GOVERNMENT RESPONSE

THIRD REPORT OF THE

STANDING COMMITTEE ON INTERNATIONAL TRADE

THE CANADIAN TRADE COMMISSIONER SERVICE

Introduction

The Government of Canada is pleased to respond to the Third Report of the House of Commons Standing Committee on International Trade entitled “The Canadian Trade Commissioner Service.”  The Government shares the Committee’s view that the Trade Commissioner Service (TCS) offers services that are of high quality, tailored to the needs of Canadian businesses and particularly vital for small and medium-sized enterprises (SMEs).  SMEs have been at the forefront of firms entering new markets. Indeed, the share of every regional market held by Canadian SMEs has increased, and, in Asia, SMEs accounted for nearly half of Canadian export sales in 2009.

As noted in the Committee’s report, the Government has a role to play in supporting Canadian companies as they advance their international commercial strategies.  A peer-reviewed study conducted by the Office of the Chief Economist of Foreign Affairs and International Trade Canada (DFAIT) demonstrated that every $1 spent on the TCS results in $27 in increased exports.  The same study showed that exporters who received TCS assistance exported, on average, 18 percent more than comparable exporters who did not receive TCS assistance.  Moreover, the TCS has been effective in helping firms diversify into new markets and has a positive impact on export product diversification.  TCS clients export to 36 percent more markets than non-clients.  The business case for trade commissioners around the world is stronger than ever. 

The TCS helps companies effectively navigate the complexities of international markets.  With an extensive network of offices abroad, TCS trade commissioners have been successful in gaining market intelligence and insight, and uncovering opportunities for Canadian companies.  They have hands-on knowledge that comes from helping thousands of companies each year to tackle concrete problems and pursue opportunities in foreign markets. 

The TCS covers the full spectrum of international trade activities – whether a client is interested in exporting, investing abroad, attracting investment or developing innovation and research and development partnerships.

Since the launch of the Global Commerce Strategy (the international implementation of Advantage Canada, the broader national competitiveness strategy), the TCS has expanded its footprint in emerging markets.  The TCS has also aligned its activities with client needs by working more closely with the private sector in recent years.  Private sector representatives sit on TCS sector advisory boards, providing advice on sector-specific strategies in priority markets and advising on the prioritization of business development projects carried out by trade commissioners in Canada and abroad.  Furthermore, additional resources have been provided to enhance Canada’s ability to attract foreign investment in proactive sectors and create jobs for Canadians.  New initiatives have been introduced to connect Canadian companies and researchers to international science and technology networks in order to promote innovation and commercialization of new Canadian technologies.

An important opportunity for making further improvements to the TCS was contained in Budget 2012, which calls for intensifying Canada’s pursuit of new and deeper international trade and investment relationships, including refreshing the Global Commerce Strategy.  An updated Global Commerce Strategy will align Canada’s trade and investment objectives with priority markets with an eye to ensuring that Canada is branded to its greatest advantage within each of those markets.

The Government has carefully reviewed the recommendations in the Standing Committee’s report and welcomes the opportunity to respond to each recommendation individually.

Recommendation 1:  The Trade Commissioner Service ensure greater consistency of service across offices.

The Government accepts this recommendation.

The TCS offers four key services to clients: preparation for international markets, market potential assessment, qualified contacts and problem solving.  TCS service standards and guidelines exist and must be followed by all trade commissioners.  For example, an acknowledgement of or response to a client should be sent by the trade commissioner in a timely manner.  This being said, client feedback has pointed to some inconsistency in the application of these service standards and guidelines. 

In order to improve governance, accountability and consistency of service, DFAIT created the International Commerce Coordination Board (ICCB) in late 2008.  Comprising senior management, the ICCB reviews and provides direction on strategic and operational issues pertaining to DFAIT’s international commerce mandate.  A transactional client survey was established in 2010 to provide management, including managers at posts, with actionable client feedback on the consistency and quality of service delivered.  Survey results show that client satisfaction increased significantly from 66 percent in 2008-2010 to 80 percent in 2011-2012, reflecting the commitment of the TCS to continuous improvement. 

Building on these improvements, and in order to ensure greater consistency of service delivery, a client service strategy has recently been developed to continue improving client satisfaction and client success abroad and to facilitate the entry of more Canadian clients, particularly SMEs, into international commerce.  The proposed strategy was presented to and endorsed by the Small and Medium-Sized Enterprises Advisory Board during their last meeting.  In tandem with the implementation of the client service strategy, elements will be focused on learning and professional development to ensure that managers and trade commissioners are able to improve client satisfaction and success rates.  A greater emphasis on service standards and guidelines will be included in training initiatives to re-enforce greater consistency of services across offices.

Recommendation 2:  The Trade Commissioner Service continue to build capacity in emerging markets where the potential for growth in Canadian trade is high.

The Government accepts this recommendation.

As part of ongoing efforts to implement Canada's Global Commerce Strategy, the TCS has identified 13 priority markets around the world where Canadian opportunities and interests have the greatest potential for growth.  Fifteen new offices in Brazil, China, India, Mongolia, Qatar and Turkey have been opened in recent years to promote trade, investment and innovation with these fast-growing markets and lay the foundation for tomorrow's jobs and prosperity.  These investments are already reaping results.  Over the past four years, the TCS has served a growing number of new-to-market clients, especially in priority emerging markets such as Brazil (1,032), China (2,634) and India (881).  Moreover, the total number of TCS services delivered in these three markets over the past four years has grown by 79, 92 and 311 percent respectively. 

