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NOTES FOR AN ADDRESS BY

THE HONOURABLE PIERRE PETTIGREW,

MINISTER FOR INTERNATIONAL TRADE,

TO THE ALLIANCE OF MANUFACTURERS AND EXPORTERS

OF NEWFOUNDLAND AND LABRADOR

ST. JOHN'S, Newfoundland

May 24, 2000

I would like to thank the Alliance of Manufacturers and Exporters of Newfoundland and Labrador, co-organizers of this luncheon and host of this morning's exporting seminar, and especially your Chair, Lorne James, who has been most gracious to me and my delegation since we arrived here yesterday.

This opportunity is particularly welcome, because I see this as an excellent follow-up to our Team Canada Atlantic business mission to Boston and New England earlier this month. The participation of Sandra Kelly and Premier Tobin helped us to showcase Newfoundland's many attractions.

It's always a pleasure to be back in St. John's, and I thank you for your hospitality. I have always admired the spirit and dynamism of the good people of Newfoundland and Labrador. I must say, however, that since becoming Trade Minister last August, I have gained an even deeper respect for your character and strength of will, as I have learned more about the way you have been reshaping yourselves to deal with the new economy and cope in the globalized world.

Even though Newfoundland and Labrador is Canada's youngest province, it is one of North America's oldest trading centres. Europeans were frequenting this harbour as far back as the Italian Renaissance, around the beginning of the 16th century.

Basque, French, Spanish, Portuguese and English all engaged in the fishery along the coast long before Canada became a country.

And, of course, we can't forget the Vikings -- the very first Europeans to visit our shores 1000 years ago -- as the remains of the l'Anse-aux-Meadows settlement remind us.

So I guess you won't be too surprised to see somebody who was born in Quebec City, went to school in England, lives in Montreal and works in Ottawa.

But when I travel abroad, as I am often required to do, and I see that maple leaf, I feel extremely proud of being a Canadian. Not a French-Canadian, an English-Canadian or an Italian-Canadian. A Canadian.

Being a Canadian, with our culture of respect for diversity and our experience of working together toward common goals, has always been a tremendous advantage everywhere in the world. In this age of globalization, it is an even greater advantage.

It is no accident that everywhere I go, I can see that Canadians are known as efficient, dynamic, friendly -- and as fair traders.

Unfortunately, and ironically, that is less well known here in Canada. That is why, since before Easter, I have been pursuing this cross-Canada outreach tour in eight local communities from coast to coast. My goal is to meet with people who are interested in international business, to discuss the importance of trade in the daily lives of Canadians and to outline the client services that the Government of Canada offers to exporters and investors.

Too often, we tend to think about trade as something that happens out there across the globe, rather than right there, across the street. Certainly, Canadians are selling their goods and services around the world, but what's important is that the benefits are being felt right here, in our local communities.

Trade Policy

Recent years have seen dramatic and exciting changes in the international trade arena. Around the world, old barriers are falling down and new opportunities are opening up. Markets that had been closed for centuries are now opening their doors.

For a trading nation such as Canada, with a relatively small domestic market, these developments are to be welcomed.

They create significant opportunities for Canadians to expand their horizons, increase their markets and grow their businesses.

In order to facilitate the entry of our goods and services into key markets, the Government of Canada has worked hard, signing free trade agreements with the United States and Mexico, Israel and Chile. These agreements have helped us immensely. I know that the media like to point out the jobs that have been lost because of free trade. But I can tell you that the jobs that have been created have greatly outnumbered those that have been lost.

And Canada has been on the front lines of opening up trade around the world, both through our involvement in global bodies, such as the World Trade Organization [WTO], and through regional trade initiatives such as the Free Trade Area of the Americas [FTAA].

This emphasis on opening up markets is understandable, because as any business person knows, you can't sell if you can't get in.

So our priorities have been clear: obtain secure access for Canadian companies; ensure that the rules are fair; and create a level playing field.

That's the big picture, the trade policy side of the equation.

Export Promotion: The Role of Trade in the Canadian Economy

But there is another side, equally important to our long-term prospects and prosperity -- and that is trade promotion. And it is export promotion that I would like to spend a few minutes discussing with you here today.

Without trade, it is unlikely that we would have been able to eliminate the deficit, or to bring unemployment to its lowest level in a quarter of a century, or to create an economy that will surpass the trillion-dollar mark this year.

Without trade, it is doubtful that we would enjoy the standard of living we do, or that we could sustain a social system that reflects our values and binds us together as Canadians.

