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<html> <head> <meta name="Generator" content="Corel WordPerfect 8"> <title>MR. PETTIGREW - ADDRESS AT THE ENERGY ISSUES IN LATIN AMERICA CONFERENCE - CALGARY, ALBERTA</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, AT THE ENERGY ISSUES IN LATIN AMERICA CONFERENCE "EXPANDING OUR TRADE RELATIONSHIPS WITH LATIN AMERICA: CHALLENGES AND OPPORTUNITIES" CALGARY, Alberta October 10, 2002 Introduction It is indeed a pleasure to join you today at this seminar. I am pleased with the continued interest in Latin America, as reflected by both participants and contributors at this conference from many countries in the hemisphere. It is entirely appropriate that Canada--and our host city, Calgary--is the venue for these informative sessions. As a major centre for the energy sector, and a past World Petroleum Congress host, it's no surprise that many companies have chosen this beautiful city as their head office location. Petro-Canada, Shell Canada, Suncor, Talisman Energy, Nexen, Husky Energy and EnCana are just some of the Canadian companies that have achieved great success in the energy sector in the Americas. Over the course of my remarks, I want to highlight how Canada is working to expand liberalized trade and investment in Latin America, and to talk about promising developments in the energy sector for Canadian companies, building on our current success. As results from our recent summit in Quebec City indicate, increased linkages in the region, particularly in the energy sector, bode well for Canadian companies. Benefits of Increased Hemispheric Trade There is much to be gained from a concerted effort by all levels of government, individuals and the business community to improve the fortune of citizens across the Americas. The Canadian government is working with other countries toward free trade agreements, building new avenues for growth, pushing to better involve civil society in the FTAA [Free Trade Area of the Americas] process, and promoting corporate social responsibility to ensure that the activities of corporations make a positive contribution to the communities where they do business. Cooperation is the key. You know that Canadian industry is already active in Latin America, searching for opportunities and seeking cooperation across governments, departments and regions, all endeavouring to address the needs of Latin America. I can tell you that the region is already showing great promise and with the Free Trade Area of the Americas' negotiations underway, we have the potential for even greater market access. A Framework for Expanding Our Trade Relationship with Latin America Let me begin by addressing the framework for expanding our trade relationships with Latin America generally, before dealing specifically with issues in the energy sector. The overall trend in Canada's relationship with Latin America is very positive. Despite the present economic difficulties, the Americas are gradually becoming more integrated, agreements are coming into play and new alliances are forming. We are working to expand the existing framework through trade agreements. While Canada has been active in the Americas, our outlook is shifting beyond the bilateral to the inter-American. This outlook has been shaped by our participation in NAFTA, linking two developed countries--Canada and the United States--with Mexico, a developing country. The ongoing success of the project demonstrates that freer trade and investment between developed and developing countries are beneficial for all parties, especially developing ones. In the first five years after NAFTA, Canada's trade with the United States increased 80 percent, and our trade with Mexico doubled. By 2004, nearly all trilateral trade between our three countries will be duty free. Since 1994, investment in the NAFTA countries has been dynamic and growing because of the certainty and transparency that NAFTA's legal framework provides. Building on NAFTA's success, we are pursuing free trade throughout South America. Building on NAFTA and FT Agreements For example, Canada and Chile entered into a free trade agreement (FTA) in 1997, which will see tariffs completely phased out by 2003. Canada has also expressed support for Chile's eventual membership in NAFTA. In addition, we have signed an FTA with Costa Rica and are currently negotiating another with what we term the "Central America Four" countries: El Salvador, Guatemala, Honduras and Nicaragua. On August 7, 2002, I announced the beginning of talks on a proposed trade agreement with the Andean community (Bolivia, Colombia, Ecuador, Peru and Venezuela). This would provide Canadian exporters with preferential access to the Andean market over competing suppliers, such as the United States and Europe. As you can see, we are working hard to expand Canada's access to markets throughout the Americas. Free Trade Area of the Americas - 2005 The negotiations toward agreement on a Free Trade Area of the Americas hold the potential to create the world's largest free trade area, with 800 million people and a combined gross domestic product [GDP] of nearly $18.5 trillion, more than one third of the world's economic activity and greater than the GDP of the European Union. The successful conclusion of this initiative by the target date of 2005 will create enormous opportunities for Canadians. That's why Canada's commitment to the establishment of the FTAA is so firm. Clearly, there are very promising areas for growth in the energy sector. Promising Areas: Canada's Comparative Advantage Over the last two decades, Canadian linkages to Latin American petroleum industries have increased noticeably. That we operate in the same time zones makes business easier to conduct. The population of the Americas continues to grow, and the demand for energy and electrification increases annually. That translates into a demand for Canadian goods and services, as our companies have a number of advantages in this market. Energy Services Canadian companies provide a full range of specialized services in the oil and gas sector. These activities touch every area. From feasibility studies, through site preparation, construction and maintenance, to the marketing and delivery of energy through pipelines, the Canadian industry is recognized as a leader. Our companies have expertise in a number of areas, including advanced drilling technologies, oil sands production and specialized recovery and processing products. Revenues of the Canadian oil and gas services industry are estimated at some $5 