The TCS continues to strengthen capacity in emerging markets through the development and implementation of its sector strategies.  Sector advisory boards – which include representatives of leading companies, other government departments, agencies and crown corporations such as Industry Canada and Export Development Canada – are providing information on Canadian capabilities.  The boards also advise on strategies for implementation by trade commissioners in the field, ensuring that high-growth markets receive the attention they deserve.

Emerging markets are also included as priority markets for investment attraction, as well as in the renewed International Science & Technology Partnerships Program.  This program promotes international collaborative research and development with emerging markets such as Brazil, China and India with the objective of facilitating commercialization of their innovations. 

Resources in Canada are also focused on building capacity in emerging markets.  For example, a trade commissioner is currently embedded with the Canada-India Business Council in Toronto. 

Finally, the TCS uses a number of evidence-based tools to assist in the assessment and allocation of financial and human resources internationally.  Analysis of information from various sources is used to ensure that financial and human resources are deployed to markets with strong potential for growth.  This allows the TCS to maintain and adjust an international footprint that is reflective of Canadian companies’ commercial interests. 

Recommendation 3:  The Trade Commissioner Service address the lack of corporate memory and local knowledge resulting from the constant rotation of Canadian trade commissioners abroad.

The Government accepts this recommendation.

The Government announced in Budget 2012 its intention to extend the length of some postings.  Longer assignments overseas will help to deepen the local contact networks of Canada-based trade commissioners, in addition to reducing the administrative costs associated with frequent relocation.

To help increase operational efficiency, knowledge transfer and sharing, and enhance the corporate memory of the TCS, DFAIT is also developing a multi-year Information Management/Information Technology Strategy.  The strategy will include initiatives such as TRIO2 (an improved client relationship management system).  It will also include an internal collaboration platform for employees to connect with each other online, share experiences, best practices and information, and foster centres of expertise.  Further, a web-based reporting system will foster communities of interest by increasing accessibility of reports as well as allowing trade commissioners, regardless of where they are located, to contribute in areas in which they have expertise.  Ongoing improvements are being made to the departmental wiki.  The strategy also includes GCDocs (a new records and documents management system).

As is the case with most foreign ministries, DFAIT will continue to rely on locally-engaged staff who have long been recognized as playing an important role in day-to-day work.  Their knowledge of the local culture, language and physical environment, and their local contacts and corporate memory of events through a succession of Canada-based staff rotations, has enhanced and will continue to enhance the capacity of the posts to achieve Canada’s overseas objectives.

Recommendation 4:  The Trade Commissioner Service focus on the countries with which Canada has signed a free trade agreement in order to help Canadian exporters and investors take advantage of the preferential treatment obtained as a result of these agreements.

The Government acknowledges this recommendation.

Under the Government's Global Commerce Strategy, Canada has prioritized its engagement with fast-growing emerging markets, particularly in Asia and the Americas, and is pursuing an ambitious pro-trade plan.  Accordingly, the TCS has prioritized markets where Canadian commercial activity and the demand for services by Canadian business clients is growing the fastest, even though Canada may not have concluded free trade agreements (FTAs) with these countries.

As set out in Budget 2012, the Government of Canada has now embarked on the most ambitious trade negotiations agenda in its history, with 19 distinct trade negotiations underway covering 74 countries, in addition to a similarly ambitious negotiating agenda of foreign investment promotion and protection agreements and air transport agreements.

Canada completed an economic complementarities study with China in May 2012 and is entering into exploratory discussions on deepening bilateral trade and economic relations.  Canada is also in exploratory trade discussions with MERCOSUR (Argentina, Brazil, Paraguay and Uruguay) and Thailand.  In November 2011, Canada announced its intention to enter into formal consultations to explore Canada’s possible participation in the Trans-Pacific Partnership (TPP).  Bilateral negotiations on a comprehensive economic partnership agreement with Japan were launched in March 2012.  Free trade negotiations are ongoing with the European Union and India.

This approach complements Canada’s ongoing commercial engagement with existing FTA partners.  The existence of FTAs and other market access agreements informs TCS activities, including the allocation of financial resources through both operational budgets, which provide trade commissioners with resources for targeted business development projects, and the Global Opportunities for Associations program, which supports international market development activities undertaken by national associations.  Efforts are being advanced to systematize the analysis of opportunities flowing from the completion of agreements and to provide clients with more targeted information on resulting market opportunities. 

The TCS has developed a strategic approach to trade missions for the Minister of International Trade, the objective of which is to proactively support international business development by Canadian companies through the Minister’s domestic and international travels.  Being strategic by effectively prioritizing, planning, focusing, communicating, branding and following up will increase the impact of trade missions, and better link trade promotion and trade policy objectives.  Currently included in the strategy are trade missions to Peru, Colombia, Panama and Jordan, countries with which Canada has recently signed free trade agreements. 

A marketing strategy has been developed and implemented for the free trade agreements in the Americas and will be used as a model for future efforts to promote the benefits of upcoming free trade agreements.  In addition, sector strategies will continue to ensure that Canadian capabilities are matched appropriately with opportunities in priority markets.  Moving forward, the trade negotiations agenda will continue informing the selection of markets for trade missions and marketing efforts. 

As for human resources allocation, evidence-based tools assist with the assessment and allocation of trade promotion resources internationally.  The process takes into consideration government-to-government agreements, including free trade agreements, as well as other priorities – such as Canadian client interests – to ensure support and promotional activities in these markets.

Finally, the fundamental issues of priority markets, free trade agreement opportunities, and other initiatives mentioned above, which touch upon the important trade and investment development role of the TCS, will inform a refreshed Global Commerce Strategy that the Government will release in 2013.