Mr. Speaker, I will be sharing my time with the member for Etobicoke North.
This morning as I sat here I heard many members talk about the various aspects of the budget, such as EI, health care and infrastructure. I would like to focus a bit on what the budget actually does to make Canada competitive in North America and globally and to ensure that Canada remains a strong voice in the world.
The Minister of Finance talked about the concept of turning Canada into a northern tiger, a magnet for global investment attracting the best in human capital. On the latter point I just want to make the comment that the best in human capital means that we need to continue to invest in our people. We need to invest in our human capital.
It also means that as a national government we need to pay attention to local organizations like the Industry-Education Council from my area, which for some time now has been promoting a trading model to assist our manufacturing sector and to ensure that Canada remains strong and vibrant in the area of skills and skills training. I think that as a national government we need to be very much aware of what some of the local areas are doing to put forward local solutions that can form a template, a model, for national solutions.
I think it is also important to mention this morning that the Canadian economy, as everyone knows, does not function in isolation. It is part of a continental economic base. The budget does paint a picture of a remarkably strong economy given the situation around the world. We have read about the job creation numbers in 2002, at 560,000 with the majority being full time. That is in contrast to what the U.S. economy has experienced recently. The unemployment rate in Canada is now about the same as the U.S. rate for the first time in 20 years. Interest rates remain at 40 year lows and we have had 3 years of current account surplus. It is a very positive picture of our particular circumstance.
It is also important to note that our net foreign debt as a percentage of GDP is falling, for the first time below that of the United States, and our Canadian economy is expanding quite well with a solid 3.3% in 2002, considerably faster than the 2.4% recorded by the United States. That is certainly faster than all other G-7 and G-8 countries, so I think we continue to move along quite well in terms of our economy.
However, the continuing uneven recovery in the United States certainly is a concern for a lot of our manufacturing sector and I think it should be a concern. We did see stabilizing late in 2001 in the U.S. equity markets but it again declined sharply in summer 2002 in the wake of Enron and other accounting and corporate scandals. It is worrisome, I think, and the point I want to make is that it is worrisome because of our level of economic integration.
We have taken some steps and that is the reason we have done as well as we have. Some of these steps have been very key in continuing to move our economy along. We have our existing tax reduction plan, which lowers the general rate of corporate tax from 28% to 21% in 2004. Again, with these cuts, the average federal-provincial corporate tax rate in Canada is below the average U.S. rate for the moment, although there now is a package in front of the president to deal with the U.S. tax situation. As for capital gains, again we are lower than the typical top tax rate in the United States.
We have also taken what I and many members in the House consider a welcome step in phasing out the capital tax, although I would suggest that some would like to see this move along more quickly than has been proposed in the budget. Phasing this out is a good step. I think it is also important to mention that this reduction and the gap created are unaffected by the recent tax changes proposed by the U.S., so this will remain an advantage for us, but I also think it is important to state that we cannot really stop there. If we are to become the true northern tiger, we need to maintain and expand this advantage.
Economic prosperity is certainly not just about taxation. It is about a lot of other things and I think this budget speaks to a lot of the other areas that we need to invest in to continue to move our economy along.
I want to take a few moments to speak about ensuring that we take a proactive and a mature approach to securing the long term Canada-U.S. trade flows that our economy is so dependent on. Certainly the importance of the border cannot be underestimated. This budget reaffirms support for the implementation of the Canada-U.S. 30 point smart border action plan. The plan enhances the security of the border and will facilitate the legitimate flow of people and goods, but I still believe that we can do more with respect to this issue.
I think that the Nexus fast lane program at our land borders needs to be expanded to air travellers. I know there are pilot projects, but we need to go beyond the pilots. The FAST program for commercial shipments, with its acronym meaning free and secure trade, was implemented in December 2002 and we need to look at it to ensure that it remains smooth. We also need to look at expanding the program beyond the six highest volume border crossings.
In fact, we need to place appropriate security measures without damaging our economic security, so it is really an approach to the relationship that we need to accept and adopt as parliamentarians and as a government. I look to a comment made by Carleton professor Michael Hart in a recent publication. When he talks about the differences in objectives, approach and rationale of a wide range of Canadian and American laws and regulations relating to both security and economic well-being, he puts the differences in these terms: very minor and, in most instances, unimportant.
If we want to ensure that our trade flows remain free flowing and that our economy continues to prosper as we continue to export to the United States, we should be focusing on a lot of these objectives and the approach and the rationale of a lot of the areas that deal with our economic and security issues. We should recognize that the differences are minor and we can deal with them. I am not suggesting that we harmonize our differences with the United States, but I am suggesting that we should aggressively pursue mutual recognition agreements that would simplify our border commerce while maintaining our democratic control. We need to ensure we do that to maintain our sovereignty. That is an issue a lot of people talk about when this comes up. We already have some mutual agreements in place. We have them for refugees and we have them for criminal justice. There are many we could look to as models.
The budget also commits $11 million over the next couple of years to bolster Canada's representation and trade promotion activities in the United States. That is a good step. We have to be cognizant of the fact that our other NAFTA partner, Mexico, has 43 offices in 19 states in contrast to the 13 offices that Canada has, including the embassy in Washington. We need to ensure that our profile and our presence in the United States are well resourced and well funded and I think the $11 million does move us in that direction.
On the broader discussion about Canada-U.S. relations, I talk about it as an underpinning to our budget and as an underpinning to our economic prosperity. We have policy choices in large measure because of the kind of export market we have with the Americans, with 87% of our exports going to the United States of America. I suggest that we continue with a step by step pragmatic approach. We need to expand on our successes. We need to expand on our smart border approach. We need to deal with mutual recognition agreements. Perhaps we need to consider the “tested once” approach in North America between Canada and the United States for a multitude of products. That would really allow the continued flow of goods. We also need to work toward increasing the free flow of persons across the border.
In closing, let me say that we need to engage in this debate. We need to understand that we have been successful in our economy because of our access to the United States in a North American market. We are a trading nation and we need to continue to trade. We need to ensure that we have access to that market so that we can continue to develop many other markets around the world.