Thank you, and thanks for the opportunity to be here today to share CFIB's perspective on how governments can connect small and medium-sized enterprises with trade opportunities.
I am going to walk you through a bit of a slide presentation. I'm hoping you have it in front of you, over the next few minutes.
First, CFIB is a not-for-profit, non-partisan organization that represents more than 110,000 small and medium-sized businesses across Canada. Our members represent every sector of the economy and are found in every region of the country.
To better understand our members' perspective on international trade, we conducted a survey in 2017 that got almost 4,400 responses. As you can see, 31% of the survey respondents had some experience with exporting, and 71% had some experience with importing. For some, it's only very occasionally that they engage in trade—maybe a few times a year—while others trade daily. What's important, though, is that regardless of their trade frequency, it needs to be as seamless as possible if we want them to continue to trade internationally.
It's also important to keep in mind that not all small businesses can or want to get involved in international trade. In fact, almost half claim that their products or services are not exportable, and just over one-third actually state that domestic markets are sufficient.
However, there are still some real opportunities to work with some of those who do not currently export because they lack resources or expertise to expand into foreign markets, may not have the appropriate contacts or struggle with things like currency fluctuations or financing. All of these are things we believe governments and organizations like ours can help SMEs to overcome.
For those interested in getting more involved in trade, what motivates them to do so? Most do it because they see a growing market demand for their product or service, want to expand their business or see good potential market opportunity. However, more than one-third also cited favourable free trade agreements as having an influence on their intentions to export.
More recently, the CPTPP and the USMCA agreements included SME chapters. This was done for the first time, which is a starting point in recognizing that maybe some of the challenges that SMEs face are unique. Building on these chapters, though, by introducing tools, activities and programs aimed at assisting smaller firms, may encourage more of them to trade.
How can governments best assist small firms to get involved? Looking at some of the most common challenges they face and finding ways to help them address those challenges may be one avenue to explore.
Those challenges include currency fluctuations, shipping costs and various duties and taxes, as well as understanding rules and regulations. Negotiating new free trade agreements is helping to address some of those duties and taxes, but governments could also provide tips and tools on how small businesses could better manage shipping costs and currency fluctuations, as well as help them understand all the various rules and regulations involved in trade and how to address them.
Of course, there are already a number of government agencies that offer some of these services, such as the trade commissioner service and Export Development Canada. However, there is very little use of these services by SMEs. Almost half of the respondents were unaware of EDC and almost 60% were unaware of the Canadian trade commissioner service.
SMEs are also not as aware as they should be about free trade agreements themselves. For example, CETA, which has been in place for about a year, offers extensive new trade opportunities in one of the world's largest markets. However, 88% of SMEs were not that familiar with CETA. Much work remains on demystifying international trade and building greater awareness of the opportunities and tools that already exist.
How do we get more small firms engaged and aware of trade opportunities? Based on this feedback we've heard, I would suggest communicating clearly and often about the various new trade agreements and how they may benefit SMEs. Smaller firms, as was said, will not read entire trade agreements, which can be hundreds of pages long, so governments and other groups like ourselves need to pull out those relevant parts and ensure they are communicated effectively.
We need to provide resources aimed at SMEs that give concrete steps on how to engage in trade. These should include things like guidelines on what customs processes are, what documentation they may need and what regulations may impact their specific shipments. This should be done in plain language, without having businesses consult multiple websites or go to multiple helplines to get the information.
We need to work with other countries and trade-related entities to build tools for SMEs, such as a centralized website with relevant information in plain language. Canada Border Services has talked of a single-window approach with relevant information for years, which would allow one access point to get all the information you need to import. While some progress has been made, it's not yet a reality for most smaller firms.
It would also be helpful if governments would build tools, offer advice or give guidance on how to mitigate things like currency fluctuations, which is the number one challenge they are telling us they face when dealing in international trade.
Another key tool that already exists is the tariff finder, which was recently launched by the CBSA. This is a helpful tool in understanding which codes to use when trying to import products. It would be great to see governments developing more tools like this and making sure businesses are made aware of them.
Finally, we need to build greater awareness of trade-related services such as EDC and the trade commissioners. Most small firms do not believe that these services, if they actually know about them, are aimed at smaller firms. Therefore, they tend to stay away from them, thinking their mandate is to work with large companies. This perception needs to change, and it starts with governments expressing their support and the value that smaller firms bring to Canada and to international trade. We also need to make sure that the various government services focused on trade are well integrated, by making sure they refer to each other.
CFIB is a strong supporter of international trade opportunities. We're ready and willing to work with the government on promoting and encouraging international trade as well as providing feedback on how we can work together to improve tools and resources aimed at small businesses.