International Trade Committee on Oct. 20th, 2011

[Edmond Chiasson]

Actually, I think that was Bruce's comment, but I'll say this, though. We have also worked with the Ontario government and the Province of Alberta, who have officers on the ground in various jurisdictions, and I have to admit that it has been our experience that they are pretty well coordinated. So the more people on the ground that are representing Canadian interests, the better.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

And on the product launch, because I think product launch is important, and Canadian brand and development of that....

[Bruce Linton]

One example, and I apologize if anybody's heard it before, as I'm giving it for about the twentieth time, is that we're regulated by provincial legislation because we're in municipal infrastructure. And when I'm in Chongqing, China, and am trying to explain our political structure, where our water is one guy's responsibility and the fish another's, it doesn't make a lot of sense.

When I think of a product launch and packaging for export that would speak to your provincial level, having references on adopted and proven Canadian technologies is very helpful. Any interaction from the federal to the provincial level so the trade commissioners and the companies would have a provincial-federal letter saying this company is a company in good standing and they have had operating systems for x number of times.... But what we usually get is a letter confirming the absence of negatives. When the letter says, to our knowledge there are no problems with this system and to our knowledge this system hasn't failed, that is not helpful when you're trying to export.

No. We need both the federal and provincial governments to come together and have a positive letter, and you would be amazed that it has not yet been possible to get that after two years of requesting it.

[Gerald Keddy, Conservative, South Shore—St. Margaret's, NS]

That is an interesting point. It sounds like there's a little hiccup somewhere in the bureaucracy, and it's probably something we should all follow up on.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Shory.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Thank you, Mr. Chair.

Thanks to the witnesses. It seems that all of you are passionate, successful businesses with the assistance of TCS—or that's what I hear.

I heard Mr. Chiasson talk about how things can always get better. Mr. Shah also made a comment about how small- and medium-size businesses should be assisted as well.

We all understand, I guess, that 98% of the businesses, with all of that employment, are small or medium size businesses. We believe that the success of businesses lies in opening more markets. That's why, I believe, our Minister of International Trade has always said that trade is a kitchen table issue. We are working very hard to open new markets for other businesses as well.

You can appreciate that this government, in the last five years, has signed quite a few trade agreements—I believe nine—with other countries, whereas we see that some of our colleagues in some parties oppose free trade.

Would going into new or emerging economies such as China, India, Brazil, etc., and having access to all of these markets help your companies and other businesses to expand and to hire more workers, or would it hinder them?

[Hemant M. Shah]

It will always help when you go into a new, emerging market. If you look 20 years ago, China was the main market. Then the focus came on India. Now everywhere the focus is on India. It's not only Canada, but all around the world everybody wants to be in India right now.

Coming back to the TCS, when you have been in a market for the last 20 or 30 years.... When I used to travel to India, when India's economy was closed, there was 150% duty--the “licence raj”, we used to call it--and we exported during that time. But my suggestion here, or my point, is that the companies who are very successful in India today established that route, that joint venture or office, 30 years ago. Take the success from there. Use them as success stories when you are on a trade mission or doing a webinar. During missions the local trade commissioner calls the export people in India, but they should invite the successful companies that have done business in India over the last 30 years.

To answer your question, sir, you are correct: it will help. In an emerging market, you're going to create more jobs, and you're going to create more jobs in Canada. You're going to create more jobs in India and here. In both countries it's a win-win situation today.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Does anyone else have an answer?

[Bruce Linton]

I don't want to monopolize the discussion, but when we describe our company, we describe ourselves as having made a choice in 2009 to be from Canada. Our priority was to go to the emerging markets where GDP growth still existed. So I think any bridge that gets you from Canada, with the credibility of being Canadian, into those markets where there still is GDP growth at a real rate is helpful to the Canadian point of origin.

We have had no experience trying to use trade commissioners in the existing developed world. I'm thinking that if you were to add more senior contacts to the trade commissioner's resumé in the emerging markets.... In Ecuador, for example, our trade commissioner is a very senior person; the in-country person is very well-networked. That's probably more helpful in developing economies than in developed countries, and it might be an attribute of the seniority you'd seek in those trade commissioners.

