International Trade Committee on Nov. 27th, 2018

[The Chair, Liberal, Mark Eyking]

Good morning, everyone.

Welcome to our witnesses.

Sorry for the delay. It's a busy time of the year for legislation up on the Hill and with the slippery roads, it takes a little bit to get up and down, but we're glad you folks made it from all corners of the country.

Of course, you know why we're here. This is the international trade committee. We've embarked on a study. Over the last few years, we've done many trade agreements since this committee started in this Parliament. Right now, we're doing a study on how to capitalize more on them, especially with the small and medium-sized businesses across this country. They're such an important part of our economy. I think this is our fourth meeting.

Some of you may have been in front of committees before. Usually five minutes or less is what we like to do, for your opening statements. That gives us time for dialogue with the MPs.

We'll start off with Ms. Peters, from Communitech.

[Avvey Peters, Chief Strategy Officer, Communitech]

Thank you, ladies and gentlemen, for the invitation to join you today.

My name is Avvey Peters and I'm the chief strategy officer for Communitech. We're a tech organization in the Waterloo region of Ontario. It was established in 1997. I also lead something called the Canadian Digital Media Network, which is a group of 26 of Canada's leading innovation hubs.

At Communitech we work to build a pipeline of companies that have scaled and will continue to scale into globally competitive firms. They start in the Waterloo region and then they grow and stay in Canada to create jobs and economic opportunity.

Over the last decade we've supported more than 3,000 companies, helping them to attract $1.7 billion in investment and create 16,000 new jobs. This has helped Waterloo region create the second-highest density of start-ups in the world and to attract companies like Google, Shopify and NetSuite to the region.

Our job is to help start-ups and scaling firms do everything from raise capital, to recruit talent, to build out sales and marketing processes, and to help them export to global markets. It's that last area of activity that I want to highlight for you today, given that part of your work is to delve into the ability of small and medium-sized enterprises to maximize the government's assistance in benefiting from trade opportunities.

To that end, there are two ideas I'd like to share with you related to helping those SMEs. They are the importance of early-stage support for Canadian firms and that of partnering to effectively connect firms with the help that they need.

Tech firms are born global. They seek customers outside Canada from the outset. Often they look first to the U.S., but increasingly we see those firms moving beyond North America to explore sales opportunities. From our work to help more than 5,500 companies across Canada each year, we've come to recognize that the most important assistance we can give them is to help them understand how to effectively navigate new markets at the earliest moment possible.

Small firms need market intelligence data and analysis to help them evaluate market opportunities and the potential for customer attraction. They need advice from experienced business leaders who have current networks and a strong understanding of regulatory environments, business culture and supply chains. They need support for travel, so they can meet directly with customers and investors and develop their own in-market perspective. They need pre-flight training and follow-up programming so they can maximize their participation in other programs like Techstars, Y Combinator or the Canadian technology accelerator program. They need to learn how to leverage the brand of Canada when they do business abroad.

The government supports these needs already through the trade commissioner service, Export Development Canada, and through a number of programs offered by Innovation, Science and Economic Development Canada. In fact, many of these ideas were highlighted in the recent fall economic statement. The challenge that faces many small firms is, first, how to become aware of these supports and figure out how to access them. It is also to quickly understand whether they are good candidates for these programs or not, so that they don't waste time that could be better spent on building their businesses.

This is where the notion of partnership comes in. Government agencies and departments can't have an on-the-ground relationship with every single promising tech company in Canada, but there are organizations that have those working relationships.

Innovation hubs, chambers of commerce, boards of trade all engage on a daily basis with firms to help them attract talent, raise capital and find customers. Closer collaboration among those regional organizations and the Government of Canada would create a more seamless experience for companies by providing local training, coaching and preparation in advance of their global sales efforts, and a coordinated hand-off to in-market experts and resources.

These kinds of partnerships can also help to surface points of friction in existing programs, the limitation of CanExport, for example, to be available only to companies entering a market for the first time. What of the company that has piloted online sales in a new market to test customer attraction before moving heavily into that region?

For many small firms there's a great deal of pre-work required before they can take full advantage of the resources made available by the Government of Canada. Regional partners can help with these preparations. We can act as a funnel of strong candidates to the right opportunities and we can make sure that firms know about the resources and supports available to them.

We run something called the soft landing program, where we provide travel support and connections to experts and resources in market. Since 2012, more than 480 Canadian SMEs have done business in 58 different countries. They have reported $86.7 million in new revenue as a result of those landings. They have reported more than $84 million in investment opportunities and they have created 235 new jobs. These results are modest relative to the scale of the work done by the Government of Canada to support firms in their efforts to export, but they're a good test of firms' capacity to enter new markets and be ready for more advanced services.

I share these two ideas in the hope that they will be useful to you in your work. I'd be happy to answer any of your questions and share any further background about our work.

Thank you very much.

[The Chair, Liberal, Mark Eyking]

Thank you.

We'll move over now to Northern Cables Inc. We have Mr. Stafford, the president, and Mr. Bacon, the chief executive officer.

Welcome, gentlemen. You have the floor.

[Todd Stafford, President, Northern Cables Inc.]

Thank you.

[Shelley Bacon, Chief Executive Officer, Northern Cables Inc.]

Thank you for having us here today.

We are a manufacturer. We manufacture products. Canada has been a great place in which to be located. We have many things to be thankful for.

I have samples here of Teck cable, if you want to know what it is. We can pass these around, if you like. Teck cable is an innovative Canadian-designed power cable used in mining and hazardous location practices. In the early 1930s, the Teck-Hughes gold mine in Kirkland Lake decided to use an alternative cable to the unprotected, flexible, portable power cables that were the standard at the time. The popularity of this new Teck cable, driven by Canadian industry, quickly spread to pulp and paper and other heavy industries that benefited from these features.

In 1965 CSA formally recognized and developed a national standard around this new cable. Small and medium enterprises, including Northern Cables, manufacture and sell this product in Canada. Occasionally, we even get the chance to export outside of Canada for job-specific applications where someone with Canadian expertise specifies this cable for use.

