SPEECHES
October 24, 2005
TORONTO, Ontario
2005/38
CHECK AGAINST DELIVERY
NOTES FOR AN ADDRESS BY
THE HONOURABLE JIM PETERSON,
MINISTER OF INTERNATIONAL TRADE, TO THE
CANADIAN ASSOCIATION OF IMPORTERS AND EXPORTERS
74TH ANNUAL CONFERENCE, TRADE SHOW AND GALA
Good morning. Thank you for that kind introduction and especially for the opportunity to
be with your members who represent so much of Canada’s international commerce.
Today I want to say a few words about three key elements of our international
commerce strategy: our trade relationship with the United States, our approach to
emerging economic powers, and the final push at the WTO leading to the Ministerial in
Hong Kong from December 13 to 18.
The world in which we trade and invest is changing—and we must embrace and shape
these changes in order to build a more prosperous future. Our national advantage is not
a given: it must be enhanced through the right business environment at home and
through the right strategies to meet head on the new challenges we face, and to
capitalize on the enormous opportunities that await us.
In today’s global market, Canada’s economy and public finances are national strengths
that increasingly set us apart. We have the best growth in living standards among the
G8 and the fastest job growth. We are the only G8 nation paying down debt, and the
only nation with eight consecutive balanced budgets.
You helped to build this record of achievement, and we will continue. Going ahead, we
must balance the budget, pay down our debt and pursue prudent monetary policy. This
is the most important commitment we can make to you and to the future prosperity of
Canadians.
Balancing the budget, however, was never an end in itself. We worked hard as a
Liberal government with all Canadians to create a surplus so we could build the type of
Canada that we all believe in and make the investments required in health care, early
learning and child care, our cities and communities, post-secondary education, seniors,
defence, and foreign aid.
To continue making these investments, we must focus on the basis of our future
economic prosperity: trade. As a nation of only 32 million people, we must access
foreign suppliers, foreign markets and foreign investors.
In terms of a Trade Department, our resources are limited compared to many of our
global competitors. This means tough choices. We must work smarter than the
competition to ensure that our trade and investment activities have the maximum
impact. And we must focus on the priorities in our commercial relationships.
Canada-U.S. Relations
Our number one priority remains the United States.
We are the largest trading relationship this world has ever seen. We trade $1.8 billion
worth of goods and services every day, 86 percent of our exports go to the U.S.,
300,000 people cross the border every day, a truck crosses the border every two
seconds.
The importance of this relationship is lost on no one. In fact, it is the very reason we
negotiated the NAFTA in the first place. We wanted a rules-based agreement with a
dispute settlement mechanism that would bring certainty to our primary trading
relationship.
For the NAFTA to have the integrity we all need, it is not good enough for the rules to
be followed only when they’re convenient. That is what has happened in softwood
lumber. Despite a unanimous NAFTA Extraordinary Challenge Committee ruling in
August, the United States refuses to revoke the duty orders and refund the $5.1 billion
in deposits. This position is unacceptable. The bottom line is that NAFTA cannot lead to
North American solutions if settlements under its provisions can be overturned by
special interests. NAFTA must be respected.
Softwood lumber and NAFTA are so important that the government will lead a take note
debate on this very issue in the House of Commons tomorrow evening to hear from all
parliamentarians. At that time I will lay out our three-track approach to softwood lumber.
First, we are moving ahead with litigation, focusing on the Court of International Trade
case where we are pressing the U.S. to revoke the orders and refund the duties.
Second, we have requested WTO authority to retaliate for over $4.8 billion. In the most
expeditious of circumstances, retaliation wouldn’t occur before mid-2006 and only after
extensive consultations with our business community—but it’s a serious option that we
won’t take off the table.
Third, we have engaged U.S. officials at the most senior levels—the Prime Minister
discussed the dispute with President Bush, most recently a little over a week ago. The
Prime Minister underlined the need for the prompt and faithful implementation of
NAFTA decisions—this is necessary if we are to preserve NAFTA’s integrity. Mexico’s
President Fox understands this—and we welcome the support he expressed for our
position when he was in Canada last month.
I have discussed it with Commerce Secretary Gutierrez and U.S. Trade Representative
Rob Portman and I have raised it with the U.S. Ambassador to Canada.
