International Trade Committee on Oct. 23rd, 2017

[The Chair, Liberal, Mark Eyking]

Have you finished?

[Tracey Ramsey, NDP, Essex, ON]

No one answered because of what you said.

[The Chair, Liberal, Mark Eyking]

Go ahead, the clock is ticking.

[Mathew Wilson]

I've already said my piece on de minimis earlier.

[Nathalie Blais]

Might I suggest some reading? Tax expert Marwah Rizqy, at Université de Sherbrooke, published a study this summer on Australia's progress in the area of taxation, and she in fact talks about the de minimis threshold.

[Tracey Ramsey, NDP, Essex, ON]

Our amazing Library of Parliament has done the same for me. I asked about that as well. We had an earlier witness, so we're looking at that model as well.

[The Chair, Liberal, Mark Eyking]

Thank you.

Now we're going to move over to the Liberals.

We have Ms. Ludwig. You have the floor.

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

Thank you again. I'm glad to be able to ask a few more questions.

One of the themes I've heard today and throughout our testimonies for the last two years is the opportunities around trade education. As someone who taught international trade both at colleges and universities, I will say that as much as 75% of first-time exporters are not exporting in their second year.

My question to you as a group is this. How much do you access the college and university business students, particularly international trade students, to work with businesses to co-operatively generate the research that needs to be done, because the line we often used was “people don't know what they don't know” in the international market. But we certainly found much higher rates of return and success rates of companies that were directly involved with colleges and universities where the student did the legwork and helped them out with their business planning and opportunities to help mitigate risk.

I'm wondering if each of you could speak to the challenges and opportunities that you can see with the colleges and the universities.

[Ethan Clarke]

Maybe I'll start, if no one else minds.

In our membership, the college students aren't coming to help someone else. They are turning to being freelancers because they graduate from college with a technical training in digital illustration or photography or some other technical communication trade—

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

Maybe I could just clarify. Sorry, Mr. Clarke.

Is anyone accessing students while they are in post-secondary education, as part of their projects?

[Ethan Clarke]

My members are largely working independently, so probably not, but they are finding themselves caught in a situation coming out of school where they have these technical skills, but they don't have the verbose Canadian media to go and work with, so they strike out on their own and try it on their own.

[The Chair, Liberal, Mark Eyking]

Ms. Ludwig, I think Ms. Lennox wants to jump in there.

[Victoria Lennox]

Yes. We have 50 start-up communities across Canada and we work a lot with Mitacs. Mitacs is a cool organization that helps our companies to access talent, primarily around commercialization and R and D. I would say there would be an opportunity to connect anyone who's specializing in trade with our entrepreneurs.

I like that program a lot because it's not directly in the institution. It's kind of on the side, so it's easier for the private sector to connect to it. We have found it useful.

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

Just on that, Ms. Lennox, did you ever access or do your companies ever access the international students who are coming to Canada to study in particular international trade? Do you connect with them?

[Victoria Lennox]

We do at Startup Canada, but I wouldn't say that our members do.

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

Okay. Thank you.

Mr. Wilson or Mr. Holden...?

[Michael Holden]

I think it would be fair to say that most of the companies we represent are small manufacturers, and just to generalize, they are too busy trying to do what it is they're doing on a day-to-day basis to compete. One of the challenges that we as an association have is trying to help match them up with untapped resources, whatever those might be. I have to say that the use of students in that capacity is not something that I think is taken up enough.

One of the other issues, if I might mention it, that is closely related to this, which your question made me think of, is that we did a survey last year of manufacturers asking about the trade resources that were available. Although we had a huge list of government resources from EDC to the trade commissioner service to the Canadian Commercial Corporation—the whole list—and we asked them whether they were aware of these programs and whether they used them, those who used them were quite happy, generally speaking, with them, but a disturbingly small number actually took advantage of these services, which begged the question of whether they didn't know about them or just didn't use them.

It's not a question of the value. It's a question of the accessibility.

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

On that, Mr. Holden, do you think it would be of value for the committee to study, for a certain amount of time, the opportunities available for exporters and start-up companies as well as how we can better connect businesses to services?

