Thank you, Mr. Chair.
My name is Mathew Wilson. I'm the vice-president of national policy with Canadian Manufacturers & Exporters.
I'm pleased to be here on behalf of 10,000 members across Canada to discuss Canada's possible entry into the Pacific Alliance and to provide our support for the government on this initiative.
For those of you who don't know CME, we're a national organization with offices in every province and every region of the country and members right across the country, as well as offices in Europe, Mexico, and the United States.
Eighty-five per cent of our members are small and medium-sized enterprises that represent every industrial and every export sector, and from all regions of the country.
Manufacturing is the single largest business sector in Canada. Canadian manufacturing sales totalled $571 billion last year, directly accounting for 13% of Canada's economic output. Manufacturers employ about 1.8 million Canadians in highly productive, value-added, high-paying jobs. Their contribution is critical for the wealth generation that sustains the standard of living of each and every Canadian.
Manufacturing is an export-intensive business. More than half of Canada's industrial production is exported directly each year. In fact, manufacturers are responsible for 63% of Canada's total merchandise export and more than 70% of Canada's goods exports to the countries of the Pacific Alliance.
It is increasingly critical for Canadian manufacturers to succeed in global markets and to diversify their customer base, just as Pierre was talking about in Bombardier's case.
As manufacturers further invest in innovation and become more agile, specialized, and able to serve niche markets, the more they need to find customers, suppliers, and business partners globally.
While Canada and the U.S. remain the priority for most of Canadian industry, we must also understand that a growing share of our membership is looking to take advantage of new and emerging opportunities beyond North America in countries such as those in the Pacific Alliance.
The opportunities the companies are looking for are to find new customers in new markets, to find potential investors in Canada, to seek investment opportunities abroad, to be able to source services from around the world, and to find qualified personnel to bring back to Canada.
While Canada has existing free trade agreements in place with Chile, Colombia, Mexico, and Peru, these markets are still being developed and discovered by many Canadian manufacturers. In a recent survey of our members who represented almost 2,000 facilities across Canada, companies outlined how their supply chains and customer bases are expected to change over the next three years. Increasingly, manufacturers are looking less and less at domestic markets and more towards opportunity in developing markets.
Mexico, which has by far the largest economy in the Pacific Alliance, is in particular expected to be a significant growth market for Canadian exporters. Over the next three years, based on our survey results, there will be nearly a 20% increase in the number of companies exporting to Mexico, with more than 90% of companies expecting to be exporting there by 2015.
Total exports to the region of the Pacific Alliance were worth more than $7.5 billion last year, of which $5.3 billion were of manufactured goods. Many of these exports are in traditional sectors, such as aerospace and automotive production, which is deeply integrated across the NAFTA region; however, exports are much more diversified and growing across such sectors as agricultural products, iron and steel, mining equipment, oil and gas extraction equipment, and electronics. Given the expected growth of the economies in these markets, they should provide additional market opportunities for companies in these sectors as well as in such other sectors as construction, engineering, insurance, transportation equipment, and financial services.
In order to take full advantage of these trade agreements, CME's priority for the government's trade agenda policy as a whole, as well as for specific trade agreements such as this one, is to ensure that it enhances manufacturers' and exporters' ability to compete and win in domestic and global markets. In other words, our priority is to ensure that trade agreements put us in a position to grow and strengthen Canada's manufacturing base, and by extension to grow Canada's exports of goods and services.
We believe, in the case of the Pacific Alliance, that given the existing FTAs with these countries, it can be an important initiative to strengthen trade relations with existing business partners and better position Canada to lead regional integration throughout the Americas and into the Pacific region.
This agreement will help set the framework for further supply chain strengthening and for growing export throughout Central and South America and across the Pacific. CME believes that this opportunity and strategy are similar to those of the Trans-Pacific Partnership, which started with a small group of companies and grew to a much larger collection of economies, one which now represents more than 650 million consumers and more than $20 trillion in GDP.
We also believe that using multilateral frameworks such as the Pacific Alliance provides Canada an opportunity to elevate all countries to the same high level of ambition that Canada has in its negotiations, including those of the TPP and CETA currently under way, and ensure that free trade agreements not only eliminate tariffs but also will open up foreign markets through the elimination of non-tariff barriers, will open procurement markets, and will facilitate the movement of goods and people among these trading partners.
CME is very supportive of Canada's full involvement in the Pacific Alliance and in other such trade agreements that expand market access on a reciprocal basis and will deliver a net benefit to Canadian industry.
Thank you for letting me be here today. I look forward to the discussion.