Speech - guest speaker: The Honourable James Scott Peterson, Minister of International Trade NAFTA : The Way Ahead

Speech to the World Trade Centre in
"NAFTA and the Way Forward"
by the Honourable Jim Peterson,
Minister of International Trade


Check against delivery

Thank you Benoît for your kind introduction. I also want to express my appreciation to the World Trade Centre Montreal for inviting me to speak on a topic that I think is critical to Canada 's future, and the world's future.


This year marks an important milestone for Canada . It is the 10 th anniversary of the coming into effect of NAFTA, a visionary trade agreement when it was signed, and still a model for the world.

I don't have to stand here today and make a case for why NAFTA has been so important and such a key factor in Canada 's economic turnaround and growth during the past 10 years.

Yet despite all we now know, there are still protectionist voices ? in the U.S. certainly, but also in Canada ? who want us to turn back the clock, who would have us turn our backs on the benefits of trade and investment liberalization to Canada , North America and the world.

Certainly NAFTA has not resolved every economic challenge or abolished the business cycle.

But lets look at the overall record. Since 1994, Canadian trade with the U.S. and Mexico has almost doubled, and now surpasses $659 billion annually.

Together, the three NAFTA partners constitute the world's largest trade area, with a combined GDP of almost $18 trillion ? roughly one third of the global total.

Total foreign direct investment in Canada reached $350 billion in 2002. Investors are strongly attracted by Canada 's competitive advantage and location as a gateway to the world's largest market. KPMG recently identified Canada as the lowest-cost country for doing business among 11 countries studied, which included all the G-7 countries.

Most importantly, NAFTA has paid off where it counts for Canadians ? in growth and in jobs. Our entrepreneurs have embraced the new opportunities created by a larger NAFTA market to become stronger, more competitive and export-oriented. All this has helped make Canada a perennial leader in G-7 economic performance.

On the jobs front, remember the prediction that NAFTA was going to cause a “giant sucking sound” of jobs heading to Mexico ? Recently, political rhetoric by U.S. candidates cites NAFTA as a reason for the outsourcing of jobs to India and China . But the last time I looked they were not on my map of North America .

The NAFTA years have coincided with the lowest unemployment numbers in both Canada and the U.S. since the 1960s. The NAFTA has helped make Canada one of the foremost trading nations in the developed world, with export trade representing almost 40% of our GDP. And it has contributed to creating almost 3 million net new jobs.

In other words, it has brought Canada more prosperity than would have been possible without the agreement and has helped us preserve and enhance our social programs.

But there's one benefit that can't be measured in numbers. It has given Canada the credibility to say to others: “Trade liberalization works and we have the record to prove it.”

NAFTA tomorrow

As we move forward, we will continue to look for ways to further enhance our trade and economic relationship with the United States and Mexico .

Canada , the U.S. and Mexico are currently working together in more than 30 different forums in an attempt to keep pace with emerging challenges and needs, such as encouraging speedier procedures for the mutual recognition of professional credentials.

Last October, at the meeting of the NAFTA Commission here in Montreal , the three partners agreed, among other things, to make it easier for exporters to qualify for duty-free treatment and reduce transaction costs.

Engaging the developing world

On the FTAA front, Canada is taking a leadership role. Because we have seen the benefits of NAFTA, we are one of the strongest advocates for creating a free trade zone in our hemisphere that, when completed, will extend from Nunavut to Tierra del Fuego and have a combined GDP of more than $20 trillion, or about 40% of the world's economic activity.

Bilateral and regional trade initiatives are part of Canada 's multi-track trade strategy.

But the cornerstone of Canada 's trade policy is and must remain the WTO. We are determined that despite the minor setback – or speed bump – of Cancun, this Doha Round of negotiations must not be permitted to fail.

The WTO is vital to Canadian interests because it is there that the major issues affecting our relationship with the world will be decided.

And because the world is changing rapidly, so must our role in it.

Canada 's economy may not always be larger than that of India , China , Brazil or Russia . We need not fear change as long as we are poised through trade, investment and far-sighted policies to benefit from it.

We must recognize as well that the jobs of today will not always be the jobs of tomorrow. We cannot halt labour market evolution through protectionism without paying a heavy price now and every year hereafter.

At the same time, we must not forget that governments have a critical role to play in helping workers adapt to the inevitable disruptions that ensue during periods of economic change.

Governments can provide temporary support measures to help workers cope in the short term. And they can provide retraining, life-long learning opportunities and labour market conditions that produce new and even better jobs to help them prosper in the long term.

Canadian public policy also has a major role to play in bringing progressive change to the developing world, where four billion people live on less than $5 a day, and 1.2 billion live on less than $1 a day.

Liberalized trade is crucial to these nations. They need access to our markets. But how can they compete against massive trade-distorting agricultural subsidies of over $1 billion a day, which outstrip by more than four times all development assistance going to them?

This is why success in the Doha Development Round of the WTO is so critical. It is only through success at the WTO table that we can eliminate or significantly reduce such subsidies and achieve something truly historic ? the inclusion of the developing world within the global trading system.

Meeting this challenge will also help Canada 's farmers. It is by eliminating obscenely high global farm subsidies – that is, creating a level playing field – that our farmers can compete with anyone in the world.

Because an agreement is so important, our government will continue to play a strong, leading role in working for a successful completion of the Doha Round.

Meanwhile, we are not waiting for the world to act. Through our General Preferential Tariff and Least Developed Countries Tariff, Canada has opened its markets wider to exports from poorer nations.

Developing countries ? as Cancun showed ? need trade-related technical assistance to build the capacity to fully profit from liberalized trade. World Bank and IMF programs must be coordinated with bilateral programs to promote coherence and maximize benefits.

Investment is also critical to development. That is why, for example, our government created the Canada Investment Fund for Africa , which will leverage private sector investment in support of Africa 's development.

Another very useful initiative is the Report on the Commission of the Private Sector and Development issued by our own Prime Minister, Paul Martin, and former Mexican President Zedillo at the United Nations earlier this month. The report sets forth many concrete ways ? including mentoring, technical assistance and partnerships ? to encourage developing country entrepreneurs to establish and grow their own businesses.

In closing, Canada will continue to pursue trade and investment liberalization on a bilateral and regional basis. Our primary focus, however, will continue to fall on the WTO because it is unique in its potential to deal with agricultural subsidies and enhance development.

The stakes are high. But opportunities abound.

Thanks to our success with NAFTA, Canada is a highly credible voice to advocate for trade liberalization on the world stage. Nations in search of models need look no further than Canada .

And, as both Canada and Mexico can attest, the benefits of freer trade can be realized without sacrificing our unique values, our culture, our health care, our public education and our social services. Closer trade ties do not mean a loss of sovereignty.

For Canada , the message is clear: protectionism protects no one, least of all those it is invoked to protect. It is a misguided doctrine rooted in the belief that we can make time stand still.

Our efforts will not cease until the term “globalization” means global markets for all nations, opening to people everywhere new opportunities for development and prosperity. We ask all nations to aim higher and join in this endeavour.

Thank you.

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