January 10, 2008
BEIJING, China
2008/1

NOTES FOR AN ADDRESS BY
THE HONOURABLE DAVID EMERSON,
MINISTER OF INTERNATIONAL TRADE,
TO THE CANADA CHINA BUSINESS COUNCIL
“CANADA AND CHINA: BUILDING A LASTING PARTNERSHIP”

It’s great to be back in Beijing again to further the Canada-China relationship.

I want to begin by recognizing the stellar work of the Canada China Business Council. Over the last 30 years, your organization—on both sides of the Pacific—has been a steady, visible and effective advocate for stronger Canada-China relations generally, but for business relations in particular.

As a government, we appreciate your efforts and we value your advice as we work to grow the Canada-China partnership.

Canada and China

When we examine Canada-China relations, it is always easy to dwell on trade statistics and business trends as the barometer of our relationship.

Economists and statisticians have endlessly measured and quantified the robust trade that is evolving. But a close, durable relationship is not driven by commerce alone. It’s driven by people, and the relationships that bind people together, bind them into long-lasting and virtually unbreakable webs of family, friends and associates.

Close to one million people in Canada are of Chinese descent. They have made, and continue to make, a dramatic and lasting contribution to the fabric of Canadian life. Their presence and cosmopolitan imprint on cities like Vancouver and Toronto has been profound. And they form a permanent and critical “human bridge” between China and Canada.

Chinese languages are now the third most widely spoken in the country, after our official languages, English and French.

Human links have also helped drive our political relationship over many years.

Canada was among the first Western countries to establish diplomatic relations with China.

We were an early and active supporter of China’s accession to the World Trade Organization.

We have encouraged and supported China’s strategy of liberalizing the economy, introducing market reforms, expanding economic freedoms and opening to the outside world.

It’s been a massive national undertaking with far-reaching results.

It brought China from a closed economy, near collapse, to one that is a fully integrated, highly competitive leader in today’s world of global commerce. From a recipient of World Bank assistance, China has become a proud donor.

Most astonishing, this transformation has been under way for less than 25 years. It has occurred in a single generation. I was in mid-career when it all began, and I’m not done yet!

Through it all, Canada and China have worked as partners.

We’re partners in Pacific Rim affairs through APEC [Asia-Pacific Economic Cooperation forum].

We’re partners through thousands of daily interactions between our businesses and investors, here and in North America. And we are partners through ongoing cross-cultural and athletic initiatives between our two countries.

We’re also partners in many areas critical to international health and security.

Health cooperation is a good example. My colleague Tony Clement, Canada’s Minister of Health, recently launched the new Canada-China Joint Committee on Health. Chinese and Canadian officials will work together to address issues such as food, drug and product safety. And we are working together to establish cooperative approaches to the early detection and containment of infectious diseases.

A close look reveals two sovereign and friendly countries—two complementary economies, each on its own distinct path, both locked on upward trajectories.

As I said earlier, China is now a top economic performer in the new global economy. In fact, China has come to symbolize the new era in world trade and commerce.

It’s a world where technology is destroying distance through revolutions in communications and transportation. It’s a world where virtually every person on the planet is reachable as a consumer, and networks of supply and production span the globe.

It is the “flat world” that Thomas Friedman has eloquently described, where almost anyone, almost anywhere, can access the burgeoning global reservoir of information and technology. And they can put it to work like never before, for the betterment of their family, their community and their country.

No country has done more to take advantage of this tectonic economic shift than China. It’s a country that is fast outgrowing its reputation as a low-cost manufacturing hub. China is climbing the value chain and showing a patient, disciplined determination to become a world leader in science and technology.

China has become a competitive investment destination. And with investment has come needed technology and expertise. Now China has itself become a leading international investor in its own right.

Canada, too, is on an evolutionary path.

Throughout our history we have been a leading natural resources power. That remains true today, although with more focus on energy resources than ever before.

