SPEECHES

2004/31                                                          CHECK AGAINST DELIVERY

NOTES FOR AN ADDRESS BY

THE HONOURABLE JIM PETERSON,

MINISTER OF INTERNATIONAL TRADE,

TO THE

CANADA-ARAB BUSINESS COUNCIL

OTTAWA, Ontario
September 13, 2004

I am pleased to be with such a distinguished group of leaders at this year’s Gala hosted by the Canada-Arab Business Council [CABC] and the Arab Ambassadors in Canada. I would like to specifically thank Dwain Lingenfelter [CABC Chair] and the Board of the CABC, and [Saudi] Ambassador [Mohammed] Al-Hussaini in his capacity as Dean of the Arab diplomatic corps, for inviting me to this event.

I welcome this opportunity, not only to discuss trade and investment with you, but also to strengthen the bridges of friendship and commerce that my country has with your increasingly important part of the world.

This vast and diverse region of 18 Arab states, which runs from Mauritania in North Africa through Egypt in the Middle East to Yemen at the southern end of the Arabian peninsula, and has a population of 300 million and $1.8 trillion in GDP, represents one of the great markets of the world.

In that vein, I am delighted to see so many Canadian exporters and investors here this evening, testifying to your commitment to developing trade and investment links with our partner-countries in the region.

Canada and trade

I find it somewhat humbling that I should be speaking with this group about the importance of trade. After all, several thousands of years ago, it was in your region that the concept of trade was, if not invented, at least perfected. Names such as Phoenicia, Alexandria, Carthage, the Tigris and the Euphrates come to mind. Canada is undoubtedly a latecomer to the world of international trade!

Some things don’t change. Today, trade and investment remain the linchpins of a modern, progressive economy. They help create jobs domestically, spur innovation, encourage businesses to compete and expand, increase a country’s overall prosperity.

Canada is a trading nation. In relation to the size of its economy, Canada is a trade leader among G8 nations. In fact, Canadian exports in goods and services account for almost 40 percent of our total GDP.

Canada’s single most important trading arrangement is NAFTA, which this year is celebrating its 10th anniversary as the world’s biggest trading bloc. In that decade, our trade with the U.S. and Mexico has doubled from $269 billion to over $550 billion. Total direct investment in Canada reached $358 billion in 2003. And NAFTA has contributed to the creation of almost three million new jobs, which on average are better paying than those in the strictly domestic economy.

It’s the tremendous success Canada has had trading within NAFTA, and with the rest of the world, that has helped us become a perennial leader in G8 economic performance.

And it’s because trade is critical to our economic future that last year our Liberal government created International Trade Canada, a new department. Under this new organization, we will marshal our resources so we can better respond to our client needs and shifting global trends.

We will help Canadian businesses position themselves for rapidly emerging global supply chains, and assist them in building their presence in today’s emerging markets and markets not yet on the radar screen. We want to be alert, active and ready for each and every opportunity that presents itself. In fact, we have to be.

Lastly, it’s because we’ve seen the benefits of trade and investment that our government is such a strong advocate of trade liberalization. We are aggressively pursuing a multi-track trade liberalization strategy: at the bilateral level by negotiating agreements with specific, interested nations; at the regional level by seeking to create a free trade zone of the Americas; and most importantly at the global level by working within the World Trade Organization [WTO] to ensure that the Doha Round of negotiations comes to fruition.

Canada has grown and prospered through trade, and we want as many countries in the world as possible to share in the prosperity that trade brings. Canadians believe we all move forward when no country is left behind in the emerging 21st-century global economy. To be frank, we also believe in globalization because we think it will be good for Canada. The more prosperous the world, the more we believe Canadians will benefit, by exporting to foreign markets and attracting investors to our country.

Progress at the WTO

On that point, I want to commend the 147 members of the WTO for seeing the big picture and reaching a framework agreement on July 31. This framework is an important step toward concluding the Doha Development Round. The negotiated framework constitutes tangible progress on what is admittedly one of the more difficult issues facing international trade ministers and stakeholders: that is, the challenge of significantly reducing trade-distorting agriculture subsidies.

