SPEECHES

CHECK AGAINST DELIVERY

NOTES FOR AN ADDRESS

BY

THE HONOURABLE PIERRE S. PETTIGREW,

MINISTER FOR INTERNATIONAL TRADE,

TO

THE NATIONAL PRESS CLUB

OTTAWA, Ontario

May 11, 2000

Good afternoon, and thank you all for coming. Today is somewhat of a historic day because this morning my Parliamentary Assistant Bob Speller tabled in Parliament the first of what are intended to be annual reports on Canada's foreign trade and investment. We have kept it simple, calling it "Trade Update 2000: First Annual Report on Canada's State of Trade."

This report is important because it demonstrates just how successful Canada has been in competing on the world stage. Unfortunately, not enough Canadians are aware of just how competitive and successful we are in international markets. One of my key goals, aside from improving still further on our outstanding performance, is to address this lack of knowledge.

As you would expect, reports such as this are, by necessity, full of numbers and statistics. They speak of surpluses and balances, ratios and rates. But as my colleague Paul Martin said recently, countries are made up of people, not economic indicators. We must never forget that behind these numbers are individual Canadians -- Canadians who are holding down jobs, starting new businesses and building better lives for themselves and for their children because of our trade with the world.

Quite simply, trade is first, foremost and always, about people: people finding rewards for their efforts, markets for their products and hope for their future.

The pursuit of new markets and new business abroad enhances the competitiveness of our companies as they take on the very best from around the world.

Trade is also contributing to the more intangible aspects of our national life: for example, enhancing our confidence as our companies succeed in tough international markets and contributing to a higher quality of life for Canadians and a greater range of choices for consumers.

Trade is expanding our frontiers and our fortunes and advancing our standing around the globe, as we export not only our products, but also our values.

In 1999, we saw strong evidence that all of these benefits were likely to continue, as the volume of our exports continued to grow. In fact, 1999 marked the eighth straight year in which we set a new record for exports -- truly remarkable period of success, which is a tribute both to the marketing skills of our businesspeople and to the national commitment on the part of Canadians to produce high-quality goods and provide first-rate services.

As we look at the details of this report, two realities become readily apparent.

The first is that Canada continues to record trade and investment numbers that are truly staggering. Every single day our two-way trade with the world amounts to over $2.2 billion. Two point two billion dollars worth of business a day! Seven days a week, 52 weeks a year.

And the attractiveness of Canada as a place in which to invest, to build a company, to live and raise a family, was demonstrated by the more than $36 billion in direct international investment which poured into Canada last year.

That brings the total stock of foreign direct investment in Canadian enterprises to $240 billion. That's $240 billion that's at work right here in Canada, creating jobs, stimulating research and development and providing opportunities for Canadians from coast to coast to coast.

Overall, the trade picture is strong -- and getting stronger.

Our exports increased by more than 11 percent in 1999 -- reaching $410 billion. To put it into perspective, that's 43 percent of our entire GDP [gross domestic product]. And this growth has been taking place for some time. Ten years ago, our exports represented 25 percent of our GDP, so we've increased exports from 25 percent to 43 percent in one decade. By comparison, the U.S. exports about 11 percent of its GDP and Japan, 15 percent.

The payback of this volume of trade to Canada -- where one out of every three jobs depends on exports -- has been obvious. The 427 000 jobs that Canadians created last year was the highest number of net new jobs created since 1979 and can be attributed directly to our success in global markets. In fact, most of the 2 million new jobs created since 1993 are related to our growth in trade.

That is why trade is so vital to our economy. Not because it allows us to post huge numbers on the board, but because it allows us to create jobs -- one at a time and by the thousands -- for Canadians right here at home.

So that's the first thing I would highlight -- the size and importance of trade to our national life.

The second point I would make is the dramatic transformation toward the "new economy" which is now beginning to show up in the statistics. This trend began several years ago, but really picked up steam in 1999.

This shift is showing up in the industrial sectors and the mix of our exports. The export of equipment for example, in areas such as telecommunications, grew by 11 percent in 1999.

The trend toward the new economy is also evident in the large increase -- about 24 percent -- in the highly sophisticated and competitive automotive products sector.

Exported research and development services have increased an average of 15 percent per year from 1993 to 1999. Last year alone, exports of services which generate royalty and licence fees grew 31 percent.

Indeed, fully two-thirds of our exports are now in high value-added areas!

