International Trade Committee on Nov. 8th, 2018

[The Chair, Liberal, Mark Eyking]

Welcome, committee members and minister.

I'm sorry for a bit of confusion on times, but we have it back on track.

This is the start of our study on how small and medium-sized businesses can take advantage of the trade agreements we have in place.

Welcome, Minister. As you may know, not only are we the most hard-working committee on the Hill, but....

[Mary Ng, Minister of Small Business and Export Promotion]

I'm not sure. The ones I worked on before were pretty hard-working too.

[The Chair, Liberal, Mark Eyking]

The last few years we've gone through quite a few trade agreements. Of course, you know about them: the European, the CPTTP, and of course, the new NAFTA. We've been also working on Mercosur, the ASEAN countries, and right now we're also involved with the Pacific Alliance.

As many of you know, the House voted yesterday on the Canada-Israel bill. I think it's Bill C-85, which is going to be coming to us very shortly. I don't know if you'd call what our committee is doing “taking a breather”, but as all of these agreements have come forth and we've studied them, many times we find that a lot of small and medium-sized enterprises out there are wanting to take advantage of these agreements. That's what our study is all about.

We're going to listen to many small and medium-sized enterprises and stakeholders out there, the chambers of commerce, etc., to find out what they need to take advantage of those agreements.

Welcome, and the timing for you to come is very good because we're just kick-starting our study. You know the drill. You have the floor and then we'll have dialogue with the MPs.

Go ahead, Minister.

[Mary Ng]

Mr. Chair and committee members, thank you so much. It really is a pleasure to be here.

Before I begin the official remarks, I want to thank the committee for the work that you're going to be doing. As the chair says, there are many trade agreements that have been negotiated and many that are to be negotiated, and others that have proceeded. It really is a good piece of work that your committee is going to be doing. I'm really looking forward to understanding and learning what you will find in the committee. I just want to thank the committee before we start for the great work that I know you will be doing.

I want to begin by thanking this committee for inviting me here, and for the study you will be doing. I look forward to seeing the results of your work.

Canada is a country built on trade. In our early years it was based on the raw materials that powered other nation's economies. Today, we provide value-added exports that increase prosperity for Canada and for our trading partners.

Exporting remains crucial to Canada's economic prosperity. It provides a future for Canadian businesses and for workers by creating great opportunities for Canadian companies abroad. I have a mandate from the Prime Minister to help small businesses in Canada start up, scale up and access new markets.

I am also responsible for the Business Development Bank of Canada, the only bank in Canada devoted solely to entrepreneurs.

As the Minister of Small Business and Export Promotion, I am focused on making it easier for businesses across the country to access government services and programs.

In partnership with the Honourable Jim Carr, the Minister of International Trade Diversification, who has the responsibility for Export Development Canada, we will work together to enable Canadian export success by helping Canadian SMEs become more productive, more innovative, more export-oriented and more export ready.

I often say that Minister Carr opens the doors for Canadian businesses with the trade agreements with other countries, and I help those Canadian companies, especially the small and medium-sized companies, walk through that door, or those doors.

Why the emphasis on small and medium-sized enterprises? The vast majority of exporters are large companies with 500 or more employees, but small and medium-sized enterprises make up 99% of all companies in Canada. They make up 90% of our private sector workforce and they employ close to 11 million Canadians.

And yet, only 12% of SMEs export. We want to significantly increase that number.

On average, firms that export invest more in R and D, pay 14% higher wages and enjoy up to 15% higher productivity.

There are opportunities to do more. Let me give you some examples.

There is the recently negotiated trade agreement between Canada, the U.S. and Mexico, which will preserve Canada's preferential access to the U.S. market, our largest trading partner, and will ensure most trade between these three countries remains duty-free. This translates into economic stability, future job growth and opportunities for Canadian small and medium-sized companies.

However, we also know that in order to create even greater success for Canadian companies, we must look beyond the traditional North American markets.

The comprehensive and progressive agreement for trans-Pacific partnership, also known as the CPTPP, will come into effect on December 30, giving us preferential access to markets in the Asia-Pacific countries, including Japan, Australia, Singapore, New Zealand, Vietnam and others. These markets account for about 18% of the global GDP and nearly 500 million new customers for our Canadian businesses.

ln September, we celebrated the one-year anniversary of the European Union-Canada Comprehensive Economic and Trade Agreement, otherwise known as CETA. ln the 11 months before CETA came into effect, Canada's trade with the EU totalled $38.4 billion. ln the first 11 months after CETA, trade with the EU increased to $41.1 billion, which is up 4.3%.

