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NOTES FOR AN ADDRESS BY

THE HONOURABLE SERGIO MARCHI

MINISTER FOR INTERNATIONAL TRADE

AT THE

INDUSTRY FEDERATION LUNCHEON

BELO HORIZONTE, Brazil

September 9, 1997

This document is also available on the Department's Internet site: http://www.dfait-maeci.gc.ca

Dr. Salej, Ambassador Stiles, distinguished guests, ladies and gentlemen, querido amigos.

Let me begin by thanking the Industry Federation of Minas Gerais for hosting this beautiful luncheon.

E um grande prazer estar aqui com voces em Belo Horizonte, que lugar maravilho.

I am delighted to be back in Brazil and to visit Belo Horizonte -- a city which is fast becoming one of the pre-eminent economic centres of this region. And it is easy to see why Business Week magazine has called Minas Gerais "the new business Mecca."

So it is a great pleasure to be with you and to celebrate the wonderfully close relationship between Brazil and Canada. But, like any friendship, we must renew and refresh our relationship from time to time, and I welcome this opportunity to meet with you today.

I am very pleased that our colleagues from Industry Canada are also here today, as part of an environmental mission. This completes the circle for me, because when I was last in Belo Horizonte, it was as Environment Minister, and I had the opportunity to meet with Governor Eduardo Azeredo and to witness the signing of a memorandum of understanding between this Federation and the Canadian Environmental Industries Association.

This afternoon, we will witness the signing of another important agreement, between your Federation and Wintec Energy Management Corporation of Toronto.

It is very encouraging to see how the collaboration between Brazil and Canada has progressed since our last visit here, and I am sure that this is just the first of what will be many significant initiatives in the environmental field.

Today, we also celebrate the Canada nas Gerais festival, which began last week. This magnificent festival showcases not only Canadian businesses and technology, but also the rich diversity of Canadian culture.

If you haven't had the opportunity to take in some of the exhibits, I hope you plan to do so. There are a number of exciting events planned -- everything from a beef cattle auction to a workshop on tourism in Canada.

The presence of over 200 Canadian companies at this festival testifies to the fact that Canada is committed to this region and understands its enormous economic potential.

One of the most exciting trends in the world today is the expansion of freer trade. Around the world, barriers are falling down, markets are opening up and opportunities are being created that were simply unimaginable just a few short years ago.

With expanded trade comes many benefits. Certainly it means jobs -- good jobs. Trade also means more economic opportunities for those with vision and daring. But trade means something else as well.

Trade breaks down walls that divide us and creates common interests that unite us. It invites us to see one another not as strangers but as partners; divided, perhaps, by geography, but united by common goals and a common future.

And so today I come to Brazil to encourage more trade and investment in a co-operative effort to build that future.

As you know, Canada is a trading nation. With a large territory and a relatively small domestic market, we have had to look outward to find markets for our goods and services. Today, nearly 40 per cent of our GDP [gross domestic product] is generated by exports and one in three jobs in Canada is directly tied to trade.

It is not surprising, then, that Canada should be at the forefront of trade liberalization around the globe. Through our experience with free trade agreements with the United States, with Israel and with Chile, and the North American Free Trade Agreement with the United States and Mexico, we have seen first-hand the benefits of freer trade.

We also know from experience that adjusting to freer trade is not always easy, but that the overall benefits far outweigh the costs.

Above all, we believe that a transparent, rules-based trading system is of benefit to all of us, as it both stimulates trade and makes it more secure. It also encourages investment and facilitates the transfer of technology.

That is why we remain committed to the goals of the Miami Summit.

A Free Trade Area of the Americas [FTAA] is an idea whose time has come. In 1994, in Miami, it seemed a distant dream; but now countries across the hemisphere are preparing to launch negotiations that will bring it closer to reality.

In this regard, Canada sincerely hopes that the U.S. Congress provides President Clinton with fast-track authority, which will ensure full U.S. participation. Negotiation of an FTAA will not be an easy road to travel. But we must continue to keep our shoulder to the wheel and maintain the momentum we have developed to date.

Canada is also eager to forge closer links with Mercosur, which we see as an important compliment to the Free Trade Area of the Americas. To that end, President Cardoso and Prime Minister Chrétien discussed the creation of a framework for enhanced trade, during the President's visit to Canada last spring.

In July, prior to the FTAA vice-ministerial meeting, Canada presented a paper that identified specific areas for increased co-operation. We look forward to receiving Mercosur's response to that paper.

Canada's commitment to Mercosur and to the FTAA can be seen as part of a larger transformation going on in our country. While our roots sprang largely from European soil, Canadians are increasingly identifying themselves with the family of the Americas. More and more, we are realizing that our future is tied to this region.

Of course, one of the engines driving Mercosur is Brazil, and Canada is committed to expanding our trade here.

