2002/3 CHECK AGAINST DELIVERY

NOTES FOR AN ADDRESS BY

THE HONOURABLE PIERRE PETTIGREW,

MINISTER FOR INTERNATIONAL TRADE,

ON THE OCCASION OF THE LAUNCH OF THE KPMG STUDY:

COMPETITIVE ALTERNATIVES: COMPARING BUSINESS COSTS

IN NORTH AMERICA, EUROPE AND JAPAN

OTTAWA, Ontario

January 29, 2002

I am pleased to have the opportunity to join with KPMG and this audience of Ottawa entrepreneurs on the occasion of the launch of this impressive study. As people focused on research, innovation and opportunity, you provide a splendid example of the dynamism and resourcefulness of Canadian business. Despite global economic uncertainty, the entrepreneurs of Ottawa continue to attract new venture funding, develop new technologies, and bring new products to market, a tribute to the strength of your successful enterprises and deft management. And what other group better recognizes the importance of brand image in global markets?

We, in this room, know that Canada is number one. The latest proof is captured in this important new study. It says that Canada is setting the pace globally as the most cost-competitive of the leading industrial countries in which to do business. And I should add, as the most cost-competitive nation from which to export around the world.

But now, we have to tell the world.

The study contains critical information for any investor seeking a cost advantage coupled with advanced skills and innovation. The bottom-line results are credible, compelling, balanced, but undeniable: Canada maintains the lowest costs among the leading European and North American economies, especially in industries driven by innovation and knowledge.

And while Canada wins top spot, other countries also have winning factors -- such as low natural gas costs, or "most improved" position since the last survey. So, the good news in this study can be shared around. But, you will indulge me, I hope, if I take some credit for Canada's top position on behalf of the Government of Canada. The job of prosperity building is never done, but I think we have done our share to put in place the fundamentals of a strong and vibrant economy.

We've enjoyed ten years of low inflation. Our corporate tax rate will soon be lower than that of the U.S., and our tax cut, once fully implemented, will reach $100 billion. We are the only G7 country with a balanced budget this year, our fifth in a row. We have paid back over $35 billion of debt during the course of this government's mandates. Our foreign debt has dropped from 45 percent to 20 percent as a share of GDP, its lowest level in 50 years. Total foreign investment in Canada has nearly doubled in the past decade. Overall, Canada is on its best investment footing in 20 years.

The fundamentals are right. But putting those ingredients to work is up to you. So, the real heroes of Canada's success are here in this room and in communities across the country where hard working entrepreneurs and innovative workers live and work. They turn cost leadership into jobs for Canadians. They turn export opportunity into new markets.

You have helped grow and diversify our economy to the point where commodities make up 30 percent of our exports, compared to 60 percent 20 years ago, and where $2 billion in trade crosses the Canada-U.S. border every day. It's no surprise that Canada's biggest cost advantages over the U.S. are in knowledge-intensive industries that thrive on innovation and highly skilled people.

It's clear to us. Canada is number one. But the world is a cluttered place. Our image abroad does not always reflect reality.

In the next few days, I and my colleague Minister Rock will be participating with our Prime Minister in the World Economic Forum (WEF), which brings together key world leaders from business, government, academia and the media. Our primary goal is to ensure that the world's most influential executives know the whole story about Canada's success.

The WEF once compared how countries ranked in terms of competitiveness with how competitive they were perceived to be by leading executives. Canada ranked as the fourth most competitive country in the world. But foreign executives ranked us number 12. That's a huge gap. It's a gap that is all perception. And it's a gap we have to close.

Likewise, a study by Burson-Marsteller looked at what attributes people associated with other countries. Canada ranked fairly high on attributes such as "friendly", "kind" or "calm." But the point is, if we want to attract more investment, we have to create an image of innovation, cost-competitiveness, energy and drive.

If we want our message to be heard, it has to cut through the clutter. The KPMG study is part of our arsenal. In addition to pressing our case at the WEF, I will take this message with me on the Prime Minister's Team Canada mission to Russia and Germany. In the coming months, I expect to be in major European capitals, as well as in Asia, to bring our message to investors.

Canada is the place to be -- this KPMG study illustrates it -- and we are here to proclaim that message far and wide. Canada truly is number one. Let's tell the world.

Thank you.