moved that Bill C-61, an act to implement the Canada-Israel free trade agreement, be read the second time and referred to a committee.
Mr. Speaker, I am pleased to commence the debate on second reading for the bill with respect to Canada-Israel free trade.
This historical agreement is both significant and symbolic. Significant because it marks the first free trade agreement Canada has signed with a partner outside this hemisphere and symbolic because it stands as further evidence of Canada's commitment to freer trade around the globe.
It sends a very clear message. Canada is ready, willing and able to trade with the world. With this agreement we will stand on the same footing as the European Union and the United States, both of which have already signed free trade agreements with Israel.
For the first time we will have direct access to the Israeli market without having to funnel our trade through the United States or any other country.
The globalization of markets is one of the great waves of history and it is one Canada cannot afford to and does not intend to watch from the shores.
In today's ever changing world no nation, however rich or powerful, can long remain isolated form the great economic currents of this day. Markets are opening up, barriers are falling down and free movement of goods, services and ideas is becoming simply unstoppable.
Today Canadian companies quite rightly see the world as their marketplace, and the opportunities are boundless. We are vigorously and we are successfully winning new markets and opening new doors.
As a result, our balance of trade with the nations of the world has tipped dramatically in Canada's favour to a record merchandise record surplus in 1995 of over $28 billion.
Part of the success we have realized to date has been the co-operative approach taken by this government since coming to office. New partnerships have been created in every province to provide better export services to Canadian businesses with particular emphasis on dynamic small and medium size enterprises.
We have also benefited from the Team Canada trade missions abroad which joined federal and provincial governments with the private sector to present a united and common front in searching out new opportunities for Canadian companies.
To date the Team Canada trade missions have produced some $20 billion in contracts for Canadian companies signed at the time of the trade missions and signed by companies which will be hiring more people here in Canada to fill those contracts as well as to develop new ones. It is estimated that for every billion dollars in new trade 11,000 jobs are either maintained or created as a result.
All of these activities I believe reflect the fundamental change on how Canadians view freer trade. We have come to realize that there is far more to be gained from globalization than to fear from it. We have come to realize that freer trade is the key to expanding Canada's and the world's economy. More to the point, it creates, it sustains jobs, lots of jobs.
Looking at exports alone, one in three jobs in this country depends on export trade. Trade accounts for some 37 per cent of our gross domestic product, more than one-third of our economy. Quite simply, trade with the world has become the economic engine of this country.
The choice before us is clear. We can expand and diversify our trade or we can stagnate and condemn ourselves and our children to leading lesser lives in a lesser land.
This government is not prepared to let that happen. We are not prepared to sit back and watch the jobs, the growth and the opportunities pass to other nations. We are determined to put Canada in a position where it can realize its potential and not only sustain but enhance our standard of living.
To do that we must constantly seek out new partners and new markets. With a relatively small domestic market we must look beyond our borders if we are going to maintain that standard of living. We must give our businesses the access they need to the most dynamic and robust economies in the world.
That is why we signed the North American Free Trade Agreement, NAFTA, and why we are working to have Chile join that pact. That is why we are working diligently to help create a free trade area of the Americas. That is why we are such strong supporters of the World Trade Organization in its efforts to
liberalize trade throughout the world. That is why we are involved in the Asia-Pacific economic co-operation forum, known as APEC. That is why we have signed a free trade agreement with Israel.
This agreement is a perfect complement to our efforts at trade expansion. Since November 1993 Canadians have created, as my colleague the Minister of Finance has said on many occasions, over 600,000 new jobs. Canada is projected to have the highest employment growth of all the G-7 nations in 1996 and again in 1997. The lesson is clear. Given the access to world markets Canadians will create jobs and they will produce prosperity.
International trade is a subject involving large numbers, billions of dollars in trade and millions of jobs created. Sometimes amid all of those strings of zeros we lose sight of the fact that behind the big numbers are people, individual Canadians, men and women granted the dignity of holding a job; men and women beginning to plan for the future and building a better life for themselves and for their children; men and women who pay taxes and contribute to the economic health of their communities and to our country.
