International Trade Committee on Nov. 20th, 2018

[Colin Carrie, Conservative, Oshawa, ON]

Mr. Agnew, maybe I could ask what you would like to see in Wednesday's update that you could say is going to be increasing our ability to compete but also educating our SMEs about how to diversify their trade.

[Mark Agnew]

In terms of the high-level chamber priorities, I'll preface it by saying that I'm not our chief economist. I know that calling for a comprehensive review of the tax system is something we are hoping to see, as well as something on reducing the regulatory burden.

Susanna, I don't know if you have anything else to add.

[Susanna Cluff-Clyburne]

Specifically to SMEs, I guess it would be some of the measures that we outlined earlier in our presentation that would be of specific help to get SMEs that are either thinking about or have made that step to go internationally to continue to grow internationally.

[The Chair, Liberal, Mark Eyking]

Thank you very much.

We're going to go to the Liberals now.

Madam Ludwig, you have the floor.

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

Thank you, Chair.

Thank you all for your excellent testimonies today.

I'm going to start with Ms. Tompkins. I'm very proud of maintaining my certified international trade professional designation through FITT.

One of the things you mentioned—and I think it's very clear from witnesses we have heard in this committee for the last three years—is that when we're looking at international trade, we need champions. In really small businesses, the person is either making payroll or there are four or five employees. They know their domestic market, but in having the experience to take that risk, how do we develop champions?

If you look at the products and services that you've been involved with over the last 20 years, how have they been evolving to be more adaptable to industry?

[Caroline Tompkins]

With respect to creating champions in SMEs, a lot of it is informing them of the opportunities that international trade will bring them, but at the same time informing them of the risk and helping them know how to mitigate those risks. A lot of that is training.

In most SMEs, the employees have finished post-secondary education, and they don't really think about lifelong learning. If a business wants to do something new in terms of getting involved in international trade, it's like learning a new instrument. You have to put the time in to train yourself.

The good thing with SMEs, though, is that you can spread out that training. If an SME wants to look at comprehensive training, the FITT programs have comprehensive training for that. They're also now broken down into workshops. There are tons of resources available that talk about, not what you need to do but how you need to do it.

I think there are tons of resources available for these companies about what needs to be done. We need that champion to get them moving to how they do it. If it's a small company of four or five people, the accountant and the bookkeeper should understand international trade financing and transactions.

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

Okay, thank you.

Certainly over the years, my experience in education and post-secondary teaching is that we still have a division between domestic business...a BBA versus an international BBA. Really, when we look at the Canadian market, we should be looking at them as one in terms of the experience.

Ms. Tompkins mentioned knowledge, skills and abilities. If I may ask the Canadian Chamber of Commerce, when you heard what Ms. Tompkins was commenting on, how are you able to get that information to your members?

A party talked about their experience going to India next week. When you're working with your members, do you try to connect them with other members who have had experience in different markets?

In terms of the possibility for training, I think it is important to look at sector by sector, but also a comprehensive set of standards.

[Mark Agnew]

The ways that we communicate our information to members probably won't surprise you. It's webinars, round tables, teleconferences, etc.

When it comes to talking about specific opportunities represented by trade agreements, I'll go back to an earlier comment I made that it's a very highly segmented product you're promoting. Certainly, if one person wants to hear about exporting apples but the other person wants to hear about exporting aerospace parts, there's only a certain level of overlap between the two. Otherwise, you're almost giving two separate presentations.

As far as the Canadian chamber's resources, there is always the capacity constraint we have that constrains us from really giving that tailored piece to members. I think the trade commissioner service has probably faced a similar constraint as well.

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

What do the products look like? If we, as a government, were to put forward something in the budget to do with developing products for education and training, what might they look like? I'm not saying to standardize everything, but what could the products possibly look like? What would they include, if you were able to disseminate that amongst your membership and encourage increased training and awareness?

[Jonathon Azzopardi]

Maybe I can speak to what I'll be doing next week.

I will be meeting with the Indian government, the Canadian government and probably six different manufacturers in India. Then I will take that with a market research package, and I'll be creating a package that we'll hand to Canadian companies to be able to look at India, not only for export opportunities but also for establishing in India.