It is critical that we do so. These subsidies, which total over $1 billion a day, harm not only our producers here in Canada, but also other countries unable to match the largesse of the U.S. and Europe. More importantly, they are a barrier to export and growth for developing countries.

The framework also embodies tariff reduction for developing countries, recognizing that 70 percent of the duties on their imports are on goods from other developing countries.

I am confident that we now have a road map for cutting these trade-distorting subsidies, and for better integrating developing nations into the global economy.

Of particular interest to you, I am also pleased to note, is the fact that negotiations to welcome the Kingdom of Saudi Arabia into the WTO are progressing well. Canada completed negotiations with the Kingdom earlier this year, and we look forward to its entry as a full member in the not-too-distant future.

Canada and Arab states

Canada has had strong trade and economic ties with the Arab countries from the Maghreb, the Arabian peninsula and the Middle East for many years.

Last year, Canadian exports to the region as a whole were valued at $2.1 billion. Our imports totalled $4.9 billion and are rising. In 2003, our two-way trade with the six member-countries of the Gulf Cooperation Council exceeded $2 billion, which was almost evenly divided between exports and imports.

These numbers may not sound large, but they do represent a 26 percent increase over 2002 and total more than Canada’s 2003 exports to India or Brazil.

But our linkages go beyond pure dollars and cents. Hundreds of thousands of descendants from Arab countries have found new homes in Canada, enriching us with their talents and unique cultures. As well, approximately 4,500 students from the Middle East and North Africa came to Canada last year to study in our universities, furthering our understanding of your world and your understanding of ours.

This is a good beginning, considering the distances between our two worlds. Still, we can do much better. Let me outline the opportunities for strengthening our economic collaboration that I see before us today, and some that are coming on stream in the future.

Canada welcomes trade and investment from everywhere in the world, and there are good reasons why investors from Arab countries should be taking a closer look at Canada.

We are the only nation in the G7 with both a fiscal and current account surplus, and both the OECD [Organization for Economic Cooperation and Development] and the IMF [International Monetary Fund] forecast that Canada will be among the growth leaders over the 2004-05 period. In February, Finance Minister Ralph Goodale tabled Canada’s seventh consecutive balanced budget, the longest run since Confederation, and we are projecting bringing Canada’s debt-to-GDP ratio down to 25 percent within the next 10 years. If you remember what the situation was 10 years ago, you know this is an impressive record.

Canada is also recognized as one of the best places in the world to invest. The 2004 KPMG international cost-competitiveness study placed Canada first among the 11 major nations surveyed, and the Economist Intelligence Unit recently ranked Canada as the best place to do business in the world for the next five years.

Significantly, KPMG gave Canada a nine percent cost advantage over the U.S. This means that if you are specifically targeting the U.S., the world’s biggest market, the best place to locate is in Canada, thanks to the free-trade zone created by NAFTA, which remains the world’s largest trading bloc.

And we are not resting on our laurels. Our government is committed to making Canada an even more attractive investment magnet by making it among the most innovative nations in the world.

We have increased annual funding for research and innovation from $400 million in 1999 to $2.1 billion. We have earmarked $900 million over five years to create 2,000 Canada Research Chairs in our universities in order to attract the finest teachers and researchers. We have also established a $600-million Border Infrastructure Fund to ensure that goods and people travel freely between Canada and the U.S., and we have cut corporate taxes to give Canada a competitive edge over our largest trading partner.

These are some of the actions Canada is taking to position our businesses for success in the global marketplace and to attract investment and leading-edge technologies to our shores.

I must congratulate you on some of the changes we see occurring in your countries as well.

Within the region, we see a new commitment to privatization, modernization and economic diversification.

We are encouraged with the progress to more fully integrate with the world, including the fact that a majority of nations in the region are now full-fledged members of the WTO and most others are either observers or beginning accession talks. It is no coincidence that the current round of WTO negotiations began in Doha, Qatar.

