Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue No. 2 - Evidence - Meeting of February 17, 2016
OTTAWA, Wednesday, February 17, 2016
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 4:15 p.m. to study foreign relations and international trade generally (topic: Argentina: political, economic and international prospects).
Senator Percy E. Downe (Deputy Chair) in the chair.
[English]
The Deputy Chair: Welcome to the Standing Senate Committee on Foreign Affairs and International Trade. We are authorized to examine issues that may arise from time to time relating to foreign relations and international trade. Under this mandate from the Senate, the committee will hear today from witnesses on the topic of Argentina: political, economic and international prospects.
The committee held two meetings on this topic last week, during which it heard from academics and experts. This week the committee is pleased to receive a presentation from government officials. This is the committee's opportunity to explore the topic in depth with Global Affairs Canada, which is the new name for the former Department of Foreign Affairs and International Trade. On behalf of the committee, I welcome Mr. André Frenette, Director General of the Latin America and Caribbean Bureau; and Ms. Sylvia Cesaratto, Director of the South American branch.
Mr. Frenette, you have the floor.
André Frenette, Director General, Latin America and Caribbean Bureau, Global Affairs: Thank you, Mr. Chair. It is a pleasure for my colleagues and me to be here with you today to talk about Argentina and Canada's role in Argentina on behalf of Global Affairs Canada.
[Translation]
Mr. Chair, this is an opportune time for Canada to be looking more closely at Argentina, a country which is an important partner in the Americas. Since 2007, Canada has put a particular focus on enhancing its relationships with countries of the Americas, by seeking to increase mutual economic opportunities, addressing insecurity, strengthening institutions, and fostering lasting relationships.
As the second-largest economy in South America and a founding member of Mercosur and UNASUR, Argentina is a valuable interlocutor on hemispheric matters, both in sub-regional fora and through the OAS. Argentina is also a fellow G-20 member.
Canada and Argentina share some similarities that have bolstered our bilateral relations. We are both blessed with an abundance of natural resources. We are also both polar countries located at the extremities of the Americas, which has resulted in joint polar technical collaboration. In addition, we face similar challenges on environmental issues, as well as in connecting cities and communities over large territories. In addition to these similarities, our countries have strong people-to-people ties, particularly in the academic, cultural and scientific fields.
Canadian companies significantly strengthened their engagement with Argentina, especially from 2001-2011. However, the toll of high inflation, coupled with market access and currency exchange restrictions, have affected the country's attractiveness and created certain obstacles for Canadian companies in recent years.
Bilateral trade between our two countries totalled $2.1billion in 2015, with relatively modest exports from Canada that have nevertheless increased by 27percent in 2015. The stock of Canadian direct investment, as reported by Statistics Canada, stood at $3.45billion in 2014, which makes Canadian companies the sixth largest investors in the Argentine market.
Despite the recent difficult economic climate and the protectionist policies of the former Kirchner administrations, Canadian companies have remained interested and engaged in Argentina, and continue to recognize the potential of this country that counts just over 43million inhabitants. The great majority of Canadian companies active in Argentina are in the extractive, agro-industrial and telecommunications sectors. From mining to oil and gas to agri- food and beyond, Canadian companies are committed and valuable partners.
In addition, Argentina and Canada have a long-standing and successful relationship in the area of nuclear cooperation, dating back to the first contract of the Embalse CANDU reactor in 1973. To summarize, Argentina and Canada enjoy good relations but there is room for improvement, which brings me to the recent political developments in the country.
[English]
Mr. Chair, the recent election in Argentina is significant. The election of President Mauricio Macri in November2015 was historic in bringing to power a centre-right president after 12consecutive years of a centre-left nationalist government.
After multiple military regimes, lasting until the early 1980s, the election of Macri continues to strengthen the country's democracy, with his first-ever presidential debate, as well as the first presidential run-off in the country's history.
Time will be the ultimate judge in determining how much of a game-changer this new government will be. But there is a wave of optimism among international observers that the change will be positive.
