SPEECHES

October 27, 2006
VANCOUVER, British Columbia
2006/17

CHECK AGAINST DELIVERY

NOTES FOR AN ADDRESS BY

THE HONOURABLE DAVID L. EMERSON,

MINISTER OF INTERNATIONAL TRADE AND

MINISTER FOR THE PACIFIC GATEWAY AND

THE VANCOUVER-WHISTLER OLYMPICS,

ON THE OCCASION OF THE ASIA PACIFIC SUMMIT

Good afternoon. It's a great pleasure to be here today. I'd like to thank the Asia Pacific Foundation and the Pacific Council on International Policy for the invitation.

Your summit's theme—“North America Meets Global Asia”—is very timely.

We are a trading nation. We are one of the most trade-dependent nations of the advanced industrial world.

As such, we have the most to gain from a strong trade performance. But we also have the most to lose from a poor one.

In today’s global economy, a strong trade performance must include strong and growing ties with Asia.

China and India are emerging economic giants. South Korea and the ASEAN [Association of Southeast Asian Nations] nations are taking off, and are becoming important economic partners. And Japan continues to hold its place as the number one economy in the region.

The new reality is clear. The world’s “economic centre of gravity” is shifting inexorably toward Asia.

For Canada, this should be good news. This country has long had real advantages in terms of intensifying our economic linkages with Asia.

One obvious advantage has been our well-established Asian ethnic communities.

The 2001 Census showed that almost 8 percent of Canadians are of Asian origin—significantly higher here in Vancouver. Australia, with 7 percent, is almost on par with us. Only 3.6 percent of Americans are of Asian origin.

For many years we have used our strong cultural links as a natural bridge to expanded commerce with Asia.

Canada also has a distinct geographical advantage.

Positioned on the Pacific Rim, our ports are much closer to the main commercial ports of Asia than most of the competitive American and Mexican ports.

Add to that “gift of nature” our increasingly integrated system of ports, airports, road and rail connections—connections that reach across Canada into the North American heartland—and you have another source of competitive advantage.

NAFTA [North American Free Trade Agreement] provides another critical advantage. It means that Canada has the potential to be an excellent location for staging economic activity that combines commercial linkages to the United States, Canada and Mexico as well as to Asia.

Canada saw the opportunity more than 20 years ago. We joined APEC [Asia-Pacific Economic Cooperation], we established the Asia Pacific Foundation, and we contemplated the Asia Pacific Gateway. But with what results?

This part of the picture is not so pretty.

In 2005, Canada's total trade with Asia came in at just under $100 billion. Compare this with Australia at $160 billion, or the United States, with over $1.1 trillion in total Asian trade.

Australia has almost twice as much total trade with Japan as does Canada and more than 2 ½ times more trade with India.

Less than 10 percent of Canada’s total exports make it into Asian markets. Our share of Asian imports has never risen above 2 percent in the past 15 years.

Chinese imports from Canada grew 2.3 percent in 2005, compared to 40 percent growth for Australia and 9.14 percent for the United States.

Not only are we not performing in Asia, we are also under serious competitive threat from Asia in North America. We now forecast, for example, that in 2007 China will replace Canada as the number one exporter to the United States.

And Asia consistently represents less than 2 percent of inbound FDI [foreign direct investment] into Canada. More generally, our overall share of FDI in North America has been declining for a decade or more.

Let’s be very clear. This trade and investment under performance did not just happen. This is not an issue that just arose this year. It’s longer term and it’s systemic.

And it’s not just an issue with Asia. It’s part of a larger trade malaise that has seen Canadian export growth declining for the past decade. Take energy out of the numbers and we’re in negative territory.

Explanations are also complex and debatable, but there are a number of areas of direct concern to me.

First, Canada has not kept up with the competition in terms of trade liberalizing initiatives. And our preferred multilateral approach to trade liberalization under the WTO [World Trade Organization] has clearly stalled.

Without a successful WTO round, countries are falling back to regional and bilateral arrangements. Worse than that, we are seeing competition for trade bilaterals that threatens the level playing field and transparency that the WTO was to deliver.

I’m not just referring to big ticket FTAs [Free Trade Agreements], but to

•         air agreements

•         tax treaties

•         FIPAs [foreign investment protection and promotion agreements]

•         and other mechanisms for trade and commercial intensification

Canada has signed 3 FTA deals in 10 years. The last one was 5 years ago with Costa Rica. The United States has signed 15 deals in the past 5 years. Australia, a late starter, has concluded 3 FTAs in the past 3 years.

Compare the total number of FTAs that Canada has signed to those of Mexico and Chile. Mexico has 12 FTAs covering 43 countries. Chile has 19 FTAs covering 53 countries.

Canada has signed 4 FTAs covering 5 countries. That’s 4 FTAs compared to 12 and 19 for Mexico and Chile.

Today, Australia is pursuing 5 more FTAs (ASEAN, China, Malaysia, Gulf Cooperation Council and UAE [United Arab Emirates]). The United States is pursuing 8 FTAs, 3 with Asian countries.

We need to be clear. Every bilateral advantage our competitors have that Canada does not have costs our companies and costs us economically.

What about our geographical advantage as an important transportation Gateway between Asia and North America?

Today, our ports in B.C. have only 9 percent market share of trans-Pacific container traffic moving into the United States. The U.S. Pacific Northwest (Portland and Seattle) has 19 percent.

The lion’s share goes through California, with 10 percent going through Oakland and 62 percent going through L.A. [Los Angeles] and Long Beach. Nine percent obviously is not an indication of a truly successful Gateway.

All of this should be taken as a wake-up call.