Altogether, CETA, the CPTPP and the USMCA are going to provide access to up to 1.5 billion customers for our Canadian SMEs.

Canada is also the only G7 country to have trade deals with all other G7 nations. Through our comprehensive and progressive trade deals, Canadian SMEs have preferential access to 60% of the world economy.

We're looking to always work on new ones, from modernizing the agreement with Israel, which is currently before Parliament, to the early-stage talks with the Mercosur member countries.

While Minister Carr is opening the doors for Canadian SMEs with these trade deals, how do we help grow exports for our small and medium-sized businesses? When a Canadian business owner first considers exporting, we need them to know that the Government of Canada is here to support them. That means better marketing and more innovative offerings.

I want to share with you the top five areas in which SMEs have told us that more needs to be done.

The first is knowledge. We hear that SMEs don't know where to go, in order to access the support they need to go global. We have the tools, but there's also a thriving ecosystem of third party programs that support the work for these SMEs across Canada. What are these? Where are they?

The second is time, which is something that SMEs don't have. Innovation Canada is a step in the right direction. lt brings together hundreds of programs—everything the government does for businesses—in a single portal. What more can we do to improve ease of access, ease of use and additional support to help them be successful?

The third is coordination. Small and medium-sized firms tell us that Canada lacks a coordinated value-chain or sectoral approach towards exports. We're looking very carefully at the advice from our economic strategy tables, which is an industry-government partnership that examines six areas where Canada is positioned for growth. These tables call for a national export promotion effort, where successful Canadian firms abroad enable further success for their value chains and sectors.

How can we enable a strategic and support approach such as this?

The fourth area is in infrastructure, improving our trade corridors as well as the availability of broadband to enable companies to become export ready and to grow the economy. “Trade corridors to global markets” is one of the pillars of transportation 2030, led by Minister Garneau. The goal of this pillar is to improve our transportation system to get products to market and grow our economy. What are the critical pieces that will have the most immediate impact on export readiness for our Canadian SMEs?

Last but not least is local knowledge. SMEs need more help to understand how businesses work in countries outside of North America. This is where the trade commissioner service—Canada's best sales force, as I often call them—has and continues to have a role to play in providing market intelligence and in making the right connections for our Canadian companies. It's also why we launched CanExport, where already more than $37 million has been provided to Canadian SMEs looking for new export opportunities and to grow abroad. How can we best support companies as they look for market intelligence, introductions, financing options and more?

These five focus areas require efforts that are greater than one minister or one government. They require all of us to pull together and to work horizontally to make a difference. We know that Canada is one of the best places in the world for starting a business, and has been ranked in the top 20 in terms of ease of doing business, according to the World Bank. We're committed to doing even better, creating the right environment so that entrepreneurs and business owners can succeed internationally and create middle-class jobs here in Canada.

I look forward to working with you to encourage more Canadian SMEs to market themselves to the world, to diversify Canada's export portfolio and to open up new opportunities through additional trade deals. I'm looking forward to your advice as a committee as we work to continue to support the success of our Canadian small businesses.

I look forward to your advice and to working with all of you as we continue to support the success of Canadian small businesses.

Thank you very much. I would be happy to take questions.

[The Chair, Liberal, Mark Eyking]

Thank you, Minister.

Before we start the dialogue with MPs, I'd like to welcome MP Jeneroux from the Edmonton Riverbend riding in Alberta.

Welcome to the committee.

We'll start off with Mr. Allison from the Conservatives.

Go ahead, sir. You have five minutes.

[Dean Allison, Conservative, Niagara West, ON]

Thank you, Mr. Chair.

Thank you, Minister, for being here today.

Mr. Thompson, it's good to see you again. I've seen you over the years at various committees.

I appreciate some of the things you guys are trying to work on. I think small business is critical. I guess one of the concerns I have is the elephant in the room, which is the lack of competitiveness that we have as a country. I think that has to be part of every discussion.

I mean, deals are important, absolutely. All those things are important, but I think you need to convey a message back to the finance minister that we are one of the worst countries. We're struggling with competitiveness. If our firms cannot compete locally, I don't know how they can compete globally.

I can give you just a few stats. The Word Economic Forum has us ranked at 12th overall for competitiveness. The U.S. is number one, and that's our major competition. Canada came in 34th in the adoption of information and communications technology, 53rd in regulatory burden, and 96th in tariff complexity. When you put all these things together, it puts us at a tremendous competitive disadvantage. I could talk about Bill C-69, about the regulatory framework in terms of the energy sector, and I could go on and on.

