Thank you very much for inviting ITAC to meet with you today to talk about the comprehensive economic trade agreement.
I am here this afternoon as a poor substitute for my boss, Karna Gupta. Karna is in Dubai today, leading a trade mission at the Arab health conference. He's with seven of our members who are active in electronic health delivery.
This is our second mission to emerging markets in as many months, which I hope gives you a sense of the importance of global markets to the technology companies that we represent.
To my knowledge, this is the first appearance ITAC has had before you. Thank you again for the opportunity. Let me begin, therefore, with a quick thumbnail of the information and communications industry within Canada.
There are over 30,000 ICT companies across the country. In total, they generate about $155 billion in annual revenue and contribute about 5% to the Canadian GDP. They employ 521,000 Canadians directly. When you calculate the number of techies employed by other sectors, our workforce swells to about 800,000 people.
Our employees are very well educated: 45% of ICT employees have university degrees, compared with the national average of 26%. They're also well compensated, earning an average salary 52% higher than the Canadian average.
The sector leads the economy in investments in research and development, accounting for nearly a third of business investment in R and D in Canada.
While some of ITAC's members are over 100 years old, and the organization itself has existed for 60 years, we're still a relatively young industry. Our sector experienced its most rapid stage of growth from the period of roughly 1976 to 2001. I believe it's fair to say that our industry very much grew up in a period of freer trade, and we're clear beneficiaries of historic trade agreements.
Our growth and our success are closely tied to our ability to export. Well over half of what we produce is exported. The simple reality is that the Canadian market is simply too small to ever be sufficient to support the growth and leadership of Canadian producers of computers, software, wireless devices, applications, and microelectronics.
ICT companies know from the moment they emerge from their incubators that they must find customers in global markets or they will fail. A key mandate of our association is to do whatever we can to assist in the development of effective international business development strategies as early as possible in the evolution of these companies, and to assist them in any way we can. We rely very heavily on the resources of the Department of Foreign Affairs, Trade and Development and its trade commissioner services, as well as Export Development Canada, to help us fulfill this mandate.
In 2011 we exported $20.7 billion in goods and services. The nature of ICT exporting is changing. The United States and our close connections with the U.S. ICT industry have been very important to us. The legacy of freer North American trade has positioned us to be viewed, or to think of ourselves, without hubris, as Silicon Valley north.
The freer flow of talent across the 49th parallel has also had a profound impact on our industry. Silicon Valley experience is prized in the Canadian industry. Many, many ambitious ICT entrepreneurs have tested themselves in the valley, or the alley, or the other centres of ICT excellence. Frequently they return home to build stronger enterprises of their own here in Canada.
Access to U.S.-based global giants is also prized. Partnerships with these companies can set a course for global success for Canadian firms in their supply chains. Of course the U.S. business and consumer markets, exponentially larger than Canada's, also have a magnetic power on Canadian ICT. For all these reasons, the United States is and will continue to be vitally important to our industry, and receives about 64% of our exports.
But other markets are growing in importance as well. The size of Canada's ICT exports to the United States actually declined in 2011, while exports to the European Union increased by 8% to constitute 12% of ICT exports, totalling approximately $1.4 billion. We've seen significant growth in Asia Pacific trade as well.
The nature of what we're exporting is also changing. The computer and software space is currently accountable for about 86% of our industry, and is its fastest growing segment.
Canadian companies are proving themselves to be world class in solving enterprise transformation challenges for organizations throughout the world. We're seeing the services component command an increasing larger share of ICT exports, accounting in 2011 for just under half of our exports.
This requires new thinking about the nature of 21st century knowledge exports and challenges us in our use of terms like shipments and ports of entry. It challenges us to think about the increasingly digital nature of what we produce and the invisible and instantaneous way that it is delivered to global markets. One of the things we like about the comprehensive economic and trade agreement is the admirable way it's met many of these challenges. I'm pleased to say that we can observe the same forward thinking in other trade agreements currently under discussion.
When CETA was announced last fall, we welcomed it as good news for technology, giving our companies unprecedented access to a sophisticated market of 28 countries. We hope we were sufficiently enthusiastic in our response. Here are some of the specific elements of CETA that we welcome.
CETA expresses an understanding of the importance of the global trade in services. As the CETA overview so clearly expresses, “Trade isn’t just about importing and exporting goods. Ideas and expertise are also traded in the form of services and investment flows from one country to another to create jobs and growth in both the originating and destination countries.”
The agreement understands and makes provisions for a trade context where a major Canadian export is brainpower. CETA also understands that knowledge exports require the freer flow of people. Thanks to digital technology, brainpower can be exported in a variety of ways but sometimes exporting brainpower requires the physical relocation of the human being attached to the brain.
Because the importance of exporting is such a fundamental tenet of our industry and because we've become adept at succeeding in global markets, we've learned pretty quickly that no country has a monopoly on creativity or innovation, so Canadian ICT companies have developed a sharp appreciation for the highly qualified talent found throughout the world. We believe it's important to safeguard and protect Canadian jobs and protect Canadian employees from abuse, but because our primary product is knowledge, we view the pursuit of freer access to global labour markets as part of the same impulse that drives us to seek new opportunities in global goods and service markets. This isn't necessarily a widely held belief, so it is encouraging to see this idea captured in some of the thinking behind CETA.
CETA explicitly includes knowledge-based sectors, once again expressing recognition that there are no natural monopolies on knowledge. CETA seeks to create stronger ties for discussion and cooperation in science-based sectors, including ours. It also underscores the importance of clearly understood and shared mechanisms for the protection of intellectual property. With a focus on the ways that regulation can impede or foster innovation, it provides for an environment of regulatory cooperation.
CETA understands the role that government procurement plays in economic growth. The provisions of the agreement aim to expand and secure opportunities for Canadian companies to supply their goods and services to governments in Europe. European companies will have similar access to Canadian procurement, which should lead to robust competition for government business and better outcomes for taxpayers.
Finally, CETA is forward looking and encourages Canadians to be forward looking. With its focus on knowledge sectors, its understanding of electronic commerce, and its fundamental recognition that the world of modern business is so dynamic that even trade agreements must be adaptable to new realities, CETA is a very modern trade agreement.
We look forward to its formalization. When this occurs, Canada will have freer access to markets in half of the world and for global traders like Canada's technology sector, this is good news indeed.