Evidence of meeting #139 for International Trade in the 42nd Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was businesses.

A recording is available from Parliament.

On the agenda

MPs speaking

Also speaking

Christine Fréchette  President and Chief Executive Officer, Chambre de commerce de l'Est de Montréal
Raphaëlle Mandelbaum  Director, Export Assistance, Chambre de commerce de l'Est de Montréal
Gary Stepien  Finance Manager, Iafrate Machine Works Ltd.
Gerald Fowler  President and Owner, Manna International Inc.
Terry Sheehan  Sault Ste. Marie, Lib.

4:10 p.m.

Sault Ste. Marie, Lib.

Terry Sheehan

Perhaps more programming could be available to entrepreneurs. If they don't have it, they could purchase it, if you will, from the private or public sectors.

4:10 p.m.

President and Owner, Manna International Inc.

Gerald Fowler

The challenge is that, with all due respect to widget makers, they have a lovely product and they want to move it, to do something with it. The first step is something that's going to cost them a lot of money, and so they spend a lot of money on that and then they say, “Well, I need a business plan.” Then they spend a lot of money to get someone else to make a business plan because they don't have the expertise to do that, and all of a sudden they choke on how much their income is, and they just put the widget on the shelf. I mean, being local, I think there are some wonderful widgets sitting on shelves in Sault Ste. Marie that never got to market because no one helped them get them there.

4:10 p.m.

Sault Ste. Marie, Lib.

Terry Sheehan

You mentioned mentors. In the fall economic statement, $13 million is set aside to try to develop that. In the fall economic statement, they also talk about the trade and transportation corridor and investing almost $1 billion into transportation networks.

How important is that to the export market?

4:10 p.m.

President and Owner, Manna International Inc.

Gerald Fowler

It's critical. We're having trouble. Ontario may fall out of the soybean business to Europe because of costs. Europe is becoming a bit more protectionist, and so they are trying to buy their products in Europe. They can buy in local currency. The shipping is a lot easier. Whereas if they are going to buy with the U.S., because we're CBOT-based, logistics and shipping are absolutely huge. The practicalities are huge.

I was approached by someone locally who said they wanted to get into the soybean business and could they sell to us? No. From Sault Ste. Marie I have to ship it to Europe. It isn't going to work.

Logistics is huge. In Essex County it works better because they are closer to the hubs.

So rail.... We were shipping by vessel out of Goderich, and that was working well, but then for the food sector, we need a bit more protection so we have to do it by container.

4:10 p.m.

Sault Ste. Marie, Lib.

Terry Sheehan

That's really important.

Do I have any more time?

4:10 p.m.

Liberal

The Chair Liberal Mark Eyking

You have 20 seconds so either you make a statement or a very quick question and answer.

4:15 p.m.

Sault Ste. Marie, Lib.

Terry Sheehan

Thanks again to everybody. I would be playing a bit of a homer when I thank Gerry.

4:15 p.m.

Liberal

The Chair Liberal Mark Eyking

You got a lot of praise. All that praise for you, Mr. Sheehan, is on record too.

We have finished the first round. We're going to the second round, starting with the Liberals for the first five minutes.

Mr. Hébert, you have the floor.

4:15 p.m.

Liberal

Richard Hébert Liberal Lac-Saint-Jean, QC

Thank you very much, Mr. Chair.

I would like to thank all the witnesses who appeared today. Your comments were very interesting, especially those of the Chambre de commerce de l'Est de Montréal, which I found to be positive and invigorating.

Ms. Fréchette, you have a clear and precise view of the situation. You are already know that exporting is extremely important, especially since you told me that the Montreal Port Authority is a member of your organization.

In 2018, there was a 9% increase in traffic at the Port of Montreal, a direct result of agreements we signed in previous years, and in particular the Canada-European Union Comprehensive Economic Trade Agreement, or CETA. In total, Canada signed 14 agreements with 51 countries representing 62% of the global economy. Our markets are now open to 1.5 billion new customers, a fact you are surely aware of.

You spoke about the fact that the government could be more effective and that it could increase its presence on the ground. You also invited the government to refer SMEs to your services and to participate in joint activities. By the way, you can call me as I am always available.

Only 12% of our small businesses are exporters. We must grow that number. I have three questions for you. First, Mrs. Fréchette and Mrs. Mandelbaum, do our department's services provide enough assistance to small businesses that wish to export? Next, could you give us specific examples of small businesses that have received assistance from our government in your region? Finally, what barriers do small and new businesses face when they are considering exporting?

4:15 p.m.

