International Trade Committee on May 4th, 2015

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

Obviously the United States remains a wider market for Canadian exporters, but as we have seen from previous testimony before this committee, our companies are doing business around the globe. From your experience, where are the trade opportunities arising? Are they from countries like China, India, Brazil, or are any other emerging international markets of equal or greater significance?

[Corinne Pohlmann]

I'll take that one.

I hesitate to create a program where you're limiting which market people should go into because for some reason it's been regarded as a target market. Putting the U.S.A. aside, perhaps that's the one market you don't include because it is a bit easier, but even then I would suggest for some very small companies that's the first step they're going to take.

I would be hesitant to suggest which country because you never know. The winds change as Joy noted. Russia was once a darling we were supposed to be going toward, and now it's a place we're not supposed to be exporting to. It can really change, and I think you need to leave it up to the businesses themselves to create the case as to why they think their product will be of benefit to that particular market. I don't completely agree with Philip, but I do agree with the fact that they need to show they're willing to put money and time into that market in order to make it a success. That has to be part of what they have to show in their application.

[The Chair, Conservative, Randy Hoback]

Okay, I'm going to have to stop you right there. Unfortunately your time is done.

We'll go to Mr. Morin. You have five minutes.

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

Thank you, Mr. Chair.

Ms. Pohlmann, you spoke about the fact that companies do not know about the programs available to them. I would like to turn things around. Do you think the agencies and the government know enough about the businesses to be able to create programs that are adapted to their needs and that meet their requirements?

[Corinne Pohlmann]

I think what you're suggesting is correct. They don't necessarily understand, and I think a lot of these agencies are set up for a more traditional type of export firm where it's a commodity or a good, and they're doing it from Canada. They are exporting to another country. What I don't think the government, the trade commissioners, and so forth, are set up to understand is this idea of moving into supply chains and how to support those types of companies, or companies that are based here but manufacturing elsewhere, and how to support those types of companies, which are a growing part of our economy. I think that there is a bit of a disconnect between what the government agencies are supplying and what it is that's happening in the marketplace.

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

We are talking about programs to support exports, but government policies can also be obstacles. For instance, there is a company called Enzyme in my riding that specializes in adapting video games. I saw the problems firsthand. The company was adapting video games into Kazakh and needed programmers who spoke Kazakh. If a job like that was posted at the Saint-Jérôme employment centre, I'm sure they they would not find anyone.

Shouldn't we have an industry development policy in Canada to enable the companies to grow and survive locally? Exporting could come later.

[Corinne Pohlmann]

Now you're talking about all of the other issues that we certainly work on within our organization.

Even our data tells us that a good chunk—60% or so—are not ever going to get involved in export because it's just not exportable. However, definitely barriers around red tape within Canada and standards.... Even within Canada, going from one province to another, there can be barriers. I think we need to fix those just as quickly as we're trying to fix some of the international barriers.

In fact, some of the work on internal trade that's ongoing is promising for the first time. It shouldn't be easier to do business in the United States than it is to do business in another part of Canada. We should encourage companies to do more trade within Canada, and there are still too many barriers in place for some of them to do that.

[Marc-André Morin, NDP, Laurentides—Labelle, QC]

Mr. Turi, I think you spoke a little earlier about the criteria, particularly that a company's export potential should be considered more seriously.

I have another example. A company in my riding managed to develop a product with huge potential. Its representatives made contact with buyers in Japan, but the company needs $15 million in inventory as a guarantee to insure orders with Japanese companies. It's a great project with unlimited potential. However, if the company does not get any help, it will have to make do with the local market. It might export to the United States, but that will be all.

What can we do for cases like these

[The Chair, Conservative, Randy Hoback]

You're going to have to respond very quickly.

You've used your five minutes up, Mr. Morin.

If somebody wants to give a five-second answer, that would be fine.

[Philip Turi]

In five seconds, from my comments earlier, that would be a perfect example.

A company in that situation should be able to apply to this fund. That is a high export-potential type of project. As part of their project, it should be using government services. If they're not, that should be something that we consider. That would be a perfect project for this fund to actually go into and invest in.

I agree with you.

[The Chair, Conservative, Randy Hoback]

Okay, you're on point there.

The floor is to Mr. Allen for five minutes.

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

Thank you, Chair.

Thank you to our witnesses for being here.

Mr. Turi, I'd like to start with you. I want to pick up a bit on the accelerated capital costs that you mentioned.

One of the things we heard in our finance committee prebudget consultations, specific to ACCA, was trying to make sure that Canada was on a level playing field because companies are making investment decisions—here, or in the U.S. or Mexico—based on different tax policies. They were able to do that.

