Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
OTTAWA, Wednesday, February 16, 2011
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 4:15 p.m. to study the political and economic developments in Brazil and 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: Honourable senators, I call the meeting of the Standing Senate Committee on Foreign Affairs and International Trade to order.
The committee is continuing its special study on the political and economic developments in Brazil and the implications for Canadian policy and interests in the region, and other related matters. This is our ninth meeting on this study.
This afternoon we have before us, from Canadian Manufacturers & Exporters, Mr. Jean-Michel Laurin, Vice President, Global Business Policy; and from Saskatchewan Trade and Export Partnership, Mr. Lionel LaBelle, President and CEO.
Welcome, gentlemen, and thank you for taking the time to give us your advice and opinions with respect to our study. I know that you have some opening remarks and that you are well acquainted with senators and parliamentarians, who wish to ask questions.
Welcome. I will disclose that we had conversations about STEP and Saskatchewan, and I thought you would have something to contribute. The floor is yours, Mr. LaBelle.
Lionel LaBelle, President and CEO, Saskatchewan Trade and Export Partnership: Thank you for the opportunity to be here this afternoon. I will spend a few minutes explaining what STEP is, what we do and how we deliver, a little bit of statistical data, and then I will drill down into some of the issues we have with Brazil. We hope that information will be beneficial. My experience at these events is that we get the most value from the question-and-answer period, so I will focus in quickly on my presentation, and from there I will follow the direction of the chair.
STEP is a bit of an anomaly in Canada. There is nothing like us. Most provincial governments have trade promotion organizations, referred to as economic development and trade. In 1996, the Province of Saskatchewan carved out its trade development strategy to a corporate entity, separate from government, which works with the export community at large. We are a member-based organization and we are at a historic high in terms of the number of members who participate in STEP. We also have a contract with the provincial government, where we deliver services on behalf of the provincial government on a regular basis.
We are an anomaly. We are actually fashioned after the Hong Kong Trade Development Council, and we have had quite a bit of success. I will speak a bit about that.
We are governed by an elected board of 15, 12 from the membership base and three government appointed representatives. The model is working well. It is 14 years. We are a catalyst. As opposed to a trade promotion organization, we are an organization that promotes and develops companies and facilitates transactions. We have a tremendous track record, of which we are proud.
Our membership is divided into two categories: regular and what we call associate members. A regular member is someone who can answer the acid test: If we deliver a trade lead to you, do you have a product or service that you can deliver?
Many of you may not know about our export capacity and what has happened in Saskatchewan in the last decade. Ten years ago, Saskatchewan's international exports were about $10 billion. They peaked in 2008, when oil was $150 per barrel and potash was $1,000 per tonne, to $31 billion. Exports slid back in 2009. We estimate that in 2010, our exports will be $24 billion. Domestically across Canada, we will export an additional $10.5 billion, so collectively $34 billion. This is significant and makes Saskatchewan the largest exporter per capita of any province in Canada.
Our number one customer, of course, is the United States of America, where we traditionally do about 58 per cent to 65 per cent of our business. In relation to provinces like Ontario or Alberta, their numbers are in the 80s and 90s. We see incremental growth in the United States, but we also see exponential growth in many different markets of the world.
With reference to Brazil, in 2009, they were our fourteenth best customer. In 2010, we anticipate them to be our eighth best customer. We track 25 countries around the world, where we do in excess of $100 million a year in business.
In terms of where we are as an exporter, we have a huge disadvantage from any other province in the country, which is lack of access to a seaport. This is a challenge for us. When we send a container of lentils to Bangladesh and we are 1,500 kilometres away from a port, it is a challenge. Logistics are a challenge for us, and yet we have a great deal of success in terms of what we accomplish.
I will give you a quick snapshot of our ranking in terms of our exports. Energy has traditionally been number one over the last 20 years. There was an anomaly in 2009, when food was the number one export. Traditionally, energy has been first, food second, potash third, uranium fourth and manufacturing fifth. Collectively, that is about 92 per cent of our exports.
Our uranium numbers on the chart we provided are a little bit low, because double that number ends up in Ontario, to be reprocessed before it is shipped somewhere else around the world. Uranium shipped from Ontario is an Ontario export, not a Saskatchewan export.
Our exports are phenomenal in terms of size. I have provided a map of the world in terms of strategies and priorities. DFAIT has a number of different jurisdictions they are focused on, in eight or 10 different regions. We have highlighted four jurisdictions that are of high importance to the federal government, and then we have articulated the five that are important to Saskatchewan. Clearly, the U.S. is important, and then the India-Pakistan-Bangladesh corridor.
We are going to India in 10 days. We sell in India, Bangladesh and Sri Lanka. In 2010, we will sell $1 billion of pulse crops; that is peas and lentils, those types of crops. Saskatchewan does more business in India than any other province in Canada, about 47 per cent. That is more than Ontario, Quebec, B.C. and Alberta combined. We see great opportunities in India. As an example, we have not yet sold our first pound of uranium, so we are keen on that.
The map also shows a circle around Brazil, which is obviously a target market for Canada, but it is not a target market for us. There are reasons for this, and I will speak to that.
First, the number one export from Saskatchewan to Brazil is potash. The number one export from Canada to Brazil is potash. We like that relationship. There is no question that we think this is an important relationship. In terms of Saskatchewan's exports to Brazil, potash comprises between 85 per cent and 90 per cent of our exports. We do poorly in a whole host of other products that we attempt to market in Brazil.
I did not mention in my opening remarks that STEP does approximately 40 to 45 international missions a year, where we bring STEP members into those marketplaces. We have been in the South American market many times. We have strong relationships in Chile, because of the mining sector, and in Peru, but we certainly struggle in Argentina and Brazil, and let me explain why.
In the manufacturing sector, the challenges are what we refer to as tariffs or taxes. If I were marketing a $100,000 piece of agricultural equipment in Saskatchewan, that same product in Brazil would have to be sold for upwards of $170,000. Through their tariff structure, — and I have provided a chart — Brazil has four levels of taxes that affect that product. That is very problematic for us. That is the first part.
The second part is that they really do not have the structure within the country of what we refer to as agents and distributors. Access to those individuals does not exist, because imports to their country and manufactured products are prohibitive from a pricing perspective. I am speaking specifically about agricultural manufacturing.
Saskatchewan has global expertise in agricultural manufacturing. I have supplied a catalogue of some of the companies we have that sell products around the world, in Kazakhstan, Russia, Ukraine, Mongolia and northern China. We do a tremendous amount of business in those parts of the world. In many ways, Brazil provides a unique opportunity for us to sell some of our global products, which would be a wonderful opportunity to heighten their production capabilities.
