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SOCIAL PROCUREMENT AND THE IMPACT OF NAFTA ON WOMEN-OWNED BUSINESSES

Ahead of the renegotiation of the North American Free Trade Agreement (NAFTA), Women’s Enterprise Organizations of Canada (WEOC) offers the following insight into the potential impact of NAFTA on the nearly one million women entrepreneurs in Canada. WEOC is the only national association of professional business support organizations dedicated to the advocacy and success of women entrepreneurs, and the authority on women’s entrepreneurship in Canada.

Women’s economic development has become a global economic development priority since 2010. As the Canadian Taskforce for Women’s Business Growth indicates, “a 20% increase in total revenues among majority female-owned enterprises will contribute an additional $2 billion per annum to the Canadian economy” (2011).

Only 5% of women business owners (WBOs) export, versus 11.8% of men (Industry Canada, 2011), which represents an untapped economic driver for the country. Integrating policies into trade agreements that benefit WBOs is a key strategy to encourage international trade by women entrepreneurs and increase their economic contribution. According to the UN Foundation / Clinton Global Initiative, women reinvest 90% of their earnings back into health, education, family and community.

WEOC supports the continuation of NAFTA, with the inclusion of policies that provide a gender perspective. As such we make the following recommendations, which are supported by the included brief:

• Prioritize social procurement: Negotiate the freedom for Canada to implement procurement targets for diverse suppliers

• Promote the ecosystem: Continue to foster international relationships between support organizations • Encourage market access: Highlight the need for trade partners to recognize Canadian WBOs

With over 22 years of experience, WEOC has an extensive international network as well as internationally-recognized best practice models of service delivery, business financing and market-access programs. WEOC has been invited to the W20 every year since its inception in 2015, and this year one of the recommendations put forth by the W20 is to support women’s entrepreneurship to:

… ensure their equal access to finance and markets, and accord them their fair share in global value chains. […] Increasing the huge untapped potential of female entrepreneurship would significantly contribute towards achieving the G20’s growth goals.

Canada is a leader in gender equality, and integrating women’s entrepreneurship into international relations is another way to demonstrate our commitment to sustainability. As part of the women’s entrepreneurial ecosystem, we appreciate the opportunity to provide input at this important juncture in trade policy.

Laurel Douglas Sandra Altner CEO, Women’s Enterprise Centre CEO, Women’s Enterprise Centre Manitoba Director, WEOC Director, WEOC

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THE IMPACTS OF TRADE POLICY ON CANADIAN WOMEN BUSINESS OWNERS

Building upon the broad network of support and research for women’s entrepreneurship in Canada, we are poised to benefit from revised international trade policy that recognizes the unique contributions of WBOs. As such, WEOC makes the following recommendations:

1. PRIORITIZE SOCIAL PROCUREMENT: Negotiate the freedom for Canada to implement procurement targets for diverse suppliers

WEOC recommends the introduction of supplier diversity targets into NAFTA. This would enable all trade partners to proactively institute targets in their own procurement practices, encourage WBOs to scale their businesses and create a significant opportunity for economic growth.

By committing to social procurement targets, Canada provides a fast lane to economic development by accelerating WBOs’ export growth. As environmental and social governance increasingly becomes part of Fortune 1000 companies’ fundamental KPIs, many have adopted social procurement policies. Innovation, cost benefits, corporate social responsibility, increased competitiveness and compliance with diversity policies are some of the advantages cited by members of the Billion Dollar Roundtable and many other long-time practitioners of supplier diversity.

Sixty-six percent of the world’s largest multinationals have aligned their business goals with the UN’s Sustainable Development Goals, and while some acknowledge it’s the ‘right thing to do,’ most have largely done so because it makes good business sense.

Multinationals that are able fulfil their needs from local suppliers benefit from the suppliers’ on-the-ground experience and are able to overcome barriers that may have restricted their expansion into various regions. Less resource-intensive production means lower costs and sourcing locally is critical to performance; agility comes from small, hungry vendors who prioritize the business of multinationals. IBM cites its diverse suppliers’ ability to apply different approaches, in addition to providing great products and services, as critical to its own innovation.

