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<title>MR. PETTIGREW - ADDRESS AT A BREAKFAST HOSTED BY THE CANADIAN CHAMBER OF COMMERCE ON CANADA AND MEXICO: SHARING A TRADE VISION, MEXICO CITY, MEXICO </title>
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<p><strong></strong><font size="+1"><strong></strong></font><font size="+1"><strong><u>CHECK AGAINST DELIVERY</u></strong></font></p>
<p align="CENTER"><font size="+1"><strong>NOTES FOR AN ADDRESS BY THE HONOURABLE PIERRE PETTIGREW, MINISTER FOR
INTERNATIONAL TRADE,</strong></font></p>
<p align="CENTER"><font size="+1"><strong>AT A BUSINESS BREAKFAST HOSTED BY THE CANADIAN CHAMBER OF COMMERCE
IN MEXICO CITY ON CANADA AND MEXICO: SHARING A TRADE VISION </strong></font></p>
<p><font size="+1"><strong>MEXICO CITY, Mexico</strong></font></p>
<p><font size="+1"><strong>June 3, 2002</strong></font></p>
<p>I would like to acknowledge the presence of the Canadian business contingent accompanying us today. I would also like to
extend a welcome to our friends from the Mexican business community and government, whose teamwork in recent years
has helped transform Mexico into a dynamic marketplace. And finally, I would like to express my appreciation to the
members of the Canadian Chamber of Commerce in Mexico for their success in building linkages between our two
countries.</p>
<p>This morning, I would like to talk to you about the growing Canada-Mexico trade relationship, the trade vision that I believe
we share, what we have accomplished and where we are heading.</p>
<p> </p>
<p>It was a decade ago that Mexico, Canada and the United States set to work to create the North American Free Trade
Agreement, which came into force in 1994. There can be little doubt that NAFTA has been a success for all three countries.
Together, we have broken down trade barriers and worked to lay the foundations for the creation of the commercial links
this continent needs to compete in the global economy of the 21st century.</p>
<p>By any measure, NAFTA has been a resounding success. Total merchandise trade among the three partners has increased
roughly 160 percent (from C$370 billion in 1993 to C$952 billion in 2001) since NAFTA was implemented. Canada-Mexico trade has also benefited enormously from NAFTA, with total two-way trade increasing 300 percent since 1993. In
2001 alone, a year that was by all accounts a dismal one for many economies, Canadian exports to Mexico grew by
20 percent.</p>
<p>The success of NAFTA has helped to confirm a shared conviction: simply put, trade matters. By lowering trade barriers,
NAFTA has expanded trade and has fostered increased investment and employment generation. Canada and Mexico, I
believe, agree on the need for, and benefits of, trade liberalization. Both governments believe that opening markets is a win-win proposition.</p>
<p>In fact, NAFTA has been so successful that following the recommendations of our respective business communities, we
agreed last January to accelerate the elimination of NAFTA tariffs on a large number of products, reducing the cost of these
imported goods into each other's country.</p>
<p>Both our countries rely increasingly on trade. In Canada, exports account for more than 40 percent of our GDP, and we are
the world's sixth largest trading nation, accounting for about 4.5 percent of global trade.</p>
<p>In recent years, we have worked hard on the domestic front to put our economy in order. Canada's credit rating was recently
upgraded to triple A, the highest and most prestigious investment grade accorded by Moody's Investment Services. This is a
level we had not reached since 1994, and it returns Canada to the elite group of top-investment-grade countries. With lower
inflation and continuing growth, I think we can safely say that Canada has weathered the economic slowdown in the United
States and has come out strong.</p>
<p>Mexico, too, has now caught the eye of the global business community for its remarkable accomplishment in rapidly turning
around its economic policy. In February, Standard & Poor's awarded an investment-grade rating of "BBB-" on Mexico's
long-term foreign currency sovereign credit. This is a strong vote of confidence, which will lower public sector and major
corporate borrowing costs. Mexico has also won praise for its economic stability and has remained relatively unaffected by
economic crises in some Latin American countries. As Canada, and now Mexico, can attest, prosperity follows prudence;
investment follows confidence.</p>
<p><strong>NAFTA: A Work in Progress</strong></p>
<p>Because NAFTA has been around for so long and works so well, many assume that it has achieved its potential. But I would
like to remind you that NAFTA is a work in progress, and that the NAFTA partners continue to work to ensure that the
agreement lives up to its full potential. NAFTA continues to be a living, breathing, vital means of fostering closer ties and
resolving the disputes that inevitably arise in even the smoothest of commercial relationships.</p>
<p>As an example of our ongoing commitment to NAFTA, last week I attended a meeting of the NAFTA Commission, which
oversees 30 working groups and committees responsible for the implementation of the agreement's various provisions.</p>
<p>At our meeting last week, my counterparts and I agreed that NAFTA has been a great success and remains the cornerstone
of our increasingly important trilateral trade and economic relationship. In fact, we noted that not only has NAFTA served
to increase jobs and trade in all three countries, it has established a very strong foundation for future growth.</p>
<p>At our meeting, we also agreed to continue our work to clarify the provisions of NAFTA Chapter 11 on investor-state
disputes. We believe that the NAFTA provisions are important, since investors should be protected from arbitrary or
discriminatory actions by governments. However, it is equally important that governments be in a position to regulate in the
public interest without being impeded by unintended interpretations of investment rules.</p>