We look to 1935, when Canada and the United States signed an agreement where they removed agricultural machinery and manufacturing, for the most part, into a free-trade position. In Saskatchewan, if you are a Brazilian manufacturer today, you can sell a piece of agricultural equipment with zero taxes — no PST, no GST. Zero taxes. That is true of anyone selling agricultural equipment in the Prairies, because of what happened in 1935. I mention this because the world will become short of food. I think Saskatchewan and indeed Canada can play a role to help improve agricultural capacity on a grand scale. I would drill down with Kazakhstan and other parts of world to show you how we are benefiting agriculture with the type of technology that we market.
I think there is an opportunity for Canada to take a strong stand with Brazil, to say, ``You are hurting yourself by not allowing the newest and best technology into your country to improve production capabilities.''
Jean-Michel Laurin, Vice President, Global Business Policy, Canadian Manufacturers & Exporters: Thank you for inviting me to appear before the committee today on behalf of Canadian Manufacturers & Exporters to take part in your consultations on the development of Brazil's economy and its implications for Canada.
Canadian Manufacturers & Exporters is Canada's leading trade and industry association and the voice of manufacturing and global business in Canada. The association represents directly more than 10,000 leading companies nationwide. More than 85 per cent of our members are small- and medium-sized enterprises, representing every industrial sector and every export sector of the economy. As Canada's leading business network, CME, through various initiatives, including the establishment of the Canadian Manufacturing Coalition, touches more than 100,000 companies across the country engaged in manufacturing, global business and service-related industries.
Manufacturing remains the single largest business sector in Canada. It is a $534 billion business across Canada. Companies that make things account for 13 per cent of Canada's total economic output. Manufacturers still employ over 1.7 million Canadians in highly productive and high-paying jobs. They pay one third of the taxes levied on Canadian businesses. Their contribution is essential for the wealth generation that sustains the standard of living of each and every Canadian.
However, the business of manufacturing encompasses much more than those companies that make things. In fact, manufacturers consume close to one half of the resources grown and extracted in Canada's farming, fishing, forestry, mining, and oil and gas industries. Manufacturing accounts for one third of the output of Canada's utility sectors and consumes 30 per cent of the value delivered by business management, engineering, and technical expertise. In fact, every $1 of value created by Canadian manufacturers generates $3.25 in total economic activity.
Manufacturing is also a very export-intensive business and that is why we are here today. More than one half of Canada's industrial production is exported directly. Manufacturers also account for two thirds of Canada's exports. As a result, issues around manufacturing competitiveness in Canada are closely intertwined with our ability to compete and succeed in international markets.
It is increasingly critical for Canadian manufacturers to succeed globally. As manufacturers increasingly invest in innovation and become more agile, specialized and able to serve niche markets, the more they need to find new customers and business partners globally.
We also know that a growing share of our members is looking to take advantage of new opportunities in high- growth emerging markets. South America and Brazil specifically, are good examples of where there are tremendous opportunities for Canadian businesses and where we have been seeing growing trade and investment.
In fact, in 2010, South America was the region where Canadian exports grew the most. They grew by 29.2 per cent, to be precise. This compares with 11 per cent growth in the United States and 20 per cent growth in Western European markets.
Exports to Brazil actually grew by an impressive 67 per cent last year. Canada's exports to Brazil now total $2.4 billion per year, with 0.6 per cent of Canada's exports going to Brazil. While that country accounts for slightly more than 3 per cent of the world's economy, we believe that there is still a lot of room for Canadian businesses to grow their presence in that market.
Currently, fertilizers, energy products such as jet engines and turbines, and pharmaceutical products such as vaccines and paper products together account for approximately two thirds of our exports to Brazil. As I said, we believe there is still a lot of room to grow our presence in that market in key sectors where there is a good complement, such as automotive parts, mining, forestry, farm and energy equipment, engineering services and aerospace, just to name a few key sectors. That being said, some significant trade restrictions remain for Canadian businesses to overcome if they are to succeed in this market.
Import tariffs are at the top of the list. Tariffs range from 0 per cent to 35 per cent, with an average around 11.5 per cent; but the average bound tariff — which is the highest limit they are allowed to put under WTO rules — is at 31 per cent. Exporters to Brazil face also high uncertainty in relation to tariffs because the effective tariff rates can be increased closer to the bound rates, and we have seen some shifts in tariff rates in Brazil.
Brazil also has some exceptions granted under the Mercosur's common external tariff, which will expire at the end of this year. However, some items were removed from that list so that tariffs could be raised on some products — steel products are one example.
Brazil's tax system and customs procedures are very complex and increase the cost of goods exported to that market. The example Mr. LaBelle gave was a good one.
As another example, we recently had to help a member who wanted to transfer equipment from Canada to the Brazilian operations to shift some production over there to serve local demand. Brazilian customs required that the member obtain an import permit because Brazilian customs had assessed that similar technology could be sourced domestically. Mind you, that company was trying to create jobs in Brazil and transfer some of its production there, but it faced significant barriers to being able to shift some equipment, which normally should be a fairly standard operation.
One thing we have also noticed is a lot of Canadian companies, if they want to get into the Brazilian market, have to find good local partners. In some cases, they even have to invest in building operations in that country because of the significant barriers to exporting into that market.
Another issue I would like to raise with this committee is the issue of visas for business visitors coming here to Canada. This is an issue that our members have been facing not only in relation to Brazil, but in relation to many of the other emerging markets where we are trying to do more business.
Last year, CME and other five national associations issued a report entitled, Facilitating Business Travel to Canada: Making Canada more Competitive. The report outlines this issue and makes specific recommendations for Canada's government.
The movement of business visitors to and from Canada plays a vital role in our members' ability to forge relations on which future business expansion hinges in improving Canada's international trade performance. Business visitors would enter Canada for short periods of time, either to finalize sales, to familiarize themselves with Canadian goods and services, to receive management and other training related to the sale of machinery and equipment, or to participate in strategy meetings that impart essential information about business positions abroad. All of these are critical aspects of conducting business. Therefore, we need to better align our trade diversification objectives, which target rapidly growing countries like Brazil; but also our visa policies to ensure we can freely conduct business with nationals from these countries that require visas to come to Canada. Being able to trade with emerging economies requires addressing the systemic problems in our treatment of business visitors from emerging economies, as we related in our report. I can table a copy of that report with the clerk following my presentation.
