Introduction

Well-functioning supply chains and diversified international trade contribute to Canada’s prosperity and economic growth. Supply chains are critically important to domestic firms, which—for example—use them to import goods that are provided to customers for direct consumption or that serve as intermediate inputs in production processes. Diversifying the country’s international trade can take a variety of forms, such as exporting to more foreign markets, increasing the number of firms that export, and exporting a greater range of goods and services.

According to Innovation, Science and Economic Development Canada, in 2023, Canada’s top five export markets for merchandise trade were: the United States, at $594.7 billion; China, at $30.5 billion; Japan, at $15.8 billion; the United Kingdom, at $15.2 billion; and Mexico, at $8.8 billion. Global Affairs Canada’s State of Trade 2024 states that, in that year, Canada’s five highest-valued merchandise exports were energy products, motor vehicles and parts, metal and non-metallic mineral products, consumer goods, and industrial machinery, equipment and parts. Statistics Canada reports that, in 2023, the country’s top five export markets for services trade were: the United States, at $104.6 billion; India, at $10.1 billion; the United Kingdom, at $8.9 billion; China, at $7.3 billion; and France, at $5.5 billion.

Statistics Canada’s The Daily for 16 May 2024 indicates that 48,718 Canadian firms exported merchandise in 2023, with large firms having merchandise exports valued at $420.8 billion, a 3.0% increase from 2022, and small and medium-sized firms having merchandise exports totalling $282.5 billion, an 8.6% decrease from the previous year. Regarding services trade, The Daily for 9 November 2023 reports that—in 2021—the country’s large firms exported commercial services valued at $52.3 billion, a 20.0% increase from 2020, and such exports by small and medium-sized firms totalled $53.1 billion, an increase of 12.0% from the previous year.

On 17 October 2023, the House of Commons Standing Committee on International Trade (the Committee) adopted a motion to undertake a study to:

(a) identify programs, tools, and measures that support the growth of Canadian businesses and their contributions to domestic and global supply chains, export abroad, and becoming integral players in various economic sectors; and (b) diversify and increase the presence of Canadian businesses in global markets, focusing on areas of competitive advantage and regional diversity of goods and services.

The current study augments previous recent work by the Committee concerning various supply chain–related issues. For example, the Committee tabled the following reports in the House of Commons in February 2023, April 2024 and October 2024 respectively: Prohibiting the Importation of Goods Linked to the Use of Forced Labour and Developing a Related Strategy; The Strike in 2023 at British Columbia Ports: Selected Economic Impacts and Federal Actions; and Eliminating Forced Labour from Canadian Supply Chains.

In the context of the current study, during eight meetings held between 30 January and 9 May 2024, the Committee heard from Government of Canada officials, 12 trade associations, seven Canadian firms, two Canadian port authorities, two federal Crown corporations, one Canadian airport authority, one not-for-profit organization, one think tank and one Canadian mayor. As well, the Committee received three written responses^[1]—from the Canada Border Services Agency, the Economic Development Agency of Canada for the Regions of Quebec and Global Affairs Canada—and three briefs—from the Canadian International Freight Forwarders Association, the Organization of Canadian Nuclear Industries and UPS Canada.

This report summarizes comments relating to supply chains and expanded international trade that witnesses made to the Committee during a meeting or in a written response or brief. The first and second sections focus on Canada’s supply chains, and the third and fourth sections are concentrated on expanding the country’s international trade. For each of these two areas, observations are provided about selected challenges, as well as about existing and proposed federal measures. The final section contains the Committee’s thoughts and recommendations.

Not summarized in this report are witnesses’ views that do relate directly to supply chains or expanding international trade. Some of these were linked to topics that the Committee has recently examined because of other motions. For example, on 18 April 2024 and 29 April 2024, the Committee tabled The CBSA Assessment and Revenue Management System (CARM) and The CBSA Assessment and Revenue Management System: An Interim Report, respectively, in the House of Commons. As well, opinions relating to Bill C-58, An Act to amend the Canada Labour Code and the Canada Industrial Relations Board Regulations, 2012, are not included. The Committee notes that this bill received Royal Assent on 20 June 2024.

Supply Chains: Challenges

Witnesses provided the Committee with their perspectives about several factors that negatively affect Canada’s supply chains. In particular, they discussed: trade-related infrastructure, both generally and in relation to specific transportation modes and regions; regulations; labour-related actions, including work stoppages, issues in specific sectors, and forced and child labour; and climate change-induced disasters.

