MR. PETTIGREW - ADDRESS TO THE CONFERENCE BOARD OF CANADA"CANADA IN THE WORLD: PROMOTING PROSPERITY IN THE WORLD THROUGH TRADE" - TORONTO, ONTARIO
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NOTES FOR AN ADDRESS BY
THE HONOURABLE PIERRE PETTIGREW,
MINISTER FOR INTERNATIONAL TRADE,
TO THE CONFERENCE BOARD OF CANADA
"CANADA IN THE WORLD: PROMOTING PROSPERITY IN THE WORLD THROUGH
TRADE"
TORONTO, Ontario
April 25, 2003
Introduction
I would like to thank the Conference Board of Canada for the opportunity to share some thoughts with you on
how Canada can promote prosperity in the world. While I see the expansion of open markets as a very
important "ingredient" for building prosperity, it remains only part of the solution to increased prosperity, not the
entire answer.
In Canada, it is natural to see trade as a way to advance our own prosperity. Indeed, trade is the source of
close to 45 percent of our GDP and one in every three jobs in Canada is tied to trade. You are all no doubt well
aware that over 80 percent of Canada's goods and services exports go to the United States. You appreciate the
vital necessity of keeping that market open and that border flowing as freely as due attention to security will
allow. We all know how our profoundly integrated economies require goods, services, people, information and
ideas to move without impediment.
Trade and investment are a road to new and emerging markets. At present, some of these markets may still be
a small share of our total exports. And yet, despite some of the difficulties faced by many of these emerging
market economies, the Canadian presence is growing. When Canadian companies invest in these new
markets, we are not only creating jobs at home for Canadians, but also jobs--and most importantly
opportunities--abroad in developing countries. The efforts we make to open markets and to build business ties
with these markets are a valuable way to engage and indeed to empower developing countries.
The Role of Trade in Promoting Development and Prosperity
I do not view trade as the answer to every social ill. But I am not alone in saying that the long-term prospects for
growth and prosperity for any country depend greatly on its ability to tap into foreign markets. These days,
recognition of the importance of open markets to a country's social and economic development has crossed
traditional political boundaries. For example, Ricardo Lagos Escobar, the President of Chile, is a man who is a
dyed-in-the-wool socialist--someone who served as Salvador Allende's ambassador to Moscow (just to give
you a sense of his socialist credentials). President Lagos can hardly be described as an agent of global
capitalism, yet he is a fervent supporter of improved trade ties within the Americas and elsewhere. For his
country, he sees this as the only avenue for real and significant development.
He is not alone. At the Quebec Summit of the Americas in April 2001 on the Free Trade Area of the Americas
(FTAA), we had 34 democratic leaders of the western hemisphere saying, "We want in!" The leaders, whether
they were from poor island nations, or strong developed countries, whether they were socialist politicians or free
marketers, all spoke with one voice on at least one issue: their support for increased, liberalized trade and their
belief in its benefits.
In the case of the African continent, China and India, the consensus is clear: trade is a necessary and likely
vital factor to achieving social and economic progress. One estimate suggests that, in developing countries,
within 10 years we will see an additional 900 million people with U.S.-level personal incomes--three times the
population of the U.S.
In China, already the world's fourth largest trader, GDP growth is over 7 percent. In India, growth exceeds 5
percent. Developing countries, in all, can expect an average of 4.7 to 4.8 percent growth, twice the average rate
expected of OECD [Organization for Economic Cooperation and Development] economies. Trade with and
among developing countries has been growing at five times the rate of global trade.
While continued aid in the form of investment, financing and capacity building is also important, a dollar of trade
will generate far more development than a dollar of aid. This is where developed countries like Canada can
help. There is no question that in the current international trade environment developed countries present
significant barriers to development in developing countries in this hemisphere and beyond.
Let me offer you two examples:
• In 2000, OECD countries spent an incredible US$300 billion on agricultural subsidies alone. This sum is the
equivalent of sub-Saharan Africa's total GDP.
• The price distortion caused by U.S. cotton subsidies is estimated to cost African cotton-producing countries
US$250 million annually.
The costs of these subsidies, both economic and social, are enormous. Development is a long-term process to
building prosperity, but it is most immediately a crisis of survival for most of the world's citizens. Half the world's
people still live on less than $2 per day and one billion live on less than $1 per day.
Many developing economies and societies are engulfed in a health crisis and facing collapse in the face of
diseases like HIV/AIDS, TB and malaria. How can we expect the people of these countries, and their children,
to survive, let alone thrive, if developed countries do not do their part to lower barriers to trade?
I can tell you, however, that Canada is part of the general consensus in favour of a comprehensive approach to
helping developing countries help themselves. For example:
• We have taken concrete action on market access to Canada.
• We are playing a leading role in Doha Round negotiations.