[Devinder Shory, Conservative, Calgary Northeast, AB]

Good.

We have companies here that are quite young, one that's six years old and another that's 140 years old. I can see the variation.

But tell me, when you get in touch with trade commission services, do you need them for just the initial contact or do you need their services on an ongoing basis?

[A voice]

Good question.

[Jean-Michel Laurin]

It depends. To give you an example, yesterday one of our member companies contacted me. They're trying to deal with the REACH regulations in the European Union. I put them in touch with a trade commissioner in Europe, who's knowledgeable about these regulations, so they can figure out how to get their product certified and available for sale in Europe.

Some of those services are very transactional; some are a lot more relationship-based. We heard about some of them today. It can take time to build a relationship with someone, but once you have that, he or she can open up several new doors for you, especially in countries like the United States. We heard a really good example of that today. I think that is type of service we see becoming more valuable going forward; it's more than simply a transactional service. In the United States, we're usually more familiar with how to manage risk in the markets there, but there is a lot of things that only a government trade commissioner can provide. In other words, you can't get that in the private sector. To have someone on behalf of the Canadian government opening doors for you and acting on your behalf can do wonders.

As I mentioned, we've been around for 140 years as an association. It used to be the case with the trade commissioner service that we would charter boats and take trade delegations across the Atlantic. I think things have changed quite a bit over the years. Now it's not necessarily so much about only promoting Canadian exports abroad, but I think that a lot of it also now involves helping Canadian companies invest in other countries and attracting foreign investment to Canada, especially with the large multinationals based in the United States and Europe.

A lot of the work the trade commissioners do in the United States that I'm saying is relationship-based involves maintaining that relationship with large multinationals based in New York or in Minnesota, or wherever, and making sure they keep Canada on their radar screens so they will further invest in their operations and sustain jobs here in Canada.

[The Chair, Conservative, Rob Merrifield]

Thank you.

Go ahead.

[Chris Clarke]

If I may speak briefly, my experience has been that we do both. If I have travelled to Boston to make a presentation and have made a point of making an appointment ahead of time with the ITC there to sit down and have a quick meeting to talk about whom I'm going to be meeting, it has been very helpful. If there doesn't seem to be a real business potential there, that's the end of that branch of the relationship.

On the other hand, I've had very good ongoing and long-term relationships, particularly in San Diego and Washington, D.C. In those cases, the trade commissioners there have been able to really help establish business relationships for us with companies and government agencies. What has really impressed me about these longer-term relationships is that the company on the other side, or the government agency on the other side in the U.S., is so receptive to the ITC in the relationship. I've realized over time that it's because it's not simply about a push, that is, pushing Canadian companies toward the U.S., but it's such a helpful and productive and efficient system, from what I've seen, that these U.S. companies also effectively become clients of ITC. They know Canada as a country of innovators and small companies, and the large U.S. companies in particular will say, “Listen, I'm looking for technology in this field. I have a mandate to do this. You've helped me by bringing me these guys. Who else do you have? Do you have something for this?”

That has been very effective for us. It has been very good for Canada that ITC has been able to dig back and find companies to push into these U.S. opportunities, but that two-way relationship really allows for strong communication when I do go out and talk to one of those businesses. The door is open for ITC.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

You have had your time and then some. Ms. Moore.

[Christine Moore, NDP, Abitibi—Témiscamingue, QC]

Thank you, Mr. Chairman. My questions are for Mr. Laurin and Mr. Clarke.

I am interested in everything involving public safety and defence technologies. It is an area of trade that is very specialized and that ties in with high tech. When all is said and done, it is governments that are the customers. It is a market that is extremely dependent upon the state of the global economy.

I would like to know what services you offer or how you go about assisting companies when the field in which they are engaged is directly linked to the state of the global economy.

[Jean-Michel Laurin]

I will start off.

Our association offers a variety of services to those companies that are members of our organization. One element of these services consists in being here today to represent them. We also have offices in each of the provinces throughout Canada. We help businesses share best practices. In fact, what we see is that private businesses often experience similar problems. Indeed, we have observed that a business involved in the defence sector can learn a lot from a business active in the field of infrastructure or renewable energy. For example, if the idea is to sell to governments in India, I am convinced that a businessman like Bruce would have recipes and good advice to provide to companies wishing to develop that market and who are involved in other sectors, such as that of defence.

