Good morning. Thank you.
Mr. Chair, committee members, thank you for the invitation to take part in your study on a potential free trade agreement between Canada and the Pacific Alliance.
The Business Council of Canada represents the chief executives and entrepreneurs of 150 leading Canadian companies in all sectors and regions of the country. Our member companies employ 1.7 million Canadians and are responsible for most of Canada's exports, corporate philanthropy, and private sector investments in R and D.
The Business Council supports Canada in negotiating a free trade agreement with the Pacific Alliance. With over 221 million consumers, the Pacific Alliance's combined GDP makes it the world's sixth largest economy. What's more, PA members are experiencing strong growth and exhibit favourable demographic trends. The Pacific Alliance is already an important market for many Canadian companies. Bilateral goods and services trade between Canada and PA members is valued at $54 billion. If treated as a single country, the Pacific Alliance would be Canada's third-largest trade partner, ahead of Japan and the U.K. Investment flows are also impressive, with two-way investment valued at $52 billion. Several Pacific Alliance countries rank among top destinations for Canadian foreign direct investment.
There are really three reasons why we think it's important for Canada to be negotiating with this bloc.
The first is diversification. Canada must be doing everything possible right now to find new customers for our exports and new economic opportunities for our citizens. The best way to do this, we believe, is to position Canada as one of the world's most open and global markets. I think this is increasingly important right now, when we're witnessing protectionism on the rise and inward-looking policies around the world.
The Pacific Alliance is an important component of Canada's overall diversification efforts. As the bloc grows, Canada could gain new market access in member countries. When you combine the Pacific Alliance with the recently concluded CPTPP, CETA and potential trade agreements with China and perhaps India, Canada will be in an enviable position, with market access to some of the world's largest and most dynamic markets.
The second reason is consolidation. Canada has a unique opportunity to both consolidate its existing trade agreements with Pacific Alliance members and set a high standard for subsequent bilateral agreements with the bloc. We believe that an ambitious and comprehensive outcome could enhance Canadian competitiveness in the region for years to come.
While Canada, of course, has separate trade agreements with all four Pacific Alliance members, each agreement varies in age and ambition. Harmonizing these agreements could facilitate a greater cross-border presence for Canadian companies already in the region. For example, agreeing to a common set of simplified rules of origin would allow for cumulation across Pacific Alliance members. This would facilitate the development of Canada-Pacific Alliance supply chains.
The third point is modernization. As global trade and commerce rapidly evolve, there is a constant need to upgrade and modernize trade agreements to reflect the way business is conducted. Negotiating a trade agreement with the Pacific Alliance that improves the digital innovation environment and enhances labour mobility could be particularly beneficial. Financial technology firms are innovating at a rapid pace, often posing challenges to regulators. An agreement that facilitates co-operation among the parties' various regulators could allow for faster commercialization of new technologies across a large customer base.
At the same time, modernizing and harmonizing labour mobility provisions could broaden the regional talent pool and facilitate the movement of business travellers between markets. Other areas for improvement include transparency, e-commerce, and regulatory co-operation.
Before I conclude, I have just one final point. With the Pacific Alliance, really the potential is unknown. That's why we think it's important that Canada is involved at an early stage. As you'll recall with the TPP, Canada was invited to join when it was a very small agreement amongst four countries. No one saw its potential at the time. I can tell you that even the Business Council looked at it, but we didn't understand what it was about to become. Canada was invited to join, declined the invitation, and then of course the U.S. got involved and suddenly it became this major initiative. We ultimately paid a price getting in at a late stage. I think it's important for Canada to join agreements like this at an early stage, when there's interest in having us take part, because it allows us to shape them and build them as they grow into larger trading blocs.
With that, I conclude my remarks. Thank you for the opportunity to address the committee.