It is clear that Canadian companies are taking on global competitors in knowledge-intensive sectors and showing that we can compete with anyone, anywhere. This bodes very well for our continued success as a trading nation in a modern economy.

Indeed, all of these statistics are good news -- for Canadians with jobs as well as those seeking jobs, for consumers, for companies and for the future of our economy.

But while our trade performance in 1999 is justifiably a source of pride, it must not become a justification for complacency.

The fact is that there is still tremendous untapped potential, and the challenges that await us are daunting. If we don't continue to progress, to think creatively about new products, services and approaches to markets, we will surely be left behind by those who do.

Aside from the obvious quality of our products and services, and the capability and reputation of our businesspeople, one of the keys to our export success is the network of international trade agreements that we have negotiated.

These agreements -- for example NAFTA -- have worked well. And while we face real challenges as we seek to expand the scope and strength of the WTO [World Trade Organization], this is something to which the Government of Canada is firmly committed.

We can and we must work hard to achieve our goals for the WTO -- goals such as greater transparency and a greater sensitivity to the concerns of developing nations. In the coming year, these will be a priority on the policy side of our agenda.

In addition to trade agreements, the government has in place literally hundreds of accords aimed at facilitating trade and investment -- everything from visa and double-taxation agreements to foreign investment protection.

These, too, must be expanded and strengthened so that our companies will not be impeded in their efforts to conduct business abroad or to attract investment to Canada.

Going forward, we must continue to ensure that Export Development Corporation [EDC] has the capacity to provide innovative financing arrangements so that Canadians can take the next step in their pursuit of new markets.

And we must continue to invest in our trade commissioners and their affiliates in more than 130 posts around the world. I am very proud of the outstanding job our trade commissioners do -- a view that is reflected by the high satisfaction rating they receive from Canadian companies in our customer surveys.

In keeping with our tradition of excellence in the Trade Commissioner team, I am pleased to announce today that Mr. John Gero will assume responsibilities as ADM [Assistant Deputy Minister], International Business and Chief Trade Commissioner at the start of next week. John brings more than 20 years of experience to this position, including time in Geneva as a member of the Canadian delegation to the Uruguay Round. He has been a valued advisor these past months and I want to congratulate John and wish him well as he continues his public service in this important position.

Strengthening the international rules-based trading system, creating the appropriate infrastructure through international agreements, supporting EDC and our trade commissioners are all key challenges. But there are others.

Here at home, we also have to encourage more companies to either begin or expand their exporting efforts. While it is true that a substantial amount of our exports are generated by about 50 large companies, it is also true that the vast majority -- in fact some 70 percent -- of the companies that are exporting are small, with sales of less than $1 million.

Imagine what the impact on jobs would be if each of these businesses could increase their exports by an additional 10 percent -- and hired even just one additional employee! This is a goal we can reach. And it is a goal we must set.

The smaller to mid-sized companies of today are the exporting powerhouses of tomorrow. That is why we need to support them as much as possible now. This means not only encouraging more of them to begin, but also helping all of them to succeed.

We also need to expand our efforts in emerging markets, for those are the real ground floor opportunities of today. And if we are to profit from them, our presence must be felt and it must be felt early.

Finally, we must do a better job of selling Canada as a low-cost place in which to invest. As last year's report by KPMG demonstrated, Canada offers a cost advantage of between 5 and 15 percent compared to the United States in such high-tech areas as software, electronics and telecommunications.

Nor did the Canadian advantage stop there. According to the KPMG report transportation costs were 13 percent lower than in the U.S.; electrical costs, 24 percent less; building construction costs, 15 percent lower. And our telecommunication and Internet charges are the lowest in the G-7.

Overall, the cost of doing business in Canada is just 57 percent of what it is in the U.S. and 59 percent of what it is in Germany.

When you combine all of these advantages with a highly skilled labour market, universal health care and access to the vast North American market, you have a very attractive investment destination -- and we simply must make that case more forcefully abroad.

In short, this is no time for self-satisfaction. As the saying goes, there is nothing harder on your laurels than resting on them.

Rather, now is the time to redouble our efforts; to take our trade to the next level and to build on the tremendous foundation we have laid. I and the Department of Foreign Affairs and International Trade look forward to working with Canadians as we add to our already impressive successes abroad.

I have every confidence that in the year ahead, we will do just that.

Thank you.