Canada Looks to Bolster E-Commerce Trade

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TORONTO -- Canada is in danger of falling far short of an ambitious e-commerce benchmark proposed by Paul Martin, finance minister with the ruling Liberal party, and other senior technology industry leaders.


In a speech in September to the Toronto Board of Trade, Martin said the government ought to work with the private sector to capture "5 percent of global e-commerce trade by 2003."


In fact, according to a study released last month by International Data Corp., Canadians were responsible for 5.9 percent of Internet-based business transactions in 1999. But the research also forecast that Canada's share of e-commerce trade would tumble to just 3.9 percent by 2004.


"We would have to do something dramatic to increase our productivity to achieve that [5 percent]," said Joe Greene, vice president at IDC Canada. "That's a very lofty goal."


IDC Canada conducted the study on behalf of a committee of the Canadian E-Business Opportunities Roundtable. The roundtable, chaired by John Roth, chief executive at Nortel Networks Corp., and David Pecaut, president of iFormation Group, is a private-sector initiative that is supported by and advises Industry Canada, a government department.


John Wetmore, chief executive at IBM Canada Ltd. and chairman of the committee responsible for the study, downplayed Canada's performance in favor of highlighting its performance compared with that of the United States. In 1999, there was about $9 (all figures in Canadian dollars) of e-commerce trade in Canada for every $100 of e-commerce trade in the United States. IDC Canada estimates that by 2004, Canadians will account for about $10 in e-commerce trade for every $100 of U.S. e-commerce trade.


"It's one thing to have a position in the world, but it's almost more important to have a position relative to your major trading partner. It's pretty important to keep an eye on that," Wetmore said.


Canada is responsible for about 2.5 percent of all world trade. In setting a target of 5 percent for e-commerce trade, Martin and the e-business roundtable are, in effect, calling on Canada to grab twice as large a share of e-commerce trade as it has in overall trade.


IDC Canada said Canada and the United States would lose ground in terms of total global e-commerce trade as Western Europe, Japan and other Asian countries catch up. Wetmore said that to keep up, more Canadian businesses must embrace e-commerce.


Wetmore has been an enthusiastic advocate for his committee, which is known as the e-Business Acceleration team. He has crisscrossed the country in the past several months, speaking at Industry Canada seminars, chamber of commerce meetings and business breakfasts.


The e-business gap between Canada and other countries could be closed more quickly, he said, if governments and large organizations were to become bigger users of Internet-based business processes.


"The small businesses tell us that there isn't enough demand on the part of their customers, so they're not moving faster to get on with it," he said. "Large enterprises in Canada, like IBM or the banks or governments, can play a real important role in pulling the small and medium[-sized] business economy along faster."


Wetmore said the e-commerce gap continues to widen in the crucial business-to-business sector, which represents 80 percent of all e-business activity. According to IDC Canada, business-to-business transactions involving Canadian firms will grow at a rate of 67.8 percent through 2004, compared with 72.9 percent among U.S. firms.
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