In recent years other countries, including China and the United States, have started manufacturing these cables and other similar armoured cable designs, which they export for sale in Canada. One of the main difficulties for small and medium enterprises, including us, is that we cannot sell this cable in their jurisdictions, which have IEC codes and no equivalence or any comparable sizes.

The interlocking armoured power cable, which is what you have there, is a North American invention. All of the products and all of the metals that go into the manufacture of that cable are sourced from the province of Quebec. Furthermore, the technology to produce that armour, the flat-rolled mechanical-grade aluminum, has benefited us; it was developed and largely brought on stream by Alcan in flat-rolled steel over the past 50 years.

According to Stats Canada, the volume of imported electrical wiring cable, including Teck cable, is growing each year in Canada. That is creating greater and greater trade imbalances between nations like us and China and the United States. In 2017 Canada imported $1.6 billion of electrical power cable. We only exported $331 million. That's a ratio of $4.85 of imports to every dollar exported from Canada.

Now, the Government of Canada can benefit small and medium enterprises like us by assisting in the promotion of cables like this to be a globally recognized product within IEC standards for trade within CETA and CPTPP. These are new markets. The differences between them, very simply, with these cables all classified in American wire gauge sizes, are the barriers to global trade. Bare copper and bare aluminum conductors are the starting part for all cable designs. Canada needs to take the lead to remove these barriers.

Our own electrical code in Canada, part 1, and provincial electrical codes are creating barriers by only specifying AWG sizes. The IEC standard 60228, on conductors of insulated cables, is also a barrier to trade for North American cable sizes. In order to achieve global trade based on SI units, Northern Cables believes a set of standard sizes based on SI units should be developed.

As I said, there are two types of gauges. There's AWG, which is a standard that goes way back to the 1850s, and there's SI, or système international, which is all based on square millimetres, the size used in IEC 60228, conductors of insulated cables.

I have provided a table in the background information. We have soft conversion. We have hard conversion. No one buys cable in North America in metric sizes. They always refer to it in AWG. You cannot sell the stuff offshore.

We propose a four-step plan to try to elevate the stuff with assistance from the Standards Council of Canada. Add metric conductor sizes to the Canadian electrical code, part I. As part of this first step to introduce the metric sizes, we've already put a proposal in. One of our engineers and Steve Douglas did this. We want to submit more of these things into these codes and standards and convert to hard metric sizes as opposed to the soft conversion.

Canada is a metric country, but we've only gone partway in these areas. By elevating this to hard metric sizes and having the SCC elevate this to the next level, we can then make these products, introduce them into these other markets and export. As it is, these countries can sell into Canada, but we cannot sell into those countries.

Canada follows the international rule of law, with high standards for labour, safety and the environment. As Canada encourages other countries to follow its lead, we inadvertently subject Canadian small and medium enterprises to more regulation and additional costs associated with these high standards.

Teck cables, and other electrical cables, such as telecom, extension cords and utility cables, are all made in other countries from coal-based energy, and contain polymers that sometimes don't meet our low temperature standards.

Currently, we're experiencing aluminum conductors such as this stuff, which we manufacture, coming in from Asia at below world market prices. It's a form of dumping. We would like to see the government apply the Special Import Measures Act duty so that all electrical cables entering Canada come in at world-recognized market values.

Carbon taxes on imported materials and finished goods should be applied. There should be a benefit to domestic manufacturers using clean energy in Canada, and a cost to import electrical cables made from coal-powered energy. That's basically what we're competing against.

In conclusion, Northern Cables is a 22-year-old privately held Canadian manufacturing company located in Brockville and Prescott, Ontario. The firm was started after the closure of Phillips Cables, a Canadian public company that had been located in Brockville since 1922. We started with five employees, and we now have approximately 230 employees as of 2018. We started selling Teck cables domestically in the early years and have consistently added licences and diversity.

Currently, Northern Cables has grown our export market to about 50% of our production. To maintain our position and grow our business, we really need to work within the Standards Council of Canada and the Business Development Bank so we can enter other countries, such as Latin America, South America, which are rich in mining and other natural resources.

We're unable to grow our business more in Canada, because Ontario has already lost 320,000 good-paying manufacturing jobs in the last 15 years due to global trade and government policy. Many of these closed industries were once industrial and commercial users of the cables that we manufacture in Ontario.

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you, sir. That's a very interesting industry in the challenges you face.

Thank you for coming.

Now we're going over to Ms. Arsenault from the best island in the world. From the Cape Breton Partnership, we have the president and CEO.

Go ahead.

[Carla Arsenault, President and Chief Executive Officer, Cape Breton Partnership]

Good morning, Mr. Chair and committee members. On behalf of the Cape Breton Partnership I would like to thank you for the opportunity to appear before you today.

The Cape Breton Partnership is Cape Breton's private sector-led economic development organization, made up of more than 150 private sector investors who are all committed to investing in our island's future and believe that, by working together, we can create a thriving Cape Breton-Unama'ki.

Cape Breton, or Unama'ki, as the Mi'kmaq have called it for centuries, is a breathtakingly beautiful island in northeastern Nova Scotia. It makes up about a third of Nova Scotia's land mass and about 14% of its population at just over 132,000 people spread across five municipalities and five first nations.

The story of Cape Breton's last century is a familiar one in North America. For more than 100 years, the coal and steel industries boomed, turning Cape Breton-Unama'ki into one of the most bustling industrial centres in the country. This was followed, however, by a prolonged decline and a near simultaneous collapse of the fishing, coal and steel industries over the last few decades, and the impact has been devastating. Unemployment, poverty and youth outmigration have all soared, seeing the island's population drop by over 30% in the last 30 years.

