Mr. Speaker, the legislation we are considering today at third reading, Bill C-57, an act to implement the agreement establishing the World Trade Organization, will ensure the implementation of the GATT Uruguay round agreement which the Minister for International Trade signed on behalf of Canada in Marrakech on April 15, 1994.
Adoption of this legislation would enable Canada to reap the benefits of the biggest trade deal in history by creating a more open and stable international trading environment. This agreement will generate increased Canadian exports and investment which are crucial to Canada's continuing prosperity in the achievement of the government's jobs and growth agenda.
Since the second world war Canada's trade with other countries has risen by over 70 per cent as a share of the gross domestic product. This is due to trade liberalization, our ability to explore trade opportunities and a reduction of average tariff rates to Canada from over 10 per cent to an average as low as 3 per cent in 1992 figures. While this alone may not be directly responsible for economic growth, one can clearly conclude that trade liberalization and the removal of trade barriers such as tariffs can generate economic gains while at the same time create jobs.
Free trade and trade agreements have to be fair, comprehensive and transparent. Despite some of the unresolved trade issues between Canada and our trading partners, I believe that Canada's trade interests are served today more than ever before. Since the adoption of the first general agreement on tariffs and trade, GATT, in the 1940s, global production has increased over five times and the quality of life has improved for trading countries. Many trade barriers were removed and many third world countries moved up to join the ranks of developed economies. However, there is still room for improvement.
Before assuming office the government made it clear that we would continue to support the GATT as a cornerstone of Canada's trade policy. We undertook to focus our effort on breaking the deadlock in the Uruguay round negotiation and on building a new World Trade Organization. This legislation is the fruit of those efforts. The Uruguay round was the largest, most comprehensive trade negotiation ever undertaken.
The final package contains over 30 agreements, understandings and declarations. These agreements made many important gains for Canada. The following stand out as highlights for us.
First, the market access package includes the largest tariff deal in history with most industrial tariffs being cut by at least one-third. Second, the agricultural sector is brought under the rules based multilateral regime for the first time ever. Third, trade and services and trade related intellectual properties are brought within the framework of multilateral disciplines. Fourth, the agreement thoroughly reforms and strengthens subsidy and trade remedy rules, thus realizing one of Canada's priority objectives going into the round. Fifth, the new integrated dispute settlement system with clearer rules, tighter deadlines, an appeal process and binding effect is a major improvement over the existing GATT system and should effectively preclude unilateral measures responding to trade disputes.
Finally, the crowning achievement of the Uruguay round is the creation of a new World Trade Organization, WTO, that will oversee the preparation of the complex series of agreements resulting from the round. It will put international trade on a firm institutional footing. The World Trade Organization will be-
come the third pillar, along with the World Bank and the International Monetary Fund, of the world's commercial and financial structure.
Completion of the Uruguay round will have major implications for the world and for the Canadian economy well into the next century.
The GATT secretariat estimates that, in year 2005, global revenues will be at least $500 billion US higher than what they would have been without the Uruguay Round. Based on a conservative economic assumption, we estimate that quantifiable gains to Canada will amount to at least 0.4 per cent in terms of real income, or $3 billion per annum, once the agreement is fully in force. This means an income increase of $400 per year for each Canadian household.
However, these quantifiable gains are only a portion of the real earnings that we are almost sure to enjoy. Clearly, for Canada, the challenge now is to optimize its share of the economic benefits resulting from the Uruguay Round, through increased trade and investments, which in turn will promote job creation, higher income and a higher actual standard of living.
There are tremendous opportunities. In several traditionally strong sectors of the Canadian economy, such as forest, chemical and pharmaceutical products, tariffs will be eliminated or substantially reduced world-wide, not to mention that major non-tariff barriers will fall.
Our service sector, which accounts for 20 per cent of our export earnings, will benefit from more open and stable global markets. New agreements on intellectual property rights on exported goods, combined with clearer rules of the game for supporting research and development, will open up new prospects for our technology and knowledge intensive industries.
I especially want to emphasize the export and growth opportunities now open to small and medium sized enterprises to expand onto new niche markets abroad. It is these firms that are now the most important source of job creation in Canada.
Our service sector which accounts for 20 per cent of export earnings would benefit from improved and more secure global opportunities. New agreements on trade related intellectual property rights combined with clearer rules of the game for supporting research and development will open up new prospects for our technology and knowledge intensive industries.
I want to especially emphasize the export and growth opportunities presented to small and medium size enterprises to expand into new niche markets abroad. It is these firms that are now the most important source of job creation across Canada.