Trade-Related Infrastructure

The Hamilton-Oshawa Port Authority stated that Canada’s trade-related infrastructure includes marine and inland ports, roads, railways and airports, and the Canadian Agri-Food Trade Alliance described the infrastructure linked to railways, roads and ports as “key elements of Canada’s supply chains.” The Port Alberni Port Authority suggested that the country should improve its transportation infrastructure to move “goods on and off [Canada’s] shores,” with UPS Canada’s brief expressing concern that inadequate infrastructure is leading to “inefficiencies” in Canada’s supply chains and delays in cross-border trade flows. In the St. Lawrence Seaway Management Corporation’s view, delays in moving goods—whether by ship, rail or truck—contribute to a lack of fluidity in the country’s supply chains.

Characterizing railway services as “a critical component” of its members’ supply chains, the Western Grain Elevator Association argued that Canada’s ability to compete in foreign markets depends on its capacity to move goods to the country’s ports. The Canadian Agri-Food Trade Alliance contended that inadequate road infrastructure, particularly in smaller municipalities where farms are located, make “the connection from farm gate to national trade corridors less efficient.” The Hamilton-Oshawa Port Authority emphasized that port authorities facilitate trade and ensure “robust” supply chains, and underlined such challenges as an inadequate number of Canada Border Services Agency officers and Canada’s inability to build trade-related infrastructure “quickly and efficiently.” In the Canadian Trucking Alliance’s opinion, the extent to which importers can clear customs inland rather than at a border crossing is limited by too few sufferance warehouses.

Officials from the Canadian Northern Economic Development Agency noted that, although Canada’s North represents 40% of the country’s land mass, the region is “significantly distanced” from the supply chains that support firms and trade in Canada’s South. Groupe Gilbert stressed that inadequate trade-related infrastructure in Saguenay—Lac-Saint-Jean, Quebec negatively affects supply chains.

Regulations

Institut de recherche en économie contemporaine asserted that disparities in product quality and safety standards among Canada’s trading partners can lead to some of “the most significant distortions in the functioning of supply chains,” and the Canadian Chamber of Commerce characterized “increased red tape and differing certification and technical standards” as “major” challenges for supply chains. According to the Western Grain Elevator Association, Canada’s regulatory frameworks are “unnecessarily rigid, redundant, [and] antiquated,” and they limit “commercial investments to improve supply chains.”

The Buffalo and Fort Erie Public Bridge Authority described the $5 million grant from the National Trade Corridors Fund to “construct an innovative commercial pre-arrival” system at the Peace Bridge as a “game changer” that is expected to expedite the movement of goods to the United States. However, it expressed concern that Canada will not realize the system’s full potential unless facial identity verification is approved. The Buffalo and Fort Erie Bridge Authority claimed that, if this verification were to occur on the Canadian side of the Peace Bridge, truck drivers would not have to stop on the U.S. side of the bridge to complete customs procedures. In its opinion, a harmonized procedure on both sides of the Canada–U.S. border would facilitate the movement of the 1.1 million trucks that cross the Peace Bridge annually.

With a focus on Canada’s railways, the Railway Association of Canada argued that extended interswitching allows U.S. railways to transport goods to Canada at cost-based rates that are regulated, adding that the Canadian National Railway Company and Canadian Pacific Kansas City Limited do not receive similar cost advantages when they transport goods to the United States. In the Railway Association of Canada’s view, extended interswitching should be ended because it has resulted in “fewer available carloads” for Canadian railways to move goods across Canada, congestion at the country’s railways, and higher costs for domestic exporters, importers and consumers.

Institut de recherche en économie contemporaine commented on the benefits of harmonizing standards and rules that regulate the parties involved in similar supply chains.

Labour-Related Actions

The Canadian International Freight Forwarders Association contended that work stoppages at Canada’s ports and railways are “a chronic problem” that affects the country’s “reputation as a reliable trading partner.” In the Western Grain Elevator Association’s opinion, those stoppages are “hampering Canada’s ability to reliably deliver to customers,” with “even short disruptions of supply chains … affect[ing] product availability and price.” Arguing that ports and railways are at “the centre of Canada’s supply chains,” the Canadian Federation of Independent Business asserted that port and railway infrastructure should “remain fluid at all times,” and suggested that strikes at ports and railways “cause significant delays, affecting the entire supply chain.”

