Thank you again for your flexibility this morning concerning my scheduling challenges.
First off, my name is Mathew Wilson. I'm the senior vice-president with Canadian Manufacturers and Exporters. I'm pleased to be here on behalf of Canada's 60,000 manufacturers and exporters and our association's 2,000 direct members to discuss the TPP.
CME is the largest industry and trade association in Canada. We also chair the Canadian Manufacturing Coalition, which represents 55 sectoral and manufacturing associations. More than 85% of our members are small and medium-sized enterprises, representing every industrial sector, every export sector, and all regions of the country.
Manufacturing is the single largest business sector in Canada. Canadian manufacturing sales surpassed $600 billion last year, directly accounting for 11% of Canada's GDP. The sector employs 1.7 million Canadians in highly productive, value-added, high-paying jobs. Their contribution is critical to the wealth generation that sustains the standards of living of each and every Canadian.
Simply put, Canada's domestic market, however, is just too small for manufacturers to thrive. Manufacturing is an export-intensive business. More than half of Canada's industrial production is directly exported, either as part of global supply chains or integrated manufacturing or as finished consumer products in almost every product category. Manufactured goods account for roughly 70% of all Canadian exports and are growing in importance as natural resource prices remain weak.
While Canada and the U.S. markets remain a top priority for most Canadian exporters, a growing proportion of our members are looking to take advantage of newly emerging opportunities beyond NAFTA, especially with those countries represented by the TPP. Today this collective market represents more than 650 million people and $20 trillion in opportunities.
CME strongly believes that no trade agreement is worth signing unless the deal is principled and fair. First off, we think every deal should create a fair and level playing field for manufacturers and exporters, to make sure that they have an equal opportunity to access foreign markets as our competitors have to access Canada. Second, the TPP allows value-added exports from Canada, not just the export of natural resources. Finally, it does not undermine existing manufacturing supply chains developed through existing FTAs, especially the NAFTA.
CME has supported Canada's entry into and the signing, in principle, of the Trans-Pacific Partnership because of Canada's small domestic market, the export orientation of our manufacturers, and the deal's inclusion of our major trading partners and the significant opportunities this inclusion affords.
However, this support is not without reservation from many CME members. Concerns over certain elements of the proposed deal remain significant. Lowering content on automotive rules of origin, lack of additional measures to curb Buy American policies for government procurement in the U.S., and uneven tariff phase-out in certain sectors compared with those of our American counterparts are just some of the concerns that I hear about directly from our members.
However, despite those reservations we continue to encourage negotiators to work through these issues to ensure fair treatment of opportunities for Canadian exporters. It is critical to keep in mind that export opportunities start at home and are propped up by the strength of our domestic market, the innovativeness of our private sector, and the supports that Canadian exporters receive in accessing and succeeding in foreign markets.
To be blunt, Canada has a poor history of success in trade agreements. Aside from NAFTA, very few if any of the agreements have led to an increase in exports. On the flip side, we've also typically not seen massive increases in imports either. FTAs are signed, and business generally continues as before.
This time it will be different. We are entering into an agreement with many aggressive export-oriented and coordinated countries. If we don't have similar domestic strategies for success, Canada has the potential to lose. We need a national strategy that aims to support domestic competitiveness first and global exports second.
These trade agreements will open the door to increased competition. This can and should be perceived as a good thing. However, we need to be ready for that competition. While the private sector is willing and ready to compete on a level playing field, our business environment is often not level. While our corporate tax regime is world class, many other areas are not. Canadian companies face higher input costs, a much more costly regulatory burden, higher labour costs, and higher energy costs. Meanwhile, domestic supports for manufacturing investment and advanced technologies significantly lag those of our international competitors. We need to recognize that Canada is not an island and that these trade agreements make us less so. Our business environment must be world class at home to succeed internationally.
Second, while our trade support network is strong, it can and should be significantly strengthened. To start with, we need to do a better job of educating Canadian companies about offshore potential. Despite our success and high level of exports, very few Canadian companies are looking internationally. We need to set up programs to educate companies in new market opportunities and to increase their internal capacity and expertise for global trade—an export-intensive accelerator program similar to what is available in other markets, for example. Expanded foreign trade missions to connect companies with foreign buyers should also be supported. Exporters also need to have better market intelligence and improved connections to international business partners through an expanded trade commissioner service.
The TPP can and should be a major step towards achieving these objectives. CME recognizes and applauds the government's leadership in helping Canadian manufacturers grow their business in global markets through agreements such as TPP and CETA as well. However, we must remain focused on a principled approach to trade that grows value-added exports and does not undermine existing supply chains, while implementing a strong support network to allow companies to take advantage of these new market opportunities.
Thank you for your time this morning.