We’ve ridden the wave of a strong macro economy—much of it due to energy and commodity markets.

Our fiscal situation is exemplary.

And we’ve had over a decade to harvest the low-hanging fruit—the economic opportunities that NAFTA made readily available.

But the rise of Asia has been a tectonic shift. We have not “walked the talk” on our advantages with Asia, and we are missing a generational opportunity.

I can tell you, the Prime Minister understands that, I understand that, and this government understands that.

We have to make up for lost time.

Let's take a look at where we're going on the Asia-Pacific Gateway and Corridor Initiative.

The Prime Minister recently announced federal contributions totalling $591 million for over a dozen Pacific Gateway projects. Of this, $321 million will be committed to immediate projects on infrastructure, security and private sector opportunities.

We also included a “fast-track” process to decide where to best allocate the remaining $270 million over the next year.

But I want to be emphatic. The Asia-Pacific Gateway initiative is not a $600 million project.

•         It's many billions in infrastructure

•         It's a series of border initiatives

•         It's a supportive regulatory framework

•         It's a focused approach to integrating the hundreds of disparate elements of an efficient transportation and logistical system into a practical and coherent strategy.

Our job as government is to create the framework for further commitment of private capital. And to work in partnership with governments and private industry to drive a successful Asia-Pacific Gateway and Corridor Initiative.

Great transportation and logistics are clearly essential for trade success, but without trade liberalizing framework agreements, they aren’t enough.

You can get the product to the country but you can't get it in. You can make investments, but you have no protection.

We've had a number of trade and investment agreements under negotiation for years. I've asked my officials to compress the time frame for negotiations that have been too long in the pipeline. Can we move ahead on some? Let's find out very quickly whether it's worthwhile to keep going back to the table.

If not, let's get on with new priorities—stop spinning our wheels.

China, Japan, Korea, India, Singapore and Indonesia must become more active focal points for trade policy attention.

Currently we're negotiating Foreign Investment Protection and Promotion Agreements with China and India. These are essential building blocks for building and accelerating trade and investment with these economic dynamos.

We're pursuing free trade talks with Singapore and Korea. Today, I'm also participating in a business roundtable on opportunities in the ASEAN region—to find out what the real, tangible opportunities are. I've already had one focused on China, and one focused on India.

We've also completed improved air bilaterals with China and India, and we intend to pursue further open skies agreements with countries in Asia and around the world.

Don't get me wrong. All of these negotiations take time. But what I can tell you is that our government is focused—focused on real results—real tangible initiatives to strengthen Canada's trade and competitiveness.

My department is also working closely with Canada's business community to develop country-specific commerce strategies in key Asian markets.

These strategies will respond to the realities of global commerce—realities like S&T;, value chains and investment. And they will closely match Canadian expertise with Asian demand.

We will do a better job of linking our S&T; community—universities, research institutes and the private sector—with the rapidly growing Asian networks of innovation.

We also need to develop a more targeted investment strategy for Asia, for both inward and outward investment. Canadian companies need to build linkages into international global value networks. They need to make investments in Canada and abroad if they are to become successful players in the new world economy.

Government can help. We can help a lot. But business needs to step up.

My department is examining the best locations in Asia to post more trade commissioners and sectoral specialists to assist Canadian business.

Our trade commissioners will act as world-class intermediaries for Canadian business, helping them open doors that others can't.

I believe that in order to succeed in Asia, we must also succeed in North America.

We've done extremely well under NAFTA over the past decade.

We're creating cross-border clusters and supply chains that are becoming highly competitive and can become stronger still.

Through NAFTA and SPP [Security and Prosperity Partnership], we will need to look at how Canada, the U.S. and Mexico can go even further to tackle Asian opportunities and threats from a competitively powerful North American platform.

Today our government is taking further steps to support the people and organizations that are taking direct action to improve our Asia Pacific linkages.

That's why I'm pleased to announce today, on behalf of the Minister of Western Economic Diversification, The Honourable Carol Skelton, an investment of $1.52 million for three key projects.

First, the United Chinese Community Enrichment Services Society—or S.U.C.C.E.S.S.—will receive over $356,000 to renew the Business Links for their New Immigrants Program, to give new immigrant entrepreneurs the support they need to be successful.

Second, S.U.C.C.E.S.S. will receive an additional amount of over $938,000 to expand its “Gateway to Asia” program, which links Western Canadian companies with new Asian immigrants who can facilitate new business relationships with potential buyers and investors in Asia.

Third, the Asia Pacific Foundation will receive over $220,000 to bring together key stakeholders in seven sessions across Canada to build business awareness of opportunities in the Asia Pacific region.

Conclusion

It’s clear that Canada does need an aggressive, targeted trade and investment agenda for Asia. What we’ve had, has not worked.

There is a lot at stake. If we’re having a hard time grappling with the ramifications of this, just imagine what our kids will face ten, twenty, thirty years down the road.

We need to think carefully about the kind of competitive edge our kids are going to need—and how we can achieve it.

I’m here today to tell you that this government takes this challenge very seriously. The Prime Minister and his entire Government are committed to our success in Asia.

My colleague [Agriculture Minister] Chuck Strahl recently visited China to discuss agriculture issues. Natural Resources Minister Lunn is going in the next few weeks. And, I’m planning a trip to China in the New Year, where I hope to make some headway on a variety of trade issues such as ADS [Approved Destination Status]. I know [Foreign Affairs] Minister McKay would like to join me, and we are working together on that.

In two weeks, the Prime Minister, Minister MacKay and I will be in Vietnam for the APEC summit.

You can be sure, Canada will be visible, active and focused on building the Asian linkages that are so critical to Canada’s future.

Thank you.