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<html> <head> <meta name="Generator" content="Corel WordPerfect 8"> <title>MR. MARCHI - ADDRESS TO THE COMMONWEALTH CLUB - SAN FRANCISCO, CALIFORNIA</title> </head> <body text="#000000" link="#0000ff" vlink="#551a8b" alink="#ff0000" bgcolor="#c0c0c0"> 99/29 CHECK AGAINST DELIVERY NOTES FOR AN ADDRESS BY THE HONOURABLE SERGIO MARCHI MINISTER FOR INTERNATIONAL TRADE TO THE COMMONWEALTH CLUB SAN FRANCISCO, California April 8, 1999 (12:30 p.m. EDT) Thank you to the Commonwealth Club, the California Council for International Trade, and Women in International Trade of Northern California for sponsoring this luncheon. It is good to be with you today and to address the Commonwealth Club, which since 1903 has provided such an important venue for ideas to be presented and issues to be debated. As you know, this year we are celebrating a very important anniversary -- the fifth anniversary of the North American Free Trade Agreement [NAFTA]. So today it is fitting to speak briefly about the NAFTA, about its achievements to date and where we go from here. By any measure, the NAFTA has been a resounding success. Despite dire predictions of "great sucking sounds" of jobs heading south and the shrill voices of protectionism, the NAFTA has confounded its critics, impressed its supporters and enriched the lives of citizens in its three participating countries. Under the NAFTA, Canada, the United States and Mexico have experienced healthy economic growth and are recording historically low levels of unemployment. This is a key point: the NAFTA has meant jobs in all three countries. Employment has increased by 20 percent In Mexico, by 7 percent in the United States and by 10 percent in Canada. Total trade among the three countries has also increased -- by 75 percent -- to stand now at over US$500 billion annually. Besides providing jobs for our people, this growing trade relationship has also helped cushion our economies against the slowdown in Asia and other emerging markets. In Canada, for example, the increase in our trade with the United States and Mexico has more than offset the decline in our exports to other major markets, such as Japan, and we have emerged in far better shape than we would have without the NAFTA. I understand that President Clinton made a similar point when he addressed the Commonwealth Club in February: that the United States weathered the Asian storm much better than expected in part because of its increased trade with Mexico. So the NAFTA has created jobs, stimulated growth and provided some insulation from the storms that have raged abroad. It has also helped the partners reduce barriers to further trade among us and paved the way for even more commercial activity in the future. Last year, for example, Canada and the United States eliminated all tariffs covered under the NAFTA, and most of the tariffs between Canada and Mexico will be removed by 2003. The reduction or elimination of these tariffs is not some abstract achievement -- it produces concrete benefits to consumers in all three countries, and it helps stimulate trade and make our economies work more efficiently. Similarly, the NAFTA has enhanced co-operation among its members to eliminate non-tariff barriers as well. We have come a long way, for example, toward making standards regimes more compatible, and this makes it easier for companies operating in one country to export to another. More generally, the rules-based trading framework created by the NAFTA has made the conduct of business in North America more predictable and transparent, and this in turn has helped minimize disputes. When disputes do arise, the NAFTA provides a forum for effective, prompt and impartial resolution. Trade is not the only beneficiary of the NAFTA; its increased protection for investors has also encouraged investment in all three countries. In fact, the NAFTA partners have invested more than $380 billion in each other's economies since the Agreement was signed. As well, the NAFTA agreements on labour and the environment have bolstered co-operation in these important areas and ensured that domestic laws are fully enforced. These accords have provided eloquent testimony to the proposition that sound environmental practices and the fair treatment of workers can go hand in hand with trade liberalization -- indeed, that they must do so. As a former Minister of the Environment, I know of San Francisco's long-held commitment to environmental issues -- indeed, this is the birthplace of the environmental movement -- and I know you share my hope that the NAFTA will continue to contribute to an awareness of the relationship between trade and the environment. In all of these areas -- economic activity, job creation, trade and investment -- the NAFTA has worked and worked well for its members. For Canada, the NAFTA has done something else as well: it has ignited the interest of our business community in pursuing opportunities throughout our hemisphere. Over the past few years, we have worked to extend the benefits of free trade beyond North America. For example, Canada has concluded a free trade agreement with Chile that is modelled very closely on the NAFTA. And last year, more than 500 companies from across Canada signed up to participate in a major visit to Latin America led by our Prime Minister -- the highest participation rate that we have ever seen for such a mission. We are also chairing the Free Trade Area of the Americas negotiations, designed to create the world's largest free trade area -- 34 countries in all -- with a population of 800 million and a combined gross domestic product of $9 trillion. So the NAFTA has been important not only for the benefits it has brought but also for the precedent it has set and for the desire it has inspired to expand our vision beyond its borders. One of the most important qualities of the NAFTA is its dynamism. It is not a static agreement with a limited shelf life. Rather, it has created