Good morning.
Thank you to the committee for conducting this study and for inviting the Canadian Chamber of Commerce to provide comments and our views on a potential agreement between Canada and the Pacific Alliance.
The Canadian Chamber of Commerce is supportive of preferential trade agreements as a means to expand Canadian exports and to reduce barriers to trade. As a trading nation, we know these are important tools to remain globally competitive and also to help our economy grow.
Specifically on the Pacific Alliance—and I'll try to keep my remarks fairly brief—the chamber is supportive of the government's interest in seeking associate membership for four main reasons, and I'll outline those for you.
The first one is that an FTA with the Pacific Alliance would upgrade, or modernize in a sense, the individual agreements that we have with each of the four Pacific Alliance members. While this might seem perhaps an unnecessary thing to do, it's quite relevant given the level of integration and coordination that the Pacific Alliance members are pursuing, particularly in areas like regulatory standards, for example, or trade facilitation. We know for a fact that the terms of the agreement under Pacific Alliance would be far superior for Canada than the current scenario. We see the existing bilaterals as a good foundational start for an eventual FTA.
The second reason is first-mover advantage. Canada has been an observer member of the Pacific Alliance for a number of years, since 2012, and that gives us an early start. But that window of opportunity is narrow. It's closing fairly quickly in the sense that last year Australia, New Zealand, and Singapore all joined Canada on the short list of countries seeking associate membership to the Pacific Alliance. We know that roughly 50 countries are currently observers in the Pacific Alliance. If we look at it another way, we see that Canada is at this moment in time the only G7 nation in that short list of countries seeking accession to the Pacific Alliance, and the only one in the hemisphere. That gives us a very early advantage and an opportunity, really, to play a significant role and even a leading role in the trade relationships in the Americas.
The third reason is strategic. Canada is right now in a privileged position, in that we have a CETA and we are still in the mix for CPTPP. What we're observing in trade rules globally is, in a way, a race to the highest gold standard for modern rules of trade. What's interesting is that the Pacific Alliance is in a way already there. It's very forward looking, and they have a high level of ambition when it comes to things like digital trade, for example, or new industries like fintech. It would be very valuable for Canada to be a part of that. We're seeing the competition or that race as accelerating. We see Japan moving very quickly on its deal with the EU, and the EU itself modernizing and closing a number of agreements, so it's important to keep those things in mind. Of course improved access and rules of trade are good for businesses already operating in that region. Beyond that, being a member of the Pacific Alliance or an associate member would give Canada a voice also in the accession of future members, which is, once again, a significant advantage.
The fourth reason—and perhaps this should be the most obvious one—is that the Pacific Alliance is an attractive region on its own. Put together, the four economies of the Pacific Alliance make up the equivalent of the ninth-largest economy in the world. It's growing fast, it has a large and young population, and it has taken significant steps toward economic reform. In fact, two of those countries are OECD members.
Really, if we look at it, we see there is no real reason we shouldn't pursue this agreement. It's just perhaps that there has been a lot on our plate, our attention has been perhaps elsewhere, and we've been preoccupied with other agreements, but it's quite an attractive region in its own right.
Arguably, with the exception of Mexico, some might say, “Well, they don't really represent a big chunk of our export markets; they don't really feature in the top five countries.” That doesn't mean they're not buying from elsewhere, and that's where an improved access would help. It would be an added tool in the bag, so that Canadian exporters could access or improve our share in that market.
Of course, trade negotiations are complex, so we have a lot on our plate. This one is still at a relatively early stage, and yet a lot of the work has already been done. We'll continue to observe how negotiations proceed. We often recommend to the government that we look for easy wins or aim for the low-hanging fruit, and this is exactly it. The Pacific Alliance is a modern agreement. It has solid foundations. It opens new markets with relatively low costs in an attractive region, and it supports our ambition to diversify our trade.
Overall, just to close, the chamber is supportive of this initiative.