International Trade Committee on Oct. 20th, 2011

[The Chair, Conservative, Rob Merrifield]

Mr. Laurin.

[Jean-Michel Laurin]

As for cases of supposedly unfair treatment of SMEs, no such case has ever been reported to me.

In my view, it would be a bad idea to use the size of a company as a criterion for the provision of a service such as that offered by the Trade commissioner service. If criteria must be set, they should reflect the fact that the company calling upon the service is financially healthy enough to have a reasonable chance of winning contracts internationally. In other words, it should be ready to export, it should have a business plan, resources and innovative solutions.

There are countries that do this. Australia, for example, works with our equivalent, the Australian Industry Association, in view of the preparation of export readiness reports. This is a test used to verify if the company is truly ready and if it has a solid enough financial footing to be competitive on the world stage, no matter what its size, whether it be a small, medium or a large business.

If there were one criterion to choose, it would be that the business by ready. If it is not, then it would have to be provided with adequate services in order for it to improve its competitiveness.

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

I must admit that I was very happy to learn that the services are very good and that you speak highly of the Trade commissioner service.

However, if you will allow me, Mr. Laurin, given that there is a cost to the taxpayer and given the resources of some categories of businesses, it seems to me that there is duplication. Some companies are being allowed to call upon services that they would have no difficulty paying for on their own. You see what I am getting at?

This is why what I had in mind was a rational use of these resources.

[Jean-Michel Laurin]

We live in a world where competition is quite fierce. I often hear it said that in Canada we are at a competitive disadvantage given the fact that companies based in other countries have access to more resources. The equivalent of the Trade commissioner service in these countries disposes of much greater resources and means.

I was talking about Australia, which is a good example. There are other countries as well that, for example, share in the costs relating to the development of marketing materials for the export market. They also share in the costs and risks related to the participation in trade fairs in foreign countries. Canada has had similar programs in the past, but cuts were made several years ago.

We must look at the situation of most of our foreign competitors. Let us look at the United States. President Obama has made a commitment to double exports between now and 2015. A lot of resources are thus being made available to American exporters with a view to developing export markets.

It is therefore important that we continue to have these services. The government must continue to provide them. We could perhaps have discussions as to the way of improving these services, but it is important that this access be maintained and that this be done at the current rate.

[The Chair, Conservative, Rob Merrifield]

Thank you.

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

That is all for me, unless Mr. Shah would like to say a few words.

[The Chair, Conservative, Rob Merrifield]

He may not have understood or heard, because his translation was not on.

[Hemant M. Shah]

Bruce gave me what you were saying. Thank you very much. We are short of time, but we can talk about it.

Again, regarding small- and medium-size businesses, I heard my friend here say what other countries are doing. Let me tell you, Canada is blessed by people like me who have come from different countries: use them as trade ambassadors.

I expanded trade between Canada and India, because my motherland is India and my adopted home is Canada. That is how I made the bridges. This is what the trade commissioner services is doing a great job at; they're using these people. I've travelled in Saudi Arabia and in Vietnam, and they use the people from those countries. I don't care if the U.S. is spending double on expanding its exports to, and resources in, Australia.

Canada has a great trade commissioner service, and I think we should focus more on small- and medium-size businesses. Large companies have lots of money, and lots of taxpayers' money. They will make it themselves. Small- and medium-size companies need more attention.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Shipley.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Thank you, Mr. Chair.

I want to thank Mr. Shah for the last statement. As a government, that is clearly a significant point, in looking at the fact that 95% of our companies are small. Those are the ones that are hiring most of the people. I really appreciate that comment.

The other point I also wanted to touch on is this. When you have recommendations, I hope that we can hear about them when we're doing our study. I'm not looking for a hundred, but we are looking for a consolidation of priority recommendations, because I can tell you, the witnesses, that you are the envy of many agencies that sit at the witness table, in telling them how they are used and in making recommendations directly That is encouraging in terms of being able to bore or narrow down on how we can make the service better. Those are the things we're really interested in.

The other part I'm interested in is your comment about how the market is a world. I have a question to each one of you. How much of your market is domestic? How much is international? We've been working on trade agreements. As you know, we're looking at another 40 or 50 trade agreements. How much of your business success will be dependent on our doing new trade agreements?

Secondly, regarding the value of the Canadian brand, which than one of you have mentioned that, I have a quick story. A small business in my riding was making a product, and they were struggling. The owner said that he could not believe that when they put the Canadian flag on the back of the product, so that anybody on the road could see read it, they sold the product. It made a huge difference. I asked him why that was so important.

So my question to you is why the Canadian brand is so important to the success of your business in the international world.

I want to start with Mr. Clarke, and then Mr. Chiasson.

[Chris Clarke]

Right now, I would say our revenues are approximately 50-50 domestic and foreign. For the security market, the standard rule of thumb is that 50% of the world market is the United States, and 50% of the rest is the U.K. I think Canada already has very well-established trade agreements with the U.K. and the United States. So that's really what our success will rely on: trade with the United States and the U.K., and vastly more so than sales within Canada.

In terms of the Canadian brand, there are a number of aspects. Some of it is genuinely a gut feeling that people from other countries have. Canada has been a very strong international player in peacekeeping, politics, and the United Nations. On the trade side, Canada has an established reputation of being trustworthy and having good intellectual property controls. An important aspect is that historically, when the TCS have spoken up and vouched for a company, it has in fact been a solid company. That's really what's behind the value we have seen in the Canadian brand.

