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<html> <head> <meta name="Generator" content="Corel WordPerfect 8"> <title>MR. PETTIGREW - ADDRESS TO THE CANADA-U.K. CHAMBER OF COMMERCE BUSINESS LUNCHEON, CANADA-U.K. COOPERATION: PARTNERS FOR PROSPERITY - LONDON, U.K.</title> </head> <body text="#000000" link="#0000ff" vlink="#551a8b" alink="#ff0000" bgcolor="#c0c0c0"> CHECK AGAINST DELIVERY NOTES FOR AN ADDRESS BY THE HONOURABLE PIERRE PETTIGREW, MINISTER FOR INTERNATIONAL TRADE, TO THE CANADA-U.K. CHAMBER OF COMMERCE BUSINESS LUNCHEON CANADA-U.K. COOPERATION: PARTNERS FOR PROSPERITY LONDON, England January 20, 2003 Introduction It is my pleasure to be here in London today building on the very positive relations between our two countries. Already on this visit I have had an opportunity to meet with several key U.K. investors in Canada. And I should add, that my informal meeting with members of Network Canada, a U.K.-based forum for business-minded young Canadians, provides me with great optimism. I am sure that the future of Canada-U.K. commercial relations will be a bright one in their hands. In order to round out this visit, it is very appropriate that I find myself addressing the Canada-U.K. Chamber of Commerce. Your organization, which traces its origins back to 1921, typifies the strong links that exist between Canada and the United Kingdom. I would like to thank the Chamber for organizing this event and bringing together those dedicated to strengthening our commercial ties. It is also important to acknowledge the ongoing role played by the Chamber in providing a point of contact for Canadian companies in the U.K. and providing interested British companies with information on Canada. Canada-U.K. Relations: Shared History and Values Canada-U.K. trade relations are already very strong. It is our shared history and shared values that have formed a solid foundation for our successful economic partnership. These shared values--democracy, inclusion, partnership and innovation--have led directly to our competitive edge on the global stage. They also make it much easier for our business people to understand each other and to work together toward common goals. One common thread between our two countries--and indeed between our two continents--which I would like to point out in particular, is our increasingly diverse populations. When one walks the streets of European cities, it is evident that we share this advantage. The diversity of our societies strengthens our ability to compete in a global economy and enriches our lives. In Canada, multiculturalism has been a key determinant of our success. The inclusiveness offered by democracy, coupled with an emphasis on multiculturalism, afford Canada the double benefits of new and dynamic Canadians who retain strong personal, cultural and commercial ties with their countries of ethnic origin. We will continue to be a leader in advocating the importance of cultural diversity in international trade and culture forums. We will continue to raise this element in all forums in which we participate--and we see the U.K. as an important ally and dialogue partner for such issues. I was pleased that the November 2002 Canada-U.K. Colloquium, held in Toronto, was able to bring together so many of our best academics and policy experts to focus on the theme of immigration, multiculturalism and citizenship. Canada-U.K. Relations: Strong Economic Ties The United Kingdom is Canada's primary trading partner among European countries. It ranks second in the world, after the United States, as a destination for Canadian direct investment abroad, a source of tourists coming to Canada, and a market for Canadian business services. Worldwide, the U.K. is also the third-largest market for Canadian exports, after the United States and Japan. When it comes to trade in goods, the U.K. is Canada's third-largest export market worldwide at $5.05 billion. A quarter of all Canadian exports to Europe go to the United Kingdom. More important, the U.K. is Canada's second-largest market for manufactured goods and for services. Canada-EU Relations It would be an incomplete picture if I were to omit the European Community from my description of Canada-U.K. relations. The 1976 framework agreement for commercial and economic cooperation between Canada and the European Union provides for regular official dialogue on trade at several levels, something that helps to ensure that we continue to look outside our regional trading arrangements, continuing to foster greater trade ties. As a result of this open dialogue, this past December, Canada and the EU committed to negotiate a new, forward-looking, wide-ranging bilateral trade and investment enhancement agreement that would go beyond a classic free trade agreement based on market access issues. We expect that this new agreement will include so-called new generation trade issues, such as regulatory cooperation, standards and technical regulations, cultural diversity, as well as other outstanding market access barriers. The title of the agreement includes a reference to "investment," since investment is the fastest-growing aspect of our economic relations, both with the U.K. and with the EU. In designing the agreement, we will examine ways to further promote the positive climate for Canadian investment in Europe and for European investment in Canada. I believe that we will be able to count on the support of the British government in achieving this goal. Indeed, when Prime Minister Blair addressed the Canadian Parliament during his February 2001 visit to Ottawa, he highlighted