Our overriding challenge with this issue is that the Canadian system has become less responsive and more burdensome than visa processes in countries that are our main competitors. As a result, Canadian firms are losing out on opportunities in some of these high-growth markets.
I will not go into the types of problems in much detail. The report does a good job of outlining these issues and makes recommendations that I invite you to read. One of the recommendations is for the government to devise an expedited process for issuing visas to business travellers invited to Canada by trusted, low-risk Canadian businesses.
One way to accomplish this would be by expanding the Business Express Program to visa applicants from any country, as long as they are invited to Canada by a qualified Canadian company. We could also design a new program along the lines of the FAST program that applies at the Canada-U.S. land border, which is managed by CBSA here in Canada and does a good job in facilitating cross-border trade in that instance. We would welcome the committee's support on this issue and will be pleased to provide any additional information that may assist you.
These are just a few of the challenges that our members experience when doing business in Brazil. Some of the other challenges are internal in nature, such as finding the appropriate resources, identifying business opportunities, being able to find reliable foreign partners and also managing exchange rate issues. These are challenges that we are working with our members to overcome so that they can grow their businesses in international markets.
I will end my comments here, but I will be pleased to answer any questions you may have.
Senator Finley: Thank you very much for your fulsome presentation. Mr. Laurin, does your association represent huge operations like Bombardier down to one-man shops or do you represent smaller businesses?
Mr. Laurin: Our members are largely small and medium-sized manufacturers; 85 per cent of our members are small and medium-sized businesses, but we also have members that are large companies with multinational operations.
We do not disclose our members' list, but you could probably figure out which are the larger members. Usually, they are household names in Canada. However, there are many good success stories of smaller Canadian companies that most people have never heard of but that have unique solutions they are able to sell internationally. Many are also from Saskatchewan, which both Mr. LaBelle and I have the pleasure to serve.
Senator Finley: Mr. LaBelle, you said there was not any other organization like yours in Canada.
Mr. Laurin, do you deal with the other provincial trade arms or is Saskatchewan the only one you deal with?
Mr. Laurin: No, CME serves members throughout Canada. We have offices in every province. We deal with provincial governments on a number of issues, including trade. We work with every province and the federal government in supporting the international diversification of businesses.
Senator Finley: I have not come across your organization. How does your association work? Do you have a resource group that deals with the exporters or the potential exporters? Do you have a network in Brazil?
Mr. Laurin: First, CME offers five services to our members. One is advocacy, which is why I am here today. We also provide networking opportunities to help our members meet other manufacturers in the area. We help manufacturers share best practices. One type of best practices we help companies share is the work they are doing internationally. Some companies have been able to grow specific markets and put in place successful strategies. We try to encourage them to tell everyone else what they have been able to do so that other companies that do not compete with them are able to learn from their experience.
We also provide business intelligence to our members. Market intelligence, which is one part of business intelligence, gives them more strategic information before they go into specific markets.
Specifically on Brazil, we connect our members with the resources that will assist them in their region. If they come to us with a specific problem, we refer them, for example, to the trade commissioner service in Brazil. If they come to us with customs issues, we will typically refer them to customs brokers that are partners of ours. If they come to us for strategic advice, we might provide that ourselves or in partnership with organizations like STEP and others throughout Canada.
We do have memorandums of understanding with foreign affiliates, foreign sister organizations. We have carried out a number of initiatives with Brazilian regional chambers. We have some contacts with similar employer associations in that market; in other words, member funded, member driven and closely connected with businesses.
Senator Finley: In your presentation you mentioned the difficulty of finding suitable Brazilian partners. Is ``partner'' a code word for ``agent''?
Mr. Laurin: It could be. Every situation is different, and that does not apply only to Brazil; it applies to nearly any market in the world that Canadian companies are trying to get into.
One key challenge, particularly in more geographically distant markets, is the need to find a good and reliable local partner. To find a suitable foreign partner, you have to invest a lot of time and resources. When a partner proves to be unreliable, it can delay your penetration of the market for an extended period of time, because you have to respect your original agreement. Our members are trying to overcome that key challenge.
The challenge is greater in markets where there are greater language challenges, greater time differences and greater geographic distances. However, we have seen countless members succeed in another market because they found the right partner for their business. It becomes a win-win situation because the local partner and the Canadian company are able to grow their businesses together.
Senator Finley: There is a corruption stigma in certain parts of the South America. Is Brazil in that category?
Mr. Laurin: We have not heard that concern. I am not saying it does not exist, but I have not heard of specific cases. Perhaps our members just do not come to us with those types of problems.
In business that is always something you have to be aware of, and there are stringent restrictions on what companies should not be doing. We certainly advise our members to ensure that they follow the letter of the law.
We are aware of the implications when dealing with corrupt business practices, especially for companies that are active in the U.S. The American legislation is clear on what you are not allowed to do, and there are strict penalties for companies that engage in such business practices.
Senator Finley: Mr. LaBelle, your sales export figures indicate a huge blip in 2008 and they seem to have self- corrected in 2009. Did you explain the reason for that?
Mr. LaBelle: That was caused by the price of oil going from $140 to $40 a barrel and the price of potash going from $1,000 a tonne to zero.
Senator Finley: You have made pretty steady incremental growth.
Mr. LaBelle: To give you an example on the manufacturing side, our exports of manufactured products in 2008 went up about 25 per cent, which is an anomaly. That did not happen in the rest of Canada, and mostly because it followed agriculture, which stayed quite strong through the period. We expect our 2011 numbers to parallel our 2008 numbers.
Senator Finley: Have you been to Brazil as part of a marketing endeavour?
Mr. LaBelle: I have not, but my team has on many occasions.
[Translation]
Senator Fortin-Duplessis: Mr. Laurin, Mr. LaBelle, welcome. I am sure my colleagues are very happy to have you with us today.
As you have noticed, 2011 promises to be a little less difficult in terms of economy. In Canada, growth must be a priority. Though the economic crisis appears to be behind us, we should not celebrate our victory just yet. Early 2010 was especially difficult, but things picked up a little towards the end of the year. Jobs have been recovered, and company profits are back to their pre-crisis levels. Interest rates are low, and the real estate market is doing well.
To maintain their enviable position and continue to thrive, Canadian companies must remain competitive. They usually weather the storm if they succeed in distinguishing themselves by adequately addressing their clients' needs.