Despite Argentina's vast potential, the Macri administration faces significant challenges to transition from a nationalistic, economic model based on protectionism and policies of import substitution, to become a more open, liberal economy.
Some of the lingering effects of the Kirchner years include high inflation, a weakening peso, dwindling foreign currency reserves, outstanding debt issues and a growing energy deficit.
Further hampering the country's development has been chronic underinvestment in infrastructure. Shortly after his election, President Macri made policy announcements that broke with some of his predecessor's policies, sending a strong message of transparency, efficient governance and a forecasted end to many of the irritants of the past years.
To make Argentina more attractive to foreign investment, President Macri has promised to create clear rules for business and to promote a more predictable business environment.
The president has committed to adopt a different approach on economic policies and is trying to garner support from different sectors to help consolidate his coalition government.
In terms of implementing concrete steps to revitalize the economy, President Macri has eliminated export duties on key agricultural products and decreased the rate of duties paid on soybeans. He has also eased the restriction on the purchase of foreign currency. His government also lifted currency controls, allowing for a floating peso. This has resulted in a devaluation of the peso, which may improve the competitiveness of Argentine products.
Argentina has also restarted negotiations with holdout bond holders of the country's sovereign debt and recently concluded agreements with some of them. This should help restore the country's access to capital markets, and allow it to borrow at reasonable rates to support further reforms.
Finally, of significance for regional dynamics, President Macri has proactively promoted and defended democratic principles in the region. He raised this issue with Mercosur partners and emphasized the importance of member countries in respecting the organization's democratic and human rights principles.
For the first time in over 12 years, a president of Argentina attended the World Economic Forum in Davos. The president showcased Argentina's shift towards a market-friendly approach and emphasized his desire to have Argentina open for increased foreign investment.
The U.S. treasury secretary has praised Argentina's progress and positive economic policy reforms, while announcing that the United States will no longer oppose lending to Argentina from multilateral banks.
Given that President Macri's party does not control either chamber in congress he may face some challenges in pushing forward with his economic reforms. He will need to build coalitions and work across party lines with provincial governors, senators and deputies to be successful.
On the foreign policy front, the Macri administration has indicated that Brazil will continue to be a priority partner and that he will work to deepen bilateral cooperation with the United States. He has shown interest in resetting Argentina's relations with the United Kingdom, including by adopting a different approach to the sovereignty dispute over the Falkland Islands.
President Macri has shown interest in forging closer ties with more liberal economies like the Pacific Alliance. His approach to economic policy has also provided renewed momentum to the EU-Mercosur free trade negotiations which may, in turn, open opportunities for free trade agreements between Mercosur and other partners, such as Canada.
[Translation]
Mr. Chair, there is no doubt that Argentina is going through a period of change ushered in by the coalition government of President Macri. Of course we need to be conscious of the past century which has shown Argentina's economic performance as being highly cyclical, with periods of strong growth interrupted by downturn or crisis-like episodes. As Canada's economy is highly integrated with that of our closest neighbour, so is Argentina highly influenced by its relationship with Brazil. The economy in Brazil is presently facing a downturn, which will no doubt have an impact on Argentina as well. This, coupled with lowering commodity prices may temper the speed with which infrastructure investments and other reforms can proceed in Argentina.
However, the actions taken by President Macri since his election provide a strong opportunity for Canada to reinvigorate its relationship with Argentina. Canada and Argentina are well suited to establish a dialogue as we explore new areas for enhanced bilateral relations, and greater co-operation on hemispheric priorities including regional security, the reform and reinforcement of the Organization of American States, climate change and energy issues. By increasing our high-level engagement, Canada can show support for the new Argentine government and work to reinvigorate our relationship with this hemispheric partner.
[English]
I think I will stop there and take any questions committee members may have.
The Deputy Chair: Thank you for that detailed and informative presentation. I have a list of senators who have questions.