In its brief, the Canadian International Freight Forwarders Association underscored the impacts of the 2024 labour disputes involving the Canadian National Railway Company and Canadian Pacific Kansas City Limited, and indicated that “even a short labour stoppage” results in “a significant amount of time” being needed “for those bottlenecks to clear … after work resumes.” Mentioning the St. Lawrence Seaway and railways on Canada’s east and west coasts, the Aluminium Association of Canada stressed that—in recent years—strikes have disrupted trade flows. In the Canadian Chamber of Commerce’s view, strikes at Canada’s west coast ports have “a significant impact” on the country’s supply chains.

Discussing labour issues in particular sectors, Groupe Gilbert claimed that a failure to replace the aging workforce in Canada’s trucking sector with new truck drivers “could jeopardize” the country’s supply chains “in the long term.” In its brief, the Organization of Canadian Nuclear Industries suggested that, in order for Canada’s nuclear supply chain to be competitive in foreign markets, the federal government “must take immediate action to support” the training and retention of a skilled workforce in that sector.

Export Development Canada officials drew attention to the impact on Canada’s supply chains of domestic firms’ importation of goods made with forced labour or child labour. Global Affairs Canada officials pointed out that the Customs Tariff makes it illegal to import goods into Canada that have been made with forced labour.

Climate Change-Induced Disasters

Transport Canada officials said that, in recent years, Canada’s transportation system has been particularly vulnerable to disruptions resulting from “the COVID-19 pandemic, climate change and geopolitical conflicts.” Canadian Manufacturers & Exporters asserted that extreme weather-related events affect that system and—consequently—the agility and resiliency of Canada’s supply chains. In the Canadian Chamber of Commerce’s opinion, climate change-induced disasters—such as frequent floods and wildfires—have demonstrated the “fragil[ity]” of the country’s supply chains.

The Canadian Association of Importers and Exporters underscored that disrupted transportation networks due to the 2021 floods in British Columbia “caused increased costs and economic hardship across the entire supply chain.” According to the Canadian Agri-Food Trade Alliance, rain in Vancouver affects producers’ ability to transport grain to foreign markets, leading to supply chain disruptions.

Supply Chains: Existing and Proposed Federal Measures

Witnesses provided the Committee with their observations about existing and proposed federal measures regarding Canada’s supply chains. They focused on: trade-related infrastructure, both generally and in relation to specific modes and regions; trade corridors; the National Supply Chain Office; resiliency; and collaboration among relevant governmental and other parties.

Trade-Related Infrastructure

Canadian Manufacturers & Exporters asserted that manufacturers rely on Canada’s transportation networks to receive production inputs and to distribute goods to customers, adding that transportation- and trade-enabling infrastructure is “one of the single best economic investments that any government can make.” However, Canadian Manufacturers & Exporters claimed that such investments in Canada “have been made sporadically rather than on a sustained and strategic basis.” Like the Canadian Chamber of Commerce, it supported the proposal made by certain trade associations for the development of a federal investment strategy for trade-related infrastructure that is both integrated and long term.

In the Canadian Chamber of Commerce’s view, Canadian firms need to move goods to markets in a reliable manner. City of Port Colborne Mayor William Steele stressed that, in order for Canada’s supply chains to be “sustainable, reliable and multimodal,” the country’s “different modes of transport need to work together and be complementary.” The Hamilton-Oshawa Port Authority suggested that Canada’s governments should establish multimodal hubs that would lead to less congestion at the country’s ports.

Mayor Steele advocated measures to expand shipping on the Great Lakes, arguing that the outcome would be fewer trucks in urban areas and less congestion on Canada’s roads. The St. Lawrence Seaway Management Corporation contended that the Great Lakes St. Lawrence Seaway System provides “an essential link to a network of inland ports and international connections on both sides of the Canada-U.S. border.” As well, the St. Lawrence Seaway Management Corporation urged the federal government to develop the St. Lawrence Seaway’s capacity to accommodate higher volumes of traffic, with the Hamilton-Oshawa Port Authority calling for greater investments in—and better use of—the St. Lawrence Seaway “by combining the multimodal nature of road, rail and marine” to ensure access to “more sustainable and robust supply chains” for Canadian firms.

The Vancouver Airport Authority described the Vancouver International Airport as “strategic trade infrastructure” that connects passengers and cargo to markets in the Indo-Pacific region. Specifically, the Vancouver Port Authority suggested that current efforts to transform the airport “into a multimodal hub for trade,” as well as the $150 million invested in 2023 to increase the airport’s cargo capacity by 160,000 tonnes, will enhance the resiliency of Canada’s supply chains.

The Canadian Trucking Alliance asserted that the Gordie Howe International Bridge between Windsor, Ontario and Detroit, Michigan is “probably the most important [trade-related infrastructure] investment in decades.” It added that, once operational, the bridge will be “a modern gateway to [Canada’s] largest trading partner.”

