moved that Bill C-55, An Act to implement the Free Trade Agreement between Canada and the States of the European Free Trade Association (Iceland, Liechtenstein, Norway, Switzerland), the Agreement on Agriculture between Canada and the Republic of Iceland, the Agreement on Agriculture between Canada and the Kingdom of Norway and the Agreement on Agriculture between Canada and the Swiss Confederation, be read the second time and referred to a committee.
Mr. Speaker, it is a great honour for me to stand in the House today and lead off debate on this trade agreement with the European Free Trade Association.
It is important when we debate our trade relationships to bear in mind that Canada has been, is now and always will be a highly trade dependent country. Indeed, there is probably not a member in the House or a person in Canada who is not dramatically affected by Canada's trade and Canada's trade performance.
I should note that we are unlike the United States, for example, as we are nearly two and a half times more trade dependent than the United States. We have a domestic market of 34 million people compared to nearly 400 million in the United States.
Trade is Canada's lifeblood. We can look at the forces of protectionism, which will be damaging to the United States over time if they continue, and we can see that if such forces were to be unleashed in Canada, I can assure hon. members it would be not just hurtful but devastating to Canada. Therefore, it is critically important that Canada continue to develop trade relationships such as the one we are debating today.
As you have noted, Mr. Speaker, this agreement is with four countries: Norway, Iceland, Liechtenstein and Switzerland. It is really a milestone in terms of Canadian trade policy. It is a milestone for a couple of reasons.
First, it is really our first substantial trade agreement in over a decade. Canada had a small agreement with Costa Rica in 2001, but I have to tell hon. members that the trade and investment numbers between Canada and the EFTA countries are nearly 30 times that of our relationship with Costa Rica. Really, our previous most significant trade agreement was back in 1996-97, when we made the deal with Chile.
We can look at the trade numbers and see that the combined exports and imports between Canada and the EFTA countries were over $13 billion in 2007. That is of course higher than our trade with Korea. It is a very substantial volume of trade and has grown rapidly in recent years.
When we look at foreign direct investment, we can see that two way investment flows between Canada and the EFTA countries are in the $28 billion range as of 2007. While people may make light of the fact that this is not a deal with the entire European Union, which would be our next priority on that side of the Atlantic, this is a very significant trade deal. These countries are relatively wealthy. Their GDP per capita is among the highest in the industrial world. They are technologically advanced countries. As I say, it is our first trade deal with a European bloc or country in terms of our bilateral free trade agreements.
When we look at it strategically for both countries, we can see that this is a trade deal that allows the EFTA countries to think of Canada as a gateway to the entire North American market, a market of 440 million people, and it allows Canadian businesses to look at the EFTA countries as a gateway into the European Union, because the EFTA countries do have a free trade arrangement with the European Union.
It is also important because Canada, and I think the majority of Canadians, most provinces and certainly the Government of Canada, is anxious to deepen our economic relationship with the larger European Union. To have shown that we can establish a free trade deal of the kind we have done with EFTA puts us in a very strong position to maintain and improve momentum in terms of doing a deeper trade deal with the European Union. That is a very high priority of this government.
As I look at our trade relationships, it is very important for members to recognize that we really have been on the sidelines for the better part of a decade in terms of our trade policies. We have become extremely dependent on the United States market because of NAFTA. That is all good, but for our trade it does mean that roughly 76% of our exports are going into the United States market. That is highly concentrated.
There are protectionist pressures in the United States these days, so it is critically important that we not focus just on improving NAFTA, which is a focus for us, but that we also look at diversifying our trade relationships. Other countries are doing it and they are doing it aggressively.
We can look at the United States. It has free trade agreements with 16 countries. Mexico has free trade agreements with 40 countries. Chile has trade agreements with 53 countries. Many of these countries are negotiating additional agreements as we speak.
We can look at Canada. Before this agreement, we have had free trade agreements with five countries through four agreements covering five countries. That is not good enough for a trade dependent economy like Canada's, which is why Canada is actively negotiating free trade agreements with a number of countries.