[Bev Shipley, Conservative, Lambton—Kent—Middlesex, ON]

Mr. Chiasson, do you have any comments?

[Edmond Chiasson]

We're still not making any money, but we're big thinkers, and we think we'll eventually make a lot of money.

[Voices]

Oh, oh!

[Edmond Chiasson]

When we look at the world today, we believe that Europe and China will be the large markets for what we do, which is the creation of innovative energy from waste technology, because they need to upgrade their infrastructure. In Europe there's a strong push to reduce waste in landfills and to bring in much better systems.

On the brand--to support what Chris said, which I thought was well articulated--Canada's environmental standards are particularly important for us. There's a sense that if you've gone through Canadian environmental assessments and regulatory frameworks, that's a very high standard that speaks well about what we do.

I'll leave it at that.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Cannan.

[Ron Cannan, Conservative, Kelowna—Lake Country, BC]

Thank you, Mr. Chair, and thank you to our guests here this afternoon.

First of all, we're celebrating small business week and the year of the entrepreneur. When my colleague Mr. Moore was the minister of small business and tourism, I know he was a strong advocate for small business as the economic engine that drives the economy.

Coming from a community in the Okanagan Valley in the interior of British Columbia, we have several small manufacturers. We have a fantastic trade commission that we utilize to help in the aviation industry, in forestry, and in trying to get our wine to other parts of the country--and not only Canada, but abroad. I thank you for sharing your stories here this afternoon.

As you know, there hasn't been a more active Minister of Trade than Minister Fast. In his five months in the portfolio, he has been to South America a couple of times. He visited Honduras with the Prime Minister recently. He just came back from China. He was in Japan and Morocco. As you know, it's important to have feet on the ground and to have the minister's representation. So that's fantastic. He's also working on the EU trade agreement and the other nine agreements we'll have in place in six years. So we're definitely opening markets, and we thank you for taking advantage of that.

But there have been discussions. As you know, we're looking at the global economic crisis and at our own fiscal house and are trying to look at achieving 5% reductions within the different ministries. We've heard a lot about spending more money, but can we find a way to utilize our resources more efficiently?

There's the cost-recovery model Mr. Shah alluded to for larger businesses. For SMEs, we generally talk about having over 500 employees. That's maybe 2% of the companies in Canada. So the other 98% would basically have the services provided for free.

Is that what you're alluding to as a cost-recovery model for the trade services, Mr. Shah? Does anyone want to answer that, or venture down that way and give some suggestions to the government about how we can be cost efficient?

[The Chair, Conservative, Rob Merrifield]

Mr. Clarke.

[Chris Clarke]

I think there are a couple of interesting ideas that have been put forward here about the difference between the needs and the abilities of SMEs. My particular emphasis is on the SEs. I think it's very important that Canada supports all of the companies in the country. It's critical to the success of the TCS and the relationships that TCS can build. However, I think there are some costs that could be adopted by the larger companies. That would perhaps allow some of the cost reductions you're looking for, but still support the growth of the small businesses, which are really the employers of the country.

[The Chair, Conservative, Rob Merrifield]

Mr. Laurin is next, and then we will go to Mr. Shah.

[Jean-Michel Laurin]

It's a good point. When you talk about large companies, the services they require are often different. For example, when the French trade minister goes to meet with his counterpart in a foreign country, the ambassador and some trade commissioners will be alongside him making the point that the French company is doing a great job and would be a great fit for what the country needs. Do you want to start charging a Canadian company for a phone call that a trade minister might make, or for a good word that an ambassador might put in when he meets with officials in a foreign country? It's hard. A lot of these services are relationship based.

I'm not sure, but maybe it would be interesting to look at what other countries are doing. I think if the trade commissioner service is looking to raise revenue, it could possibly look at expanding its services beyond what it does right now.

I know that the Swedish trade commissioner service, for example, has people on the ground acting almost as sales agents for companies. For very small companies that don't necessarily have the means to hire a full-time staff person in a target country, they can use the Swedish trade commissioner service to do that. I'm sure there are other examples where that's the case.

I think it's dangerous to go down the road of charging for services that are already provided. The needs of small and large companies are different. Other countries are providing these services that we're getting free of charge, as well. Going forward, it's a discussion that we probably need to have, but I think we have to be very careful before going down that road.

[The Chair, Conservative, Rob Merrifield]

That's a very good point.

Mr. Shah.

[Hemant M. Shah]

Now all of the services that have been provided by the trade commissioner service, like during trade missions and everything else, are being charged for. But my point is that a small- or medium-size company that has been successful and has done business and used the TCS will be willing to provide any kind of service you need. That's what I've experienced in talking to our medium-size companies. They have always shown interest—and in the fees, if necessary.

[The Chair, Conservative, Rob Merrifield]

Mr. Linton.

[Bruce Linton]

I'm offering the perspective as a company that used to do $30 million in business in Canada and now does zero in Canada. We sold all of that to pursue this.

When I think about how to make money back, it may not be directly related, but I think the Canadian Commercial Corporation is our most underutilized potential tool. If you tripled the rate you charged--because small- to medium-size enterprises carry an inherently higher risk than the larger corporations--but allowed us to secure government-to-government contracts in those geographic areas, I think you would cut the sales cycle by half and increase the sales volume tenfold. There would be a lot of payback from that. So that's where I would shift the reward or return opportunity to.