Trade Corridors

Transport Canada officials highlighted the $4.6 billion National Trade Corridors Fund, which—through spending on marine, road, rail and air transportation systems—is designed to improve the capacity and efficiency of Canada’s supply chains, and to enhance the competitiveness of Canadian exporters. Agriculture and Agri-Food Canada officials said that the fund finances infrastructure projects that improve Canada’s trade corridors, and that enhance the fluidity and resiliency of the country’s supply chains. They identified specific projects aimed at strengthening the agricultural sector’s supply chains, noting the $102 million allocated to the Port of Vancouver to improve road and rail connections to the marine terminals.

In the Canadian Chamber of Commerce’s opinion, the National Trade Corridors Fund is “a positive step forward.” However, it encouraged three federal actions: provide funding for projects more quickly; collaborate with firms to ensure transparency in executing projects; and demonstrate the ways in which the fund is helping to address current and future challenges regarding supply chains. The Hamilton-Oshawa Port Authority contended that the fund should finance existing and new projects that expand trade-related infrastructure, particularly in Canada’s Great Lakes region, which is “sometimes overlooked as a critical trade gateway.”

The Port Alberni Port Authority advocated an expanded Asia-Pacific Gateway and Corridor—“the Asia Pacific gateway 2.0”—that would “include the whole of [Canada’s] west coast” to expedite the movement of goods to Asia. It described the development of a new container terminal in the Alberni Inlet to enhance the capacity of the Asia-Pacific Gateway and Corridor. Specifically, the Port Alberni Port Authority asserted that the Port Alberni transshipment hub project will create one of the largest container terminals in Canada, and will “expand and maximize” the use of Canada’s west coast “marine highway.”

Recognizing the implications for Canada’s supply chains of the transition to electric vehicles, officials from the Federal Economic Development Agency for Southern Ontario identified an opportunity to establish a trade corridor between northern Ontario, where critical minerals are extracted, and southern Ontario, where electric vehicles are produced.

The Arctic Gateway Group suggested that increased funding to expand the Port of Churchill is “essential” if Canadian firms are to have “a reliable Arctic trade corridor.” It argued that the Port of Churchill provides “a critical gateway” to the Arctic, and can play “a significant role in diversifying and de-risking” Canada’s supply chains.

Resiliency

Canadian Manufacturers & Exporters asserted that, although relying on new digital technologies—including artificial intelligence—would optimize Canadian firms’ ability to “improve [the] productivity and resilience” of their supply chains, a “significant capital investment” would be required. In its view, the federal government should ensure that the business environment is “conducive” to attracting investments in digital technologies.

Supply Chain Canada called on the federal government to introduce automation at Canada’s ports to enhance “efficiency and reliability,” and to develop guidelines to ensure that Canada’s supply chains are “safe” from cyber threats. Officials from the Canadian Northern Economic Development Agency noted that efforts to address cyber-related vulnerabilities “are incredibly important” because of the potential for supply chains to experience “major disruptions” because of cyber incidents.

Because of vulnerabilities in Canada’s supply chains that were identified during the COVID-19 pandemic, officials from the Federal Economic Development Agency for Southern Ontario provided funding to Canadian firms “to onshore key capabilities and thereby build a more resilient domestic supply chain.” The Canadian Wood Pallet and Container Association underscored that the pandemic “definitely exposed some cracks” in Canada’s supply chains. It suggested that the federal government should learn from those experiences and address “weaknesses” in the country’s supply chains.

Focusing on the increase in protectionism that is occurring globally, Innovation, Science and Economic Development Canada officials highlighted efforts by Canada and like-minded countries to diversify supply chains and to source certain critical minerals from jurisdictions that do not have “hostile trade policies.” They added that, with its “resource wealth,” Canada can be a reliable supplier of critical minerals and can develop “domestic industrial capacity across multiple industrial supply chains.”

Eagle Graphite Corporation proposed the creation of “a critical mineral stabilization reserve” to ensure the resiliency of Canada’s supply chains for critical minerals. It claimed that such a reserve—or “stockpile”—would reduce the country’s “reliance on adversaries” for supplies of critical minerals.

Asserting that “lead is a critical mineral for electrification,” KC Recycling called on the federal government to add lead to Canada’s critical minerals list and to restrict the exportation of used Canadian batteries. It claimed that “used lead batteries are a critical Canadian resource.”