However, this history also includes the longer, more constant story of entrepreneurship and innovation that has allowed diverse cultures to thrive on the island for centuries: from the Mi'kmaq to the European farmers and fishers, especially the Gaelic-speaking Scots and French-speaking Acadians who settled on the island and had to rely on their wits and hard work to carve out prosperous lives; from later arrivals like the inventor Alexander Graham Bell who, with his wife Mabel, established one of the first innovation hubs in the world at Beinn Bhreagh in Baddeck; to the host of extraordinary artists and thinkers who have called Cape Breton-Unama'ki home ever since.

I am here today, most of all, to share with you the news that this spirit of invention and creativity continues to thrive in Cape Breton-Unama'ki in the numerous cutting-edge businesses, innovators and artists who live and work on the island, including in Victoria County, which has the highest number of small businesses per capita in all of Nova Scotia. Like Alexander and Mabel Bell, these entrepreneurs are creating and growing companies, products, technologies and works of art that continue to serve and change the world.

After decades of being defined by decline and despair, Cape Breton-Unama'ki is reinventing itself and is poised to become one of Canada's good-news stories and serve as a model for how small, out o the way places can become well-connected incubators and launch pads for world-changing ideas. Cape Breton-Unama'ki is “creative island”. It's potential is unlimited.

To fully realize Cape Breton-Unama'ki's immense potential and the potential of other regions like ours across the country to contribute to our collective and ongoing prosperity, we invite our federal partners to work with us and others to, first, continue to address connectivity infrastructure gaps like broadband Internet and cellular service, as well as rail, road and sea transportation. These service gaps limit businesses' ability to connect with the rest of the world, and rural communities' ability to attract and retain much-needed new residents.

Second, we invite our federal partners to work with organizations like ours, the provinces and others to better coordinate and communicate business support programs and services directly to the private sector through initiatives like program navigators or concierge services. Cape Breton Partnership's export growth service pilot program is one such example, as well as the Atlantic immigration pilot initiative, on which we've been working with the Nova Scotia office of immigration as well as our partners at ACOA.

Third, we invite our federal partners to work with organizations like ours, the provinces and other innovation ecosystem stakeholders to foster greater regional and subregional collaboration among businesses and partners to allow the small innovative businesses, like those working to lead the modernization of the fishery in We'koqma'q, New Haven or Louisbourg, for instance, to contribute to greater national and international efforts. This includes reducing barriers in policy and programs that limit small rural businesses participating in federal programs like the Atlantic fisheries fund and others.

Last, we invite our federal partners to join us and those like our 150 private sector investors, who are putting their own hard-earned money into building a better future for Cape Breton-Unama'ki and all of Canada, in taking bold, coordinated and long-term looking action, action that is looking 10 years into the future and beyond and is focused on supporting entrepreneurs, innovators and small and medium-sized businesses where they live, and on helping them start strong, reach the world more easily and build a better country for us all, from the grassroots up.

I would like to thank you very much for your time, and I would be happy to answer any questions.

[The Chair, Liberal, Mark Eyking]

Thank you.

We're going to go to Monsieur Noël from the Fédération des chambres de commerce du Québec. Bienvenue.

[Philippe Noël, Director, Strategy and Economic Affairs, Fédération des chambres de commerce du Québec]

Good morning, everyone.

Thank you for inviting the federation to discuss government support for international trade of small and medium-sized businesses.

Before getting to the heart of the matter, I would like to introduce the Fédération des chambres de commerce du Québec (FCCQ).

The FCCQ brings together more than 130 chambers of commerce and 1,100 member companies, making it the largest network of business people and companies in Quebec, the provincial chamber of commerce.

Thanks to our extensive network, we represent more than 50,000 companies operating in all sectors of the economy across Quebec.

Government support for the success of our companies in global markets is very important for us because the future of our economy depends on the ability of our companies to export and deal with the increasingly fierce competition, both domestically and internationally.

As we like to point out, more than 28% of our economy depends on the production of goods and services for international markets. If we include sales in other provinces, more than 45% of our GDP is connected to markets other than Quebec. Those data remind us how important this issue is to the economy.

The FCCQ has previously had the opportunity to present its point of view on support for SMEs in export matters to both the Government of Quebec and the federal government, for example, on committees such as this one.

We would like to focus on three aspects today.

The first is the need to properly promote the business opportunities arising from new trade agreements. Large companies generally have a better understanding of global trade issues and are better able to quickly respond to a new trade agreement. However, our discussions with SMEs and chambers of commerce allow us to identify gaps in information and awareness about the issues with new trade agreements. If poorly informed, companies may miss out on business opportunities created by those agreements, or be taken aback by the arrival of new competitors on their traditional markets.

The second aspect is the need to better target support for companies with exports. Other organizations, such as Export Development Canada (EDC) have previously demonstrated that providing support that takes into account the company's level of maturity in exporting is preferable, as it helps to better guide the company's export strategy. For example, we are talking about giving more online support to smaller companies and personalized support to companies with great potential.

To this end, we were pleased to note in last week's economic update by the Minister of Finance that he is planning three measures in line with that recommendation.

First, he mentioned a new mentoring program, designed to match entrepreneurs who want to enter new markets with business leaders who are already established there.

Second, he intends to provide funding for export preparedness and capacity building initiatives for high-potential companies.

Third, he plans to provide additional funding for trade commissioners to better support emerging sectors and our agricultural exporters.

The last point we want to make is the importance of continuing to support our companies as they seek to maintain or gain market shares in the United States. The majority of companies that start exporting do so in the United States, which makes perfect sense. It is the world's largest economy and this market is nearby, just south of the border. We know that the government wants to increase the share of Canadian exports to high-potential overseas markets, but for many of our SMEs, breaking into the American market remains the number one objective.

That is why the FCCQ has set up the COREX program, which facilitates trade between Quebec SMEs and companies in the seven northeastern U.S. states, including New England and New York State. The program is supported by Canada Economic Development, among others. This is precisely the sort of initiative that SMEs say they appreciate, as it makes it easier to connect with new business partners in a priority market.