We have active trade negotiations going on with some 27 countries. When we broaden it to cover air bilaterals, investment agreements and free trade agreements, we are negotiating presently with something in the order of 100 countries.
This government is committed to a re-energized trade policy. We are moving forward aggressively to ensure that Canada is back in the game and that Canadian producers and Canadian jobs are not disadvantaged because we are sitting on the sidelines.
I would also note that on the same day we signed the EFTA agreement in Davos, Switzerland, we also concluded negotiations with Peru. That is another very significant trade agreement. It is a new generation trade agreement. When it comes before the House I will be able to explain to members some of the new and innovative elements in the agreement with Peru.
This agreement is what we call a first generation trade agreement because it was initiated roughly a decade or so ago, so it does not cover trade in services. It does not have an investment chapter, although it does have provision for those chapters to be added within the next three years.
I should say that this deal is a good one for both agricultural and non-agricultural interests in Canada. It has certain sensitivities that have been inhibiting the closure of this agreement over the years. The shipbuilding industry was one particular area in which we have had some sensitivities.
This agreement has the best provisions on shipbuilding of any free trade agreement that Canada has ever signed. The tariff phase-out is 15 years on the most sensitive products and 10 years on the next most sensitive products, and the first 3 years is a period during which there would be no tariff reductions at all.
When we combine what is in this agreement with the buy Canada shipbuilding program that the Government of Canada is bringing along, with over $8 billion in shipbuilding, and when we combine that with the replenished structured financing facility for shipbuilding, I think we are on the threshold of a renaissance in the shipbuilding industry in Canada. I think it will be very good for the shipbuilding industry.
Even today as we speak, the Davie shipyard in Quebec, which has gone through serious financial problems over the last 10 years, is now owned by a Norwegian company and its order book goes out at least five years, with many of the vessels and work being done in that shipyard being sold back into the Norwegian and European markets.
I would also note on the agriculture front that this agreement does exclude the supply managed sectors. As members know, we have committed not to put those on the table in our free trade negotiations with other countries, and we have not done so in this case.
Let me wrap up by saying that this is part of the government's approach to enhancing Canadian competitiveness and to recognizing that while we have had the strongest economy among the group of eight, certainly fiscally and economically, we do see risks on the horizon. Everyone knows there are some serious economic adjustments taking place in the United States and the rest of world. We are aggressively moving to ensure that Canada's economic performance in the long term is enhanced, because Canada's economic performance will be driven by our trade performance.
There will be no way that we can spend our way to prosperity in Canada. It does not work that way. It leaks out in terms of just enhancing imports for Canada. We have to trade. We have to export. We have to sell to other countries. Our global commerce strategy, which is part of “Advantage Canada”, is designed to do just that.
I would note that our approach is driven by the modern integrated approach to international trade which recognizes that trade today is driven by global value chains. Global value chains are driven by investment. Global value chains are driven by technology. Global value chains are driven by the movement of capital and people around the globe.
Rooting those value chains deeply into Canada is a critical part of our trade strategy, which is why our free trade agreements are important. It is important to expand our free trade agreements from goods to cover services and investment. It is important to bring air bilaterals into the mix, because if we do not have good air services between Canada and our trading partners, we cannot service and be efficient in terms of being part of global supply chains.
We are also doing investment agreements. As I noted earlier, investment agreements are critical because investment carries with it technology and opportunity in terms of driving exports and imports.
We are looking at transportation and logistics in a way that integrates this, like no other country and like never before in Canada, with our trade policy. Our transportation and logistics gateways in the Atlantic, in the Pacific, through Churchill in the north, and north and south between Ontario and Quebec and the United States, are critical elements of trade policy. Without transportation and logistics at a globally competitive level, we simply will not be a competitive trader in the world economy today.
This is part of a larger mosaic of policies that are fitting together in a comprehensive way to ensure that Canada, Canadians and our kids and grandkids have opportunities like those we have enjoyed in the past. I welcome the discussion on this agreement today.