Ironically, Canadians have often tended to be embarrassed about our resource-based economy, referring to ourselves as “hewers of wood and drawers of water.”

Today we see our natural resources as a strategic economic asset. We see natural resources accelerating the emergence of an economy that is rich in science, in technology, and in the people, companies and institutions that nurture and grow that capacity.

Today we are also at a historic inflection point in Canada’s North. The North is opening up like never before. The waters of the Arctic are becoming increasingly navigable. And we are investing billions of dollars in our capacity to develop, monitor and secure this vast expanse of untold wealth and opportunity.

Energy resources are there in abundance, as are diamonds, uranium, lead, zinc and copper. Plus there is an undeveloped fishery and tourism potential, all of which offers an exciting future for northerners, for Canada, and for a world that depends on Canada as a stable, reliable source of supply.

The message: don’t look for Canada to disappear from the radar as a natural resources and energy power anytime soon. But you can be sure that development will be technologically sophisticated and environmentally sustainable, and it will take us inexorably up the value chain.

Like China, we are expanding our capacity in terms of a knowledge- and technology- based economy. We are committed to taking Canada to the leading edge in terms of global competitiveness.

We recently announced a new science and technology strategy that will help us build a more competitive and dynamic business environment, one that encourages investment in S&T and innovation.

We are also boosting our competitive position through a strategic focus on globally connected transportation and logistics systems. We’re putting the infrastructure, the technology and the regulatory framework in place to become a fast, efficient gateway to the entire North American continent—that’s a market of 440 million, not just 34 million Canadians.

Complementing our trade and transportation gateways, Canada is investing a total of $33 billion over the next seven years in economically critical infrastructure, with the private sector and other governments adding billions more.

Thanks to good fiscal management, Canada is also recognized as a top fiscal and economic performer, and an increasingly competitive destination for global investment.

As a result, we have been able to introduce measures to provide tax relief for businesses and individuals of $188 billion over the next five years, including $50 billion in business tax relief. By 2011, these measures will provide business in Canada with the second-lowest marginal effective tax rate in the G7.

Growing the Trade Partnership

But as we each travel our own path, we should also focus on those places where our paths converge—those intersections of opportunity where we can collaborate for mutual benefit.

That’s why Canada’s government has made China a top priority for our trade and investment efforts.

As part of our Global Commerce Strategy, we’re boosting our presence throughout China. Our focus is to help Canadian businesses break into a number of well-defined, very specific segments of the market where China has a particular need and Canada has a particular capability.

I’ve just returned from Mongolia, where I had the great pleasure of announcing Canada’s new Honorary Consul, Alain Fontaine, who will represent Canadian interests in that country. I’m also pleased to note that our two countries are exploring the possibility of a bilateral investment agreement, to continue growing our commercial partnership.

This is good news for Canadian businesses, especially for the extractive sector, which is extremely active in Mongolia and throughout Asia.

But we need more Canadian businesses making a serious commitment to the Chinese market, as a number of CCBC members have done—companies like Bombardier, SNC Lavalin, Manulife, Power Corp., and Bank of Montreal. All have had a presence here for many years, and it’s paying off.

As these companies are showing, the Canada-China partnership is more than the sum of its parts. There are real economic synergies, real opportunities for mutual gain.

Our trade statistics are indicative of this.

In 2006, China became Canada’s fourth-largest export market and our second-largest trading partner, behind only the United States.

And 2007 was another banner year. Canadian exports to China registered a record performance, and Chinese exports to Canada grew at a double-digit pace.

In the first 10 months of 2007, Canada’s exports to China grew by 29 percent. That’s the strongest growth among our major export markets. And it is relatively balanced across agricultural, resource and industrial products.

Going the other way, China exported $33 billion worth of merchandise to Canada in the first 10 months of 2007—an increase of 14 percent over the same period in 2006.

Since 2004, China’s machinery and equipment exports to Canada have consistently surpassed consumer goods exports, with computers and telecommunications equipment accounting for a growing share.