Recognizing this, our government has set the goal of doubling the number of Canadian companies actively exporting by the year 2000. We believe that this is the best way to encourage economic growth and create jobs.
The free trade agreement with Israel represents another step toward our goal of freer trade worldwide. It is clear proof that Canada is prepared to match our rhetoric on free trade with concrete actions.
Why Israel? Israel and Canada have long enjoyed close relations. Our relationship is rooted in common values and shared democratic beliefs: the belief in freedom and the dignity of the individual. Our relationship has been grounded in common hopes, hopes for peace and prosperity. With this free trade agreement we move toward cementing those ties and realizing the economic potential of our relationship.
It was in November 1994 that the late Prime Minister of Israel, Yitzhak Rabin, and our Prime Minister began the process that has led to this historic agreement. It was in Toronto just a few months ago that I had the privilege of signing a final agreement with Natan Sharansky, the Israeli minister for industry and trade.
If I might be permitted a personal word, it was a great honour to meet Mr. Sharansky whom I had read a great deal about. I followed his courageous crusade for human rights in the former Soviet Union back in the seventies and early eighties. It was wonderful to meet him personally and to discuss a wide range of issues.
One of his most remarkable qualities is the ability to persevere and to transcend. For many years he was deprived of his liberty, but he never abandoned his principles. Throughout the darkest days of Soviet oppression he remained one of freedom's torchbearers.
With the signing of the agreement in July, both countries undertook to introduce enabling legislation into their respective parliaments. That is why we have introduced this bill. If the implementation process is completed on both sides by the end of this year, the agreement will come into effect on January 1, 1997.
Before turning to some of the main features of the agreement, let me state clearly something important. While the agreement is between Canada and the Government of Israel, we intend to extend the same benefits to the Palestinians. We will be meeting with Palestinian officials to examine the best ways to go about this.
Canada has always been firmly committed to the Middle East peace process. The relationship between peace and freer trade is clear. At its best free trade acts as a system of rules for peaceful economic relations. It will help to bring additional economic development which will help to bring stability to the region for the people of Israel and for the people under the jurisdiction of the Palestinian authority in Gaza and the West Bank.
The late former Prime Minister Yitzhak Rabin once said that peace requires a world of new concepts. One of the most important new concepts shaping our world today is freer trade between nations.
While recent developments in the Middle East have been a source of concern to all of us, they should not blind us to the progress to date, nor discourage us from the long term goals. We should be encouraged by the pledges recently made by both Chairman Arafat and Prime Minister Netanyahu to renounce violence and continue negotiations toward peace. Those commitments are a clear indication that both sides have an appreciation for the stakes involved as well as an understanding of the simple truth that far more can be achieved by dialogue than by violence.
We must recognize that the peace process has already brought concrete benefits to Israel. A large number of capital projects in the areas of transportation, energy and communications are being considered by Israel and her neighbours, a development which would have been unthinkable just a few years ago. Canada supports these constructive alliances and wants to be a full and active player in the future economic development of this region.
This agreement is also important to Canada because of the nature of the Israeli economy. With a thriving private sector, an educated workforce, modern banking systems, an important stock exchange and an excellent communications system, Israel is one of the fastest growing economies in that region.
The new Israeli government's far reaching economic program is aimed at lowering taxes, reducing government spending, cutting red tape and reforming restrictive labour practices. As a result, residential construction is booming and foreign investment is growing. In fact, Israel has become something of a magnet for foreign investment which is supplying the capital Israel needs to grow and prosper.
Israel has also been busy expanding its trade ties. It has signed free trade agreements with Turkey, the Czech Republic, Slovakia, as well with as I mentioned before, the European Union and the United States.
Complementing Israel's economic reforms are its growing political relations. At the end of 1995 Israel had re-established relations with more than 40 countries that had broken ties in the 1960s and 1970s.
