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<title>CANADA STILL NUMBER ONE</title>
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<p><font size="+1"><strong>January 29, 2002 <em>(1:30 p.m. EST)</em> No. 9</strong></font><font size="+1"></font></p>
<p><font size="+1"><strong>CANADA STILL NUMBER ONE</strong></font></p>
<p>International Trade Minister Pierre Pettigrew and Industry Minister Allan Rock today welcomed the results of the new
business study, <em>Competitive Alternatives: Comparing Business Costs in North America, Europe and Japan</em>, which ranks
Canada as the leading cost-competitive industrial country. The study was conducted by the management consulting firm
KPMG. The 2002 study marks the third consecutive time that Canada has come out ahead of other industrialized nations.</p>
<p>"The KPMG study shows that Canada is still the low-cost leader among industrial nations," said Minister Pettigrew. "As
the overall lowest-cost country for conducting business, Canada offers distinct and compelling advantages to those global
firms seeking the best location to establish or expand their operations."</p>
<p>The 10-month international study of leading industrial countries provides comparative after-tax costs of starting up and
operating a business for a period of 10 years, taking into account factors such as labour costs, taxes, transportation costs,
energy costs and facility costs.</p>
<p>"Canada has created one of the most attractive investment climates in the world," said Minister Rock. "When international
investment comes to Canada, it means Canadian jobs and stronger Canadian communities."</p>
<p>Canadian cities ranked higher than many of their international counterparts. In particular, Canadian cities scored higher than
U.S. cities in all five North American regions and Canada averaged 14.5 percent cost savings for international investors
over the U.S.</p>
<p>The KPMG study was sponsored by 45 economic development agencies in Austria, Canada, Italy, the Netherlands, the
United Kingdom and the United States.</p>
<p>The study is available at <a href="https://bac-lac.wayback.archive-it.org/web/20070221032349/http://www.competitivealternatives.com /">http://www.competitivealternatives.com</a></p>
<p>The Web site also features an interactive costing model that can determine the impact of fluctuating exchange and interest
rates.</p>
<p>- 30 -</p>
<p>A backgrounder is attached.</p>
<p>For further information, media representatives may contact:</p>
<p>Sébastien Théberge </p>
<p>Office of the Minister for International Trade</p>
<p>(613) 992-7332</p>
<p>Media Relations Office</p>
<p>Department of Foreign Affairs and International Trade</p>
<p>(613) 995-1874</p>
<p>Selena Beattie</p>
<p>Office of the Minister of Industry</p>
<p>(613) 995-9001</p>
<p>Marcel Gaumond</p>
<p>Investment Partnership Canada</p>
<p>(613) 941-9268</p>
<p>This document is also available on the Department of Foreign Affairs and International Trade's Internet site:
<a href="https://bac-lac.wayback.archive-it.org/web/20070221032349/http://www.dfait-maeci.gc.ca/">http://www.dfait-maeci.gc.ca</a></p>
<p><font size="+1"><strong>Backgrounder</strong></font></p>
<p>KPMG's 2002 report, <em>Competitive Alternatives: Comparing Business Costs in North America, Europe and Japan, </em>shows
that Canada is setting the pace globally as the most cost-effective nation in which to do business.</p>
<p>The 2002 study marks the third consecutive time that Canada has come out ahead of other industrialized nations. Similar
KPMG cost studies were completed in 1997 and 1999.</p>
<p>The report presents the most thorough business cost analysis ever to compare leading industrial countries. It examines a
number of industries in 86 cities in Austria, Canada, France, Germany, Italy, Japan, the Netherlands, the United Kingdom
and the United States.</p>