Director, Export Assistance, Chambre de commerce de l'Est de Montréal

Raphaëlle Mandelbaum

Have the services provided by the government benefited our clients? Yes, they have benefited some of them. Not everyone knows a trade commissioner. We talk to our clients about federal services to help them, such as support services, and some use those services. It is my understanding that the Quebec team of trade commissioners is small and that it cannot help everyone. We cannot look after every Quebec firm that knocks at our door and provide them with a list of customers in countries with trade commissioners. I think that the number of Quebec exporters that receive assistance from trade commissioners is still low.

The timing of trade commissioners' involvement in the business is another important aspect. Our chamber of commerce has a team that promotes exports, and we are not the only ones in Quebec. For those who do not know this, there are about twenty of these teams across the province that provide these services across Quebec.

Our job is to get businesses ready to export. Once they are ready, the trade commissioner can do a market study and introduce them to potential partners in a given market. It is my understanding that it is not the trade commissioner's job to establish the strategy or ensure the logistical success or regulatory compliance of the businesses.

That is why we suggested earlier that the federal government work more closely with us, as we are the ones preparing businesses to export. Some of them contact trade commissioners when they are not yet ready, and then they are not deemed a priority either because they are not ready or because of the sector in which they operate. In these cases, we are prepared to help them.

As other witnesses mentioned, there is a multitude of barriers. We understand why Canada enters into free trade agreements. That said, a business's day-to-day reality is altogether different. Just because an agreement was recently signed with Korea, companies are not suddenly going to go halfway around the world and spend a week in Korea. For example, we have clients who do business with Brazil or Saudi Arabia even though Canada does not have a free trade agreement with these countries, because they believe they are relevant markets. Now that the Comprehensive and Progressive Agreement for the Trans-Pacific Partnership, or the CPTPP, has been signed, an agreement that includes Chile and Peru, will these clients look to Chile and Peru rather than Brazil? I am not sure that it is warranted by the market size.

There are a great deal of barriers. Businesses do not necessarily have the requisite capabilities and skills within their organizations. You could have the best invention in the world, but there are many barriers that could prevent you from achieving the desired results in a given market. The main factors to consider are logistics, being surrounded by good partners, and in the case of sanitary products, for example, obtaining the required certificates. These businesses need support, they need to know how to get the help they require and what resources are available to them.

4:20 p.m.

President and Chief Executive Officer, Chambre de commerce de l'Est de Montréal

Christine Fréchette

We could also encourage exporters to diversify their markets by providing incentives, for example.

February 26th, 2019 / 4:20 p.m.

Liberal

The Chair Liberal Mark Eyking

Go ahead and finish your thoughts.

4:20 p.m.

President and Chief Executive Officer, Chambre de commerce de l'Est de Montréal

Christine Fréchette

Okay. Thank you.

In the current climate, it is important to encourage our SMEs to diversify their export markets. The government could provide incentives to foster diversification primarily in an effort to somewhat counter the usual response of turning to the North American market. Perhaps such measures already exist. This would certainly be a good message to send. We have heard it from Canadian federal leaders. With regard to these measures, there may be incentives for businesses that could be considered.

As we stated in our earlier remarks about barriers, the availability of Canadian government representatives is sometimes inadequate. Our organization could step up, identify the best candidates among businesses that may not yet be exporting and help them become exporters. In our opinion, this type of assistance is encouraging for businesses and provides them with more information about opportunities if they take advantage of export measures. They can be put in contact with several stakeholders, such as federal and Quebec government representatives, among others.

We are at the heart of a network or an ecosystem that brings together many stakeholders. We are familiar with government assistance programs and we can also network with other companies that have taken the same approach. In a way, we are a very useful tool that leverages the Canadian government's intervention.

In closing, I will add that when a free trade agreement is signed, we have to look at it as the starting point and not just the ultimate goal. Few businesses have the ability to unravel the text of a free trade agreement, and when they do it can still be difficult. These agreements use very technical terms. When an agreement is signed, the content must be put into layman's terms. We must use the tools available to explain to SMEs what was agreed to. It is very important that SMEs understand the agreement. It is an ongoing effort.

Fortunately, the impact is felt fairly quickly. That was our experience following exchanges with the Montreal Port Authority. There was a huge increase in trade flows, and others have been initiated in recent months. That is a good sign. However, what we are hearing is that these recent flows have generated more imports than exports.

4:20 p.m.

Liberal

The Chair Liberal Mark Eyking

Thank you very much.

We're going to move to the Conservatives now.

Mr. Carrie, you have the floor.

4:20 p.m.

Conservative

Colin Carrie Conservative Oshawa, ON

Thank you very much, Mr. Chair, and I'd like to thank the witnesses for being here.

During the constituency week, I had a round table in Oshawa, focusing on trade opportunities. We have the new CETA. We have the new CPTPP . We had representatives of EDC, Global Affairs, manufacturers and agricultural interests there.