billion, of which more than half is generated by exports. Canada and Energy Services Negotiations The limited number of commitments for energy services in the 1995 General Agreement on Trade in Services (GATS) has led to increased attention in this sector. We also expect this sector to be integral to ongoing regional negotiations, notably the FTAA and the negotiations with the "Central America Four" countries. In March 2001, Canada submitted a proposal on oil and gas services in the ongoing GATS negotiations, in order to improve access to foreign markets by services suppliers. The proposal cannot be interpreted as requiring governments to privatize or to deregulate any services; it is simply part of good regulatory practices. The right of WTO members to regulate or introduce new regulations within their territories to meet national policy objectives remains enshrined. Canada has submitted requests to over 60 WTO member countries, including some in Latin America, seeking commitments in many sectors, including oil and gas services. None of these requests are to least developed countries. The commitments being sought are for securing market openness and for Canada's trading partners to eliminate restrictions on repatriation of profits and on the entry of professionals and equipment, and to eliminate arbitrary business and licensing requirements. For Canadian companies, this means that market access could be significantly enhanced in those countries and investments could be protected from repatriation. Increasing the Canadian Presence in Latin America The Canadian government's target countries in Latin America have traditionally been Brazil, Mexico and Venezuela, those with substantial heavy oil resources. Brazil Indeed, the September 2002 World Petroleum Congress in Rio de Janeiro as well as the Rio Oil and Gas Show were major opportunities for showcasing the industry. Canadians made the top five in delegation size, with 200 participants and some 60 Canadian companies. Canada is once again finding favour in the Brazilian oil and gas industry and was warmly acknowledged in media reports. Mexico In terms of the Mexican market, we are seeing direct benefits from NAFTA, and Alberta is one of the most active provinces. I am very pleased that during Premier Ralph Klein's visit to Mexico this past September, he inaugurated Alberta's trade representation in Mexico City, at the Canadian embassy. Restructuring and modernizing the energy sector is a priority of President Fox, requiring US$200 billion over the next 10 years. Energy reform and opening up to greater private investment would greatly increase Canadian participation. Venezuela Venezuela, the fourth largest petroleum producer in the world, presents a great opportunity for Canadian companies. Last year, the Venezuelan market for oil and gas equipment and services totalled approximately $1.82 billion and is continuing to grow as a result of exploration expenditures and the development of new oilfields. Petrochemical production is planned to double by 2006. Venezuela's domestic oil and gas industrial base suffers from technical and financial limitations and is often unable to meet all of the needs of petroleum producers. Roughly 90 percent of components are imported. Outsourcing initiatives have created a positive climate for the establishment of partnerships and joint ventures with foreign companies. But Canada's presence in the Americas is certainly not limited to Brazil, Mexico and Venezuela. Argentina Canadians played a key role in developing the Southern Cone gas transportation network and Canadian oil and gas companies were among the first to enter the Argentine market when deregulation opened it to foreign investment. These investors and other international oil and gas companies have relied on Canadian technology to develop their operations, creating interesting business opportunities for Canadian industry. Parallel interests between the province of Neuquen and Alberta have been especially strong, although hit hard by recent downturns. The recent financial and banking crisis in Argentina definitely is a challenge for Latin America. The actual crisis, however, is not stopping several world-class companies from increasing their interest in investments in Argentina. More than US$ 2.5 billion worth of investments have been confirmed for 2003. The opportunities are still there, perhaps postponed a little, but nonetheless trade will improve once the economic difficulties of the moment are surpassed with on-going support and an eye to the longer term. In addition to many unexplored areas in current production basins, Argentina's extensive offshore shelf holds promise for future discoveries. Argentina's market is open as a business doorway to Canadian companies looking for opportunities in South America. Several renowned Argentine companies have an active presence in Chile, Bolivia, Peru, Ecuador, Venezuela and Brazil. This situation deserves to be evaluated by Canadian companies looking for regional business. Peru/Chile/Bolivia The countries of Peru, Chile and Bolivia present opportunities for re-starting talks on financing of mega-projects (Peru), focusing on the mining sector (Chile), and following up on projects by increasing manpower in the field (Bolivia), especially considering the untapped potential noted by Canadian geophysical background reports. The CCC and EDC I remind Canadian companies of all sizes to access the services of the Canadian Commercial Corporation, especially those in the oil and gas, machinery and environment technologies sectors. Those seeking buyer financing are urged to continue to call upon the Export Development Corporation, which has played an important role in supporting Canadian suppliers. I look forward to furthering Canadian and Latin American relations in the energy context during the upcoming APEC Joint Ministerial meetings and the APEC CEO Summit at the end of this month in Mexico. Conclusion In closing, the special importance for Canada and Latin America is our common interest in the success of trade liberalization within the Americas to ensure that growing national energy demands can be met. The Canadian energy services industry is competitive and Canada has been proactive in ongoing negotiations for trade agreements in the hemisphere. As we expand free trade agreements throughout the Americas, I urge you to continue to expand your exploration of these markets. The oil and gas sector in the Americas continues to show great promise. Thank you. </body> </html>

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