All of this is a welcome development and stands as further evidence of a new Middle East, a Middle East which is dynamic and outward looking, embracing change and expanding opportunities. It is a Middle East which will not allow its past to limit its future. It is in this Middle East that Israel is poised to become an economic power. It is therefore an opportune time for Canada to strengthen its presence in the growing market through the Canada-Israel free trade agreement.
Trade between our two countries is modest, but it is growing. Two-way trade last year is up 37 per cent, to stand at $450 million. Our exports stood at $216 million in 1995, up 49 per cent from the previous year. I am confident that with the implementation of this agreement those figures will grow dramatically.
In fact, even before this agreement was signed, companies in both countries began to retool and adjust their business plans. Air Canada's service to Israel is helping to speed the passage of business, goods and people between our nations.
When we talk about visits, in 1995 more than 68,000 Israelis came to Canada as tourists. If this trend continues, as I understand it is, we will probably welcome more than 100,000 Israeli tourists this year.
With the signing of this agreement, the pent-up demand, the close ties and the vast potential can all begin to be realized. Canadian and Israeli companies will have duty free access to each other's markets for industrial goods. They will benefit from the reduction or elimination of tariffs on agricultural products.
Many Canadian companies, some well known such as Bombardier and Newbridge, and some not so well known such as Claridge Israel, Global Upholstery, Reikh International, Signatel and Telespace, are on the ground already exploring new partnerships and bidding on new infrastructure projects. These firms are spearheading an increase in exports and imports between our countries. They are boosting investment and encouraging innovation through research and development and joint ventures. All of their efforts and those of others will be made much easier by the agreement we are considering here today.
While Israel as a whole represents a healthy and expanding market for Canadian goods and services, there are some sectors that offer particularly strong potential for Canadian companies. These include advanced electronics and communications systems, power and energy projects, oil and gas exploration, as well as agri-food products and environmental technology. All of these are areas where Canada enjoys world class expertise, and all of these are areas of opportunity in Israel.
This agreement provides access to the Israeli market. We realize that access is only half the battle. Companies must be made aware of the opportunities that await them. Canadian companies in the private sector wanting to expand into Israel will have a great deal of support. The Canadian embassy in Israel is working hard at this moment to line up potential partners and to match up Canadian goods and services with Israeli buyers.
Another important vehicle which our companies can use is the Canada-Israel Industrial Research and Development Foundation. Established in 1993 to promote industrial co-operation, it has played a key role in matching Canadian firms with ones in Israel. To date the foundation has approved some 11 co-operative projects worth over $9 million in collaborative research and development efforts. The foundation also provides repayable grants for promising joint ventures.
I am pleased to note this has been so successful that the Government of Alberta and the Atlantic Canada Opportunities Agency, ACOA, have signed agreements to co-operate and work with the foundation. A similar agreement is in the works for the Federal Office of Regional Development in Quebec, FORD-Q. The involvement of these governments and agencies is very encouraging because it means a much broader market will be able to tap into the benefits of the foundation. This in turn will lead to more partnerships and more opportunities.
In addition, another agency of the government, the Export Development Corporation, EDC, offers four lines of credit for buyer credit financing in Israel. Canadian companies looking for financial or risk management services will find a ready source in the EDC.
So the support is there. Now that governments have played their parts in establishing the infrastructure for free trade, it is up to the private sector in both countries to step forward and realize the potential of this new relationship.
Let me turn briefly to the substance of the agreement. I will not go into a great deal of detail but I will outline the main elements.
First, under this agreement all tariffs will be removed from industrial products beginning on January 1, 1997, all industrial product tariffs. At Canada's request, the only exception is that women's swimwear, and at Israel's request, certain cotton fabric will continue to be subject to tariffs. Even here however the tariffs are scheduled to be phased out over two and one-half years.
Second, duty free access or low duties will be applied to a variety of agricultural and fisheries products exported by either country. For Canada such exports include grains, grain products, beef, salmon, maple syrup, alcoholic beverages and various processed foods.