I would also like to say that we encourage the federal government to work closely with the provinces to ensure that their export support services are well integrated and, most importantly, to better communicate to businesses all the services that are available. For example, by systematically cross-referencing federal and provincial services to meet the needs of exporters, the full range of services offered becomes better known.

In closing, let me take this opportunity to remind you that, while the opening of markets offers many business opportunities to companies, concerns remain, particularly about the compensation paid to Quebec dairy producers.

Recent free trade agreements have created breaches in the supply management system. I will have the opportunity to come back to this in our discussion, if you wish.

Thank you again for your invitation. I will be happy to answer any questions you may have.

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

That wraps up the presentations of our witnesses. We're going to move on to dialogue with the MPs.

I'd like to welcome MP Rusnak from Thunder Bay—Rainy River and MP Choquette from Drummond.

We're going to kick this off with the Conservatives going first.

Mr. Allison, you have five minutes.

[Dean Allison, Conservative, Niagara West, ON]

Thank you very much, Mr. Chair, and to our guests, thank you as well for being here today.

My question is for you, Ms. Peters.

I know you guys do a wide range of things. Would you consider yourselves more an incubator or an accelerator? You do all of it, so where do you spend most of your time? Is it in acceleration?

[Avvey Peters]

We think of ourselves as a third category. The innovation hubs often will have an incubation program or an acceleration program as part of what they do. We work with companies from the one-person start-up right up to the size of OpenText or Google. We run the gamut.

The focus in the last couple of years has really been on scaling firms, because we have a really strong pipeline of early stage companies that are now starting to get on that growth curve. We have been spending a lot of time thinking about how you take a company that has $1 million in annual revenue and get to it to $10 million. Then, how do you take that $10 million revenue company and get it to $25 million, $50 million and on up the chain?

Our focus is really on how we help more companies grow to $100 million, because once they're at that size, they have every option as far as how will they grow and how they'll do business is concerned. They become the real engines of job creation.

[Dean Allison, Conservative, Niagara West, ON]

I guess the challenge is that when you're scaling a company from zero to 10, 10 to 20, or 10 to 50, it's different skill sets.

[Avvey Peters]

Absolutely.

[Dean Allison, Conservative, Niagara West, ON]

Sometimes the entrepreneurs have it and sometimes they don't. It's up to them to sometimes get out of their own way or get the expertise they need.

What are the challenges? You talked about some in your opening remarks, but where would you say the greatest challenges are? I guess it depends on the stage or the [Inaudible—Editor]. Is it in raising capital?

Because of your size, scope and reputation, you guys probably have a lot of opportunity for angel investors to come in. You probably do your own Dragons' Den type of stuff where you get to pitch what's going on.

In your opinion, though, where is the toughest challenge?

I talk a lot about competitiveness as being a challenge in this country. You guys are in a different market in that you're attracting the best and the brightest, some of them coming right out of Waterloo and being able to stay in the region. You guys have built some critical mass, so it's a great place to go. I wish we could replicate you guys all across the country, quite frankly.

Talk to us about some of the challenges, in particular, that you guys deal with in the scalability of companies.

[Avvey Peters]

Part of the reason for our national network approach is to try to scale good programming and access to resources from one end of the country to the other. There are 26 of us in all kinds of communities trying to build this kind of capacity.

There are three major problems we're all trying to help companies solve. One is access to the right kind of talent. To use your example, a founder is not necessarily a CEO. He or she can, in many cases, become a CEO with the right kind of opportunities to meet with others who've built that kind of a company before by building a network that helps them do that.

The access to capital piece is the other one we spend a fair bit of time on and encouraging companies to seek investment anywhere that makes sense for them. Some of it is Canadian investment, and some of it is not.

The third piece is that access to new markets and new customers, because we know most of our tech firms are not primarily selling in Canada. They start globally, so for us it's helping them understand how to set up their company to be successful so that they don't run afoul of international regulations or paint themselves into a corner.

[Dean Allison, Conservative, Niagara West, ON]

Sure.

Talk to us about keeping companies Canadian. I know one of the biggest challenges is that you start raising additional funds and sometimes the cash is coming from the U.S., Boston, San Francisco, or wherever, it doesn't matter. Then some of these people want to move. What's the strategy?

I'd love to see Canadian companies that grow to $100 million and actually stay in Canada. I realize that access to capital is part of that, but it's not the only thing.

I'll come to this in the second round, but talk to us about how we keep those companies so that they can grow $100 million here in Canada.

[Avvey Peters]

This is exactly the strategy we're trying to pursue, because we know companies have all kinds of options. We've seen a really encouraging trend in the last eight or nine years. We used to have really promising start-ups get a round of investment from a U.S.-based investor and that would be the last we saw of them. They were required to move. They are increasingly coming back. The investors are starting to understand what the deal flow looks like in Canada.

We spend a lot of time building relationships with foreign capital providers, and getting them to actually come and see companies. Once they make one investment, then they're regularly coming to Waterloo, Ottawa or Vancouver to check in on that investment. That's an opportunity for us to expose them to the next wave of companies.

We're seeing investors coming to us more and more to pursue that deal flow. It's always something we have to balance. Provided that companies can get the resources that they need here—whether it's the right technical talent, the right leadership talent or the investment they need to grow—they don't want to go. They want to be headquartered here and do business elsewhere.

[The Chair, Liberal, Mark Eyking]

Thank you.

We'll go to the Liberals now.

Mr. Dhaliwal, you have the floor.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Thank you, Mr. Chair. Thank you to the presenters.

My first question goes to Mr. Bacon.

Being a professional engineer—and I'm sure Omar being a professional engineer as well—I find it interesting that you talked about the building code and the different standards that you have. You also mentioned CETA and CPTPP.

Could you tell me in clear terms what role government can play that will help companies like yours when it comes to national and international standards?

[Todd Stafford]

I'll answer that.

We've grown well beyond the $100-million threshold and we're trying to stay in Canada, but in trying to export cables, our industry is still dominated by American measurements. That's really the small piece that we're talking about today.