The fact is that it is trade that has powered our economic performance in recent years -- a performance that The Economist magazine has called "The Maple Leaf Miracle."

As recently as May 14, The New York Times called Canada "home to some of the world's most successful high technology companies...its economy and stock market are on the prowl again." In that same business page article, the chief economist of Merrill Lynch Canada is quoted as writing that today "Canada's economy is arguably the strongest it's been since the mid-1960s."

Indeed, over the past decade or so, Canada has emerged as one of the greatest trading nations in the world. We export much more proportionately than the United States or Japan, two of the biggest economies and trading nations in the world. As a result, our economy is now inextricably connected to our ability to sell our goods and services abroad.

In fact, 43 percent of our GDP is now generated by trade. Put another way, we export almost half of every good we produce and every service we sell.

Last year, Canada's exports grew by 11.3 percent, or nearly double the rate of the economy as a whole. What this suggests is that a new economy -- led largely by trade -- is propelling our prosperity and, just as trade has been the engine of growth in recent years, it will continue to play that role in the years ahead.

The impact of this on job creation in Canada has been enormous. One out of every three jobs in Canada is now tied to trade. Look around you and think about that -- one in three!

Two weeks ago, I had the honour of releasing the first Annual Report on Canada's State of Trade. In my speech on the day of the tabling of the document (called Trade Update 2000) in the House, I underlined the fact that Canada continues to set record trade and investment numbers.

I also pointed out that every day of the week, Canada does an average of $2.2 billion worth of business -- exports and imports of goods and services -- with the world. That's an extraordinary amount of business that goes on every day of the week, every week of the year!

Recognizing the importance of trade to our economy, the recent federal budget reduced both personal and corporate taxes and made a number of other changes aimed at helping companies like yours, especially smaller firms, attract and retain skilled workers.

Clearly, without export sales -- without the opportunities they bring, the demand they generate and the jobs they create -- our economic position would not be as strong as it is.

But if we are to continue to generate a high standard of living -- if we are to continue to provide good jobs and bright futures for Canadians -- we need to work hard to promote the benefits of international business and ensure that Canada remains one of the greatest trading nations in the world.

Now, this requires input from all of us. For our part, the Government of Canada will continue to negotiate trade agreements, seek access to the most dynamic markets of the globe, and ensure that our companies are treated fairly.

Local Importance of Trade

Trade also plays an important role in the spectacular turnaround of the Newfoundland and Labrador economy. For the second year running, your province posted the strongest growth of any province in 1999. Significantly, gains in exports and capital investment powered your real GDP growth of 5.3 percent registered last year. The value of exports grew 13.1 percent, and capital investment increased 21 percent.

The export of Newfoundland energy products alone expanded by almost 40 percent, while high-value seafood exports jumped 34 percent. The marine sector's future position looks robust, with ocean projects like Terra Nova and White Rose offering so much promise, both for employment and for technology.

While over two thirds of Newfoundland and Labrador's imports come from inside Canada, almost 75 percent of its manufactured shipments are exported to international markets.

Recent export market research also indicates that Newfoundland and Labrador companies are expanding into new geographic markets, especially within the service sector.

EDC [Export Development Corporation] estimates that exports from Newfoundland and Labrador will grow this year between 8 percent and 10 percent from 1999, followed by a further 4 percent to 6 percent growth in 2001.

St. John's is also becoming well known as a good place to do business. A 1999 study by KPMG identified this city as one of the most cost-effective business locations in North America, Europe and Japan. It ranked first among 42 cities studied in 1998, and second among 64 cities in 1999.

Importance of Small and Medium-sized Enterprises

Despite your province's and the country as a whole's success in international markets, I still feel that we need to get more small and medium-sized enterprises (SMEs) selling abroad, and not just leave it up to the big companies to generate those impressive trade numbers.

In 1997, for example, just 4 percent of exporting companies accounted for 82 percent of all exports. In other words, a handful of companies were doing most of the exporting -- and reaping most of the rewards!

But we know that many smaller and mid-sized companies will become the export powerhouses of tomorrow. Indeed, SMEs are the engine of job growth in the Canadian economy -- over 90 percent of new jobs over the past decade have been generated by SMEs.

Here in Newfoundland and Labrador, the small-business sector accounts for over one third of all paid employment. This sector is creating jobs at a rate faster than any other, accounting for about 95 percent of all net job creation in the province.