Our role is to facilitate these linkages, this sharing of best practices. It sometimes happens that specific problems have to be resolved. We regularly, if not daily, receive calls from members facing problems in foreign markets. Our work consists mainly in linking them up with the right people. This is why, on a daily basis, I send business representatives to trade commissioners from all over the world. Often times, it is they who are in the best position to help these businesses.

I am less familiar with the defence and security industry. You might want to invite its association to appear before you. We do however have several members from that industry and I can say that several of them regularly call upon the services of trade commissioners. As you mentioned, they do so mainly because they are selling to foreign governments. A good portion of their clientele is government-based. It often proves very useful to be accompanied, during meetings, by a trade commissioner, when the idea is to sell to a government.

EDC also plays a very important role in a good many foreign markets. There is also the Canadian Commercial Corporation that facilitates the negotiation of contracts with governments. The government therefore does not just offer the Trade commissioner service. There are also other services available to exporters with specific needs.

A good portion of our role is to facilitate networking, the establishment of linkages between our Canadian member companies and the right resources on the ground. Indeed, it can take some time for a company to find the best trade commissioner in the world to help it develop such and such a market or resolve such and such a problem. The solution, as we were saying earlier, can sometimes be found at the provincial or municipal level. In short, our task is to connect businesses with the right resources.

[Chris Clarke]

I guess that was partially directed towards me.

You're right it is a complex sale. It's a long sale cycle. The defence and security industry is quite specialized and the ultimate customer for our equipment is government. So what we've had the benefit of, in Washington, D.C., in particular, is a trade commissioner focused on defence and security. We have had Rich Malloy and then Angela Dark and a successor since then.

We've essentially had a two-pronged attack with them that has been somewhat successful. One is that the commission there organized several partners-in-security trade missions with symposiums and events at the Canadian embassy. Those were very helpful, very productive. Part of the market intelligence that we received from the trade commission was that a small Canadian company like ours was going to have real difficulty with a sales process to government in the U.S. Effectively, the message was that it's not realistic.

We were given help in identifying U.S. channel partners. That's exactly what this partners-in-security trade mission was about. To establish credibility in the U.S., it is wonderful going in with the Canada brand and hand-in-hand with someone representing the Government of Canada. But there's more to it than that. For my technology, we need credibility on the technological side as well as the security side. The staff in Washington organized several meetings with members of the Department of Homeland Security domestic nuclear detection office. That has been very helpful and they have since visited us in Ottawa and seen our installation here. It has led to simple and easy conversations when we meet potential new clients in the U.S., who ask, do you know so and so? Yes, we have four contacts in DNDO. They know all about us, because we met with them in Washington. It's been very effective.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Hiebert.

[Russ Hiebert, Conservative, South Surrey—White Rock—Cloverdale, BC]

Thank you.

I'd just like to follow up with Mr. Linton, and then I have a general question for the others.

Mr. Linton, you said you'd like to see the TCS focus on outcomes, on securing contracts. Do you think that is a realistic way of assessing it, and how would that look? I'm sure in some countries it might be easier to secure contracts where there are more established relationships. I'm trying to figure out whether that is a fair measure of the service that's provided. Or do you see it as an additional measurement to determine whether or not they're doing the best job they could? That's question number one.

For my second question, also for you, you talked about a letter from the government. What kind of content would you see in that letter? You talked about having positives. Are they simply saying that this company was founded on such and such a date? There's limited ability for governments to promote, unless they've had personal experience. What can you put in a letter like that?

Those are my first two questions.

For the rest of the panel, starting with Mr. Chiasson, you talked about other countries coming to you asking your company to invest in their countries. It got me thinking, what do you see other nations' trade service individuals doing that we should be doing here in Canada?

The floor is yours.

[Bruce Linton]

It's probably a selfish measure in terms of the objective of a small business exporter. I think it is an incremental measurement of how one could measure trade commissioners. But it would give an orientation to their organizational structure and procurement processes of the end client. I don't know if you could measure it at that level, or in terms of outcomes.