the importance of strengthening transatlantic trading ties of this nature. I am hopeful, therefore, that this initiative can provide a major stimulus, one that will take an already very positive commercial partnership forward to even greater achievements. Investing in Canada Let me now take this opportunity to give you a taste of what Canada has to offer and explain why Canada is the place to be for investment. It is not surprising that investment is perhaps the brightest star in the Canada-U.K. economic partnership--and the potential and prospects for new, two-way investment have never been better. Indeed, Canada is far more than green space and natural resources. When you think of Canada today, you should be thinking innovation, leadership and technology. You should be thinking of a knowledge-based economy: one with a terrific business climate, and an educated work force to match; a country hungry for new investment, new business and new partners. The fact is that over the past 15 years, Canada has undergone a fundamental rethinking of its public policy, which is clearly visible in three key areas: • First, Canada today is fiscally responsible. The days of governments spending more than they had or promising more than they could deliver are over. Canadian federal government spending, as a percentage of GDP, just hit a 50-year low. • Second, Canada today is a free-trader--in fact, Canada is the number one trading partner for the United States. The United States trades more with Canada than with all of the European Union countries combined. • Third, Canada today understands that in the knowledge economy, where people, goods and money flow freely, the role of government is to give people the tools they'll need to compete and the freedom to go as far as their talent will take them. That's why we've invested so significantly in our research capacity, in universities and in new frontiers of knowledge such as genomics. So how did Canada go from being what the Wall Street Journal once called, "an honorary member of the Third World" to pulling off what Business Week called "the maple leaf miracle"? Let me tell you, It wasn't easy, but we did it. Transforming Our Economy The economic transformation began in the mid 1990s, when Canada became the first G7 nation to pull itself out of deficit and into surplus. This past October, John Manley, Canada's Deputy Prime Minister and Minister of Finance, announced that the federal surplus was $8.9 billion for fiscal year 2001-2002, the fifth consecutive year the federal budget has been in surplus. And we are the only G7 nation that is expected to balance its budget this year. In fact, the Organization for Economic Cooperation and Development [OECD] expects Canada to be the only G7 country in surplus in 2002 and 2003. Little wonder then, that the Institute for Management Development has declared Canada to be the best fiscally managed country in the G7. Moreover, we are one of the few countries to begin paying down our debt--more than $45 billion in just the last few years. As a result, our debt-to-GDP ratio has fallen faster than that of any other major industrialized nation, and is now below 50 percent--and dropping. Our market debt has fallen to below 40 percent of GDP. All of this progress in restoring order to our books has not gone unnoticed. Both Moody's Investors Service and Standard & Poor's have restored Canada's triple-A credit rating--the highest rating possible. Moreover, it has laid the foundation for strong, sustainable economic growth. Both the International Monetary Fund and the OECD predict that Canada will lead all G7 countries in growth in 2002 and 2003. Well, you may say, that's an impressive turnaround and good for you. But what does it mean to me? Why should a U.K. company or venture capital firm look at Canada for investment opportunities? First, because our economic fundamentals are solid. Second, because our R&D infrastructure is impressive. And third, because we've got the low-cost business environment and skilled workers to turn innovative ideas into products and services that sell. The dramatic turnaround in our economic fundamentals has enabled Canada to cut taxes and cut them significantly. In fact, Canada has marked the new millennium by introducing a $100 billion tax cut package--the largest in Canadian history. For businesses, this has created tremendous opportunities. By 2005, firms in Canada will have almost a four and a half percentage point tax advantage over U.S. firms. And our capital gains taxes have been slashed. In fact, Canada's top rate on capital gains is now lower than the typical top rate in the United States. When you add to these the most generous tax credits for research and development in the G7, you have a tax system that is not only competitive, but in many ways lower, than that in the United States. The Innovation Agenda We have also made significant new investments in support of our government's overriding economic objective: to make Canada one of the most innovative nations in the world--a magnet for the best minds and ideas and for new investment and new ventures. The government has committed to doubling its investment in R&D, with the goal of being among the top five countries in R&D performance by 2010. Canada has also unveiled a new Innovation and Skills strategy, backed by a commitment of more than $1 billion in the last budget. Over the past few years, we have invested more than $3.15 billion in the Canada Foundation for Innovation, to make sure that our universities, hospitals, and other research institutes have the infrastructure