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Remarks by Brian Kingston, Vice-President, International and Fiscal Issues, to the Senate Standing Committee on Foreign Affairs and International Trade.
Madame Chair, committee members, thank you for the invitation to take part in your consultations on Bill C-30.
The Business Council of Canada represents the chief executives and entrepreneurs of 150 leading Canadian companies, in all sectors and regions of the country. Our member companies employ 1.7 million Canadians, account for more than half the value of the Toronto Stock Exchange, contribute the largest share of federal corporate taxes, and are responsible for most of Canada’s exports, corporate philanthropy, and private-sector investments in research and development.
The Business Council strongly supports the ratification and implementation of the Canada-European Union Comprehensives Economic and Trade Agreement (CETA). There are four key reasons why CETA will benefit Canada.
First, CETA will boost economic growth. While this may seem like an obvious point, it deserves to be emphasized given that we are living at a time of slow economic growth around the world.
The agreement will benefit Canadian businesses of all sizes by giving them preferential access to the world’s largest and wealthiest economic block, with a population of 509 million and combined GDP of $17 trillion. The EU is the world’s largest importer of goods and a major services importer.
According to analysis by the Conference Board of Canada, tariff elimination on goods will result in over $1.4 billion being added to Canada’s merchandise exports to the EU by 2022. At a time of lackluster Canadian trade performance, this will serve as a significant boost.
Across Canada, in industries from food processing to chemicals to health sciences and professional services, the removal of tariffs and other barriers that currently impede Canadian exports will create jobs, improve productivity and promote growth.
At the same time, the agreement will benefit Canadian consumers by eliminating tariffs amounting to nearly $1 billion annually once fully phased in. This will enhance competition and lower prices for Canadians while businesses will have access to cheaper inputs.
Second, CETA is Europe’s first comprehensive economic partnership agreement with a Western developed country, giving Canadian companies a significant “first mover” advantage over competitors.
With the US-EU Transatlantic Trade and Investment Partnership (TTIP) negotiations stalled, Canadian companies will be positioned to take advantage of preferential access over their US competitors in the large European market. For many small, medium and large Canadian employers, that will mean new opportunities and increased sales.
The first mover advantage will also help to attract investment to Canada. Companies looking to increase sales to Europe through CETA can use Canada as an export platform, attracting investment and jobs to communities across the country.
Third, CETA sends a positive and hopeful signal to the rest of the world about the benefits of international economic cooperation and open markets.
Since the end of the Second World War, trade has been the principal means by which countries around the world have grown and prospered. As trade has flourished, incomes have increased and workers have benefited from new opportunities.
But despite the clear benefits of trade, we are witnessing a rise in protectionism around the world. Since 2008, according to the World Trade Organization, G20 economies have introduced 1,583 new trade restricting measures and removed just 387.
This has contributed to slowing global trade growth of just 1.3 per cent in 2016. In fact, 2016 was the first time in 15 years that the ratio between trade growth and world GDP has fallen below 1:1.
In short, CETA builds on Canada’s reputation for openness to the world at a time when others are turning inward.
Fourth, and perhaps most importantly, CETA helps to diversify Canada’s trade.
The United States is, and will remain, our most important trade and investment partner – over 76 per cent of Canada’s exports were to the United States last year. However, with the uncertainty created by the anticipated NAFTA renegotiation, Canada’s trade diversification efforts are more critical than ever to sustaining our collective prosperity and quality of life.
Canada must do everything possible to find new customers for our exports and new economic opportunities for our citizens. The best way to do this is to position Canada as one of the world’s most open and global markets through a renewed trade strategy. The swift implementation of CETA must be the first component of this strategy.
With that I conclude my remarks.
Thank you for the opportunity to address your Committee.