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<html> <head> <meta name="Generator" content="Corel WordPerfect 8"> <meta name="DATE" content="6/4/1998"> <meta name="Author" content="Mark Warren"> <title>MR. MARCHI - TO THE JAPAN SOCIETY - TORONTO, ONTARIO</title> </head> <body text="#000000" link="#0000ff" vlink="#551a8b" alink="#ff0000" bgcolor="#c0c0c0"> 98/43 CHECK AGAINST DELIVERY NOTES FOR AN ADDRESS BY THE HONOURABLE SERGIO MARCHI, MINISTER FOR INTERNATIONAL TRADE, TO THE JAPAN SOCIETY TORONTO, Ontario June 5, 1998 This document is also available on the Department's Internet site: http://www.dfait-maeci.gc.ca I would like to thank the Toronto Japanese Association of Commerce and Industry, and the Japan Society, for hosting this wonderful luncheon. I was reminded recently that in 1929, just two years after receiving the right to establish diplomatic relations with other countries, Canada proceeded to establish diplomatic relations with two countries that it considered to be of great importance: France and Japan. Nearly 70 years later, I stand before you to reaffirm the importance that we attach to our relationship with Japan, and to declare, in no uncertain terms, that we intend to remain fast friends and firm allies for the next 70 years as well! Your organizations have always played an important role -- in furthering economic relations, enhancing cultural understanding, and supporting business and educational exchanges between Japan and Canada. But your role is even more vital now, when the present financial difficulties in Asia cause some to question our commitment to this region, or to suggest that our interests and efforts should be directed elsewhere. At such times, your in-depth knowledge and your long-term perspective become essential, reminding us of the opportunities that await us and the underlying strengths that support them. So I welcome this chance to meet with you today, to reassert our commitment to Japan and to developing even stronger commercial relations with it. Let me begin with a clear statement of Canada's position: We are not a fair-weather friend. Japan is Canada's second-largest trading partner, and one of our major allies in the world. Our commitment to it remains undiminished. We remember the Japanese proverb that "one arrow is easily broken, but not 10 in a bundle" -- and we intend to stand by your side and offer you our support. Indeed, as we celebrate the 70th anniversary of diplomatic relations between us, we do so with greater optimism than ever about what lies ahead. As a companion that is in for the long haul, Canada is prepared to match its words of support with steps of assistance. We are working with Japan, in the G-7 and APEC [Asia-Pacific Economic Cooperation forum], to support the hard-hit economies in Southeast Asia. For example, we have contributed to multilateral IMF [International Monetary Fund] assistance packages for Korea and Thailand, and have provided additional support for Indonesia and other countries in Southeast Asia. But we also know, as you do, that Asia's problems will ultimately be solved by Asians -- that reforms will need to be introduced, and difficult decisions will need to be made. In the case of Japan, the problems are both structural and cyclical. To address these problems, Japan has introduced a number of measures, including the deregulatory "big bang" in financial markets. Other initiatives have included an injection of public funds into the banks, spending on public works, and tax cuts. Canada supports these efforts as important first steps. We remain of the view, however, that the only way to sustained economic growth and recovery is through comprehensive deregulation and reform. Deregulation will increase domestic demand, enhance global competitiveness and create new employment opportunities. While the "big bang" will produce some deregulation, we believe that a more far-reaching restructuring of companies, inter-company relationships and distribution systems will be necessary if an extensive revival of the economy is to occur. Canada does not speak as a critic of Japan -- it speaks as a friend -- one that has been through its own period of reform and renewal, and that understands the benefits offered by such a process. While the challenges we faced were different from those confronting Japan, both countries share the need to respond to change -- and I am confident that Japan will meet the test. So while Canada recognizes the seriousness of the problems facing Japan and the necessity of substantial reform, we are also determined not to allow the current challenges to obscure the tremendous opportunities that still exist. One of those opportunities is that presented by APEC. As you know, last year was Canada's Year of Asia Pacific, culminating with our hosting of the APEC Summit in Vancouver. We must not lose the momentum created by that exciting year. And we intend to push forward on reducing trade barriers and opening up new markets, beginning with the meeting of APEC Trade Ministers, later this month in Malaysia. It is important that we not retreat from commitments in Vancouver, as this will result in stronger and more robust Asian economies in the medium and long term. As I mentioned a moment ago, Japan stands second only to the United States as Canada's leading trading partner. Last year, two-way trade between us was more than $23 billion. And one third of all foreign investment coming into Canada came from Japan. The size and importance of the Japanese economy can hardly be overstated. Japan alone accounts for almost one fifth of the world's GDP [gross domestic product], and produces almost 12 percent of the world's exports. The Japanese population of 126 million represents a sophisticated and highly competitive market. And in areas such as autos, electronics and industrial technology, Japanese companies are world leaders. But Japan must also realize that just as a plane needs two wings to fly, so a nation needs both imports and exports to create a healthy domestic economy. Any effort to simply "export your way to recovery" is doomed from the start, because it deprives the Japanese economy of the invaluable