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Canada’s focus on trade is big for small business

The Globe and Mail Report on Business 6 November 2016

U.S. presidential nominees Hillary Clinton and Donald Trump may vehemently disagree on most key issues – immigration, economic prescriptions and who has the right temperament to be president – but one item the opponents seem to align on is trade. Throughout the campaign, both have made increasingly definitive statements against the Trans-Pacific Partnership and demonstrated strong skepticism toward the North American free-trade agreement and other international deals. Time will tell who will win the election, but one thing is certain: Come Wednesday morning, Canada’s top trade partner may want a new deal.

Similarly, it took dramatic, last-ditch efforts to save the Canada-Europe Comprehensive Economic and Trade Agreement from being derailed by the Wallonian Parliament in Belgium. There remains a long, bumpy road to full ratification against a backdrop of intense opposition from European anti-trade activists. CETA may be signed, but many question whether it can actually be sealed and delivered.

While these developments demonstrate increasing global skepticism about the benefits of trade, we are seeing a different trend in Canada. Canadians remain largely enthusiastic about trade deals (evidenced by Prime Minister Justin Trudeau’s government’s move to open trade discussions with China) and Canadian businesses continue to embrace trade opportunities.

Even small businesses – traditionally excluded from discussions about trade – are seeing the benefits of exporting. According to a recent UPS Canada survey, three-quarters of Canadian small and medium-sized businesses (SMBs) recognize that free-trade agreements create opportunities in foreign markets by reducing trade barriers, and 61 per cent say exports are the key factor for continued growth and success.

Given this openness to trade, it’s perhaps not surprising that eBay Canada’s SMB Optimism Index found that Canadian retail SMBs that export are optimistic about the future. On a scale from 1 to 100, from very pessimistic to very optimistic, Canadian retail SMBs averaged a score of 74 on the index. However, exporting SMBs scored five points higher; at 79, theirs was the highest score reported among retail SMBs surveyed. Further, exporting SMBs reported nearly 60 per cent more revenue than non-exporting SMBs, they reported outperforming their non-exporting counterparts across all other performance indicators, and they were more optimistic about both international and domestic opportunities.

A similar trend emerged when we looked at SMBs who trade on eBay: Virtually all of them (99 per cent) export, with the majority of their sales coming from outside the country.

These sellers also indexed higher than the average retail SMB, with a score of 76.

Adrien Lavoie is one example of a small business entrepreneur reaping the benefits of international trade. The 27-year-old has built a successful online and offline retail business selling sneakers. Selling globally through online channels has been the key to his success – 90 per cent of his sales are from outside Canada, and he regularly ships items to more than 45 countries. To date, he has sold more than $1-million worth of shoes and apparel online.

The entrepreneurial spirit is alive and well in Canada, and the timing couldn’t be better for SMBs to reach untapped markets through international trade. Thanks to technology – the Internet in particular – entrepreneurs are able to take part in global grade without the high capital investments previously required.

The result? More inclusive trade.

While the United States and Europe seem to want to back away from their trade relationships, it’s encouraging to see the Canadian government continue to focus on international trade. Given the relatively small size of the Canadian market, the success of our economy is closely linked to our trade with other countries; this couldn’t be more true for Canadian SMBs looking to scale up.

As the government works to build international trade deals and create opportunities for Canadian businesses, they shouldn’t underestimate the big impact this can have on the little guys.

Andrea Stairs is managing director of eBay Canada.