Senator D. Smith: You spoke with a very positive tone, and positive tones are better than sour, negative tones. We have heard evidence in Argentina and other Latin American areas that issues of corruption come up, as well as democratic, bona fide elections, and things like human rights. Do you feel that genuine progress has been made in these areas? We have heard that from some people who acknowledge that corruption was still a challenge. I like your positive tone, but I don't want to be naive. These other issues are still there, but progress has been made. Is that a fair way of putting a question that not everyone relishes but that has to be asked at some point?
Mr. Frenette: It is a fair question. It has been asked in many different forms, especially since the election of President Macri.
If we look back, the last dictatorship in Argentina ended in 1983. That's not too long ago, when you consider the reforms that have taken place in Argentina since 1983. First, we have to consider Argentina as a democracy that is still evolving. Despite that, we have seen tremendous progress in terms of electoral reform and human rights tolerance since the end of that last dictatorship in 1983.
Second, President Macri was elected only a few months ago, and already we have seen him come out with policy statements very quickly. In my remarks, I have talked about some of the economic reforms that the president wants to put forth. During the campaign, the president emphasized a great deal— issues around corruption within the government and within Argentina, and his strong desire to address issues of corruption.
He talked about transparency. There was an article in The Economist earlier this week on this. Their equivalent of Statistics Canada was not really quite relevant in the policy-making of the previous administrations. As one of the first things he did, he brought that back and has given the responsibility to that organization to provide reliable statistics upon which the government can inform policy.
It is early days, of course, in the Macri administration and in that democracy, but we have seen considerable progress.
Senator D. Smith: In terms of various areas of trade, from both sides— we brought up the more frequency we see Argentine wines, beef and things like that. What are the areas of Argentina that represent potential sales to Canada, and what is the quid quo pro; what are the areas for Canadian exporters where you think there's potential to increase those areas?
Mr. Frenette: I mentioned in my remarks and we talked about the extractive sector. That still remains in Argentina an attractive sector for Canadian investments. The other one I mentioned is in the nuclear area. Argentina is still considering development of new nuclear reactors. Canadian technology and expertise in that area would be welcomed.
We have a presence in Argentina in agricultural production. That can be increased, definitely.
One of the areas that we don't often talk about, and Argentina is ripe in this area, is cultural industries. It has a strong film industry, vibrant performing arts and so on. In Canada, we have similar strengths in that industry.
Innovation, in a number of different areas— in the scientific field— is where we can make some in-roads.
You have heard this from the four witnesses who came before you in the last two sessions, but the issue to keep in mind is that the environment looks promising. President Macri has said and done the right things. It is very early days yet, but what we recommend to Canadian companies that want to get into the market is that they do their due diligence. The signs are positive. There will be opportunities, and there are opportunities. They should do their due diligence. They should be working with our trade commissioners, both in Buenos Aires and Ottawa, to get the lay of the land.
But now is not the time to shy away from Argentina.
Senator D. Smith: The cultural thing, which I follow; I played in the symphony when I was young. In the 1890s, there was an Italian orchestra on a tour of Argentina and the conductor got sick. So a violinist took over and conducted. That was the first place he conducted. His name was Toscanini. Now that is serious.
[Translation]
Senator Dawson: Mr. Frenette, you spoke about relations with Brazil, but you did not mention Uruguay or Paraguay. Has there been a slowdown in regional trade, aside from in Brazil? How is that trade doing?
Mr. Frenette: With your permission, I am going to let my colleague answer that question.
Sylvia Cesaratto, Director, South America, Global Affairs: We mentioned Mercosur in our statement, a commercial bloc Argentina and Brazil belong to, together with the other countries you referred to. Those countries, like most countries in South America, are suffering economically because they have a strong dependency on trade in natural resources, which have seen a considerable decline in value, in that the value of mined products and precious metal extracts such as copper and gold have experienced a global decline. This has had a major impact on the economies of countries in that region, including Brazil, Argentina and the Mercosur member countries.
