MR. KILGOUR - ADDRESS TO THE CANADIAN COUNCIL FOR THE AMERICAS ON'MOVING FORWARD WITH THE FREE TRADE AREA OF THE AMERICAS'
CHECK AGAINST DELIVERY
NOTES FOR AN ADDRESS BY
THE HONOURABLE DAVID KILGOUR
SECRETARY OF STATE (LATIN AMERICA AND AFRICA)
TO THE CANADIAN COUNCIL FOR THE AMERICAS ON
"Moving Forward with the Free Trade Area of the Americas"
CALGARY, Alberta
November 26, 1999
It is a pleasure to meet again with the Canadian Council for the Americas. When I talk to members of this
organization, I know I'm preaching to the converted. We share enthusiasm for our blossoming relationship with
the Americas. You appreciate the business opportunities in this hemisphere of 800 million people with a
combined GDP of US$10 trillion. Many of you are already out there in the pampas, mountains or jungles of
Latin America blazing new trails for Canadian business.
Hemispheric integration is moving forward and some of the people in this room are part of it. That is why we
can all be pleased with recent progress on the long road toward a Free Trade Area of the Americas (FTAA) by
2005.
Earlier this month, Canada concluded its 18-month chairmanship of the FTAA negotiations with a meeting in
Toronto of trade ministers from the 34 participating countries. We, as Canadians, can be proud of our
leadership in advancing the negotiating process. We have come a long way from its initial stages at the
Santiago Summit of the Americas and the meeting of trade ministers in Costa Rica, both in the spring of 1998.
This month's meeting of trade ministers produced a 32-point declaration discussing progress so far and setting
out a map of where to go from here. Most significantly, agreement was reached on a package of business
facilitation measures that will have a positive impact on companies doing business in the Americas - not in
2005, but starting in 2000. These measures will simplify customs clearances, and also make rules and
regulations more transparent. This is tangible progress and a key benchmark.
The meeting also produced a strongly worded hemispheric message to send to the WTO [World Trade
Organization] talks in Seattle next week, calling for the elimination of agricultural export subsidies and other
trade distorting practices. It is a sign that the countries of the Americas can speak with a common voice on key
international trade matters.
There was also agreement in Toronto to continue engaging civil society in the process at the hemispheric level.
Not all countries have been as enthusiastic as Canada and the United States about involving civil society.
Increasingly though, there is recognition that if the FTAA is to be successful, citizens must be engaged in the
process. We recognize that trade policy does have a social dimension and there are genuine concerns in
various quarters about the impact of globalization. If we are to move the process along, we must be prepared to
engage in frank and honest discussion. When my colleague Trade Minister Pierre Pettigrew met with
representatives of civil society in Toronto, he was joined by a number of other trade ministers from the
hemisphere who increasingly recognize the need for this dialogue.
Perhaps most important of all, however, is that contained in the 32-point declaration produced by the trade
ministers are clear directions to negotiators on where they would like to go next. Ministers specifically mandated
their officials to develop a draft text of an FTAA agreement for the next trade ministers' meeting in a year and a
half. This is an exciting prospect. In January negotiators will begin this work, with the resumption of meetings in
Miami of the nine FTAA negotiating groups, covering a range of sectors and issues. Also meeting will be the
three special groups addressing broader issues - civil society, electronic commerce and smaller economies.
Canada is now handing over the chair of negotiations to Argentina for the next 18 months, but we have left a
solid institutional foundation firmly in place. Argentina hosts the next meeting of trade ministers in Buenos Aires
in April 2001, setting the stage for the third Summit of the Americas to be held shortly afterwards in Quebec
City.
The FTAA is an ambitious project, but a very important one. For business and trade relations to flourish
throughout the hemisphere, clear, consistent, predictable and transparent rules are a must. Strengthening the
rules-based trading environment is the object of this exercise. It's not easy. The 34 democracies of the
hemisphere include rich and poor, small and large, developed and developing - from the enormous United
States to small Caribbean island nations. Reconciling the interests of such diverse countries requires genuine
sensitivity and willingness to compromise. Canada has been sensitive to the particular needs of its neighbours.
