Canadian dollar depressed by NAFTA risks
OTTAWA -- One of Canada's newest cabinet ministers is tasked with making progress on a long-running challenge: encouraging more businesses to chase opportunities beyond the comforts of North America.
Adding to the pressure, Mary Ng, named to the Trudeau cabinet in July, is taking on the role as minister of small business and export promotion at a deeply uncertain time for the critical Canada-U.S. trading relationship.
Industry leaders say there is a growing urgency to help Canadian businesses find overseas markets, pointing to the unknown future of the North American Free Trade Agreement, a cross-border tariff dispute and threats by U.S. President Donald Trump of more American duties on the important automotive sector.
What should Canada do at the NAFTA negotiating table?
"The U.S. is an important trading partner -- they will always and continue to be an important trading partner -- but looking beyond to other markets for Canadian businesses is the right thing to do and it's an opportunity," Ng, a Toronto-area MP who worked in the public sector for 20 years, said in an interview.
"I always think it's good to diversify."
Ng's small business portfolio comes with an additional responsibility and title compared to her predecessor -- export promotion.
She is one of three federal ministers focused on trade. International Trade Diversification Minister Jim Carr and Foreign Affairs Minister Chrystia Freeland, who is leading NAFTA negotiations, round out the trade trio.
Ng's focus will be spreading the word to companies about overseas markets and directing businesses to government services designed to help them take advantage of numerous trade deals Canada has struck in recent years.
"(Carr)'s the one who's going to open the door and I'm here to help our companies, our SMEs, walk through that door," she said.
The treaties include recent agreements with the Pacific Rim -- known as the Comprehensive and Progressive Trans-Pacific Partnership or CPTPP -- and Canada's free-trade deal with the European Union, also known as CETA.
The Asia-Pacific and EU deals will open up access to a billion potential customers, but getting small businesses to explore those markets won't be easy. Only about 11 or 12 per cent of smaller Canadian firms are currently exporting their goods or services abroad, she said.
"We have a low number of SMEs that are exporting right now," said Ng, who worked in Prime Minister Justin Trudeau's office before winning a 2017 byelection.
"We need to do better."
She said she knows from her own experience that small business owners are often too busy running their day-to-day operations to figure out how to get access to a new, faraway market. Ng grew up in a small, family business and, later on in her career, said she worked with startups and small companies.
Liberal and Conservative governments have made considerable efforts in recent years to get more of Canada's small- and medium-sized companies to pursue new opportunities outside North America.
For most business owners, however, the massive American market -- with its proximity, familiar regulatory environment and common language -- has been more than enough.
Dennis Darby, president and CEO of the Canadian Manufacturers & Exporters, said uncertainty related to the country's largest trading partnership has "magnified the need for us to look beyond the U.S."
The new trade agreements are helpful, but he recommends the government streamline access for SMEs to its current services. Even with that, patience will be needed, he said.
"This is going to take a significant amount of effort, I'd say, over the next decade to really take advantage of these two big trade agreements," Darby said, referring to the CPTPP and CETA.
Dan Kelly, president and CEO of the Canadian Federation of Independent Business, said after the 2007-08 financial crisis there was a "noticeable uptick" in the number of smaller firms that pursued trade beyond the then-struggling U.S. market. The U.S. rebound, however, has led more businesses to revert back to what's easiest -- the giant market right next door.
He suggests Ottawa focus on a facilitating role by helping provide fresh ideas and building up capability for firms to take advantage of trade deals like the CPTPP and CETA.
But a government can only do so much, Kelly said.
"There is a natural limit to export promotion and we need to be conscious of that," he said.
"Nobody starts exporting to Japan or to Lithuania because the government tells them it's a good thing."
Kelly and Darby say they're encouraged by the government's decision to expand Ng's portfolio to emphasize export promotion.
Conservative MP Blake Richards, the parliamentary critic for small business, export promotion and tourism, said it's "laudable" the government's made export promotion clear cabinet responsibility.
But he argued the federal Liberals have, at the same time, made it more difficult for small businesses to explore foreign markets because of competitiveness challenges at home -- from regulations to the tax burden.
Richards pointed to the federal carbon tax as an example.
"It's great to say we want to help give this opportunity to promote ourselves, but the other actions you're seeing don't match up with that," Richards said.