Mr. Laurin, you said that Canada's exports to Brazil total $2.4 billion, which is a fairly significant sum. To do business in Brazil, people need solid local partnerships. How many Canadian manufacturers and exporters are currently doing business with Brazil or exporting to Brazil?
Mr. Laurin: That is a very good question. Unfortunately, I do not have an answer to it. I could try to find those figures, but there are probably some discrepancies between them and manufacturing sales in Brazil. Statistics Canada is conducting a few surveys on this. Some exporters would say that the number of manufacturers doing business with Brazil is estimated at a few hundred. However, that is just an estimate.
If you look at the data, you will notice that there are four or five product categories that account for the vast majority of our exports to Brazil.
In each of those categories, a few large companies are key players in the market. For instance, if we focus on Canadian exports such as energy products, or paper and forest products, we note that there are a handful of companies that account for a large percentage of exports toward those countries.
However, many small and medium-sized companies have solid innovation strategies that aim to provide their clients with much more complete solutions that involve product delivery. I know that many of our members export to Brazil, and they are not necessarily representatives of well-known companies.
Small companies do not necessarily lead the way, from a statistical standpoint, but there is nevertheless a growing number of companies selling their products directly in markets like Brazil. I would also say that there are many growth opportunities for companies that could go to Brazil because our solutions are usually in demand in that market. However, there are many trade restrictions involved in exporting to Brazil.
When we have asked our members to do business with Brazil in the sectors I mentioned, sectors we consider to have potential, interest has been shown. However, the restrictions are rather significant. Some businesses invest in Brazil because the domestic market is strong enough to make investing there worthwhile. However, many SMEs are lacking the means to invest abroad, so we prefer that they do it here, in Canada and that they invest in their operations.
I would say that trade restrictions prevent small companies from penetrating this market. That is the kind of problem a free-trade agreement or trade negotiations could possibly eliminate.
Senator Fortin-Duplessis: Could you tell us which provinces are home to the manufacturers or companies that want to export to Brazil?
Mr. Laurin: These data are available, but I do not have them on hand. I could send you the provincial data. My colleague may know about the situation in Saskatchewan.
Just by looking at the list of main products exported to Brazil, I get the feeling that there is solid balance among the provinces. The raw materials come as much from the west, as they do from Central and Eastern Canada.
If we take the pharmaceutical industry as an example, the exports mainly come from Quebec and Ontario. However, I think that there is a solid interprovincial balance in our trade with Brazil.
Senator Fortin-Duplessis: You think that Canada should try to conclude a free trade agreement with Brazil, right?
Mr. Laurin: We have not studied this specific issue with our members. The main thing would be to find a way to reduce trade restrictions, especially when it comes to Canada's exports to Brazil. Our association supports any agreements that would help Canadian companies access Brazilian markets.
We know that the government has recently invested a lot of effort into liberalizing our trade with some South American countries. That being said, we need a free trade agreement that would include other parties, but we must first determine to which markets Canadians and Brazilians want to have access.
Are open markets in Canada's best interest? I know that Brazilian companies have a lot less difficulty in accessing Canadian markets than the other way around. In other words, it is more complicated for a Canadian company to sell in Brazil.
When it comes to taxes and customs, there are certainly trade restrictions that we would love to do away with. However, I think there is a lot of work to be done before we can say that we are in favour of Canada beginning free trade negotiations with Brazil as soon as possible.
Senator Fortin-Duplessis: There is no doubt about that.
Mr. Laurin: However, we are certainly interested in this fast-growing market, which will be the centre of attention owing to the World Cup and the Olympic Games that will take place there. We are prepared to work with the government to find a way to eliminate certain trade restrictions our members in Brazil are facing.
[English]
Senator Downe: I am interested in the Saskatchewan Trade and Export Partnership, which you indicate is unique among the provinces. In your presentation, you discuss a public-private partnership. If it is not confidential, what percentage of your budget comes from the province through that agreement?
Mr. LaBelle: STEP International does significant work around the world. The chair is aware of our presence in the Ukraine, for instance. We were there for seven years, employed 60 people and had 16 offices. Depending on the year, it is a ratio between 60 to 40 and 70 to 30. The government contribution is the higher portion.
Senator Downe: I notice that the vast majority of the board is from industry. Out of 15 members, only three are from government.
Mr. LaBelle: That is correct.
Senator Downe: Are you and your senior staff hired by the association as opposed to the government?
Mr. LaBelle: We do not use the word ``association,'' but yes, we are hired by the board of directors.
Senator Downe: What is the equivalent federal group you deal with?
Mr. LaBelle: We deal with DFAIT. We are the Saskatchewan representative when dealing with interprovincial, national and international issues.
Senator Downe: You are dealing with bureaucrats, not with similar associations.
Mr. LaBelle: Respectfully, we are unique in Canada. We are a bit of an anomaly. CME is familiar with what we do and how proactive we are in what we do. We are driven by industry. We have, as an example, 26 different deliverables that we mark every month as to our level of success. Our world is simple. We ask the question, ``What did Saskatchewan sell today?'' That is our focus and we have had a great deal of success.
Senator Downe: Saskatchewan has many initiatives in Canadian history. This may be another one that we want to copy.
My final question is about how difficult it is to do business in Brazil. The World Bank Group ranked Brazil at 129 in terms of ease of doing business, behind Mongolia and Kazakhstan.
What major problems do you have in Brazil and what if anything can the Canadian government do to facilitate better trade?
Mr. LaBelle: We have strong relationships, by the way, in Kazakhstan and strong relationships in Mongolia. We have been successful in what we have done in those countries. Brazil is a real anomaly for us.
When I speak of the tariffs, some are federal, and a number of them are state related. Many people do not understand that they are stacking. You may have a 5 per cent tariff, and, by the way, it is not on the imported cost of the product but the imported cost plus insurance plus freight plus storage. That tax is charged and then the new tax is charged on that gross amount so you have taxes upon taxes. As a Brazilian company, in many cases, you get that back as an investment tax credit, but, in the Saskatchewan example, we do not get that back. It is a real problem.
One of the issues we talked about is culture. We talked about the ability to access distributors and agents in Brazil. There is no real culture for that. Consequently, I would argue that the culture is not there because nobody could make any kind of revenue from it.
Saskatchewan, more than any jurisdiction in North America, is dependent on trade. We are free traders. We can compete. We understand our product, and we understand the efficiency of the product we sell.
As an irony, few Brazilian agricultural products are imported into Canada, because in most cases, they are one or two generations behind the product that we produce. We have a lot to offer Brazil; however, because of their tariff structure, we just cannot get in the front door.