I strongly encourage those of you in small and medium-sized businesses to join your fellow Canadians in international markets and open yourselves to the benefits that exporting can bring.

You'll have plenty of good company -- 70 percent of exporters have sales of less than $1 million. They have discovered that speed and quality, not size or volume, can determine export success -- so don't limit yourselves by thinking that you need to be big to be successful.

Educating Canadians about the Importance of Trade

The polls also tell us that Canadians don't have a clear understanding of the kinds of things we're exporting. Too many people still view Canadians as "hewers of wood and drawers of water" rather than the dynamic, technologically driven economy we have become.

The fact is that, over the past 20 years, commodities as a share of total Canadian exports have fallen from about 60 percent to just over one third. Commodities now represent only about 12 percent of our GDP!

There is no doubt that Canada will continue to be a leader in resource exports. But even here, our ability to compete globally will be dependent on technology and know-how. I am told, for example, that more mining exploration is done from space than on earth -- so our skills, our technologies and our innovation will be essential even in the traditional resource sector.

In your own province, of over 1000 companies currently exporting products from the province, more than half of them are value-added manufacturing companies. They sell their products in more than 60 countries worldwide.

After this luncheon, I will be visiting one of Newfoundland and Labrador's great success stories, ZeddComm, which is also one of Canada's fastest growing information technology companies. ZeddComm is very active in the United States, and has recently opened its first U.S. office in Irvine, California.

What I find even more interesting in ZeddComm's success is that it is attracting Newfoundlanders back home from other provinces, an eloquent example of how success on foreign markets can help the development of our own communities.

Today, more than two thirds of Canada's exports are in highly value-added areas such as machinery and equipment, while exports of services continue to expand.

What this means is that Canada is ideally positioned to benefit from two powerful trends: the emergence of the knowledge-based economy, and the opening up of markets keen on acquiring what we have to sell.

We also have the invaluable advantage of being next door to the world's biggest, richest and most competitive economy. Canada has a bigger share of the U.S. market than any other country in the world -- half again bigger than Japan. Very few Canadians know that our position in, and access to, the U.S. market is the envy of every country on earth.

Newfoundland and Labrador exporters and investors know this market well. But, as was pointed out at this morning's export seminar, there is room for many more of them across all market regions of the United States.

Trade Services

When you do go exploring new markets abroad, you will find that you are not alone. The Government of Canada stands ready to help, and we have created something called the Team Canada Inc business services network of federal government departments and agencies, aimed specifically at giving fast and easy single-point access to small and medium-sized businesses just like yours.

Team Canada Inc offers the ExportSource Web-based search engine and a national 1-888 toll free number for small business to obtain assistance. ExportSource can be consulted by anyone with a PC for market research, trade statistics, information on export financing, contacts and regulations, and details about trade shows and missions.

Team Canada is represented right here in St. John's by a dedicated team of about 10 people at your local International Trade Centre.

The best known arm of Team Canada Inc is the Canadian Trade Commissioner Service based in our embassies and consulates. There are now more than 500 trade officers in more than 130 offices in Canada and around the world offering six core services that business tells us are indispensable. These trade officers are ready to plug you into opportunities, provide you with market research and promote your products or services with local business people.

I am today announcing that the Trade Commissioner Service has just launched its second annual client survey. Hundreds of our clients, including Newfoundland companies -- perhaps some of you here -- will be interviewed by a third party over the phone. We look forward to this feedback so we can continue to improve.

Recent client surveys indicated that you, our clients, value this service immensely and would like us to build our capacity in this area. Last year, 81 percent of those who used the trade offices abroad reported that they were fully or somewhat satisfied.

That is why I announced recently that I would be adding 10 new trade officers in the coming year where business tells us they are most needed -- in the United States, Western Europe, China, the Middle East, Western Africa and South America.

How do you connect with Canada's global network abroad? By adding your name to the Department of Foreign Affairs and International Trade's WinExport client management database, you will find yourself on the radar screen of over 100 of our offices worldwide, so you are better served and kept in mind when our trade officers find business leads or opportunities you should know about.

Another way to access the export development services of Canada's embassies is the Trade Commissioner Web site, InfoExport, through which you can download -- free of charge -- more than 500 market studies, covering nearly every major market in the world.

Every month, the site's 50 000 visitors can get easier access to our trade offices and people -- on the ground and abroad.

