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<html> <head> <meta name="Generator" content="Corel WordPerfect 8"> <title></title> </head> <body text="#000000" link="#0000ff" vlink="#551a8b" alink="#ff0000" bgcolor="#c0c0c0"> 2004/20 CHECK AGAINST DELIVERY NOTES FOR AN ADDRESS BY THE HONOURABLE JIM PETERSON, MINISTER OF INTERNATIONAL TRADE, ON THE OCCASION OF TRADE POLICY DAY OTTAWA, Ontario March 29, 2004 Trade Policy Day has become one of the premier events on the calendar of the new Department of International Trade. I am pleased that so many senior officials of the Department are taking part. And I want to congratulate the Canadian Chamber of Commerce, the Council of Canadian Chief Executives and the Canadian Manufacturers & Exporters for doing such a fine job this year. On March 23, my colleague Finance Minister Ralph Goodale tabled the first budget of the new Paul Martin government. Now, I may be biased, but I think that Budget 2004 is outstanding. And I am confident that Ralph will be tabling many, many more budgets. But more objective observers also agree. I quote: "The government has heard our call and delivered a back-to-basics budget that restores our confidence in the government's fiscal management." That quote proves that Nancy Hughes Anthony [President and CEO of the Canadian Chamber of Commerce] is not just a fine host, but a discerning one as well. Budget 2004 is fair, responsible and disciplined. It prudently mixes unswerving commitment to balanced budgets with strategic investments that strengthen both our social foundations and the competitiveness of our economy. It contains key investments in health care and learning. It also takes important first steps to deliver on our government's pledge to forge a New Deal for communities across Canada. But, for the benefit of you here today, I want to discuss it from a business and trade perspective. Budget 2004 recognizes that, if Canada is to be a country of achievement in the 21st century, we must have a sound economy that is driven by technology and innovation. Budget 2004 sustains a fundamentally strong Canadian economy with a forceful commitment to fiscal discipline and expenditure control. It is Canada's seventh consecutive balanced budget, representing the longest run of balanced federal budgets since Confederation. It also projects balanced budgets or better for next year and the year after. Budget 2004 also sets the objective of bringing Canada's debt-to-GDP ratio down to 25 percent within 10 years. As many of you recognize, 2003 was a challenging year for the Canadian economy. There were shocks like BSE, SARS, the blackout here in Ontario, forest fires and Hurricane Juan. They combined with the uncertain global economy and the rise in the value of the dollar to slow economic growth to 1.7 percent last year. Prudent fiscal management enabled us to address these challenges without falling into a deficit situation. To cushion against future shocks, our government will maintain its Contingency Reserve at $3 billion and set aside an additional $1 billion in economic prudence in both 2004-05 and 2005-06. No one knows better than those in this room that a 21st-century economy is driven by ideas and innovation. In that context, business needs partnership with government that nurtures an advanced research capacity and rewards entrepreneurship and risk taking. Budget 2004 addresses these priorities by boosting funding for Canada's three federal granting councils to help foster knowledge and innovation, and includes $270 million to provide venture capital for start-up companies in key emerging sectors. Budget 2004 also increases the capital cost allowance [CCA] rate for computer equipment to 45 percent from 30 percent. And it increases the CCA rate for broadband, Internet and other data-network infrastructure equipment to 30 percent from 20 percent. Budget 2004 recognizes that the small-business sector is a key source of innovative ideas. That is why, among other steps, we are accelerating by one year the planned increase in the small-business deduction limit--the amount of business income to which the lower 12-percent income tax rate applies--to $300,000 by 2005. We are removing an impediment that has prevented small businesses, in some circumstances, from fully accessing the refundable Scientific Research and Experimental Development Investment Tax Credit. We are extending the non-capital loss carry-forward period to 10 years. This will be particularly beneficial for innovative start-up small businesses, which may experience financial losses while developing new technologies and products. Given that building a 21st-century economy is a pillar of our government's agenda, I have been deeply gratified by the positive response of the advanced technology sector to the Budget. The Canadian Advanced Technology Alliance said, "This is a very positive budget that invests wisely in innovation." The Information Technology Association of Canada said, "We think that the government has created a solid framework for growth." Indeed, I am proud of the initiatives outlined in Budget 2004. The fiscal discipline, the focus on strengthening our social foundations and communities and the stress on building a 21st -century economy will greatly assist me in my role as Minister of International Trade, one of the chief salespeople for Canada. The Budget sends a clear message to the world that Canada will continue to be one of the best places in the world in which to invest and do business. As such, Budget 2004 supports the aggressive trade and investment strategy we are pursuing in the newly created Department of International Trade. The state of trade Earlier, I referred to the shocks that hit the Canadian economy last year. While the fundamental strength of our economy allowed us to weather each of them in solid shape, it should not be surprising to find that they did have a detrimental impact on Canada's trade and investment performance last year. The Fifth Annual Report on Canada's State of Trade, which I am releasing today, reflects this impact. It shows a broad-based decline in exports and imports in economic sectors ranging from automobiles, machinery and equipment to tourism. It also shows that both foreign investment in Canada and Canadian investment abroad declined last year. These numbers are disappointing. But they are also a tribute to the incredible strength of the Canadian economy and to the wisdom of trade liberalization. Imagine the impact of a year like 2003 on a Canada that did not have its fiscal house in order. Imagine what the impact would have been if we were not a part of NAFTA, or if we did not benefit from the rules-based access to markets afforded under the WTO. Imagine where we would be if we followed the counsel of those who pin every economic hiccup on globalization, on innovation, on the fact that other countries are modernizing their economies and beginning to compete with us. Imagine all of that and you wouldn't just be pessimistic today. You would be downright depressed. This year marks the 10th anniversary of the coming into effect of NAFTA, an agreement that Canadian business fully supported and helped bring to fruition. You can be proud of the role you have played in that success. Canadian trade with the U.S. and Mexico has