International Trade Committee on Feb. 19th, 2019

[The Chair, Liberal, Mark Eyking]

It's pretty impressive. What's the average number of employees in those companies?

[Rakesh Naidu]

It's a good question. I would say roughly between 50 to 80.

[The Chair, Liberal, Mark Eyking]

Okay. Thank you.

Now we're going to move over to Futurpreneur Canada.

We have Ms. Young. Welcome.

[Karen Greve Young, Chief Executive Officer, Futurpreneur Canada]

Thank you very much.

Good afternoon, everyone.

Futurpreneur is Canada's only national not-for-profit organization that provides comprehensive support to small business owners who are beginning their journey, particularly for those business owners aged 18 to 39.

Our unique comprehensive proven model provides entrepreneurs with pre-launch tools and resources, with the financing they need to launch their business and with mentoring to drive their entrepreneurial success once they have launched.

Since 1996, Futurpreneur Canada has supported over 12,000 entrepreneurs across our country, yielding more than 10,000 businesses and 50,000 jobs.

These young entrepreneurs really create businesses across Canada's not only geography, but also economy. We work in a wide array of sectors including retail, agriculture, health care and technology in communities of all sizes from Sydney, Nova Scotia, to Port Alberni, B.C., including young entrepreneurs supported by Futurpreneur in every one of the committee members' ridings.

We do this work with the steadfast support of the Government of Canada, provincial governments, BDC, corporate partners and over 200 community partners across the country.

Many of the Canadian entrepreneurs supported by Futurpreneur have achieved international market success, like Joanna Griffiths of Knix. Her Knix clothing line has reinvented women's intimates for real life. It was founded in 2013, and today Knix exports to over 85 countries in every region of the world including Europe, Africa, South America, the Middle East and Asia, with plans to continue her growth.

Another great example is Nicole Verkindt. She is the founder and CEO of Offset Market Exchange, OMX. OMX is a procurement platform that provides economic impact analysis for companies working in complex global supply chains including domestic and international defence, aerospace, oil and gas, mining, automotive and construction industries. Not only does OMX export globally, but its platform supports global market opportunities for other Canadian companies.

As a third example, Futurpreneur also helps aspiring young business owners buy existing businesses as part of their succession planning and grow them to be export-ready. Barbara McLean-Stollery has increased revenue at Calgary-based executive airways grooming service by more than 1,500% since buying it from her former employer 10 years ago upon his retirement. Barbara was part of the Futurpreneur Canada-led Canadian delegation at the 2016 G20 Young Entrepreneurs' Alliance summit in Beijing where she made connections that led to her company successfully operating in China today.

Based upon our experience supporting entrepreneurs like Joanna, Nicole and Barbara, we have three recommendations to share with the committee to ensure that young entrepreneurs meet their export potential and fuel Canada's economy.

Our first recommendation is to increase awareness of trade agreements and services with youth-focused communities.

The Government of Canada has worked hard on trade agreements that offer important opportunities for Canadian small businesses, but we often hear from young entrepreneurs who are unaware of the opportunities inherent in these agreements. We also note a lack of awareness of the important services available through the trade commissioner service among young entrepreneurs.

Compelling, easily digestible electronic tools and guides, particularly featuring young entrepreneurs who have successfully exported, and available on media that are relevant to Canadians under 40 years old would help ensure that young Canadian entrepreneurs are aware of and equipped for global opportunities.

Our second recommendation is to address persistent regulatory barriers in export markets. We often hear of challenges that young export-ready entrepreneurs face in understanding and adapting to the regulations such as health and safety that are different in export markets versus Canada.

We encourage the government to continue—because we know the efforts are under way—to work towards greater regulatory co-operation with our trading partners to realize the full potential of our trade agreements. Where barriers persist, it would be helpful for the government to provide entrepreneurs with accessible resources explaining the regulatory differences in different markets, and to support entrepreneurs as they navigate and overcome these challenges.

Finally, our third recommendation is to facilitate international opportunities for young entrepreneurs. Futurpreneur Canada is a founding member of the G20 Young Entrepreneurs' Alliance. We partner with Global Affairs Canada to help young Canadian entrepreneurs advance their business opportunities in G20 countries at the annual G20 YEA summit through B2B networks and connections.

