October 31, 2001 (3:15 p.m. EST) No. 147

PETTIGREW TABLES GOVERNMENT RESPONSE

ON CANADA-EUROPE RELATIONS

International Trade Minister Pierre Pettigrew today tabled the Government Response to 25 recommendations made in the report Crossing the Atlantic: Expanding the Economic Relationship between Canada and Europe.

The report was prepared by the Standing Committee on Foreign Affairs and International Trade, and tabled in the House of Commons in June of this year. It explores Canada's economic relations with Europe, and recommends ways to boost trade and investment between the two markets.

"Many of the government's current policies and programs are in concert with the report's recommendations," said Mr. Pettigrew. "We recognize the growing potential of the European market for Canada, and we want to expand our trade and political relationship with our partners there. The Government Response to the report describes many of the innovative activities already under way to strengthen our commercial ties with Europe."

The Government Response acknowledges the challenges of promoting trade and investment with Europe, and highlights activities undertaken to better brand Canada in Europe. It also mentions the importance of reducing trade barriers with Europe through multilateral trade negotiations. The government agrees as well with the need for co-operation between Canada and the European Union (EU) on regulatory issues. In addition, the Response acknowledges that a free trade agreement between Canada and the EU is an option meriting careful consideration. A study on the effects of tariff elimination on Canada-EU trade, presented to the EU last June, was a first step toward evaluating the benefits and costs of trade liberalization with Europe.

The Government Response is available on the Internet site of the Department of Foreign Affairs and International Trade at:

http://www.dfait-maeci.gc.ca/english/geo/europe/index.htm

- 30 -

A backgrounder is attached.

For further information, media representatives may contact:

Sébastien Théberge

Office of the Minister for International Trade

(613) 992-7332

Media Relations Office

Department of Foreign Affairs and International Trade

(613) 995-1874

Backgrounder

CANADA-EUROPEAN UNION RELATIONS

The Report of the Standing Committee on Foreign Affairs and International Trade addressed Canada's economic relationship with all of Europe, not just the European Union (EU) and its 15 member states. The information below concerns only the EU-Canada relationship.

Economic Relations

With a population of 375 million and enormous market and production capacity, the EU had a 20 percent share of the world's aggregate GDP in 2000. The EU is also the world's largest trader of goods and services: in 2000 it accounted for 36 percent of global exports of goods and services.

Canada's economic relations with the EU are characterized by strong two-way trade and investment flows. In 2000, bilateral trade in goods and services totalled $75.4 billion, and two-way cumulative investment reached $134 billion. However, with Canadian exports to the EU accounting for only 6.6 percent of Canada's total goods and services trade, there is likely to be room for growth. Our trade with the EU is not increasing as rapidly as with other regions. As a result, the EU's share of Canada's total exports and imports has been declining over the past decade.

Trade

In 2000, Canadian exports of goods to the EU amounted to $22.1 billion, and imports to $33.4 billion.

Canada exported $9.6 billion worth of services to the EU in 2000, and imported $10.3 billion.

Investment

The stock of Canadian direct investment abroad in the EU has grown substantially during the past decade, and stood at $56.5 billion in 2000.

The stock of EU foreign direct investment in Canada stood at $77.9 billion in 2000. It underwent a very substantial increase of $28.3 billion in 2000 as a result of major acquisitions, which included Alcatel's purchase of Newbridge and Vivendi's acquisition of Seagram.

Political Relations

Since the signature of the Joint Canada-EU Political Declaration and Action Plan in 1996, Canada's relationship with the European Union has been significantly strengthened. It now goes beyond commercial relations to include a whole range of issues facing Western nations: foreign and defence policy, environment, social issues, immigration, information technology, health, and employment.

Canada and the EU co-operate on a number of initiatives. The year 2001 marks the - 30 - 25th anniversary of Canada-European co-operation under the Framework Agreement for Commercial and Economic Co-operation, signed in 1976. This Agreement was "inspired by the common heritage, special affinity and shared aspirations" uniting Canada and the EU countries.

Twice yearly, Canada and the EU hold summits to discuss how the two partners can co-operate on various foreign policy and trade issues. At the last summit in Stockholm in June 2001, Minister Pettigrew presented to European Commissioner for Trade Pascal Lamy the study entitled Canada-European Union Trade and Investment Relations: The Impact of Tariff Elimination. It concludes that Canada-EU trade could increase by over $10 billion a year if tariffs were eliminated on transatlantic trade. The study is an initial evaluation assessing the possible effects of tariff elimination on Canada-EU trade. Other issues, such as non-tariff barriers, investment, trade in services, rules of origin and agriculture, warrant further examination.

Canada-European Union Trade and Investment Relations is available on the Internet site of the Department of Foreign Affairs and International Trade at:

http://www.dfait-maeci.gc.ca/english/geo/europe/EU/Canada-EUFTAStudy-english.pdf