EVIDENCE

[Recorded by Electronic Apparatus]

Thursday, November 30, 1995

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[English]

The Chairman: I'll call this meeting to order. We're continuing our study into small and medium-sized businesses.

We're pleased to welcome to the committee today this panel of representatives from three cities. They will give us the perspectives of the cities on how they encourage exports by the small and medium-sized business sector. We have representatives from the City of Kitchener, Valerie Gibaut; from the City of Calgary, Mr. Dawson;

[Translation]

from the city of Montreal, Mr. Jean Marchand and Mr. Jean-François Chapleau.

I would like you to proceed in that order.

[English]

We have one hour and a half. I'd ask that all three cities take about ten minutes each, then we will move to questions. I think you'll find the question and answer period is the most rewarding part, so if you could start with a short introduction we could then move to questions.

I would ask the City of Kitchener to go first. Madame Gibaut.

Ms Valerie Gibaut (Director, Economic Development, City of Kitchener): Good morning. My name is Valerie Gibaut and I am the director of economic development for the city of Kitchener, which has a population of 180,000.

You have my whole presentation in front of you. I would propose to walk you through it, if that's all right.

The Chairman: Fly over it, as they say.

Ms Gibaut: As you can see from the first page, 37% of our manufacturing base in Kitchener is involved in exporting, along with 10% of our service businesses.

The second page relates to Canada's technology triangle. I'm sure you are all aware that we are a member of one of four cities that comprise Canada's technology triangle. This is an economic partnership among neighbours in which cooperation and technology combine to concentrate the thrust of future growth. We have several dynamic partnerships within our technology triangle and I have listed them there.

With respect to small and medium-sized enterprises and the export market, as I will explain, we are a division of a municipal government structure. We have a staff of six. Our strength is that we have very close contact and relationships with our employment base. The contacts that we make through a series of visits give us the information to work on export markets, among other things. We realized seven years ago that this was an increasingly important aspect of our economic development work. We spent a tremendous amount of time on business retention activities, this being one of our major business retention activities because it encourages company growth and expansion within our community. I've therefore explained at the top some of the things that we've been involved in: strategic alliances, partnership opportunities, export assistance and government programs.

I've then gone into the strategic alliance, joint venture and trade show activities, some of the areas throughout the world where we have worked, and some of the consulate offices we've worked closely with.

On page 5, you can see our promotion of export development activities. Our Global Opportunities newsletter - I have some copies that I said I would attach - goes out to 3,000 businesses in the community. It has become very popular, and is totally produced in house. We conduct an economic development survey, from which we gather information about companies and their export initiatives. We host a series of export seminars throughout the year. We have many foreign trade missions. We have an export club. Again, these are all listed.

Identifying local export needs and interest: Again, as I've explained, we do on-site visits to companies. We have a very close working relationship with our local businesses. This is one of our strengths. We're on the ground level, so to speak. We're not dealing at arm's length. We have a tremendous series of networks that we can promote and interchange and link companies with. I believe that's one of the things we do the best.

The last few pages are comments and views on the export assistance that's provided by the federal government. I surveyed many of our manufacturing companies prior to doing this report and prior to coming here. What you see here is a summary of the comments that I've received from them. Hopefully, you will have a chance to look through those. Some of them are very interesting, and maybe they can be a source of questions afterward. The PEMB program, for instance, is very widely used and highly recommended. I also have views here on the Canadian consulate office services and on embassies.

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To conclude, I hope I've been able to provide you with clear insight as to the type of export assistance available in CTT and the city of Kitchener. We will continue to expand our activities in this area.

I welcome the opportunity to present these views this morning, and I thank you for inviting me here. I would like to be available to answer questions at the conclusion of the presentations.

Thank you.

The Chairman: Thank you very much, Madame Gibaut. We'll look forward to questions as well.

Mr. Dawson.

Mr. Paul Dawson (Chief Commissioner, City of Calgary): Good morning. I'm Paul Dawson, the chief commissioner of the city of Calgary.

Calgary operates it economic development process through a separate authority that is partnered with the chamber of commerce and the city of Calgary. It has a board of fifteen governors. The chairman of the authority is the mayor of the city. The co-chairman, who is elected every second year, is a prominent businessman. We also have an advisory council of another eighty to a hundred businessmen who meet monthly. All three levels - the executive of the authority, the authority itself and the advisory committee - meet monthly at three separate meetings.

We basically have two processes regarding international trade for small businesses. First, we have economic alliances with a number of cities around the world - two in Russia, one in China, one in India, one in Mexico and two in the United States. We also have sister city relationships, again with another city in China, as well as Jaipur, India, and Naucalpan, Mexico. We're also just finalizing one with Taejon, Korea.

With regard to bringing our community into the international arena, we have established a process by which we have frequent missions to various parts of the world. As we prepare for these missions we have have pre-meetings with the businessmen involved. A typical mission will involve about 20 to 22 businessmen and another two or three officials, usually including the mayor. There will be about six to eight of these a year, and we will structure them so that we and the businessmen who are going have set pre-meetings with officials in the countries we are visiting. We will basically meet with the officials and the company being visited to try as much as possible to consummate business transactions for our companies.

We've had a lot of success recently. I know engineering firms in Calgary have built water plants in Indian, China and Mexico. I know there are a couple of hospitals being built. I think we are doing some hospital construction right now in Russia. There is consulting being done around the world by some of these small businessmen.

We find the partnership with the business community works very well. The mayor is able to open doors for the businessmen in various communities. Once the mayor has opened the doors, the businessmen take over and basically run the meetings and the contacts.

The authority basically plans well in advance. We have set what we call our 2001. We have our strategy set for the turn of the century and are exploring further sister relationships around the world. Right now we are being courted by three American cities to have sister relationships. They have a policy and we generally have a policy of one such relationship per country. Right now we're looking at Dallas, Houston and Phoenix, which are in the southwestern United States.

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We also reciprocate, and the sister cities do bring their officials to Calgary. When they're in Calgary, we also set up meetings and interrelationships with the various industries our visitors are interested in.

At the present time our economic development authority has a one-year secondment from Naucalpan, Mexico. One of their economic development officials is resident in Calgary. It has been sponsored through a joint sponsorship between FCM, the Federation of Canadian Municipalities, and CIDA - the CIDA, versus Calgary's CEDA.

The other major development that's happening right now - and we believe in it strongly - is in February Calgary is moving to a co-location with the other two levels of government. We are going to move our development authority into shared offices so that there will be one common information service for all three levels of government and better coordination of such things as trips and economic development initiatives.

We believe this is going to be one of the first in Canada to be like that. It involves our provincial economic development authority and I believe the department of trade and tourism in the federal government.

Mr. Chairman, I'll be glad to answer any questions regarding Calgary's economic development.

The Chairman: Thank you very much, Mr. Dawson. We'll look forward to that.

[Translation]

We will now hear Mr. Marchand from the city of Montreal. Will you be sharing your time with Mr. Chapleau?

Mr. Jean Marchand (International Affairs Advisor, Executive Secretariat, City of Montreal): Mr. Chapleau will be first and then it will be by turn.

The Chairman: All right. Mr. Chapleau.

Mr. Jean-François Chapleau (Exports Commissioner, Economic Development Branch, City of Montreal): Thank you, Mr. Chairman. First of all, I want to thank you for inviting us.

To begin, I would like you to excuse us for not having filed a written submission this morning. We just got back from a mission in Asia, where we accompanied the mayor who was heading an important economic mission.

As a starter, I will give you a brief outline of the support that the city of Montreal provides to the local businesses, and my colleague, Jean Marchand, will follow up by describing to your what we say in Asia over the past three weeks.

I must tell you that the city supports businesses through three main organizations.

First, supports comes through the Economic Development Office of the Montreal Urban Community. As you know, the Montreal Urban Community brings together 29 cities, on the Island of Montreal, the city of Montreal being the main one, with a 54% share of the Montreal Urban Community's budget. So, through the Economic Development Office, we can act on the international scene, especially with regards to investment scouting abroad, mainly on three markets: Asia, Europe and the United States. That's why I mentioned this first organization.

Secondly, a couple of years ago, a forum was created under the umbrella of the World Trade Centre, namely International Trade Centre, an organization which is funded by both the city of Montreal, through the Economic Development Office of the urban community which I referred to earlier, and the Board of Trade. This forum welcome and supports businesses in their exports ventures, specifically those businesses which are starting up, and it also hosts the foreign missions coming to Montreal.

Finally, there's the Economic Development Branch of the City of Montreal, the Branch I belong to and which, given the high level of attention afforded to foreign markets, thought it would be necessary and useful to create and exports commissioner's position in 1992, a position which I have held ever since.

I act essentially as a consultant with Montreal SMF's, since we are dealing more specifically this morning with SMF's. This role takes the form of support for the assessment of exporting capacity, for the defining of an exports strategy, etc. We are here also to facilitate access to information and to the support provided by the various governmental programs, namely the Quebec government programs, such as the APEX program, the federal PEMD program, the CIDA and EDC programs, federal programs such as the NEBSs, the New Exporters to Border Trade Program, etc, and, of course, the various trade missions of various governments.

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So my role is to encourage Montreal businesses to take part in these programs and to facilitate the access to these programs. For instance, you must have heard of the new exporters' clubs, an initiative launched by the FBDB and which we are part of in most cases. There was one on Mexico in 1994, and some 20 Montreal businesses took part in it. We have one currently running. It is the eight workshop of our club for clothing and textile. Some 15 SMFs are taking part in it and, this morning, they are discussing funding for exports.

Regarding those new exporting clubs, there was this year the Eastern Montreal Club, in which 25 businesses took part and they organized a trade mission in Boston which worked very well. That is the kind of initiative which I worked with fairly closely, and there as well other initiatives launched by other business organizations such as the AMCEQ, the Association des maisons de commerce extérieur du Québec, on the board of which I sit.

Finally, the city supports businesses to through our International Affairs Branch, whereMr. Marchand works, where we set up and carry through on trade missions headed by officials, such as the Mayor of Montreal sometimes. There was one in Monterrey in 1994, in Moscow and, last month, in Asia. I will now yield the floor to my colleague, Mr. Marchand.

The Chairman: Thank you very much, Mr. Chapleau. Mr. Marchand.

Mr. Marchand: Thank you for your invitation, Mr. Chairman.

I shall be brief. First I have to mention that there only four of us in the International Affairs Branch. It is therefore quite a small shop.

As for the mayor of Montreal, he is himself directly responsible for the City's International Affairs Department. He intends to head two important trade missions every year with business people, with Montreal business people. He just head one which went to Asia, namely to VietNam, China, Japan and HongKong, and he want to head equally important trade missions in Latin America and the Middle-East next year.

As our colleagues from Calgary mentioned for his own city, we also have this twin cities network, the oldest one being in France. There is also Shanghai, in China, Moscow in Russia, and recently Hanoï in VietNam. We are also targeting other cities in central and southern America. We also have to underline the fact that we have a privileged relationship with the city of Boston and the United States.

I will now talk very briefly about our trade missions. We define it roughly along the same lines that our colleague from Calgary mentioned earlier. The mayor sees himself as one official opening the doors for the business people of his city going to accompany him; he sees himself as their middle man for their own economic development. He is by the way fully aware of the fact that Montreal cannot develop without international development.

As for our trade mission in Asia, we did not want to reinvent the wheel. So we worked with the existing people and programs. We also worked very much with the federal network, the embassies and consulates, and also with the Quebec delegations network abroad to set up this trade mission where 25 to 30 businesses followed us in VietNam and in China. There were less businesses with us in Japan and in HongKong, where the mayor went mostly to promote investments and tourism.

I also have to mention the fact that the politicians support, be the mayors or other officials, is very important in countries such as VietNam or China, where public organizations can do a lot to establish the credibility of businesses.

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So there were from 25 to 30 businesses with us, some of them big other not so big, and I will circulate our list now. You will see that there were people from the consulting - engineering sector, but also from other sectors such as the manufacturing sector, transports, construction, computer services, etc.

To sum up, the mayor will head at least two trade missions every year with a large group of business people to promote their product or services abroad. I will now be happy to answer your questions. Thank you.

The Chairman: Thank you very much.

[English]

Mr. Morrison (Swift Current - Maple Creek - Assiniboia): I don't have any specific question, but I have an observation I'd like someone to comment on, such as Mr. Dawson.

I have this vision of all these federal, provincial, and city people with briefcases, and then the people who are actually out there doing the business, all tripping over one another. Is it necessary in your view for us to have all of these various levels competing for space or running over one another? Can't we simplify things just a little bit? What do you feel about that?