I guess the challenge we have is this. I love some of the stuff we're doing. I love what the EDC does, and the BDC and CCC and all these things. I love CanExport. I think that's great, but what are you guys doing, as you mentioned in your opening remarks, to help SMEs understand that these programs exist? I mean, I'll bet a number of MPs don't know about half the programs we provide. Because of the committee we sit on, we've been exposed to them over the years.

What are some of the things you guys could do to help SMEs understand some of the things we have going on that could help them leverage what they are doing?

[Mary Ng]

Maybe I'll start there and then work back to your other questions.

It's precisely why I have the portfolio of small business and export promotion. I put a bit of an emphasis on promotion.

In the three and a half months that I've been minister, I've met with about 1,200 small and medium-sized companies across the country. I know all of my colleagues, and all of my parliamentary colleagues, have met businesses. You're quite right. There is work that we need to do in order to do a better job at providing information to our SMEs so that they understand the various programs and services the government has available to them.

I talked a little earlier about Innovation Canada.

Innovation Canada is our effort and it's phenomenal, because in about two minutes, as an individual business owner or an entrepreneur, you can go in and answer a number of questions about your company: Are you a small business? How many employees do you have? What are you looking for? Are you looking for talent, export resources and advice or are you looking for networks?

There's a series of questions, but the point is recognizing that small and medium-sized businesses need to know about the programs we have, along with programs offered in other jurisdictions, know where to get them and have an ease of use.

In that period of time, it's been up for about eight months—off the top of my head, and the officials can give me the exact number—over 150,000 unique businesses have entered into that portal. The whole point about that is, as you said, if we have these great programs how do we make sure that Canadian SMEs know that they exist for them? How do they access it, and when do they access it, is it easy for them to use?

We've certainly put that in place solely with the objective of letting them know about the programs, services and resources available at the different levels of government—not only federally—and making a tool that is easy for them to use. In two minutes, you're going to get a very tailored set of supports or answers to the questions you're looking for.

[Dean Allison, Conservative, Niagara West, ON]

Thank you, minister.

I don't have much time. As a matter of fact, I think I only have time for a comment now because of the time left.

I would encourage you to continue to—I spoke to 150 businesses this summer myself, on tariffs, particularly—pass back to the finance minister how important it is that we deal with regulatory burden and competitiveness in this country. I know we're having an update soon so we'll just have to wait and see what's going to happen.

I really hope that those are some of the issues that are addressed: what's going on in the States around regulatory reform, taxation reform and all those things. Like it or don't like it, it doesn't matter. It's making us less competitive and we're seeing dollars leave this country.

I encourage you to speak to the minister and continue to work on this whole issue of competitiveness for our country.

[The Chair, Liberal, Mark Eyking]

Okay.

We're going to have to leave it at that comment.

We'll move over to the Liberals now.

Madam Ludwig, you have the floor.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Thank you.

Thank you so much, minister, and team, for joining us this morning.

My husband and I are small business owners. Over the decades, we certainly understand the commitment and requirements involved in running a small business, as well as running a family and working full time outside of those small businesses.

The awareness piece is something that I heard consistently in terms of the program. EDC and BDC have often come before our committee and presented and done a phenomenal job. As you've mentioned in your great work there, minister, 99% of our businesses are small businesses. In rural areas, getting access to the services becomes a little trickier, as well as the distance to go to the regional offices.

Within your strategy, are you considering reaching out to the regional chambers of commerce, the CBDCs, maybe Startup Canada, the regional development corporations and even the Canadian banks? Many small businesses will go to a bank first. As you well know, banks are typically risk-adverse, so even if the banks have an option to send them someplace else.....

The other piece I would encourage, and I hope is part of your strategy, is talking to post-secondary institutions, the business programs, either undergraduate or graduate programs, and making the students more aware but also explaining how they might be able to partner through a program like the export partnership program with small businesses. Thank you.

[Mary Ng]

Thank you so much for that.

You're absolutely right. Again, that's why I have export promotion. I think the promotion part is key. We have to let our small and medium-sized businesses across the country know where the resources are.

You're absolutely right in terms of the organizations, the small and medium-sized businesses but also the networks and the ecosystems that exist across the country. We have to let them know where those supports might be, whether it is access to capital, talent or mentorship.

Whether it's the banks, the chambers or the start-ups, I'm very pleased to say that within the first week of my appointment, I talked to all of them. It really wasn't to dig in, it was to simply say that I have this portfolio and I'm so excited to be working with you.

I do see that it isn't just government, and even within the government, we must work horizontally. We also need to engage with the stakeholders and with others who are working to help support the growth of our Canadian small and medium-sized businesses.

