Mr. Speaker, at the outset I would like to say right off the bat that the Department of Foreign Affairs and International Trade and the Minister for International Trade do not support Motion No. 391.
One of the key objectives of the Government of Canada is the promotion of prosperity. From trade and foreign policy perspectives, there are two key elements required to meet this objective.
First, we need to foster the expansion of Canada's international and economic interests abroad. This is achieved by gaining and maintaining market access for Canadian goods and services and by supporting and protecting Canadian investment interests in foreign markets.
Second, the government policy needs to support a secure and predictable business environment. This is critical if we are to successfully attract foreign investment into Canada and create a competitive environment where the import of ideas, goods, services and capital can be combined with Canada's resources.
How can Canada benefit from investment flows? Capital flows worldwide have grown rapidly in recent years, far faster than trade over the past two decades, and have contributed to global economic integration. Canada is an active player in this global economy. For example, Canadian direct investment abroad more than quadrupled from $98 billion in 1990 to $432 billion in 2002. Over the same period, direct investment in Canada more than doubled, from $131 billion to $349 billion in 2002. It is interesting to note that since 1996 Canadian direct investment abroad has surpassed foreign direct investment in Canada.
These dramatic figures underline the fact that Canadian businesses know that if they are to prosper they must compete internationally. Many Canadian companies not only export their goods and services but have also established production facilities abroad through international investment or established a commercial presence in foreign markets in order to supply their services. Other companies have significant minority ownership in companies in foreign markets. International investment is thus becoming a central element for success in today's global economy. As such, the Canadian business community has established high standard and internationally agreed upon rules that ensure a level and transparent playing field and include recourse for impartial dispute settlements, which is critical for companies who invest abroad.
Outward investment plays an important role in promoting Canada's interests. Outward foreign direct investment creates jobs abroad and at home as it strengthens the commercial links between countries by establishing a presence in foreign markets and by sharing Canadian expertise. It also increases the export of our goods and services.
This positive link between outward investment and jobs at home was highlighted in a 1999 OECD study of 14 countries, which estimated that each dollar of outward investment generated $2 of additional exports. This is good for us as an exporting country.
On the flip side, foreign investment in Canada is a major source of economic growth and an important contributor to the creation of jobs here at home, often higher paying and more highly skilled ones. In addition, research shows that inward foreign investment spurs innovation by bringing new ideas and technologies to our companies, providing much needed additional capital, and contributing to exports. Such investment makes our country economically stronger and contributes to a higher quality of life for all Canadians.
Why does Canada need investment agreements? Given the important contribution made by international investment to the economy of all countries, it is not surprising that governments are increasingly establishing the frameworks necessary to create an attractive investment environment. For many countries, this has meant simplification or abolition of investment screening mechanisms, the easing of sectoral investment restrictions, and the opening of entire sectors to foreign investment.
Frequently, these domestic efforts to improve the investment climate have been augmented by the international agreements, which provide rules at the international level to promote and protect investments.
The desire of government to facilitate freer flows of international investment through international rule-making is reflected in the dramatic increase of the number of bilateral investment treaties, BITs, during the 1990s. These treaties were designed to provide predictability, protection and transparency, and access for investors in specific priority and emerging economies. There are now in the range of 2,000 BITs worldwide, compared to less than 400 at the beginning of the 1990s.
At the regional and multilateral level, groups of countries have begun to pursue investment rule-making. Arrangements as diverse as the Asia-Pacific Economic Cooperation, the Association of Southeast Asian Nations, the Free Trade Agreement of the Americas, and the Southern Cone Common Market have all made commitments to the development of rules reflecting and liberalizing investment policies.
Typically, these agreements focus on improving the conditions under which investments are made and include key principles such as: transparency, by providing open reporting and publishing of national investment rules and relevancy regulation changes so that investors can have a clear understanding of the rules of the game; non-discrimination, by undertaking obligations not to discriminate against investors on the basis of their nationality; protection, by ensuring fair and equitable treatment in accordance with the customary international law standards for the treatment of aliens, compensation in the event of expropriation, and free cross-border transfer of funds; and finally, the impartial dispute settlement mechanism, which we have used many times, by providing binding dispute settlement procedures to settle disputes arising from alleged breaches of the obligations taken by the parties.
A medium-sized and open economy such as Canada has supported these principles in the international trade and investment area. This is what Canada has promoted in numerous international negotiations, including the NAFTA and our bilateral Foreign Investment Protection and Promotion Agreements, FIPAs. The rules within the NAFTA and the FIPAs provide a framework of disciplines to encourage efficient resolution of disputes and greater consistency in legal and policy regimes. These rules are often for a greater measure of security for Canadian investors through assurances that national policies would not be changed unduly or applied in a discriminatory manner.
Canada has numerous agreements which contain investment protection rules and provide recourse for impartial investment state dispute settlement. These rules ensure that business investors would be treated even-handedly and in accordance with international law by setting out dispute resolution procedures to resolve disputes between the investor and the host government.
I believe that Motion No. 391 is redundant because we already have the rules in place.