<p>Locations are compared on an after-tax basis, based on the cost of start-up and 10 years of operation.</p>
<p>Canada ranked first in seven out of 12 industries studied and posted impressive advantages in manufacturing, research and
development, software and corporate services.</p>
<p>Canada has a 14.5 percent cost advantage over the United States, with overall costs in specific Canadian cities generally 10
to 20 percent lower than their regional U.S. counterparts. Even when applying a hypothetical 20 percent increase in the
value of the Canadian dollar, Canada's cost advantage over the U.S. cities exceeds five percent.</p>
<p>Most European countries now rank ahead of the U.S. in cost competitiveness. As in the 1999 study, Japan has the highest
business cost structure among the leading industrialized countries.</p>
<p>The 2002 study is being released after a significant period of change in international business costs between 1999 and 2002.</p>
<p><strong>Key Findings</strong></p>
<p><strong>Breakdown by country:</strong> Based on a cost index with the U.S. equal to 100, Canada is the lowest-cost country, as follows: </p>
<table border="1" width="100%" cellpadding="1" cellspacing="1">
<tr valign="TOP"><td>Country</td>
<td align="CENTER">Cost Index</td>
<td align="CENTER">% Cost Advantage
<p>over the U.S.</td></tr>
<tr valign="TOP"><td>Canada</td>
<td align="CENTER">85.5</td>
<td align="CENTER">14.5</td></tr>
<tr valign="TOP"><td>United Kingdom</td>
<td align="CENTER">86.9</td>
<td align="CENTER">13.1</td></tr>
<tr valign="TOP"><td>Italy</td>
<td align="CENTER">88.6</td>
<td align="CENTER">11.4</td></tr>
<tr valign="TOP"><td>The Netherlands</td>
<td align="CENTER">90.8</td>
<td align="CENTER">9.2</td></tr>
<tr valign="TOP"><td>France</td>
<td align="CENTER">92.2</td>
<td align="CENTER">7.8</td></tr>
<tr valign="TOP"><td>Austria</td>
<td align="CENTER">93.7</td>
<td align="CENTER">6.3</td></tr>
<tr valign="TOP"><td>United States</td>
<td align="CENTER">100</td>
<td align="CENTER">N/A</td></tr>
<tr valign="TOP"><td>Germany</td>
<td align="CENTER">101.9</td>
<td align="CENTER">-1.9</td></tr>
<tr valign="TOP"><td>Japan</td>
<td align="CENTER">117.8</td>
<td align="CENTER">-17.8</td></tr></table>
</p>
<p><strong>Breakdown by business operation:</strong> Canada ranks at the top of seven industry sectors as follows:</p>
<table border="1" width="100%" cellpadding="1" cellspacing="1">
<tr valign="TOP"><td>Industry Sector</td>
<td align="CENTER">Cost Index for Canada</td>
<td align="CENTER">Rank</td></tr>
<tr valign="TOP"><td>Biomedical R&D</td>
<td align="CENTER">72.2</td>
<td align="CENTER">1</td></tr>
<tr valign="TOP"><td>Advanced software</td>
<td align="CENTER">77.8</td>
<td align="CENTER">1</td></tr>
<tr valign="TOP"><td>Electronics assembly</td>
<td align="CENTER">89.4</td>
<td align="CENTER">1</td></tr>
<tr valign="TOP"><td>Content development</td>
<td align="CENTER">77.6</td>
<td align="CENTER">1</td></tr>
<tr valign="TOP"><td>Electronic systems testing</td>
<td align="CENTER">66.9</td>
<td align="CENTER">1</td></tr>
<tr valign="TOP"><td>Specialty chemicals</td>
<td align="CENTER">89.6</td>
<td align="CENTER">1</td></tr>
<tr valign="TOP"><td>Shared services</td>
<td align="CENTER">80.3</td>
<td align="CENTER">1</td></tr>
<tr valign="TOP"><td>Pharmaceuticals</td>
<td align="CENTER">90.9</td>
<td align="CENTER">2</td></tr>
<tr valign="TOP"><td>Precision components</td>
<td align="CENTER">86</td>
<td align="CENTER">3</td></tr>
<tr valign="TOP"><td>Metal components</td>
<td align="CENTER">88.9</td>
<td align="CENTER">3</td></tr>
<tr valign="TOP"><td>Plastic products</td>
<td align="CENTER">89</td>
<td align="CENTER">4</td></tr>
<tr valign="TOP"><td>Food processing</td>
<td align="CENTER">92.5</td>
<td align="CENTER">4</td></tr></table>
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