I think this is where there's an opportunity for you, as the committee, to actually study this and perhaps take the time to hear more, in greater depth. I look forward to the work that the committee is going to do, so that I can benefit from some more specific types of recommendations, or some prioritized recommendations from those organizations that would then help me do our work.

With respect to post-secondary...absolutely. There are five supercluster initiatives across the country. They see academia as integral to the growth of small and medium-sized businesses. There are companies that are growing that research—where you're taking from research to commercialization—who use the services of IRAP, the industrial research assistance program, for example, out of the NRC. These are programs that the federal government has that are working with academia.

Academia also sits closely with many of the incubators and accelerators across the country. Those are also supports that the federal government—along with provincial partners and others—has collaborated on. There we are seeing wonderful growth and opportunities of small companies, young entrepreneurs who are developing their business plan and ideas out of post-secondary. Through that effort, through the attached incubators and then the accelerators, they are getting the access to advice, mentorship networks and financing.

Whether it is financing through the BDC or through our venture capital catalyst initiative....

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Can I squeeze in one more question?

[Mary Ng]

Yes, please.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Thank you.

On the importing side—

[The Chair, Liberal, Mark Eyking]

You'll have to be quick. You only have 20 seconds.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Is there any consideration for working with small businesses to let them know about the importing opportunities?

Companies already have their own supply chains established. There may be an opportunity, when someone's looking to export to Canada, to partner with them.

[Mary Ng]

Indeed. I think that this is something that you can look at.

Trade goes both ways.

[Karen Ludwig, Liberal, New Brunswick Southwest, NB]

Great, thank you.

[The Chair, Liberal, Mark Eyking]

We're going to go to the NDP now.

Ms. Ramsey, you have the floor.

[Tracey Ramsey, NDP, Essex, ON]

Thank you, Minister.

It's very important that you're here. Yes, a lot of trade agreements are being signed, but what we're seeing is that the exports are going down once we're signing these agreements. Yesterday the media reported that the National Bank of Canada is saying the Canada-E.U. trade deal is a disappointment, as deficit with Europe soars 46% over the last nine months, in comparison to the previous year.

Yes, we are signing these agreements but we're not seeing their benefits in the way that SMEs desperately need to be seeing them.

I have two questions for you. The first one is around the steel and aluminum.

We have had a lot of SMEs coming before the committee to present to us the desperate situation they are in, because the programs are not working. We heard from several of them that they just don't apply because it's too difficult to navigate the system of supports that are available.

I'm going to read you this quote. This is from Mr. Chris Wharin, from Bohne Spring Industries, who came here on October 23:

No small business owner in Canada should have to be subjected to this type of pressure. Business is stressful enough without having to deal with government intervention of this scope and magnitude. How much time and effort should I have to devote to fighting these tariffs and trying to pass the price increases along to increasingly hostile customers? Does our government care if small businesses such as ours survive? How can I grow and run my business effectively when I have to deal with the consequences of these tariffs and material increases? Shouldn't small businesses be focused on growth instead of fighting the government and fighting with customers on price increases?

I give you that quote for thought. The question I have for you is, what role are you playing in trying to help the SMEs impacted by the steel and aluminum tariffs?

[Mary Ng]

Thank you so much for your question.

I'm going to begin with a general answer, which is that absolutely we care. We care about all of the small and medium-sized businesses. They are 99% and, therefore, they absolutely are the backbone of our economy. They're the job creators. Their success is indeed our success.

With respect to the steel and aluminum tariffs, we believe they are unacceptable. The tariffs are harming workers not only in Canada but—

[Tracey Ramsey, NDP, Essex, ON]

I'm sorry, but I have limited time.

Can you speak specifically to the work you're doing on this file to help the SMEs? I know these things and we agree on the situation, I think, but how are we helping them? How is your ministry and department helping?

[Mary Ng]

Part of the reason I'm here and part of the reason I'm looking forward to the study that you're going to be doing is that I hope that what I will be able to get back from the committee are some recommendations about how we actually help our small and medium-sized businesses grow through exporting.

We have signed many trade agreements. The export figures you quoted don't always capture the supply chains. The statistic I quoted earlier was that in the 11 months since CETA came into force, we have seen 4.3% growth for companies.

We know that it's a billion and a half new customers and only 12% of our SMEs export. If only 12% export, there is a real opportunity.

[Tracey Ramsey, NDP, Essex, ON]

Of course. I agree with that.

[Mary Ng]

There is a real opportunity for our SMEs to grow, so I'm really looking forward to the work you are going to do to help me with some of those concrete recommendations on how to help our SMEs become more export ready so that they can take advantage of the new customers.