Senator Downe: I see the five priority areas that you have identified. The percentage of business you are doing with Brazil has gone up, but not compared to others.
Mr. LaBelle: Mr. Laurin's numbers are right on the mark. There have been market improvements in Brazil, but mostly in potash, which has been variable, and energy, which has been variable. In terms of day-to-day stuff we sell, that really has not gone anywhere for the last five or six years.
Senator Downe: Basically, in a world of limited resources, you will focus on countries where you can get the maximum return and Brazil is pretty far down that list for you, is that correct?
Mr. LaBelle: I am fond of the RIC group of countries, Russia, India and China, not necessarily the BRIC group, Brazil, Russia, India and China. From our perspective, we think there is exponential growth in the other three markets and that is where we will focus.
Senator Di Nino: Mr. LaBelle, I came across your aggressive marketing in two countries; one is in Kazakhstan and the other is in India — specifically in Gujarat where, as you know, many fear to tread. I understand that Saskatchewan did very well, congratulations. I suggest that your reputation, at least in those two countries where I was exposed to discussions with government officials, is very high.
I will speak about some of the non-tariff problems that you may face in doing business in Brazil. Did you ever come across issues concerning genetically modified organism, GMOs, or issues such as food security et cetera? What are the other areas where we need to sharpen up or improve in doing business with a country like Brazil?
Mr. LaBelle: The GMO question is near and dear to me. Brazil is an anomaly because they have GMO in corn, soybeans and sugar cane; we understand they are looking at it in cotton, as well.
We just lost a significant amount of business with Brazil because we had some GMO flax end up in Europe, and we had the door slammed on us. That surprised us because they have a culture of understanding GMO, as we do. It is a bit of anomaly in terms of understanding how to break through that problem.
Senator Di Nino: Do we have advantages in areas like green farming, secure food products or processing, et cetera?
Mr. LaBelle: First, the quality of the product we ship based on Canadian Grains Council and our grading system is absolutely the best in the world. This is critically important to us when we are shipping our products around the world; we are proud of our grading system and the quality of our product. I could tell you lots of Kazakhstan stories about product.
From our perspective, the Brazilians have had a huge agricultural focus on sugar cane and soybeans. There are many opportunities for so many of the products we produce well, like cereal grains and pulse crops.
We have something in Saskatoon called the Crop Development Centre. You all have heard about pulses, but you might not know that in the last 10 years that organization has introduced 69 new varieties of pulse crops, all of which fit specific markets for specific windows. For example, one is a very small red lentil; we say ``lentil'' but there are multiple types of lentils. A small red lentil goes into the Bangladesh market; a large green lentil goes into the Indian market. We have created that; much like RIM creates a new BlackBerry, we have created a new product to go specifically into a market — one that is high in food value and high in nutritional value.
Going back to the Brazilians, we think we can offer them so much on the hi-tech end of the science of agriculture that we believe could be beneficial there.
Senator Di Nino: Mr. Laurin, you noted the difficulty in getting business visas for Brazilian businessmen coming to Canada. First, could you clarify that; and second, are you having problems from the other way as well?
Mr. Laurin: We have not heard from members in terms of difficulties getting visa applications processed to go to Brazil. One of the issues we have is that there is a lack of predictability in terms of the decisions. It is difficult to get an explanation in cases where a foreign business partner applies for a visa and has his application denied.
I do not know if you have ever seen the letters they send out, but they do not provide a lot of information. In many cases, we have heard from members that their business partners have been offended and say they do not want to deal with Canada anymore.
We have seen members who need visas to bring customers to Canada for training, for example. They say now we are training our customers in the U.S. because their system is more responsive.
In all fairness, we have had a chance to meet with Minister Kenney on this issue. He listened and I think he understands the issue. There is a willingness on their part to look at ways of improving the system, but we want to make sure you understand that this is a very important issue.
We have heard that there is a bit of a disconnect between our visa policy and our trade policy that makes it difficult for us to do business with countries where people require visas. We are not saying people do not need visas to come to Canada. It is has more to do with the process of delivering a visa to a foreign business visitor. We do not have a business visa for Canada. It is just a regular class for visitors, but some countries do have a business visa. That is something we should look at.
The Business Express Program is in place for India and Mexico. It is working tremendously well. We suggest having the same system for a Canadian company that needs to bring in people from around the world. Those companies are well-known names in Canada. They are willing to put up a bond, if needed, or do whatever it takes, but they want to be recognized as a low-risk company. If we allow these companies to pre-qualify and provide guarantees, it will allow Citizenship and Immigration Canada to focus a greater share of its resources on the higher risk travellers to whom we should be paying more attention.
Senator Di Nino: That is a useful answer and I am sure it will find its way into our report.
President Rousseff has been in power for a while now; have you seen any changes or is it steady as she goes?
Mr. Laurin: I do not have anything specific to say but if I do hear something by the time you publish your report, I will provide that input to the committee.
Senator Di Nino: What is the perception of the Canada brand in Brazil from the standpoint of the experiences of your members?
Mr. Laurin: That is a good question. I would be pleased to consult our members that have operations in Brazil to get their input. I do not have anything specific to report. However, whenever we do consultations with members on international trade generally, that is often an issue that comes up.
Manufacturers and exporters are looking for Canada to do more to brand our country internationally. We want to position Canada as an innovative country that is developing new technologies. We are trying to ensure we have the right type of branding overseas. I know it is something manufacturers look for the government to do more on — to brand Canada in international markets.
As far as the perception of Brazilian business people to Canada, I have not heard any anecdotal evidence to say this is what they think of Canada. You might get different answers, depending on who you talk to, but I have not heard anything on that topic.
Mr. LaBelle: I would argue that their opinion is certainly not negative, but it is probably neutral at best. I do not think there are glowing reports of Canada, but I am not aware of any negative feedback.
[Translation]
Senator Robichaud: Mr. Laurin, your organization has many members. Do most of your members see Brazil as a good business opportunity? Do any of them view Brazil as competition?
Mr. Laurin: The short answer is that some of our members view Brazil as a business opportunity. Do the majority of our members think so? No. We are surveying our members. We have about 3,000 members in Canada. Thanks to various initiatives, we are reaching a much greater number of manufacturers.
