CIIT Committee Report

From June 3 to June 14, members of the House of Commons Standing Committee on International Trade conducted two separate fact-finding missions to some of Canada’s major priority markets around the world. One group traveled to the Arab States, specifically to Saudi Arabia, Yemen and the United Arab Emirates (UAE), and to Brussels in the European Union (EU), while the other traveled to Southeast Asia — Singapore, Indonesia and Vietnam.

Why did we choose these regions?

There are a number of reasons why the Committee chose to travel to the Arab States, Southeast Asia and the EU. First, Canadian businesses and the Department of Foreign Affairs and International Trade (DFAIT) have both identified these regions as priority markets. During the Committee’s recent hearings on Canada’s trade policy, business leaders in particular stressed the need for the Committee to visit the Arab States and Southeast Asia.

Their reasons for doing so were simple. The Arab States and Southeast Asia are dynamic, fast-growing regions with considerable economic potential, but where Canada’s presence is below what it should be. It is precisely in markets such as these where the prospects for expanding trade and investment are the best and where a visit by the Committee on International Trade would have the greatest positive benefit.

To be sure, there are larger markets out there. Some may wonder why the Committee did not travel to China, India or Brazil — the three largest developing economies in the world. Part of the reason is that there is no shortage of information about those countries. Litres of ink have been spilled in analysis of the economic opportunities and challenges in China, India and Brazil. Far less is known about the Middle East and Southeast Asia.

Furthermore, the Committee has conducted studies in the past five years that have seen it travel to all three of the largest developing economies. Of the countries visited on these most recent trips, the only return visit was to Singapore.

It is also worth noting that Canada is already engaged with China, India and Brazil. By contrast, government-level contact with the Arab States or much of Southeast Asia has been more limited. Indeed, during our trip to Saudi Arabia, we learned that our visit was the first by Canadian Parliamentarians to that country in four years. In our view, a trip to the region was long overdue.

Purpose of Travel

The purpose of our trips was to raise the profile of Canada in these markets and to work towards improving trade and investment linkages. To that end, we had several specific objectives: to learn about the economic opportunities in these parts of the world, as well as the unique challenges in each country; to help build stronger government-to-government ties; to open doors for Canadian businesses; and to send the message that Canada is interested in doing business.

Unlike most other Committee travel, these trips were not associated with a specific Committee study. Rather, they are a direct result of one of the key findings in our most recent major study, Ten Steps to a Better Trade Policy, presented to the House of Commons on May 1, 2007.

One of the conclusions of that report, the result of months of testimony from Canadian stakeholders and foreign government representatives, was that the Government of Canada plays an important role in improving trade and investment ties around the world. Specifically, the government needs to be more active internationally. It needs to greatly increase the number of high-level official and political visits to key markets around the world, as well as to make a stronger effort to invite official delegations and foreign political leaders to Canada.

This message runs counter to conventional wisdom and practice in Canada. Canadians are not used to thinking of their politicians as trade and investment promotion agents. Many Canadians see trade and investment as the exclusive domain of business; governments are responsible only for creating and regulating the environment in which international commerce takes place. Any international government travel that extends beyond that narrow scope is often criticized as being a wasteful political junket.

This view may be common in Canada but, as we learned, is not widely shared around the world. Over the course of its hearings on Canada’s trade policy, the Committee was struck by the frequency with which it heard the message that in many of the world’s most dynamic economies, there is a critical role for governments to play in trade and investment promotion. We need to be sensitive to these cultural differences in how business is conducted around the world. To ignore them does a great disservice to Canadian businesses and limits the long-term growth prospects of the Canadian economy.

Moreover, the view that political travel is wasteful is also not shared by the Canadian business community. Business associations and leaders repeatedly asked us for our help. They were adamant that if government officials and elected members enhanced their physical presence around the world, improved trade and investment linkages around the world would follow.

One of the most important ways in which trade and investment links are forged is on the foundation of closer political ties. Trade and investment in many countries is built on relationships; not just business-to-business contacts, but government-to-government ties as well. Frequent government contact, whether at the political or executive level, not only builds goodwill and trust, but also sends an important signal: this relationship matters.

Unfortunately, the relative absence of such government contact has meant that Canada is inadvertently sending specifically the wrong message to many countries around the world. As stated in Ten Steps to a Better Trade Policy, we heard that “[B]y not actively traveling abroad to cultivate stronger relations, Canadian Parliamentarians are signalling that Canada is not interested in building closer economic ties around the world.”[1]

Canada’s international competitors have been quicker to learn this lesson and are profiting as a result. Countries like Australia, Spain, France, the UK, China and others regularly send delegations abroad to promote their businesses and to build government-to-government relations. We learned, for example, that Spain sent 42 delegations to Saudi Arabia in 2006 alone. Evidence of Canada’s interest in building economic ties with that country came in the form of a single trip consisting of two companies.

Structure of the Report

This report is divided into two sections, corresponding with the two concurrent trips undertaken by Committee members.  The first section is the report of the Committee members who travelled to the Arab States and the European Union. It provides an appraisal of the opportunities and challenges in those regions and also includes policy recommendations to the Government of Canada on how economic relations with each might be improved. The second section of this report does likewise for the trip by Committee members to Southeast Asia.