Market Access
Market access refers to the ability of exporters from around the world to access Canada's markets. Canada's
main objective in this area is to explore ways to allow the world's poorest countries to develop by increasing
their private-sector revenue flows. This can be done by increasing their opportunities to trade and by
encouraging investment in their economies.
As of January of this year, Canada has opened its markets to the world's least developed countries (LDCs).
This initiative will help to foster economic growth throughout Africa, for example, by eliminating tariffs and
quotas on almost all products. We are doing this in a balanced way that respects the needs of domestic
industry while meeting the international objective of opening our markets to LDCs.
This is a made-in-Canada solution that eliminates some of the barriers to Africa's full participation in the global
economy and has an immediate impact on the development prospects of the continent--and on the lives of
Africa's people. Freer trade is ultimately about ensuring an improved standard of living in developed and
developing countries alike. For the LDCs, the Canadian approach constitutes one of the most tangible gains
they have realized to date. We are encouraging other developed countries to follow and we hope they will.
Along with the Canadian International Development Agency's social development priorities, our contribution to
the New Partnership for Africa's Development, and our cooperation with other countries on debt, health, and
sustainable development, the LDC market access initiative is part of a comprehensive approach to poverty
reduction that addresses economic, social, environmental and systemic issues.
Regional and Multilateral Trade Negotiations
Developing countries will have an enormous role in future global growth. Further integration can open the door
to helping developing countries meet their growth objectives and potential. Developing countries make up two
thirds of the WTO's membership. They make up a substantial number of the negotiating parties of the Free
Trade Area of the Americas.
One study predicts that developing countries would see a $540-billion annual income gain from the elimination
of barriers to trade in goods. Three quarters of that gain would arise from the elimination of developing
countries' own restrictions. In fact, 71 percent of tariff payments go to other developing countries. South-south
payments are 42 percent of the world total.
As Minister for International Trade, I have spent the last three years working to ensure a fair, rules-based global
trading system. Trade negotiations are where "the rubber meets the road" for developed and developing
countries alike. It is there that the rules are defined. Each party to the negotiations has different objectives and
interests.
While we in Canada are acutely aware of our own national interest, in the context of trade negotiations, I have
learned that we must understand developing country objectives. There are differences among the developing
countries. Indeed, even the phraseology of developed versus developing countries leaves much to be desired,
as there are marked differences between Honduras and China, for example.
At the trade table, the days of bloc voting are over. Some contracting parties are more interested in one
segment of the negotiations, such as agriculture, than others. Others see no benefit at all to them in the Doha
Round. They say that Uruguay Round commitments by some WTO parties have not been implemented and
that they do not wish to move on to new issues because of that. Some smaller developing countries worry that
a successful round will erode their preferences in the EU market. Least developed countries are too often
unable to participate effectively in these complex and multi-faceted talks through a lack of resources.
If there is common ground among most developing countries, it is that some special and differential treatment
should remain. Canada is sympathetic to longer transition periods for implementation by developing countries
but feels that reciprocity of treatment is essential. The outcome must be to integrate rather than to segregate.
That is the reason Canada has chosen a leadership role on the successful integration of developing countries
in the world economy and in the international trading system, both through the WTO Doha Development
Agenda and through regional negotiations such as the FTAA.
We understand the complexity of the negotiations and the challenges of taking effective advantage of new
opportunities presented by opening markets and so have contributed generously to trade-related technical
assistance and capacity building. Last month, I announced a new commitment of half a million dollars to the
WTO Global Trust Fund. Over the previous three years, we allocated $520 million to training and other
capacity-building initiatives.
Canada's Challenge
What we see ahead in this global journey is a gathering convergence of Canada's foreign policy, trade interests
and humanitarian values. What we need for our long-term prosperity are instruments that allow us to respond to
emerging opportunities in a changing world. Growth in developing countries shifts the shape of our world.
Engagement with developing countries not only tracks with emerging opportunities, it also positions Canada
with new centres of growth in the world economy and new centres of influence on the full range of human
events.
It also explains why we want to work with the business community and others, on a voluntary basis and within
the OECD Guidelines for Multinational Enterprises, to make Canada a leader in what we call corporate social
responsibility. We have much to offer in our models of governance and much to benefit from all actions that
consolidate fair practices and the rule of law. Finally it is why we are trying to take an integrated approach to all
policies, whether enhanced market access, development aid, technology transfer, debt relief, education
linkages or environmental cooperation.
There is no single way to gain new markets for Canadian business or to provide assurance of sustainable
growth and equity in the developing world. Yet through this effort to build coherence, reinforced by new
partnerships, I believe that Canada can lead and that the standards Canadians set by their example will be as
much part of the brand, as much a sign of what we are and how we are seen, as the technology and skills we
bring to workplaces of the world.
Once again, thank you for your kind attention and my best wishes for a successful meeting.