I think the measure of past and current trade commissioners is their knowledge of what the companies coming in do, and their knowledge of the broader market with respect to the problem you might solve or the benefit you might bring. So you end up at the door of the customer. They may or may not have some contacts with that potential client. I'm encouraging placing a priority upon keeping a current organizational chart of the water board, if the municipal government is one of the purposes or targeted clients. That matters because you would probably begin the process of introducing your solution to the end client higher up, and sooner than we necessarily do now.

Regarding the letter, my assumption is that the letter references domestic suppliers, so most of the Canadian exporters aren't necessarily trying to find their first customer outside the country. It's for those that already have resident reference sites, which we've had for 20-plus years in Canada. We have reviews by the regulator confirming that the system operates. I'm looking at generating positive references for companies going into the market—and you'll see this if you look at what Australia and Germany do. What you want to do, when the person buying the system fills the folder saying why they bought it, is to use the red and white camouflage that's possible. That letter acts as red and white camouflage to confirm that a small company from Canada has a good system. “Small” from Canada is considered minuscule when I'm in India or China. Because of this concept of scale, we never ever want to represent a 50- or 20-person company as too unimaginably small to buy a big system from.

So those would be the two additions to make. I offer them in a very positive way.

I like what we do; I just want more.

[The Chair, Conservative, Rob Merrifield]

Mr. Chiasson.

[Edmond Chiasson]

I think something we're learning as a company is the expectations we should have when dealing with our trade commissioner service. That's a very fair question.

I actually couldn't sleep the other night, so I looked at the testimony of some of the previous witnesses who appeared before this committee. I saw that Mr. McGovern spoke about the value of relationships and about how the trade commissioner service really tries to maximize the value of those. That gets difficult when you are expecting someone, in some office somewhere in our case, to actually say, “We're going to help your company convince this local market that you're the greatest thing in the world”.

I think part of what could be done early on, for companies that deal with the trade commissioner service, would be to set a reality check of expectations with regard to what's really possible and doable. They can give strategic advice. They can understand local market conditions. In my view, they could be stronger at understanding public policy, which is something that's really a matter of their training and doesn't have to do with the sales cycle, and which can be extremely important to a company such as ours working in environment and energy.

I think it would be very fair to have a sense of the expectations, because I agree with you that at the end of the day, we have to sell our own value added. I made the point about the Canada brand; I think any effort to bring that to the table is extremely helpful.

In terms of other countries, I just raised it because I've had personal experience. The U.K. and France called us up and brought us in. They had done a lot of homework about our company, and they actually said, “We want you to come to our country and make an investment and participate in our communities and create jobs”.

So I'm just asking, because I don't know, are we doing that in Canada? That may be something we should be looking at.

[The Chair, Conservative, Rob Merrifield]

Very good. Thank you very much.

Mr. Côté.

[Raymond Côté, NDP, Beauport—Limoilou, QC]

Thank you, Mr. Chairman.

To begin with, I am truly sorry that the witnesses had a mistaken perception of our position regarding free trade. I was compelled to correct the situation this week, with the European ambassador. I told him that we were in favour of the principle, but that we had different solutions to the same problems.

We are hoping that we will be able to move forward alongside all of our House of Commons colleagues and offer solutions or proposals that will provide us with the best possible agreement, be it with Europe or with other countries. We are working in the same direction. That being said, I now address myself to Mr. Shah.

I was very interested by your statement regarding small businesses. You said that the Trade commissioner service should focus more on small and medium-size business, perhaps even devote itself exclusively to it. I took you at your word. I hope that I have not misinterpreted your thinking.

Mr. Laurin, I do not know if you have received any complaints of this nature. Small and medium-size business managers have on occasion complained of being unfairly treated during trade missions compared with larger companies.

One must not hide from the truth. Even if Canada is a rich country, our resources are relatively limited. We cannot throw money out the window just like that.

Mr. Laurin and Mr. Shah, do you believe that the Trade commissioner service should concentrate more on small and medium-size business, even if it means excluding certain categories of companies? I am thinking of companies that have more than enough means to represent themselves throughout the world and who, more often than not, have well established activities worldwide.