<p>We are also working hard to achieve the mutual recognition of engineers under NAFTA, and we hope that once this
agreement is finalized we can expand it to other professions. This would greatly facilitate the movement of professionals
among our three countries and lead to increased trade and investment.</p>
<p>Work also continues in the areas of government procurement and anti-dumping. In the area of land transportation, our
working groups meet regularly throughout the year to discuss issues of harmonization and standardization.</p>
<p>NAFTA has also fostered growth in bilateral cooperation. For example, in the energy sector, Canada and Mexico continue
to identify new opportunities for business partnerships that could work to the mutual advantage of both our countries. Over
the last two years, we have had unprecedented bilateral exchanges, both at the political level and at industry levels. The
memorandum of understanding on energy signed in April of this year is a good example.</p>
<p>In agriculture, we have invited key Mexican congressional deputies to visit Canada and learn more about the Canadian
approach to agricultural reform in the face of increasing globalization and competition.</p>
<p>Just last month, we had members of the Mexican Congress and private sector transportation officials visit Canada to
exchange views on trucking safety issues and best practices at the border.</p>
<p><strong>Where Do We Go from Here?</strong></p>
<p>With a track record that has caught the eyes of leaders around the world, Mexico will continue to be at the centre of a series
of key discussions that will largely determine the future direction of the international trading system. And, partly as a result
of NAFTA, Canada and Mexico are engaged in these multilateral negotiations in a new and closer way.</p>
<p>As you may be aware, Mexico is hosting this year's APEC [Asia-Pacific Economic Cooperation forum] process. Last week,
I attended a meeting of APEC trade ministers in Puerto Vallarta, where the groundwork was laid to prepare for the APEC
leaders' meeting to be held in October in Los Cabos. This summit is being preceded by over 20 gatherings of APEC
ministers, who will meet throughout the year to discuss trade, finance, energy, small and medium-sized enterprise, tourism
and many other sectors of the global economy. Canada looks forward to continuing to work with Mexico during its year as
host of APEC to help ensure the greatest possible success for what is in so many ways a shared agenda.</p>
<p>As well, starting in March of next year, Mexico will be hosting the Free Trade Area of the Americas [FTAA] negotiations,
and the FTAA Administrative Secretariat will be moving to Mexico. The vision of a hemispheric free trade zone is
challenging and exciting. The idea of 34 countries in the hemisphere linked by trade is a prospect that must be embraced.
These negotiations are a priority for many reasons. The FTAA will be good for Canada and Mexico, and it will be good for
the hemisphere.</p>
<p>Canada is committed to the FTAA process as part of our commitment to open markets and liberalized investment. We are
confident that the FTAA will deliver significant benefits to all the participants in the hemisphere, once the agreement is
concluded in 2005. In addition, the FTAA holds the potential to provide improved market access commitments in the
services sector and to establish stronger investment protection measures throughout the hemisphere.</p>
<p>In yet another example of multilateral trade cooperation, trade ministers, including Mexico's, agreed last November in
Doha, Qatar, to launch a new round of World Trade Organization negotiations, to be known as the Doha Development
Agenda. We hope this new round of negotiations will lead to lower non-agricultural tariffs, more transparency in
government procurement, and new rules and stronger disciplines for anti-dumping and subsidies.</p>
<p>I hope I have given you some insight as to where Canada will be focusing its efforts in the negotiations that lie ahead. These
negotiations are ultimately about creating the conditions for growth, economic efficiency and prosperity--conditions that
will allow all countries of the hemisphere to flourish and give their governments the ability to deal with broader challenges.</p>
<p>With a global economic recovery under way, the prospects for trade and investment between our two countries are good. By
working together, we can solidify our position within NAFTA while at the same time cooperating bilaterally in a number of
multilateral forums.</p>
<p>For our part, we see Mexico not only as a strong North American trading partner, but also as a significant ally in working to
overcome trade barriers throughout the hemisphere. Recent U.S. protectionist actions in the steel and agriculture sectors
have raised concerns internationally about the direction of U.S. trade policy.</p>
<p>This is obviously a concern for both Canada and Mexico, since both countries are heavily dependent on the U.S. market.
Each of us has our own specific concerns with respect to our neighbour: Canada will continue to defend its position in the
softwood lumber case, while Mexico continues to fight for improved access to the United States for its agri-food products.
Thankfully, NAFTA has provided a means to fight protectionism, and it has also provided us with an ideal forum in which
to exchange views on our experiences with our largest trading partner.</p>
<p>The flourishing of the relations between Canada and Mexico that we are seeing today was envisioned by the original
advocates of the North American Free Trade Agreement. Indeed, even the most optimistic would perhaps have been
surprised at how effective NAFTA has proven to be as an instrument for liberalizing and managing trade and investment. I
can assure you that Canada will continue working with Mexico to ensure that both countries benefit from the advantages of
opening trade routes, and then keeping them open.</p>
<p>Thank you.</p>
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