National Supply Chain Office

Transport Canada officials highlighted the National Supply Chain Task Force, whose goal is to improve the efficiency and resiliency of Canada’s supply chains. They stated that the task force recommended—and the federal government subsequently established—the National Supply Chain Office. As well, the officials said that this office will develop long-term strategies to address recurring challenges to Canada’s supply chains, including those arising from extreme weather-related events that affect transportation networks and disruptions resulting from human actions.

PECO Pallet and the Canadian International Freight Forwarders Association supported the creation of the National Supply Chain Office, although the Canadian International Freight Forwarders Association expressed concern about the office’s ability to address the issue of inadequate trade-related infrastructure in Canada. In particular, the Canadian International Freight Forwarders Association argued that, although the federal government has established “large funds” for such infrastructure, it does not have a “national strategy to help guide investments.” In its view, the office’s role should include “directing infrastructure investments,” such as those financed through the National Trade Corridors Fund.

Collaboration

In the Canadian Chamber of Commerce’s opinion, the reliable movement of goods in Canada requires the federal government and the country’s firms to “shar[e] the common goal of a functional supply chain.” The Canada Border Services Agency’s written response indicated that the 2022 National Supply Chain Summit provided recommendations about ways in which Canada’s governments and firms could collaborate to increase the reliability and resiliency of the country’s transportation systems and supply chains.

PECO Pallet asserted that frequent consultations with relevant parties are needed to ensure the existence of resilient supply chains. It also stressed that the federal government “can gain a full scope of the complexities of supply chains” by receiving feedback from parties “involved in ensuring a product goes from production to the store aisle.” In particular, PECO Pallet urged the government to “prioritize stakeholder engagement with all levels of the supply chain.”

Supply Chain Canada contended that supply chain disruptions due to such situations as climate change-induced disasters, labour disruptions and cybercrimes “are mitigated through intergovernmental partnerships.” It called on the federal government to develop risk mitigation strategies.

Transport Canada officials noted collaboration between the federal government and provincial and territorial governments designed to reduce disruptions to supply chains. In particular, they mentioned the process through which federal, provincial and territorial ministers of transport identify Canada’s long-term needs for infrastructure investments. As well, the officials drew attention to the National Supply Chain Office’s consultations with relevant parties in the country’s western, central and eastern trade corridors to improve the efficiency of Canada’s supply chains.

Officials from the Atlantic Canada Opportunities Agency highlighted the partnership between the federal government and the four provincial governments in Atlantic Canada that led to the Atlantic Growth Strategy, which is partly focused on enhancing the resiliency of the region’s supply chains. They also underscored the Atlantic Canada Opportunities Agency’s collaboration with Transport Canada under the Green Shipping Corridor Program to establish “green shipping corridors” along the Great Lakes St. Lawrence Seaway System.

Naviga Supply Chain Inc. advocated “a national reindustrialization strategy … to coordinate and prioritize efforts to design” supply chains that would support business productivity. In its written response, the Economic Development Agency of Canada for the Regions of Quebec stated that supply chain disruptions associated with such factors as the COVID-19 pandemic, protectionism and geopolitical tensions “provide opportunities for reindustrialization” in Canada.

Expanded International Trade: Challenges

Witnesses provided the Committee with their views about some challenges experienced when seeking to expand Canada’s international trade. In particular, they discussed: trade agreements, non-tariff barriers to trade and protectionism; regulations, taxes and other costs; and knowledge, expertise and federal measures.

Trade Agreements, Non-Tariff Barriers and Protectionism

Focusing on the benefits for Canadian firms resulting from trade agreements, Global Affairs Canada officials noted that they have observed some Canadian firms “effectively leaving money on the table” by not trading, to the desired extent, with jurisdictions with which Canada has a trade agreement. They speculated that this outcome perhaps reflects a lack of understanding about trade agreements and their benefits. Providing an example of a situation in which Canadian firms may not be taking advantage of the preferential treatment provided by a trade agreement, the Canadian Association of Importers and Exporters suggested that the process for determining whether a good qualifies for such treatment is “very technical, complicated and confusing.”

Agriculture and Agri-Food Canada officials characterized non-tariff barriers to trade and protectionist policies as “challenges posed by the global trading environment,” with Innovation, Science and Economic Development Canada officials stating that such barriers and policies “harm Canadian industry.” Officials from the Economic Development Agency of Canada for the Regions of Quebec commented that, in addition to protectionism, a “changing geopolitical context” limits the ability of Canadian small and medium-sized firms to “achiev[e] their full potential through exporting and internationalizing their operations.”