Mr. Dawson: I think I share your feeling. There's no doubt that the more we can partnership and focus on what we're trying to do, the better it is, because there's only one businessman, and he's being represented by maybe all three levels of government. That's what I believe to be one of the strengths of this co-location project that we are undergoing right now. I would strongly advocate a coordinated effort, probably across the country.

Very often we have set a mission, and we'll find our provincial or federal counterparts are trying to do the same thing in the same area maybe a week or two weeks apart. To a degree, I think it's somewhat a waste of time and funds.

On the other side of the coin, just as my colleagues from Montreal said, it's very important to have the involvement of what I would call public officials.

I'll give you an example. I went with our mayor and 23 businessmen to Naucalpan, which is a major suburb of Mexico City. When we arrived, we were met by the governor. We didn't go through immigration or customs. Our luggage was just brought to the hotel. We used the Canadian embassy that time to host a lunch for about 75 Mexican businessmen. This was, in that case, what I would call coordinated, low-cost and highly profitable. Of those 23 businessmen, eight landed contracts on that visit. We should coordinate more, not do it three times.

There's another interesting thing that we sometimes see. Maybe it's an idiosyncrasy of Canadians. Say there are a hundred prospects out there, and one company, a Canadian company, gets one of them. The first tendency is for the other companies to try for that one, rather than to go after the other 99.

We've been trying to work on our businesses to tell them that there are lots of opportunities if they are properly addressed in these foreign ventures. There's room for all. I think we've been fairly successful, but I think the term we're using is ``partnership''. We're trying to cover the costs for these ventures out of the profits made by the successful businessmen. The businessmen are starting to pay some of the costs, for instance, of the mayor's time and what not, so that we can do more and more of it.

[Translation]

Mr. Marchand: As my colleague from Calgary said, I think that coordination is the key.

Especially for the mayor's mission in Asia, we benefitted from the very strong support of the federal as well as from the provincial government. But the main problem for me is not as much the fact that there may be overlaps at the municipal, provincial and federal level, but the fact that the Canadian volume in general is simply not strong enough. There are not enough Canadians going through Asia when you think of all the opportunities and the scope of those Asian markets.

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As a matter of fact, there is a specific opportunity for those twin cities. Take Shanghai for instance. It is because our cities are twined that the Montreal businesses wanted to accompany the mayor to Shanghai, because of the political relationship between the mayor of Montreal and the mayor of Shanghai.

It is a matter of mutual influence and benefit here. I think that our businesses were able to benefit from that. There is therefore a specific opportunity for cities here.

Mr. Chapleau: We agree with the comment made by a member of this committee regarding the duplication that exists in some instances. We are currently thinking about regrouping - and the mayor referred to this - within one organization which could be called Montreal International all those decision makers which are in the business of supporting those firms competing on the international markets. Let us take for instance the economic development office, the Montreal Metro Board of Trade, Inforum Montreal, the federal and provincial governments, the city of Montreal, etc. Given the role that Montreal plays as a city-region, it might be useful to group within one single organization all those services provided to businesses. That is part of the thinking that is going on.

The Chairman: Mr. Paré.

Mr. Paré (Louis-Hébert): I have two questions. Given that cities want to support those exporting firms, would you be able to give us a few examples of success stories which were due to initiatives launched by the cities? That is my first question.

My second question deals with the respect for human rights. You talked about trade missions, among which the one in Asia. We know that many countries, and among them Vietnam and China, are often human rights abusers. Could these businesses, in a way, contribute to the improvement of the human rights situation in those countries?

I know that it was not their first mission, but could those Canadian businesses dealing with countries which are human rights abusers exert some influence on the respect for these rights?

Let me conclude by mentioning one specific case. A Quebec businessman is currently being detained in Vietnam for close to two years. He served as a middleman for an American company and a Vietnamese company. I can tell you that the way that the judicial system operates over there is not cake walk!

So here is my question. Do business people reflect on the reality of human rights in those countries? Are they aware of the fact that the judicial system in those countries is very much different from ours and that if they manage to find a niche on those markets, they become vulnerable with regards to their own business habits?

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Mr. Marchand: First, with regards to the Quebec businessman who is being detained in Vietnam, mayor Bourque, after having read a letter which this man's family had sent to them, did make representations to the mayor of Hanoi and did mention that case in a public meeting.

Secondly, with regards to human rights in general, mayor Bourque said Tuesday, at a press conference, that as a mayor or as a city, we could only espouse Canadian policies.

With regards to China, specifically, Canada, as opposed to the United States, never wanted to make this linkage between trade and human rights, as you know. Personally, I believe that this is the way to foster dialogue and exchange.

As for some success stories, I will yield the floor to Jean-François.

Mr. Chapleau: At a press conference he held two days ago, mayor Bourque mentioned some very concrete results of his trip to Asia by referring to comments made to him by businesses when he got back from Asia.

I have here the comments made by the consulting firm HBA-EXPERCO:

We very much appreciated spending these few days in your company and your presence was quite beneficial to our project. Indeed, your participation to a lunch with the principals from the Department of Transport enabled our consortium HBA-EXPERCO and Dessau to show that we had a tangible support on the part of various levels of government, and this in a country where thrust, credibility and sincerity are all important.

He concludes by saying:

Thanks to your presence, we have obtained from the Director General of the department a letter of invitation to take part in the development stage of a feasibility study for a road project in southern Vietnam.

It is a 5 million dollar project.

I also have the testimony from a company from Pointe-aux-Trembles, in Montreal East:

The mayor's presence gave us a visibility as well as some credibility that were quite beneficial. That enabled us to have easy access to authorities and thanks to participating in the mission, we have been able to sign a partnership agreement to have our products assembled in Shanghai, valued at 1.1 million U.S. dollars, plus we sold a container to the Shanghai First Department Store.

There are several examples of that kind. Bombardier told us that the mission had enabled them to position themselves so that they stood a good chance to obtain the contract for phase II of Shanghai's subway. As we know, Bombardier is presently in a competition with Germans to obtain that contract. Dessau did the same thing. To participate in this mission together with the mayor gave them a greater credibility.

I can also give the example of Groupe immobilier Vinatech International that signed two memorandums in Vietnam, one with a company from Hanoi for an office building worth 12 million dollars U.S., and the other one for building a residential and commercial project also valued at12 million dollars U.S. together with another group from Hanoi.

The president of Vinatech International wrote to us to say that it was really thanks to the presence and the intervention of the mayor and thanks to their participation in that mission that their company had managed to have access more quickly to the authorities concerned and had thus managed to finalize the signing of that contract.

These are but a few examples. I have about ten in all.

[English]

The Chairman: Did you want to add something to that?

Ms Gibaut: Yes, if I could.

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On the first part of the question, concrete examples, I'm of course dealing with smaller companies than the ones mentioned by my colleagues here. Let's take, for instance, NAFTA. When certain government policies are enacted and put into place, that opens up a whole area for us. When NAFTA was signed, suddenly we had a tremendous interest in Mexico. We concentrated municipally on Mexico as an export market. We brought in Mexican authorities, we brought in the bankers. We made it very easy for our local businesses to access the Mexican market by bringing people to them and letting them know that this expertise is available to them.

I find with the kinds of companies we're dealing with, we have to make it easy and non-threatening for them to enter these markets. We had some very good success with Mexico, which is ongoing today.

Mr. Dawson: With regard to successes, we always found we get our major successes in trading on our strengths. Calgary has tertiary water treatment, excellent water and sewage supply. So we have put into place, through our consultants and through operators, two water treatment plants in China that I know of, and two in India. We have joint ventures for water treatment in low-cost housing in Hungary. We have consultants building a children's hospital in Russia and another hospital in Mexico. We have joint venture for computer training with U.K. firms, and we're putting in water treatment and gas pipelines in Mexico. I think very much in the consultant end of things and in the knowledge end of things Calgary has been very successful in business ventures. We also have some export-import agreements that have been made...fruit from Mexico, for instance, that are going by the American market into the Canadian market.

With regard to human rights, I have found generally that when businessmen are allowed into some of these countries they are fairly sheltered or shielded from what I would call the realities of human rights in that country. But upon occasion it does happen. I was in Mexico when we went to a building site that was very rudimentary by Canadian standards. They were mixing cement with shovels and carrying the water to mix the cement, etc. They had about 550 workers on this site. We talked to the project manager and commented that a Canadian site would have had 90 people. The project manager, who I believe was educated in the States at MIT, said he understood that fully, that he could do the job with 90 people too, but by doing the job this way he created jobs at the wages that are produced and serve the people better.

So there is some consciousness in the business circles of asking questions about the way people are treated and the way jobs are done. But getting down into what I would call the base human rights in the country, I think when they arrive in a country the businessmen are very focused on doing business and don't get much exposure to the human rights climate.

Mr. Telegdi (Waterloo): The question about having people trip over each other had me thinking about the whole culture that's involved in trade.

I'll refer to a local example in the Waterloo region. This isn't even a small company. When Toyota came into Cambridge they took the regional chairman and the mayors over to Japan to tour the home plant, because obviously local government was making a major investment, along with the provincial and federal governments, to accommodate that plant. On top of it, the first car that came off the assembly line was given to the mayor of Cambridge, which he just recently turned over to the local heritage museum.

In so many countries local politicians and provincial politicians and regional politicians mean a lot in terms of opening doors and greasing, if you will, then giving direction, to make sure everything falls in place.

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A most interesting thing I've found in the Kitchener presentation is when you look at Canada's technology triangle it's something that overlaps boundaries. It involves the city of Cambridge, Kitchener, Waterloo, as well as Guelph.

The particular one I have talked about many times in the House was the information technology, the software sector. Just looking at the stats here for 1991, it talks about 100 companies with 4,000 employees. When we had them up here a year ago.... There are 125 companies now and they have 5,500 employees and they expect to have 20,000 to 30,000 employees by the turn of the decade, which also has incredible implications for the local communities. If you can imagine 20,000 new jobs coming in, you have to plan for them on the ground, you have to have acceptance for it.

When I first started in municipal politics the hottest local issue was putting a lid on growth, and that means no more new housing and that means you can't fully expand. It was just incredible how much time we spent on trying to come up with a growth policy, and along comes the recession. It just slammed the brakes on for everybody. It's so critical that you have the planning locally and then you also have the interaction of the local politicians, because in a lot of places that's exactly how business is done.

It really helps the culture for us Canadians to plug into all the advantages we have and make sure all levels of government are thinking about job creation, exports. Because the information technology stuff - something like $650 million a year - 90% of that is export. They're not even on to the kind of exporting they should do.

I think that's a unique kind of alliance where you take four different municipalities. That really defines our trading area in Canada's technology triangle.

Valerie, maybe you could just tell us how it came together and some of the problems you might have in keeping it going, which is a natural trading boundary.

Ms Gibaut: Thank you for that lead-in, Andrew.

First of all, I would like to update you. I don't know if you saw the local paper yesterday -

Mr. Telegdi: No.

Ms Gibaut: - but a local realtor who's done a study is predicting up to 90,000 jobs in the software information technology sector within the next five years in our four communities. So it is a significant -

The Chairman: I don't like to interrupt you, but I wonder if I could just follow onMr. Telegdi's question. I wonder if you could tie in the role of the university in creating that, because it seemed to me this was an important factor in how both the cities and the knowledge community relate to that. We heard evidence about that in other hearings, and that might be helpful in this high-tech area.

Ms Gibaut: I'm sure you've heard that Bill Gates hires 80% of his employees from graduates from the University of Waterloo. That's a significant number.

We all know that to attract IT staff and to have those kinds of companies in your area, you have to have the universities. Having the University of Waterloo develop the way it has over the past 30 years has been a tremendous bonus to us, there's no question about that.

We're very fortunate in our area. We have a very good economy and it's predicted to grow. We became partners in 1987 as Canada's technology triangle because we identified the need to promote ourselves in the international marketplace as not just each of us being a relatively small city, but also having a major economic region with all of the wealth behind us, the infrastructure we have together. To do that, we crossed the political boundaries, which has been a major plus, I think, in retrospect. We are not susceptible to budget cuts because we don't have an identified budget. We all contribute from each economic development budget.

I think the opportunities are there for Canada's technology triangle to grow and become more involved, particularly in international marketing. The way some of my colleagues described it, I'm almost salivating at the thought of what we could do as an organization to promote ourselves at an equal level as Calgary and Montreal. To do this, we have to do that as Canada's technology triangle. There's no question we could and should be doing this.