American wire gauge, AWG, is in inches and thousandths of an inch. Export markets don't recognize that. Everything is metric in the rest of the world. If we're going to be global, we need to finish the job that we started in 1974 and become metric, because when we go to Europe or we go to other countries, they don't recognize AWG. Everything is in millimetres squared.

Our own national standards are in AWG. We've used IRAP grants, and we've worked with the BDC, but before we pack up and go on a trade mission to a foreign country, we have to get our world into metric. We're not looking for a financial gain. We want to get things level so that our standards.... They can still use AWG, or you're going to have a bunch of old electricians who won't know what they're looking at, but we need the metric system in our electrical standards so that our products can be marketed.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Are you telling me that our building code is still following the AWG?

[Todd Stafford]

Yes.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Okay, first of all, we have to change the building code. Have you made those efforts?

[Todd Stafford]

We're working with the SCC, but it's slow. If there's any assistance we could get, that's our purpose for driving here today. We're trying to get some assistance. There's some urgency to that.

We've made proposals to the SCC. We have our own engineer. We've paid to fly him around the world to sit on committees. We sit on standards committees. We sit on CSA committees. There's a real reluctance domestically to go fully metric.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Once we go fully metric, then you will be able to better compete across—

[Todd Stafford]

Now we can open up and work with the Business Development Bank, and work with programs to get into global.... We export our product all over the world now, but it's to very specific areas where no electrical code works...like in a mine site where there's a Canadian engineer and he specifically asked for our product.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Thank you.

Getting on to what my friend Mr. Allison was talking about, the previous government and we, as Liberals, have introduced and signed a number of treaties.

If we look at the manufacturing industry in Canada, we can't compete with countries like China and India. It's going down. Either we have to be a knowledge-based economy or there have to be programs in place so our SMEs are able to grow into bigger enterprises that can trade internationally and provide opportunities for our young people.

I would like to know how the companies and the government can work in collaboration. This is open to all of you. Anyone can chip in.

[Todd Stafford]

Our biggest challenge is really to get standardization and then get regulation out of our way. We struggle. We're in Ontario, so we struggle with all kinds of things to be competitive. We struggle with electricity. We struggle with labour laws. We struggle with all of those things that are just part of our environment. Then, at the same time, when we have an opportunity to go to the foreign market, we're fighting against our own standards that haven't gone global yet.

Before we can worry about some of the other programs, the first step is to get Canada on a level playing field with the trading partners we have.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Does anyone else want to chip in?

Ms. Peters.

[Avvey Peters]

If I understand your question correctly, in a couple of areas of technology, Canada has the capacity to have world-leading advantage. Artificial intelligence, quantum computing and regenerative medicine are places where we really are at the front of being able to create some world-changing products and services.

It's important for us to think about how we can back the momentum in those really critical areas of technology, because that's where we can make a big difference.

[The Chair, Liberal, Mark Eyking]

Thank you, Mr. Dhaliwal.

We're going to the NDP.

Mr. Choquette, you have the floor.

[François Choquette, NDP, Drummond, QC]

Thank you very much, Mr. Chair.

My first question will be for you, Mr. Noël. I will start with the end of your presentation. You talked about dairy farmers in Canada. They are—how should I put it politely?—a little exhausted by all the breaches in supply management from the negotiations of both recent free trade agreements. They are of course expecting action from the current Liberal government. You briefly mentioned last week's economic update. Were you as surprised as the dairy producers to find that there was nothing in this update, no announcement, no sign that they would be compensated for all the losses they have suffered as a result of those trade agreements?

[Philippe Noël]

As a first response, we know that the federal government wants to organize consultations on this issue, in which we want to participate actively since many of our members are concerned about it. We really hope that the measures will be clarified in the next federal budget.

Furthermore, we often hear that some producers have not received anything under other free trade agreements, or that payments were significantly lower than they had been promised, according to them. We want the compensation parameters for dairy producers to be defined in the short term. It is also desirable that a system be put in place quickly, applied diligently, to speed up the payment of the compensation promised to dairy processors. Contributions from the dairy processing investment fund should also be paid, prorated to the volume of production.

[François Choquette, NDP, Drummond, QC]

Absolutely.

In my riding in Drummond, a number of dairy farmers have come to see me. They had applied for the dairy farm investment program, but they did not receive anything because the window for receiving applications for the program was open only for one day, 24 hours or something like that. Overnight, they lost the opportunity to receive funding in preparation for those agreements. They hope that the next window for receiving applications will allow everyone to submit them.

I have another question for you about a problem that we are seeing a lot right now, particularly in Quebec, but also across Canada, namely the labour shortage. I think it is because of the changing economic, labour and training needs. Does the federation have a position on that? Does it plan to ask the federal government to support the provinces in this economic transformation? All businesses—including SMEs, I believe—are facing these challenges when it comes to recruiting a skilled workforce capable of performing today's new tasks.

[Philippe Noël]

That's one of the main issues our federation is facing. We are working extremely hard to try to remedy this labour shortage, which is a major problem in Quebec. The federation offers the Un emploi en sol québécois program, which targets several sectors of the economy. Because most—if not the vast majority—of new immigrants arrive in the greater Montreal metropolitan area, we want to encourage them to settle more in the regions to fill vacancies. In our prebudget submission to the federal government, we are asking for specific assistance to help retain experienced workers in the workplace. This federal assistance could help to offset the labour shortage.

[François Choquette, NDP, Drummond, QC]

Thank you very much, Mr. Noël.

We raised this subject in the recommendations of our 2015 report.

Ms. Arsenault, you talked about the importance of being connected to high-speed Internet across Canada. What could the government do to help you in that regard?

[Carla Arsenault]

I had a little difficulty picking up the last part of what you just said, but I think you were asking about the Internet.

I did a fair amount of research and talking with our small and medium-sized businesses across a range of industries before coming here today. I was a bit surprised by the feedback I received. I expected them to list this program or that program, and say they need this or that. However, it wasn't like that at all. It was very basic. I'll give you an example.