Regulations, Taxes and Other Costs

Transport Canada officials underlined that “the misalignment of regulations, excessive regulations and the means by which regulations are administered create burdens” for Canadian firms that export, and officials from the Economic Development Agency of Canada for the Regions of Quebec highlighted the various standards with which Canadian small and medium-sized firms must comply. With a specific focus, Agriculture and Agri-Food Canada officials emphasized that “there is still work to do” to ensure that regulations in Canada’s agri-food sector do not limit exports by the country’s small and medium-sized firms.

Citing the results of a survey it conducted in January 2024, the Canadian Federation of Independent Business said that, for the Canadian small and medium-sized firms that responded to the survey and that export, the cost of shipping is the greatest challenge, followed by exchange rate fluctuations, and duties and taxes. It also mentioned that, notwithstanding these challenges, most of the respondents indicated an intention to increase their exports. SERDEX International described a “lack of financing and liquidity” as one of the “three top issues facing [Canadian] companies in the export sector.”

Knowledge, Expertise and Federal Measures

Recognizing that the United States continues to be Canada’s primary export destination, Global Affairs Canada officials maintained that the Trade Commissioner Service encourages Canadian firms to export to a range of foreign markets. The Canadian Federation of Independent Business observed that, although it promotes the Trade Commissioner Service’s programs to its members, the programs are under-used. As well, the Canadian Federation of Independent Business stated that, in its January 2024 survey, many respondents indicated that they were not aware of, and that they had not used, the services provided by the Trade Commissioner Service, Export Development Canada and the Canada Border Services Agency.

Officials from the Economic Development Agency of Canada for the Regions of Quebec stressed that, because of a lack of expertise and knowledge, Canadian small and medium-sized firms experience challenges when exporting. SERDEX International emphasized such firms’ lack of “market knowledge.”

Expanded International Trade: Existing and Proposed Federal Actions

Witnesses provided their perspectives about existing and proposed federal actions designed to expand Canada’s international trade, whether through increasing the number of firms that export, the range of goods and services exported, or the foreign markets to which exports occur. In particular, they focused on: trade-related programs and other measures designed to assist Canadian firms; trade missions, negotiations and agreements; and the National Trade Diversification Strategy and related actions.

Programs and Other Measures

With a focus on federal programs designed to assist Canadian firms that export, Global Affairs Canada officials commented that the CanExport program helps firms protect their intellectual property in foreign markets. Canada Border Services Agency officials highlighted the Duties Relief Program and the Drawback Program, which allow qualified firms either to not pay or to be refunded the duties on imported goods that are subsequently exported.

Officials from Prairies Economic Development Canada discussed programs that it and Canada’s other regional development agencies administer, such as the Regional Economic Growth through Innovation program, with officials from the Economic Development Agency of Canada for the Regions of Quebec maintaining that the program “helps [firms] boost their productivity and compete with international companies.” They added that the program provides funding to help Canadian small and medium-sized firms develop export plans. Officials from the Pacific Economic Development Agency of Canada said that the program’s Business Scale-up and Productivity stream “focuses on companies with a desire to scale up through export growth,” and underscored that the program has achieved “significant results in terms of new export sales.” They also commented that the Global Hypergrowth Project helps Canadian firms “pursue international expansion.”

Global Affairs Canada officials indicated that the Trade Commissioner Service supports the expansion of Canadian firms in “high‑growth sectors of interest across the globe, such as the green and digital economy.” As well, they identified sectors to which the Trade Commissioner Service often provides assistance, including information and communications technology, agri-food, education, clean technology and life sciences. In its written response, Global Affairs Canada mentioned that it has expanded the number of trade commissioners under the Indo-Pacific Regional Capacity Uplift initiative.

Export Development Canada officials characterized the energy and agri-food sectors as “sectors of opportunity” because of global concerns about energy security and food security, and they stated that—in 2023—Export Development Canada facilitated “record” values of exports and foreign investment, as well as trade development activities, for Canadian firms in the clean technology sector. Moreover, the officials underlined other “priority sectors,” including advanced manufacturing and “digital industries.” Officials from the Atlantic Canada Opportunities Agency pointed to opportunities for export growth in Canada’s energy sector and in its “technology-intensive industries,” with Canadian Manufacturers & Exporters observing that the federal government has established initiatives and programs focused on advanced manufacturing and clean technology exports.

