International Trade Committee on April 20th, 2015

[Stephen Baker]

It's just a stumbling block. It's a way for them not to take our product.

[Murray Rankin, NDP, Victoria, BC]

All right. This question is for Mr. Stebbins, for just a moment.

You talked about your business being primarily service-based. But then you were talking about your electronic monitoring. You talked about both products and services, and you said you had tight manufacturing margins in the business, presumably going to the goods part of that. Is there a problem? Are our foreign trade officers or others going to help you address the goods part of this? I'm just a little unclear as to what your recommendation might be for the electronic monitoring part of your business.

[Shawn Stebbins]

Actually, we're struggling with that right now. It has nothing to do with the trade commissioner or anything like that. We have a bit of an identity crisis. We've been providing professional services for 30 years, and we're very good at that. When we had the idea to develop this electronic monitoring technology, there was nothing on the market that fit the bill, so we had to do it ourselves. We were kind of forced into the “garage” situation of building our own technology. Given that, we're not a sophisticated, knowledgeable products company. We've kind of figured our way out along the way. We have contracted out our manufacturing, which was a good first step, and now I think we need to separate the product part of the business from the services part so that it can really reach its full potential.

It's a business-structure issue for us that we have to work our way through.

[Murray Rankin, NDP, Victoria, BC]

Thank you.

My last question, if I have time, is for Mr. Hodgson of the Conference Board.

In late March the Conference Board brought out a report called “Raising Our Game Across the Pacific”. It was a provocative report. Canada doesn't seem to be changing its market share much in that incredibly expanding market. We're still about where we were with market share 20 years ago.

Your report said something that troubled me. You said that Canadian service exports to Asia are at $10 billion, well below exports at $51 billion and that while overall trade with Asia has boomed, commercial service exports have fallen since peaking in 1998, which is almost unfathomable considering the pace of growth of Asia’s economy.

What are we doing wrong? What could we be doing better?

[Glen Hodgson]

Your series of questions actually touches on the new form of trade barrier, which is regulation. Non-tariff barriers and the fact that there are small differences in food inspection standards between Europe and Canada, for example, may be shutting you out of the market. We have to address that. It's the same thing for commercial services. We have three big global insurance companies in Canada now, but they have to find a way to invest in Asia to actually operate there. You can't automatically export an insurance policy from downtown Toronto to a policyholder in Indonesia or China. It's not a matter of what we're doing wrong, but of accepting the fact that the next stage of free trade negotiations has to be around regulation and regulatory alignment and non-tariff barriers.

In our report, by the way, we said that Canadian trade with Asia had actually fallen by half. We've fallen from 2% to 1%. We're effectively not part of the Asian energy market. That's the big swing variable. We don't have pipelines beyond the Kinder Morgan single pipe. We don't have the capacity to supply either oil or gas to the Asian market, where global demand is growing. We're trapped basically selling our energy to one buyer.

[Murray Rankin, NDP, Victoria, BC]

This is “hewers of wood, drawers of water”, the Asian version.

[Glen Hodgson]

But we're also a provider of high-value services and new ideas, as these exporters—

[Murray Rankin, NDP, Victoria, BC]

—but we're not able to get there because of non-tariff barriers such as regulatory challenges like those we heard about.

[Glen Hodgson]

I'm not sure whether there are regulations, but it's also a question of adequate infrastructure.

[Murray Rankin, NDP, Victoria, BC]

Yes, all right. Thank you.

[The Vice-Chair, Liberal, Chrystia Freeland]

We're going to have to leave it there, and thank you for that excellent question.

I'm going to allow myself some editorial comment. I also thought that was an excellent report by the Conference Board. Thank you for that hard work.

[Glen Hodgson]

Madam Chair, you'll probably like my commentary in The Globe and Mail on Wednesday.

[The Vice-Chair, Liberal, Chrystia Freeland]

Okay. We heard it here first.

[Glen Hodgson]

That's just a heads-up.

[An hon. member]

You're scooping yourself.

[The Vice-Chair, Liberal, Chrystia Freeland]

Mr. Allen, you have five minutes.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you, Madam Chair, and thank you to our witnesses for being here.

Ms. Laslo-Baker, I'd like to start with you. You brought up the banks and started talking a little about their hesitation to fund especially women entrepreneurs. Some of our regional development agencies.... I'll use ACOA as an example, because I'm from Atlantic Canada. ACOA has programs to develop and finance women entrepreneurs who want to start businesses; it may be through seed capital and other such things. But with these obstacles, are you seeing change? Is it getting worse? Is the reaction of the banks to women entrepreneurs getting better? It seems to me that if we are to expand the footprint of businesses that we want to have exporting in the next number of years, women entrepreneurs are going to be very critical to growing that mass.

Can you speak to this? I'd like to understand your viewpoint.

[Dionne Laslo-Baker]

Thank you. That's a very interesting question.

Interestingly, in the United States a female entrepreneur can be at an advantage, because there are very high listing fees that will sometimes be waived by companies such as Walmart. So for a female entrepreneur there are some big advantages.

From the outside, it looks as though there are some funds available and that we get special attention, but when you're the woman trying to actually do it, and you're balancing so much—because being a female entrepreneur is really, I've discovered, quite different from being a male entrepreneur.... It's acceptable for a man to come home at 6:00, 6:30, 7:00, but Mom has to pick up the kids at 4:00 and is talking to her team on the phone, waving her hand in the back of the vehicle to keep her children quiet. We truly have challenges that others don't face. I find that it's a world still unfortunately dominated by men who may not understand the challenges we face. I don't think I would have believed it until I had seen at first hand how challenging it is to access those things that are supposed to be advantageous to female entrepreneurs.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Here is a quick question to follow up. Have you seen any of that shifting for the better or for the worse in the last few years?

[Dionne Laslo-Baker]

I've only been in this...you know, we've grown so quickly. We only went into the market a little over a year and a half ago and have grown exponentially. I haven't had time to notice. All I know is the challenge that I've faced as a female entrepreneur. Hearing especially—BDC is a good example—and being excited by something on a front page: here we go, and there's this money. Then you look into it, and well, it's just the same: it has been allotted, it's supposed to be for women, but that's about it; it wasn't too exciting. It's great for a headline, but it does not necessarily come into play.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

Thank you for that feedback. I appreciate it.

Mr. Stebbins and Mr. Bar-Ziv, I'd like to ask you a question. From the standpoint of services, and mostly the professional services you'd be exporting, and from having been in the consulting business a few years ago and going back and forth to different countries—I don't think anybody has asked this question yet today—has either of you run into any stumbling blocks with respect to labour mobility when your employees or your contract staff move back and forth between companies? Are there inherent roadblocks that other countries are putting up—call them non-tariff trade barriers, if you will—when it comes to labour mobility?

[Gali Bar-Ziv]

We have some employees in China. We just try to be creative. If it's as a representative of the...I forget the acronym, but a foreign-owned company in China, you try different structures, you create lots of different companies, and you try to move people between the companies.

We bought some technologies out of Israel. We closed the shop in Israel, we moved some of the people here, and we had great challenges in terms of the length of the work visa they got. When it was time for renewal, they were all rejected, so we had to go back. We actually had a little stumbling situation there whereby we lost some knowledge. The government was not very friendly, when it came down to it. Maybe they thought it was about immigration, not about knowledge.

So to your question, it's not always great.

[Mike Allen, Conservative, Tobique—Mactaquac, NB]

No.

[Technical Difficulty—Editor]

[The Vice-Chair, Liberal, Chrystia Freeland]

Should we let Mr. Stebbins follow up?

[An hon. member]

Yes.