
As to your question about Canada's involvement in Myanmar investment, as well as with trade promotion, I think we have made a good start now with the appointment of an ambassador and the opening of a new embassy in Rangoon, as well as the appointment of a trade commissioner. We have made a good start.
Also, it is gratifying to know that Canada has identified Myanmar as the parity market in its Global Market Action Plan, GMAP, recently. This will also give added momentum for our trade relations. There is plenty of room to improve trade relations between the two countries.
With regard to investment, we've been working and trying to persuade more Canadian investment in the country because you have everything — the know-how, technology and also capital — and there's plenty of room for Canadian investment.
Personally, I'm in the process of trying to get a solar energy company to undertake a project in the country. That is just one example. That would benefit the people of Myanmar because we still need a lot of electricity and power generation in the country. That's just one example, and there are many other opportunities for Canadian business in investment and trade.
The Chair: Your Excellency, thank you for coming forward and providing this input into our study on Asia-Pacific. We are nearing the end of our study and it's important. As you said, you're a new, developing country within your new democracy, so it was important to see and hear you give us your perspectives from your government's point of view. That has been extremely helpful to our study.
Thank you for accommodating us. I hope that some of what you say will resonate in our report and will strengthen the relationship as we go forward.
Senators, we have concluded our testimony today.
(The committee adjourned.)