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Canada Has Played Significant Role in Building International Trade System

This month in Cancun, Mexico, the world’s trade ministers will gather for a midterm review of the current round of World Trade Organization negotiations and provide direction to move the negotiations forward to a successful conclusion.

These negotiations — launched in November 2001 in Doha, Qatar — have two main issues that need to be addressed: agriculture and development. Of course, they are rounded out by a broader package that includes market access and rules, as well as new issues that will help to modernize the international trading system.

Canada is an energetic participant in these negotiations because Canada has much to gain from greater market access and transparent rules that allow innovative and productive Canadian firms to operate without discrimination or excessive red tape. Canada also believes that improved trade rules can help further integrate the developing world into the global trading system and help them build their economies and societies.

Many readers may not be aware, however, of Canada’s long-standing role in building, nurturing and designing the current international trade system. Canada was a founding member of the General Agreement on Tariffs and Trade, and has invested a great deal of diplomatic energy in the past 50-plus years in promoting prosperity through greater trade and investment. Canada has always believed that participation in trade institutions and treaties contributes to global order and cooperation. As a middle power, it is not surprising that Canada has embraced a multilateral approach as the basis to our trade and foreign policy.

But Canada has also been pragmatic and has been willing to try diverse approaches to advancing trade, as long as these efforts contribute to a stronger global system and advance Canadian prosperity and our country’s social and environmental goals. We believe these initiatives, both regional and bilateral, have helped to build confidence in trade institutions and have allowed innovative regional expressions of liberalized trade that have led to a stronger, more sensitive global system.

While the cornerstone of Canadian trade policy remains the World Trade Organization, bilateral and regional initiatives have complemented and reinforced multilateral liberalization by generating political momentum, by developing and refining elements of the trade regime, and by preparing domestic industries and citizen groups for the further opening of markets.

In the past 20 years, Canada has renewed our historical interest in bilateral and regional trade agreements, an interest that had waned with the reduction in the tariff preference given to Commonwealth countries after the United Kingdom joined the European Economic Community (now the European Union) in 1973. In the 1980s, the governments of the day recognized the increasing integration of the Canadian and American economies and, having first tried to negotiate sectoral trade agreements, embraced Canada-U.S. free trade. This was followed in 1994 by the North American Free Trade Agreement, which added Mexico and extended the disciplines.

NAFTA broke new ground in the treatment of issues such as services, intellectual property rights and trade-related investment — experience that was relevant to the successful conclusion of the Uruguay Round.

As we celebrate the 10th anniversary of NAFTA, it is clear that the agreement has been an unqualified success for all three parties. It has proven its value as a means of stimulating trade, investment and competitiveness.

Since NAFTA came into force, Canadian merchandise exports to the United States have more than doubled to reach approximately $350 billion (Canadian dollars) in 2002. In 2002, goods imports reached $218 billion. Our two-way goods trade with Mexico has grown even more impressively, more than tripling since 1993 to top $15 billion Canadian in 2002. Mexico is now Canada’s sixth-largest export destination and fourth source of imports worldwide.

NAFTA has been a great success for Canada and its North American partners, and we are committed to ensuring that it continues to help us realize the full potential of a more integrated and efficient North American economy.

We followed up on the success of NAFTA by concluding a bilateral free trade agreement with Chile, which entered into force in 1997. This very successful agreement has brought strong two-way benefits in both trade and investment.

More recently, the Canada-Costa Rica FTA, which entered into force last year, demonstrated that it is possible to forge a mutually beneficial agreement between parties of different sizes and levels of development.

Just as NAFTA and Canada-Chile and Canada-Costa Rica FTAs have yielded economic and social benefits for all parties involved, the proposed Free Trade Area of the Americas agreement holds similar promise.

The Americas region represents Canada’s most important market, and strengthening our economic ties with the region through the FTAA is a priority. Involving the 34 democratic countries of the Americas, the FTAA is a vehicle to promote growth and create prosperity throughout the region. With negotiations scheduled to conclude by January 2005, the FTAA would create the world’s largest free trade area.

The FTAA would provide rules that create the stable and predictable environment that encourages increased trade and investment throughout the hemisphere. Just as important, it would complement the Summit of the Americas’ objectives of strengthening democracy, promoting human rights and reducing inequalities and poverty.

Elsewhere in the Americas, Canada is currently negotiating a free-trade agreement with four Central American countries (El Salvador, Guatemala, Honduras and Nicaragua). Canada is also in the midst of exploratory discussions with several other countries of the hemisphere toward eventual negotiations of free-trade agreements. These countries include the 15-member Caribbean Community bloc, the Dominican Republic and the five countries of the Andean Community.

Outside of our own hemisphere, Canada has had a free-trade agreement with Israel since 1997. We are working closely with the European Union to develop a bilateral Trade and Investment Enhancement Agreement, which, although not a “traditional” free trade agreement based on tariff elimination, would strengthen our ties with the EU, particularly at a time when it is welcoming new members. As well, Canada and the countries of the European Free Trade Association seek to reach a free trade agreement.

In Asia, Canada is in the midst of bilateral free-trade negotiations with Singapore and is actively involved in the trade-liberalizing initiatives of the Asia Pacific Economic Co-operation forum.

Many countries in Africa are beneficiaries of Canada’s generous, unilateral least developed countries market access initiative of last year, which provides tariff-free and quota-free access to the Canadian market to all imports from least-developed countries except dairy, poultry and eggs.

Canada has an active regional trade policy agenda, but rather than detracting from multilateral efforts, these bilateral initiatives allow us to explore new commitments and disciplines in a manner that is full consistent with, and indeed supportive of, the multilateral trading system. In this way, we not only reinforce WTO rules but also encourage liberalization in new areas that build more open, transparent and secure markets.

Fitting all the pieces of a multitrack trade policy together is a challenge for the government and other players alike. Starting from the trade policy priorities outlined above, this discussion has shown that there is more than one way to promote prosperity through trade and investment opportunities and competition; there is more than one set of rules out there; and there are many avenues, some more promising than others, for pursuing broader political or social objectives.

Canada hopes that this spirit of pragmatism and innovation will permeate discussions in Cancun this month. Cancun is an opportunity to move forward, to build on the strong foundation of multilateral, regional and bilateral approaches to trade liberalization that Canada and so many others have built in the past 50 years. It is a chance to forge new rules that will help developing countries flourish and meet the rigors of a dynamic new global economy.

Pierre Pettigrew is Canada’s minister for international trade. This article copyright the Department of Foreign Affairs and International Trade, Canada, 2003.

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