FAIT Committee Report
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It has become increasingly clear to the members of the International Trade Sub-Committee that economic relations between Canada and Europe are in dire need of a boost. On both sides of the Atlantic, trade has become more and more regional in nature, with Canada devoting an ever-growing share of its exports (87% in 2000) to the United States and intra-European Union (EU) trade now accounting for over 70% of member countries’ exports. As a consequence, the EU’s share of total Canadian exports has declined over the years.
Europe, however, represents the world’s second largest economy whose long-term potential looks promising given the economic integration now occurring there. As our report clearly suggests, we ignore this potential at our peril. The key question then becomes, how can we turn the existing situation around and capture what is really a golden opportunity for both sides to expand trade and investment? This report offers what we believe is a useful blueprint for growing the bilateral relationship.
Most helpful would be a free trade agreement with Europe. Such a bold step would, overnight, alter the psychology of businesses on either side of the ocean to create interest in each other’s markets. We urge the federal government to quickly complete free-trade negotiations with the European Free Trade Association (Switzerland, Norway, Iceland, Liechtenstein) as well as the necessary steps to launch similar negotiations with the EU.
Second, it is our view that the Government of Canada needs to give greater weighting to Europe in its trade and investment promotion. More resources should be given to day-to-day operations, a high-profile Team Canada trade and investment mission to Europe should be launched, and a national strategy established to promote foreign investment in Canada.
Finally, the Sub-Committee’s productive meetings at the World Trade Organization (WTO) in Geneva have reinforced, in our minds, the urgency of a new round of multilateral trade liberalization negotiations. The launch of a new round in November would enable Canada to deal with important EU trade issues at the global level. In addition, we have come to the conclusion that the WTO should improve both its decision-making processes and dispute-resolution mechanism. Regarding the latter, the Canadian experience with WTO decisions shows that the international community needs to find a way to avoid both non-compliance with such decisions and the costly retaliation that can accompany them.
Our work would not have been possible without the excellent cooperation and insight of the private-sector witnesses and government officials who appeared before the Sub-Committee, both in Ottawa and in Europe. A special thanks goes out to the Canadian ambassadors, and their thoughtful and capable employees, in each of the countries visited. The Sub-Committee was also extremely well served by its competent staff, including our clerk, Marie Danielle Vachon and the research team of Peter Berg and Blayne Haggart. To all these we express our appreciation.
Mac Harb
Sub-Committee Chair