OTTAWA, Ont.–The ability of firms to move their people closer to customers is the single most important policy barrier to selling Canada’s highest-value, most time-sensitive business services globally, according to a new Conference Board of Canada report.
“Canada’s future economy will be built not only on resource extraction or manufacturing, but on close proximity to clients for knowledge-based service businesses and harnessing strong client services needed for global success,” said Jacqueline Palladini, Senior Economist, Global Commerce Centre, and author of Becoming a Services Superpower: Tapping into the Global Appetite for High-Value Services.
“Services is a skilled, labour-intensive sector, so the focus on positioning staff close to customers makes sense. It matters for both trade and investment: barriers to people movements are negatively associated not only with trade, but also investment in this sector,” she said.
To capitalize on growing demand for high-value business services, businesses will need to move their people closer to customers and develop a presence in foreign markets.
Three types of high-value services stand out for Canada: research and development; computer and information services; and technical and scientific services.
Canada’s next generation of trade agreements, such as the Canada-EU Comprehensive Trade and Economic Agreement (CETA) and the Transpacific Partnership agreement (TPP), have begun to address barriers to increasing services exports into global markets.
Businesses will have to take the lead to effectively capitalize on the growth in high-value services through recognizing potential growth markets, possibly setting up local operations, innovating relentlessly, and considering both emerging and traditional markets. While demand, technology, and business strategy are likely to be the most important factors driving Canada’s future performance, policy factors still matter, said the report.
Governments have already started to address policies that affect services in negotiating Canada’s next generation of trade agreements, such as the Canada-EU Comprehensive Trade and Economic Agreement (CETA) and the Trans-Pacific Partnership agreement (TPP).
The TPP would allow for easier temporary entry of business people to provide after-sales services, movement of professionals and technicians to most TPP countries, intra-company transfers among countries, and fewer limitations on foreign direct investment.
Canadian governments at all levels need to recognize the shift towards traded services and adapt historical policies at home and abroad to these new realities. These policies include removing cross-border barriers to movements of people, investment, products, and information, and ensuring a competitive and dynamic services environment at home.