Great. Thank you so much.
Thank you for the opportunity to be here today to present CFIB's perspective on NAFTA. You should have a slide presentation in front of you that I just want to walk you through very quickly.
CFIB is a not-for-profit, non-partisan organization that represents more than 109,000 small and medium-sized businesses across Canada. Our members represent all sectors of the economy, and are found in every region of the country. It's important to remember that Canada's SMEs employ 90% of Canadians who are working in the private sector, and they're responsible for the bulk of job creation in Canada. Addressing issues of importance to them can actually have widespread impacts on job creation and the economy overall.
Canada is a trading nation. Every year, billions of dollars of goods and services flow through our border, and many jobs depend on the vitality of our trade relationships. To better understand our members' perspective on NAFTA, we conducted a survey in May that got almost 4,400 responses.
Of the survey respondents, 63% had experience importing from the United States and 28% had experience exporting to the United States. As well, 3.5% had experience importing from Mexico, and 5% had experience exporting to Mexico.
As the U.S.A. is our largest trading partner, changes to NAFTA have the potential to seriously impact how we do business. Uncertainty in this area makes it difficult for Canada's SMEs to plan for the future. In fact, more than one in four businesses are already looking to alter their trade plans, with another 42% not yet knowing if they will. Only 30% were confident that their trade plans would continue as they are.
This reaction should not come as a surprise, as getting involved in trade, even when there is more certainty, is not easy for smaller firms. There are almost always challenges that smaller businesses must try to overcome. Some, such as currency fluctuations, will not be solved by trade agreements. Others however, such as the cost of shipping, duties, and taxes, and understanding rules and regulations can certainly be addressed to some degree by successful trade agreements. These are among the areas we are seeking governments to address in this renegotiation of NAFTA.
It should be known that most get involved in exporting because they see a growing market demand for their product or service, because they want to expand their business, or because they see a good potential market opportunity. However, more than one-third also cited favourable free trade agreements as having an influence on their intention to export, so addressing SME trade priorities could encourage even more to engage in trade.
Our survey garnered more than 100 pages of comments on how NAFTA could be improved, and many common themes emerged. These slides provide a summary of the most important priorities to address in these NAFTA negotiations to assist small and medium-sized businesses. They include having a chapter specifically addressing the needs and particular challenges faced by small businesses. It could include a series of commitments and principles that all parties agree to, and we have suggested a few in a submission that we've also circulated to the committee members.
We also think we need to ensure that the current range of duty-free goods within North America remains as is, or is expanded. Many small business owners stated how important the agreement was in making them competitive, and losing this advantage would be devastating to their business. A focus on simplifying the rules, with the aim of reducing the overall administrative burden for small businesses involved in trade is another area.
Our submission outlines some very specific examples raised by members in our survey that could be addressed. Sometimes, the toughest issues that small businesses face are the myriad of taxes and rules at the state and provincial levels of government. We would encourage governments to find ways to include sub-national levels of government when working towards regulatory co-operation of tax and regulatory systems across all those multiple levels of government.
We would also strongly discourage changes that would complicate or tighten the rules of origin. Many expressed alarm that the NAFTA renegotiations could further complicate what is already a very daunting task for many SMEs. Rules of origin should be easy to understand, clearly communicated, and include solid examples of what is required.
Some of the most frustrating aspects of trade are the paperwork and the processes businesses must follow to get people or products across borders. Making border processes easier should include better customer service, easier and timelier access to information resources, and quicker response times to business inquiries.
Also, truck transportation is vital. It's a vital aspect of free trade in North America. While we understand the importance of safe and secure borders, NAFTA should look at ways to improve the speed at which trucks are able to cross those borders. This could include looking at how well trade facilitation programs such as the FAST program serve their intended purpose, and ensure that they are easy to access and more tailored to the needs of small firms.
Many small businesses also told us that there is a lack of clarity as to what visa may be required or not required for various types of labour to cross the border. This is often compounded by the uncertainty as to how the CBSA or the U.S. Customs and Border Protection will react to those. Even when their paperwork is in order, there are sometimes complications that cause delays in what should be an otherwise simple and straightforward process. The federal government should ensure that the free flow of labour remains an important component of NAFTA, and work to improve and clarify labour mobility rules.
Finally, we need to look at ways to modernize NAFTA.
E-commerce may be best to illustrate a technological advancement that should potentially be included as part of any free trade agreement. However, any new provisions related to e-commerce should be balanced with the needs of “bricks and mortar” businesses that have to compete with those online businesses. There is much more information on each of these items in the submission that we provided to you here today, as well as many member comments, and I'd be happy to answer any questions that you may have.
Thank you.