Economic ties between us are strong -- and growing. In 1995, Prime Minister Chrétien visited Brazil and, as I mentioned, Canada was honoured to welcome President Cardoso last May. Accompanying both the President and the Prime Minister on their respective visits were large contingents of business people -- a clear indication of their recognition of the potential for partnerships between our two countries.

Many of those companies were small or medium-sized enterprises, which play such a vital role in creating jobs and generating growth. In Brazil, these companies are helping to develop a strong entrepreneurial spirit that will support and sustain a dynamic, trading economy.

Brazil and Canada are already major trading partners. In fact, Brazil is our most important trading partner in South America and our 10th worldwide. Last year, total trade between us was over two and a half billion dollars -- up more than half a billion dollars from just two years earlier.

But impressive as these numbers are and as important as our trading relationship has become, we know that we are just scratching the surface -- that there is an enormous amount of potential still unrealized.

And let me assure you, Canada is committed to seeing that potential fulfilled. To the already close bonds of friendship, we want to add the strong ties of commerce.

The Federation and the Chamber are doing wonderful work to forge those ties. Now I want to hear your suggestions on how we, as a government, can help make it easier for companies in our respective countries to do business together. How can our trade commissioners, for example, work better with your organizations to enhance trade?

I welcome and I value your input on these issues.

Over the past few years, Brazil has undertaken many difficult economic reforms. It has not been easy, but look at the results! Privatization has opened up many key sectors, leading to lower costs and greater efficiencies. Business opportunities are increasing, inflation is declining and Brazil is leading the way among the emerging markets.

And Canadians have noticed. I am proud to say that Canada is now the seventh-largest international investor in Brazil, with total investments approaching $4 billion. Some of our leading companies have demonstrated their confidence in and commitment to this market. Companies like Alcan, Nortel, Moore Business Forms, Newbridge and Seagram.

And our Export Development Corporation, Canada's official credit agency, has identified Brazil as one of Canada's five priority markets worldwide.

Many of the reforms undertaken by Brazil create specific opportunities for Canadian companies. Deregulation of the telecommunications and informatics sectors, for example, are two areas where Canada offers world-leading technologies. And exciting potential also exists in the energy and mining sectors.

Day after day, Canadian businesses are recognizing the potential of Brazil and investing their time and talent in its future. I mentioned Alcan a moment ago. This is now Canada's largest investor in Brazil, with annual revenues here of over $750 million. Last spring, plans were announced to expand facilities in Sao Paulo, adding even more jobs to the 4500 they have already created here. Alcan is also investing $100 million into its operations in the state of Minas Gerais.

Or take SHL Sytemhouse, which has made an investment of US$15 million in Proceda Tecnologia e Informatica S.A., and in Andrade Gutierrez. The new company, Proceda Systemhouse, will be a major provider of information technology services in areas like networking, satellite communication and client servers.

Or Newbridge Networks, a leading Canadian high-tech company, which is expanding Embratel's high-speed digital network and playing a key role in the development of Brazil's telecommunications industry.

Trade is a two-way street. Not only do we want to sell to you, but we are looking to buy from you.

These companies are not isolated examples. More and more, companies in Brazil and Canada are recognizing the benefits and the opportunities in each other's markets and are forming mutually beneficial partnerships to develop them.

For Canadians, the attraction of Brazil is obvious: a population of 160 million people, a strategic location in a dynamic region and a GDP that's one of the top ten in the world.

For Brazilians, I trust the attraction of Canada is equally obvious: strong economic fundamentals, low interest rates, low inflation, a dynamic and diverse economy, world-leading technologies, an educated workforce, superb infrastructure, an excellent quality of life, and, of course, privileged access to the United States and Mexico.

As well, the International Monetary Fund expects the Canadian economy to lead all G-7 nations in growth this year and next. Little wonder, then, that the Economist magazine ranks Canada fifth in the world as a "business-friendly" environment.

And we Canadians are very proud of the fact that, for the last four years running, the United Nations has ranked Canada's quality of life the very best in the world.

When Brazilians think about international partnerships and exciting economic opportunities, we want a large red maple leaf to come to their minds!

I am confident that together, Brazil and Canada can form partnerships that will create jobs for our people and growth for our economies. I am confident that we can realize the vast potential that lies before us.

As I think about that task, I am reminded of a story that is told of the great French Marshall, Louis Hubert Lyautey. Marshall Lyautey once asked his gardener to plant a tree. But the gardener objected, arguing that the tree was slow-growing and would not reach maturity for many years.

The Marshall replied, "then we have no time to lose. Plant it this afternoon."

The full maturation of the Brazilian-Canadian relationship may still be years away. But we have no time to lose. Let us plant our trees today.

Muito obrigado. Thank you.