There is a saying that if one does not use it one will lose it. If our Canadian small and medium size businesses do not respond to these new opportunities our economy stands to lose a great deal. Here is why. Between 1979 and 1989 small and medium size firms created over 85 per cent of net jobs representing over 2.2 million people. Out of 920,729 firms in 1992 figures, 920,233 or 99.8 per cent of firms were small and medium size with less than 100 employees. Out of 10,736,700 private sector jobs, there are over 6,360,000 or around 59 per cent who are employed by small and medium size enterprise. Therefore, most of the new jobs will be generated by this sector of our economy.
These figures follow a similar trend in most developed countries. If we were to compare the number of Canadian firms involved in trade with other countries we would find that Canadian small and medium size businesses are missing many opportunities. In fact, according to a 1990 study, 100 Canadian companies accounted for more than 60 per cent of the $141 billion of exports and only 7.6 per cent of all Canadian firms exported at all. However in Korea 42 per cent of their export is done by small and medium enterprise and in Taiwan it is 55.9 per cent. In China, 50 per cent of small and medium size enterprises are involved in export.
To increase the number of small and medium size enterprises involved in trade we must involve our small business sector and different levels of government must respond to their needs and concerns. Of course our competitors are already focusing on these very same opportunities. However, we must be smarter, more persistent and more aggressive in identifying and exploiting the hard won gains in access to both traditional and newly emerging markets around the world.
In response to this challenge the government has recently launched an international business initiative called Access 95. It is designed to translate the complex Uruguay round market opening measures into a strategy that targets the best export prospects among the billions of dollars in newly accessible global opportunities.
This initiative will help our business partners to select and develop more efficiently those new markets offering the highest value added returns over the long term. By enhancing industrial competitiveness, Access 95 will contribute to our domestic growth strategy to attract investment in the high tech industries and the jobs of the future.
Before outlining the Access 95 initiatives, I would like to highlight international trade opportunities that should open up to export industries across the country as a result of legislation before us today.
Agricultural producers across western Canada should benefit from a gradual increase in international prices for grains or oilseeds and special crops over the six year transition period and from expanded export opportunities.
Canadians will compete in a fair environment as European and American export subsidies for agricultural products are cut by 36 per cent. Quantitative import restrictions and variable import levies will be replaced by tariffs that will be cut by 15 per cent over six years, thereby stabilizing the export markets in Europe, Asia and Latin America for wheat, canola, barley, malt and alfalfa.
Our beef and pork producers should also profit from the replacement of foreign import restrictions and levies with a tariff based regime, as well as from improved and more uniform rules on sanitary and phytosanitary measures. These should foster increased export of breeding stock, embryos, plus beef and pork products to Europe, Japan, Korea and Australia.
Agri-food producers across the country can take advantage of greatly improved export prospects, especially for dairy products, seed potatoes, fresh and processed fruits, vegetables, beer, whisky and horticultural products.
Clearer international rules and fairer phytosanitary regulations will further stimulate exports and encourage Canadian processors to invest and plan upgrades and expansions. Our consumers will also benefit from access to a broader range of lower cost food products.
Manufacturers of horticultural, construction and mining machinery in Alberta, Saskatchewan, Manitoba and Ontario will be able to build on the economies of scale which have already resulted from improved access to the U.S. market. The elimination of tariffs on many of these machineries in major offshore markets should spur our exports.
Western Canadian producers of large scale and special crop farming technologies are especially well positioned to take advantage of new market opportunities as our exporters of construction and mining material and handling equipment.
Export oriented chemical producers in Alberta, Saskatchewan, Quebec and Ontario can also capitalize on tariff cuts of over 40 per cent and harmonization of rates between zero and 6 per cent. The prospects are excellent for chemical commodities in major industrial markets and for specialty products in each market.
Computer and instrumentation companies concentrated in Quebec and Ontario should welcome with enthusiasm the elimination or considerable reduction of tariffs in major industrial markets. They will enjoy wider access because of tariff consolidation in newly industrialized countries and tighter implementation of technical standards.
The generalized elimination of non-tariff barriers will open up new markets for manufacturers of computers and computer parts. The new rules on services and investments and better copyright protection will facilitate trade in computer services linked to hardware and software sales.
Manufacturers of electronics and industrial machinery throughout Canada should get ready to exploit new and exceptional export opportunities in key industrial markets where tariffs on electronics, most electrical appliances and industrial machinery will sometimes be cut by 65 per cent. Lower tariffs will also bring down the price of imported machinery, which is good news to Canadian investors thinking of equipping or modernizing their plants.
