Canadian business can reap big benefits from exporting, but only about 4 percent of our companies are direct exporters.
In this commentary, Bill Currie (Deloitte, Vice Chair, Managing Director Global Regions and Platform) distills some insights gained from interviews with 46 experienced Canadian exporters. He describes a three-stage journey needed for firms to become successful exporters, and he offers concrete ways that the federal government can play an even stronger role in export promotion, including:
1. Improve awareness of existing export support programs.
Companies won’t use export support programs if they’re unaware of them. Disappointingly, only about one-fifth of Canadian exporters know about Export Development Canada (EDC). The Canadian Trade Commissioner Service, Business Development Bank of Canada (BDC) and several industry associations also have programs to help exporters, including mentorship and networking opportunities.
Governments and organizations need to work together to improve the visibility and accessibility of these programs. They should also try to consolidate the available information to reduce the confusion and burden for businesses seeking support. The government’s recent “Go Global” export workshops — whose aim is to provide small- and medium-sized enterprises with information and tools to take advantage of export opportunities — are a step in the right direction.
2. Structure tax incentives for business around growth, not firm size.
Many federal and provincial business tax regimes and financial support programs heavily favour small businesses. This creates disincentives for businesses to grow too large. For example, in addition to having lower general corporate tax rates for small business, the Scientific Research and Experimental Development credits are much more generous for small companies than for large ones. Yet Deloitte’s research finds that small companies are no more likely to drive growth than their larger peers. Replacing size-based qualification criteria with ones that reward growth would encourage more Canadian businesses to expand through exporting.
3. Finalize and implement as quickly as possible important free trade deals.
With the rapid growth of emerging its economies, Canada must continue to reduce its reliance on the US market and expand linkages with other trading partners. The government should prioritize the implementation of large-scale trade deals with the European Union (CETA) and the Trans-Pacific Partnership (TPP) as well as concluding high-potential agreements with emerging market countries, such as India. These trade deals are critical to boosting Canadian participation in the economies that will drive future global growth. Post-agreement commercialization frameworks are also needed to measure the success of signed free trade deals and track progress toward specified targets.
The author notes that governments can’t promote exports alone; ultimately business leaders must lead the charge. For prospective Canadian exporters, this process begins by adopting a global mindset and by seeking information and perspectives from successful exporters.
You can read the full commentary here (in pdf), which is part of the IRPP’s forthcoming volume Redesigning Canadian Trade Policy for New Global Realities.
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