According to Hackett Group Research, 55% of US multinationals with supplier diversity programs plan to expand their program internationally in the next 2-3 years, which represents significant growth potential for women entrepreneurs.

If the government of Canada commits to supplier diversity targets, then WBOs are more likely to self-identify as diverse suppliers knowing that the international playing field is open to them. Once certified through organizations such as WEConnect International, Women Business Enterprises (WBEs) have access to an even more robust network of resources that support buyer-supplier relationships.

2. PROMOTE THE ECOSYSTEM: Continue to foster international relationships between supplier diversity support organizations

Entrepreneurs are the drivers of the economy, and it takes an international network to help them succeed. Within Canada, there is an established network of organizations (public, private and non-profit) such as WEConnect International, Supplier Diversity Canada, the Canadian Aboriginal & Minority Supplier Council, the Canadian Gay & Lesbian Chamber of Commerce and women’s business support organizations that support diverse suppliers. This ecosystem provides a number of services, including procurement opportunities with global companies, trade mission support, supplier diversity training, growth support and advocacy for the practice of social procurement.

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Canadian business owners also access and substantively benefit from the resources and services of the supplier diversity ecosystem in the US market. The longstanding existence of supplier diversity-driven opportunities has already given rise to substantial peer networks, such as the National Association of Women Business Owners (NAWBO) (US), regional and industry-focused women’s business associations, Black and Latino Chambers of Commerce and other professional groups which offer peer networks where joint bid, joint venture, merger or acquisition partners may be more readily identified, fueling the capacity for growth of women-owned enterprises.

By improving international connections, Canada has the opportunity to enrich the women’s entrepreneurial ecosystem. This can lead to sharing of best practices, increased opportunities for partnerships, market access, more cost-effective business development opportunities and greater peer-to-peer business networking.

3. ENCOURAGE MARKET ACCESS: Highlight the need for trade partners to recognize Canadian WBOs

Hundreds of matchmaking events are held in the US every year by 14 regional partner organizations of the Women's Business Enterprise National Council (WBENC) – states, cities, companies and industry associations with the express intention of bringing procurement and vendors together. The WBENC National Conference and Business Fair, one of the largest US-based trade events for buyer-supplier matchmaking, connects 75-100 multinationals and 5000+ women business owners at the annual conference, now in its 20th year. Recognizing the significance of this opportunity, Global Affairs Canada has led a delegation to WBENC for several years.

Multinationals are favorably inclined toward Canada and proactively seek to identify Canadian suppliers. In numerous interactions with representatives of Fortune 500 companies, WEOC has witnessed the commitment of many US-based multinationals to repeatedly participate in Canadian-based vendor identification and matchmaking events. Some of the most positive interactions have been with procurement representatives from the automotive, aerospace and defense industries, as they value the common language, rule of law and business practices of Canadian suppliers that they believe align with their own.

More than 50% of women-owned businesses are in the service sector, which comprises over 70% of jobs in North America, and 76% of the GDP. The international trade of services is much simpler than delivering goods across the border, so there are fewer barriers to trade for over half of WBOs. With a common language and many shared points of reference, as well as comparable business structures, decision-making processes and reporting practices, women are well-situated to not only participate, but to drive economic growth to the advantage of the shared economy.

WEConnect International. (2017). The Business Case for Global Supplier Diversity and Inclusion: The Critical Contributions of Women and Other Underutilized Suppliers to Corporate Value Chains. Retrieved from https://weconnectinternational.org/images/Report.pdf

WEConnect International. (2016, September 2). WEConnect International Day. [YouTube]. Retrieved from https://youtu.be/w8TnAmLarKY Business Women in International Trade. (2017, April). Business Women in International Trade. Retrieved from BWIT website

http://tradecommissioner.gc.ca/businesswomen-femmesdaffaires/index.aspx?lang=eng Women Deliver. (2017). Get the facts: A collection of infographics on women’s contributions to society. Women Deliver. Retrieved from

http://womendeliver.org/resources/infographics/

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THE WOMEN’S ENTREPRENEURIAL ECOSYSTEM IN CANADA