Clearly, the roots of a modern and diverse commercial relationship between our countries are taking hold.

Our job is to continue building on this foundation.

Canada is committed to this objective.

Driving Two-Way Investment

First, investment... Investment is a key driver of any strong and healthy trade relationship.

Canada and China enjoyed $2.9 billion in two-way investment in 2006, a 26 percent increase over 2005. But that’s only the beginning.

The creation of the $200 billion China Investment Corporation is a clear indication that China intends to extend its presence in global markets and around the world.

Not surprisingly, the emergence of China as a major player in world markets has been the source of much business and media chatter.

But let me be clear: Canada welcomes Chinese investment.

And as I indicated earlier, Canada has a lot to offer:

• a rich and diverse natural resource base;

• a secure supply of abundant energy, including oil and gas;

• a stable, competitive and transparent business environment;

• an innovative, high-tech economy;

• easy access to the 440-million-strong North American marketplace; and

• a massive plan to build economic infrastructure.

Canada is open for business. And we welcome Chinese investment.

We’re also aware of the concerns some investors have raised about our Investment Canada Act, especially as it pertains to state-owned enterprises.

My colleague Industry Minister Jim Prentice recently announced new guidelines under the Act to clarify existing requirements and give foreign state-owned investors greater predictability.

Let me stress that these are not new requirements. Rather, the guidelines clarify existing requirements under the Act.

Canada remains open and welcomes foreign investment—both private and state-owned.

And we certainly remain committed to concluding a high-standard foreign investment promotion and protection agreement with China as soon as possible.

Strong and secure two-way investment is the fundamental driver of a healthy and sophisticated commercial relationship.

Let there be no misunderstanding. Canada is squarely committed to a deeper relationship with China.

Forging Innovation Ties

Innovation is another key part of the Canada-China partnership.

We’re about to celebrate the first anniversary of our Science and Technology Cooperation Agreement.

The Agreement has been met with a great deal of enthusiasm.

The first call for collaborative proposals attracted 135 expressions of interest—a clear indication that our respective S&T communities are serious about bringing our research and innovation relationship to a new level. As both of our countries climb the value chain, we should continue looking to science and technology as an ideal opportunity to collaborate and bring exciting new products to the marketplace.

Building the Gateway Together

Another area of collaboration is our Asia-Pacific Gateway and Corridor Initiative.

As I told you last year, this is a big focus for our government—and for our provincial government and private sector partners.

Together, we’re making an unprecedented effort to boost our transportation and logistics capacity to establish world-competitive links between North America and Asian giants like China.

And this year, I’m happy to report substantial progress.

Consider the recent opening of the new, expanded Fairview Container Terminal at the Port of Prince Rupert.

In November, the first carrier to use the terminal was the COSCO Antwerp, which unloaded 360 containers directly onto flatcars. The containers reached their ultimate destination—Chicago—92 hours later, a full eight hours earlier than expected.

This gives Prince Rupert a significant advantage over key American ports.

Through Long Beach, for example, a similar voyage would take 32 hours longer than it would through Prince Rupert. Even through Seattle, it would take 28 hours longer.

So it should come as no surprise that Canada’s gateway is attracting some serious interest.

In 2006, for example, Dubai Ports World acquired Centerm Marine Terminal in Vancouver.

We want to continue building our gateway with the help of partners like this.

And partners from China, too.

Last year, I joined Li Shenglin, China’s Minister of Communications, to sign a memorandum of understanding for further cooperation on trade gateways and corridors between Canada and China.

Work is steadily advancing to identify concrete actions to advance the gateway in partnership with our Chinese colleagues.

A strong, effective air transportation gateway is an essential part of the Asia-Pacific Gateway initiative.

For trading nations like Canada and China, efficient air travel is essential—not just for transporting cargo, but for stimulating trade in services and facilitating the “human links” that solidify our national partnership.

