Mr. Speaker, I want to talk, in particular, to the service sector, but I will first highlight the fact that issues regarding trade and democracy are critical in this discussion and Canada's national interest must be the overwhelming issue for Canadians. Whether the issue is health care, the environment or culture, we must protect it.
There are potentials in terms of the free trade agreement of the Americas. However, we must move, in my view, slowly and cautiously, keeping in mind that issues are being raised and being raised in a very thoughtful and lucid manner.
The Americas is one of the most dynamic regions in the world. There are 800 million people, not even one-sixth of the world's population, and they account for more than one-third of the world's economic activity. The combined gross domestic products of the Americas, about $17 trillion, is greater than that of the European Union.
The leaders of the western hemisphere believed that the Americas had tremendous potential and that the countries of the Americas could work more effectively, particularly in areas to promote democracy, development and growth.
We have seen great changes in the Americas over the last 10 or 15 years in terms of democratic growth in the hemispheres. We have moved from military juntas to fledgling democracies, which Canada has a very important role to help promote and protect.
The leaders also committed to strengthening not only democracy but greater prosperity. They also committed themselves to practical measures to improve such things as health care, to increase access to quality education and to protection of biodiversity, to collective action against the scourge of drugs and corruption, to expanding the deepening dialogue with civil society and regional priorities.
I had the opportunity a few weeks ago to participate in a forum of parliamentarians from the Americas which was held here in this very Chamber. Issues such as democracy, drugs and trade were discussed. It is very important to bring parliamentarians from this hemisphere together to talk about these key issues.
At the second summit, held in Santiago in 1998, issues were talked about and moved forward. Once again leaders endorsed action to support the development of democratic institutions, to protect human rights, to enhance transparency and to respect the rule of law. I believe these are critical issues for all Canadians. The leaders gave specific instructions to begin the process of negotiating the free trade agreement of the Americas. If the free trade agreement of the Americas is eventually signed, it will create the largest free trade area in the world.
In short, the summit of the Americas process may offer numerous opportunities to further enhance Canadian openness to the western hemisphere. The FTAA is one of the most tangible opportunities on the economic front. It certainly does have potential for enhanced market access for Canadian exports.
If there is one sector where new access could lead to significant benefits for Canada, and particularly for Canadian business, it is obviously the service sector. This is a key sector. It is the engine of the Canadian economy. It is responsible for more than two-thirds of Canada's gross domestic product, almost three-quarters of employment with 10.5 million jobs, and nearly 90% of new job creation in the country. It is leading the transformation of the Canadian economy into a knowledge based economy. Many employees in the service sector are highly educated and enjoy earnings well above average. Services are the heart of Canada's innovative society. For example, telecommunications, financial services and technical business services are among the most innovative industries in the country.
Canada is a trading nation and it counts on its service exports to strengthen its prosperity. Not counting Canada's direct investments abroad in the service companies, Canada is the 12th largest exporter of services in the world, exporting $51.8 billion worth of services in 1998 alone. Canadian companies such as SNC-Lavalin, Teleglobe, Enbridge and Hydro-Québec are among the world leaders in their fields and their expertise is sought across the hemisphere.
Though service exports account for only 12% of Canadian exports, Canadian trade in services is increasing at a much faster pace than our trade in goods. Given the importance of trade in our economy, we can say without fear or exaggeration that improving market access abroad for our services provides an opportunity for sustaining our prosperity.
The argument for supporting Canada's service exports is particularly strong when it comes to the Americas. In Canada's commercial services, exports to FTAA countries, excluding the United States and Mexico, were worth about $1.9 billion in 1998 and $787 million in 1993. Clearly this is a growing market, with an annual rate of approximately 19% growth during that period.
Countries such as Argentina, Chile, Costa Rica, Venezuela, Colombia and Brazil are all existing or potential export markets for Canadian service providers. There are three sectors of particular note: telecommunications, financial services and engineering services. Many of these are in my own community.
The Canadian telecommunications sector is enjoying tremendous success, exporting services valued at over $2 billion a year and employing over 104,000 people. As a consequence, since 1993 the sector has been growing by an average of 9%.
Still, Canadian exports of telecommunications services face market access and regulatory restrictions in some countries in this hemisphere, in part due to the presence of telecommunications monopolies and, in addition, a lack of transparency, predictability and timeliness in the process of awarding operating permits and licences or prohibitive fees for licensing or interconnection. Reducing such barriers would significantly increase export opportunities for Canadian telecommunications companies.
In recent years Canadian financial institutions have been very active in Central and Latin America. One leading example is Scotiabank, which is active in Argentina and in Chile, where its subsidiary is the seventh largest bank in that country, as well as in Brazil, Costa Rica, Belize, El Salvador, where it has 33 branches in that country alone, Guyana, Panama, Peru, Uruguay and Venezuela. Another example is the National Bank, which recently teamed up with three U.S. venture capital companies and a local Chilean partner to form Corp Banca Consortium in order to purchase banking institutions in South American countries.
I had an opportunity, along with other colleagues in the House, to be in Chile for the Asia-Pacific parliamentary forum in January. I had an opportunity to talk to representatives of Chilean congress with regard to not only the FTAA issues but issues in the financial services sector.
Another sector where Canadian expertise is renowned around the world is the engineering sector. Canada is currently the world's third largest exporter of engineering services and the high calibre of Canadian engineers is internationally recognized. Business opportunities are significant, especially in Central and Latin America where Canadian engineering expertise in resource based energy related infrastructure projects is in high demand. I would refer hon. members to such companies as Hydro-Québec and its recent acquisition of Chile's Transelec, which owns 50% of Chilean power transmission lines. This is a good example of the type of business opportunities the countries in the western hemisphere have to offer. That is why Canada is actively participating in the service negotiations under FTAA.
Canada has much to gain from the establishment of a comprehensive set of rules on trade services in the FTAA. However, again I caution members that we must proceed cautiously. We have to make sure the interests of this country are protected. As we know, sometimes some of the biggest free traders are the Americans but often in name only. We have to be careful and we have to be aware that the negotiations are going to be difficult, but I certainly support a transparent and open process.