infusion of trade and investment that is a spur both to local spending and to increased productivity. So I would urge Japan to adopt a more open posture with respect to goods and services from abroad. Canada wants to build on our already strong relationship with Japan, and has developed an Action Plan to enhance our commercial partnership. As many of you know, that plan identifies a number of sectors that we believe hold the most promise for Canadian businesses. These include tourism, information technologies, medical equipment and devices, consumer and building products, as well as food and fish products. There have already been some notable successes. In the food products sector, for example, each year, new Canadian products are being adapted to the needs of Japanese clients, and are finding their way into Japanese homes. We have also moved forward on another front -- what we call "Third Country Co-operation" -- an agreement designed to promote collaboration between our respective private sectors. This agreement was based on the premise that, through partnerships, our companies, especially our small and medium-sized enterprises [SMEs], could win a larger share of the expanding market for infrastructure around the world. Since the Third Country Co-operation agreement was signed in 1996, there have been a number of exciting success stories. For example, H.A. Simons, of Vancouver, has developed a relationship with a Japanese company to collaborate on a petrochemical project in Saudi Arabia. And here in Toronto, R.A. Andrews, a small engineering company, is now working on its third project with a Japanese company. Part of expanding our commercial ties with Japan involves raising the profile of Canadian products, services and technology. To that end, I met with Japanese Minister of Industry and Trade Horiuchi during the Quad meeting in April. And our Prime Ministers have met several times, most recently at the recent Birmingham G-7 Summit, where they agreed that a high-level business mission from Canada should visit Japan. Such a mission would serve to continue the excellent work of the Keidanren Business Partnerships Mission, which visited Canada in September of 1996. I understand that the private sectors of both countries have endorsed this idea, and that a high-level delegation will be led by Jacques Bougie and Tom D'Aquino, possibly as early as November. And just as we need to expand the awareness of what Canada has to sell to Japanese consumers, so we must enhance the understanding of what Canada has to offer to Japanese investors. We must let our Japanese friends know that Canada is an ideal place in which to invest or start a business. Many of you will be familiar with a study conducted by KPMG that compared the costs of establishing a business in seven countries -- five European, the United States, and Canada. The study found that when you consider all of the elements, Canada ranks number one. In other words, it is cheaper to set up and run a business in Canada than anywhere else studied -- cheaper than Europe, cheaper than Great Britain, and cheaper than the United States by some 5 percent. This is a critical point. Investors from Asia who want a foothold in North America in order to get access to the 400 million consumers of the NAFTA [North American Free Trade Agreement] market, can do so in a more cost-effective way by looking to Canada rather than to the United States. To take a stark example from the KPMG study, an Asian business setting up a typical 100-worker plant in Canada, will save, on average, nearly US$1 million annually over a similar site south of the border. And when you combine these low costs with the high quality of our workers, infrastructure and living standards, you have a superb environment for investment. One sector that has already demonstrated the benefits of investing here is the automotive industry. By combining the skills of Canadian workers with the technical expertise of Japanese automakers, we have produced some of the world's most efficient assembly facilities. As many of you know, Canada has been conducting a review of the competitiveness of the automotive sector, and its results will be made known shortly. The automotive sector is just one example of successful Japanese investment in Canada, and we believe that by getting the word out on what we have to offer, we can attract more -- much more -- to the benefit of both nations. We want to ensure that when Japanese business people think about investing abroad, a large red maple leaf to comes to mind! Of course, the relationship between Japan and Canada goes far beyond the exchange of goods and services. There is also a very strong people-to-people exchange -- through tourism, youth programs and the twinning of cities. These not only foster good will between our people, but also help to ensure that the Japan-Canada relationship retains the profile it deserves. I began by discussing the need for perspective in assessing the current crisis in Asia. And I suggested that those of you in this room had a particular role to play in providing that perspective. Canadians want to understand events in Japan better. We need your insights, your wisdom, your experience. In the days ahead, your contribution is needed more than ever. In closing, let me relay a story that is told of Abraham Lincoln, which I think captures the essence of what I've tried to say today. One night, when he was a young boy, Lincoln and a friend were out walking, when a meteor shower began. Lincoln's young companion became frightened, but Lincoln told him to look beyond the meteors, to the fixed stars shining above them. Today, we also must look beyond the present difficulties to the bright stars of opportunity and promise. We must see the storms for what they are -- troubling, but temporary. And if we do, we will see the rising sun of Japan still shining behind the clouds, still full of promise, and still strong enough to provide a bright future for its people. This is the future that Canada sees for Japan. And this is the future that we want to help build. Thank you. </body> </html>

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