Building on the G20 YEA, we see merit in continuing to ensure that young entrepreneurs are included in Canada's many trade missions focused on established businesses. We also encourage the government to consider stand-alone, youth-focused trade missions to key markets, beyond the annual G20 YEA summit.

In conclusion, with our extensive networks and expertise, Futurpreneur Canada can be a key partner for the government to inform and support young entrepreneurs who are building the export businesses of tomorrow. We recommend that Canada increase awareness of trade agreements and services with youth-focused communications; address persistent regulatory barriers in export markets; and finally, facilitate international opportunities for young entrepreneurs.

Thank you for the opportunity to share with the committee our insights from Futurpreneur's two-decade track record of supporting young entrepreneurs in Canada and globally.

Thank you.

[The Chair, Liberal, Mark Eyking]

Thank you, Ms. Young.

We're going to go to Startup Canada, with Mr. Rémillard.

The floor is yours, sir.

[Richard Rémillard, Interim Chief Executive Officer, Startup Canada]

Thank you very much, Mr. Chairman.

Let me begin by introducing myself and presenting the regrets of our co-founder, Victoria Lennox. She would have loved to have been here but, unfortunately, is very ill. She has asked me to step in, in her place.

I'm the interim CEO of Startup Canada. I jumped off the board a month ago to make sure the trains run on time and to look for a permanent successor. If anybody knows somebody who would qualify, tell them to call me, please.

With that ad, I'll move on.

We are part of the entrepreneurial ecosystem in Canada. We work pretty closely with my friend Karen here. We have one mandate, which is to grow the entrepreneurship culture in Canada—period, full stop.

We have three outstanding assets that we bring to the party. Number one is our people, who are top-notch producers of digital programming and the like. Number two is that we have a string of start-up communities—like a string of pearls—which are local grassroots organizations embedded in their ecosystems everywhere from Vancouver and Whitehorse to Halifax, and coming soon to St. John's, Newfoundland. Number three—and it's been only six and a half years since the organization got going, started by Victoria Lennox—we have an amazing digital presence that has won awards several times for podcasts, webcasts and Twitter chats.

Our job is really simple. It is to raise awareness—as my friend Karen has said—of how important it is for Canadian SMEs to export, to raise awareness of the tools and resources that are available, and to address the perceived risks and costs of going outside Canada's borders.

Let me say a word about what is turning into one of our flagship events. The Canadian export challenge was begun in 2018—about 10 or 11 months ago—in partnership with EDC and UPS. We delivered a day of programming and what you could consider to be professional development with these partners and several others in the course of one day in seven or eight cities across the country. We ran a pitch contest. The winner, from among the exporters and potential exporters, was lauded and won a prize.

We are proposing, and are in the midst of, doing the same thing, but growing it bigger, more, better, in the same general format and in more cities. We've taken the trade commissioner service as a major partner and their help has been invaluable to us in making this happen. It will be running across the country in the May to June period. You'll find details—much more than I can go into right now—on our website, startupcan.ca, as of this coming Thursday afternoon.

Some observations have come from our experience in running the Canadian export challenge. We hope to get at least 1,500 people in conference rooms across the country as we roll this out with our partners, and up to 15,000 or 17,000 online. We think this has been quite successful. Something like 98% of the attendees last year said they were better prepared to export having followed the program. Of those in-person attendees, 75% would meet the EDC export readiness test. That's not inconsiderable, and 47% were female entrepreneurs and business owners.

Ideally, we would like to work together with our partners at TCS, Global Affairs, EDC and the private sector—like UPS and others too numerous to mention—to do this twice a year to minimize that gap between how difficult, expensive and frustrating SMEs perceive exporting to be and how it really is. That is going to take a sustained effort.

I was in a meeting with the Canadian Intellectual Property Office, CIPO, last week; they're in this as well. Their data seem to indicate that people who have crystallized intellectual property are four times more likely to export. That's why they will be part of the program this year.

I'll say a brief word, if I may. I can't emphasize how much Victoria would have loved to be here, if her health had permitted it. She has been travelling again in partnership with our friends at Global Affairs, to Israel recently and to the Baltic nations and Finland. There are a couple of takeaways that she asked me to pass on to you.