a living, breathing framework for managing current and future priorities in the North American marketplace. More than 30 committees, working groups and other subsidiary bodies have been established under the NAFTA, not only to oversee the implementation of our commitments but also to facilitate the conduct of business in North America and consider opportunities for further co-operation. This is not always glamorous work -- indeed, it is often very technical. But it is central to the ongoing, day-to-day work that allows the tremendous flow of trade and investment across this continent to run smoothly. And despite what you might hear or read in the media, trade and investment in North America do run smoothly the vast majority of the time. Beyond the economic sphere, the NAFTA has also helped build a stronger sense of community and shared interests among our three countries, spanning both the economic and social worlds. While we have achieved much, our work is not done. We must keep our focus firmly on the challenges and opportunities that still lie ahead. Later this month, I will host the meeting of the NAFTA Commission -- the trade ministers from all three countries -- in Ottawa. This will be an ideal opportunity not only to celebrate the past five years but, more important, to begin to chart the way forward. While I will not attempt a full elaboration of what our shared future may hold, let me just quickly note several priority areas for Canada. First, we must ensure the continued implementation of the NAFTA, with particular attention to the few areas where we have slipped behind in our commitments -- cross-border trucking services is one example that comes to mind. Second, we need to work to ensure greater openness and transparency in the NAFTA institutions. Demystifying the NAFTA, including its dispute settlement processes, would strengthen public confidence in the Agreement. And engaging our respective private sectors and other interested parties would ensure that our work together is as relevant and responsive as possible to those it is intended to serve. We need to remember that, like politics, all trade is local. Third, we must take a close look at the investment chapter -- Chapter 11. We are seeing more and more cases being brought under the investor-state dispute settlement procedures, and this is a good example of where more transparency and openness can be brought to NAFTA procedures. I believe the public has a right to know when their government is being challenged. I also want to see whether the NAFTA countries can be more explicit in our common understanding of certain provisions, particularly those related to expropriation and compensation. We all have our share of imaginative trade lawyers looking for further opportunities. But the original intent of the NAFTA Parties is clear: the rights of investors do not inhibit the sovereign responsibility of governments to legislate and regulate in the public interest. It is also important to ensure that the NAFTA expropriation provisions are interpreted in a manner consistent with the original intent of the Parties. Fourth, we need to ensure that the NAFTA keeps up with the rapid technological change taking place -- something that those of you in Silicon Valley understand better than most. We need to ensure that new ways of doing business, such as electronic commerce, are fully reflected in the NAFTA and that we do not proceed into the next millennium with rules that don't reflect the new realities. Fifth, we should reassess areas that either were not fully addressed in the NAFTA or where further progress -- or even a different approach -- may be possible. This could include greater co-operation in our respective use of trade remedies, particularly in light of the growing integration of the North American economy and our shared multilateral interests. It may also be possible to make our respective technical standards regimes, including those that apply to agricultural trade, more compatible and less distorting. Finally, we would like to see greater co-operation in the development of, and interaction between, trade and the labour and environmental side agreements. The nine ministers under the NAFTA, for example, have never met to discuss the horizontal, converging issues of the day. In an era of globalization, the social dimensions of our trade policies are attracting more and more public attention. There is no doubt that the goals of trade liberalization, sustainable development and enhanced respect for workers' rights are compatible. What is important is to ensure that the instruments and approaches we adopt for pursuing these goals are as mutually reinforcing as possible. As I mentioned, this is certainly not an exhaustive list, and our American and Mexican friends may well have additional priorities. The important point, however, is that our three countries work together to ensure that we have a common vision for North American trade policy and that the NAFTA remains the vital, state-of-the-art instrument its architects intended it to be. Canada and the United States remain not only neighbours but friends. We have fought together in times of war and stood together in times of peace. We are major trading partners and enrich each other in more ways than we can imagine. Our partnership has now been expanded to include Mexico, and the opportunities for prosperity and for enrichment of the people of this continent are greater than they have ever been. Let me close by quoting one of this state's former governors, Ronald Reagan. When he addressed the Parliament of Canada in 1981, President Reagan reminded us that "our mission is more than simply making do . . . [it is to] lift the world's dreams beyond the short limits of our sights, to the far edges of our best hopes." Let us take that wise counsel to heart and raise our own sights to the dreams of this continent and all that it may become. Thank you. </body> </html>

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