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<title>MR. PETERSON - ADDRESS FOR THE TORONTO STOCK EXCHANGE EUROPEAN SHOWCASE - FRANKFURT, GERMANY</title>
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<p><font size="+1"></font><font size="+1"><strong>2004/1 <u>CHECK AGAINST DELIVERY</u></strong></font></p>
<p align="CENTER"><font size="+1"><strong>NOTES FOR AN ADDRESS BY</strong></font></p>
<p align="CENTER"><font size="+1"><strong>THE HONOURABLE JIM PETERSON,</strong></font></p>
<p align="CENTER"><font size="+1"><strong>MINISTER OF INTERNATIONAL TRADE,</strong></font></p>
<p align="CENTER"><font size="+1"><strong>FOR THE TORONTO STOCK EXCHANGE EUROPEAN SHOWCASE</strong></font></p>
<p><font size="+1"><strong>FRANKFURT, Germany</strong></font></p>
<p><font size="+1"><strong>January 20, 2004</strong></font></p>
<p>As one of Canada's chief salespersons, I am delighted to be here to make the case for my country. Let me start by
answering the bottom-line question that drives investment decisions the world over: why should I choose Canada?</p>
<p>To begin to answer this question, I would first draw your attention to some of the Canadian firms trading on the TSX
[Toronto Stock Exchange].</p>
<p>Nortel, Bombardier, MDS, Magna International: these are global leaders. They tell a 21st-century story; they tell Canada's
story--a story of creativity and innovation, of the best minds in the world pioneering new technologies and new processes.
They tell a story of a competitive business climate, a sophisticated and dynamic financial market, and an investor-friendly
government.</p>
<p>On top of all that, <em>The Economist</em> magazine actually declared Canada "cool" a few months ago--which is not a word often
associated with our country, except in meteorological terms.</p>
<p>When we speak of Canada as a 21st-century economy we start with the economic fundamentals, which have been
transformed over the past decade.</p>
<p>Not long ago, our country was weighed down by crippling deficits and skyrocketing debt. Interest payments devoured as
much as 36 cents of every tax dollar. This burden robbed us of the capacity to make choices and to make investments in the
priorities that Canadians cared about most, such as health care, education and the environment.</p>
<p>During his time as Finance Minister, Prime Minister Paul Martin set a course that restored our economic vitality. The
sacrifices paid off.</p>
<p>Barbara [Stymiest] has already touched on some of the impressive statistics:</p>
<p>• we've had balanced budgets over the past six years;</p>
<p>• our debt-to-GDP ratio has dropped from 71 percent to 49 percent; and</p>
<p>• from 1997 to 2002, Canada's GDP per capita grew faster than that of any other leading industrialized country. We are
forecast to outperform all G7 countries again in 2003.</p>
<p>Given all of these factors, it is little wonder that a 2002 international study of G7 countries conducted by KPMG ranked
Canada the number one most competitive country in terms of business costs. Or that the Economist Intelligence Unit last
fall ranked Canada first among 60 countries as the best place to do business over the next five years.</p>
<p>The challenge for our newly formed government, therefore, is, where do we go from here? How do we consolidate the
gains of the last decade while continuing to build for the future?</p>
<p>Above all, Canada must continue to maintain an unswerving commitment to balanced budgets, expenditure control and
lowering of public debt.</p>
<p>We will continue to put in place the right environment for business through key investments in innovation and social
programs and by introducing a favourable tax climate.</p>
<p>We will continue to implement our $100-billion tax reduction package. This puts Canada on track to have corporate tax
rates that will be, on average, five percentage points below those of the United States.</p>
<p>We will also be focusing much greater attention on upholding and safeguarding the integrity of the institutions in which the
public put their trust. Indeed, good governance, whether it be in the public or private sectors, is the bedrock of a 21st-century economy. </p>
<p>Canada's efficient and competitive capital markets have earned the trust of investors thanks, in large part, to a strong
tradition of promoting sound corporate governance, and to the leadership of individuals like Barbara.</p>
<p>In the mid-1990s, with the leadership of the Toronto Stock Exchange, Canada was among the first countries to implement
improved governance and mandatory disclosure. But, as the Enron and WorldCom scandals have shown, there is no room
for complacency.</p>
<p>That is why the Government of Canada is working with provincial governments, securities regulators and industry leaders
to promote confidence in Canadian capital markets, in such key areas as financial reporting and disclosure, the audit
process, corporate governance and management accountability.</p>
<p>We have placed a particular emphasis on toughening enforcement. Not because we believe that there is rampant abuse--far
from it.</p>
<p>It is simply a recognition of the potential gravity of the offences.</p>
<p>In this context, the Royal Canadian Mounted Police and federal partners will receive up to $30 million a year over the next
five years to create working partnerships among police, lawyers and other investigative experts to investigate and prosecute
serious market-related crimes.</p>
<p>This is an important step forward. But more remains to be done.</p>
<p>The attractiveness of Canada's capital markets, at home and abroad, depends in no small measure on the quality of its
securities regulation.</p>
<p>That is why, last March, the former Minister of Finance appointed a committee of experts to assess the existing system of
securities regulation in Canada and to recommend a regulatory structure that will best meet Canada's needs.</p>
<p>The committee tabled its report last month. Most significantly, it recommended that Canada adopt a fundamentally new
structure--a single regulator administering one code to replace the existing system of provincial regulators.</p>
<p>The new Finance Minister is currently reviewing the report closely and has shared it with provincial ministers responsible
for securities regulation.</p>
<p>He has expressed his desire to sit down with his provincial colleagues and industry insiders to have a frank discussion about
where we need to go from here.</p>
