NAFTA: Canada's Path to Continuing Economic Success
The Canada-U.S. Free Trade Agreement and NAFTA have resulted in a highly prosperous Canadian export industry. However, Canadians should continue to improve upon these agreements. Trade in North America, predominantly with the United States, is indispensable to our economy. We must perpetually widen our perspective on ways to improve access in these dynamic and evolving markets. Speech to the Senate Foreign Affairs Committee, Ottawa, Ontario, February 3, 2003.
You all know that Canada's trade and economic interests span the globe, so the cornerstone of our trade policy continues to be the multilateral trading system. However, as you also know, by any criteria--movement of goods, investment people, ideas--North America, and in particular the United States, is by far our most important market. So, securing and improving access to this market has to be our number one trade policy priority.
The study that this Committee is currently conducting is therefore extremely timely and provides an excellent opportunity to seek the views of Canadians on priorities for future work. This work will allow us to build on the successes we have realized in the U.S. market through the Canada-U.S. Free Trade Agreement, and subsequently in the United States and Mexican markets through the North American Free Trade Agreement [NAFTA].
NAFTA: A catalyst for our trade relations with the United States and Mexico
NAFTA has been a tremendous success in making North America one of the most efficient, integrated and competitive regions In the world. By strengthening the rules and procedures governing trade and investment on this continent, it has allowed trade and investment flows to skyrocket. From 1993 to 2001, Canada's merchandise exports to its NAFTA partners increased almost 95%. Our total merchandise trade with me United States and Mexico reached S884 billion in 2001.
Through NAFTA, Canada has consolidated its position as the largest trading partner of the United States. We buy as many goods from the United States as do all the European Union countries combined--almost 19% of American exports. Thirty-eight American states have Canada as their largest market. This represents roughly $1 billion in trade, day in and day out, every day of the year.
Mexico is now Canada's sixth-largest export destination and our fourth-largest source of imports, with two-way merchandise trade in 2001 reaching $14.9 billion. And Canadian direct investment in Mexico continues to grow--its cumulative value reached $4.2 billion in 2001.
But NAFTA has been more then a scorecard for trade. The reorientation of Canada's industrial structure was encouraged by the new opportunities and competitive pressures created by NAFTA and by its predecessor, the Canada-U.S. Free Trade Agreement
NAFTA: The Way Forward
As we approach the 10th anniversary of NAFTA, which entered into force on January 1, 1994, Canada's view is that the NAFTA framework is the best tool for further enhancing our trade end economic relations with the United States and Mexico. NAFTA, with its ongoing working groups and implementation commitments, is in many ways a living document, and it holds much scope for achieving market access improvements. All countries are committed to its full implementation.
On January 1, 2003, for example, the final tariff reduction in the Canada-Mexico phase-out schedule was done, The Mexican administration showed its commitment to NAFTA by proceeding with the tariff outs in the face of significant political opposition from certain sectors, another good example of our commitment to trade liberalization through NAFTA is the amendment of rules of origin for certain products, including alcoholic beverages and petroleum! topped crude oil, which was implemented on January 1 as well. These changes make it easier for manufacturers of these products to qualify for duty-free treatment under NAFTA. …