The Mercosur countries shared a rather left-leaning ideology, and that is why they formed a political bloc and a customs union, which may now be seeking to create new contacts with other players. For instance, they have begun in- depth discussions with the European Union. They would like to see a free trade agreement between Mercosur and the European Union. Canada is observing this phenomenon with interest, because we had also begun discussions of that nature a few years ago. However, the bloc was not ready to move forward in those negotiations, because it preferred to negotiate with the European Union.
I think that Brazil is now somewhat more open to considering other negotiations besides the one with the European Union, and this could be an opportunity for Canada and other countries, such as the Pacific Alliance. This is another regional group, a commercial bloc with four member countries that have a different approach in terms of the economy and international trade. The idea is to find openings between Mercosur and the Pacific Alliance.
Senator Dawson: Is the Pacific Alliance the Trans-Pacific Partnership?
Ms. Cesaratto: No.
Senator Dawson: Is it a regional alliance?
Ms. Cesaratto: Yes. It comprises four founding countries, Mexico, Peru, Chile and Columbia.
Senator Dawson: So this is an economic alliance and not a political one.
I had the pleasure of taking a vacation in that region, and I noted different attitudes. In Uruguay, you go up to a counter where you deal with a representative of Uruguay and a representative of Argentina for customs and citizenship matters, both to enter and to leave, and this only takes a few minutes. In Chile, however, there are two representatives, one for customs and one for immigration, when you are leaving Argentina. Afterwards, when you cross the street, you are greeted by a Chilean representative at immigration, and a second representative for Chile.
Will that situation improve under the new regime? There does not seem to be a good relationship with Chile.
Ms. Cesaratto: These countries function independently as concerns the management of their borders, but within the Pacific Alliance, one of the elements proposed is the free movement of persons. Among the member countries of the Pacific Alliance it is easier, because that is something they want to promote. Of course, Argentina is not a member of the Pacific Alliance, and that ideology is not advocated by Mercosur currently.
[English]
Senator Johnson: Thank you for your presentation. We know he doesn't have this majority to carry out the reforms he wants. How is that going to be reflected in his foreign policy? Will he have more success with people working more closely together, even if he doesn't have a majority? For example, with the U.S. and the U.K., he wants to deepen relations and reset relations in terms of the U.K.
Mr. Frenette: It is going to be challenging. There's an acknowledgment on the part of many international observers that despite the significant change that this represents for Argentina and for the region, the president certainly has his work cut out for him in terms of building consensus around some of the issues he wants to bring forward. He doesn't have the majority, you are correct. He doesn't have the majority in both chambers. He is leading a coalition government. He won by just close to 3per cent — perhaps just under 3per cent — in the presidential election. It will be an opportunity for him to look at issues case by case, one issue at a time, trying to negotiate within the coalition, even within his own cabinet. Correct me if I'm wrong, but there are 21 members in the cabinet, eleven of whom come from his party, and the others from other parties. He will have to work hard across this coalition to get some of his policies through.
More regionally speaking, I was in Brazil when he was elected, and I had meetings with government officials and non-government officials, and his election completely consumed the conversations that I was having with Brazilian officials. That relationship is important, and I think there's a tremendous amount of support. In Paraguay and Uruguay, as well, I think we will see a tremendous amount of support for what the president wants to do because of the objectives of Mercosur, because of the economic objectives of that bloc, and because of some of their own domestic interests in terms of building their own economy.
Again, it is early days, but like I said earlier he's saying and doing the right things. I think there will be support. I mentioned in my speech he had a conversation with the U.K., with Cameron, talked about the Falklands, apparently, and they put that aside and talked about other issues they wanted to collaborate on. It looks positive, but it is early days.
Senator Johnson: Is he a more open individual compared to the last one, for sure?
Mr. Frenette: The indications that we're getting if we look at what some of the think tanks are writing about and some observers are talking about, in terms of international relations and in terms of an openness to engage internationally, this is night and day from what we saw just a couple months ago.
Senator Johnson: How about Canada? What is your take on that?