Number one is that all-women delegations work.

It's funny to hear that from a male, but pretend that I am Victoria—much better looking and much younger.

Opportunities for collaboration, she found, were much more extensive than in previous foreign trade delegations, when there was a mix of male and female. That's her observation.

Secondly—and this comes from the tour of the Baltics and Finland—it would be really interesting to work with government officials on an ecosystem innovation checklist for use by the trade commissioner service. That doesn't exist right now. We'd like to facilitate digital round tables with global trade commissioner service innovation systems and their Canadian counterparts.

Those are the highlights.

I have one final thing, because my time is running out. You have been very generous.

I invite everybody in this room to join us on March 20 at the Sir John A. Macdonald Building. We're celebrating International Women's Month, and there's a reception from 5 p.m. to 8 p.m. hosted by the all-party entrepreneur caucus.

Thank you very much. I will be happy to take any of your questions.

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

We hope for a speedy recovery for your colleague, Ms. Lennox.

[Richard Rémillard]

Thank you. I'll pass that on.

[The Chair, Liberal, Mark Eyking]

In a month or so, we'll have this report done and will give you and her a copy of our findings.

Before we go into dialogue, Madam Jobin from the Chambre de commerce, can you explain your organization a little bit and how many companies you represent in the region?

[Audrey Jobin]

I represent the Chambre de commerce et d'industrie de Dolbeau-Mistassini.

Our city has about 15,000 residents and is situated in an RCM with a population of 25,000. We have more small businesses than medium and large ones. Very few of those small businesses export abroad and they have few, if any, levers with which to develop international markets. Only the region's major companies, like Résolu and Rio Tinto, for example, can, and have the means to do so.

Much as my colleague from the Chamber of Commerce was saying earlier, market development must be easier and small businesses must be provided with resources tailored to their own needs. They must also be given the tools they need for their initiatives, as can be done for medium and large companies.

Thank you.

[The Chair, Liberal, Mark Eyking]

We're going to go to dialogue with the MPs.

We're going to start off with the Conservatives on the first round.

Mr. Carrie, you have the floor for five minutes.

[Colin Carrie, Conservative, Oshawa, ON]

Thank you very much, Mr. Chair.

I want to thank the witnesses for being here for our study of the Government of Canada's support for the international trade of small and medium-sized businesses.

It's kind of a coincidence, but last week I had a round table in Oshawa and I invited businesses. We had representatives from EDC and Global Affairs to get the message out, because we all know Oshawa got some really bad news recently and the people on the ground want to see what they can do to create jobs.

It was amazing that a lot of the businesses really had no idea. We have these trade agreements, but they don't know what to do. They expressed frustration, because some of them, especially the manufacturers, are being approached by Americans regularly to move their plants to the U.S.

I think, Mr. Naidu, you were talking about the competitiveness issue. That's what I heard at this round table. Especially with the new NAFTA, there was a failure to have the steel and aluminum tariffs removed. Just a couple of weeks ago, we heard about the Buy American exemption and how now Canada has lost it. Mexico has retained it. There's a big concern about access to U.S. contracts. The CME is calling for a reciprocity type of action, and we really haven't heard too much about what we can do about this.

I was going to ask Mr. Naidu and maybe Audrey Jobin what they think the government should do in particular about this Buy American exemption that we just lost, and how that is going to affect the ability of small and medium-sized businesses to export.

[Rakesh Naidu]

That's a very important point. As I mentioned, we are a region that exists primarily because we export a significant amount of what we produce, be it fresh produce or what we manufacture, which is exported mostly to the U.S. Almost 85% to 90% of what we make and produce here is exported out.

It's extremely important for us to be competitive. In the past, we've done pretty well for a few reasons. One is our corporate tax advantage vis-à-vis the U.S. That was key, and that was very important to helping us to continue to be competitive.

Also, in Ontario, our wages used to be lower than they are today. That was another competitive advantage that we had, which is no longer there. The dollar exchange most of the time used to work in our favour, but you can't really rely on that. It fluctuates and, going forward, we really can't be sure where it will stand.

Then, as you pointed out, this whole Buy American thing, the initiative in the U.S., is really putting our manufacturers at a disadvantage. All of those put together are creating this perfect storm for our small and medium-sized businesses.

