"The Canadian and Arab Economies: A Force of Mutual Attraction in a Different World"

On behalf of the Prime Minister of Canada, the Right Honourable Jean Chrétien, I would like to say how important the Government of Canada feels it is that over the next two days, Montreal will host the International Banking Summit of the main union of Arab and Arab-international institutions. We know that you always hold your International Summit in one of the world’s major financial centres. After Frankfurt last year, here you are in Montreal. You are thus testimony to the increasing importance this metropolis has in the financial and international trade scene. You are showing how much you believe, as we do, that Canada and the Arab world present tremendous investment opportunities.

The business leaders and consumers of your respective countries know more and more of the high-quality goods and services produced by Canadian companies, and are expressing growing interest in them. We know that Canada is considered to be a very reliable partner. And we know quite well that the region of the Middle East and Northern Africa has considerable purchasing power and financial resources. The mutual attraction of our economies is reflected in the figures: in 2002, the value of bilateral trade in goods and services between Canada and the countries of the Middle East and Northern Africa exceeded $8 billion.

Opportunities are not lacking for Canadian companies in your countries. Companies such as Norr Limited, HOK, Cansult and SNC-Lavalin continue to garner major contracts in architecture, engineering and construction services, as your countries pursue the intensive development of their infrastructure. Canadian firms are becoming key partners in natural resource exploration and development: Petro-Canada recently expanded its partnerships in Maghreb and Syria, while Nexen has established a strong presence in Yemen, and EnCana and Talisman are currently undertaking oil exploration projects in Yemen, Qatar and Oman. The development of natural gas resources, especially in the Gulf states, will create many additional opportunities. Pharmaceuticals, information technology, multimedia and communications are other sectors with great potential.

New agreements will create conditions more conducive to forging solid business ties. With economic cooperation framework agreements, tax treaties, air transport agreements, institutions such as the Canada-Saudi Arabia Joint Economic Commission, private-sector associations such as the Canada-Arab Business Council, we have a wide range of tools to expand our trade relations.

One of the catalysts of our economic relationship stems from the vitality of Canadians of Arab origin. Engineers, economists, managers, business leaders, academics, are making an invaluable contribution in all sectors of the Canadian economy, where they are often the bridge between their countries of origin and their adopted country. I am in a good position to testify to that, as the Member of Parliament for one of the ridings on the Island of Montreal, Saint-Laurent-Cartierville, which has numerous vibrant Arab communities. Indeed, Saint-Laurent is affectionately nicknamed Saint-Lebanon! I would also point out the growing number of academics from your countries who choose to pursue their higher learning here in Canada.

While Canada thus has every reason and many opportunities for investing in your countries, the opposite is also true: the Canadian economy offers great potential for your investment. In a report released last November 15, the International Monetary Fund described Canada's macroeconomic performance as "exceptional," adding it "owes much to the sound policy framework and its skillful implementation." More recently, on April 30, the Chief Economist of the Organization for Economic Cooperation and Development described Canada as the "wonder boy" of the OECD, stating that: "A flattering example is that of Canada, which, like Australia, has managed in extraordinary fashion to weather the US downturn. This can be indisputably explained by the vigour with which public finances have been reformed, which were in poor shape, and by an excellent monetary policy." [Translation]

Just today, Canada’s Finance Minister, the Honourable John Manley, gave a speech which updates the current state of the economy and public finances showing that, although the global downturn has affected Canada, we are forecasting solid growth for our economy this year and next, and the maintenance of sound public finances.

Canada is now the only G-7 country whose public finances are balanced, rather than in deficit. Moreover, Canada, of all the G-7 countries, is the one that has most reduced its debt level in recent years, from 64% of GDP in 1993 to 41% in 2002. In addition, Canada is the G-7 country that over the past ten years has most reduced the weight of its taxes and spending in the economy. Ten years ago, government spending was equivalent to 49% of Canada’s GDP; it now represents only 37%. The average corporate tax rate also will soon be lower in Canada than in the United States.

Our federal government has reduced the weight of its spending while still protecting the Canadian social fabric and investing in our skilled labour force, our knowledge economy and the excellence of our universities. Notably, it has made a substantial investment in research and development, and it has considerably increased its direct spending in the post-secondary education sector. Since 1997, it has increased its budget by 59% in those two sectors.

This "sound" strategic framework, in the words of the IMF, is paying off. Canadian household income has grown markedly since 1996 and has never been higher. The unemployment rate fell to 7.8% in May 2003, down 4.3 percentage points from its last peak in November 1992, while the labour force participation rate hit a record level of 67.5%. In the first quarter of 2003, the current account balance showed a 15th consecutive surplus. In a sign that bodes well for future investment, corporate profits stood at 12.5% of Canadian GDP in the first quarter of 2003, well above the historical average of 10%.

Canada’s productivity has grown strongly since 1997. Productivity growth in the corporate sector averaged 2.2% a year between 1997 and 2003, compared with a gain of 1.2% during the period 1990-1996. This enhanced productivity has led to a much higher standard of living in Canada. During the 1997-2002 period, real GDP per capita grew 3.1% a year on average, faster than all other G-7 countries.

"Banking in a Different World" is the theme of your International Summit this year. It is certain that the economic and financial world is changing quickly, but I know you are not afraid of change. One of the elements that should motivate your optimism is that you will be able to count on a solid partner, Canada, with all the strength of its economy and its financial market.

1. International Monetary Fund, 2003 Article IV Consultation with Canada, Statement of the IMF Mission, November 15, 2002.
2. Ibid.
3. La Presse, April 30, 2003, p. A17.
4. Ibid.