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I would like to add that one of our local software companies has identified a number of concerns with the government programs with respect to international marketing. His first comment is that there should be a commitment to raise Canada's international profile as a source of quality software.

The Chairman: Madame Beaumier.

Ms Beaumier (Brampton): I was delighted to hear you talk about quality, because I think that's one of the areas in which we're selling ourselves a little short. When we talk about not being competitive, we're not looking at the quality aspect that makes us very competitive.

I have a very specific question. I looked at your economic development survey and I noticed that it appears that most of them.... There are two elements: one is investment and the other is export. The survey gives the government agencies over there fairly good marks. I wonder, though, about one of the problems that comes up in my riding a lot: that the investment isn't a problem - you get cooperation from all sorts of people there, including the foreign governments - but export often becomes a problem in Mexico because of the inability to get your product past the Mexican authorities in a short period of time. Is that common? If so, is it more difficult to get it into the U.S., and do we have more problems getting into the U.S. and Mexico, where we have a free trade agreement, than into countries that charge a tariff to us?

Ms Gibaut: In my experience, talking to our local companies, it depends on the product, I think. A lot depends on the product.

I remember one of our cookie manufacturers, Dare Cookies, was having problems getting into Mexico because of the issue of having to change transportation at the border and change trucks to go into Mexico. That has been resolved and the trucks are now allowed to drive straight through.

But no, I have not heard of any specific problems. I understand it's relatively easy for our local manufacturers to get into both the U.S. and Mexico.

The Chairman: Do any other municipalities have any experience with this?

Mr. Dawson: I can comment that I think it sometimes depends on the types of products and maybe how crucial they are to the business and political climate in the country. With regard to Mexico, if it is materials for the construction of water and sewer plants, it seems they open the doors and let it flow right in.

If we want to import fruit from Mexico, it gets an awful lot of difficulty going through that U.S. market, as they have strict regulations both at the Mexican border and at the Canadian border that are, to a degree, helping to protect their fruit industries.

It's a sector thing, and it's also whether it's crucial to the infrastructure or economic well-being of the area you're dealing with. So it varies by industry, and sometimes just by company in the industry.

Ms Beaumier: What I wonder though is whether your organization helps companies deal with this when there are problems. Do they come to you?

Mr. Dawson: Yes, they come to us, both on the import and the export side. What we basically do is try to act as a doorway. We will either help them contact the officials they have to contact, or contact them ourselves if they seem to be hitting a stone wall.

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Part of the endeavour of the economic development authority is to aid and abet the smooth flow of goods to and from the countries we're dealing with. Once a business deal is made, the regulatory and political doors sometimes have to be opened through contacts and through dialogue with the authority and the mayor. Sometimes we use the office of the premier to work on those things.

Ms Gibaut: As Paul was saying, we're very much facilitators, and at that point we get called only when there's a problem. Then we have to take them through the problem or identify the appropriate people they should talk to.

Ms Beaumier: Do you feel that would be best handled at the local level?

Ms Gibaut: Absolutely. We're the first line of contact.

The Chairman: With the Mexican authorities, you're going to have to deal with the Canadian embassy or the Canadian authorities. You're not going to just pick up the phone from Calgary or Kitchener and say.... At some point you're going to have to deal with the Canadian government authorities, aren't you, to deal effectively with the Mexican or American authorities?

Ms Gibaut: I think the point I was making was that a local company will call us first because they know us; they know me at the other end of the phone. Then I would put them in touch with the people they should be fighting this fire with.

The Chairman: Right. Okay, just as long as we're clear on that.

Ms Beaumier: This was something I was doing for my own.... I've had companies in my riding tell me they're having serious problems, and I'm not sure if we have an association like this in my riding.

The Chairman: Thank you.

[Translation]

Mr. Paré.

Mr. Paré: Mr. Marchand, in your presentation, you mentioned that you were putting into place a network of twinned cities. I would like you to expand on this and to tell us as well what additional benefits this twinning offers, compared to other means.

Mr. Marchand: I have a better knowledge of our twinning with Shanghai, because it is the oldest example. This year marked in China the tenth anniversary of the twinning of Montreal and Shanghai.

The goal of this twinning of cities is to establish institutional links between two cities, specifically between the city of Montreal and a foreign city, namely Shanghai. The same type of agreement exists with other cities that were mentioned previously such as Moscow, etc.

These twinnings allow institutional links to be established in various areas. It can be the exchange of expertise at the municipal level in areas such as water treatment, the management of garbage, of traffic, and so on. These institutional links are particularly appreciated in some Third World countries.

Since we are talking about Montreal, we can say that its twinning with Shanghai enabled the city to make a break-through in that city, at the business level as well as in academics. We have not said much on the subject of universities and research centres, but they are quite important in Montreal.

What could I add? Last month, we signed with the Mayor of Shanghai a document outlining an exchange program in eight areas: economy, urban planning, cleanliness, auditing, horticulture, etc. In most of these areas, we mostly try to have business people and academics work together.

Mr. Chapleau: To illustrate the usefulness of such agreements between our two cities, let us look once more at the example of Mayor Bourque's mission in Asia.

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We went to Hanoï, VietNam, and during the summer, we received a delegation from Hanoï in Montreal. The chairman of Hanoï's people committee also came to Montreal and the mayor went back to Hanoï a few weeks ago. All these visits enabled us to identify some areas for exchange such as the environment. Hanoï's needs in that area are huge and Montreal's expertise could be quite useful to them.

A Montreal company is presently participating in a joint venture in the area of ship refitting in Hanoï, and that is working quite well. We contacted that Montreal company and have pointed out to them that there was an opportunity to sign a contract for the supply of garbage collection trucks. Thanks to the special access that Mayor Bourque has to the chairman of Hanoï's people committee, we were able to help that Montreal company obtain potential contracts that would be given by the City of Hanoï in that specific area.

That is the kind of support that we can give to businesses through agreements between cities.

The Chair: Does the City of Montreal intend to reach twining agreements with francophone cities? Does the fact that your are a francophone city help you in your breakthrough in VietNam and in other areas?

Mr. Marchand: That is an excellent question. I think that the mayor's objective is first of all to listen to what the people from Montreal want to do. As for his trade mission in Asia, he was not sure that he would go at the beginning of the year. He made two rounds of consultation with some sixty business people gathered at two working lunches in order to ascertain whether Montreal businesses would be interested to have the mayor of Montreal go in a mission in Asia and, if so, whether they were interested to go.

As you know, there is in Montreal a very significant community of people from VietNam, for linguistic reasons among others, decided to settle in Quebec rather than in other regions of Canada. That community has taken the lead with a view to doing business with VietNam.

That being said, there is no deliberate policy to favour the twining of Montreal with francophone cities. I believe that the mayor and the City of Montreal want to have twining agreements that will mostly facilitate the marketing efforts of our companies where there are potential markets.

[English]

The Chairman: Mr. Dawson, did you want to add something to that?

Mr. Dawson: We have a direct reason in the twinning situations that we have, and we want to look after economic relationships with our business community and the communities in the city. Often there is a cultural and political exchange. We have been twinned with the oil capital of China for ten years, and on the anniversary of the fifth year of the relationship I think the premier, the mayor, and some businesses went on a cultural exchange to celebrate it. Their governor and mayor came on the tenth anniversary.

We have concentrated on making our sister relationships for business or economic reasons rather than for political or cultural. We feel we're doing these things for business first and for culture and relationships second.

Mr. Flis (Parkdale - High Park): I'm always interested in how Canadian businesses find emerging markets. I noticed that in global opportunities you have a section on doing business in emerging markets. I also know that a country like Azerbaijan, which is sitting on ten billion barrels of oil under the Caspian Sea, is in need of our technology in offshore drilling. There wasn't one Canadian presence there until a group of people from Alberta went down. I think business will be starting pretty soon there.

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How did these businessmen from Alberta find that there is such market potential in Azerbaijan? Was it through organizations such as yours and Cassidy of Calgary? Was it the provincial government? I don't think the federal government had anything to do with it. Mr. Dawson, if you know about that project, that would help us look into how Canadian businesses find these new markets that are out there.

Mr. Dawson: We have found that large multinational corporations have plenty of resource and economic development officers of their own, and for the most part our economic development authority is probably focused on small and medium-sized business.

The international oil community in Calgary is doing business in Russia, and they've managed to do it on a barter system. They can't get currency out, but they're getting product out in exchange for their services. They have an international network of knowledge of where oil reserves are worldwide. In their corporate boardrooms I think they look at the risk and potential gain factors, and on a business basis will go into countries, either through partnerships with the political processes or companies in those countries, and try to make their own inroads.

We find that they have an extremely high and competent economic development activity inside their corporate envelopes, and also inside their governing authorities - the Canadian oil associations, the Canadian Petroleum Association and the Canadian Drillers Association. So there is a process inside their own community for knowing these and exploiting them.

Very seldom does the oil industry come to our economic development authority. They did for Russia. Our mayor and premier helped open a lot of doors in Russia, because it was exploring a whole new method of payment for services rendered, for drilling and for pipeline repairs. The only way payment could be extracted was to receive petroleum.

So we have found that the large companies are very able to look after their own interests and open all the doors they want to.

Mr. Flis: Is there any way for the smaller business people to piggyback on that world network market intelligence?

Mr. Dawson: In the oil parlance, it depends on what type of play it is. If it's a high-tech, high-cost play such as drilling in an ocean basin such as Prudhoe Bay or off our east coast, you generally need multinationals to afford something like that. But if it is a drilling play in lands or areas similar to what the small to medium-sized drillers have done before.... They have such an entrepreneurial attitude, and these drilling rigs can be lifted and brought to any place in the world. Through their entrepreneurial attitude, they end up in some of these places. So it depends on the type of play involved and the type of oil field they are dealing with.

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Mr. Flis: Last night a group of parliamentarians met with the European ambassadors here in Ottawa. It's a series of regular meetings they have through the Canada-Europe parliamentary group. European countries of course are getting concerned because our emphasis has been to do more trade in Asia and Latin America and we are forgetting our traditional trading partners.

Here I see Montreal investing a lot of money in workshops in clothing and textiles, and you're penetrating the Asian markets. How can you compete with the Asian countries in clothing and textiles? Would you not be better off trying to tap the European markets?

Further to that, are there any difficulties with the western provinces and the more central eastern provinces vying for the same markets? Should maybe certain provinces in Canada concentrate on Latin America, others on Europe, others on Asia Pacific?

[Translation]

Mr. Chapleau: I can answer regarding the support that we give to businesses in the apparel industry.

I mentioned earlier our club of new exporters in the apparel industry. You must understand that it is on the American market that this project is going on.

We have apparel businesses that incorporate high level of design in their products - Montreal is recognized as a centre for design - for small or medium-sized series with high value added on the American market and even on the Mexican market. There are excellent opportunities and it is mostly in these markets that we support our companies in their exportation endeavours.

For the Asian market, it is not as developed at this stage.

The Chair: That is not surprising.

[English]

Mr. Dawson: I would briefly answer that also.

We find that it's our businessmen who are looking at markets, and I don't think politically we could head our business community in a direction they didn't want to go.

Right now, our demographers and what not are looking at the middle class in India. There are 250 million middle class who are going to become big spenders and consumers. The same thing has happened in the China market. So an awful lot of the business people we interact with want to get inroads into those markets. Basically the City of Calgary, jointly with the province, has employed a person - our man in India, so to speak - who is a businessman, who is there to aid contracts between Calgary and Alberta companies and enterprises in India.

I find that targeting is done more by the business community and by their desires and their ascertainment of where profit lies, rather than politically saying let's go down to South America as an alternative.

Mr. Flis: I noticed Kitchener in its global opportunities has only Britain mentioned in about ten pages of opportunities. Kitchener, would you not be interested in trading with Germany and other countries?

Ms Gibaut: Absolutely. Germany is one of our biggest trading partners. Those opportunities are opportunities that come to us from a third party. They are sent to us unsolicited for the most part. We have another series of networks with local business people, investors, developers who have links to Germany. We deal with them on a separate basis.

[Translation]

The Chair: I have a couple of questions for the representatives of the City of Montreal.

The textile and apparel industries are quite competitive and markets are very hard to penetrate, mostly because of rules of origin.

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What benefits are there for Montreal in exporting textiles and apparels to the United States? I thought that it was more and more difficult because of rules of origin. Is it the style, the knowledge aspect that is being exported, or is it the product itself?