One of the key principles of the negotiations is that the final agreement must be adopted as a "single
undertaking" by all countries. This means that countries cannot pick-and-choose among the various chapters or
provisions of the agreement. Rather, they must accept it on an "all or nothing" basis.
It seeks to maximize market openness through a balanced and comprehensive agreement. In some areas, it
will chart new territory, and yet it will be consistent with the rules of the WTO. While the FTAA and WTO are
separate processes, they cannot work at cross purposes. The FTAA includes some areas not currently under
the WTO, such as a common investment regime, government procurement, and competition policy. It,
therefore, is breaking new ground.
To a trading nation such as Canada, it is essential to have open markets throughout the hemisphere. Today
one in three Canadian jobs depends on trade. Now 43 percent of our GDP consists of exports - a significantly
higher percentage than in any other G-8 country - and up from only 30 percent just five years ago. Since 1993,
our trade performance had exceeded domestic growth by nearly two to one. A very significant number of the
more than 1.9 million new jobs created in Canada since 1993 have come from export growth. Every billion
dollars of exports sustains about 11 000 Canadian jobs. Trade, then, is the key to our economic well-being.
Canada has a particularly important stake in the successful negotiations of the FTAA.
Regional agreements such as the FTAA help to build on and lock into place the accomplishments and
momentum of trade liberalization in recent decades. Much progress has already been made through unilateral
measures as well as sub-regional trade agreements. It is now important to extend the benefits to the
hemisphere as a whole.
Around the time that FTAA negotiations began, I was asked whether smaller regional trade blocs are a bridge
or a barrier to hemispheric economic integration. My answer then was the same as it is now - Canada firmly is
on the side of those who believe that sub-regional trade blocs are an important bridge - not only to an FTAA,
but to improved hemispheric relations in general, and a better global trading environment. We advocate the "co-existence" of the FTAA with sub-regional agreements because they are stepping stones to regional integration
and a more open multilateral system.
Given Canada's own successful experiences with smaller free trade agreements, why should my answer be
different? First, in 1988 we concluded the two-way Free Trade Agreement with the United States. Then, in 1993
with NAFTA we added Mexico. Canada had hoped to include Chile in NAFTA, but when the U.S. Administration
failed to win fast-track authority for this from Congress, Canada concluded its own bilateral free trade
agreement with Chile. We have also made advances in our relations with other sub-regional trading blocs,
including MERCOSUR, Central America, the Andean Community and CARICOM.
These sub-regional trading blocs are not only proliferating in the Americas, but ties are being built between
these different communities. Most important to the larger objective, they serve as a learning process for smaller
countries, stripping away decades - in some cases centuries - of protectionism and inward-looking
development policies. Not only do negotiators from individual countries gain technical expertise through the
process of working out sub-regional arrangements. These agreements also help smaller countries begin the
adjustment process to more open economies. Obviously trade liberalization has a bigger impact on a small
country such as Trinidad, with one million people, than on a large country such as the United States with a
domestic market of 260 million.
We cannot, however, allow the development of sub-regional trade blocs to become a pretext for slowing down
the FTAA process itself. Sub-regional blocs must be seen as stepping stones to hemispheric integration, but
not as the final goal.
In our own experience, for example, Canada learned from the process of negotiating dispute settlement
mechanisms with the United States in the FTA of 1988. These mechanisms have worked well, and are one of
the reasons why our bilateral relationship has been so successful, even though we are dealing with an
economy ten times our size. Canada is able to share this knowledge with other countries that have similar
concerns. We know first-hand how important it is that smaller economies are not held hostage to the whim of
larger ones. Indeed, the FTAA process provides many opportunities for sharing Canadian expertise.