As well, some countries in the region have negotiated separate trade agreements with, among others, the U.S. and China. Canada has negotiated double taxation agreements with Kuwait, the U.A.E. [United Arab Emirates] and, as recently as this year, with Oman. We have signed air agreements with Egypt, Lebanon and the U.A.E.

There is also the new Canada-Algeria Business Alliance, which promises to bring together Canadian and Algerian investors and build upon a long-standing relationship. I salute your efforts, [Algerian] Ambassador [Youcef] Yousfi, and wish this alliance tremendous success, for the potential between Canada and Algeria is immense.

These and other positive changes present Canadian investors and exporters with exciting new opportunities in both traditional and new sectors.

Opportunities for trade and investment

For instance, in the field of civil engineering, Canadian firms have successfully participated in the design and construction of major engineering projects throughout the region. These include the massive Palm Island Resort in the U.A.E., an aluminum smelter in Oman and the Abu Dhabi Trade Centre.

And more opportunities are coming on stream. By itself, Qatar has more than $71 billion in infrastructure projects planned over the next few years. I am talking about $258 million for the city-centre commercial complex expansion. I am talking about $129 million for both the national museum and the national library. I am talking about $212 million for broadcasting studios. And the list goes on.

In the education sector, Canadian institutions are partnering with local interests to establish new educational institutions in the region. [Newfoundland and Labrador’s] College of the North Atlantic recently signed a partnership contract to create a collegiate system with a campus in Doha. This year, the Egyptian-Canadian Institute for Applied Learning and Vocational Training will open its doors to students, and the private Al Ahram Canadian University in Cairo will become the first Canadian university in that country.

In the field of health, Canada has for over a decade been the primary post-graduate training location for Saudi doctors, who later return to their home hospitals not only with knowledge of Canadian methods and society, but also, we hope, with an affinity for Canadian medical products and systems.

In the environment sector, the opportunities are many. Canadian firms have already won contracts for a wastewater treatment plant in Morocco, a water supply project in Algeria and a marine dredging and reclamation project in the U.A.E., among other examples.

Of course, the openings for Canadian investors and services and technology providers in the traditional oil and gas sector are far from exhausted, and important new engineering developments in that sector are occurring in Algeria, Egypt, Kuwait, Libya, Qatar and Syria.

What is needed now is the will and the foresight, on both our parts, to move forward on all of these fronts.

I’m not going to sugar-coat it. Canada’s priorities in the region begin with security. Instability, terrorism and the seemingly unending Arab-Israeli dispute all have an impact on security and our mutual aspirations for a growing economic relationship.

As such, Canada endorses the G8 intentions from the Sea Island Summit to work in partnership with countries in the region on a range of issues that will support good governance, social justice, the rule of law and increased economic activity. We will continue to work toward these goals.

That said, it would be a mistake not to acknowledge the tremendous and positive changes occurring in the region, some of which I’ve mentioned, and an even greater mistake to miss the opportunities for greater economic collaboration these changes present to us.

I am personally committed to seeing that we move forward and strengthen our relationship.

I am aware of the work the CABC is doing to promote greater collaboration in trade and investment between Canada and the Arab world. International Trade Canada will aid that work in any appropriate way possible, including by helping to make your mission to Yemen, the U.A.E. and Egypt this November a success.

One of my priorities is to see foreign direct investment, by both Canadian businesses in the region and companies from your region in Canada, as well as two-way trade, continue to grow.

As well, we intend to continue welcoming your students and experts to Canada so that we can learn from each other’s experiences. We have much to offer each other.

And our government is committed to supporting and encouraging countries in the region to join the WTO and accept its disciplines. We believe that, when nations trade and invest with each other under clear and mutually accepted rules, everyone wins.

As for the future, I believe that Arab states and Canada can and will be even bigger winners as, together, we expand our ties of investment and trade.

Let us all today commit to strengthening and enhancing our bonds of commerce and friendship and to achieving the full potential in our relationship that we know can be ours.

I am with you tonight to tell you that Canada stands ready, with pleasure and enthusiasm, to do its part. The best is yet to come.

Thank you.