That's very expensive. It's time consuming. We do it because we're promoting our industry, but if the Canadian government could acquire that information on a sector-by-sector basis and be able to provide a road map for Canadian companies, instead of our having to deliver it to our members, that would be helpful. We're happy to do so, but it takes time.

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

The only thing I will add to that, Jon, is that you're offering that information. Sometimes it's better coming from you.

[Jonathon Azzopardi]

Or working in conjunction with us...yes.

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

That's right. Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you.

We'll to go to the NDP.

Ms. Ramsey, you have five minutes. Go ahead.

[Tracey Ramsey, NDP, Essex, ON]

Thank you so much.

Thank you to all of our witnesses today.

I'll pick up on my colleague's thread. There is a role for industry associations and SMEs to play on their own, but the resources that it requires, to your point, are quite significant. Hopefully there will be something that will connect those pieces and allow resources to go to all of your groups so that you can continue to research.

I know, Ms. Pohlmann, you've been here on several occasions with different datasets reflecting not a huge trend. Things are kind of staying exactly where they are year after year. We're not able to see movement on some of the things that we'd like to see.

We had the minister here last week. The concerns that we're raising and, I think, that we're hearing from companies across the country are that, yes, we're signing these trade agreements, but are we improving trade? There were some really discouraging.... A report that came out of National Bank last week on the Canada-EU trade deal said that we now have a deficit of 46% after signing it, over 10 months. How is it that we're signing agreements that are supposed to open doors for all of the SMEs, but they're not getting across that threshold? It sounds like even the big players are not getting across in the way that maybe they used to.

Something else that's come up at the committee—and a lot of you mention this in your comments—is the importance of SMEs combining export-oriented programs with industrial domestic strategies. These things don't sit independently. They have to work together and be under one piece.

How can we create this? I would like your thoughts, but before I go to them—because we'll probably run out of time—I would like it if you could all submit your recommendations to the committee and be as specific as possible about what you think will work going forward for SMEs to see opportunities in international trade. That's really the crux of what we're doing here, to have a report to provide to the government.

I'd like your thoughts on how we really need to look at these pieces together and not in isolation.

[Jonathon Azzopardi]

We believe that one comes before the other. We believe that, if the foundation isn't here in Canada.... We are committed to creating Canadian jobs. We're committed to paying Canadian corporate taxes, but we can't do that if we don't have an environment suitable for that. We believe that cleaning house in Canada needs to come first before taking on these agreements, because the reverse could happen if you sign a FTA such as CPTPP when we're not really ready. If you take a low-cost country like Malaysia, which will beat us on costs, infrastructure and supporting their SMEs, and go up against Canada, which is not prepared, the opposite may happen.

We believe that taking care of your house here should come first.

[Caroline Tompkins]

With respect to the export-oriented programs, from our perspective, there are foundational international trade skills every SME needs, regardless of what product or service they have, what they are exporting or to which country they are going. Those are foundational international trade competencies that everybody within the company should have.

Programs that support that are critical to ensure that those standards, that foundational know-how, is within the company, and if not, if it's a small business, at least it's within the people they are outsourcing services to so that they have foundational international trade knowledge, whether it's trade financing, global value chains, market entry strategies, etc.

[Tracey Ramsey, NDP, Essex, ON]

That's so difficult to do with the SMEs. On our study about the tariffs, SME after SME has been before this committee saying they don't even have someone they can assign to this. They're dealing with such a loss and have no resources to put in.

I think, Corinne, on your point about the one window, I hope to see this reflected in your recommendations as a way to serve the needs of SMEs.

[Corinne Pohlmann]

Yes, to your first point, I agree with everyone that the competitiveness is absolutely key.

We're taking a different approach to it. It's about affordability for small businesses in Canada right now. Being able to afford to run a business today is becoming more and more difficult. If you can't make it work domestically, then the chances that you're going to take it internationally are probably even less likely.

I think getting the domestic house in order, as some people have positioned it, is really important. That to me is not just on the taxation side, which is absolutely key and I could start talking about all the different taxes we're worried about coming at us in the next few months.

