Address by Prime Minister Jean Chrétien to the Forum of the New Economy

Nothing gives me greater pleasure as Prime Minister than having a chance to showcase Canada to the world. Our people. Our know-how. Our desire to build new alliances and new opportunities. Our resolve to brand Canada as a business partner of choice in the global economy of the 21st century.

That is why I am delighted to have this opportunity to address the Forum of the New Economy. To reaffirm the strength of the business relationship between our two nations and to express our strong interest in exploring and tapping into opportunities made possible by the position of Spain as a privileged point of access to the European Union and of Canada as the gateway to a NAFTA market of more than 400 million people.

The entrepreneurs and firms represented here today do just that. They embody the strength of and vibrance of the economies of Canada and Spain. They are proof that the partnership between Spain and Canada is a busy two way street.

Over the past few years total investment between our two countries has exceeded $1 billion (Cdn). Spanish investors are involved in key sectors in Canada such as chemicals, transportation, construction, and retail. The Canadian business presence in Spain is also significant and has grown substantially in the past three years, especially in the sectors of transportation, publishing and telecommunications.

For example, a Canadian global leader in the provision of advanced technology recently announced plans to locate a flight training centre near the Madrid airport. And by this fall, a major Spanish petro-chemicals group will have a second chemical plant up and operating in Canada.

But, as always, ladies and gentlemen, Canada is hungry for new investment, new business and new partners. And I would like to outline some clear Canadian advantages that potential Spanish partners should keep in mind as you plan for future growth.

First, of course, is the undeniable strength of the Canadian economy.

By the summer of 2001, the global economy was experiencing a significant slowdown. The terrible events of September 11th served to accelerate that weakness. But I am pleased to report that Canada has not only avoided a recession we are on track to post strong growth in the first quarter of 2002. Both the International Monetary Fund and Organization for Economic Co-operation and Development predict that Canada will post the strongest growth among G-7 countries this year and next. And KPMG recently released a study naming Canada the most cost-effective country in which to do business.

The foundation for this encouraging news has been the stellar fiscal performance of Canada.

Last December, we tabled our fifth straight surplus budget. We are the only G-7 nation that is expected to balance its budget this year. And we expect to balance our books for at least the next two years. We have paid down $36 billion of our public debt. Over $17 billion as recently as last year. And our debt-to-GDP ratio has fallen faster than that of any other major industrialized nation.

These statistics are impressive.

But the world is also clearly taking note of the renewed strength of the Canadian federation. Just last Friday, Moody’s Investors Services made special mention of this fact when it restored to Canada a "Triple A" rating for our domestic and foreign currency debt. The highest rating possible.

But this is only part of the good news from Canada. Our rock solid commitment to fiscal discipline is the foundation upon which we have taken important steps to stimulate the economy and make key strategic investments that will prepare Canadians to prosper in the long term.

For instance, coupled with tax cuts already flowing through the economy our latest budget is providing a boost to the economy of 2.4% of GDP this year.

We have implemented the largest tax cut in Canadian history, most of which is already in effect. It will see personal income taxes fall on average 35% for Canadian families with children. And corporate tax rates will fall about five percentage points below average U.S. rates. A strong incentive for new investment in Canada. Our capital gains taxes have been cut steeply. In fact, Canada's top rate on capital gains is now lower than the typical top rate in the U.S.

In the wake of September 11th, we have announced significant new strategic investments that will make our shared border with the United States more secure and will also eliminate bottlenecks in key trade corridors.

And we have made significant new investments in support of our government's overriding economic objective: to make Canada one of the most innovative nations in the world. A magnet for the best minds and ideas. For new investment and new ventures. For new discoveries and breakthroughs.

We have already taken extraordinary strides in creating an environment of excellence and inclusion in which all Canadians can take advantage of their talents, their skills and their ideas, in which imagination, skills and innovative capacity combine for maximum effect.

Canada is now one of the most connected countries in the world. Among G7 nations, we have the highest percentage of the population on-line, with every school and library linked through the Internet. We have the most generous research and development tax incentives in the world. And our colleges and universities are among the best in the world.

We also know that we can and must do more. We continue to challenge ourselves with ambitious new targets.

We will double the federal government's investment in research and development. Helping to position us among the top five countries in research and development performance by 2010. And we have unveiled a new Innovation and Skills strategy. A blueprint for the future that covers areas such as skills, research and cluster development.

All of these advantages make Canada an ideal commercial partner for Spain. But if we are going to strengthen our bilateral business ties for the long term, we must also continue to be partners in creating a more prosperous world with dynamic new markets.

We have both long embraced the fact that liberalized trade is the engine of global growth and shared opportunity. To that end, Canada and Spain are working together, through the EU, to promote a more inclusive and coherent rules-based approach to free trade, anchored in the WTO.

We have both supported regional trade arrangements. Canada has the NAFTA and we are champions of a Free Trade Area of the Americas. Spain has the European Union. But we must take care not to pursue such arrangements at the expense of trans-Atlantic trade.

I reaffirm today that Canada is firmly committed to expanding the trading relationship across the Atlantic. Several years ago, I raised the idea of a Canada-EU free trade deal. Our Parliament has recommended that one be negotiated. And we are examining this recommendation carefully. In consultation with our provinces and private sector.

Spain and Canada also both understand that promoting open trade and investment will not, by itself, ensure that the benefits of globalization are truly global. We understand that some nations have become so marginalized from the global economy that concrete action and new partnerships are imperative.

With that in mind, I will be honoured to host President José Aznar this June at the G8 Summit in Canada, where he will represent the European Union.

At the centre of our discussion will be endorsing a concrete Action Plan for Africa. We envision a new partnership. In which progressive African governments who are committed to democracy, human rights, good governance, and open markets will be rewarded by developed nations with enhanced assistance and increased market access.

There is no question that the community of nations has a moral obligation to assist African nations reverse the social and economic decline that has afflicted them for generations. But we will also be guided at the Summit by the fact that thriving economies in Africa will create new foreign investment opportunities, that a more prosperous Africa means a more prosperous world.

I am confident that we will rise to this historic challenge.

Moreover, I have been convinced by our welcome here in Spain that our two nations will rise to the challenge of deepening and broadening our commercial partnership.

The message I bring to you today is that for Canada the best is yet to come. With a sound and growing economy. With an investment and business climate that is among the best in the world. With talented people who are well schooled and well-trained.

Where the Maple Leaf is a 21st century trademark for confidence, optimism and excellence.

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