Mr. Frenette: Again, it is early days. The president was at Davos, and had an opportunity to have a quick chat with our Prime Minister in the margins of Davos. That went well. For Macri's inauguration in January, the Prime Minister sent former Prime Minister Joe Clark to represent him. This is not insignificant. I think we're starting to see early signs of a good relationship in the making.
Senator Oh: With the significant devaluation of Argentina's currency — 40per cent down against the U.S. dollar — are we creating more difficulty for the country, expanding on economic issues?
Ms. Cesaratto: It is certain that some of the reforms that have already been enacted, and some of those to come, are going to be hard on the economy. The devaluation of the peso, of course, is making it that much harder for them to import products that they need. At the same time, it may make their exports more competitive.
We expect more tightening in terms of the fiscal revenues, most definitely. They also lifted the dual currency, so now there's just one floating currency. All of these are measures that they're putting in place with a view to potentially return to capital markets. There's also the question of negotiating with the bond holderholdouts, but with a view to being able to borrow money on the capital markets at more advantageous rates than at the moment. These are also recommendations that have been made by the IMF and other organizations over time.
They are definitely going to have a negative impact in the short term on the economy. There is a more difficult time ahead before a potential turnaround.
Senator Oh: I do talk to some investors who went to Argentina and they find the most worrisome thing is the unstable Argentine currency. When you bring in so much money to invest, the devaluation is faster than they can make in Argentina.
Ms. Cesaratto: In the short term that will be difficult. One of the policies implemented was to remove restrictions on currency repatriation. I think that was a positive thing, especially for Canadian companies that are operating there and looking to repatriate some of their profits. Perhaps in terms of exchange rates, it is not the opportune time to be doing so, as you say.
[Translation]
Senator Rivard: I read the documentation on Argentina, and I find it strange that that country imposes taxes when it exports. Normally, countries do the opposite. For instance, in Canada, about 20years ago before the existence of the GST, there was a federal tax, but exports were tax free in order to encourage competition. However, in your presentation, you said that the country eliminated the import tax on major agricultural products and the duty on soy. This means that when Argentina exports wine to Canada— and we know that there is a considerable volume— there is an export tax. Is that correct?
Am I mistaken to think that the biggest Canadian mining company over there is Barrick Gold? What happens when it extracts ore and brings product back to Canada? Does it have to pay duty on the quantity and the value of product, and also pay tax on the profit it makes in Argentina?
Ms. Cesaratto: Normally, the answer is yes. The government and mining companies negotiate to determine the percentage of mining royalties to be paid. In addition, income tax must be paid on the income that is generated, and in this case also perhaps on the product that is exported.
Senator Rivard: I have one last question to ask. I would like to discuss past events with you, briefly. In 1982, was Argentina's attempt to claim the Falkland Islands related to national pride— since they are after all at quite a distance, close to Argentina — or was their action intended to protect fishing limits, or perhaps a bit of both?
Ms. Cesaratto: I am going to let my colleague answer that question.
Mr. Frenette: I am not an expert on this particular matter. I think you have identified two factors that probably were behind Argentina's actions. The only comments I might add are related to the current situation. I mentioned in my statement that for the former regime, the Falkland Islands were a great priority in connection with its international engagement. Mr. Allan Culham, the ambassador who was your guest a few days ago, mentioned that Argentina never missed an opportunity to debate this in international fora, and that was a good thing. The new president has stated that this matter is important to him, but it is not the only one that the international community should look at. Canada's position in this regard has not changed. We respect the decision of the residents of the Falkland Islands to determine their own future.
[English]
Senator Ataullahjan: Thank you for your remarks. You say the president needs to build coalitions and work across party lines. He is facing challenges in pushing forward economic reforms and he needs to work with the governors and senators and the deputies to be successful. Has he shown that willingness so far to be willing to work across party lines?