More in-depth surveys we are conducting of our members or our network suggest that priority markets are still Canada and the United States. Most businesses are interested in other markets, but Brazil attracts only a minority of them. However, the number of businesses interested in Brazil is rising annually. Each year, our surveys indicate that a growing percentage of members are turning their attention to South America and especially Brazil. Trade data indicate that Brazil is one of the markets where Canadian exports are increasing the most rapidly.
Do some of our members see Brazil as more of a threat than an opportunity? This is no doubt the case for certain products. Brazil does have a fairly developed manufacturing industry. Their expertise in several industry sectors is in competition with Canada.
I do not have any data with me on Brazilian exports to Canada. However, in certain industries, such as aerospace, Brazil has solid capacities. In other areas, they have really developed their industry. The perfect examples are the automotive industry and the suppliers in that sector.
In certain areas, Brazilian and Canadian manufacturers complement each other. Brazil's forestry sector has developed tremendously over the last few. In other sectors, we could possibly be competing with Brazil. If our products are not in direct market competition, we are usually competing when it comes to attracting investments. Just look at the automotive or forest products sectors. In those industries, companies are free to invest around the world. Therefore, Canada must ensure that it is an attractive destination for investors in terms of the know-how and of the incentives provided to companies that set up in Canada.
Senator Robichaud: Mr. LaBelle, do you see Brazil as a competitor? The exported products are mainly related to energy, food and potash. Could Brazil become a serious competitor?
[English]
Mr. LaBelle: No. They are an agri-giant and so is Canada, and the bottom line is that the world is starving for more food. I do not see any issue for us in terms of capacity or ability to compete. Other parts of the world, such as Australia and Bangladesh, have had such tumultuous weather that I do not see them as competitors. I think we can complement them, frankly.
Senator Robichaud: Some witnesses have expressed concern that labour costs are quite a bit lower.
Mr. LaBelle: It is interesting you would say that. We try to define in-country strategies, and one that we follow a lot and are quite impressed with is Germany. They do not sell cheap products; they sell high-end products and do quite well.
Saskatchewan is focusing on high-end quality products that will compete on the world stage and deliver value. We are not about the cheapest product on the shelf but rather about the best quality product.
Senator De Bané: Mr. LaBelle, what is the approximate value of the food export in our country?
Mr. LaBelle: I do not know that.
Senator De Bané: What is it for the province of Saskatchewan?
Mr. LaBelle: I know that. When we talk about food, we talk about anything that comes from the land or has a heartbeat. We export between $7 billion and $9 billion annually.
Senator De Bané: What will that number be in 20 years?
Mr. LaBelle: I have a 30-year background in the agricultural industry, so I am close to it. I am familiar with where production levels were in 1965 and where they are today.
It is easy to suggest that Saskatchewan could see a doubling of our capacity within the decade, and there are many reasons for that suggestion. One is increased prices, but a large reason will be some of the new varieties of grains that have increased yield capacity. I am confident in saying that.
Senator De Bané: There is a strong possibility that Saskatchewan can double its exports in the next 10 years?
Mr. LaBelle: Are you asking about food or all exports? The answer to both of those questions is yes. Whether we can hit $60 billion worth of exports in 10 years is another debate for another Senate committee. It is a logistical issue.
You have heard of the potash growth in Saskatchewan. We will triple our capacity within the next five years. We are very fearful that our railway system will not serve us well. That would be the pinch point; not customers, price or volume. The problem will be the logistics of getting our product to port.
Senator De Bané: What transportation modes are needed?
Mr. LaBelle: About one third of our exports leave the province via pipeline. The other two thirds leave by rail or truck, the vast majority going by rail. Any international product leaves by rail. For instance, lentils are shipped in 20- foot containers because of their weight. It is almost impossible to get 20-foot containers in Saskatchewan. Potash is a bulk product that is loaded at one end and unloaded at the other and is simple to ship. However, there are 27 varieties and grades of lentils, and getting one container into the port of Chittagong in Bangladesh is a challenge; getting 40,000 in is a bigger challenge.
Senator De Bané: I heard a comment many years ago from a Canadian minister of industry. He said that it was a blessing that our neighbour has the richest market in the world. He said that when there is a recession in the United States, the federal government sends Canadian companies to distant markets where they fill their order books with new orders. Then, seven or eight months after they come back to Canada, the market picks up in the United States and they regret having gone because it is a lot easier to work with someone who has the same commercial law and the same way of doing business, and they forget about those distant markets.
Your numbers show that most of our exports go to one country, which is the richest.
Mr. LaBelle: There is a caveat to that. Of our 10 provinces, British Columbia is the least dependent on the American market at about 55 per cent. Saskatchewan is about 60 per cent and everyone else is 70 per cent and above. We have clearly articulated that we love the American market. The nature of business is that it goes up and down. The reality is that we see U.S. growth as incremental growth. We see our real opportunities in international markets.
For instance, Canada sold nothing in Kazakhstan 20 years ago. Saskatchewan is doing an interesting volume of business there today. They had drought there last year, but we are doing some exciting things with Kazakhstan. We are focused on the international markets. India is a prime example of what we are doing. That a small province like Saskatchewan is doing 47 per cent of Canada's business in India is quite profound.
You are right that we refer to the United States as the low hanging fruit. It has a common culture, language, and common law, but the reality for us is that it is not our future. Our future has to be catching the train called emerging markets, where a growing middle class wants to buy better and more productive products, services and food. Saskatchewan has what the world wants.
Senator De Bané: I am a senator from the Province of Quebec. I very much admire the hard-working farmers in Saskatchewan.
Mr. LaBelle: Thank you.
Senator D. Smith: This is more of question born of curiosity than one that is crucial to the big picture. Great food is important, but you need to wash it down. It occurs to me that, over the years, I have enjoyed some fine wine from Chile, some quite good wine from Argentina, even some from Uruguay once or twice, but offhand I cannot recall having any wine from Brazil. Is their wine industry strong? Is it at a level suitable for export? We might have to have a sampling at some point.
Mr. Laurin: I do not know, but if you think the committee could do a fact-finding mission, I would be pleased to join you.
Mr. LaBelle: I am a lover of great wine. I would tell you that the industry in Chile is remarkable, but I do not know of the Brazilian wine industry.
Senator Raine: Mr. Laurin, your association deals with goods and services. Do you have a strategy around the services that were developed in the lead up to and the good performances at the 2010 Winter Olympic and Paralympic Games? Brazil will soon host the Olympic Games and the World Cup. I wonder if you are selling those services. Is there a market for such services? I was excited to find that the last World Cup was played on turf from Manitoba, and I wonder if there is a market for the turf to be developed for the World Cup in Brazil.
