Thank you, Mr. Chair, for the opportunity to address this committee.
Thank you, Mr. Chair and distinguished members of the committee, for inviting me to speak today.
I have to tell you that it is both an honour and a privilege to be here with you. I know the request came in not too long ago, but for me it was really important to be here. It really demonstrates the importance and it's nice to see that the committee recognizes that as well. It is a pleasure to address the committee on the measures we are taking to educate and support Canadian SMEs seeking to scale up through innovation and trade.
I'd like to take this opportunity to acknowledge my colleagues who have accompanied me here this afternoon. Kelly Gillis is the associate deputy minister at Innovation, Science and Economic Development Canada. David Lisk is the vice-president of the industrial research assistance program of the National Research Council. Michel Bergeron is the senior vice-president of marketing and public affairs at BDC.
As we all know, SMEs represent 99% of all businesses in Canada and employ almost 90% of the private sector workforce. We are a nation of entrepreneurs who want to succeed, and small businesses are the backbone of the Canadian economy.
They create jobs, support communities and enable our best and brightest to make their mark.
As the first Minister of Small Business and Tourism, my goal is to help these small businesses prosper through innovation and exports.
First, allow me to talk about innovation. In June, I joined my colleagues Minister Bains and Minister Duncan in launching the government's innovation agenda. Our goal is for Canada to be a world leader in turning ideas into solutions, in growing start-up companies into global successes, and in attracting and retaining the best talent. We listened to Canadians closely, and we are now acting on a plan to make this vision a reality.
Canadian entrepreneurs told us, for instance, that government support for innovative, high-growth firms must be simplified. In that regard, I was thrilled to launch the accelerated growth service last June. Under this initiative, we are piloting a different approach to delivering federal support to growth-oriented companies with export ambitions. The AGS brings together federal partners like Export Development Canada, the trade commissioner service, the National Research Council, the Business Development Bank of Canada, and the regional development agencies. The goal is to help high-growth SMEs to become more productive, innovative, and export-oriented. This is why EDC, with its relationship with foreign buyers, and the trade commissioners, with their on-the-ground expertise around the world, are critical partner organizations.
The AGS offers high-growth firms one point of contact and tailored services like strategy development, finance, and export support. This is all offered in a client-centric, coordinated manner. This is about delivering the right services at the right speed and scale.
Let's take a look at LED Roadway Lighting Ltd. based in Halifax. They are a world leader in the design and manufacture of street lighting and LED control systems. Their products help municipalities and utilities around the world save on energy costs as compared to those for conventional lighting technologies. Through the AGS, they were introduced to services available to them in a more cohesive and coordinated way, saving them valuable time and allowing them to focus on business development. Today, the company continues to grow, with operations in the United States, Mexico, Brazil, and China.
By March, we expect to have supported 150 firms, with another 300 to come on board in 2017. Entrepreneurs also told us during the innovation agenda consultations that they could benefit greatly from having the Government of Canada as a client before they export their products abroad. We're now working to expand the scope for Canadian firms to bid on government procurement projects from coast to coast to coast. The benefits here are twofold: increasing business opportunities, especially for smaller businesses, and lowering government costs. Our aim is to ensure that firms across the country get broader access to billions of dollars in new procurement opportunities, whether we're talking about a Calgary contractor or a Thunder Bay supplier or a Saskatoon entrepreneur with a solution. One thing is clear: having the federal government as a customer would give Canadian companies a leg up as they seek clients across the globe.
Allow me now to turn to trade. As committee members know very well, only 12% of small and medium-sized enterprises export. Many Canadian SMEs hope to expand beyond the United States, with whom nearly nine out of 10 of our exporting SMEs do business. Indeed, only 31% of SMEs export to Europe, and even fewer export to China and other Asian countries. Of the 12% of SMEs that export, nine out of 10, or about 89% of them, export to the United States. About 13% of them export to China, and 16% export to other Asian countries.
We want to broaden their horizons. We want them to consider more export markets, as there is a real opportunity for growth here. Small firms, however, cite a number of challenges in expanding to global markets. When it comes to addressing these issues, SMEs, which have fewer resources than do large corporations, can really have a tough time. We understand that, so to support Canadian exporters, I was thrilled to launch a program called CanExport with the Minister of International Trade.
CanExport helps Canadian small businesses explore global markets, while creating jobs and supporting economic growth in Canada.
I understand that Global Affairs officials provided an in-depth briefing on the program last Thursday, so I won't belabour that point.
CanExport is a key element of the government's overall trade and investment strategy. I have been working closely with Minister Freeland and now with Minister Champagne on a new international trade and investment strategy.
This strategy will include a progressive trade policy agenda that recognizes and addresses SMEs' concerns over trade agreements and negotiations. It will also include enhanced support to SMEs that are looking to grow through exporting. The new strategy will also feature trade agreement implementation plans in order to help SMEs take advantage of the opportunities that flow from trade agreements. The strategy will also aim to deepen trade and investment relations with emerging markets, particularly China. More details will be announced later this year.
One detail I can share now, however, is that in the strategy we will add a focus on SMEs owned by under-represented groups such as women and indigenous Canadians.
On the topic of women entrepreneurs, last June I signed a memorandum of understanding with the United States and Mexico to promote women's entrepreneurship and the growth of women-owned enterprises in North America. Also, as you know, earlier this week, Prime Minister Trudeau announced the creation of the Canada-United States council for the advancement of women entrepreneurs and business leaders. Not only do these initiatives help to promote and support the growth of women-owned enterprises, but they promote these companies to think and go global.
Our Canadian companies trade not only in goods, but in services.
As the minister responsible for tourism, I would be remiss if I did not mention that tourism is Canada's largest service export, accounting for 2% of our GDP. The tourism sector is critical for SMEs, generating $18.4 billion in export revenue in 2015. Of the 192,000 businesses in the tourism sector, 98% are small and medium-sized enterprises. Not only is tourism an important economic driver for SMEs, but tourism marketing also supports international trade opportunities by raising awareness of the qualities that make Canada a favourable place in which to invest and do business. The Canadian brand is strong, and we will keep it that way.
Finally, allow me to touch briefly on the importance of interprovincial/territorial trade.
As you know, our current rules prevent us from truly having one national economy. I am pleased to tell you that our government is working collaboratively with our provincial and territorial counterparts on modernizing Canada's internal trade framework to help SMEs compete and thrive. A more modern agreement will help to further open up our market and expand trade within Canada—a stabilizing force for our economy during periods of global instability. When completed, it will be instrumental in helping SMEs scale up at home in order to help grow the next generation of globally competitive Canadian companies. This will create opportunities for good middle-class jobs, attract innovative companies, and grow our economy.
In closing, you can count on me to continue to ensure that SMEs' interests are reflected in trade agreements and programs designed to support our exporters.
I sincerely want to thank all members of this committee for recognizing the vital role SMEs play in our economy and for recognizing the importance of ensuring that SMEs have the export markets they need to successfully compete.
Mr. Chair, I want to thank the committee members.
I'm now ready to answer your questions.