Mr. Chapleau: Let me come back to the example of our group of exporters in the apparel industry. That exporters club includes the three associations in the area of fashion, that is fashion for children, for men and for women, and the three of them are participants in the project.

Undoubtedly, their main asset is in the area of design. Indeed, or designers from Montreal have quite remarkable creative power. They work together with our manufacturers and mostly produce small and medium-sized series. The success they have reached on the American market and even occasionally in the European market are noteworthy.

What distinguishes Montreal's fashion industry and makes of Montreal one of the major production centres for value added products is its originality, its specific style and its significant design content. That is also what allows that industry to penetrate the American market in particular.

The Chair: In spite of the problem of the rule of origin?

Mr. Chapleau: Yes, absolutely.

[English]

The Chairman: To follow up on Madame Beaumier's question on twinning, obviously Madame Beaumier was saying there are non-tariff barriers you often run into at borders. Often they can be phytosanitary in relation to fruit you mentioned, or vegetables, or they can be trucking regulations or a whole host of things that can be used at border points.

If you have a twin city arrangement, does that give you an advantage in being able to phone up maybe the mayor's office of your twin city and asking them to phone their congressman or their border points and do something at the national level? Can you use those local contacts as a way to help your importers and exporters break through the national barriers? Do you have that sort of in-depth relationship with the twinning? How useful is this twinning to you at that level?

Mr. Dawson: Well, I would say that our experience is that what I'll call the blockage situation is fairly rare, at least in the types of goods that are being traded by Albertans and Calgarians. In all our twinning relationships I would say there is a very mutually beneficial relationship, not only between the mayors of the twin cities but also between generally the governor of the state and the premier.

So when there are difficulties and we are asked, we not only can do a contact mayor to mayor, but we generally in the visitations find out who their economic development officers are and who their administrators are in the various agencies their political form has. We usually have as part of the twinning relationship made contact with the Canadian embassy there. So we will use all those relationships and the Canadian embassy to try to iron such things out. At times, if they don't seem to be working we'll do a visit and go face to face and find out what is hindering a worthwhile economic relationship.

The Chairman: Working visas are often a problem in the NAFTA context. Would you phone someone up in Houston and ask them to phone their consulate in Calgary and tell them to give this guy a visa because we've got to get this thing going? Can you do that? Is that the type of brokering you can conduct on behalf of your businesses?

Mr. Dawson: I would say that I can't remember that we've ever had to try to influence a visa. Usually those things, as part of the transaction, have been very readily obtained.

Interestingly for Calgary, there is a tremendous use of your Houston and Dallas relationship. There is an ongoing relationship because of the oil company head offices in both countries, and there's a movement of Americans to Calgary and Canadians down to the States. It just seems to go unabated, with no difficulties at all.

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The Chairman: If I can make a comment here, our experience in Toronto is that Calgary is the best office to operate through. I don't know why, but it seems to be true that Toronto is much more difficult to operate through. Savvy lawyers will tell you to go.... Anyway, that's another discussion. We don't want to go into that.

Ms Gibaut: I want to add something to the visa question.

We actually have been involved with getting a visa cleared, and I was fortunate enough to call John English's office at the time and get some help. But I also sent a letter directly - it was in India - to the consulate office there, the embassy, and we did get the visa cleared. I don't know whether that was the catalyst, but it did happen quickly for one of our local businesses.

The Chairman: I think what it does is give legitimacy to the request -

Ms Gibaut: Yes.

The Chairman: - and that's what they're looking for: is this a legitimate business transaction, or is this some sort of immigration thing or whatever? So I quite agree with that. I wondered to what extent you used your city contacts. That's a very interesting idea.

Mr. Telegdi had another question.

Mr. Telegdi: I want to finish off on the point Ms Gibaut made, which I think really has incredible implications for the federal government, and the provincial government as well, that Microsoft hires more people from the University of Waterloo than anybody else.

There is a shortage of people in the information technology sector and that is going to increase, as was mentioned, by the dramatic requirements of the workforce. One of those people who graduates from the University of Waterloo has had an investment of close to $100,000 into them by the Canadian taxpayer. This individual now is working down in the States and paying taxes down in the States.

One of the companies, Open Text, is going to be going public in the next couple of weeks, and that company is going to be creating 100 millionaires, virtually everybody who worked for Open Text and bought into the stock of the company.

If you look at what kinds of economic benefits it has for us as a country, versus having all these people going down to the States to work for Microsoft, what is critical for us at the federal level and the provincial level is to make sure we have the graduates in the future and that those sectors be assisted in whatever way we can to make sure those jobs stay here instead of going south, because the implications financially are devastating to our economy.

The Chairman: One of the chapters in our report is that relationship, particularly in the high-tech area, about the knowledge base of the local community tied in with all the other aspects we're trying to examine. So I quite agree with you that it's very, very important to keep.... And access to capital is another thing we'll be dealing with in the report as well.

I think that's the end of this particular time.

[Translation]

I want to thank our visitors from Montreal,

[English]

Calgary, and Kitchener. I think you've given us a very good overview of the types of things cities can do.

I want to say, Mr. Dawson, when the foreign policy review was taking place our subcommittee went to Calgary. We heard about many of the things you were then doing, and I think some of that filtered through into the foreign policy review document as well. It's the type of level of interest the municipalities have in international activities that is very important, as well as the federal and the provincial dimensions.

Thank you all very much for coming and helping us understand that.

Ms Gibaut: Thank you.

The Chairman: Before we break, members of the committee, could I ask you to have a quick look at the ninth report of the subcommittee on agenda and procedure. I'd like to get an approval of this report, if I could.

Very briefly, you'll note that the subcommittee has invited the ambassador of France to come and speak to the committee on nuclear testing. That will take place on December 12.

The subcommittee agreed that we would do a round table follow-up on the Commonwealth and the relationship between trade and aid. In the context of the Nigerian situation, we agreed that given the extra time and commitment of the experts we retained to prepare the report, we would extend in a minor way the payments to them for their contracts to make sure the report will be written properly.

Finally, in number four we have recommended to you that to meet all our budget needs we'll approve the budget before you, which comes to $39,175, of which $30,000 is for our committee and $8,500 is for the human rights subcommittee.

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You'll notice it is in order to give this subcommittee the flexibility to invite witnesses. At the moment they have no funds in their control. They already incurred some expenses by inviting some witnesses to appear before them and we have to make sure they have the funds necessary to be able to carry on their business.

Mr. Morrison: Mr. Chairman, what date did you say that committee on Nigeria might show up?

The Chairman: December 14.

[Translation]

Mr. Paré: Mr. Chairman, isn't that the subcommittee has adopted that agenda, is it in order for members of the committee to raise questions or are we asked to adopt it as a mere formality?

The Chair: Non no. You can always ask questions. Go ahead.

Mr. Paré: I have a couple of questions on that issue. Regarding the first proposal, namely that we receive the ambassador from France, I wonder whether we should not hear as well the ambassador from China, because there is nuclear testing being done in that country as well.

As regards the second aspect, I agree entirely on the process, but it would seem normal to me that the international centre for human rights and democratic development be a participant in that process. It would seem to me to be more relevant than the IDRC with Ms MacDonald.

The Chair: Agreed. We will take note of your suggestions. Is that the Broadbent organization?

Mr. Paré: That's it.

The Chair: As for China, we can always try. Until now, I was under the impression that the ambassador from France had accepted our invitation. It would not necessarily be the case for the ambassador from China. With the ambassador from France, we have at least someone who accepts! That is why we have invited France and not China. Still, I will see what we can do in that regard.

[English]

The Chairman: Are there any other observations or questions? I would like a motion to approve the budget.

An hon. member: I so move.

Motion agreed to

The Chairman: I would note, Mr. Paré, for your purposes that in the subcommitteeMr. Bergeron did not approve of the money allocated to the human rights subcommittee because the Bloc does not participate. We can also note that here, if you wish, on the record.

[Translation]

If you want, we can take note of that as well.

Mr. Paré: We h ave indeed discussed that issue and we are wondering about that.

The Chair: They were passed on division, that is with the objection of the Bloc regarding the $8500.

[English]

Secondly, you'll note that we have a motion by Mr. Morrison before us that the appropriation 16-A of $12,124,000 be reduced by $1 million and that the appropriation 20-A in the amount of $98,375,000 be reduced by $5 million.

Mr. Morrison: I see these reductions as being very tentative baby steps towards cutting our suit to match our cloth. The total cuts requested of $6 million represent one-third of one percent of the CIDA global budget, which is more than $1.7 billion.

On the first one, the request to reduce the $12 million in operating funds, Madame Labelle indicated when she appeared before us that $5.4 million of that is actually the carry-over from the previous budget. My first instinct would have been to say let's just cut it all. They're just saying let's spend it all because it's there. That would be counterproductive, because we're trying to encourage people to have these carry-overs.

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The Chairman: Right.

Mr. Morrison: As a compromise and to force them to perhaps take a little more care of their overhead, I am suggesting in my motion that we cut that by only $1 million.

The second motion is in regard to the $98 million that we were told is entirely directed toward the newly emerging countries of the eastern bloc. It's my belief that this is somewhat at loggerheads with the mandates of the Canadian ODA as it was laid out by government in February. The mandates do say that CIDA should be spending its money in the developing countries in the countries that are the poorest of the poor, if you will, rather than offering economic incentives to the countries of the former east bloc.

I have to say quite frankly that the $5 million is totally arbitrary. I could have asked for $98 million. It is the size of figure good managers could live with. In the business sector, if they suddenly discover a $98 million budget has been cut by $5 million they live with it.

That is the rationale and the justification for my two motions. I certainly welcome any comments from the other members.

The Chairman: Are there any comments?

Mr. Alcock (Winnipeg South): Mr. Chairman, I have a question on procedure. Is it the intention that we vote on this now, or is this for information?

The Chairman: If we don't vote on it today, it will be too late. Today is the last possible day. It may even be too late now, because if we must have the estimates approved....

Mr. Flis, I think today is the very last day we could actually deal with this item ofMr. Morrison's to reduce the CIDA budget by $1 million and $5 million, isn't it?

Mr. Flis: I'd have to check, but I think it's pretty....

Mr. Morrison: I think it's pretty correct, Mr. Chairman.

The Chairman: That's why we're putting it to you right now. I'm sorry to catch you off guard. We did discuss this at the level of the subcommittee. Oh, I'm sorry, we discussed -

Mr. Morrison: We discussed it with representatives of CIDA.

The Chairman: - with representatives of CIDA when we were here. Mr. Morrison brought it up the other day and we deferred it until today.

Mr. Alcock: Thank you.

[Translation]

Mr. Paré: Mr. Chairman, if we vote on Mr. Morrison's motions, what will be the impact? Is it on an advisory basis? Is it a commitment for the government?

[English]

The Chairman: If we agreed with Mr. Morrison's....

[Translation]

If we agree on Mr. Morrison's motions, we will report to Parliament and recommend that to the government that their budget be reduced by that amount.

[English]

Mr. Alcock: Mr. Chairman, I can't support either motion. I think been a very detailed and very thorough program review undertaken by all the departments, including CIDA. They have made significant changes in their programs and cuts as a result of.... I think it's irresponsible for us to cherry-pick on a couple of issues.

Mr. Morrison: These are the only two issues we can pick at because these are the only two in the supplementaries.

The Chairman: I think it's fair to recall the evidence of the president of CIDA, which was that their budget had already been cut by 15% in the course of the thing.

Are there any other comments?

Mr. Flis: It's too bad the time line is so critical, because what I would like to see - and it's too bad Mr. Morrison didn't ask this of Madame Huguette Labelle when she was before the committee - is what implications the cuts in these motions would have on existing programs. They have already been cut by 15%, so they're already down to the bone. If this motion hurts some critical program, if it means denying something to the poorest of the poor - which we debated in our review committee and said we shouldn't do - I would also have to vote against it.

On the other hand, I think it would have been an excellent test case to see how far this process goes and what influence the committee actually does have in modifying the estimates. I think we might have missed a golden opportunity, but maybe we can use this for future moves such as this.

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Mr. Morrison: Mr. Flis, Madame Labelle did say that the $98 million appropriation was directed exclusively towards the newly emerging nations of the eastern bloc. This has nothing to do with the forest report.

The Chairman: Well, have you been in Ukraine lately?

Some hon. members: Oh, oh!

The Chairman: Monsieur Paré.

[Translation]

Mr. Paré: As far as the first motion is concerned, the budget of official development assistance was cut badly enough last year. I do not think it would be advisable to cut it even more.