One of them is selling millions of dollars' worth of seafood around the world every day but can barely book a plane ticket on the Internet, because the service doesn't stay up long enough to hit the submit button to get the ticket booked to go to a trade show in Beijing. Another example is they can't carry on a cellphone conversation from the plant to their home because the cell service is so poor.

Many of our rural businesses and our rural regions across the country are exporting, and the programs and services are there, but for some of them to be able to scale up and grow, it really becomes about general access to the world. Broadband Internet and cellular service are so tremendously important for some of our rural communities. The connect to innovate program was not particularly helpful for our region.

There is a provincial Internet trust currently in the works that we are hoping will mean a change. It's really a very fundamental thing. It's probably not what you expected to hear from me today, but....

[The Chair, Liberal, Mark Eyking]

Thank you.

Time is up for the NDP. We're going to move over to the Liberals.

Madam Ludwig, I think you're sharing your time.

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

Thank you.

I'd say, Ms. Arsenault, that you should speak with your MP.

[Voices]

Oh, oh!

[The Chair, Liberal, Mark Eyking]

I was wondering who was going to say that. She actually has two MPs.

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

Double duty, then....

I'm going to start with you, Ms. Arsenault.

I represent the riding of New Brunswick Southwest. Certainly, broadband and cellular infrastructure is absolutely critical, not only to attract business to our rural areas, but also to keep people there.

You mentioned specifically the Atlantic immigration pilot. Could you share with us the results you have from that? Do you do any tracking or matrices on the follow-up?

[Carla Arsenault]

Regarding the Atlantic immigration pilot program, the particular piece I was acknowledging was that we have a partnership with ACOA and the Nova Scotia office of immigration. That has enabled us to hire program leads who are on the ground in rural regions. They work for organizations like ours and are connecting businesses with the office of immigration, working with them side by side and helping them through the paperwork process.

Many of those small businesses don't have the internal resources. They have no idea where to start or where to go, so we have staff who are knocking on the door and saying, “If you are having labour challenges, this is a great alternative for you,” and working them through that process.

We started a little more than a year ago, and just over 100 companies have become designated to date. Of those, we have just over 99 endorsements. The designation is getting companies designated to receive an individual, and the endorsement is when the candidates have been identified. Many of those are bringing family with them.

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

Thank you.

Is there a particular region of the world that your companies are targeting, or a particular skill set that they feel is lacking in the area?

[Carla Arsenault]

For the Atlantic immigration pilot, the NOC codes are a bit different from those in some of the other streams, which has been incredibly beneficial, so we're bringing in chefs and a number of different types of NOC codes that we traditionally could not have. It has not been specific. It has been really dependent on the needs of those individual companies.

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

Thank you.

I'm sharing my time with Mr. Hébert.

[Richard Hébert, Lac-Saint-Jean, Lib.]

Thank you, Ms. Ludwig.

Thank you, Mr. Chair.

Let me congratulate all the witnesses for providing us with illuminating insight into the various situations presented to us.

Ms. Peters, you must have been pleased to hear in Minister Morneau's economic update that there would be money for digital media. I think you have certainly mentioned the assistance that will be provided to the media.

However, my question is for you, Mr. Noël. You talked about the importance of doing business with the United States and capitalizing on the most natural border possible. We are talking about exchanges worth $2 billion every day, of which you are certainly aware. You are also probably aware that the team of the Minister of Small Business and Export Promotion is very focused on this.

In recent years, Canada has signed 14 different agreements with 51 countries, opening up additional markets with a total of 1.5 billion customers. Can you tell us if your members are aware of those numbers and of our services, for example by visiting our Innovation.canada.ca website? I suppose so, but I would like to hear you say it and I would especially like to know whether our officials are helping you enough to export more. We know that companies that export more pay their employees better. It's a cycle. Could you comment on that?

[Philippe Noël]

We recognize that the government is doing a lot these days to inform SMEs about the benefits of certain free trade agreements. However, the SMEs often tell us that they are not sufficiently aware of the assistance programs. In other words, they need to be better informed about opportunities and challenges in other markets.

As for the United States, I have talked at length about it. It is important to diversify our exports. In its economic update, the government announced measures to increase and further diversify business exports. Regulations, including customs obligations and certification processes, should be monitored. The government should work much more closely with businesses and make an effort to share the assistance with them. I think that's critical.

For our part, we toured the companies. We visited 11 regions and met with 500 participants to introduce them to the Comprehensive Economic and Trade Agreement (CETA), between Canada and the European Union. In Montmagny, for example, we talked to 60 entrepreneurs—a huge number for the region—to let them know about the many opportunities this free trade agreement offers them. So we are doing our part. The use of existing networks such as the FCCQ could help to promote this and achieve those objectives.

[Richard Hébert]

I was also pleased to hear you say that—

[The Chair, Liberal, Mark Eyking]

Sorry. Nice try, but we're going to move to another round.

Mr. Fonseca, you have the floor.

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

Thank you, Chair.

Thank you to the witnesses.

I want to start with Northern Cables.

You're quite a success story. You could be a case study for manufacturing and being a successful manufacturer here in Canada. I think you said you started with five employees and you're up to 230 employees and that today, 50% of your revenue is coming from exports. Of that 50%, how much is U.S. and Mexico based and how much would be from other countries?

[Todd Stafford]

It's primarily all from the U.S. Right now, maybe 2% to 3% is from somewhere other than the U.S.

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

Is that through the supply chain, with some of the mining companies and others you work with?

[Todd Stafford]

It's specifically from mining. The mining industry is the single biggest opportunity we have for export.

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

You're looking to grow that 2% to 3% and diversify outside of the North American market. Do you have a plan for that? I know you talked about going metric in terms of your product, but do you have a robust plan set up? Have you shared that and gotten into contact with the trade commissioner service's offices?

