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NEWS RELEASES

January 29, 2002 (1:30 p.m. EST) No. 9

CANADA STILL NUMBER ONE

International Trade Minister Pierre Pettigrew and Industry Minister Allan Rock today welcomed the results of the new business study, Competitive Alternatives: Comparing Business Costs in North America, Europe and Japan, which ranks Canada as the leading cost-competitive industrial country. The study was conducted by the management consulting firm KPMG. The 2002 study marks the third consecutive time that Canada has come out ahead of other industrialized nations.

"The KPMG study shows that Canada is still the low-cost leader among industrial nations," said Minister Pettigrew. "As the overall lowest-cost country for conducting business, Canada offers distinct and compelling advantages to those global firms seeking the best location to establish or expand their operations."

The 10-month international study of leading industrial countries provides comparative after-tax costs of starting up and operating a business for a period of 10 years, taking into account factors such as labour costs, taxes, transportation costs, energy costs and facility costs.

"Canada has created one of the most attractive investment climates in the world," said Minister Rock. "When international investment comes to Canada, it means Canadian jobs and stronger Canadian communities."

Canadian cities ranked higher than many of their international counterparts. In particular, Canadian cities scored higher than U.S. cities in all five North American regions and Canada averaged 14.5 percent cost savings for international investors over the U.S.

The KPMG study was sponsored by 45 economic development agencies in Austria, Canada, Italy, the Netherlands, the United Kingdom and the United States.

The study is available at http://www.competitivealternatives.com

The Web site also features an interactive costing model that can determine the impact of fluctuating exchange and interest rates.

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A backgrounder is attached.

For further information, media representatives may contact:

Sébastien Théberge

Office of the Minister for International Trade

(613) 992-7332

Media Relations Office

Department of Foreign Affairs and International Trade

(613) 995-1874

Selena Beattie

Office of the Minister of Industry

(613) 995-9001

Marcel Gaumond

Investment Partnership Canada

(613) 941-9268

This document is also available on the Department of Foreign Affairs and International Trade's Internet site: http://www.dfait-maeci.gc.ca

Backgrounder

KPMG's 2002 report, Competitive Alternatives: Comparing Business Costs in North America, Europe and Japan, shows that Canada is setting the pace globally as the most cost-effective nation in which to do business.

The 2002 study marks the third consecutive time that Canada has come out ahead of other industrialized nations. Similar KPMG cost studies were completed in 1997 and 1999.

The report presents the most thorough business cost analysis ever to compare leading industrial countries. It examines a number of industries in 86 cities in Austria, Canada, France, Germany, Italy, Japan, the Netherlands, the United Kingdom and the United States.

Locations are compared on an after-tax basis, based on the cost of start-up and 10 years of operation.

Canada ranked first in seven out of 12 industries studied and posted impressive advantages in manufacturing, research and development, software and corporate services.

Canada has a 14.5 percent cost advantage over the United States, with overall costs in specific Canadian cities generally 10 to 20 percent lower than their regional U.S. counterparts. Even when applying a hypothetical 20 percent increase in the value of the Canadian dollar, Canada's cost advantage over the U.S. cities exceeds five percent.

Most European countries now rank ahead of the U.S. in cost competitiveness. As in the 1999 study, Japan has the highest business cost structure among the leading industrialized countries.

The 2002 study is being released after a significant period of change in international business costs between 1999 and 2002.

Key Findings

Breakdown by country: Based on a cost index with the U.S. equal to 100, Canada is the lowest-cost country, as follows:

Breakdown by business operation: Canada ranks at the top of seven industry sectors as follows: