International Trade Committee on May 6th, 2014

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

Hopefully you'll stay for that session.

The other aspect is that we as Canadians have a lot to offer, not only with our finances and our skills but also with our corporate social responsibility. I was in a bank the other day, and they had a brochure about taking it international. Part of this document is also about how we can help other countries in development or we can just improve—and some of the trade committee members were looking at this—the CSR of the mining companies. Maybe you could expand about how this document can help raise the social responsibility and the quality of life for other countries as well?

[Daniel Schwanen]

Sure. I think trade and development are definitely hot topics, especially in developing countries. I think—and this speaks to an earlier question—policies we put in place regarding corporate social responsibility, corruption, and setting high standards for our companies might, at the margins, stop some business from taking place, which others may then swoop in and take. But I think those things are part of the Canada brand, which I think we need to develop. That will help all of our businesses expand. When you come from Canada, that has to mean something. I think that's also reflected in the plan, and I think overall it's a good development, both for Canada and for the country that we invest in or trade with.

[The Chair, Conservative, Rob Merrifield]

You have another minute, if you want.

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

I have just one quick question following up on Don's comment.

Mr. Curtis, in your written comments you said there are only about 17% of Canadian businesses exporting. So if we're looking at trying to increase that up to 40% or 50% by 2018, do you think that's realistic?

[John Curtis]

Doing that by 2018 would be ambitious, but I think if we get our domestic economy right and we are successful in pushing through the doors—and don't forget the growth in the United States in this half-decade. I'm not saying we should be influenced by that forever, but the next five years, surprisingly, will be the American years.

So I think we'll have a dramatic increase in export performance over the next half decade. To say 40% by 2018 would be ambitious, and we won't get there, so I wouldn't set it as a target. But it is important that government and the Canadian public more generally, as well all the institutions of which we are a part, keep pressing on that front, because ultimately it leads to more prosperity for everybody—for small towns, the resource sector, and everybody.

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

As far as trying to help Canadian SMEs, do you work with post-secondary education? For example, you mentioned incubators. Do you work with co-ops and things like that to try to encourage entrepreneurialism? If you have a business and you need help, especially if you're only 25 years old, and you have the desire and the ambition, how do you take that concept to commercialization?

[Daniel Schwanen]

That goes to the culture question. One of the reasons I mentioned the accelerator centres—not quite incubators—is that they literally match successful companies, sometimes established companies that have an interest in the growing overall business environment, with the smaller companies to help them succeed and to give them advice on the ground. I think that's one way we take our successful companies and get them to pass on their culture.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Madame Liu.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

Thanks, and thanks for mentioning incubators, they're certainly a really important way of simulating R and D for SMEs.

We've discussed in committee certain goals related to trade. GMAP identifies a number of goals. Some are phrased very specifically and some are very amorphous.

Mr. Curtis, one of the goals stated in GMAP is to “advance Canada’s core industrial capabilities and competitive advantages”. In your view, what are these?

[John Curtis]

I better ask you specifically to repeat the quote out of the GMAP to make sure I answer directly.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

The stated goal was to advance Canada's core industrial capabilities and competitive advantages. In your opinion, what are Canada's competitive advantages?

[John Curtis]

The competitive advantages are that we have the labour, the knowledge, the marketing organization, and the international focus of both entrepreneurs and labour that are able to sense the importance of the international market and operate Canadian-based firms in such a way that they are attentive. That's the great Canadian advantage in my judgment. You just have to deal with Americans or, often, Europeans, and they'll all say that one thing about Canadians is that we all understand that it's important out there because we are a relatively small country in terms of the size of the country. So I think it's a combination of people, culture, and economics to make it all work. Plus there's our foreign policy and the politics, of course.

[Laurin Liu, NDP, Rivière-des-Mille-Îles, QC]

You might be able to go back to that answer later on in my questioning, but because of time I'd like to go to Mr. Schwanen.

I was really interested to read the August 2012 report by the C.D. Howe Institute that stated:

Canada's productivity performance over the past decade was among the worst among OECD.

The report lists many reasons for this, as you are aware. Some of these reasons were: business leader risk aversion, inefficient and ineffective private sector support for innovation, lack of risk capital for start-up companies, chronic underinvestment in machinery and equipment, sheltering of the Canadian economy, and increasing competition for human capital.

What factors among these listed in the C.D. Howe report are expected to be affected by the GMAP?

[Daniel Schwanen]

I'm trying to remember which report that was. That's a long list of domestic factors that we need to address. We need to try to find ways. We are not as innovative as we should be. We don't invest as much as we should in machinery and equipment.