[Todd Stafford]

We're actually on the accelerated growth program. We've had the National Research Council, the Standards Council and the BDC come at us with a 40-page document. They will accompany us to trade shows and they will introduce us.... But we have a product that's in inches, so it's very pinpointed to the people in those countries that will accept a product in inches. We have to go back to first principles and get our product into measurements that those other countries accept, and then we can put in a full-court press. Our website is in Spanish already.

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

Great. Do you have a plan for that? Is that changing your machinery? What does that entail?

[Todd Stafford]

It's—

[Shelley Bacon]

We're not the bottleneck.

[Todd Stafford]

We're ready. We're making the product whether it's in inches or metric. We sell product in Canada in metres. It's really getting the standard, specifically for tech cable, that is a mining industry success story, getting that specification by CSA into metric sizes.

We don't need financing. We don't go to trade shows. We already sit on international boards. We just have a product that's kind of landlocked.

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

Does it look promising?

[Todd Stafford]

It's very early. To get metric accepted is something we've probably only started in the last 12 months to really put a press on. It's quite a bureaucratic battle, and we had hoped that today we could maybe spread that and get a little bit of assistance with it.

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

Thank you, Mr. Stafford.

Thank you, Mr. Bacon.

My next question will be going to Ms. Peters. It will be about our fall economic statement.

There is quite an investment that is going to be made, $184 million over five years, to the trade services for exports. There was $13.5 million established for the mentorship programs that you've spoken to as well as $10 million over the next three years to enhance small to medium-sized firms' readiness for export capacity.

Did you get a chance to read the document to see how those would align with some of your needs? I think mentorship was one that you brought up.

[Avvey Peters]

Yes, we read that with great interest.

I think part of what we have been able to do over the last eight or nine years is work really closely with the trade commissioner service so that we're vetting companies, small companies typically, making sure that they are ready for a hand-off to the trade commissioners in market and that they're ready to take advantage of the introductions, advice and those types of things.

The notion of more mentorship, more resources, and more ways to help companies go international is certainly very welcome. I know our regional partners are really interested to understand how we can make sure that we are getting companies properly ready.

I had the opportunity to talk to the lead of the Canadian tech accelerator program yesterday. We talked about what some the coaching opportunities are and if there is a pre-flight curriculum we could help develop and then deliver to the thousands of companies that we serve to streamline those requests.

I know the trade commissioners get inundated with requests for help, and we can, I think, help to manage some of that demand on their time and resources. What we'd really welcome is the opportunity to help roll out some of these new things.

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

Thank you.

[The Chair, Liberal, Mark Eyking]

We're going to move over to the Conservatives now.

Mr. Hoback, you have the floor.

[Randy Hoback, Conservative, Prince Albert, SK]

Thank you, Chair.

Thank you, witnesses, for being here.

Mr. Bacon and Mr. Stafford, you talked in your presentation about how you're seeing competition coming in from other countries. These countries are metric, but they're coming in and selling in both metric and English here in Canada. Is that what they're doing?

[Todd Stafford]

They only sell in English.

[Randy Hoback, Conservative, Prince Albert, SK]

But when they sell in their own country, it's always in metric.

[Todd Stafford]

It's in metric.

[Randy Hoback, Conservative, Prince Albert, SK]

So they're doing both. Are they running two different lines then?

[Todd Stafford]

No, it's in measurement. It's like doing metric conversion on your calculator. On the same machine you could make—

[Randy Hoback, Conservative, Prince Albert, SK]

Then, for your products going to those countries, you just need to put the metric measurements on your label.

[Todd Stafford]

We need the standard to accept metric measurements and allow it.

[Randy Hoback, Conservative, Prince Albert, SK]

If we don't have the standards here, we can't export because of that. So, it's a Canadian standard preventing you from exporting, not—

[Todd Stafford]

Yes.

[Randy Hoback, Conservative, Prince Albert, SK]

It's another example of seeing the Canadian government preventing the export from happening, not the customers saying they can't take it. The beef sector is saying the same thing. I'm hearing this over and over again. It's a repeating thing.

[Todd Stafford]

Yes.

[Randy Hoback, Conservative, Prince Albert, SK]

One of the other things that I find really interesting is, we're talking about opening up new markets, yet we're not meeting the regulations to homologations, like those issues that were faced in different regulations and different countries.

Are there any suggestions on what we should be doing here in Canada? When you decide to, let's say, go into the European Union, and you have a source in Canada, you say, “Here are the homologation requirements to go into these countries in Europe. Here is the testing platform we have in Canada, and, if you test here in Canada and it passes, it meets the homologation requirements there.”

Are you seeing anything like that happening here in Canada?

[Todd Stafford]

There are international standards boards, the Standards Council of Canada, and CANENA—

[Randy Hoback, Conservative, Prince Albert, SK]

But on actual testing, there should be verification.

[Todd Stafford]

What they do is specify a test method, and then different labs are—

[Randy Hoback, Conservative, Prince Albert, SK]

Okay.

[Todd Stafford]

We've sent products to Mexico to be tested to their standard, and then duplicated that testing in Chicago for correlation. There's a pretty good standards network, and there are a lot of cables, telecom and fibre optics that are international already, but in mining cable, specifically, and power cables in North America, we're stuck with this inch system.

[Randy Hoback, Conservative, Prince Albert, SK]

Okay.

Ms. Peters, I want to talk to you about the next generation.

We're seeing structural change happening in electronics, and we're seeing disruptive technologies coming forward. One of them is 3-D printing. One of the things I find really interesting is that we're bringing in all these regulations, but all of a sudden I can just download a file that came from who knows where, print it off, and throw it on Kijiji tomorrow.

How are we, as lawmakers and legislators, supposed to deal with that? This is coming in, and it's going to grow, and grow and grow. We've seen one example of a handgun. You can get a 3-D print of a handgun, and everybody's up in arms, but the reality is that the technology is there now.

How do we position ourselves, and how do we take advantage of it? We want to be the draftsmen, the people designing that drawing that's going out on the web, and selling it. How do we take advantage of that?

