International Trade Committee on Feb. 25th, 2020

[Tabatha Bull]

It's actually 13,000.

[Chris Lewis, Conservative, Essex, ON]

It's 13,000. That's still a very remarkable number, in my opinion.

[Tabatha Bull]

Yes. We did that research with Global Affairs Canada, and it showed that it's twice as much as non-indigenous businesses.

[Chris Lewis, Conservative, Essex, ON]

Wow, that's very interesting.

That being said, these small businesses will be affected by slower processing times at the border if the CBSA is not ready to implement this new agreement.

What's the potential impact on the CCAB and the people it represents if this is indeed the case?

[Tabatha Bull]

We have not yet done an economic assessment on export. That is work we are looking towards doing. We know we have the numbers of businesses that are exporting and the sectors they're exporting in, but we have not yet done an economic assessment.

Internally in Canada, I think we have some areas of growth for procurement as well, specifically federal government procurement from indigenous business. I think there are other areas that we could be working on. However, I don't have an answer on the economic impact.

[Chris Lewis, Conservative, Essex, ON]

Thank you very much for the answers.

Thank you, Madam Chair.

[The Chair, Liberal, Judy Sgro]

Mr. Arya.

[Chandra Arya, Liberal, Nepean, ON]

Thank you, Madam Chair.

Ms. Bull, I can certainly attest to your statement that the access to capital is one of the major barriers.

Before joining politics I was in a small high-technology company focusing on exports and I can tell you that the company survived only because of the personal financial sense of the founders. Otherwise, the company could not have grown, nor could it have survived.

Another point is that many people don't know that the bulk of the exports, almost two-thirds of the exports from Canada, are done by foreign-owned firms. I am not against foreign capital. I love foreign capital coming in and investing in Canada. The bulk of the exports from Canada, 66% to 67% of the exports, are from foreign-owned firms.

However, Canada, is just one of their branch offices. Their major objective is to go after the North American market. They may not have so much interest in supplying or exporting to other markets in other parts of the world, whether it's the Asia-Pacific or Europe.

Right now, only about 12% of small businesses are in exports and even there, it is just an average of 5% of their sales that are in exports.

However, access to capital is a different subject for a different time. Maybe when it comes to Export Development Canada or BDC, that's where we should take it.

Mr. Smout, you did mention in your January 27 statement that the economic growth has been fuelled by trade and foreign direct investment, and our ongoing prosperity relies heavily on the swift ratification of CUSMA.

As I mentioned earlier, yes, foreign direct investment is very important because of the impact on exports. On the North American market, our exports to the United States, through the earlier NAFTA, have been quite stagnant for the last 10 to 15 years. It has been holding around $320 billion of exports and around $290 billion of imports.

I have some numbers that show the importance of foreign direct investment for Canadian GDP. In fact, it says we are tied with the U.K. on the FDI-to-GDP ratio, which is quite significant.

My only concern is, are we making policies that are catering more to foreign direct investment, or should we have specific policies to encourage Canadian entrepreneurs, mostly small-sized firms, that can export outside the North American markets?

[Leigh Smout]

Yes, I agree with the statement you've made. FDI is an important aspect, and certainly most regional organizations, municipalities and so on are looking to attract investment. It's one of the ways they promote jobs and prosperity for their regions.

I also believe that the long-term health of our economy hinges on our tackling the growth of exports from our small and medium-sized enterprises, and it's really [Technical difficulty—Editor].

[Chandra Arya, Liberal, Nepean, ON]

How can we make our small and medium-sized enterprises gain strength through access to the North American market but still allow them to cater to other markets across the world?

[Leigh Smout]

Yes, it's a natural progression. I believe that Ms. Anderson mentioned that 95% of the trade accelerator program graduate companies in Vancouver start by tackling the States. Then as they grow their business, they start to look to foreign markets further afield.

I mentioned the example of Core LED. They did the same thing. They were a domestic organization. They looked to the States and as their business grew they said, “We can do this around the world.”

Many of our companies do that and we need to encourage them and support them in that growth in the U.S., as well as internationally.

Our other mandate is to try to diversify to some of those other markets and some of the ways we need to do it....

I believe procurement was mentioned. Also, all companies within the EU are now allowed to bid on contracts that are procured by municipalities at every level of government in Canada. Our companies are allowed to do the same in Europe.

The challenge is the European companies are looking here and we're not looking quickly enough there, so we're going to increase our competition here without taking advantage of these opportunities there.

My suggestion would be that the government needs to help organizations like ours and others, like all of you at the table, to encourage those businesses to look in those countries and—

[Chandra Arya, Liberal, Nepean, ON]

Exactly, you made the point, and I was trying to leave that—

[The Chair, Liberal, Judy Sgro]

Your time is up, Mr. Arya. Thank you.

Mr. Hoback.

