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