As well, Export Development Canada officials described a “suite of financial solutions” that it offers to Canadian firms with the goal of providing them with both “the tools they need to reduce financial risk” and “the capital to enter and invest in new markets.” They drew particular attention to Export Development Canada’s guarantees for working capital and credit insurance, which are “well used” by Canadian small firms. Moreover, the officials mentioned Export Development Canada’s collaboration with the Department of Finance and foreign export credit agencies to ensure that there is a “level playing field” for Canadian firms seeking access to financing. Officials from the Federal Economic Development Agency for Southern Ontario noted the ability for domestic firms entering foreign markers to access interest-free, repayable loans.

Global Affairs Canada officials emphasized the assistance that Canadian firms are offered to help them assess market potential and develop strategies to enter new foreign markets. Officials from the Atlantic Canada Opportunities Agency highlighted the Market Entry Development Program, which provides “in-market support” to firms entering export markets in Europe and the Indo-Pacific region.

Export Development Canada officials and Global Affairs Canada officials underlined the importance of educational opportunities, such as webinars, in enhancing Canadian exporters’ awareness and understanding of the country’s trade agreements. Officials from the Federal Economic Development Agency for Southern Ontario described a six-week “curated program” it co-funded with the Toronto Region Board of Trade to help Canadian small and medium-sized firms develop sector-specific export strategies. The Canadian Federation of Independent Business urged the federal government to enhance communication with, and provide information targeted to, such firms.

Agriculture and Agri-Food Canada officials anticipated that “the efficient administration of regulations” will help some Canadian small and medium-sized firms that export. The Canadian Federation of Independent Business proposed that these firms should be supported in their efforts to access foreign markets through simplified customs and duty regulations, as well as lower border-related fees.

The Canadian Chamber of Commerce identified the Asia-Pacific Gateway and Corridor Initiative as a successful collaborative approach between and among the federal government, provincial governments, communities and Indigenous populations that is designed to increase Canada’s exports.

According to the Hamilton-Oshawa Port Authority, the Canada Border Services Agency’s role is “critical” regarding imports into—and exports from—Canada. With respect to facilitating the movement of goods in southern Ontario in particular, the Hamilton-Oshawa Port Authority drew attention to its project to establish “a rail transload facility for pre-cleared containers in Hamilton” and its request that Canada Border Services Agency provide the staff needed to administer customs procedures at the facility.

Missions, Negotiations and Agreements

Drawing attention to Canada’s Indo-Pacific Strategy, Global Affairs Canada officials highlighted recent Team Canada trade missions to the Indo-Pacific region: to Japan in 2023, and to Indonesia, Malaysia, the Philippines, South Korea and Viet Nam in 2024. The Canadian Agri-Food Trade Alliance noted its members’ participation in such trade missions, and emphasized the importance of building relationships with importers in the region.

Agriculture and Agri-Food Canada officials highlighted Canada’s ongoing trade negotiations with the Association of Southeast Asian Nations and with Indonesia, adding that the country is “already a billion-dollar-a-year market” for Canada’s exports. They also described the Philippines as a “very significant market.” The Canadian Agri-Food Trade Alliance expressed support for trade diversification generally and for federal efforts to negotiate access for Canada’s agri-food exports in Indo-Pacific markets.

The Canadian Association of Importers and Exporters urged Canada’s trade negotiators to prioritize making it easier for the country’s firms to establish their eligibility for preferential tariff treatment for goods under trade agreements. It also expressed interest in the establishment of a trade facilitation committee under the Canada–United States–Mexico Agreement, and in the private sector’s participation in such a committee.^[2]

National Trade Diversification Strategy and Related Actions

Global Affairs Canada officials stated that Canada is “on track” to achieve the National Trade Diversification Strategy’s goal: by 2025, the value of Canada’s goods and services exports to foreign markets other than the United States should be 50% higher than the value in 2017. Describing the Trade Commissioner Service’s role in achieving this goal, they noted that Canadian firms that use these services generally export to “nearly 25% more markets.” As well, the officials observed that Canadian firms exporting to multiple foreign markets “seem less vulnerable to supply chain disruptions and to sudden changes in demand.”

Export Development Canada officials predicted that “new commercial partnerships in rapidly growing regions” of the world would provide Canadian firms with an incentive to diversify their trade further. They added that Export Development Canada focuses on “markets and regions where … local demand dovetail[s] seamlessly with strong Canadian capabilities.”