We are also taking this message to the American Congress. Ambassador McKenna
heads a fully engaged advocacy machine with a strong presence in the United States,
with seven new consulates and services for Canadians in 23 locations. We’ve also
opened a Secretariat in Washington to coordinate the efforts of Canada’s provinces,
territories and parliamentarians.
We will continue to enforce our legal rights under the WTO, NAFTA and before the U.S.
courts, and we will continue government-to-government advocacy, but we will also take
our case to the court of public opinion.
Every day I hear you say how important NAFTA is to your business, but I also need you
to tell your American customers, your American clients, your American suppliers and
your American investors. Most importantly, I need you to use your networks to tell
Americans that NAFTA is good for us and good for them—39 states count Canada as
their number one export market. Until this debate is brought into their backyard, nothing
will change. Together we must take this debate into their backyard.
What is most frustrating about U.S. protectionism is that it protects no one.
Rather than encouraging engagement, it allows an inefficient U.S. lumber industry to
turn its back on a rapidly changing global marketplace. Protectionism removes the
impetus for industry to invest, improve, adapt and be globally competitive.
Under the burdens of unjustifiable tariffs, our industry has become even more efficient
while searching out new markets around the globe. Just 10 days ago, my colleague
John McCallum, acting Minister of Natural Resources, announced that the entire
$2.5 million in funding for the Canada Wood Export Program would be targeted to the
Chinese market in 2005-2006.
Emerging Markets
Canada must take the need for global competitiveness seriously as we confront the rise
of new economic powers, especially the BRICs [Brazil, Russia, India and China].
For established players, the rise of new economic powers is a double-edged sword of
promise and predicament—and for Canada, the challenge is real. But we cannot turn
inwards and hope the world goes away.
Brazil, Russia, India and China have incredible potential for growth, but Canadians are
wholly under-represented in them. Although we account for almost 4 percent of world
trade, we represent only 1.4 percent of Brazil’s trade, 1.3 percent of China’s and less
than 1 percent of India’s. Clearly we have a long way to go.
Over the past year, I have led trade missions to Brazil, China and two to India, seeing
first-hand the amazing opportunities for Canadian business. Brazil is the leading
economy in Latin America. India is an economic powerhouse whose economy is
growing 8 percent a year. It is turning out two million university graduates a year,
380,000 of whom are engineers. China has driven down the cost of manufactured
goods and become the workshop of the world.
Canadian companies have to link into these global value chains. They ignore having a
China and India strategy at their own peril. Canadian jobs and prosperity depend on
Canadian businesses being globally competitive, and I ask for your help in carrying this
message to all Canadian businesses, big and small, that our economic future depends
on our ability to compete globally.
The Prime Minister has set ambitious goals for our relationship with these new powers.
Canada will double our economic exchanges with China and more than double our
exports to India and Brazil by 2010.
I know you are the ones who are taking the risks and doing the work, but we can help
you capitalize on opportunities in emerging markets by providing the right services, at
the right time, in the right places.
Already, we are negotiating science and technology agreements and foreign investment
promotion and protection agreements with India and China.
We also successfully negotiated expanded air transport agreements with India and
China to strengthen commercial ties and improve tourism and educational links.
Last Friday, the government announced the Pacific Gateway Strategy which commits
$225 million over the next five years to enhance our links with Asia Pacific economies
through investments in border services and transportation infrastructure. Our west coast
is a key nexus in transpacific trade, and building Canada’s Pacific Gateway is crucial for
the future prosperity of the whole country.
While these are significant accomplishments, to meet the Prime Minister’s goals we
have to do much more.
We need to make Canadians aware of the new challenges and opportunities of
emerging markets and the full range of services we provide to help Canadian business
thrive in foreign markets. We need to aggressively showcase Canada abroad—a very
un-Canadian thing to do.
More than that, we have to provide Canadian businesses, particularly small and
medium sized enterprises (SMEs), with the help they need to succeed.
Increasing SME success in global commerce is critical to Canada’s future prosperity.