The fisheries industry in Newfoundland, Prince Edward Island, Nova Scotia and British Columbia can diversify exports of basic fish items and higher value added fish products to Europe, Japan and Korea where tariffs will be cut between 8 per cent and 30 per cent and non-tariff barriers reduced. Canadian tariffs on a wide variety of fish processing inputs and equipment will be reduced or eliminated.
The primary and fabricated metals industries in British Columbia, Saskatchewan, Ontario and Quebec can also take advantage of substantial reductions on tariff and non-tariff barriers by our main trading partners to boost sales of primary and fabricated metals such as aluminum, nickel, zinc and copper. This could well induce new investment over the long term. Tariffs are to be eliminated on a wide range of steel products, creating a more stable investment climate and more secure access to key industrialized markets.
The subsidies and countervail agreement would provide clearer rules on actions that may be taken against our competitors' sales of subsidized iron and steel products that displace Canadian products in foreign markets as well as in the subsidizing country's domestic market.
Pharmaceutical and medical devices exporters across Canada will be major beneficiaries of the agreement as key trading partners eliminate pharmaceutical tariffs and reduce a wide range of non-tariff barriers. This more dynamic trading environment should foster Canadian research and development, investment and expansion of manufacturing. Freer trade with
developing countries should favour the export of specialized drug products. Export prospects for high technology medical devices in Europe and Asia should also improve along with sales of standard devices to Latin America.
For these industries which are driven by major and rapid technological innovation, the new intellectual property agreement will be of particular benefit in ensuring that the many proprietary aspects of drug and medical devices are not copied by offshore competitors.
Our telecommunications industries in Quebec, Ontario, Alberta and British Columbia are also poised for further expansion into major industrial markets as tariffs are eliminated or deeply cut. The binding of tariffs by many advanced developing countries would secure Canadian access to those booming markets. Moreover, our prospects for winning foreign contracts for telecommunications systems are much better given the improved access to foreign markets for service technicians under the agreement on trade in services.
Our transportation industries in Manitoba, Quebec and Ontario will also profit from a more level international playing field as a result of improved disciplines on the use of government subsidies. This will facilitate the export of business aircraft, small engines, avionics, landing gear, simulators plus parts and service contracts.
Tariff cuts reaching 33 per cent will stimulate exports from the automotive, urban transit and rail equipment sectors. As well, substantial Canadian tariff cuts on original automotive parts will reduce costs for original equipment manufacturers.
Wood processing companies in New Brunswick, Quebec and British Columbia will be more competitive on foreign markets where they will be subject to fairer regulations on the price and quantity of their products. Tariffs on lumber and wood products will go down by 50 per cent in major industrial markets and will decrease in many developing countries.
Since the implementation of standards such as the European Union's phytosanitary regulations and the development of product standards and building codes in Europe and Japan will be tightened, it will be easier for our businesses to break into these crucial foreign markets.
Pulp and paper companies in British Columbia, Ontario, Quebec and the Atlantic provinces will enjoy unprecedented advantages on foreign markets. For the first time in history, most industrialized countries are committed to completely eliminating their tariffs. This decision applies in particular to the pulp and paper industry as well as to the book trade and other products printed on paper. Furthermore, many developing countries will reduce and consolidate their tariffs on paper products, thus providing Canadian exporters with excellent opportunities to diversify their value-added exports.
Besides the tariffs, which will be phased out over a ten-year period, some non-tariff barriers will also be abolished, in particular the European Union's requirements for waterproof paper. The agreement on import licensing procedures and the agreement on technical barriers to trade will give Canadian companies more stable access to foreign markets in general and to those of developing countries in particular.
On the whole, freer world trade and more predictable access conditions should encourage our producers to modernize their plants and in the long term promote the re-establishment of pulp and paper companies.
Service industries across Canada are closely tied to the offshore export prospects of the related merchandise sector. It is estimated that every dollar of goods exported contains 39 cents worth of service output. Additionally stand alone exports of service amount to $25 billion a year and are growing at almost twice the rate of exports.
The general agreement on trade in services of the World Trade Organization provides for the first time a comprehensive framework of rules and discipline on measures affecting services, including banking and investment. Once a country has committed to open its service sectors to a specified degree, it must grant Canadian service firms in the sector the same treatment accorded to domestic companies.