Agriculture and Agri-Food Canada officials underlined Canada’s commitment to diversifying trade in the Indo-Pacific region, and drew attention to the recently established Indo-Pacific Agriculture and Agri-Food Office in Manila that promotes Canada’s agri-food exports, expands federal capacity in the region and addresses market-related challenges “proactively.” Export Development Canada officials pointed out that the office provides Canadian exporters with “visibility” and an “understanding of how business is done” in the region, and said that the office works with foreign regulators and other authorities to ensure that Canadian firms meet product requirements. The Canadian Agri-Food Trade Alliance supported the creation of the office, and noted that its members consider strengthening the capacity for “trade diplomacy” to be a priority.

The Committee’s Thoughts and Recommendations

According to Statistics Canada, in 2023, Canada’s real gross domestic product (GDP) totalled $2.2 trillion. Global Affairs Canada’s State of Trade 2024 indicates that, in that year, international trade-related activities represented about 66% of the country’s GDP. The ways in which Canadian firms produce goods, as well as move goods throughout the country and to a range of foreign markets, can have significant economic impacts.

Canada’s supply chains have been—and continue to be—affected by a number of internal and external factors, including trade-related infrastructure, labour disruptions, extreme weather-related events and geopolitical circumstances. The Committee is mindful that these and other factors are currently having impacts on domestic, regional and global supply chains, and are likely to continue to do so in the future. In that context, actions that would expand and maintain Canada’s trade-related infrastructure, and that would ensure that its trade corridors support the efficient and cost-effective movement of goods, would likely have positive implications for the country’s supply chains, as well as for domestic firms, employees and consumers.

Furthermore, collaboration between and among Canada’s public and private sectors can lead to supply chains that are efficient and resilient. The Committee observes that the country’s supply chains are always evolving, and that they are affected by both anticipated and unexpected events. Consultations with—and collaboration among—the federal government, provincial and territorial governments, and other relevant parties could help to ensure that current and future challenges to Canada’s supply chains are addressed in a timely and appropriate manner.

Finally, Canada benefits when international trade is expanded, whether that occurs through increasing the number of firms that export, the range of foreign markets to which they export or the variety of goods and services that are exported. The Committee recognizes the importance of conducting trade missions, negotiating trade agreements, and identifying domestic firms and sectors that have high potential to expand their trade. To continue to meet their export goals and thereby contribute to Canada’s growth and prosperity, domestic firms may need adequate and appropriate financial and other supports to access foreign markets and compete internationally.

In light of the foregoing, the Committee recommends:

Recommendation 1

That the Government of Canada both continue with and enhance its efforts designed to ensure adequate and well-maintained trade-related infrastructure in Canada. As well, the Government should consider whether additional or expanded trade corridors would be beneficial. These efforts should be informed by timely and ongoing consultations with relevant parties.

Recommendation 2

That the Government of Canada continue its collaboration with provincial and territorial governments, as well as with other relevant parties, with the goal of identifying and addressing both existing and expected future challenges relating to Canada’s supply chains.

Recommendation 3

That the Government of Canada take actions designed to increase the value of Canada’s international trade. These actions could include enhancing further the international competitiveness of Canadian firms, as well as ensuring that the country’s firms are adequately and appropriately supported in their efforts to export to foreign markets. In taking these and other trade-related actions, the Government should continue to prioritize sectors with high potential to expand their exports.

Recommendation 4

That the Government of Canada ease congestion at Canada’s major ports of entry, enable supply chain redundancy and reduce emissions from rail- and truck-based shipping by shortening land shipping distances through establishing a permanent Canada Border Services Agency presence at additional commercial ports of entry. In this regard, the Government should consider such a permanent presence at such smaller ports of entry as Hamilton-Oshawa, Picton, Port Alberni, Québec City and Salaberry-de-Valleyfield.

Recommendation 5

That the Government of Canada improve the performance of Canada’s ports by accelerating efforts to implement a fully digitized Maritime Single Window, which became mandatory on 1 January 2024 under the terms of the International Maritime Organization’s Convention on Facilitation of International Maritime Traffic, to which Canada is a signatory.

Recommendation 6

That the Government of Canada establish new domestic supply chain routes and reduce the reliance on rail- and truck-based shipping through exploring options for short sea shipping.

Recommendation 7

That the Government of Canada recognize the right to freedom of association that is enshrined in the Constitution Act, 1982 and the right to engage in work stoppages that is legislated throughout Canada. Moreover, the Government should affirm the rights of employees and employers to engage in a strike or lockout, respectively, notwithstanding the impacts of labour disruptions on supply chains.

Recommendation 8

That the Government of Canada continue with, and enhance, its collaborative efforts with Canada’s trade partners designed to harmonize rules and technical standards that regulate parties involved in similar supply chains. In this regard, the Government should prioritize the agricultural and transportation sectors.