SMEs are the backbone of employment in this country: 65 percent of private-sector
jobs, accounting for 43 percent of private-sector GDP. Yet they still account for only
35 percent of our export in goods. So while we will continue a wide range of support for
Canada’s big companies, it is companies with fewer than 500 employees that we need
to have engaged in the global economy.
To support SMEs, we need resources to get more people on the ground in China and
India. This will enable us to significantly enhance one-stop services for SMEs in difficult
emerging markets. The Trade Commissioner Service will increase the flow of actionable
commercial intelligence, business leads and information on relevant commercial
contracts, and enhance our capacity to provide timely, market-sensitive advice to SMEs
on successful business strategies in emerging markets.
In this new competitive global environment, it is not good enough for our Trade
Commissioners to provide information and advice alone. We must also be willing to
share the up-front financial risks of new markets. So many SMEs in Canada are on the
cusp of being export-ready, and we need to help them explore and develop new growth
opportunities in emerging markets.
This is my goal: to get many more of our SMEs into international commerce. And I will
be bringing forth a number of new measures to help make this happen.
WTO
Nothing will do more to open up the world to international commerce than an ambitious
outcome to the current Doha Development Round at the World Trade Organization.
As a trading nation, our overriding goal is to increase access to foreign markets for
Canadian goods and services.
In agriculture, this means reigning in the enormous subsidies of the U.S. and EU. We
want to eliminate export subsidies, eliminate or substantially reduce trade distorting
domestic support, and substantially enhance market access.
We are also fighting for ambitious trade liberalization in non-agricultural market access
and services; changes in the rules governing anti-dump and countervail; and new trade
facilitation measures. And in the end, it must be a development round, taking into
account issues that include preference erosion, revenue loss and trade-related
technical assistance.
The most important development aspect of Doha remains, however, creating a level
playing field in agriculture. Canadian and developing country producers must be able to
compete, not with the treasuries of the U.S. and the EU, but with one another.
Just two weeks ago today I was in Zurich. The U.S. tabled a serious proposal on cutting
its domestic support by 60 percent. I returned to Geneva last Thursday and was
disappointed, as were the other 10 nations present, that the EU did not come to the
table with acceptable proposals for enhanced market access.
Much work remains to be done and unfortunately, time is running out. But we stand
ready to meet anytime, anywhere to break the impasse in agriculture and achieve an
ambitious outcome overall.
In terms of non-agricultural goods, today almost 90 percent of industrial imports enter
Canada duty-free, but we must do more for real market access improvements in
Europe, Japan and key developing markets like China, India and Brazil.
Services account for roughly two thirds of Canadian employment and more than
$62 billion in exports. Canadian service exporters stand to gain from increased and
more secure access to foreign markets, and from more transparent and predictable
regulatory environments abroad. Canada is pursuing greater market access in key
foreign markets and emerging sectors, including financial services, environmental
services, telecommunications services and the movement of natural persons (mode 4).
The Doha Round also gives us a unique opportunity to bring an estimated 144 million
people out of poverty. First and foremost this means putting an end to the obscene
agricultural subsidies in the U.S. and the EU, which continue to deny essential
economic opportunities to the world’s poorest. Subsidies to cotton alone cost African
producers between $100 and $400 million a year in exports. Serious progress here
must be a prerequisite to call this a Development Round.
We are entering the final intensive phase of Doha negotiations and we are facing real
decisions critical to advancing the round.
I believe an ambitious outcome is possible, but only if the EU breaks the agricultural log
jam quickly and intensive negotiations on the entire package are sustained.
We are having success, but we can’t do it on our own. We need and want your support.
I encourage you to get involved, to advocate for a meaningful outcome, and to explain
why you need this Round.
Moving forward with trade deals will involve hard choices, but we cannot afford to stand
still.
Conclusion
We have to stay on top of the opportunities that are opening up before us. We need to
prepare now to meet the new challenges they present. In short, we are committed to
keeping Canada ahead of the curve, so that years from now, even in a world in which
much larger nations are competing for political and economic power, our standard of
living will continue to be among the world’s highest, and our quality of life will be second
to none.
I know that members of Canada's business community, including its importers and
exporters, are prepared to play their part. And I can assure you that we will play an
even bigger role in helping secure the future that is so important to Canadians.
Thank you.
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