As far as the second motion is concerned, if my memory serves me well, the Department of External Affairs and International Trade was accountable for amounts directed to the countries of the ex-Soviet Union, while these amounts have now been transferred to CIDA.

The Chair: That is correct.

Mr. Paré: Then, if these amounts have been transferred to CIDA, they do not represent an increase in the budget of CIDA.

[English]

Mr. Morrison: That's correct.

[Translation]

The Chair: No, it is not a budgetary increase. These are amounts that came under the budget of Foreign Affairs and that were transferred to CIDA.

Mr. Paré: So for that reason, I will also vote against the second motion.

The Chairman: Okay.

[English]

I'll call the vote. Should I take the motions individually, or could we group them together? No, I think it's better to take them individually. On the first motion....

Mr. Morrison: Yes, because they're quite different.

The Chairman: Yes, I appreciate that, Mr. Morrison.

We'll take the first vote. In relation to appropriation 16-A, those in favour of Mr. Morrison's motion to cut it by $1 million?

Motion negatived

The Chairman: I declare the motion defeated. I refuse to use the term ``negatived'', as if I've somehow fallen into the terminology of our Speaker.

Second, we have Mr. Morrison's second motion that vote 20-A in the amount of $98,375,000 be reduced by $5 million. This is the appropriation for the former Soviet Union countries. Those in favour of the motion?

Motion negatived

The Chairman: I declare the motion defeated.

Thank you very much, Mr. Morrison, for the motions.

Mr. Flis: On a point of order, I still think, if it's agreeable to Mr. Morrison, that this motion should be sent to CIDA to show there was a discussion on it.

Mr. Morrison: Yes, I agree with that.

The Chairman: Thank you very much. That's a very good suggestion. We'll do that.

We could certainly revisit these issues when.... Don't forget, Madame Labelle was speaking to just the supplementary estimates the other day, so she will be returning to speak to the development plan for CIDA. We can revisit these issues, and in particular the point on the former Soviet Union.

We will take a two-minute break and come back to our panel. They are are very kindly waiting.

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The Chairman: I call the meeting to order again, please.

We have with us now representatives from B.C. Trade and from the Department of Economic Development and Tourism of the Government of New Brunswick. Last time it was the perspective of the cities, this time it's the perspective of the provinces in international trade.

Welcome. Thank you very much for having taken the time and trouble to come and give us the benefit of your experiences. We appreciate this very much.

Without any further ado, I'll ask Madam Exell to commence for British Columbia, and then we'll turn to New Brunswick.

Ms Oksana Exell (President, British Columbia Trade Development Corporation): Thank you very much, Mr. Chairman.

[Translation]

Good morning, ladies and gentlemen. Let me first thank the committee for this opportunity to make a presentation on the

[English]

British Columbia Trade Development Corporation. That is my best attempt at what I know of French, but we keep trying. I try to do my best whenever we have occasions now in British Columbia.

I'd like to introduce Mr. Bob Chaworth-Musters, who is available for questions on the subject of our financial programs, which you may have already heard about from some previous presenters.

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I have a text, of which we have brought extra copies. We sent something ahead of time, but the material I have with me today has been revised just slightly to take into account some new material we wanted to present to you. So I would encourage you to please take a copy of this when we finish our presentation.

Companies, both large and small, need to export, not only to diversify their markets but to remain competitive in the global economy. As barriers to trade fall, Canadian companies face increasing competition from firms in the U.S., Europe, Japan and the emerging economies. Canadian businesses now have to produce a globally competitive product just to secure domestic sales. As our companies become more competitive, their ability to export will increase. Even companies with competitive products need help to market their goods and services in foreign countries, and this is where government can play an important role in the economy.

Governments, however, face the challenge of improving public services while at the same time, facing tighter fiscal constraints. Governments and companies in and out of the public realm are being re-engineered to deliver more with less - to improve service delivery, and do it for less.

Our challenge has been to develop a public agency with a strong business orientation that can both meet the needs of the province's exporting community and deliver a good economic return for the tax dollars spent.

B.C. Trade is one of Canada's most innovative public agencies, facilitating approximately $250 million worth of exports from British Columbia in fiscal year 1994-95. We provide a wide range of services to the province's exporters and potential exporters in a cost-effective manner that is responsive to local needs. As a business-oriented crown corporation reporting to a largely private sector board of directors, B.C. Trade is in touch with the needs of the province's business community.

The standing committee's mandate is to address the impact of the federal government's main international business programs on the success of Canadian SMEs in foreign markets. Before I outline B.C. Trade's views in detail, I would like to clearly articulate the three key areas where we believe progress is critical. These include the establishment of a one-stop shop for export services in each region; the reduction of duplication of export assistance within the federal government; and the creation of a framework for better delivery of export assistance between public and private agencies.

If the federal and provincial governments, in cooperation with the private sector meet these challenges, we believe Canadian SMEs will benefit greatly in the new global economy.

Large companies have traditionally been international players, but have relied on government assistance to reduce institutional barriers, entering emerging markets and making bids on very large projects. Smaller companies, however, lack the resources of large companies and face a range of challenges in exporting.

The extent of assistance required by SMEs therefore varies with the degree of export experience. There is a core set of needs to be addressed in export start-up expansion. Market intelligence is needed to select markets with good potential, determine the demand for and competitiveness of products and identify competitors.

Market entry assistance is needed to help SMEs determine which approach will work for their products in the market they are entering, and may even take the form of negotiating of partnerships or alliances to achieve market presence.

Financing is needed to ensure that SMEs not find themselves in a position where after securing an export sale they lack the financial resources to deliver the produce. The government's role is to facilitate these needs and the challenge is to do so in as cost-effective a manner as possible.

In a client research survey conducted for B.C. Trade by Viewpoints Research in March 1995, a random selection of B.C. exporters and potential exporters was asked if government should provide services to exporters. A strong majority of 70% believe that government should play a role in providing exporters with assistance in entering new markets; 53% of those in favour of government involvement believe that users should pay some of the costs of the services, while 25% think the services should be provided at no charge.

Clearly, business believes that government has an important contribution to make to help companies expand their exports, and both levels of government have a role to play.

The federal government is well placed to provide general trade information services, in-market logistical support, and opportunity identification through its international network of embassies and consulates.

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Further, trade policy and international representation should remain in federal jurisdiction, but a regional agency with more immediate knowledge of local capabilities and needs is better placed to provide in-depth and long-term services to companies as they evolve as exporters. Clearly, there is a natural division of responsibilities in trade between the two levels of government.

At present there are an estimated 18 federal agencies delivering export services, including the Department of Foreign Affairs and International Trade, Industry Canada, regional agencies such as Western Economic Diversification, Agriculture Canada, CIDA, the Export Development Corporation, the Commercial Credit Corporation, and the Business Development Bank of Canada.

The federal government also maintains an extensive infrastructure of offices in the regions to deliver the range of export services offered by these agencies. These exist in parallel with provincial agencies and target the same client group.

There is a strong case to be made for a one-stop shop for both federal and provincial services, or preferably an arrangement whereby provincial agencies, with their more in-depth knowledge and extensive relations with clients, deliver the federal programs and services on behalf of the federal government.

In this time of severe fiscal pressures, there surely is room for rationalization across these agencies. In British Columbia we have moved toward a one-stop shop by transferring the export services of four provincial agencies to B.C. Trade.

B.C. Trade is a crown corporation that has been given the mandate to encourage and facilitate the export of B.C. products and services, and a wide range of powers to do so. B.C. Trade was established as a crown corporation in order to give it the flexibility to work with companies in a variety of ways. For example, it can emulate the private sector by taking financial positions in marketing alliances or companies, or it can charge fees for a variety of services that are not available in the private sector.

On the other hand, as a public agency it can enhance its clients' credibility in international markets, particularly in those countries where there is a tradition of close ties between business and government, or where governments are the main clients.

B.C. Trade's business is export development, not trade promotion. We provide professional services that deliver unique solutions to enable exporters to go further in international markets more quickly than would be the case without our support.

In developing our services, B.C. Trade has looked at the experience of export development organizations all over the world. This has led us to adopt the following guiding principles.

Export development is part of a company's development - a process, not an event - and exporting must be part of a company's long-term strategy. It can take three to five years to establish a sustained presence in an export market. B.C. Trade provides services to support companies through all stages of that export development cycle.

Export assistance is best directed to companies that are ready to export. B.C. Trade does not try to be all things to all people. We focus our efforts on clients who demonstrate that they have competitive products and are prepared to make a long-term commitment to export.

Export assistance should be customized to individual firms. Our staff customizes services and projects to the individual requirements of companies. A key strength is B.C. Trade's local understanding of the needs and capabilities of British Columbia companies.

Inter-company cooperation is an effective way to overcome obstacles to exports. B.C. Trade has encouraged exporters to work with each other in marketing alliances or consortia, to pursue export markets. Companies benefit from sharing the costs of market intelligence and entry, and in some cases whole new export capabilities are created by combining the products and expertise to go after large bids. To date, B.C. Trade has helped create 17 such alliances or consortia, some of which are now achieving significant export sales.

Export assistance that directly contributes to sales and profit should be paid for. B.C. Trade is in the process of implementing a cost recovery strategy for services that have commercial value for exporters. Cost recovery poses a valuable market discipline on staff, which helps ensure that our services meet exporter needs, and is an important source of revenue at a time of diminishing funding.

Finally, it is important to focus on short-term results and long-term positioning. B.C. Trade dedicates resources to investigate new markets for its companies, and also to establish key relationships in future markets like China. Initial market development activities are frequently undertaken in association with the federal government. In fact, the suggestion for the team Canada mission to China first came from Premier Mike Harcourt, who raised it a first ministers meeting in December 1993.

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B.C. Trade has moved away from the traditional work of government trade promotion agencies in delivering programs and in undertaking specific short-term activities such as trade fairs and exhibits. Trade events that we organize are part of long-range export development projects undertaken with export-capable companies. The projects' strategies and scopes are developed with and funded by companies to achieve concrete export objectives.

B.C. Trade also is developing a network of business associates that consists of consulting companies, retired business people, and suppliers of export services, such as customs brokers. This network will provide our SMEs with full consultancy support from export planning to production to delivery.

In regard to company networks, by working closely with the local business community, B.C. Trade is able to identify niche industries where SMEs have competitive advantages and can benefit from joint efforts to expand markets. Our sector specialists work with groups of companies that have internationally competitive expertise in such fields as geomatics, marine, forest equipment, and engineering services, to deliver innovative export solutions.

The success of that approach is clearly illustrated through our Canadian Comfort Direct project, an alliance of suppliers of building products such as doors, windows and cabinets that targets the residential housing and commercial construction market in Japan. I am pleased to announce that since the project's launch in 1992 we have helped the companies involved make $150 million in incremental export sales. The core of this project is an innovative display of the participants' products that is included in the most important building shows and home shows across Japan. In addition to the display, there are also a number of other services, including a Japanese supplier directory, educational seminars, and incoming buyer missions. The CCD project is a cooperative venture between B.C. Trade, the Government of Canada, and the B.C. Wood Specialties Group.

The Western Marine Group is another example of an export alliance that B.C. Trade helped to create. It is a consortium of suppliers of marine products and services that have teamed to bid with a Chilean partner on maritime vessels. The marine group won an $18-million project last year and is closing another multi-million-dollar project in Tunisia, probably next month.

Another example is the International Geomatic Services group, a private and public sector alliance of geomatics companies. In the first year, IGS won $1.2 million of international contracts. It is currently working on a joint marketing effort in Bolivia and has drawn in a Quebec engineering and geomatics company and a cadastral specialist from the University of New Brunswick. This is truly Team Canada in motion.

As regards market intelligence, B.C. Trade provides SMEs with research and analysis on new markets. We also assist local companies to locate the right distribution channels and in-market representation. Long-term relationships with clients enable our staff to understand their businesses intimately and be able to provide market intelligence that is specific, timely and actionable.

B.C. Trade has developed a network of marketing consultants located in priority markets around the world to provide exporters with qualified business contacts and in-depth market analysis. Considerable effort has been made to locate the right people in the market who can provide customized, cost-effective assistance for SMEs. The international network is supported domestically by geographic specialists and a trade information centre that provides electronic access to over 4,000 databases from around the world.

Finally, in regard to finance, B.C. Trade has a range of professional financial services to support the growth of our SMEs. We reviewed the financing needs of SMEs, from receipt of order to buyer credit, and the range of products offered by the private sector and government, to identify gaps in financial services. The result has been the development of four innovative instruments that supplement current financing services available to SMEs.