I think the chamber of commerce representatives hit the nail on the head when they say, “Who does what? No one knows.” Businesses are very anxious to expand and export, but they really don't know how to go about it. I brought these people in to see if we could make some connections. I don't know how it's going to land. We're going to follow up, and things like that.

I wanted to talk to you, Mr. Fowler, because some of the food manufacturers, especially with meat and cheese, think there is a huge market in Europe. There is interest over there, but they can't quite figure out how to get there. They said there are some Ontario programs, but they weren't really able to connect with the federal side of things. The Government of Canada does have the agri-marketing program. I don't know if you know very much about that, or if it's ever used.

4:25 p.m.

President and Owner, Manna International Inc.

Gerald Fowler

I haven't looked at anything.

4:25 p.m.

Conservative

Colin Carrie Conservative Oshawa, ON

I was wondering what advice you could give these companies. Obviously, you've been successful at getting into that market. What advice would you give them, when they want to approach government to actually get the ball rolling?

4:25 p.m.

President and Owner, Manna International Inc.

Gerald Fowler

I have a couple of things, actually.

I'll go back to your first point about the confusion. In the sales business, the challenge is not what you say, but what people hear. The other challenge is that people buy benefits, not features. We have the tendency to list the features and we have to translate those features into benefits. I buy something with a benefit to me. It's a personalized feature. That's the challenge in some of the sectors because you've got different features and different benefits that apply to different groups.

The majority of our business—what we get paid for and what we live off of—comes from Europe. We've been involved in business for 30-some years now in Europe. The challenge in Europe is understanding the marketplace. It's a bit complex. Using trade commissioners to delve into the nuances—not the specifics necessarily, but the nuances—is best done by just going knocking on doors, to be honest. You put in the shoe leather and find a couple of companies that maybe meet your thing. Go and learn. Go in without something you want to get across....

On the first number of trips I did to Europe, I was just learning. I didn't try to sell anything because I didn't know what they wanted to buy. I wanted to listen. I learned more with my ears open and my mouth closed. There's a time to do that. In Japan, it used to be that you didn't talk about business. It was rude to talk about business until they brought it up. There were a couple of trips to Japan when all we were talking about was the weather and all sorts of different things. It was easy to talk about weather in Japan.

Get to know the people and the nuances—not necessarily what's on the surface—because they're the people who have your cheque in their pocket. You want to know what turns their crank and what's important to them.

Are there any barriers to getting into a country? There may be. Europe has a far more in-depth understanding of the value of food than we tend to have in North America. You have to understand those nuances because they'll come back and bite you. In their minds, they're not nuances; they're absolute. Learn what those are and just talk to them. You just learn and listen.

4:25 p.m.

Conservative

Colin Carrie Conservative Oshawa, ON

Thank you very much for that.

This question is for the chamber.

You made the comment that companies need to be aware. Governments need to be available for activities on the ground. You talk to the American consulate quite often, but sometimes you don't have the Canadian reps. This was identified as a weakness, but I think the bureaucracy is trying to get out there.

Does the chamber have resources for businesses that want to start exporting? When we did the multicultural trade here, I invited some representatives—Peter brought it up—from the Canadian-Italian chamber of commerce and the Canada-Poland Chamber of Commerce. Do we point directly to the chambers of commerce to connect and get things started?

4:25 p.m.

Liberal

The Chair Liberal Mark Eyking

Give a short answer, please.

4:25 p.m.

Conservative

Colin Carrie Conservative Oshawa, ON

She can go longer.

4:25 p.m.

President and Chief Executive Officer, Chambre de commerce de l'Est de Montréal

Christine Fréchette

Our chamber of commerce has tools to support businesses that want to start exporting their goods.

4:25 p.m.

Director, Export Assistance, Chambre de commerce de l'Est de Montréal

Raphaëlle Mandelbaum

Half of the businesses that we support are just starting out. We provide them with tools. We listen to what they need, help them develop a strategy and put in place everything they need to start exporting their goods.

You mentioned the Italian-Canadian Chamber of Commerce and others. That exists in Quebec, or it did. It was not working very well and it was closed. It was a sort of hub for all European Chambers of Commerce, but it no longer exists.

4:30 p.m.

President and Chief Executive Officer, Chambre de commerce de l'Est de Montréal

Christine Fréchette

We propose different approaches to businesses that are getting into exporting. It could be networking with a business already in place in the export country, or establishing a joint venture. We can also help them locate distributors for their products. We explore different approaches with the exporter.

After studying the business's situation, we determine whether it is ready to export its products. Sometimes, it may believe it is ready, but still have more work to do. We then help it determine the export markets for its products and how to export them. There are different approaches that can be taken.

4:30 p.m.

Conservative

Colin Carrie Conservative Oshawa, ON

Thank you.