A new report argues small and medium-sized GTA businesses need to trade more with the world — and especially Europe — to boost economic growth.
According to the report, published Wednesday by the Toronto Region Board of Trade, only 4 per cent of Canadian small and medium-sized enterprises (those with fewer than 500 employees, also known as SMEs) export. That’s compared to 28 per cent in Germany, 27 per cent in France, and 24 per cent in Japan. Among G7 nations, Canada finishes last.
By comparison, 23 per cent of large Canadian firms trade internationally. The report found that if the same proportion of SMEs did so, they would generate $225 billion more in exports and create 2 million new jobs.
“It has a huge impact to the economy if we can get more of our SMEs exporting,” says Jan De Silva, president of the Board of Trade. “And every $100 million increase in exports creates 1,000 jobs at home, both for the direct exporting company, as well logistics and movements-of-goods industries as well.” She adds that international trade can help businesses increase productivity and grow.
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The GTA has a large number of traded industries — that is, sectors providing goods and services that can be offered anywhere in the world (for example, a tech firm that builds software, as opposed to a convenience store that serves only the domestic market). “Nationwide, the Toronto region is a leader in 26 of 41 traded industries,” the report says. Even so, “our region’s concentration of traded industries is underperforming on the global stage.”
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While the U.S. remains Ontario’s largest trading partner, the report notes that the province needs to diversify its markets. It identified Europe as the region with the most export opportunities for GTA businesses. That’s good news for the federal government, because most of the Canada-EU free-trade deal — known as CETA — comes into effect tomorrow.
The report identifies the U.K. as a high-priority market, but the U.K. is also negotiating its way out of the EU, meaning it won’t be a part of CETA for long. Earlier this week, Justin Trudeau and Theresa May announced a new working group to ensure trade continues between their countries post-Brexit, using CETA as a framework to hash out a new deal.
“I think there’s tremendous opportunity,” De Silva says. “I think, government-to-government, the foundation’s already being set to move quickly on that, as soon as Brexit has been executed.”
Timothy Lane, the deputy governor of the Bank of Canada, also spoke this week about the importance of international trade to the country’s economic growth: “As in the past, further expanding Canadian firms’ access to markets and to imported inputs could unlock more opportunities.”
Small business owners understand there are big opportunities beyond our borders, De Silva says, but they’re so consumed with domestic business that they don’t have time to think about export strategies. There are many government programs to support businesses that want to trade abroad, she says, but they’re sometimes hard to find: “So it was clear that it was not rocket science but a matter of creating an easy way for our business owners to get access to the tools they needed.”
Wednesday’s report coincides with the launch of World Trade Centre Toronto, an organization at arm’s length from the Board of Trade that will provide expertise, lead trade missions, and offer programs to help businesses identify market opportunities and develop and execute export strategies.
The WTC model “gives us access to a global network,” De Silva says. “More than 80 countries around the world, 320-plus cities, have world trade centres, and those that are active in trade advisory services are really good landing points for us to do outbound missions and to do business matchmaking for our community.”
World Trade Centre Toronto will be funded by corporate sponsorship, public money (the city itself is a partner, and the Toronto Region Board of Trade hopes to secure support from other levels of government), and some fees-for-service — for example, if a business wishes to be part of a trade mission.
Businesses that are members of chambers of commerce in the GTA will have access to the WTC’s services. But the Board of Trade says businesses outside the region will be welcome as well: companies from Guelph, Peterborough, and London have already taken advantage of a trade accelerator program, which provides SMEs with expertise, resources, and coaching to develop export plans.
The Board of Trade report presents a way to focus and prioritize trade strategy, for businesses and for governments. It singles out four established industries (aerospace, automotive, food, and health and sciences) and three emerging industries (financial, urban, and green technologies) as priority export markets. It also identifies, for each of those industries, the 15 export markets that offer the greatest opportunities for GTA businesses.
And that’s a big piece of the puzzle: data that businesses can use. Trade data at the city level barely exists in Canada. “We’re going to be discussing this with StatsCan,” De Silva says. “Because we’re not going to have the bandwidth to be able to take that on ourselves.”