<p>If maintaining confidence in our capital markets is essential to building a 21st-century economy, so, too, is creating a more
robust climate for trade.</p>
<p>With this in mind, the new government recently created a stand-alone Department of International Trade to support
integrated federal trade, investment promotion and international business development.</p>
<p>This strengthened department will engage our partners, such as yourselves, to find more effective ways to increase the flow
of goods, services and investment.</p>
<p>In this context, we will be advancing an agenda of "smart regulation."</p>
<p>I consistently hear from business professionals and investors that expanding into new markets is a difficult and often
frustrating proposition. They find themselves mired in red tape. Standards in one jurisdiction do not conform to those in
another. The regulatory hurdles can be high and the bureaucratic mazes impenetrable.</p>
<p>There is a clear and compelling need for greater harmonization of processes and more productive regulatory cooperation.</p>
<p>We've made strides in this area in North America through the provisions of NAFTA, but I believe there is room for
improvement with other partners abroad.</p>
<p>I applaud the efforts of the Toronto Stock Exchange to work with its European partners to enhance market access by
investment dealers to foreign stock exchanges.</p>
<p>This is exactly the type of initiative we need to be promoting more vigorously at the bilateral and multilateral levels.</p>
<p>On a different though related front, I believe that as we look around the world for opportunities to expand trade, we need to
look at our efforts through more than a purely economic lens, and acknowledge trade as a lever for human development.</p>
<p>Trade is a lot like a river. All the boats rise when you open the dam and let the water flow freely.</p>
<p>For this reason, Canada believes that the international community needs to strengthen the multilateral organizations and
processes that encourage the free flow of goods, people and ideas around the world.</p>
<p>I am reminded of author and philosopher Michael Novak's "wedge theory": the notion that trade and capitalism in general
can be used to "wedge a democratic camel's nose under the authoritarian tent" by promoting the practices of free societies
around the world.</p>
<p>Finally, 21st-century economies are also outward-looking, energetically searching the horizon for new opportunities, even
with old friends. And as Minister of International Trade, I intend to renew our focus on Europe.</p>
<p>As you are most likely aware, we are currently working with the European Union to design a framework for a Trade and
Investment Enhancement Agreement.</p>
<p>Through the framework, I hope we can address outstanding issues such as the adoption of mutual standards and
harmonizing professional qualifications.</p>
<p>Discussions between Canada and the EU on the framework began last year, and formal negotiations are anticipated to start
later this year.</p>
<p>We are optimistic that this will be an important milestone in our relationship with the European Union.</p>
<p>Within the context of expanded Canada-EU trade, enhancing our relations with Germany, the anchor of the European
Union, is a particular priority.</p>
<p>On a rock-solid foundation of shared values and international cooperation, Canada and Germany have built a healthy trade
in goods, services, investment and technology.</p>
<p>Germany is Canada's fifth largest merchandise export market and ranks sixth among Canada's merchandise import
suppliers. Canadian investment has rapidly increased in recent years, passing the $9 billion mark.</p>
<p>Moreover, Canada is also one of the largest investors in the states of the former Democratic Republic of Germany--a
strong Canadian vote of confidence in the potential of the German economy.</p>
<p>Canada wants to take this diverse commercial relationship to a new level.</p>
<p>I have already touched on a host of reasons why German investors should look to Canada: our strong and sound economy,
our competitive financial sector and our investor-friendly government practices.</p>
<p>But at the risk of sounding boastful, I can go on.</p>
<p>Canada is a prime point of direct access to the NAFTA market of more than 400 million people with a combined GDP of
over US$11.4 trillion.</p>
<p>We have a highly skilled workforce and a network of social programs that enhance our exceptional quality of life and also
deliver competitive cost advantages--such as our universal public health care system.</p>
<p>Our country offers the most generous R&D tax write-offs in the G7. And in our drive to build a 21st-century economy,
Canada has invested $11 billion in research and innovation since 1998 alone.</p>
<p>We are impressively expanding our capacity and our potential in advanced-technology sectors, where German expertise and
global leadership are well known.</p>
<p>I see a great deal of potential for cooperation in research and development in areas such as biotechnology, alternative
energy and nano-technologies.</p>
<p>And establishing new partnerships will continue to be facilitated by the bilateral Science and Technology Agreement,
which we signed in 1971. Under this umbrella agreement, more than 500 projects have been completed in over 14 sectors.</p>
<p>We are already seeing some Canada-German success stories.</p>
<p>The Canadian company NDI, a world leader in 3D optical tracking systems, signed an R&D cooperation agreement with
the German company BrainLAB AG on developing remotely controlled surgery systems. This agreement gives NDI access
to the best German surgical robotics R&D facilities and clinics.</p>
<p>More recently, the German seed company NPZ started an R&D and distribution subsidiary in Winnipeg, Manitoba.</p>
<p>These are only two examples of many. We look forward to seeing many more.</p>
<p>I could continue to wax eloquent on the benefits of investing in Canada, but I don't want to overstay my welcome. The
ultimate message that I hope you take away from this luncheon is this: think Canada.</p>
<p>Think of the potent mix of economic, technological and policy ingredients that are rapidly making Canada the best place in
the world to invest and do business.</p>
<p>Think of the international accolades from the likes of <em>The Economist</em> and KPMG.</p>
<p>But don't just read the reviews. Come check us out for yourselves.</p>
<p>We have come a long way in Canada. But the best is yet to come.</p>
<p>Thank you.</p>
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