[Avvey Peters]

I think one of the ways to take advantage of that is to leverage the companies that are either building that technology or are using that technology to adapt their business in other industries. I can't speak to the downloadable bans.

[Randy Hoback, Conservative, Prince Albert, SK]

How do we regulate that? How do you put in standards?

You talked about your standard borders, Mr. Stafford, where you have standards set up. I can come in, from the middle of nowhere, and all of a sudden have a cable...well, cable might not be a good example, but you have a piece, a gadget and print it. You actually 3-D print it. There are no government standards; there's nothing, but I've printed it off at home and as you say, I could throw it on Kijiji tomorrow.

[Todd Stafford]

If you're printing a product that doesn't have a standard.... For a lot of products, they need a CSA or UL standard, so the onus would go back to those bodies to ensure that the product has a UL. You hear about recalls. In our industry, we hear about recalls all the time, with things coming in from offshore, mostly at the Dollar Store, that have a false UL symbol on them, so there's a big recall. To protect some of that intellectual property, some of the products we make have a whole graphic tag that goes on the label or the product, which is sold to us by UL or CSA.

[Randy Hoback, Conservative, Prince Albert, SK]

That's the thing though. You're building it and selling it.

This is a situation where they're actually manufacturing it at home and just decide to sell it tomorrow. You may be able to have a fake CSA standard or you may not. I'm just trying to look for some guidance and advice on taking advantage of that because the days of shipping stuff in containers might have changed. We might just send a drawing over to that 3-D facility in China and all of a sudden it's printing out 10,000 of those tomorrow.

How do we get into that market? How do we take advantage of that opportunity?

Carla, maybe you have some ideas because you talked about—

[Todd Stafford]

Excuse me, but I think we have to protect the integrity of the standard. That UL symbol or the CSA symbol has to have value. If it's caught being counterfeited or if it's not, that's what the government should be doing. We'll live to the standard. Just protect us, so that everybody has to live to the standard.

[Shelley Bacon]

I would also like to make one point which perhaps—I apologize if, in the presentation, we've talked about stuff that's not as apparent to you as it is to us because we're in this industry. We are trading with countries that do not have currencies that float and are traded. What happens is it allows a lot of these countries to bring things into this country, at values which perhaps they're happy with, but we can't even buy the raw materials at these price levels.

How does one compete against this? This is a huge problem going forward. If this continues, you're going to decimate any manufacturing left in this country because everything is going to come in at levels that nobody can afford to compete at. Even already for us, yes we have grown significantly, but we have also been across the river. We're looking in the United States and we're saying that if we can't do business in Canada, we might find ourselves having to look somewhere else, if we cannot stay here and compete. In the United States, as you know, they're becoming more strict on their importation. This value of goods coming in, in currency, is a big issue.

[Carla Arsenault]

For our organizations, specifically around the importing of the materials and the raw goods, I know some of our producers are saying again, that for them, it's the bigger picture stuff. If they can't compete on this, they need to at least be able to compete on things like transportation, so that they can get it out of here and out of the country. It's a little heavy—

[Randy Hoback, Conservative, Prince Albert, SK]

Rail, air, container....

[The Chair, Liberal, Mark Eyking]

We've just a couple more minutes left and I think, Mr. Choquette, you had a question.

[François Choquette, NDP, Drummond, QC]

Thank you, Mr. Chair.

I will find my question again. I'm sure it's here somewhere. I think it was Ms. Arsenault who raised the issue.

I think that it was you, Madam Arsenault, who talked about having a one-stop shop, where SMEs could go to access all the programs provided by the government. Why is that so important and why should we do it?

[Carla Arsenault]

From the businesses that I talked to, the comments I heard over and over again were not that there are not enough programs or that the programs don't exist. Don't get me wrong; they're not perfect, but there are lots. The biggest challenge most of our small and medium-sized businesses have is that again, they don't know where to even begin to look.

Organizations like ours and organizations like Communitech and others are on the ground. We know who those businesses are. I can pick up the phone and call the CEO and ask him specifically about the issue or challenge. They know to call us and our community because we are that point person today, so across the country, I'm not suggesting a cookie-cutter approach, but I am suggesting that individual communities have their own resource in the community that can be that focal point, as the ones who have those business connections.

[François Choquette, NDP, Drummond, QC]

Thank you.

Do you agree with that, Madam Peters?

[Avvey Peters]

Absolutely. One of the ways you can help to advance that is by embedding individuals. Whether it's a trade commissioner or an adviser from BDC, you can embed those folks in regions so they are close by to act as a resource, and as Ms. Arsenault said, they have the opportunity to engage the hundreds or thousands of companies that have that day-to-day relationship with an organization like ours. It becomes a one-to-many connection.

[The Chair, Liberal, Mark Eyking]

Thank you very much.

That wraps it up.

Thank you, witnesses, for your submissions and the good dialogue we had. Thank you for coming from across the country. It's a hard time of year to travel.

I have two quick motions for the committee to deal with, and if I don't hear anything against them we'll assume these motions are carried.

One motion is dealing with our having gone a little over budget on travel for our impact of tariffs study. We had more meetings, so it requires some $11,000 more.

(Motion agreed to)

The second thing is a clerical matter. Mr. Hoback brought it up. Apparently, besides Santiago, Chile, we're also going to Valparaiso, Chile. It has to be written into our submission.

Is that all good?

(Motion agreed to)

[Randy Hoback, Conservative, Prince Albert, SK]

When you submit this, I think you should talk to the other chairs and say this is crazy. Chile is Chile, whether you go to Valparaiso or Santiago. Why do you need to be that specific? To me, that's just ludicrous. It's absolutely ludicrous.

[The Chair, Liberal, Mark Eyking]

I know. It's a little too much but I'm just letting everybody know that as soon as I'm done here, I'm going over to the subcommittee to do our last pitch, and hopefully we can get it across the wire.

Anyway, that concludes our meeting.

Thanks again for coming, folks. Safe travels back home.

The meeting is adjourned.