96/45 CHECK AGAINST DELIVERY

NOTES FOR AN ADDRESS BY

THE HONOURABLE ART EGGLETON,

MINISTER FOR INTERNATIONAL TRADE,

ON THE OCCASION OF THE STANDING COMMITTEE ON

FOREIGN AFFAIRS AND INTERNATIONAL TRADE

ON BILL C-61, AN ACT TO IMPLEMENT

THE CANADA-ISRAEL FREE TRADE AGREEMENT

OTTAWA, Ontario

October 29, 1996

Colleagues,

This important legislation will do so much to cement our ties with Israel and open up new areas for co-operation and mutual enrichment.

Around the world, opportunities for trade are increasing and barriers are coming down.

In this new, interconnected and interdependent world, no nation can afford to hide itself behind walls of protectionist tariffs or duties.

Canada understands the dynamics of this new world. We understand the need to liberalize trade and to break down the old ways of the old days. And, as a nation with a relatively small population, we understand the need to look to markets beyond our borders. In fact, Canada is more dependent on trade to produce jobs and economic growth than any other developed country in the world.

In recent years, trade has become the lifeblood of our economy. Our exports have exploded and now account for one third of our gross domestic product [GDP].

Canadian exporters would not have had this kind of success if, every time they knocked on doors around the world, they were met by hostile tariffs and duties. But, because of arrangements such as the North American Free Trade Agreement [NAFTA], their access has been assured. That is why we are working hard to expand the number of countries that will open their doors and their markets to our exporters. One of these is Chile, which Canada is working hard to have eventually included in the NAFTA.

And because we know the potential of Latin America and the Caribbean, we are one of the nations leading the effort to create a Free Trade Area of the Americas [FTAA].

Israel has also realized the benefits of freer trade. That is why it has signed free trade agreements with the United States, the European Union, Turkey, the Czech Republic and Slovakia.

What could be more natural, then, than for two countries that have actively pursued free trade around the world to now secure the same with one another?

The ties between Israel and Canada have always been close. Canada's historic links with Israel have always been based on co-operation and mutual respect. To the bonds of friendship can be added those of commerce, and to the benefits of friendship can be added the benefits of investment.

Canada and Israel have been working to establish closer economic ties. In 1994, Prime Minister Chrétien and Prime Minister Rabin met to begin negotiations on the Canada-Israel Free Trade Agreement. After two years of fruitful negotiations, that agreement was signed on July 31 of this year.

Why did Canada agree to a free trade agreement with a small country like Israel? Because now Canadian and Israeli companies will have immediate, direct, duty-free access to each other's markets for virtually all industrial goods. And both sides will benefit from the reduction or elimination of tariffs on agricultural products.

Perhaps even more importantly, this agreement will place Canadian companies on the same footing as their competitors from the United States and the European Union, both of which, as I've said, already have free trade agreements with Israel. Prior to the Canada-Israel FTA, a Canadian company wishing to export to Israel could have faced high Israel duties.

I have heard reports that Canadian companies in that position sometimes manufactured the product in the United States and shipped it duty-free to Israel under the terms of the U.S.-Israel Free Trade Agreement. We want to keep these jobs in Canada, and the Canada-Israel Free Trade Agreement will allow us to do so.

Israel is an important and expanding market for Canada. Even in the difficult circumstances in which Israel finds itself, it boasts a high standard of living and impressive economic growth. Residential construction is booming, unemployment is low and foreign investment is surging.

At present, trade between our two countries is modest but growing. Two-way trade last year grew to $450 million -- up 37 per cent from the previous year. I believe that with the signing of this agreement, and the opening up of each other's markets, those figures are going to grow significantly.

Israel offers a vast number of opportunities that will be of particular interest to Canadians. High-technology goods, telecommunications, power and energy projects, oil and gas exploration, and the agri-food, fish and environmental sectors -- all of these have excellent potential for Canadian companies.

For these reasons and more, we are very pleased that the new government of Israel has chosen to pursue this free trade agreement with Canada. And we were honoured that Natan Sharansky, Israel's Minister of Industry and Trade, was able to sign this agreement in person in Toronto last July.

Mr. Sharansky is a man who has demonstrated a courageous and tenacious determination to persevere and to triumph. He is a man who personifies Israel's determination to work for peace and for the creation of a new and dynamic Middle East -- a Middle East that embraces change and expands opportunities.

