LIST OF RECOMMENDATIONS
1. The federal government needs to define still more clearly its role in
international trade and business development. The Committee
recommends that any review of the government's role be guided by the
following principles:
- Programs and services should be focussed primarily on SMEs, in
particular to SMEs that are ``new entrants'' into international
markets;
- The government's principal role is to stimulate and facilitate, not to
subsidize;
- Government programs and services should supplement and
complement private sector providers rather than duplicate and
compete with what is made available by the provinces,
municipalities and the private sector; and
- Government programs and services should be adapted to the
specificities of each province, region and economic sector.
(page 16)
2. The Committee welcomes the recent decision of the federal government to
provide EDC with $50 million of additional funds. The Committee
recommends that these funds should be dedicated to SMEs. (page 23)
3. The Committee has been favourably impressed by the newly established
EDC programs and services targeted as SMEs, notably the Emerging
Exporter Team and the Master Accounts Receivable Guarantee (MARG)
Program. The Committee recommends that their experience be carefully
monitored with a view to their further strengthening. (page 23)
4. Recognizing that export financing services for SMEs may not be
self-financing in the short-term, the Committee recommends that the
Emerging Exporter Team be given a precise and separate budget allocation
within the Export Development Corporation (EDC). This budget allocation
should include specific budget targets over a five-year period, after which
the Emerging Exporter Team should be self-financing over this term. The
Committee takes note of the efforts now being made in this direction. (page
24)
5. To press financial institutions to be more forthcoming with SMEs, the
Committee recommends when conducting the regular reviews of the Bank
Act that the federal government evaluate the performance and future
intentions of financial institutions with respect to SMEs in export markets. If
this effort is deemed inadequate, the government should take this into
account in its decisions. (page 24)
6. The Committee recommends that the government should also encourage
other financial institutions, in addition to schedule I banks, such as
insurance companies, pension funds, credit unions and caisses populaires,
to provide funds needed by SMEs for export trade. Those institutions that
enjoy special tax advantages should receive particular attention. (page 24)
7. The Committee recommends labour sponsored venture capital
corporations and RRSP eligible equity securities be encouraged to form
strategic alliances for the purpose of risk sharing in small and medium
business export programs. (page 24)
8. The Committee recommends that the government look to the marketplace
and reduce administrative constraints to the creation or importation of
alternative sources of capital. (page 24)
9. The Committee welcomes the initiative announced on January 25, 1996, to
transfer responsibility for the Canadian Commercial Corporation from
Public Works and Government Services to the Minister for International
Trade. (page 25)
10. The Committee recommends that the industrial development activities of
CIDA Inc. that contribute to investment in and the transfer of technology to
developing countries should remain within the Canadian International
Development Agency (CIDA). (page 27)
11. The Committee further recommends that trade development and promotion
programs, services and activities of CIDA be placed in the Department of
Foreign Affairs and International Trade and that the mandate and operations
of CIDA should be reviewed by the Minister concerned in the context of this
recommendation. (page 27)
12. The Committee therefore recommends:
(a) That the government sign and submit for ratification if necessary to
Parliament the Organization of American States (OAS) convention and
that it continue to work with the Latin American countries;
(b) That Canada fully participate in the work of the Organization for
Economic Co-operation and Development (OECD) and encourage the
development of an OECD Code of Conduct in this area;
(c) That the government encourage the establishment in Canada of a
Transparency International chapter;
(d) That the government consider adopting legislation directed at the use of
corrupt practices in international trade; and
(e) That the Canadian government take the lead in carrying this matter
forward in the World Trade Organization. (page 32)
13. Given these differences in opinion about the role of government in providing
market information/intelligence services, particularly in light of the growing
number of services being provided by the private sector, the federal
government needs to define more clearly its role in providing these services,
particularly for SMEs. In order to guide the government in defining its role,
the Committee recommends:
(a) That DFAIT and all other departments that have programs in
international business development should list and define the specific
market information/intelligence services that are available to SMEs;
(b) That when Canadian SMEs require services that are not normally
provided by government, they should be given a list of private sector
providers and a description of the kinds of services they can offer.
DFAIT should use existing channels of communication and
dissemination of information to make this list available to both
Canadian SMEs and private sector service providers; and
(c) The government should, upon request and based on predetermined
criteria, assist SMEs with funds to access information regarding
financing, market development and market intelligence services where
a fee is charged by the private sector. (page 38)
14. The Committee recommends that the government pursue opportunities to
make full use of Canada's linguistic, multicultural and geographic
advantages as follows:
(a) Canadian business should take greater advantage in international
markets of the fact that Canada's official languages are two of the
world's main international business languages;
(b) SMEs that are pursuing international business opportunities should
take full advantage of the linguistic and cultural ties that members of
Canada's ethnocultural communities have with their countries of origin.
These linkages with countries around the world represent a significant
but unrealized export asset for Canadian businesses and could play an
important role in creating employment in Canada;
(c) To make better use of Canada's "multicultural advantage," SMEs should
be aware of the particular market expertise of existing ethnocultural
business associations, trade councils and community organizations.