Third, the agreement also provides a clear and straightforward rules of origin, a key component of any successful trading relationship. I would point out that these rules of origin are generally less restrictive than those under the NAFTA, reflecting the structure and openness of our respective economies.
Fourth, to resolve any disputes that might arise under the agreement, both sides have agreed to be governed by a binding dispute settlement mechanism.
It is worth emphasizing the areas that are not covered by the agreement. As we would expect, supply managed dairy, poultry and egg producers are excluded. Cultural industries are also exempt. So to is the auto pact. Other areas of trade such as trade in services and government procurement continue to be governed by the multilateral rules being established through the World Trade Organization.
These then are some of the benefits which this agreement brings to Canadians. I am proud of the work our negotiators have done. I congratulate them. I am excited by the prospects that this agreement creates.
As trade barriers collapse around the world, and indeed they are, the possibilities for Canada are virtually limitless.
A world of opportunities is opening up before us and we are determined to place Canadians in a position to benefit from them. This agreement is an important step toward that goal.
It gives us access to a dynamic and important market. Strong bonds of friendship will now be complemented by stronger economic ties. We will be partners not only for peace but for progress, not only for security but for prosperity, and not only for survival but for enrichment.
This agreement is not a leap of faith so much as it is a declaration of confidence, confidence in the ability of Canadians to compete successfully anywhere in the world. To those who say the old trade barriers are simply being replaced by new trading blocks, this agreement offers eloquent proof to the contrary.
To those who say we must diversify our trade around the world, this agreement offers reason for optimism. With freer trade as our guide and our goal, let us continue to open up a world of opportunities to Canadians, confident that we can compete in the world and win.
Let me in closing answer a couple of questions that I have heard with respect to this agreement. One has to do with the process that has been followed. The process that has been followed has been the normal negotiating process that is conducted in such matters. We have negotiated government to government and we have done so in a way to consult with the industries affected.
I indicated that in a couple of cases we are phasing out the tariffs over a longer period of time because of the requests of those specific industries. That is the kind of process we use, whether it is directly with the industries affected or through the sectoral advisory committees on international trade that advise me on these matters. We do so in a consultation process to come up with an agreement which is beneficial and supported by the private sector because that is what is key to making this a success.
We have followed that usual negotiating process. We have done the consultation and now the details of this plan are here before us today.
The other question has been why now. The why now is sometimes talked about in terms of the present conflict that is going on in Israel, in the Middle East. Unfortunately there has been conflict on many occasions. Canada is committed to helping resolve the conflict and to help bring peace, stability and prosperity to the Middle East.
Let us bear in mind that one of the prime purposes of proceeding at this point is that Canada business is disadvantaged in its dealings with Israel. Our competitors in the European Union, the United States and a few other countries have that free trade access and Canadian companies do not have it at the moment. I know of businesses in this country that partially produce a product and send it to the United States for completion so that they can take advantage of the United States agreement on free trade. That costs jobs here in Canada.
We want to end this disadvantage for Canadian companies soon. We have set the date of January 1, 1997 to put this agreement into effect so that we can end that disadvantage and create a level playing field for Canadian business. It is an ambitious schedule, one that requires co-operation, which I hope members of the House will give so that we can pass this in time to put it into effect at the first of the year.
There is another reason why we should do this in terms of the present situation in the Middle East. It is a situation that I talked about a few moments ago. If we are going to have peace and stability we also need economic development. We need opportunities both for the Israelis and for those who live under the jurisdiction of the Palestinian authority.
This agreement, as I have pointed out, is being offered to the Palestinian authority to cover the people in the Gaza and West Bank. The sooner we put that into effect for them, the sooner job opportunities will help flow through and improve their economy. That kind of economic development is needed to help bring about stability in the area.
I hope we will have full debate on the matter. I hope at the end of the day that all members of the House will join with us in supporting this piece of legislation to help Canadian businesses in their relationship with Israel and help Canadians to go out into the world and compete and win, creating jobs and economic growth here in Canada.