[Randy Hoback, Conservative, Prince Albert, SK]

Leigh, I had the great pleasure of sitting down with you guys in Toronto a few weeks ago. You talked about your program and how you're taking it across Canada.

I do agree with you. I think it's a program that should be funded by the federal government, because you are encouraging a lot of SMEs to get out there and to get beyond their comfort zone, and you're holding their hands, for lack of better words, in doing that. I would encourage you to keep that up, and I'd encourage the Liberal members who are here to listen to this, because it's actually a very successful program.

Bridgitte, I want to talk to you a bit about the high-tech sector.

With people being from Vancouver, of course, and Seattle, and with the labour mobility of the people coming back and forth, how do you find USMCA in regard to labour mobility? What is good about it? In what areas can we make it even better? What should we look at?

[Bridgitte Anderson]

Recognizing that no trade agreement is perfect and compromise is necessary, we do think there are some improvements that could be made, particularly around the TN-1 visa—

[Randy Hoback, Conservative, Prince Albert, SK]

Yes, the visa.

[Bridgitte Anderson]

—to allow for the movement. When you look at the high-tech sector and the creative sector, you see that there's a lot of movement between Canada and the U.S. Also, as I mentioned, the service sector has been identified as one of those that will grow the most globally. There are provisions that could be undertaken to make sure these people can work in both jurisdictions.

If I could, I'll also point to a study that we did in 2018 called the “Regional Export Framework”, which identified key export markets for greater Vancouver for businesses, including indigenous businesses. My friend here beside me may have been referring to this as well. Despite the importance of Vancouver as the Asia Pacific gateway, it identified the United States as the most important sector.

What's key to your question, I think, is that there were four key services areas, trading clusters, that were really ripe for opportunity. One of them does include your question around high tech. There were professional services, travel and tourism, and transportation, but also computer and information technology. We see a lot of opportunity here, including for indigenous businesses as well as businesses more broadly in greater Vancouver. Given the opportunity here, there would be room to allow more for better movement, if you will.

[Randy Hoback, Conservative, Prince Albert, SK]

On that labour mobility—Leigh, you could probably jump in here too—and the film industry, Toronto, for example, has a huge film industry. I know that Vancouver does too.

I'm sure you are a little concerned about the coronavirus and the impact it could have on that sector. We experienced SARS and that wasn't by any means a pleasant experience.

I'm just curious. Is there anything in the USMCA that's actually going to make it stronger so that you attract more of those productions to Canada?

I'll start with you, Leigh, and then I'll come to you, Bridgitte.

[Leigh Smout]

We've done some work with some of the entertainment organizations in the city of Toronto. One of the things they point out is that we don't actually want to be the place where people come to rent a room to film something at their whim and when they want to.

What we need to do is build up the creative side of that industry. We need to actually be developing the writers and the producers in our country who are going to create the programming and then will want to film it and produce it here.

I'm not sure in what way the USMCA can help that, but I do think that if you don't have an agreement in place, you're certainly going to make it harder for those folks to be able to produce things locally and also to attract the talent.

There are some things we need to do in order to allow talent to come and work in Canada. We hear anecdotally through these organizations that a lot of the big stars will not come and work here because of the way they get hit by taxes when they do their acting [Technical difficulty—Editor] their career in a production that's being produced in Canada.

There are a number of things like that to work on. I think the USMCA is just part of that puzzle.

[Randy Hoback, Conservative, Prince Albert, SK]

In the subsidization area, if we were to spend $1.2 billion like we did with the CBC, for example, and if we wanted more Canadian content and more Canadian productions, in throwing that money towards the writers and the facilities to get more writers and more Canadian content, we no longer have the problems we had in the fifties and sixties of getting the networks and getting the signal out to all the rural areas of Canada. Now it's just about getting Canadian content. We have so many service providers, whether it's Netflix, Amazon, you name it.

Is this where we need to maybe start to change and rejig our spending and look at what is really more efficient and more effective?

[Leigh Smout]

We see opportunity in supporting the industry in that way through funding, and in particular on the education side in developing the talent, in helping the colleges and universities put together programs that actually produce this, and not having to go and import the talent itself from elsewhere. Then, of course [Technical difficulty—Editor] and you've trained people. Then you're able to keep them here, to retain them.

[Randy Hoback, Conservative, Prince Albert, SK]

Thanks.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

Mr. Dhaliwal.

[Sukh Dhaliwal, Liberal, Surrey—Newton, BC]

Thank you.

Welcome to the presenters.

For my first question I'll go to my home province, beautiful British Columbia.

Ms. Anderson, as you said, Vancouver is the Pacific gateway to trade, commerce, travel, all that comes. You also mentioned that 90% of small businesses are owned by women.

Is that correct?

[Bridgitte Anderson]

I did not mention that. I think it might have been Tabatha. I said that 98% of the businesses in British Columbia are small businesses, and they have five people or less.