The export loan guarantee fund was set up for export-capable SMEs that have difficulty sourcing working capital to finance production costs through normal channels. Through the program, B.C. Trade helps companies obtain bank loans in order to fulfil export orders. Companies with a purchase order in hand can look to B.C. Trade as a guarantor for up to 85% of a loan, to a maximum of $2.5 million. B.C. Trade has expert staff who work closely with clients to customize the program to their specific needs. Last year, the loan guarantee program supported $56 million in export sales from B.C.

In 1993 B.C. Trade developed the B.C. export investment fund to provide expansion capital and bridge loans to SMEs on a matched basis. Venture capital funding is limited for small companies that need less than $1 million from private sector sources. The federal government's programs, on the other hand, are not set up specifically to cater to the capital expansion requirements of SMEs. The result has been a unique source of capital funding for fast-growing SMEs based in British Columbia.

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In addition, B.C. Trade is a shareholder of Northstar Trade Finance, with the Bank of Montreal and the Ontario government. As you're aware, Northstar provides loans to foreign buyers of Canadian goods and services, with repayment terms of one to five years. B.C. Trade is an enthusiastic supporter of this initiative as it provides on a commercial basis much-needed buyer financing. The rewards are evident, as Northstar has financed $11 million of loan business in the first year of operation.

Strategic partnering is an innovative method for small businesses to gain market access, capital, new technology and special expertise. B.C. Trade is introducing this year a strategic partnering service to assist companies seeking investment from international companies.

B.C. Trade is a primary source for export development services in British Columbia. We are well positioned to take up the challenge in the international business development review report, prepared for the Honourable Roy MacLaren by Red Wilson and his advisory committee, of providing a one-stop shop for international trade services.

Currently located in our premises are the Canadian Exporters Association and BCISIT, the province's export training facility. We would like to extend the offer to the federal international trade centre in Vancouver to co-locate with B.C. Trade and integrate its services with ours to provide a one-stop shop for local exporters. This would permit more cost-effective delivery of international trade services to our clients.

We also propose that B.C. Trade serve as the agent to deliver the services of the Canadian Commercial Corporation and the Export Development Corporation in British Columbia. With our extensive contacts in the province, B.C. Trade can bring a ready-made clientele to these two agencies and market the entire range of government financial services to SMEs.

We believe by taking action on the recommendations outlined in this submission, substantial savings can be achieved and exporters will be well served.

I'd like to conclude by saying that the business of export development is a complex one. At B.C. Trade, we're constantly searching for better ways to make our clients successful in the global marketplace. This requires us to anticipate, identify and respond to and even create markets constantly. We are moderately successful because of who we are, where we are located and how we operate. Of one thing I am certain: trade promotion is not a substitute for export development. The only way we will ensure that our exporters can go further and faster than our competition is to give our exporters targeted, customized and specific assistance.

Thank you very much.

The Chairman: Thank you very much. In a minute or so we'll come back to questions, after we hear from our colleagues from New Brunswick.

Mr. Michael MacBride (Director of Trade and Investment, Department of Economic Development and Tourism, Government of New Brunswick): Thank you very much for the opportunity to appear before the committee. Our comments will be split between me and Phil Lepage.

I'm hopeful that the information we provide to you today - that is, the recent New Brunswick experience in identifying the needs and issues facing the small and medium-size exporter, or potential exporter, and the subsequent development in New Brunswick of a totally federal-provincial integrated export development strategy - will be useful to you.

One obvious need, evident to us as we examined our role in export development, was to streamline the way in which New Brunswick provincial and federal departments and agencies delivered their programs and services. Before we could even get into addressing the real export-related needs of our small and medium-sized businesses, however, we had to address the confusion, the overlap, the duplication, and the multi-stop shopping that our companies had to endure on a regular basis. I think with British Columbia we can identify with some of the different entities that are engaged in trade.

In New Brunswick we have the Atlantic Canada Opportunities Agency, Industry Canada, the Department of Foreign Affairs and International Trade, the New Brunswick government economic development and tourism department, the provincial department of agriculture and fisheries, the provincial department of natural resources, the Canadian Exporters Association, boards of trade, chambers of commerce, and even the YMCA in Saint John, New Brunswick, has been involved in trade. We only have 500 exporters, so never have so many done so much to so few. We obviously had to make some changes; hence the introduction of our integrated export development strategy.

Trade is an extremely important part of the New Brunswick economy. It represents 33.3% of our GDP, and it really is the lifeblood of a small province like New Brunswick. We have the third highest per capita export dollars in Canada. Given the importance of trade to the province, something really had to be done.

The Chairman: Can I interrupt? When you say 33.3% of the GDP, is that just exports or is that exports and imports?

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Mr. MacBride: Exports only.

The Chairman: Exports only. Thank you.

Mr. MacBride: Products, not services. We learned that we must not only be doing things right, but we have to do the right things.

In concert with our federal and provincial partners, we have developed an integrated trade strategy and a one-stop shop approach to service delivery. Obviously, in going through this process the interests of the companies were paramount, and in fact our small and medium companies were consulted. This was critical to the success of the strategy.

This transition began in the summer of 1994 when trade officials from Industry Canada and the Department of Economic Development and Tourism of the Province of New Brunswick met to outline our priorities. We were somewhat surprised to learn we were not singing from the same hymn book, so to speak. We did not share the same trade priorities. At that point we made a commitment to align our priorities and coordinate our work plans. Sector teams were established and numerous interdepartmental meetings were held.

In March 1985 a draft strategy outlining the priority sectors and planned activities was prepared and shared with senior officials of Industry Canada, the Atlantic Canada Opportunities Agency, the Economic Development and Tourism Department, and our departments of fisheries and aquaculture and agriculture and rural development, provincially, as observers.

By June of 1995, after considerable dialogue, the New Brunswick integrated trade strategy was finalized along with integrated work plans. In other words, all of our federal and provincial officers share work plans. We all have identical work plans and we have been able to eliminate the overlap and duplication in the delivery of our individual officer work plans. Our direction has been set.

While this process was ongoing, an analysis of the export capability of New Brunswick companies was under way. Utilizing information gleaned from our departmental management information system and the collective expertise of trade officers, industry services officers, regional economic development commissions, Industry Canada and ACOA, over 2300 manufacturing and service sector firms were assessed and categorized as follows: exporters, potential exporters - that is, companies with the potential to export that currently do not - and domestic companies, ones that should, probably in the near future, remain in the domestic marketplace.

This exercise resulted in the identification of 800 companies that we will be working proactively with to stimulate increased export activity. Our feeling is that it is equally important to target the appropriate companies as it is to provide the appropriate programs and services.

Phil will finish our presentation.

Mr. Phil Lepage (Project Executive, Department of Economic Development and Tourism, Government of New Brunswick): That more or less set the focus of our emphasis. Concurrent with that, in April 1995 our department conducted a review of trade assistance. We focused mainly on four programs and services provided by the associated department or agency, the ACOA action program, Industry Canada's PEMD, Economic Development and Tourism's trade assistance program, and then assistance was available through cooperation agreements.

The findings of the review revealed that we were all basically in the same business. We are all providing assistance for things like trade shows, promotional materials, market reconaissance, incoming buyers, training, etc.

While on the surface there appears to be considerable overlap and duplication, in reality for the most part the programs were targeting different companies and different markets. There was, however, confusion as to where to go for assistance.

Results of a client survey that was also conducted indicated that companies were generally satisfied with the program elements of trade assistance. Not surprisingly, financial assistance and market intelligence ranked one and two in terms of their needs.

Advice and training were also considered extremely important by the companies. In terms of advice - and I think you referred to this, Oksana - they're looking for something that is very specific to them, not just market intelligence but the match.

With this in mind, an interdepartmental committee was struck to make recommendations to improve program and service delivery and eliminate areas of overlap. The committee concluded that there was general satisfaction with what we were delivering and that generally the agencies and departments delivering were comfortable delivering what they were delivering. What needed change was how we delivered our programs and services. The result is the one-stop shop approach that New Brunswick has adopted.

Put simply, this approach means that any company with a trade-related request can enter any office of the partner departments and have their request dealt without a series of referrals. To them, this is a seamless approach.

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This seamless approach to the client has resulted in the development of a number of tools to assist trade officers to deal with the client. I believe that's included in the kit we forwarded.

First of all, we have an eligibility checklist. When a client comes into an office, the trade officer, no matter at which level, is generally able to determine whether or not that client will be eligible for a program or service. If the answer is no, then there's an explanation why and the client is no further inconvenienced.

There is a single application form now. ACOA, Industry Canada, and ourselves use one application. Depending on whether the person is eligible, the likelihood of the program is determined and the application begins to be processed.

We have an application process that requires the cooperation of all the agencies involved. There is a clear definition of roles in that process.

We have a project assessment form that allows us to evaluate the appropriateness of the activity for the client. While the client doesn't see this, it involves dialogue among Industry Canada officers, economic development and tourism officers, and ACOA officers to determine whether or not the activity proposed is appropriate for that company.

In the assessment we look at things such as product or service quality - can this product or service compete in the target market. We look at production capacity - can the company supply this potential market? Is the financial position of the company appropriate to do what they are setting out to do? Is the management committed to exporting? Is there market potential? Is the market they are targeting appropriate for them? Where are they currently exporting? Someone may come to us with a request to export to Japan and have been no further than the U.S. border, or Maine, and may not have that capability. Do they have a market plan? What export training do they have?

All these elements are assessed primarily from.... When it comes to knowing the company, it comes from our collective expertise in the province. We have a system whereby we have technical officers who work in our department and who know very well the abilities of companies to produce. When it comes to the market intelligence side, that is the role for Industry Canada, as we see it. ACOA plays a role in knowing, in many cases, companies we haven't dealt with, what their capabilities are and what training they've taken. ACOA has adopted a major focus on training.

As I said, this seamless approach has resulted in a clearer definition of roles. We've agreed amongst ourselves that provincial departments and agencies will be primarily responsible for knowing company capability to export, and in this assessment process the other agencies are required to contact us. Federal departments are primarily being asked to focus on market intelligence. Training would be a shared responsibility. Together, through the consultation process, we make the right match; that is, the right company with the right market opportunity.

What we will need to place more emphasis on in the future is developing these capabilities. In other words, the provinces will have to spend more time knowing their companies and the federal government will have to work more at providing better market intelligence; in other words, perhaps going one step deeper than they now do.

The Chairman: This one-stop shopping that both of you have mentioned is obviously a very attractive new idea. To what extent does this remove duplication, or to what extent does it mean we've just added another layer of service? For example, you said, Ms Exell, you would do what the ex-EDC in British Columbia or in the region.... Would this just mean your people would be in EDC's business, or do you see them actually being able to cut out some people?

In your experience with doing what you did for your government.... You mentioned Agriculture Canada, etc. If you put it in one place, but you're still going to have all those ministries and all those other things doing what they do, are you actually going to reduce what they do and you will do it, or are you just going to add what you do on top of what they already do?

Ms Exell: Both are right. For one thing, we don't see ourselves competing head-on with the federal government in what it provides. We do not want to undertake the representation of Canada in 128 locations around the world. We do not want to be in the business of doing the in-market logistics on missions. We do not feel that an agency such as ours would want to undertake any of those things.

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There is a little bit of overlap in the kinds of information that some of the trade consuls offer to our clients, but it's still so generic and such, in my view, not actionable information that I think they'd best be getting out of it.

In other words, somewhere in the Red Wilson report there's a recommendation to try to train up the trade consuls by seconding them into business, by teaching them something about business. That's still all very generic information, and it's of little value to a business that wants to go in and find out what this type of product.... His is just slightly off. Who can distribute it? How can he price it? You can't do that by having a generalist go into the market and find that information for him.

So in some ways we see ourselves as being in the business of providing that kind of direct, specific information - business information - to our clients.

If you placed some of the International Trade Centre people, then the Foreign Affairs staff who are located in Vancouver basically would funnel some of that information that the federal missions abroad capture, doing what we call ``opportunity scoping''. They find all kinds of opportunities, which they then funnel in through Ottawa, which then turns around and funnels them out to clients that it has on its mailing lists. That has some value to a client. We feel that it doesn't have a lot of value, but that can continue as a function.

You never know. You send out 200 leads; one may pop up and in fact may be followed through and some course of action may result with a company. They're out there. We'd might as well put them to use in collecting that information, sending it back through to the posts. So this is what the staff of the ITC could do if they were located in the premises of B.C. Trade.

