International Trade Committee on March 9th, 2015

[Susan Bincoletto]

I haven't seen an immediate impact but it's something that on both fronts we're looking at very closely. It could be a competitive advantage with the reduction in the dollar, but it does have an impact on the oil price as well. We're looking at it.

[The Chair, Conservative, Randy Hoback]

Mrs. Grewal.

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

Thank you, Mr. Chair.

Thank you to the witnesses for your time and your presentations, and for providing testimony on the importance of small and medium-sized enterprises

SMEs are the backbone of the Canadian economy and this government has made it a priority to help SMEs grow and develop, allowing for increased employment opportunities for Canadians. Our government has also been committed to opening new markets for our SMEs. The new Comprehensive Economic and Trade Agreement between Canada and the European Union is set to become Canada's largest cross-border agreement.

Could you please tell us how CETA will directly benefit our SMEs?

[Susan Bincoletto]

As I said in my introductory remarks, we're talking about a market of 500 million customers, so it is a very large market that SMEs can take full advantage of. Europe is easier to penetrate than, for example, the Asian market because it's a more mature market, the rules and regulations might be closer to what we have, and there are clearly big multinationals that operate in Europe that can become a good source of buyer potential for our SMEs.

When we speak about the attraction of the global value chains, there are lots of them in Europe and our SMEs can actually be.... Through our trade commissioner service and through the pull facilities that EDC has, we can accelerate the introduction of our SMEs to these big multinationals in Europe. I think it's an exciting potential and we are already starting to work to try to develop a strategy, in spite of CETA not being in force yet, to make sure that we keep our mover advantage.

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

Would anyone like to comment?

[Todd Winterhalt]

Perhaps I can provide just a very specific example of what Susan was referring to.

In November, EDC signed an $850-million facility with Vodafone out of the U.K., the world's second-largest telecoms provider. Of that facility, $100 million was set aside specifically to attract Canadian SMEs into the supply chain of Vodafone. It wasn't just to get into the U.K. but Vodafone's 55 other countries in which it operates, many of which are emerging markets. This allows the exporter, through a fairly well-known name and a creditworthy partner, to get into some of the emerging markets. This is how they work together and we can leverage the CETA agreement once it's ratified and in force.

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

Can you also give us some examples of SMEs who have successfully used the trade commissioner service or another one of our export agencies?

[Susan Bincoletto]

There are lots of examples. I can't really think of one company. When we provide a service in the trade commissioner service and we close a service—a service can be that we've established a contact, we've solved a shipping problem, or we've enabled a sale to occur—there's a survey that goes out to our clients. Sixty per cent of them respond to those surveys, and we have an 85% satisfaction rate. Generally, we are there as a value-add for companies to accelerate and facilitate their ability to take advantage of opportunities in various markets around the world.

[Nina Grewal, Conservative, Fleetwood—Port Kells, BC]

Which markets or regions should our SMEs be focusing on to expand growth?

[Susan Bincoletto]

Generally, we look at the potential of growth for countries. Obviously, for example, the Asia-Pacific area is one of the areas where there is the most growth. Africa is one as well, where, if you look at the potential in the future, the growth can be very promising. Africa is not for everyone, and we can't simply say you should go to Asia.

The trade commissioner will look at the business plan, the type of products or services that the SME is thinking of exporting or needing a partner in raising capital from other countries. The advice is given on a tailor-made basis in a sense. The SME has to do its own homework in order to be ready, and to have the backing, the financing, and the management team to do that.

[The Chair, Conservative, Randy Hoback]

Mr. Davies.

[Don Davies, NDP, Vancouver Kingsway, BC]

Picking up on my last question, I don't know if I gave you enough time. I think I have a good grasp of what you're doing now, but I'm thinking forward.

Is there a policy, a strategy, or a tool that Canada is not currently employing to help our SMEs better tap into export markets that you can suggest to this committee, that you would like to see the federal government adopt?

[Susan Bincoletto]

That's a tricky question.

[Michel Bergeron]

I can jump in if you want.

[Susan Bincoletto]

Yes, please do.

[Michel Bergeron]

To be honest with you, in discussions with our clients, a lot of the barriers are within the heads of our business leaders, so if we can collectively do a better job increasing the global mindset of our business leaders and Canadians in general, we'll improve our performance. An interesting study was done in Germany, which explained why mid-sized firms were so high performing on the export side. One of the reasons was because, in their vision statement, they wanted to be global leaders from day one.

If we take that vision and say we can be global leaders because we have good products, good services, good companies, and if we can just change the mindset of people who say, “You know what, my market is just domestic”, and have them think of their market as the planet, that would be a big plus.

[Shereen Benzvy Miller]

If I could just add that essentially firms that are ready for growth are the ones that are ready to look at export as a viable business plan. The more that we invest, and we already have a number of programs that help companies essentially establish themselves on the growth trajectory, the more we can encourage companies to take advantage of those programs, the better it's going to be.

We've done the venture capital action plan and we have a variety of other things to help companies in that direction. Lifestyle companies are companies that are just interested in the domestic market. They are generally not the ones that you're going to target to encourage exports.

You want to basically create a subset of SMEs that see themselves in the export market as part of their growth trajectory. It's really about getting to young entrepreneurs. We have the futurpreneur program where there are mentors who work with young entrepreneurs between the ages of 18 and 39 to really track the way in which their companies will grow. Then we can encourage them toward exports.

[Don Davies, NDP, Vancouver Kingsway, BC]

The Library of Parliament noted that in 2011, Ontario and Manitoba had the highest percentages of SMEs that exported, at 12.8% and 11.9% respectively, with Alberta and Saskatchewan having the lowest, 6% and 3.9% respectively.

Are there any factors that account for this difference?

[Michel Bergeron]

It's the industrial structures of those two economies, basically. If you look at Ontario, with the strong manufacturing base, manufacturers per capita export more than other businesses. The other piece is Manitoba is quite strong on the wholesale distribution side of things, so obviously a lot of the businesses are playing an important part in terms of the exporting and transit of goods.

[Don Davies, NDP, Vancouver Kingsway, BC]

The first thought I had was comparing Ontario to Alberta and Saskatchewan. You had the strong manufacturing industrial base versus two provinces that were more resource extractive-oriented. But Manitoba was the one that I thought was interesting. Are there any other policies provincially that may account for why some provinces are having better SME export performance, anything we can learn, any best practices from any of those provinces?

[Michel Bergeron]

I'm not aware of any differences. I don't know about my colleagues here.

[Don Davies, NDP, Vancouver Kingsway, BC]

Just a well-run NDP government, I would think.

Sorry, that doesn't call for an answer.

[Voices]

Oh, oh!

[Don Davies, NDP, Vancouver Kingsway, BC]

Stoney silence I'm met with.

Okay. I'm curious, as well, just to explore a little bit more the difference between the developed versus the developing markets, because of course, again, CETA is developed, but the focus on SMEs, it seems, as you've said, is on the emerging markets.

Do we have any strategies that may help the SME sector in Canada derive the benefits of CETA in that market, or will you be working on that if and when that agreement comes into force in the years ahead?

[Susan Bincoletto]

Yes, we are developing a strategy with our partners in the department and with others to make sure there is an awareness on both sides. On the Canadian company side, it's what the wins through CETA mean for them. There will be webinars, face-to-face discussions with SMEs to say, okay, now this is what you can translate into a greater opportunity for you within some member states, not Europe as a whole but in some member states, depending on what they offer.

The same applies to Europe, by getting a better sense of the opportunities there, in Europe, and saying, we have Canadian capability that you can tap into, and then do the matchmaking.