International Trade Committee on Nov. 6th, 2017

[Rod Hart]

We already go to every single address, whether it's rural and remote, and we're one of the only carriers that does that. I think access to broadband Internet is going to fuel more online shopping and more access for those communities to purchase from retailers abroad, outside the country, as well as within Canada, and therefore bring more volumes to Canada Post to deliver up in those more remote areas. It's an opportunity for us.

[Colin Carrie, Conservative, Oshawa, ON]

For sure.

[The Chair, Liberal, Mark Eyking]

Good. Thank you, Mr. Carrie.

We're going to move over to the NDP now.

You have three minutes, Mr. Dusseault.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

Thank you, Mr. Chair.

I'd like to revisit the Universal Postal Union issue.

I agree with Mr. Fonseca's characterization that we are practically subsidizing Chinese companies so that they can flood the Canadian market. I'm shocked, though, that Canada Post hasn't been able to put a figure on the size of the problem.

If my understanding is correct, the Universal Postal Union has an established compensation model. Are you able to tell us how much the Chinese government has paid Canada in compensation over the past few years?

[Rod Hart]

We do not have that with us right now, sir.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

No? I would think that information was available somewhere. I have trouble believing that the Canadian government doesn't know.

[Rod Hart]

Sure. We would have the information. We deem what we get paid by commercial entities or postal entities as commercial, so we don't publicize that or make it public.

[Pierre-Luc Dusseault, NDP, Sherbrooke, QC]

At least we do have data on how much we are, more or less, subsidizing Chinese companies under that agreement.

You said you were hoping it would change, and that's good. You see that it is indeed a problem and you want things to change. Who is responsible for fixing the problem once and for all, so that it's fair for companies on both sides of the border?

[Rod Hart]

We've been addressing this situation over the last number of years. I can say that it's been on a couple of fronts. One is that we have established new services with China that would give them access to a track service, which obviously costs more but would meet the needs of Canadian receivers much better. Tracking and delivery confirmation and service standards are a bit more in line with what e-commerce shoppers expect. Right now, what they are taking advantage of has no delivery standards, has no tracking, no guarantee, and therefore does not get priority treatment in terms of how it gets delivered. It can take a long time to actually cross those borders and get delivered.

We have been working on a couple of fronts. One, as my colleague Mr Jarvis mentioned, is that at the Universal Postal Union, together with a whole bunch of other countries that feel the same way we do—given that China is a huge net exporter of these kinds of small, low-value items that clog up the network and are taking advantage of very dated postal rates—we have been successful in moving, over the next number of years, some increments that will cause the compensation for the cost of those services to China to increase significantly and be much more in line with some of the costs that they incur.

The real opportunity, though, is that those services were never meant for the e-commerce opportunity. They were never meant for full tracking within a reasonable time frame of delivery. We're encouraged by seeing the tremendous growth in that service over the last couple of years. In this year, I think we have almost 300% growth in that particular service, because Canadians are becoming more demanding on how they receive items from China. They don't want to wait weeks. They would like to have those items in days.

[The Chair, Liberal, Mark Eyking]

Thank you. That wraps up your time.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

I'd like to ask a question.

[The Chair, Liberal, Mark Eyking]

There is a little time for the Liberals to ask a question.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

I have a short question on that part.

[The Chair, Liberal, Mark Eyking]

Go ahead, Madame Lapointe.

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

Thank you.

You said that parcel tracking was a new service. What percentage does it make up? Are you able to put a number on it?

[Rod Hart]

The tracked service we have—

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

With China.

[Rod Hart]

—with China is.... Tracking is not new for Canada Post, but in terms of the service we launched with China.... I'm not sure we shared the numbers publicly, but it's in the millions now, and we've only had—

[Linda Lapointe, Liberal, Rivière-des-Mille-Îles, QC]

What's the percentage today? Is it 5%, 10%, 20%, or 30%?

[Rod Hart]

It's now overtaking the volumes that were previously in the un-track stream, if we can say that, so it's that type of growth.

[The Chair, Liberal, Mark Eyking]

Go ahead, Mr. Peterson.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

Thank you, Mr. Chair, and thank you everybody for being here. It's very insightful information.

My next question is to Mr. Winterhalt and Ms. Glenn. How well do you guys work together and share information? Of course, part of BDC's mandate is to make sure small and medium-sized enterprises in Canada get to grow as Canadian companies, and part of that could obviously be export and tapping into export and foreign markets.

Do you guys share information and databases, and help small and medium-sized enterprises in conjunction with each other when you're fulfilling your mandates?

[Shannon Glenn]

I had already made reference to a long-standing MOU that EDC and BDC have in terms of referrals. We also have our presidents speak very regularly in terms of having a president-to-president discussion and action items flowing from there in terms of how we can continue to better our relationship and make sure that our various clients and prospects understand how our various products are complementary to each other.

There is a healthy middle ground where BDC has, for instance, some financing to support expansion into foreign markets, but it's still around the space that we operate in, which is term lending for specific projects. We have other initiatives, such as a collaboration with EDC and Global Affairs Canada on a tariff finder tool, so we're also in the information-sharing space as well.

[Todd Winterhalt]

To add to that, the relationship has definitely deepened over the last number of years. Shannon mentioned the referral program. In the last three years, about 1,200 Canadian companies were referred between the two organizations at the right point in time, and that's important. There's a business horizon there, an early-stage need for working capital domestically to grow the business. Pre-exporting squarely falls to BDC, and then once they're ready to go international, there's a good hand-off to EDC.

There are a number of other programs we also collaborate on, including the accelerated growth service, which is very much targeted to the small and medium-sized exporter or new business. It's actually a broad, whole-of-government approach in which we're just two of the key players.

[Kyle Peterson, Liberal, Newmarket—Aurora, ON]

I asked that particularly today because in Bill C-63, the budget implementation bill, there are some changes coming to the Business Development Bank of Canada Act. The changes are meant to give some new funds, a kick-start, to innovative companies, cleantech companies, companies that are going to be participating in the new economy, which would of course include e-commerce and international trade by definition. There's a great opportunity for the Canadian economy to grow through trade because of some new trade deals that are now online and the types of skills we can leverage.

I know there's the MOU, and I know you two work together. What client-facing dashboard or portal... How could someone who is trying to...They don't really care if it's BDC or EDC or if you're an SME. Is there a one-stop shop? Is that in place now, or is that getting any better?