Mr. Frenette: I might defer to my colleagues. I don't know what he's done specifically in terms of working with the provincial governors and the deputies. There are things that the president can do. I think there are two issues here. There are things the president can do by decree. He's done that, and he's done it very quickly at the start of his mandate to create a more business-friendly environment in Argentina, as I mentioned in my remarks.
The other issue is exactly the one you raise. These are early days in the Macri administration. I, at least, have not seen yet any major domestic policy issues that the president has put forth that have required the building of a coalition. We do know, however, that we think the president understands the complexity of what he faces in terms of building those coalitions.
He has a very ambitious agenda, both domestically and internationally, and if we're invited back to this committee next year to report on Argentina, perhaps I would be in a better position to report on how successful he's been.
Senator Ataullahjan: Just listening to you, we hear about challenges— economic, and Argentina's history of political and social unrest— so what makes us so optimistic that things are going to change?
Mr. Frenette: That's a good question. We have to be cautious, and that's a message this committee heard from the four witnesses who testified before you. The signs are positive, but we need to be cautious.
Given the past 12 years, and given the significance of some of the economic policy issues that the Kirchner administration had put forward— and now with this new approach, as we say in French:
[Translation]
We have to give them a chance.
[English]
That is especially true with President Macri.
He has demonstrated a willingness to change things very quickly. We have talked about reduction of tariffs, import duties and things of that sort.
There are some priorities he needs to address very quickly in order for his policies to work, and he's already shown that he's doing that. The first is the sovereign debt issue and to negotiate with the bond holders. There is progress being made in that regard. The second is negotiating with unions. One of your witnesses, Pablo, mentioned that 70per cent of workers in Argentina are unionized. The negotiations will be starting next month with the unions. So we can imagine, given where they were, and given some of the social benefits that many Argentinians benefit from, those negotiations with the unions will be difficult. He has already embarked on that.
My message is that we need to be cautious. There are positive signs— we need to be cautious— but this president has demonstrated very quickly his willingness to take action.
If I may bring the conversation to the international side, last Thursday, for the first time in 12 years, there was a reception in Buenos Aires for the diplomatic community— for the ambassadors. And President Macri came and met with our ambassadors and delivered a very clear message: We are open to the world. We need partners. We need your help. We need friends. We are open to the world.
This is a president who seems to be taking action very quickly and is delivering some very powerful messages.
Senator Poirier: Thank you for the presentation. There seems to be a lot of different organizations in the region, like the Organization for the American States, of which Canada is a member, the Union of South American Nations and others. We are currently looking directly at Argentina, but in your opinion, would it be more beneficial for Canada to approach a Latin America as one instead?
Mr. Frenette: Thank you for that. I would suggest we need to do both. In order to be effective multilaterally, we need strong bilateral relations. Canada enjoys very strong bilateral relations across the hemisphere, give or take maybe a country here or there— perhaps Venezuela. But, generally speaking, we have good relations, which allow us to be very effective at the multilateral level.
In the Americas, there are a number of sub-regional organizations. The OAS covers the entire hemisphere, but then there are the sub-regional ones, some of which you have mentioned. Some are more effective than others, but they do provide interesting political forums for these countries to meet and discuss issues.
Our engagement with the hemisphere happens at the OAS— no doubt about that. It is the premier forum for hemisphere-wide relations for Canada, the United States and for all members of this hemisphere. It is a norm-setting organization; it is an organization that has programs and that observes elections in a number of different areas that better the lives of people in the Americas.
For us, the premier forum is the OAS. We engage at that level on a number of key issues. But maintaining those key bilateral relationships is critical and we see the importance of doing both.
Senator Ngo: You say that President Macri, since elected, has proactively promoted and defended the democratic principle in the region, he raised the issue, according to you, to Mercosur and partners respecting the organization of democracy and human rights principles.
How will this impact political and human rights in Argentina? Also, what role can Canada play in creating a positive atmosphere in Argentina for this?
Ms. Cesaratto: It was very interesting in his campaign how he made certain comments about, as you say, upholding democratic principles in the region and maybe pointing the finger at some neighbours or countries in the region that weren't necessarily espousing those principles. We haven't heard him espouse very much on that front since he has been elected, and I think that's an interesting kind of observation.