The demand for air travel is growing significantly faster than growth in our economies—and that will continue.

Canadians are very proud of our effective, efficient and high-capacity air transportation system.

I’m joined tonight by a top-notch delegation of air service providers, including our largest Canadian airports and one of our key air carriers.

In fact, this is the first time we’ve ever had such a strong, unified delegation here in China to sell Canada’s many air services advantages.

Our airports are modern, well-run facilities, served by a large number of carriers from around the world. Since the 1990s, we’ve collectively invested $11 billion in airport development, with $4.2 billion more planned over the next few years.

Chinese shippers looking for easy access to the North American marketplace can look to Canadian airports, supported by a vast, multimodal transportation system that stretches from the Pacific across and throughout North America.

We’re sharpening this competitive edge by aggressively pursuing new international air agreements with our global partners through our “Blue Sky” policy, launched one year ago.

The policy provides new flexibility for both passenger and cargo services.

And we’re building on this by broadening programs like Canada’s international air cargo transshipment program to include more airports.

A number of new flights under the current Canada-China Air Services Agreement have recently been announced, including China Southern Airlines’ first scheduled services to Canada, a daily flight from Guangzhou to Vancouver.

And just this past November, Cathay Pacific Airways announced that it will add four new flights per week between Vancouver and Hong Kong, beginning in March.

We welcome these new services and look forward to further expansions in both passenger and cargo services between our countries.

These are some great examples of how Canada and China are building the transportation and logistics linkages that will drive business between Asia and North America.

Olympics

These kinds of transportation links will become even more important when Canada hosts the 2010 Winter Olympic Games in Vancouver-Whistler.

We’re very excited by this opportunity, and we are working hard at many different levels to give the world a Winter Games to remember.

In May, we’ll open a pavilion on the edge of Tiananmen Square that will give people a taste of what it’s like to visit Canada. The BC-Canada Pavilion in the Beijing Planning and Exhibition Hall will showcase Canada as a travel destination like no other.

It will also be an opportunity to demonstrate Canadian products and services, and will serve as a high-profile platform for business-to-business programming in the lead-up to—and during—the 2008 Summer Games.

I can also tell you that I’m extremely impressed by the work China has done for the 2008 Games.

Like China, Canada recognizes that the Olympics are a once-in-a-generation opportunity to leverage the international profile provided by the Olympics, to celebrate and brand the exciting opportunities Canada offers the world.

It’s good to see that both of our nations are making the most of the opportunity.

Conclusion

Let me draw my remarks to a close.

China has been a remarkable part of world history for thousands of years—in science, in mathematics, in literature and in the constant churn and evolution of civilization.

Once again, China is playing an important role in reshaping the world economic and political order.

Probably for the first time in history, there exists the scientific, technological and economic capability to substantially reduce poverty, disease and suffering in the world.

When you see what China has accomplished in a few short decades, you begin to realize how much progress is within reach, here in China and in virtually every country on Earth.

Canada and China, two very different countries on very different trajectories, can be part of an unprecedented improvement in the living conditions of hundreds of millions of people.

And there is no doubt: the contribution we can make together far exceeds what each of us can accomplish alone.

Our deep historical roots, our many shared values, the “human bridge” that links our two nations, and our mutual economic interests should deepen our partnership. The result should be even greater economic, social and political progress in the years ahead.

Together, China and Canada can make the world a better, safer and more hospitable place. We can do it in our homelands, and we can be a fundamental force for progress, peace and security in a wider world.

Like the Great Wall, it will require us to lay one stone at a time. We will need patience and perseverance. We will need many friends and partners—like the people in this room. And we must ensure that actions, positive actions, trump words and rhetoric.

The future is ours to shape. Tomorrow’s history is not random and it is not determined by fate alone. Tomorrow’s history is given shape and form by the leadership, the vision and the actions of today.

Let’s work together and shape a history we can all be proud of. Let there be no regrets.

Thank you.