Thank you, Madam Chair.
I would like to express our thanks to the Standing Committee on International Trade for allowing us to address you today.
My name is Leigh Smout. I'm the executive director of the World Trade Centre Toronto at the Toronto Region Board of Trade.
I'd like to make a few comments.
Canada is a trading nation. Because of our small population, we're much like a small island nation. We cannot grow that international trade. Trade results in three main things, prosperity, growth and jobs, and it's as true for any small business as it is for our geographically large, but small population nation. Without international trade, Canada cannot accomplish any of these objectives. One in five jobs depends on trade. In Ontario alone that is 1.3 million jobs, and the U.S. and Mexico are our closest major trading partners with a geographic connection that is unique to Canada. The U.S. alone is responsible for buying 75% of our exported goods and services. We are a highly important partner to the U.S., but we are far less important to them than they are to us, and this puts us at a disadvantage in negotiations with them.
Our next closest trading partner, China, is not even 5% of our exports. The World Trade Centre trade services arm of the Toronto Region Board of Trade has two mandates: grow Canadian businesses through international trade and help Canadian businesses diversify their markets away from the U.S.
Both mandates are a long game. Our trade accelerator program, TAP, helps SMEs from coast to coast develop their export plans and connects them to all the resources that can help them trade, including the trade commissioner service, Export Development Canada and Business Development Canada, as well as the private sector experts in legal, tax, process, finance, etc.
An example is Core LED. They're a company that came through our very first TAP back in 2015. They were happily doing three million dollars' worth of business in retrofitting places with LED lighting and they didn't see the need to grow their business. They had enough sales, but they didn't see how they had the capacity to operate in larger numbers. Through TAP they met RBC and BDC, which were able to help fund the growth of their production capacity.
Not having any thought of international trade to service their sales domestically, they decided that since they had the capacity they would take a look south of the border. They found two large $5-million contracts. One was retrofitting a military base, the kinds of things they had never thought of. They were helping [Technical difficulty—Editor] at that point. When they came to talk to us a year after the TAP, they said that taking a look at international trade had changed the view of their business. A year later, from being a $3 million revenue company, they were going to do $12 million that year, and they expected to do $20 million the following year because they had decided they would look further afield than the U.S., and then $50 million eventually.
International trade, including starting in the U.S., has completely changed the path of that business. Without our free trade agreements, they would not have had the competitive advantage they had in the United States.
Although TAP companies focus a much improved 70% of their efforts into markets other than the U.S., and we will shortly graduate our one-thousandth company, this can only make a small dent in our dependence upon the U.S. The Board of Trade has over 13,000 business members and our community tells us they need CUSMA in place. We need it ratified by Canada, as has already happened in Mexico and the U.S.
It is our understanding that the business community feels it has been consulted to a degree that's unparalleled in free trade negotiations. In developing the details our voices have been heard.
Although our sense is that the new agreement may not be as favourable to Canada as NAFTA, we nonetheless think it is a much better situation than living with the truly destructive results of a lapsed NAFTA . We also worry about current U.S. political volatility. Therefore, we're hopeful and we respectfully request that all political parties see the value and necessity of ratifying CUSMA as soon as it can be accomplished.
In our own efforts to continue to break down barriers for businesses of all sizes, we submitted a proposal to the Department of Finance for the unilateral elimination of 101 low-yield tariffs. That can save businesses $773 million in duty and compliance costs every year in two priority sectors: manufacturing and clean tech. The real cost is compliance; it's not the tariffs. The tariffs are not netting a great deal of money for the Canadian government, but compliance is costing companies significantly.
Overall, import tariffs cost both Canadian consumers and businesses, harming our nation's competitiveness by increasing input costs and drowning Canadian businesses in red tape. Our proposal identifies several compelling reasons for unilateral tariff elimination, demonstrates international leadership in reducing trade barriers, cuts costs and red tape for business, boosts competitiveness and economic growth, supports growing industries, and reprioritizes border resources, all the things we need in our future agreements, for instance, and in CUSMA as well.
In addition, once we have CUSMA ratified, the government needs to support organizations like our own across Canada to ensure that we have the capacity to help Canadian businesses understand the changes from the NAFTA rules, with which they are familiar. A focused and concentrated effort should be undertaken so that the uptake of the agreement is not skewed in favour of our trading partners in the same way that has occurred with the Comprehensive Economic and Trade Agreement , CETA, with the EU, such that European countries have grown their exports to Canada much more rapidly than Canadian companies have grown our exports to Europe, leading to a trade imbalance and leaving us to play catch-up.
Thank you again for allowing the World Trade Centre to address this illustrious committee today. I look forward to any questions.