almost doubled and now surpasses $659 billion annually. Total foreign direct investment in Canada reached $358 billion in 2003, as investors increasingly recognize Canada's competitive advantage and preferred location as a gateway to the world's largest market. Our GDP growth has perennially performed at or near the top of the G7 countries. On jobs, the NAFTA years have coincided with our lowest unemployment numbers since the 1960s. Even last year, 334,000 new jobs were created in Canada, many of them in the export sector. This is the best record in the G7. And, contrary to what skeptics have said, these benefits were realized without sacrificing our sovereignty and unique values: our culture, our health care, our public education and our social services. Outlook for 2004 and beyond Looking to 2004, I am confident that we will see Canadian trade and investment rebound and begin a new cycle of growth. The global economy is strengthening. The U.S., Japan, the United Kingdom, China, India and Brazil, currently our best partners and our leading potential markets, expect improved growth rates this year. Canada remains in a fiscal surplus position, and our current account is in surplus and is growing. Indeed, we are the only nation in the G7 that enjoys both fiscal and current account surpluses. The report also shows that exports of energy and energy products increased. Yet another reason why I am optimistic is that Canada continues to be recognized as one of the best places in the world in which to invest and do business. KPMG, for example, recently ranked Canada as the lowest-cost country in which to do business among the 11 major nations studied, including all of the G7 countries. KPMG gave Canada a 9 percent cost advantage over the U.S., even in the context of a rising Canadian dollar. Canada will also continue to draw new strength from our rapid transformation into a 21st-century economy. Indeed, one of the brighter spots in the State of Trade report is in the area of trade in commercial services, which remains strong. It is the environmental, financial, engineering and computer software services sectors that are putting us in the forefront of the new technology economy and providing some of Canada's highest-paying jobs. And we continue to explore new means of maximizing our potential in these growth sectors. Recently, at the Canada-EU Summit in Ottawa, for example, EU Trade Commissioner Pascal Lamy and I agreed to a framework for a Trade and Investment Enhancement Agreement (TIEA), a very important initiative for Canadian businesses, particularly those in the services sector. The TIEA is just another example of how Canada is not afraid of globalization. Indeed, we believe the world needs more free trade, not less. More fundamentally, Prime Minister Martin understands the inherent connection between trade and investment and the fundamental policy goals of our new government: building a 21st-century economy; strengthening Canada's social foundations; and enhancing Canada's role in the world. And it was to more strategically and effectively harness our trade and investment agenda to those objectives, with partners across government and across Canada, that he decided to create the new Department of International Trade. I know that my officials have been laying out the details of our new strategy for you. But I want to highlight a few key points today. First, the new department will be giving a higher profile to Canada's 21st-century technology sectors as global trade and investment partners of choice. Second, we will be modernizing our international business development tools to ensure that they meet your needs in the 21st-century marketplace. Third, we will be looking at how support for both inward and outward investment can better position Canadians to take advantage of emerging global supply chains. Fourth, we will continue to be creative and energetic in maximizing Canada's trade and investment potential in traditional markets of strength and emerging markets. Naturally, much of our work will revolve around ensuring that our relationship with the U.S., our largest market, remains strong. Last week, Canada won a clear victory in the softwood lumber dispute with the U.S. The WTO found that the U.S. had not substantiated the basis for the prohibitive 27.2-percent import duties placed on Canadian lumber. It shows we're on the right track in litigating the dispute at the WTO and before a NAFTA panel, which we expect will also soon rule in our favour. Meanwhile, in partnership with the industry, my provincial counterparts and I are pursuing a negotiated settlement that would lead to a durable, long-term solution with the U.S. Such disputes make headlines but, in reality, more than 95 percent of our trade with the U.S. is dispute free. To ensure that this remains the case, we have put in place the 30-point Smart Border initiative to improve and maintain the security and efficiency of the border. We will continue to move ahead with the Enhanced Representation Initiative to ensure that Canada's interests in the U.S. are forcefully advanced. We are also continuing to work with our NAFTA partners, the U.S. and Mexico, to ensure the Agreement continues to function well. In addition, we are committed to strengthening our presence beyond the North American market. Bilaterally, we are negotiating expanded market access for Canadian businesses through free trade agreements with Singapore and four Central American countries. Discussions toward possible FTAs [free trade agreements] are ongoing with several other trading partners including CARICOM [Caribbean Community and Common Market], the Andean Community countries and the Dominican Republic. Regionally, Canada supports the creation of a Free Trade Area of the Americas that would extend from Nunavut to Tierra del Fuego. At the Doha Round of the WTO, we are fighting to end the unconscionable trade-distorting agricultural subsidies of over $1 billion a day that are putting pressure not only on our farmers, but also on farmers in the developing world who need access to our markets to raise themselves out of poverty. Emerging economies such as Brazil, China and India are becoming our potential customers as people there improve their living standards and increase their purchasing power. We are working to develop a strategy now to ensure that Canadian exporters and investors have the support they need to take full advantage of these markets. Last year was, indeed, a tough year. But I am confident that 2004 will be better. Our economy, as the Finance Minister said in the Budget, is strong and resilient. It is well positioned to take full advantage of global growth as it picks up steam. Economic resilience is the ultimate dividend for Canadians from the prudent fiscal course that the Paul Martin government has charted. It is a 21st-century Canadian trademark in a challenging world. More fundamentally, I believe that if Canada and the world keep pushing back the frontiers of freer trade, if we remain committed to truly open markets for trade and investment, 2004 and all the years to come will be better not only for Canada, but for the whole world. Thank you. </body> </html>

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Last Updated: 2006-10-30	Top of Page	Important Notices