Notwithstanding that, I believe he's looking at what can be done internally in his country to strengthen institutions and governance, especially in the public sector. He's taken some steps to address some issues in terms of governance and policing. So I think that he will also look to strengthen those institutions, if need be, in his own country, but I don't think that many of our concerns are on that front.
In terms of Canada's role, we do operate in all countries in the region with a pool of money that our embassies have available to work with NGOs in those countries. Argentina is no exception. We would work with NGOs to strengthen democratic governance, open government and respect for human rights. This is the type of collaboration that we're doing in Argentina, for instance— so working with local NGOs to uphold these principles.
The Deputy Chair: I wonder about the role of China. They signed an investment agreement in the 1990s. How active is China now in Argentina compared to the 1990s? Given the troubles in their own economy, are they a major player? If no one has the answers, you can get the information to us.
Mr. Frenette: China is present everywhere in Latin America— increasingly so. Clearly, the commodities boom had an impact on that. The reverse is also having an impact now, but China is very present in Latin America, the Caribbean— in some places more than others.
If you agree, we can send to the committee a paper on precisely where China is engaged and at what level they're engaged. Frankly, it is significant in terms of the areas they're engaged in and the countries where they are.
The Deputy Chair: Great. We would love to see that. When you have it prepared, please forward it to the clerk.
[Translation]
Senator Dawson: You described the Falkland Islands earlier as being an irritant, but are there other irritants our committee should examine? We have no control over the value of money, of course, but are there other irritants we could make recommendations to the government about so as to improve our relationship with Argentina?
In addition, I would like to hear your thoughts on the promotion of the nuclear file as a potential source of trade between Canada and other countries.
Mr. Frenette: If you had asked me that question six to eight months ago, I would have pointed to two irritants, the Falkland Islands and the challenges Canadian companies have in gaining access to the Argentine market, because of multiple regulations, a sprawling bureaucracy and an environment that is not very favourable to enhanced trade relations.
All of that is beginning to change. As I said earlier, we have to give them a chance. President Macri is bringing in policies aimed at creating an environment that is more open to international investment, including Canadian investment. That was an irritant in the past, but it remains to be seen whether the policies will work.
As for the nuclear file, could Steve take over? We have some experts here who can help us answer.
[English]
Steve Guertin, Deputy Director, Brazil and Argentina, South America Relations, Global Affairs: I am Steve Guertin, Deputy Director for Brazil and Argentina, Global Affairs Canada.
Canada has a longstanding position in Argentina with respect to nuclear industries. CANDU AECL has been present since 1973, involved in nuclear reactor production and maintenance. We currently have an ongoing project for refurbishment where CANDU technology is being used. Canadian nuclear technology has quite a competitive advantage in Argentina. We're seen as a world-class leader, and this is demonstrated by our continued success in that field in Argentina.
This is a sector which has supply chain opportunities for Canadian industry in many areas from manufacturing to services, so we continue to look for ongoing cooperation in this field in Argentina.
The Deputy Chair: I would like to follow up on Senator Dawson's question. You mentioned the Falklands being an irritant. It must a major stumbling block, given Canada's relationship with the U.K., a former colony, we have the same Queen. It seems to me there must be some form of discrimination, either subtle or otherwise, if there are two equal proposals, one is from a Canadian company and another from a European country, the European country would have the advantage. Is it that big an irritant?
Ms. Cesaratto: We have not had any complaints of that nature, at least not since I have been on the desk.
Mr. Frenette: It has not been an issue.
Ms. Cesaratto: We accept we have a different position than the Argentines on the issue, but it hasn't really had a negative effect on our commercial interests.
The Deputy Chair: I thank everyone for their comments and presentations. Obviously judging by the number of questions, you generated tremendous interest in the committee. We may call you back as we conclude our study for a wrap-up at some point.
(The committee adjourned.)