Toronto Mayor John Tory should look to European capitals such as Paris, London or Berlin for his next international trade mission if he intends to follow the advice of a new report from the Toronto Region Board of Trade's World Trade Centre arm.
The first study from the board's newly launched trade-services branch suggests that countries such as Britain, France and Germany should become key markets for Toronto-area small- and medium-sized businesses looking to grow – and key destinations for future trade missions by politicians.
"The big thing that really excites us about the report is just being able to help our business community understand where those opportunities are for them, and putting together really effective trade missions and engagements with those markets," said Jan De Silva, president and chief executive officer of the Toronto Region Board of Trade, who had already discussed the report's findings with British Prime Minister Theresa May at a meeting in Ottawa on Monday.
The research, in a report entitled Priority Export Markets for Toronto Region Industries to be released on Wednesday, looked at more than 150 countries and analyzed seven key economic sectors in the Toronto area with export-growth potential, with an eye to encouraging small- and medium-sized businesses to go global.
Almost all of Canada's exports, however, are controlled by large companies: Only 4 per cent of businesses here with fewer than 500 employees export anything at all. That's a far cry from the numbers for small- and medium-sized businesses in other G7 countries: 27 per cent in France, 28 per cent in Germany and 24 per cent in Japan. (In the United States, with its large domestic market, the number is only 5 per cent.) Increasing this ratio in Canada, the report says, could create millions of jobs here.
The United States remains the No.1 customer by a massive margin, consuming 75 per cent of Ontario's exports. (Toronto-only figures are not available). But the report cites the imminent effect of Canada's trade deal with Europe and concludes the continent "presents the most opportunities for Toronto region businesses seeking to export." It puts fast-growing Asian markets in second place.
It points out that Europe is already a key market for several sectors identified in the report as export strengths. For example, Ontario's No.1 export customer for aerospace is France, which takes in $2.7-billion worth of aircraft or aircraft components a year, accounting for 67 per cent of the province's total aerospace exports. The United States and China are far behind in second and third place.
In the large human health and sciences sector – which includes drugs and medical devices – the United States is by far the No.1 export market, followed by Japan. Italy rounds out the top three in this fast-growing sector.
The report also singles out three emerging sectors in which Toronto has potential: "cleantech," designing and building thing such as solar panels and wind turbines; "citytech," using new technology to solve urban problems and create so-called "smart cities"; and "fintech," a growing area with the potential to revolutionize banking and financial services.
Mr. Tory, who co-ordinates his trade missions with the Toronto Region Board of Trade, made his first foreign trip, a year after his 2014 election, to London. He also visited Paris as part of a delegation to the climate change talks there in 2015 and has made trade trips to Chicago, Austin, Texas, California, India, Japan, Hong Kong, Sri Lanka, China and Israel. Such trips have the potential to become political controversies with an election looming next year. His office says it is now only looking into some short trade missions to U.S. cities.
Walid Hejazi, an associate professor at the University of Toronto's Rotman School of Business who has studied Canada-EU trade for the federal government, agrees with the report's conclusions about Europe as a top trade priority, especially given the tense talks under way with the United States over the North American free-trade agreement.
"Every time we have a trade dispute with the U.S., they hold us hostage," Prof. Hejazi said. "We really need to build more relationships into Europe and Asia. … It would make us less dependent on the U.S."
Ranking the key markets for Toronto businesses
8. South Korea
15. Hong Kong
Source: Word Trade Centre Toronto, Toronto Region Board of Trade