Let's address, among the many factors, the innovation factor. Canada used to discuss the economy in terms of natural resources versus manufacturing or trade. But quite quickly, trade is shifting towards more knowledge-based activities like research and development, life sciences—as mentioned in the plan, for example—and ICT. That's where the Canadian market is—sustainable technologies. The Canadian market is not big enough to sustain growth in these kinds of knowledge-based activities for all kinds of reasons. With anything that is knowledge-based, you immediately want to apply it to the global market to benefit from it and grow your business, and become more innovative.

That's one example.

If we grow those sectors, automatically that addresses the issues.

[The Chair, Conservative, Rob Merrifield]

Thank you very much.

Mr. Hiebert, you have last four minutes.

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

Thank you.

Gentlemen, it's been very interesting to hear your comments about the GMAP. You've raised a lot of good questions, and what I'm looking for is some specific examples as to what 3.0 would look like.

Mr. Curtis, you've highlighted for us that there's a need for another half to this document, highlighting our way of dealing with the Internet, electronic commerce, imports, massive flows of capital, mobile skilled labour, and entrepreneurs and venture capitalists who are willing to move and invest anywhere.

Personally, I don't disagree with you one bit. I think you're on to a much more accurate description of where the world is at. The question for me, and I think for everybody at the committee, is what would a strategy look like that addressed those issues. Do you have some clear ideas that we could incorporate as we start drafting the next global action plan?

[John Curtis]

That's the challenge for the committee if we're going to get into 3.0.

I think, in fact, Mr. Hiebert, to some extent we've touched on this already with all the various questions that have been raised and I risk now duplicating what I've already said. I think probably one should be quite clear as a theme if you were to comment on the present plan—which is fine, it's good, but it just doesn't go far enough, in my judgment—it would be to ensure that all the domestic departments, your ministerial colleagues, and the broader public understand that our ultimate success in the international trade and investment area depends on all these domestic factors working well and working better.

I would then focus on international education, making sure that our business schools have strong programs of international business, for example. That isn't the only thing that's important out there. It's important that marketing skills be there and be understood, and new ways of organizing business, and how to take advantage of online purchasing because it's affecting the consumer in every corner of Canada. I'd focus on all that.

I'd focus on increasingly encouraging the banks to worry less about lending against real estate, and lend against ideas for bioscience, biopharmaceuticals. These are all the things that people are going to want in the future.

I'd also focus on energy conservation, climate change conservation matters, and on cancer and other medical issues.

I'd organize our economy to be a little clearer that the training of our people and the operation of our companies, as well as our public sector often working together with them, is all part of the same operation.

That's basically the focus I would take.

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

Would you do that through the tax code, through tax incentives, or what mechanism—

[John Curtis]

No, I don't think one would necessarily do it all through tax. The tax regime has to be as good as anybody else's, no question.

I think it would be partly government procurement in conjunction with the private sector. I don't think this is a private sector or a public sector job. I think it's a partnership job, so I would argue that you do it both ways. Taking the Saskatoon biosciences centre as an example, you would make sure that the centre is connected with similar centres around the world, and have the provincial government and the Canadian government, and also get the Americans and the Chinese, and do these things cooperatively to focus on problems that we all face, whether it's rich or poor or emerging countries, in areas that we can be quite clear we all have an interest in seeing get better. The more we can show that Canada gets it, I think the better off we'll be.

[The Chair, Conservative, Rob Merrifield]

Thank you very much to both of you for kicking off this study.

We'll now hear from the private sector in our next panel and it should be a lot of fun. Thank you, again.

With that we'll suspend as we set up. We have one witness by video conference and another one in the room, so we'll suspend until we are ready for that panel.

[John Curtis]

Thank you.

[The Chair, Conservative, Rob Merrifield]

I'd like to call the meeting back to order.

Just to introduce this panel, we have from the Canadian Manufacturers and Exporters, Jayson Myers, president and CEO, who is in the room.

Welcome, Jayson.

From the Canadian Association of Importers and Exporters, we have Joy Nott, president and CEO.

You are by video conference from Mississauga, Ontario. Joy, can you hear us?

[Joy Nott, President and Chief Executive Officer, Canadian Association of Importers and Exporters]

Yes, I can.

[The Chair, Conservative, Rob Merrifield]

Very good, and you're coming through loudly and clearly on this end.

We'll proceed with this panel. We'll start with Mr. Myers.

The floor is yours, sir.

[Jayson Myers, President and Chief Executive Officer, National Office, Canadian Manufacturers and Exporters]

Thank you very much.

Thank you, Mr. Chair, for the opportunity to say a few words to the members of this committee.

Joy and I represent the private sector here today in your discussion.

I have to say that I have a bit of a—