In addition to that, it's also dealing with regulations. Red tape continues to be a huge issue for small companies. That triples when you go into international markets. That is another area where we need to figure out how we can get at them. While trade agreements address that to some degree through things like regulatory co-operation councils and so forth, that tends to focus on big business regulations and not so much on the little irritants that really bother small companies. I think that's what's important in trying to deal with what's going on at home.

The last point I want to make is that internal trade is still an issue in this country. If you can't trade among provinces, how are you expecting them to try to go into international areas? We'd love to see some progress on that front. There's been very little out there since the signing of the Canadian Free Trade Agreement.

Those I think are the areas that we have to address first, if we really expect small businesses to be able to go out internationally.

[The Chair, Liberal, Mark Eyking]

Thank you.

We're going to wrap up with one more MP.

Mr. Sheehan, you have the floor.

[Terry Sheehan, Sault Ste. Marie, Lib.]

Thank you, Mr. Chair.

Thank you for all your presentations. They're very helpful as we're kicking off this study. The minister was here recently. We asked her a lot of questions. She's told me she wants to try to pull out how the federal government can use these new trade deals to expand.

My first question is to the Toronto export folks. I used to work in economic development for the Soo many years ago. When you were testifying, one of the things I wanted to ask you is, who's using your services now? Could you give us a profile of what that business would look like? Are they a small business, a medium business, a microbusiness? Where are they on the spectrum? Are they start-ups, within the first three to five years, or beyond five years?

I think we want to figure out who's doing it, who's using it, who isn't and why not? Could you answer that?

[Leigh Smout]

The profile varies significantly, from quite small companies.... For instance in our trade accelerator program, our criteria starts at doing half a million dollars of annual business revenue. However, on average in the Toronto region those companies that have gone through TAP have been between $9 million and $10 million in annual average revenue. Not quite the start-ups obviously, a little more established.

It varies, especially by sector. I've heard sectors mentioned a couple of times. If you're looking at tech for instance, a lot of start-up companies are not even thinking domestic. They're looking at building some software so that we'll be able to push a button and deploy internationally. Whereas if you're a food and beverage or a consumer packaged-goods company, you have to reach a certain size before you're going to address selling into the U.S. or China, for instance.

We've had this great range, again, a bit by sector. The profile is of companies that we have found a way to encourage to attend. That's one of the things that I think is very interesting. A lot of these companies are trading internationally. They've gotten there by happenstance, because they thought it was the thing to do, but not by strategy. Our job is to bring them in.

We bring them in through our partners, and that includes Export Development Canada, Business Development Bank of Canada, but also the private sector, RBC, UPS and so on. All these organizations nominate these companies into this. There are amazing stories of companies that didn't think they were going to trade, they were doing $3 million and selling LED lights and thought they'd be fine, and then were convinced to come by their bank, in this case, and a year later have two big international contracts out of the U.S. worth $12 million a year out of the program.

Those are the kinds of folks we need to find a way...and the government needs to support us and all this ecosystem, as you're hearing, in getting out to them and encouraging them that there's great opportunity out there and resources are available. We bring the resources together.

[The Chair, Liberal, Mark Eyking]

Mr. Fonseca.

[Peter Fonseca, Liberal, Mississauga East—Cooksville, ON]

This will be to all the witnesses, and thank you very much for your testimonies.

Where Canada punches well above its weight is when you look at the mining sector and entertainment. PDAC is the biggest world's fair. We get all the miners from around the world coming, a lot of the financing, etc. It's the same thing we get with TIFF. You have a lot of small businesses, directors, writers, bringing all that business here.

Is that something in terms of exposure branding that your organization is talking about? Is that where the government could help in terms of creating that cluster to be able to provide exposure to many of your members, so that people from India and elsewhere would be able to travel here and see what we have available to world markets?

Should we look at more fairs, so we can expose our businesses, because it's very difficult for them to go out? We heard about the costs, here in Canada, to attract global markets to come and see what Canada has to offer, especially for small businesses.

[Leigh Smout]

Very much so. We support inbound trade missions. We think there's great value in bringing groups here to interact with our businesses. It works for both parties. Trade is a two-way street, especially where you have agreements such as CETA. The more that can be done to support those kinds of fairs here the better from my perspective.