NAFTA has made Canadian companies more aware of commercial opportunities in Latin America and the
Caribbean. By developing products and services for the Mexican market, companies have developed greater
expertise applicable to Latin America more generally. It makes sense to build on relationships that are already
strong.
Let's look, for example, at Calgary-based Alternative Fuel Systems Inc. This company, over the next decade,
will convert Mexico's entire public vehicle fleet of more than 100 000 micro buses and taxis from gasoline to
compressed natural gas. Those of you who have experienced the smog of Mexico City will appreciate how this
will improve pollution levels. While improving the environment, this company is also creating 400 to 500 new
jobs for Canadians. The company's vice president, Arie van der Lee, says NAFTA has played an important part
in removing trade obstacles and allowing such projects to move forward.
NAFTA has made a big difference to Canada's trade with Mexico, our largest trading partner in Latin America.
Canadian exports to Mexico rose by nearly 25 percent in 1998 alone; they have risen fully 127 percent since
NAFTA began nearly six years ago. Trade has expanded in both directions, and Canada is now Mexico's
second-largest export market after the United States. Canadian investment in Mexico quadrupled between
1993 and 1998. What we have achieved in Mexico with NAFTA, we can also achieve in the rest of the
Americas with the FTAA.
As business people and others interested in our expanding trade with the Americas, there is a direct role for
you in the process. Our consultations with the business community have been multi-faceted. The Fifth
Americas Business Forum (ABF) was held, of course, in Toronto as a lead-up to the trade ministers' meeting.
About 1000 business people from 26 countries of the Americas attended. Since the First Americas Business
Forum in Denver in 1995, the ABF has met on four occasions, immediately preceding FTAA Trade Ministers
Meetings. Recommendations from each of these forums have added important perspectives to the FTAA
process.
Convincing Canadians of the benefits of globalization is an important challenge. To be successful, Canadians
generally must be involved in the process. Trade Minister Pettigrew has talked of putting a "human face" on
globalization. This means recognizing that economic and social policies are two sides of the same coin.
Canada has long advocated the benefits of free trade while guarding against the negative effects of a global
economy. Globalization can become a "virtuous circle" where economic gains generate social benefits. At the
same time, human development is essential if we are to provide workers geared to the new knowledge-based
economy. In a sense, the FTAA is partly about managing the impacts of globalization.
The FTAA Committee of Government Representatives on the Participation of Civil Society was a Canadian
initiative aimed at making the process more transparent and broadening public understanding and support for
the FTAA. Many written submissions have already been made to the committee from members of civil society.
It was decided at the ministerial meeting in Toronto that this process of consultation should continue. It is
important that constructive comments be considered from a broad spectrum of society, including the business
community, labour, environmental and academic groups.
The Canadian government has also initiated comprehensive consultations of its own with the Canadian private
sector and other concerned members of civil society. A project of the scope of the FTAA will affect Canadians
in many ways. Before Canadians will support it, they must be assured that fundamental interests and values will
be respected, such as protection of the environment, labour standards, human rights, and other social
concerns.
Your engagement is vital to the growing public debate on the merits of trade liberalization. Many of you already
have positive experiences with hemispheric trade. I hope that in sharing them you will inspire others. You can
add believability to this message. Make your voices heard, and speak out for trade liberalization at every
opportunity.
I call on you, then, to redouble your efforts in shaping the future of this hemisphere.
Earlier this year, Colombian author and Nobel Literature Prize Winner Gabriel García Márquez expressed this
view for the new millennium: "Do not expect anything from the 21st century; it is the 21st century that expects
everything from you. It is a century that does not come ready-made, but rather ready to be forged by you, and it
will only be as glorious as the limits of your imagination."
In the next century, the rest of the Americas will become an even more important part of our lives, as the
neighbourhood draws closer. As business people already engaged in the Americas, your leadership and
inspiration in forging the next century is absolutely vital.
Thank you.