Hon. James Moore, P.C., M.P. Minister of Industry C.D. Howe Building 235 Queen Street Ottawa, Ontario K1A 0H5. October 18, Dear Minister Moore:

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1 Hn. James Mre, P.C., M.P. Minister f Industry C.D. Hwe Building 235 Queen Street Ottawa, Ontari K1A 0H5 Octber 18, 2013 Dear Minister Mre: The services sectr is an imprtant and grwing sectr f the Canadian ecnmy, increasing frm 65% f Canada's GDP in 2000 t 70% in It is a majr driver f emplyment and ecnmic wealth fr Canadians with apprximately 3 ut f 4 Canadians emplyed in the services sectr. (Surce: DFATD website) Public plicy that enables the grwth f services industries, including the substantial service cmpnents embedded in manufacturing is critical t ensuring Canada s nging ecnmic strength. Unfrtunately, accrding t the Department f Freign Affairs, Trade and Develpment, Canada ranks a medicre 18 th in services exprts leaving a tremendus pprtunity fr grwth. Given the dminant rle services plays in Canada, it is critical that it be accurately measured. Tday this is nt the case. The substantial value f crss brder trade in services thrugh freign affiliates, nline trade and the mvement f service prviders is largely embedded in ther statistics r nt cllected at all. This is creating an envirnment where plicy makers are reliant n anecdtal evidence rather than hard statistics. While anecdtal evidence can be helpful fr illustrating business realities, they tend t primarily cme frm single, larger cmpanies and are almst vid f small business examples - an imprtant cmpnent f the Canadian ecnmy.

2 These are serius infrmatin gaps fr Canadian plicy makers, especially trade negtiatrs, wh are wrking t imprve market access abrad fr Canadian The lack f data sharing leaves businesses f all sizes. Success in these negtiatins has the Canada in the dark: ptential t fundamentally alter the Canadian ecnmy. The effrts f Canadian trade negtiatrs t cllect the data necessary fr rbust agreements that are in the natinal best interest are being undermined by three factrs: Sharing f infrmatin Data supplied by Statistics Canada t ther parties, including within gvernment, cannt lead directly r indirectly t the identificatin f individual cmpanies. Canada s small samples sizes matched with cuntry specific inquiries can lead t DFATD being unable t attain the cre infrmatin it requires frm Statistics Canada. E.g. If a single Canadian firms sales t Ecuadr dminated Canada s engineering exprts, Statistics Canada will nly prvide DFATD with aggregate cmmercial services data (i.e. all services). Shuld a freign gvernment seek a trade reservatin n engineering services, trade negtiatrs will have n hard data t determine if this is in Canada s best interests. Missing Freign Affiliate Data It is essential that Canada start cllecting data n the peratins f Canadian multinatinals utside f Canada and freign multinatinals wrking inside f Canada. This data can have a substantive impact n services numbers. Fr example, Sweden fund that services sales were 60 percent higher when service-fcused subsidiaries are included in the analysis. 1 The current data gap in Canada means ur plicy makers are attempting t supprt ur ecnmy with limited, and ptentially incmplete, data. Due t the limited Canadian data, DFATD has t maked by relying n publicly available US gvernment data n freign affiliates having better Canadian data will allw fr better plicy chices Internatinal Cperatin is Essential Trade data has limited usefulness if it isn t directly cmparable t ther cuntries. The OECD and the WTO are wrking n creating an agreement n hw t capture mre services data in a manner that will allw fr internatinal cmparisns. We strngly encurage ur gvernment t cntinue t invest in this effrt. Recmmendatins: It is clear that Canada must take steps t imprve its verall understanding f tday s mdern ecnmy including the grwing services sectr. This change in plicy must ccur at every level and acrss all f gvernment. T imprve the cllectin, analysis and availability f services date, we recmmend the fllwing affrdable and much needed first steps: 1 Everybdy is in Services, pg. 25

3 1. Undertake a review within Statistics Canada t find a way fr essential, annymus data t be shared with Canadian trade negtiatrs that respects the need fr business cnfidentiality. 2. Ensure that Statistics Canada has the resurces and directin t give the prper priritizatin t the services sectr. At a minimum, Statistics Canada shuld implement additinal questins t their surveys t allw the cllectin f data n all Canadian multinatinals wrking abrad and freign multinatinals perating in Canada. Such additins shuld bear in mind the current reprting duties fr Canadian businesses and shuld be designed in such a manner t minimize the verall reprting burden. With careful planning, this additinal infrmatin culd be cllected fr apprximately $1M per year. 3. The Deputy Minister f Industry Canada and Chief Statistician shuld hld a small rundtable with a cre grup f Canadian assciatins, think tanks and academics n what needs t be dne t ensure Statistics Canada data cllectin and reprting better reflects Canada s 21 st century ecnmy. 4. Play a key rle in the OECD s nging effrts in building the needed framewrk fr cmparative services statistical data cllectin. Sincerely, The Canadian Chamber f Cmmerce The Canadian Cuncil f Chief Executives The Canadian Life and Health Assurance Assciatin Canadian Manufactures and Exprters The Canadian Services Calitin Certified General Accuntants C.C.: Mr. Jhn Knubley, Deputy Minister, Industry Canada Mr. Simn Kennedy, Deputy Minister, Freign Affairs and Internatinal Trade Canada Dr André Dwns, Chief Ecnmist, Freign Affairs and Internatinal Trade Canada

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