These market openings and safeguard measures will greatly improve the access of Canadian firms to billions of dollars in requirements for computers, construction, specialized engineering, management, telecommunications, as well as environmental, financial and professional services.
Both the magnitude and complexity of these opportunities are reflected in the Uruguay text of 500 pages of trade rules in addition to some 26,000 pages of tariff schedules applicable to 120 countries. The objective of the government's Access 95 initiative is to transform some of these often highly technical and complex provisions into a trade strategy that helps Canadian businesses take advantage of our hard won gains in access to foreign markets.
Access 95 is one of several important government initiatives to respond to the rapidly changing needs of our business community. We are committed to ensuring that our international trade developmental resources are focused on opportunities that offer the highest payoff for industry in the nineties. Given the
current fiscal situation I should mention that the initiative will be funded from existing resources.
The government is especially determined to strengthen our partnership with small and medium sized enterprises. These businesses often lack the resources and market specific expertise to discover and pursue newly accessible offshore opportunities. The government is tailoring its programs and services to assist small and medium enterprises in developing their particular niches in the new offshore markets.
At the direction of the first ministers the Minister for International Trade and his provincial counterparts are working to implement a trade Team Canada approach to better co-ordinate international business development. The advantage of the approach was demonstrated by the signing of contracts worth potentially $8 billion in China and over $100 million in Vietnam when the Prime Minister led a team of first ministers and 375 business leaders to Asia earlier this month.
We envisage that cost effective delivery of streamlined business development programs through federal-provincial one-stop shops will improve accessibility for firms while eliminating wasteful duplication. The approach will entail joint enhancement of exporter awareness services to prepare small and medium enterprises to export or to expand beyond the U.S. market. The development of stronger investment and technology linkage will assist small and medium enterprise to find the most suitable production technologies and partners abroad.
The more effective focusing of existing federal resources has greatly improved the delivery capabilities of our international market information and intelligence network. This links posts abroad with industrial analysts and trade officers across Canada in gathering and disseminating to Canadian firms timely and in depth foreign market intelligence that relates directly to their priority interests.
The Access 95 initiative was designed on the basis of these priorities. Launched recently by the departments of Foreign Affairs and International Trade, Agriculture and Industry, Access 95 will, first show Canadian exporters where tariffs and non-tariff barriers have been reduced; these reductions will be major gains for them because it will be easier for them to export some 200 key products and 11 types of services in 42 priority markets.
Secondly, it will provide information from our offices abroad on the most promising new markets and the key criteria for being competitive on these markets.
Thirdly, it will send information quickly and directly to interested companies through our market information network.
Fourthly, it will provide our exporters with the services of well-informed specialized consultants who can explain to them the complex provisions of the WTO agreement, in particular the implementation timetables, and indicate to them the best ways to overcome the obstacles they will meet abroad.
By specifically targeting the openings created by the Uruguay Round agreement, Access 95 should encourage our small and medium-size businesses, which are already prepared to export to the United States under the free trade agreement, to penetrate Latin American, Asian and European markets as well.
Before concluding my remarks today I want to thank hon. members on both sides for the constructive approach they have taken in the House and in committee to this most important piece of legislation. I look forward to a similar constructive approach from our colleagues in the upper chamber as Canada makes a special effort, together with our trading partners all over the world, to adopt implementing legislation in time to bring the agreement into force on January 1, 1995.
Let me assure my colleagues who may be concerned by legislative development or the lack thereof in other capitals around the world that we are keeping a close eye on the implementation process of all our major trading partners. I can repeat the assurances already offered by the Minister for International Trade that we will proclaim the legislation only after our principal partners have completed their requisite implementation procedures.
Moreover, Bill C-57 provides that the governor in council shall bring the legislation into force only when he is satisfied that the World Trade Organization agreement is in force.
In submitting the bill for approval the government counts on the support of all parties in the House for the fundamental principles of trade policy set out in the preamble of the bill. These are: that the cornerstone of Canadian trade policy is the multilateral system of mutually agreed market access conditions and non-discriminatory trade rules; that free, fair and open trade is essential for the future of the Canadian economy and for securing the competitiveness and long term sustainable development of Canada; and that trade expansion contributes to job creation, achieves a higher standard of living, offers a greater choice to consumers and strengthens the Canadian economic union.
These are the essential objectives the bill seeks to promote. I invite my colleagues to join me in assuring its timely adoption. Once again I thank my colleagues in the opposition for their excellent contributions at the committee level, at second reading stage in the House of Commons and at report stage.