Mr. Laurin: These are very good questions. Yes, we do have members that are service exporters; not all of our members are manufacturers. There are many opportunities around the infrastructure work at the World Cup and the Olympic Games. We have been working with our members, trying to connect them with opportunities in Russia, the host country for the next Winter Olympics. They have a need for some of the Canadian capabilities that were developed around the games in Vancouver. We have members looking at opportunities in Brazil.
In terms of CME, we are still trying to see what capabilities the Brazilians need that we might be able to supply. We are interested in that opportunity. As far as being able to supply turf from Manitoba, I do not have any knowledge of that, but that might be an opportunity worth pursuing for those who are in that business.
Senator Finley: Sometimes, as we investigate or do research on foreign markets in other countries, we occasionally learn things about our own country as well. I am extremely impressed by the business model that STEP has followed. Are you aware of any other province that has perhaps looked or talked about this model? Would it be easily transferable to other provinces?
Mr. LaBelle: We have given our full business model to four separate provinces from the East Coast through Central Canada. My background is in business and not bureaucracy, so I may look at it differently. There is a pushback in the bureaucracy that somehow they are giving up some kind of control. We are surprised that in at least three examples they have not moved in the STEP direction, because we are quite successful in what we do. Different national organizations are familiar with STEP because of our bold strategy. To answer your question, many have looked at it, but no one has done it.
Senator Finley: That is too bad. I think it has a lot of merit, and I would like to investigate that issue further.
I know you do not discuss the names of your association, Mr. Laurin, but could you make a selection of four or five that have been successful in different ways in dealing in Brazil, and ask them if they would be willing to speak with us? Four of five companies of different sizes, would be ideal.
I strongly believe in dealing with the people who are actually on the front line. That is not a pejorative remark about associations. I would like to hear about their business model, their problems, what solutions they sought, the difficulties they overcame, and the kind of market opportunities they see. I am not asking for the names. I am asking you to approach them.
Mr. Laurin: I am pleased to make that commitment. As I said, we do have a number of members that have operations or do extensive business in Brazil, so we will make sure we will follow up with them and with you as well. It would be great to hear first-hand experience from companies that are spending a good deal of time and resources doing business in that market. I will be happy to do it.
Senator Finley: I believe there are 17,000 Brazilian students in Canada. Is that the number?
The Chair: It sounds high.
Senator Finley: The number one destination for Brazilian students going abroad is Canada. Do you have any idea why students choose Canada as their first choice? Do you have an anecdotal or statistical response?
Mr. Laurin: I have no idea, but that might be a good reason to invite their association of universities and colleges to testify. I think you might be on to something there. The Canadian Bureau for International Education might be helpful there as well.
The Chair: They are on our list. We will research that figure.
Senator Downe: I want to follow up on your infrastructure. Do you ship through Vancouver, Churchill or through the States?
Mr. LaBelle: The capacity does not go through Churchill. If you are sending pulses and lentils to North Africa or India, you send them out of Montreal. If you are sending product to China, Southeast Asia or Malaysia, you send it out of Vancouver. That is the likely scenario for those two ports. It is 1,380 kilometres one-way and 3,000 kilometres the other.
Senator Downe: Do you ship anything through the United States other than what you sell there?
Mr. LaBelle: We had an opportunity to do a significant volume of business in central Africa, and could not find shipping times out of Canada. We worked with the Port of Houston to figure out how to get product there, but it did not work. The cost was too prohibitive.
Senator Downe: Tell me about these containers you need. There is obviously a lack of competition if you cannot get what you want.
Mr. LaBelle: It is complex. I do not want to bore you with it, but somewhere between Vancouver, Prince Rupert and Chicago, something like 10,000 empty containers pass by us each month. They do not stop because of time and logistics.
Saskatchewan is in the middle of a multi-billion dollar global transportation hub next to Regina. We have relocated CP out of the city, where we are building large capacity in order to get containers to come to a spot to be emptied and where we can have access to them. Saskatchewan is focussing on that long-term strategy. The first building opened about 10 days ago; it is a 1 million-square-foot building, so you can get a sense that this is a pretty serious commitment.
Senator Downe: Tell me about Churchill. Is it not viable because it is too far away?
Mr. LaBelle: First, it is not open many days of the year; it is a dramatically slow piece to get there. This is historic — I am showing my age here; we talked about Churchill for 35 years or 40 years, but we do not see it from a timeliness perspective.
Here is an example. It was typical that we would have a 30- to 40-day window by the time a container left Saskatchewan to get to Chittagong in Bangladesh. Over the last six months, that number has jumped to as many as 80 days. Our reputation as a shipper is not very good right now. It is not just the railway system; it is the ships and access to containers. It is a bigger problem than you can realize.
The bottom line is if Canada and Saskatchewan want to be a bona fide supplier of quality goods and services, we will have a problem with our logistics going forward.
Senator Downe: The backlog is not only with the rail; it is when you get it to the ports. You do not get any further east than Montreal, do you? You do not ship to Halifax, for example?
Mr. LaBelle: We spoke with the people at the Port of Halifax in Saskatchewan in January to have this conversation. There is a railway link from Montreal to Halifax but we have not researched it very well. There is quite a price jump when you move from Montreal to Halifax, in terms of the shipping cost.
We are working with the Port of Halifax to define a manner in which we can access it. We know there are 600 20- foot containers that leave empty every month because they cannot do anything with them so they send them to the east coast of the United States. We are working on solutions to these dilemmas.
Senator Di Nino: Mr. LaBelle, in the previous study — I think it was the China study — we heard from witnesses that the labour disruptions at the ports create an impediment for efficient delivery of products. Do you have the same comment?
Mr. LaBelle: That is absolutely true. We have examples in the potash industry, where potash companies have set up large warehouses in Portland for that reason. It is a common scenario when there is a threat of a strike on the West Coast that ships are diverted hourly. This is an ongoing issue for us.
When you see the Port of Vancouver and some of the great things it has done over the years, and then you go to China and see some of the ports that exist there, they make us look so humble. We talk about the gateway to the west; I challenge that we are not very aggressive, progressive and proactive when we think about ourselves as global traders.
Senator Dickson: I am just a visitor to this committee. I am a senator from Nova Scotia and, like Senator Downe, very interested in your organization, Mr. LaBelle.
In reply to Senator Finley's question, you discussed your structure with four provinces. Would one be Nova Scotia?
Mr. LaBelle: One is called Nova Scotia Business Inc., which we think is a great organization. We talk to them on a regular basis. They come and visit us, by the way.