Another key Team Canada Inc service provider is EDC. Export Development Corporation specializes in helping companies manage the risks of exporting through financing and insurance products. Its mandate is to absorb some of the risks that you face in selling abroad to countries or buyers that you may not know too well . EDC has a specific team designed for small exporters. It supported over $40 billion in exports last year, and provides very quick decisions.

Recognizing the growing volume of exports from this region, EDC recently announced the opening of a new office here in St. John's, and the adding of resources to support local exporters and investors.

Trade Missions

Last, but certainly not least, there are the Team Canada trade missions. Since 1994, these missions have opened doors for more than 1800 companies, helping them to secure deals worth more than $24.4 billion.

The Prime Minister announced recently that he will be leading a sixth Team Canada mission, to China, from November 18 to 26, 2000. He will be accompanied by Canada's provincial premiers and territorial leaders, myself, and a delegation of business people.

Companies that have profited from their participation in previous Team Canada missions include:

Genesis Organic Inc. of Corner Brook, which signed a $2 million joint venture agreement in Chile during the Team Canada 1998 trade mission;

Highland Homes, of Cottlesville, which signed an agreement during the same 1998 mission to supply 840 wood homes to a Chilean town being built from scratch according to new urban planning principles;

Atlantis Marine Inc., of St. John's, which signed an agreement during the Team Canada 1999 trade mission to promote and distribute its products in Japan.

Many other local companies are discovering foreign markets, such as:

Design Management Group, which started marketing its engineering services internationally just five years ago; today, approximately 40 percent of the firm's revenue and staff of 30 people are due to exporting activities;

Information Services, also from St. John's, which derives almost half of its sales from exports and expects to greatly increase foreign sales within the next 18 months;

Beothic Fish Processors, which has an office in St. John's and employs 125 people and 1000 fishermen, and exports 90 percent of its production;

Xwave Solutions, based in St. John's, whose international sales went from zero to $7 million in four years; and

True North Springs Ltd., which exports 15 percent of its production and is opening new foreign markets.

Over the coming year, I will also lead international trade missions that I believe could be very useful to companies and individuals wishing to explore or expand into new markets.

I will lead a trade mission to Melbourne and Sydney, Australia, from May 29 to June 3, 2000. This one will focus on high-technology sectors, including information technology, communications and biotechnology, as well as other advanced technologies such as aerospace. This business mission will provide an excellent opportunity to highlight the trade and investment potential between our two countries and to expand co-operative approaches in strategic areas such as e-commerce. As you may have heard, Canada and Australia recently announced a joint statement on global e-commerce that articulates a shared vision, as well as a program of co-operation for the growth of global electronic commerce.

Later, from June 28 to 30, I will lead a business delegation to Russia. My goal is to forge a working linkage with the new Russian administration; to address a number of important trade and investment problems; and to chart a course for future co-operation in the commercial and economic arena. While in Moscow, I will co-chair a plenary meeting of the Canada-Russia Intergovernmental Economic Commission, which is an industry-led bilateral forum that aims to foster trade and economic relations, investment and the transfer of technology between Canada and Russia.

I will also lead a mission to Central Europe that will include the Czech Republic, Slovakia, Hungary and Slovenia. A delegation of business people will join me from September 11 to 15, representing such industries as information technologies, communications, construction materials, health products, environmental products and services, and financial services. With this mission, I hope to position and build on our industries' presence in these countries, which are expected to enter the European Union in the foreseeable future, and to increase Canada's profile regarding its expertise in these sectors.

From October 10 to 20, I will lead a trade mission to Algeria, Morocco and Spain. As many of you know, this region offers major opportunities for Canadian companies in construction and engineering, environmental equipment, as well as agriculture. With new political leadership, the region is making political and economic progress.

The Spanish-Canadian commercial relationship is proving to be one of great promise. On the investment side Spain has invested over $5.5 billion in Canada in the last two to three years alone. Canada, too, is becoming a significant investor in Spain.

Four or five centuries after the Spaniards came here, why wouldn't people from Newfoundland and Labrador explore the economic opportunities in Spain?

In closing, I want to ask for your help. We have a big selling job to do -- not only out there on foreign markets, but right here at home.

Canadians must be made aware of the exciting possibilities that exist in international trade. Nobody can do that better than business people and community leaders like you.

My fondest wish, one that I have expressed in every city that I visited during this tour, is that the Canadian business community and the Government of Canada will become strong partners in opening up new growth opportunities that will directly benefit our communities and regions for generations to come.

Thank you.