Mr. Chair, and honourable members, good morning, and warmest thanks for giving me the opportunity to speak with you about the positive effects of the global markets action plan.
My field of work at the North-South Institute is on international trade and investment, particularly looking at the relations of Canada with the developing world, and within that, very much with the countries in Latin America.
The North-South Institute is a Canadian institution that is non-partisan and non-profit. It's fully dedicated to providing advice to the Canadian government, Canadian firms, and the Canadian public on the relations of Canada with the developing world.
Given the topic for today, I will be mostly talking about the relations of Canada with the emerging markets. I recently published an op-ed on this export promotion plan, and some of the things I will be saying today are based on that. It was published in Embassy magazine a few months ago.
In our view, the GMAP strategy comes very much as a renewal effort of the current government to expand Canadian exports worldwide. While the specific goal of this initiative is to increase the number of small and medium exporting firms, given their important role as employment creators in Canada's economy, the way this proposal has been framed indicates to me that the purpose of the government is deeper and more encompassing than simply raising exports by small and medium enterprises. More than anything it is a way to position Canada's foreign policy, particularly toward the developing world, and what that should be about. It also means a possible redeployment of Canada's diplomatic assets from the political and development sides of DFATD to its commercial section.
In several ways this strategy is very understandable. Canada as an exporting nation is very much in trouble. While world trade has grown by 70% since 2000 until now, the exports of Canada have grown by only 11%. I'm talking about the exports of goods. From 2006 until now—to be more precise, during the time of this current government—it has grown by only 6%. Meanwhile, U.S. exports, for example, have grown since 2000 until now by a full 101%, and EU exports have grown by 87%. In short, Canada is losing global market share, and is doing so very quickly. We are still, and the world is trading more every day.
Thus, a decided push to focus on expanding exports is very much correct. The emphasis on small and medium enterprises might be correct as well, but we should not confound the terms, and in this case, we should not confound the policy aims.
Canada can well expand exports without increasing the number of small and medium enterprises involved in that trade, and vice versa. We can also increase the number of small and medium enterprises that are engaged in exports without really increasing overall exports. If I interpret this policy correctly, the idea is to increase the participation of small and medium enterprises in Canadian exports, and not necessarily to increase our total exports.
We all know that Canada has a serious competitiveness problem, and that is expressed in the low pace of growth in exports. This policy does not, however, deal with that in a central manner. If it were to do so, other measures inside Canadian borders that have to do with national economic policy would be needed before engaging in any export promotion effort of any kind. Therefore, I would like to return to the idea and the issue of reallocating diplomatic assets and the strategy to advance commercial interests, particularly toward emerging markets.
This is a very costly thing to do as it's formulated in GMAP, to reallocate political and aid assets to the commercial side of diplomacy, and most nations do not do that. The reasons are simple. Politics and business don't hold the same tempo, and nobody wants negative short-term spillovers, such as, for example, Russia turning off the gas exports to Europe because there is a conflict over Ukraine, or the U.S. losing global production chains with China due to arguments over human rights. Simply, business and politics are not always aligned, and there are barriers and firewalls that need to be kept. On that side, long-term political considerations must override short-term business interests if we are to maintain a strong policy consensus on security issues and diplomatic governance with emerging countries around the world.
Precisely nested in successful political relationships is where export promotion efforts and official visits can have positive commercial impacts. In other words, we cannot just get off a plane in official missions in countries where we don't even have an embassy and try to sell our wares as if we were there as an established presence.
This requires that the political diplomatic agenda is not directly linked to the commercial one, and again, vice versa. What I see, however, in the GMAP public formulation is that politics have infiltrated commercial diplomacy goals to an extent that it might go against our wider business interests. In Latin America, for example, small markets such as Uruguay and Paraguay are counted as being emerging markets with specific opportunities in the plan, but other much bigger markets in the region that already are much more important trading and investment relations for Canada, such as Argentina, Ecuador, and Venezuela, are not mentioned. They are ignored.
The same happens in Asia and Africa, where many markets are inexplicably absent from the strategy and others are inexplicably present.
The only variable I can see as rather constant against these lapses in economic rationality for an export promotion policy is that those present on the list have governments that are widely identified with conservative politics or neo-liberal economic plans, while those that are absent have more centre or centre-left governments and have less neo-liberal policies. In other words, politics, in my view, is undermining the map of opportunities for Canadian small and medium enterprises, and particularly exporters. Therefore, I would really recommend a clear explanation of how markets have been chosen for this policy. This is very much needed to generate credibility for the policy.
Finally, I'll look at goals and relationships. To say, as GMAP indicates, that we're going to reallocate diplomatic resources to promote exports, with this policy formulated with such a narrow focus in a series of countries to simply increase the exports of small and medium enterprises and to increase that number of enterprises by 10,000 firms, hoping to create only 40,000 jobs in five years, for me is not sound dollar-per-dollar public expenditure. Given the annual ups and downs of the Canadian economy as a whole, that number of small firms will die or be created every month, and that number of jobs will be reduced or increased in the overall economy every month. So to say that in five years we'll be creating that number of firms and that number of jobs with such a policy.... It's something that is so small for the amount of effort in the redesigning of our diplomacy, I don't understand the proportion between the effort and the desired result.
Increasing exports has to be, however, the central strategy if Canada is to have an export promotion policy at all. Within that, emphasis might or might not be given on supporting small and medium exporters, or even on increasing their number in certain markets. We need to have bigger goals if we're going to use such encompassing tools for promotion, especially when we're talking about redesigning the entire Canadian diplomacy apparatus.
To increase exports, the short list of policies that Canada must urgently follow is well known. We have to facilitate full market integration of its immigrant professional class. We have to reduce barriers to trade between provinces. We have to eliminate the prohibition on investments from foreign state-owned enterprises. I'm talking about not whether all these things are good or bad. What I'm saying is that these things are necessary to increase exports. We have to establish distinct parameters to recruit an enlarged trade commissioner service.
I very much thank you for your attention. I can answer questions later.