they need to pursue leading-edge research and to train the best graduates. We have created Genome Canada, providing it with funding of $300 million over five years. And we are investing $99.5 million over the next three years in nine of the Networks of Centres of Excellence. And because there is no doubt that in the knowledge economy, the real engine of growth is the human mind, we have allocated $900 million over five years to create 2,000 Canada Research Chairs in our universities, to attract and retain the finest teachers and researchers. Now, you might think that all of this comes at a high price. In fact, the cost of doing business is lower in Canada. That's not government propaganda or wishful thinking--it's the findings of the most comprehensive study undertaken on business costs in the G7 countries as well as Austria and the Netherlands. Canada: Ranking on Top As you may know, the international consulting firm KPMG periodically conducts such a review and their most recent report--for 2002--ranks Canada number one. This marks the third consecutive time that we have come out on top as the most cost-effective place to do business. KPMG examined 86 cities and looked at the cost of doing business in each--things like the price of land and labour, transportation and utilities. Eight of the top 10 cities reviewed are Canadian. And when compared to U.S. cities, costs in Canada are between 10 and 20 percent lower. Even if the Canadian dollar were to rise by 20 percent tomorrow against the U.S. dollar, Canada would still enjoy a significant cost advantage over U.S. locations. This means that Canada not only enjoys one of the highest standards of living, but that it also has the lowest cost of living among those nations studied. As you well know, educated workers are the key ingredient of business success. That is why we have been investing massively in research and education, setting excellence as our standard and leadership as our goal. This investment--and this commitment--are paying off. On a per-capita basis, more Canadians have a university or college degree than the citizens of any other country. This emphasis on academic excellence led the Global Competitiveness Report to rank Canada first in the world at developing knowledge workers in 2000. Why should you invest in Canada? Because now you know what others have already figured out: Canada means business. Come to Canada and take advantage of the kind of entrepreneurial spirit and innovation that brought the world RIM's revolutionary technology--the Blackberry, and NASA--the Canadarm. The Canadian VC [venture capital] industry has enjoyed unparalleled levels of investment since 1999. Canadian venture deals and capital flows experienced impressive growth through the second quarter of 2002. In 2000, a record $5.3 billion was invested in 993 firms based primarily in IT, life sciences, and other emerging technology sectors. Investments from major companies like Shire Pharmaceuticals Group and DuPont Canada illustrate that with a bank of trained professionals, and government support for R&D, Canada provides a solid environment in which to do business. Team Canada Europe The Government of Canada recognizes this enormous potential for an even stronger commercial partnership. That is why Prime Minister Chrétien announced that Team Canada will visit the United Kingdom from March 29 to April 1, 2003. This Team Canada mission will help encourage the great dynamism of our relationship with the United Kingdom. Team Canada missions are a concept unique to Canada, where our provincial premiers, territorial leaders and the business community work together to develop new business, investment and science and technology opportunities. Since 1994, the Prime Minister has led seven Team Canada missions to 21 cities around the world, generating $30.7 billion in new business for Canadian businesses and our strategic partners and investors around the world. This will be our second Team Canada trade mission to Europe, following our successful visit to Germany and Russia last year. As the world's fourth largest economy and Canada's largest trade and investment partner in Europe, it seems only natural that the 2003 mission will visit the U.K. (London) and will focus on investment, trade and science and technology opportunities. Two other European partners will be part of this mission: the Netherlands (Amsterdam and The Hague) from March 25 to 29 and Italy (Rome and Milan) from April 1 to 4. I am confident that the knowledge, expertise and enthusiasm Canadian business participants will bring to Team Canada 2003 will grab the attention of British and European business leaders, and position Canada as a preferred partner for years to come. Conclusion I have covered a lot of ground, but I think that when you put it all together--a dynamic and competitive economy, strong economic fundamentals, a competitive tax system, low costs of doing business, and a highly skilled work force, you have an unbeatable recipe for success in the new economy. So I would invite you to take another look at Canada. Look with fresh eyes at our new, knowledge-based economy. Examine with a critical eye the advantages of setting up shop in a lower-cost environment. And evaluate with a clear eye what all of this can mean to your own bottom line. When you do, I'm confident that you will discover that your next big growth opportunity is in Canada. I look forward to seeing many of you again in the spring when I return to London with Team Canada. Thank you. </body> </html>

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