Do you see this 10-year window, which is a pretty significant extension over the two years we've been doing in the past, as having potential? Could it have more business investment here to become exporters, as opposed to in the U.S., Mexico, and importing?

[Philip Turi]

With regard to early signs from our membership, absolutely.

The fact that it's been extended to 10 years, that's almost indefinitely. Companies looking at the extension—from what we're hearing from our member networks—are now considering investments in new machinery and new equipment to do exactly the things that the government program was intended to do. The timeframe is perfect. From our view, that's effectively indefinite for now.

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

Ms. Pohlmann, on your pie chart where you talk about who's exporting and who's not, and then the other one on if you have traded in the past three years, were these point-in-time types of things, or do you have previous years of this data so you could see trends?

[Corinne Pohlmann]

We have some. I wouldn't say it's consistent going back a long time, but we do have some data from 2008-09, which is fairly consistent with this one from 2012. We're going to be collecting some data as well—we're doing it right now—that's going to be similar to this, so we can see if any of this has changed in the coming months as well for this past year.

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

Okay, I appreciate that.

One of the comments you made on the export market development program was to focus only on SMEs by placing limits on the size of the companies that can access program. The other comment we've heard from others before is that we should be targeting companies that have export potential. I'm not sure that those are consistent principles. I'm sure you're all hoping to get to the same objective, but I'm not sure I see the same principle.

If we're going to be targeting, is there a framework for doing this so we achieve all the objectives we're trying to?

[Corinne Pohlmann]

I know it's a tough one, but this is supposed to be focused on small and medium-sized enterprises.

Too often what happens in these funding type of programs is that larger firms tend to be able to take advantage of them more quickly because they have the resources and the people to do the research and get the work done and get it in, and then the funding's gone. By the time a typical small business is even aware of the program, the money's usually gone. That's why I think it's important that it be focused on smaller exporters, or those that intend to export and have that limit, because there are other opportunities for larger firms to access some of these types of money. This really should be focused on that. If there's a need to continue to increase the threshold, then I would worry that it would end up being more the medium-sized firms only that are going to be accessing it.

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

Thank you.

[Joy Nott]

I agree with that and I would just add that there are many other programs, so keep the threshold to really mean small to medium.

The other thing that I would add is that often many programs in the past have had a qualifier that you have to show some sort of track record. You have to have a history of exporting. I would say in this particular case, get that off the table. Sometimes you have people who...so that's the one thing that I think is really important.

[Philip Turi]

If I could just add to that, I think that the size of the company, those types of criteria that in the past may have been hurdles to taking advantage of a public program, I don't think that those should limit any company from applying. I think the number one criterion, the number one objective, should be the project itself or the company and the size of the opportunity.

The example from the honourable member was a perfect one, a small company that probably would have been precluded from applying to other government programs, perhaps even from using the services of existing government agencies, but nonetheless has a project. They have a foreign buyer, huge export potential, and they shouldn't be precluded from funding simply because of their size or their lack of experience.

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

I have a last quick question on the trade commissioner service. Some have said it's almost as if we're going from a mile wide and an inch deep to something else. If we spend on that and you make this broader, how do you continue to keep these TCS people effective and keep their training up to speed? It seems to me that it's going to be a challenge.

[Corinne Pohlmann]

I'm not suggesting that everybody be broad; I think you need your specialists. The specialists can be referred to when people come from those various sectors, but you need to have a layer that can manage those more general questions that small businesses are going to have.

[The Chair, Conservative, Randy Hoback]

Thank you.

We're going to Mr. Adler, please. You have five minutes.

[Mark Adler, Conservative, York Centre, ON]

Thank you very much, Mr. Chair.

I'm just here for the day, but I do have a couple of questions.

Canada has huge diaspora communities. Would you care to comment on those inherent advantages that Canada has, given those diaspora communities, to access markets where people speak their own languages?

[Joy Nott]

I completely agree with you. In the part of my comments that unfortunately were just going a little over, I didn't get the opportunity to explain that's what I mean when I say our Canadianness. Canadians are known because we're friendly, we're honest, we're easygoing, and all that sort of stuff. We're also known as being truly multicultural, and I think that is a huge advantage that we need to be taking advantage of more by incorporating that into a strategy where that's a conscious element, and looking to a certain extent at targeting within certain markets.

I know a lot of our members are telling us that they have open positions they'd love to hire people for, but there's a mismatch of what's in the marketplace compared to what their needs are in many cases. I think with that focus on specific market opportunities when you come to international trade, and then on groups here in Canada that come from that specific market, there should be some sort of conscious effort made to connect those dots.