These can serve as important sources of information, assist in
developing business contacts, and provide better guidance to the
cultural dimensions of specific markets; and
(d) When Canadian SMEs are exploring international markets, they should
take full advantage of Canada's geographic position next to one of the
world's richest markets south of its border, its proximity to the world's
fastest growing markets in the Asia-Pacific, and its Atlantic connections
to European Union markets, as well as the growing market in the Arctic.
(page 40)
15. The Committee recommends that the federal government continue to use all
means at its disposal, including the possibility of suspending bilateral aid
measures, to secure the protection of Canadian citizens involved in trade
and commercial disputes outside of Canada and, where possible, to
conclude consular agreements to this end. (page 41)
16. To redress this situation, the Committee recommends that the Canadian
government should pursue actively the harmonization through international
agreements of regulations and standards that have an impact on
international trade. (page 44)
17. In order to guide the federal government in the further consolidation and
streamlining of government-sponsored international trade and business
development programs, the Committee recommends the following:
(a) The Committee welcomes the government's initiative in establishing
the Canada Business Development Service Centres. To improve the
effectiveness of this service, the Committee recommends that
documentation on programs and services already available be
synthesized in a comprehensive bibliography to assist SMEs to access
more readily their particular information or service needs. Such a
bibliography should cover existing programs and services being
offered by the federal government and the provincial governments. The
Committee was impressed by the guide prepared by Quebec authorities
for their SMEs;
(b) The Committee recommends that the federal government indicate
clearly in this document the roles and responsibilities of each of its
departments and agencies in the area of international business
development. The document should also indicate precisely what kinds
of services SMEs should expect from these departments and agencies
and how these services are interlinked;
(c) The bibliography lists the roles for each government, and explains how
each program and service is linked to the next. SMEs should also be
provided with a list of private sector contacts for services that
complement those provided in federal, provincial and municipal
programs; and
(d) SMEs should be provided with criteria which would help them
determine their "export readiness." If they needed training or other
specialized services, those would either be provided or the SME would
be directed to where to access such services. In this way, SMEs would
get involved in programs and services when they are ready to take
advantage of them. (page 52)
18. The Committee recommends that a comprehensive road map be devised to
direct SMEs to the specific information and assistance that they require,
expanding the DFAIT's existing "Road Map to Exporting and Export
Performance." This improved "Road Map" would be such as to assist new
exporters to prepare themselves for exporting, while also enabling
experienced exporters to access quickly specialized advice and
intelligence. (page 55)
19. The Committee takes note of the study undertaken by the Auditor General
and expresses the wish that this study be completed as anticipated.
(page 56)
20. The Committee recommends that an independent review be undertaken of
federal government programs that affect the ability of SMEs to compete
successfully in international markets and to determine in particular the
extent to which the programs and services provided by the federal
government, provincial governments, municipalities and the private sector
duplicate each other and/or overlap. The objective would be for the private
sector to make clear what it cannot provide and what it expects from the
various orders of government. This review should be undertaken by a task
force consisting of representatives of financial institutions, trade and
business organizations, independent business people and trade experts, to
be appointed by the federal government in consultation with provincial
governments and in consultation with municipalities and the private sector.
The three levels of government should be represented in an ex officio
capacity as observers. The operations of the task force would be financed by
the principal stakeholders. (page 56)
21. The Committee recommends that this review be guided by the following
objectives: international competitiveness; flexibility; cost effectiveness;
consolidation and streamlining of programs and services; and focus on
SMEs. (page 56)
22. The Committee further recommends that the following issues be dealt with
in this review:
(a) the contracting out practices of Canadian posts to determine whether
this is an efficient and effective way to deal with the varying demands
placed on trade commissioners stationed abroad;
(b) the practicality and cost effectiveness of using tax incentives to
encourage SMEs to enter foreign markets;
(c) the ways in which SMEs can take further advantage of Canada's
post-secondary institutions to formulate international business
development strategies. This review should have regard to the
exclusive jurisdiction of the provinces in the area of education;
(d) the development of clear criteria of what constitutes a "high technology
company," that can vary by sector, so that the federal government can
determine, in collaboration with each province, municipalities and the
private sector, whether financial assistance should be made available to
high-tech SMEs and, if so, the kind of financial assistance that may be
necessary;
(e) the impact on Canadian firms of domestic regulations - federal,
provincial and municipal - on their international competitiveness; and
(f) the impact on Canadian firms of the harmonization of
international/technical standards on their ability to compete
internationally and to establish themselves abroad. (page 56)
23. To ensure that the conclusions and recommendations of the task force are
publicly available, the Committee recommends that the task force report to
Parliament. (page 57)
24. The Committee recommends:
(a) That, in the current context of globalization, Canada continue to
exercise leadership to promote respect for human rights, the basic
rights and interests of workers and global environmental standards;
and
(b) That the government associates itself with the private sector in the
development of a voluntary code of conduct covering commercial
activities occurring outside of Canada, so that such activities will reflect
and promote Canadian values. (page 59)
;