Senator Dickson: I would imagine. Why have they not adopted your structure and moved forward? Sometimes we do not like success.
Mr. LaBelle: I certainly do not want to be disrespectful because they work very hard. However, my background is in business and my life is simple — trying to understand how to get bigger, better and how to do it profitably. For the life of me, I cannot figure out why the rest of Canada has not looked at our model and replicated it.
We replicated ours from the Hong Kong Trade Development Council, which I think has 900 employees today and is a global leader. We think we are pretty good, but we are nothing compared to what we define as one of the greatest leaders in the globe.
I am not trying to be smart when I say I do not know why they have not adapted it.
Senator Dickson: A long time ago, I was involved a little bit in politics, although never elected. I recall, probably 25 years ago, that the Government of Nova Scotia thought of having a trade export department, where one minister got all the trips and really focused on trade. Needless to say, it did not get through cabinet, because there were several other people who liked to go on trips as well.
In any case, it has been tried; but I am really impressed with the outcomes you have had in Saskatchewan. I am sure that Senator Downe and I will carry a strong message home to our premiers that in the context of maritime cooperation — it may even be Atlantic cooperation — if we all got together, we might be able to come out of last place and gradually move up.
What is your experience with the export of services? I noticed on your chart here, it is energy.
Mr. LaBelle: I will give you an example that I think fits well with today's discussion. We spoke of Brazil, and we have a strong working relationship with Chile. Why Chile? They happen to be very big in the mining business and so are we. We sell extensive volumes of technology and science to Chile on a regular basis.
Many of you, I am sure, are aware of the cave-in that took place. We have some technology and science that we are working on with the Chilean engineering groups that can predetermine cave-ins. We have a certain expertise in ground geography and geology to make sure it is safer. That is a service application where we sell a service product to those parts of the world. There is a broad service complement in what we do.
One of the questions earlier was around the complexion of the companies at CME. STEP member companies range from mom-and-pop shops to global companies. We have a broad cross-section of all of them and we have a strong working relationship with them.
I will end with your comment about ministers going on trips. We are pretty real in what we tell our government. We do not need government assistance; we do not need political assistance in any Western culture at all. Where we need it from time to time is where governments play a strong role in the economy.
Not many politicians come with us, but sometimes we go directly to the premier and say we need you, and this is the reason why. That gives you some examples. We are pretty specific in our needs.
Senator Dickson: I notice in the Province of Ontario, some of the medical professions are selling services offshore. What opportunity do you see for Saskatchewan, considering it was the founder of our medical care system, with Mr. Douglas? What do you see as the opportunity, if any, for selling medical services offshore?
Mr. LaBelle: It is interesting.
Senator Dickson: And reinvestment back in Canada in one way or the other.
Mr. LaBelle: It is being explored at different levels. For instance, on the logistics of planning the health care system and keeping track of patient information and so on, we have a number of companies in Saskatchewan that deliver that service globally. I am not sure if I am answering your question, but those are some of the things we do on a regular basis.
If you go to our web page, we get about 200,000 hits a month. All of our members are on that web page, so in fairness to what CME does, our members are very much there. If you want to find out who sells lentils, type in the word ``lentils.'' If you want to find out who sells health services, type in ``health services'' and you will find companies that will deliver that kind of service.
Senator Downe: Following up from the comments of my colleague, I am intrigued. I think the committee may want to consider, at the time we are concluding our report, whether this STEP model is transferable to the Government of Canada and we can have this public-private partnership; because even withdrawing potash and oil from your statistics, the STEP model has been a tremendous success in Saskatchewan. You have driven up your exports, and, as you have indicated, they are the highest per capita in Canada. That speaks for itself.
The Chair: You said that it is a public-private arrangement with ministers and premiers when you need them; however, it took a non-partisan attitude in Saskatchewan. It has been an evolution of survival in Saskatchewan, changing the attitude of how to do business and who should be in it. Government has paved the way to make this work. In other words, you captured the politicians first before you created the model.
Mr. LaBelle: You hit it on the head. In Saskatchewan, STEP is well liked on both sides of the pew because we are absolutely transparent in what we do. We offer to meet with those caucuses on a regular basis to explain what we are doing and why. You are right that the buy-in is very strong in our province.
The Chair: You see the enthusiasm for your testimony today. You are aware of the follow-up information that we have requested. I will read into the record that in 2008, approximately 17,000 Brazilians came to Canada to study. We have yet to explore why and how, and we will do that.
Senator Finley: There was not a decent soccer player among them, I will bet.
The Chair: I will not respond to that comment.
I have one question. If it is so difficult to do business, why is everyone else energized about going to Brazil? Some of the energy is from businesses and governments because they see Brazil's strategic importance in Latin America. Neither of you touched on whether you see Brazil as a gateway to the rest of the market or a leader in perhaps looking at trade agreements and policies in the region that would be beneficial for international trade.
Mr. LaBelle: I will answer from a Saskatchewan perspective. The Brazilian model is to encourage manufacturers to come to Brazil and then to begin to sell their products in Brazil. The Saskatchewan model is to sell products in a country to define whether there is a capacity or volume that warrants the building of a facility. It is big versus small. The large multinationals are going to Brazil and building capacity there because they have confidence in their product and the market. That is not necessarily true of us. We do not necessarily have confidence in where the market will go. Capital expenditures are not being considered because we are just not certain. I argue that is the biggest impediment for us today.
Mr. Laurin: I echo Mr. LaBelle's comments. I emphasize that there are strategic opportunities for Canadian businesses and specific industry sectors in Brazil. I mentioned, forestry, mining and mining equipment, the automotive industry and the infrastructure sector. I am generalizing, but we have members who export directly to business and are successful and see that as a strategic part of their business, but the model has been more along the lines that Mr. LaBelle described. Many companies have seen Brazil more as an investment opportunity and, in many cases, as you mentioned a gateway to the rest of South America, more than as an actual export opportunity. The model has been encouraging, but that might be changing to encourage companies to invest in that market. It is a large and rapidly growing market and some Canadian companies see that as an opportunity. I will refer some of them to you, and you can have them testify before this committee. From CME's perspective, we are trying to encourage both. We support companies that want to invest in Brazil, while working to eliminate some of the trade restrictions so more companies can export directly from Canada to Brazil.
The Chair: Mr. LaBelle and Mr. Laurin, thank you. Your testimony has been extremely helpful to our study.
(The committee adjourned.) |