We really think that we need to work on all fronts. We want to make sure that we are competitive when it comes to corporate taxes. The minimum wage is nothing that the federal government can really do anything about, but that's something that is common for small and medium-sized businesses.

We also need to see what we can do to help companies navigate through the Buy American initiative there. Our companies export significantly. We do also import quite a bit. We don't have any preferential treatment when it comes to importing products from across the border or from elsewhere. Our companies are at a disadvantage right now, because while we import, our region, which consists of a lot of export companies, imports a lot of products that go into the finished products that get exported.

We do import. There's no preferential treatment. We don't have any barriers. We don't have any Buy Canadian initiative right now that affects the U.S. while we have the constraints and the restrictions on selling into the U.S. market. That definitely hampers us. It hinders our ability to compete in something that we definitely want the government to take a good look at to see what can be done.

[Colin Carrie, Conservative, Oshawa, ON]

Do you have any ideas? The people around the table where I was with this Buy American provision—I believe there are only fiftysomething days before we lose that exemption—were shocked that, with a renegotiation of NAFTA, our current government didn't ensure that we would maintain this Buy American exemption.

Just to let you know, if you're not aware of it, Mexico has retained theirs. So now one of our trading partners, Mexico, has an advantage over us. The government seems to be silent. I was wondering if you could give the government some advice because in the days—

[The Chair, Liberal, Mark Eyking]

I'm sorry, Mr. Carrie, but you're way over your time. Maybe one of your colleagues can follow up on your question to the witnesses.

We're going to go over to the Liberals.

Madam Ludwig, you have five minutes, please.

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

Thank you all for your testimonies today.

This is a really important study for us to be focusing on. We've heard consistently over the last three years that small to medium-sized businesses are really challenged in accessing export services. A lot of it is essentially on the awareness side, which many of you have mentioned here today.

This is kind of the perfect dating relationship.

Startup Canada and Futurpreneur Canada, when you were listening to the members appearing from the chambers of commerce—and likewise when the chambers of commerce were listening to the two other sets of testimony—do you see where there are opportunities for you to all work together, in terms of the expertise that you've all mentioned here today?

[Karen Greve Young]

The good news is that we do work together currently.

Both Startup Canada, as you heard from Richard, and Futurpreneur are in communities across the country. We have physical boots on the ground in 16 different communities across the country. We work in communities of all sizes and partner closely with chambers.

As a recent example, I was on the podium at the Ontario Chamber of Commerce, speaking about the importance of helping people in skilled trades get into meaningful, lasting employment.

We are members and participants in chambers across the country. The young entrepreneurs we support ultimately go on to become members of these chambers of various sizes. How involved they will be depends on what sector they are in.

To pick up on the last question, one theme that we see for our entrepreneurs all over, particularly the younger entrepreneurs, is that they're not restricting their focus to the U.S.

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

Right.

[Karen Greve Young]

CETA is at least as important to them as the new NAFTA. With those who are exporting, maybe half of what they are exporting goes to the U.S., and the rest is to the rest of the world.

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

Ms. Young, if I could just jump on that piece of how you are reaching out to your members, you talked about the relevant media for people under 40.

I'm obviously not under 40.

[Karen Greve Young]

Neither am I.

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

Could you share with us some examples of relevant media for people under 40?

[Karen Greve Young]

Sure.

It's about video. It's about being on Instagram. They're not on Twitter; you're on Twitter. I'm on Twitter talking to you and to other more seasoned professionals, but the young people are on places where they can interact by video and images, where it's all about the stories.

They need to see themselves in these stories. We've found through our experience—we test what we do—that is particularly true of women entrepreneurs and immigrant entrepreneurs—generally speaking, non-white entrepreneurs.

It's true that they are more likely to respond when they see someone who resonates with them; it feels like it's for them. That's why I think the story is important. Those who are in manufacturing will hear stories about manufacturing and the impact of NAFTA, and that will hit close to home. Those for whom those same lessons are relevant but who don't see themselves in the mainstream narrative don't think it's relevant to them.

That's a lot of what we see.

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

That's a really important lesson.

In my teaching days, I used to use the line, and still use it now: “You cannot be what you cannot see.”

[Karen Greve Young]

Exactly.