This agreement comes at a crucial time for Israel and the other countries of the Middle East. Recent events in Gaza and the West Bank are of great concern to all of us. We deeply regret that more Israelis and Palestinians have lost their lives. We have urged the leaders of both sides to explore every option, exert every effort and examine every alternative in order to prevent further violence.

There are some who say that in the face of recent events in the Middle East, our introduction of this legislation should be delayed. But we believe that this agreement strengthens Canada's presence there, and constitutes a declaration of our confidence in the peace process, as well as an investment in our common future. Furthermore, we are moving forward with Bill C-61 to bring the free trade agreement into force, since we believe it would create jobs for Canadians -- it would be good for Canadians.

We are encouraged by the pledges from both Palestinian and Israeli leaders at the Washington Summit to renounce violence, and we welcome the resumption of the bilateral discussions. It is our profound hope that these negotiations will lead to the speedy implementation of the interim agreements and, in particular, the redeployment of Israeli forces from Hebron.

For over 50 years, Canada has been a staunch supporter of the pursuit of peace in the Middle East. It was, after all, a Canadian -- Lester B. Pearson -- who originated the first true United Nations peacekeeping effort, in 1956, and who won a Nobel Prize for his efforts during the Suez crisis.

And it is a matter of pride, not only to this government but to our country, that Canada has served in every UN peacekeeping operation in the Middle East since that time.

Today, Canada is also leading more directly in the peace process, by agreeing to chair the Refugee Working Group in the multilateral track of the peace process. This working group seeks to improve the living conditions of refugees and works to find a comprehensive solution to the refugee issue. We also participate in the four other multilateral working groups, and have played a particularly active role in the fields of water and regional security.

Canada is also a member of the Ad Hoc Liaison Committee, which co-ordinates international assistance to the Palestinian Authority.

And we have been, and continue to be, generous with our development assistance. In fact, our contribution to the United Nations Relief and Works Agency [UNRWA], which channels assistance to the Palestinians in the Occupied Territories, averages $11 million per year. And our total assistance to the Middle East has averaged $50 million annually for the last five years.

But our efforts don't stop there. We have, for example, recently committed ourselves to help rebuild Lebanon. In July, we announced the creation of a liaison and advisory group that will provide support to the private sector in its participation in this rebuilding effort.

This group, composed of both private- and public-sector representatives, will work to co-ordinate and mobilize Canadian businesses so that their efforts will be of maximum benefit and effect.

Our commitment to the reconstruction of Lebanon stands in a long tradition of support for the independence, sovereignty and territorial integrity of that country. This commitment flows from our conviction that all of these elements must be in place if there is to be a truly lasting peace in this region.

Moreover, while it is true that this agreement is with Israel, Canada has offered to extend its benefits to goods produced in Gaza and the West Bank, and Israel has accepted our offer. We are discussing how best to achieve this through consultations with the Palestinian Authority.

And we stand ready to examine ways to enhance trade with other Middle Eastern countries as well. It is our intention to expand our trading relationships with the entire Middle East. We already have a significant trade with that region -- over $2.5 billion in export of goods annually, with a surplus in our favour of about $500 million. When you add in trade in services, the total trade picture is over $3 billion a year.

Looking at individual countries within the region, two-way trade with Saudi Arabia stands at over $1 billion. Our exports to Lebanon are growing and now exceed imports; our trade surplus with the United Arab Emirates exceeds $190 million a year. And trade with Jordan continues to rise, particularly in the area of oil and gas exploration, where there are a number of projects involving several companies from Calgary.

In short, the Middle East represents a rich market for Canada, and the signing of the Free Trade Agreement with Israel represents a major step toward realizing that potential.

The next step for Canada is the one before us now: to pass this legislation. Once the Agreement is in place, the torch will pass to the private sectors in both countries to make it work, and work effectively.

Colleagues, Canada and Israel have enjoyed a strong friendship. It is based on shared democratic values and common hopes. Now, it is time to develop the economic potential of our relationship and, in so doing, support the efforts of Israel and its neighbours to build a just, lasting and comprehensive peace.

It is our belief that this agreement will help to strengthen those ties and to realize those hopes.

Thank you.