[Michael Holden]

I think so. I think Victoria's idea about starting up your company and saying, “Welcome to the business world. Here are all the services that are available to you,”.... In the past we've recommended using a concierge service from government. There are a lot of good government services, but if you're a small business, it's like looking for a needle in a haystack. The programs are all over the place. They tend not to last for more than a few years at a time in a lot of cases, and they're hidden within different departments. Then there are the federal and provincial governments with their own either competing or complementary programs at the same time. It can be a maze to navigate through those. I think that's why the uptake isn't as high as it could be.

[Toby Sanger]

If I may add to that, I think this is also connected to the broader issue of how we develop industry in this country. I think there used to be more collaboration among the different actors in the economy—the businesses, education institutes, and the labour unions—in terms of sectoral strategies. It's really important, in terms of trade and growing an industry, to get everybody to work together and to plan that with our educational institutions. We don't pick that up much anymore.

There would be mixed success in different areas, but if we're trying to grow our different industries and be proactive in these areas, we need to get together in more than an ad hoc way to do this. Higher education institutes are very much a part of that.

[The Chair, Liberal, Mark Eyking]

Thank you.

That wraps up most of the MPs.

I have a question. We just finished our NAFTA study, on the future NAFTA or whatever it may be. We were at the Ambassador Bridge, and we could see how much volume was coming back and forth, but most of the volume was from big companies, with full tractor-trailer loads of wipers or whatever it was going back and forth.

We are looking at small and medium-size businesses. We often hear that we want the border to be more open and not more closed for small and medium-size businesses. If you look at Canada, we have unique products. We have our first nations. We have certain food products that small and medium-sized businesses see the United States as a home for. What should we be looking at as far as the border or things going across it go?

For the customs people, is it okay for small and medium-size businesses or should small and medium-sized potential exporters not even go there because it's too big a wall to climb to send stuff? What can be improved or what problems do you see there?

[Mathew Wilson]

I'll start. That's a great question.

First, most of what we export, as I mentioned, is manufactured goods, but a lot of the manufactured goods are production parts or subcomponents, whether in food, auto, aerospace, computer parts, machinery, you name it. It doesn't matter. That's the vast majority of what Canada imports and exports, production parts.

Mostly, what happens is that the small companies are a tier three shipping to a tier two. The tier two ships to a tier one, and the tier one to the OEM. The small companies aren't directly exporting. In fact, if you ask them if they are exporting, they would say, “No, I'm selling to Jimmy, down the street. That's who I sell to.” They don't even know where their stuff ends up, in most cases. The big companies are the ones....

When we talk about border trade facilitation, it impacts the entire supply chain, from the GM in Oshawa right down to Linamar in Guelph, where I live, or to a smaller person in that automotive supply chain, which has crossed the Ambassador Bridge. It impacts them all, but it's mostly the larger companies, which know about the problems, that have responsibility.

I came before this committee in the spring to talk about NAFTA modernization. The number one priority we heard from our members—big or small, it didn't matter—was to simplify the border, get rid of the red tape, and make it easier. It's not about security. It's about making sure that people understand the processes and can submit information electronically.

Here we are, talking about electronic commerce. You can't submit information to the Government of Canada electronically if you are moving stuff across the border, in most cases. You can't do it. The government can't accept it, and if it can accept it, chances are it's backed up by a hard copy afterwards, on paper. With NAFTA rules of origin, you have to have an original signature on that certificate to prove that it is the right product.

There are a lot of things the Government of Canada could do to make it easier, and those are the things that we are talking to negotiators about, in terms of simplifying it and making it easier for a company of any size, because it is critical. It's the number one issue that companies face.

[The Chair, Liberal, Mark Eyking]

Do the small and medium-sized American companies have it easier getting here than we do going down there?

[Mathew Wilson]

I would say it's the same. The difference is that most American companies don't realize they are shipping something out of their country, to be fair. It's the Canadian company that actually does the importing. Unlike their trade arrangements with almost anyone else around the world, Canada takes both the import and the export responsibility, so they don't actually know what their own problems are on the border, whereas we know both sides of the border very well from Canada.

[The Chair, Liberal, Mark Eyking]

Thank you, sir.

That wraps up our dialogue. We are going to suspend now.

Thank you, again, to the witnesses for coming on short notice.

Michael, welcome back.