Again, that information is of limited value. We build our business from the capabilities of our clients upwards. The world is awash with opportunity. There's more opportunity than you know what to do with. We work with our clients. We understand what they're capable of doing. We can find those opportunities. We don't work it as a top-down approach.

However, there is some value in that if you've got these posts and they're collecting information, then they might as well as funnel it through. We might as well have them pass it through to our clients. So there would be a skeleton group of Foreign Affairs people who might sit in our offices to coordinate that funnel of information coming through.

Yes, we can act as agents, because we have investment bankers who work for us who can handle very well the work that both EDC and CCC do in terms of the due diligence that has to be done on files.

Mr. MacBride: In the New Brunswick exercise, we have eliminated the overlap and duplication from the point of view that we are really, from a provincial perspective, out of the market intelligence business. We want to stay out of that.

With the downsizing of the federal presence in New Brunswick, the trade people, we believe they're scare resources. If they stick to market intelligence, which they're going to do, and out of export training, counselling, awareness, and identifying of exporters, which we've agreed is the role of the provincial people, then we'll truly be able to reduce overlap and duplication.

In the process, we've also amended our own provincial trade assistance programs in our study to eliminate the duplication with the federal PEMD program. So our trade assistance program has been changed. Obviously we couldn't change the PEMD program, so something had to change. We changed the New Brunswick trade assistance program to complement it.

I'll comment on one-stop shopping. We don't have one, and only one, office that you walk into. You can access the federal and provincial programs through any federal-provincial office. The point Phil made is that we will not be referring you to other people and other agencies for other programs.

Mr. Chairman, we'd like to table an example of what we've done. This is our road map. What we've done is put all of the funded programs - federal, provincial, all agencies and departments - in one pamphlet, which we call our road map, to help our exporters to access the programs. They're in French and English. They're available at all of the shops, federally or provincially. Now all of the programs are under one umbrella. We're extremely hopeful that this will take away some of the confusion and difficulty that companies have had in New Brunswick.

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The Chairman: We have the information highway, and now we have the exporters' highway. We just have get all the road maps together to get going.

[Translation]

Mr. Leblanc.

Mr. Leblanc (Longueuil): I have listened to your comments very carefully. You talked a lot about duplication and overlapping. You certainly know that in Quebec this is a situation which we deploy and we even go further than you do on the matter.

I would also like to bring to your attention the fact that New Brunswick, although it is a small province of about 700,000 people, could play a more important role than the federal government in assistance to exports for businesses.

Yet, it seems that right now, the federal government wants to get more involved in that area. What I deplore is not the efforts from the federal government to improve the situation, but rather the way in which he is trying to go about it. Take for example the new Canada Development Bank and other measures the federal government is putting forward to help businesses with their exports.

Those are good ideas, but they do not reduce the problem of duplication and overlapping. It is difficult for businesses to find their way through all the available support and mechanisms and in the end, in the addition to being inefficient, it becomes very costly. However, I congratulate you for your involvement at the provincial level.

The purpose of today's exercise is to see what will be the role of the federal government compared to that of the provinces in the area of assistance to exports for businesses. So I would like you to tell us frankly what should be the role of the federal government in that area. Personally, I think the federal government should stay out of it, except in terms of international relations. I would also like you to tell us about the role you see for the provinces.

[English]

Mr. MacBride: I have just a couple of comments. First, to us, the federal government is our eyes and ears abroad - the foreign posts, the embassies and the consulates overseas. New Brunswick cannot hope to have such offices. We do and will count on the federal government to provide us with market intelligence. In our opinion, that's the best role it can play for us - and I'm not talking about the financing side at this point. It's simply the best role to complement what we need in New Brunswick.

The WIN Exports system is not a perfect system. It has many problems, however we are going to try to work with that system because frankly there's nothing better. We would encourage the federal government to help improve that product, and we do want the market intelligence services from the federal government. Without the federal government, we will not have that market intelligence. I'm sure that, like any organization, they can and will be able to improve it. We're really hopeful that it will happen.

On the finance side, Export Development Corporation is one of the financial institutions that can help some of our companies. I'm not sure there's not considerable room for improvement there, too. We could spend a lot of time talking about that, but within the federal system they are again going to have to get that and other things together in order to better complement the provinces.

Thank you for your support of our initiatives, by the way.

Ms Exell: This is just a small semantical issue, but I should point out that I don't have the same definition of market intelligence as my colleague from New Brunswick.

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We do both market research and market intelligence. Market intelligence is very immediate and very specific. If you are in the business of selling tractor parts in Canada and you want to know what your competition is doing in Poland that day or that week and you're thinking about a major investment, that's market intelligence. It's that immediate and that specific.

We can actually occasionally ask the fellow government, the trade consuls, to go out and find that information for us on an emergency or ad hoc basis. What they provide overall is not market intelligence in our view. It's very general information on markets in which they're located.

For example, in Japan they'll do a value-added wood study of value-added wood needs in the Japanese market, but you can't take that information and create a business strategy from it. As a business, you can't take that information and create an export strategy for a company. It's very generic information that, frankly, I could purchase from any one of my 4,000 databases. I could buy that information from the economists' intelligence unit or from any number of large research organizations around the world. If they're there, they're going to do it. That's fine. But now you can purchase that kind of generic market information from many international bases around the world.

I can't take that and base a marketing strategy for a client on it. We have to do a whole lot more research to get that client into that market and successfully selling in that market.

So as to your question about what the feds contribute in terms of export - very little, from my point of view. However, there is still a need for representation around the world, and no one does it better than the Canadian foreign service. We have some of the most charming, best-educated people around the world who do an extremely good job of representing our Canadian national interests in the posts around the country. But from a business development and a business needs point of view, I think they provide marginal support for small and medium-sized businesses.

[Translation]

Mr. Leblanc: You didn't quite answer my question. What I mean, is that the federal government, through the Department of Industry and Trade, has offices throughout Quebec.

Moreover, Quebec also has its Department of Industry and Trade. It so happens that the federal government and the provinces are opening up offices everywhere to help businesses. My question is as follows: Since the federal government has an important role to play in international relations, should it not transfer to the provinces the practical aspect of its activities?

Businesses that go to both the federal and the provincial governments to get assistance to exports must meet different criteria. Moreover, the information they receive is also different, which they find quite discouraging. That way of doing things is far from being efficient.

That's why I'm asking the following question. Should the federal government let provincial offices look after businesses and deal exclusively with international relations concerning communications, market studies, international competitors, etc.?

[English]

Ms Exell: I tend to agree with Mr. Lastewka. In fact we feel we could very well handle the exporter needs of British Columbia SMEs in the province and we would be quite happy to maintain our contacts and have a relationship with the federal overseas offices on an as-need basis.

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At the moment federal offices offer PEMD, so there's still some leverage in the community they use to bring exporters into their offices. We don't believe PEMDs have a very long life left. Beyond that, I don't think they provide any immediate export development assistance to clients, so they would not be missed domestically.

So the answer is yes, they should draw from the domestic market.

Mr. MacBride: From a New Brunswick point of view, I agree; and that is in fact taking place. The international trade centre in Moncton, New Brunswick has seen a considerable reduction in its federal people. It's one of the things that have forced us to split the division of duties in export development.

That's why we'd like to see the federal government - and they are now not, at least in New Brunswick - involved in export training, counselling, awareness, identifying export-ready companies. That's a provincial government role. Their role will be - in Moncton anyway, and through the federal international trade office - to pass information on to us about opportunities that come to light. For example, if a trade mission is coming to Montreal from Taiwan - somebody's looking at purchasing consumer products or whatever - we in New Brunswick would like to know about that. Even if we can't bring them to New Brunswick, we'd at least like to be aware that they're going to be in Montreal, and we'll go to Montreal.

We feel we have to have this information on a more timely basis than we're getting it now. That's why, with the federal government in New Brunswick, we've said would you please do this for us: would you make us aware of these incoming missions, of market opportunities, on a more timely and a more succinct basis than probably you've been able to do in the past? If you can do that, stay out of helping train exporters on how to do business in Japan - let us do that kind of thing - then maybe, with our scarcer resources, we'll better be able to help the people we're being paid to help.

Mr. Lepage: This is done, by the way, through our integrated trade strategy process, which repeats every year. We will get together and say these are the priorities for the year, these are the priority activities. We would identify sector needs and we would identify who was going to do what.

The Chairman: I'm sorry; when you say ``we'', do you mean you and the federal government?

Mr. Lepage: Yes. We would do that on an annual basis.

Mr. Bob Chaworth-Musters (Director, Export Finance, B.C. Trade): Perhaps I could talk a little about the financial assistance programs. In British Columbia the federal government is providing about six of these programs. They are available for the exporter, with the exception perhaps of EDC, because their expertise is in the risk of the buyers overseas, and that naturally fits in with their overseas representation. The rest of the program's really comprised of three components. There's the customer contact, which is largely, obviously, with the Canadian exporter. There is what I call ``papering'' the financial transaction: the due diligence that's required, the documentation. Then the third stage is a monitoring of the financial assistance, and hopefully getting the repayment of the assistance.

In the provinces I think what's happening is that those various programs are being marketed and delivered through regional offices. For example, in Vancouver we have Western Diversification providing what I call early stage financing, export and marketing development, and perhaps some production financing. PEMD is also doing market development, through Foreign Affairs and International Trade. There's the Federal Business Development Bank. Export Development Corporation has a team in Vancouver, for example, of seven or eight people marketing directly to the exporters. There's Canadian Commercial Corporation. Then, of course, there's the Industry Canada small business loan that's available through the banks.

So if you're an exporter out there, it's quite conceivable you could have three or four people coming through your door marketing different export finance assistance programs. What we're saying -

The Chairman: Plus the private banks.

Mr. Chaworth-Musters: Plus the private banks, plus ourselves.

What we're saying is that there's confusion out there in the financial community about what all these programs are, and I think there's some confusion in the exporters about where they go to get this. This is the rationale for the one-stop financial assistance through one shop.

That's not to say the actual process, the actual products themselves, have to be administered as centrally. It's the marketing, the agency function of going out there and helping those exporters in a financial sense in the field at the street level, that perhaps needs to be centralized.

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The Chairman: You're not against the breadth of product availability, it's just the confusion of what is there and how people really know what's available. I understand that. We've heard that from the banks as well.

Mr. Flis: Of all the federal programs you've just mentioned, which program do the businesses in both provinces find the most useful, and which program do they find the least useful?

Mr. Lepage: In the case of New Brunswick, in our instance, where a lot of the companies are small, the program they found most useful was our own economic development trade assistance program, mostly because it was non-repayable and didn't require a market plan. But having said that, we've made changes now that have basically forced companies into other programs. In other words, we've limited the number of times they can come to our program to three times. We've basically adopted the attitude that our role as a province is to stimulate interest in exporting. We're working with small companies. We want to introduce them to exporting and then move them on to other program areas and get them out into the marketplace.

When we looked at all the programs they were very similar in terms of program elements. It just depended on which market you were going into, but there wasn't that much difference. So I would say we were most popular, but mainly for that reason.

Mr. Chaworth-Musters: From B.C. Trade's perspective, I'd have to say that clearly anything that deals with assessing the buyer risk and the financing of the buyer, which is largely done through EDC, has been very important. I think we're very supportive of the work and the product it delivers.

There are three other areas though -

The Chairman: But is EDC useful for small and medium-sized businesses?

Mr. Chaworth-Musters: Yes. There are variations on a theme there. There's the new MARG product it has developed through the banks. There is Northstar Trade Finance that's providing medium-term buyer assistance. EDC itself will provide medium-term buyer assistance and so forth. But they're all variations on a theme. They come back to EDC's assessment of the buyer overseas and the financing of longer-term receivables or medium-term things.

The three areas of overlap are perhaps in the export marketing area because both PEMD and Western Diversification have recently announced new loan funds in the west to help with market development. In the area of production equipment, in other words perhaps expanding a plant or whatever, the Business Development Bank does that, and Industry Canada does that through its Small Business Improvement Loan Act. Of course there are various venture capital funds that will do that in a different way, including our own B.C. export investment fund.

The other area is production financing, as I call it, or the financing of work in progress that the banks have traditionally not done. Again there's an overlap between the Canadian Commercial Corporation, which started this year, and our own export loan guarantee program. Incidentally, I should point out that both Quebec and Alberta have been running these programs for ten to fifteen years, so there is some overlap in those provinces as well as in our own province.

Those are the three areas where I see some overlap. I think if they were perhaps marketed in conjunction with each other, through one unified force, to the exporter, it would eliminate a lot of the confusion and overlap that exists out in the field.

