Industry committee  Yes, anything you can drop on your foot.

Industry committee  If we include services in the full bucket, then our share of trade going to the United States is a few percentage points lower. It's seventy-something--

Industry committee  Yes, all material things.

Industry committee  That effect is quite significant. We can see it in the numbers already this year. The slowdown in the U.S. has been under way for some time. It affected the forestry sector, first of all, because of the housing impact, but that has spread to consumer goods sectors supplying other things for homes--doors, windows, furniture, and that sort of thing.

Industry committee  The stress has been accumulating for some time. As you know, the dollar has been high for quite a while now, so the story is just getting another layer, another icing on the cake, if you like, now that the U.S. slowdown has become so tangible. We are seeing companies respond by putting increased emphasis on those other markets where growth, even if it slows, will remain rapid.

Industry committee  They're investing more. That's correct.

Industry committee  And they're investing more, not just domestically but abroad, in order to get their foot in the door in these markets that are growing rapidly. So that combination is improving their competitiveness in key areas.

Industry committee  What I was referring to was goods, and a much, much lower percentage of our services exports go to the United States. So it allows me to kind of answer two questions at once. Our integration with the U.S. is so deep and complete on trade that our numbers of goods going back and forth across the border are in a sense exaggerating the lack of diversification.

Industry committee  Very integrated. It's as if there's no border whatsoever in that fundamental production sense. So it wouldn't be a fair comparison to look at that--Canada's relationship with the United States--and then ask, well, how come we're so much more dependent on the United States than, let's say, Italy is dependent on France, or something like that, because they don't have that same kind of degree of integration.

Industry committee  The short answer is no, we haven't changed our strategy. Our strategy has always been to put most of our emphasis on the markets that are difficult to break into, and the United States isn't usually one of them. It's true that EDC's programs--perhaps half of what we do is in the U.S. market on behalf of Canadian companies, so bear in mind that most of these companies are small and the U.S. is just as scary as another place.

Industry committee  The United States remains a very big destination for us, and always will be. It's the biggest, most dynamic economy on earth. When we talk about small companies engaging in global supply chains, what we mean is that they find a link in some bigger company's global supply chain and earn that business.

Industry committee  That is correct. As I said, this is a form of competition. However, we will always find our niche market that will help sustain our growth. Perhaps this will be achieved through a partnership or through a competitive process, but the focus will always be on having very specialized knowledge.

Industry committee  As an economist, as opposed to the economist from EDC. It's usually not our mandate to comment on government policy--

Industry committee  I can say something, which is that every economics textbook will tell you that the most efficient way to impose taxation is through consumer taxes. That's the least distortionary, etc., but that's not the only factor that comes into play when you design tax systems. I agree with Mr.

Industry committee  Thank you. Admittedly, emerging countries are turning out more and more graduates who will compete in some respects with our graduates. Obviously, for years, innovation was driven by competition. Competition is not bad for economic growth. In fact, the Canadian economy has always been able to compete and it will also be true in this instance.