Mr. Flis: I would like to follow up on Ms Exell's very clear and strong distinction between trade promotion and trade development. Using that distinction, can you maybe outline for the committee which levels of government and private sector could best do what?

Ms Exell: We have an overhead that might answer your question partially. It shows you where we have tried to fit the B.C. Trade delivery of export development between the federal government's activities and the private sector activities.

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Under the federal government trade policy I've listed international offices where they do some representation, produce some generic information products, promote trade shows, have the PEMD delivery, and general advisory services. It's highly generic in nature. Again, I would be so bold as to say that if some of that generic information were not available from our own offices overseas it could be found very easily these days by companies if they wished to go to a Canada business information centre, a local library, or pull it off the Internet.

As to trade shows, it's an interesting process. My colleagues in New Brunswick described building an international strategy jointly with the provinces. Again, it's a top-down approach. In other words, trade shows are scoped out internationally and a list is put forward. The provinces have a chance to input and give their opinions about whether they are good trade shows or not and whether they fit into their plans or not. That's such high-level support to the exporting community. This committee's interest is in seeing where SMEs are placed in a global economy. A global economy means niche marketing. Niches, these days, mean small trade shows and exhibits all over the world that fit those particular niches.

Many SMEs can't afford to go, nor should they go to some of these very large trade shows where the federal presence is apparent by the space it buys and the banners it hangs out. It is questionable whether the SMEs should attend them and what value they'd get from them because they have niche products. They're looking for those very small trade shows where there are specific buyers for their products.

The offices are out there and they're going to be producing some form of information. It's an interesting first pass, in terms of what's out there and what's available. But as I said, we help companies from the bottom up. They'll find their own trade shows and tell us where they want to go. Our job is not to pay them to get there or pay them to be there. We've done that in this country for decades and all we've produced is a bunch of travelling Looky Lous. We're still not a nation of traders. We're just people who have been going to trade shows for decades.

We need to work with the company representative at home base before he ever leaves Canada, and ensure he has the tools he needs to create an effective export strategy and deliver on it. That must happen at home. It doesn't happen by sending cheques to people to attend trade shows around the world. That's not the process of exporting.

Mr. Flis: That's interesting because the committee has heard from witnesses who rate trade shows as being totally useless, and those at the other end of the spectrum who see them as being very helpful. Maybe it's because of the lack of that kind of development.

Ms Exell: In Canada, or certainly in British Columbia, you have an industrial spectrum that's a mile long and an inch deep. There are trade books this size on trade shows around the world these days. To zero in on the five you're going to support is just not a very effective strategy, in my view. You have to work with the clients to ensure they pick the right ones. We don't offer any kind of subsidies or grants to our clients. We subsidize the training and professional expertise we give them, to prepare them to tackle the difficult job of putting together an export strategy and deliver on it.

Occasionally, if the federal government supports us through a PEMD or other form, we will accept it and work with our clients with those PEMDs. But as I keep telling my staff, we can't tie our programs and strategies to ever-existing pots of government funds that will not be there, in my view, in the long term. So we have built our delivery along those principles. We now provide expert, professional advice to clients to help them engage in long-term strategies for exporting, because we think it's a profitable business. Because it's a profitable business, as of April 1 they'll start to pay for some of the services they receive from this corporation.

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Mr. Flis: Mr. Chairman, I wonder if the witness would be prepared to table a copy of the slide with the committee.

The Chairman: Sure. I'm sure we could get a copy.

[Translation]

Mr. Paré: I have a very specific question for Ms Exell. On page 4 of her brief, there is one sentence that I find quite confusing. It is the last sentence of the first paragraph:

Clearly, there is a natural division of responsibilities in trade development between the two levels of government.

If the division is so clear and natural, why is there any duplication?

[English]

Ms Exell: That's an interesting question, and I think it's an historical one. The federal government was in the business of international trade before the provinces were, and there were international offices and international domestic services, perhaps, before there were provincial ones. But as I've mentioned in my report, in the last four years we have recognized in British Columbia, certainly at B.C. Trade, that in terms of having networks overseas, in the type of offices that were duplicated some half a dozen years ago, the federal network is a more appropriate one. We have withdrawn from the international marketplace. In terms of having representational offices, out of a total of nine offices we have one and a half left, which we're scaling down.

This year we closed our large office in London, which was in an historical building. It is a well-known presence in London. We have, in fact, finally closed it down as a trade and investment office and it will be commercially leased. Our presence will be on the third floor, away from the public. We will not be hanging out the British Columbia flag because we feel very strongly that it is important in the international markets that there is only one presence for Canada. So we have taken the steps to reduce a visible presence for British Columbia everywhere around the world. We are now down to a small network of agents, single agents, who will find the right sector expertise in certain markets.

For example, last week someone came to us to help him with some market research on joysticks into Southeast Asia. We had our $50,000-a-year agent in Singapore find the right market researcher in Singapore for this agent. But this agent works part time; he's on a retainer for B.C. Trade. He does not sit in a lavish office with a British Columbia flag flying overhead, with its doors open to anyone who should want to wander in and ask about investment or trade in British Columbia. We feel that's the role of the federal government.

[Translation]

Mr. Paré: My other question is for all witnesses. In Quebec, we are fighting against duplication for political, constitutional and economic reasons. As for the other provinces, such as British Columbia and New Brunswick, for what purpose are they fighting duplication? Is it to reduce public spending, to maybe increase resources for businesses or for a better efficiency of the assistance being offered to SMEs?

[English]

Mr. MacBride: From a New Brunswick perspective, I think it is the latter two. I would like to think we have a nobler purpose to be eliminating overlap and duplication than simply because we're forced to due to constraints in our budgets. In New Brunswick, we really do realize that we are extremely small - 725,000 people. If we're going to grow, we're going to have to grow outside our borders. And that is why we have to provide better service to the exporters and potential exporters.

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It was really to provide improved service and to provide increased markets to our exporters that we entered into our initiative with the federal government to come up with a totally integrated export development strategy for the province. I'm sure we all cooperated because we realized dollars were tight, but it was really to increase our exports and improve service and efficiency.

Ms Exell: Monsieur Paré, I feel that there is no real duplication. There's minor duplication only between the federal and provincial governments. There is no cost saving to this. This is merely a way of ensuring that our clients are not confused, that we can appear to be professional when we're talking to them about export preparation and export services. It's more of a case of efficiency and trying to do the best possible thing for our clients in the province of British Columbia.

The Chairman: I wonder if I might ask a question that would help us in the report as well. It relates to the issue of services.

You mentioned product trade in terms of your numbers. My impression is that we're far better for historic reasons at delivering the services necessary to the export of products than we are to the export of services.

What developments do you see along these lines? What new approaches are required? Is it best done from the provincial level or is it going to depend on what is the nature of the service? Obviously a telecommunications service is going to require a different approach from legal services, accounting services, etc. Are you into that business? Can you help us a little bit from the service side versus the product side of things?

Ms Exell: I think I would start by saying the first thing we need is a better accounting of services. We're still struggling with that. I think we're not the only country in the world that's struggling with a means to account for and understand the trade in services that is taking place.

We've also recognized that almost every product that is sent across the border by this country has a service component to it. We are about to reorganize our corporation in such a way that we're going to view our services as part of the product targets we have set in the corporation. The products we work with will always have a service component built into them.

I'll circulate material on the value-added efforts into Japan. We have now started to work on developing architects' expertise to work in the Japanese market. We're building an alliance of companies that now provides a more holistic solution to the buyers in that country.

We'll be able to provide support in the form of development design and architect design services as well as the products and goods that go into the construction of both residential and commercial projects in Japan. We build them into all our efforts.

We used to have a separate -

The Chairman: So you think if we can sell them the wood then we can sell them Arthur Erickson, is that the idea?

Ms Exell: We can actually use Arthur Erickson to give them a sense that we can build some pretty darn good-looking buildings with good wood. Whichever, but you're right.

The Chairman: Yes.

Ms Exell: It's a holistic approach. We're trying to do more of that. We used to have a separate branch that looked after services, but we found that wasn't the way the world bought things. They actually expected solutions to their problems or a range of products that included the service component in it.

The Chairman: Very interesting.

Mr. MacBride: From New Brunswick's perspective, we are growing our knowledge industry within the province and the IT sector in particular.

As Phil and I were discussing earlier, there really seems to be a need for banks and probably other entities to get their heads around how do you finance an operation that is developing multimedia software or course ware or training packages in the IT sector to help those companies grow.

I think it's an important area that has to be discussed. That's in the high-tech area. I think it's probably not exactly what this committee's looking at, but there has to be a way, if we're going to export those services, to first have them grow within Canada. How are they going to grow within Canada if they cannot obtain the financing and support they need to grow?

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I have one last comment with respect to trade shows. In New Brunswick, we have reduced our trade show participation by 25%, but they're clearly very important - and they are to B.C. too. B.C. probably had the largest presence at the Tokyo home show recently. We have to undertake reducing our presence, though.

We have to look at marketing ourselves in different ways. For example, I'm sure you're looking at the Internet and what we might be able to do through the Internet. All provinces are doing that. There has to be a way in which we can get our goods and services promoted and marketed abroad beyond some of the traditional ways. Hopefully the committee is considering those, as well.

Ms Exell: I have one last item on your question, Mr. Chairman.

I will circulate one of our consortiums that we developed in the service sector, that being the Geomatics group that pulled in engineering and other related services to both the sub-sea and underwater geomatics capabilities in B.C. It's one of the consortia we've pulled together. The other one I'll circulate is the marine group, which is a combination of products and services that we sold. It's a consortium we created to build certain types of marine vessels.

I need to mention that we couldn't have done the first project in Mauritius - the first boat we built - if it weren't for the backing we received from EDC. They were just starting their project financing program, which in our view was pivotal to us getting the contract and successfully completing and launching the ship. The ship will actually be launched this week - December 6 - and it will be televised at the Malaysian marine show. We couldn't have done that without the EDC. So someone asked about successful programs, and I think the EDC has to be ranked among the most successful programs from an exporters point of view.

The Chairman: What's the interchange between the provinces? Are you competing with one another for these same markets either institutionally or in this service area? For example, you mentioned architecture. I know in Ontario there are experts in very high buildings and wind resistance, so maybe it's not the expertise in a particular area that's not within the province. Do you have the links to go beyond the provincial framework?

Ms Exell: We have the desire to work with other provinces. When we do it, it's because there's a good business reason to do it. We have joined with Quebec engineers to look at operations in Vietnam. We've pulled in a New Brunswick cadastral expert to work on.... The IGS is bidding on a project in Bolivia and we have a technical consultant out of Quebec on that project. On the value-added wood display, we have a Quebec and a Manitoba company. So when it makes business sense we will ask businesses from another province to come in. We will pull them in.

When we have failed, it's been because we've been involved with federal institutional agencies like Western Economic Diversification that have tried to create artificial, top-down networks to bring provinces together to work on export initiatives. I think one has to try. I think WD and other agencies like that have to be applauded for making the effort. But if there are no business reasons for companies to work together, they will not do it. The only way you can bring them to the table is by putting money on the table. In my view, that's when business decisions become wrong decisions.

Mr. MacBride: Unlike in the investment prospecting field - trying to attract investment - I don't think provinces compete. I think companies compete on the trade side, and I believe we can and do work together from a trade perspective.

For the committee's information, in Atlantic Canada there's an Atlantic Canada trade agreement because we find there is strength in numbers. We now partner on our initiatives, such as building products for Japan on an Atlantic Canada initiative, joint research and market intelligence. Those initiatives are all done by the four provinces in concert, so I really don't see that the provinces compete. I think it's the companies, and if we bring a good fit of companies together we can go abroad together.

The Chairman: Could you just very quickly give us a comment?

Mr. Chaworth-Musters: You've heard from Northstar. I think that's a good example of where you've had the federal government, through EDC, the provinces of Ontario and B.C., and a private sector company all come together to provide basically a medium-term buyer credit facility process for the SMEs. That's a good example of all the parties in Canada working together.

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The Chairman: On behalf of the committee members, thank you very much. You've come a long way from British Columbia and New Brunswick. We appreciate your evidence very much. It has been very helpful to understanding the report.

[Translation]

Mr. Paré, I hope you will tell Mr. Bergeron that we are grateful to him for having insisted that we hold this forum. I think it has been a very fruitful and useful exercise.

[English]

We'll send you a copy of our report. I'm sure you'll see in it references to one-stop shopping.

We stand adjourned until next Thursday at 9 a.m.