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[français]
Address
to Canada-Peru Business Council
Address by David Kilgour, Secretary of State
(Latin America and Africa)
to Canada-Peru Business Council
Lima, Peru, November 10, 1997
Good morning.
I am very happy to have the opportunity to
meet with the Canada-Peru Business Council.
Your success as an organization over the last
two years is evidence of the importance of
commercial relations between Canada and Peru.
I am also
very pleased to be in Peru on this, my second
trip to Latin America. In August this year
I had a brief opportunity to visit two of
your neighbours, Bolivia and Chile, and
to inaugurate a natural gas pipeline between
Argentina and Chile, built with Canadian
technology. Considering the tremendous growth
in bilateral trade between Canada and Peru
-- which has increased by more than 100
per cent to $306 million in just two years
-- it is fitting that Peru should be my
next stop.
We all know
the great extent of Canadian business involvement
in Peru's efforts to develop its mining
and energy sectors. As a Secretary of State
from Western Canada, I am particularly pleased
by the progress in these areas, as well
as the improvements in Canada's agricultural
trade with Peru. I am also aware that Peru
has many products with market potential
in Canada.
Canadians
share with Peruvians a desire to see expanded
trade throughout the hemisphere. We look
forward to efforts to establish a Free Trade
Area of the Americas by 2005 -- efforts
that will be continuing in Santiago in April.
We also share Peru's aim of facilitating
trade with the MERCOSUR countries, and of
course we look forward to enhanced ties
with all the Andean countries.
I've been
told, however, that as a group you are all
very well informed about current bilateral
trade and investment between Canada and
Peru. So rather than repeating speeches
you have heard before from other Canadian
officials and politicians, I would like
to direct most of my comments to reporting
on the current situation in Canada.
Pilgrim's
Progress In Canada
Ottawa has
made enormous progress in recent years toward
bringing its fiscal deficit under control.
We have brought down our deficit to the
point that we will soon be in a surplus
position, and will be able to pay down our
debts, as well as increasing our investments
in Canada's primary resource -- its people.
There is
other good economic news. A recent study
has found that Canada has lower overall
business costs than the United States and
five leading European countries. The study,
conducted by the independent international
consulting firm, KPMG, compared the cost
factors that companies look at when deciding
where to locate. Canada was found to be
the lowest-cost location in each of eight
key manufacturing industries examined. The
study found that Canada had lower start-up
costs, low telecommunications rates, low
interest rates, and the lowest overall tax
burden of the seven nations studied. This
gives Canada a 5.4 per cent cost advantage
over the United States, and as much as an
11.8 per cent advantage over seventh-place
Germany.
This study
reinforces other positive forecasts about
the Canadian economic climate. In September,
the International Monetary Fund predicted
Canada would lead the industrial world in
economic growth this year and next. Canada
is increasingly being seen as an attractive
investment location as a base to serve the
NAFTA countries.
These developments
represent an astonishing turnaround in our
economic situation. Four years ago, Canada's
economy was at the brink, and Canadians
and many in the rest of the world had lost
confidence in us. In 1993-94, our deficit
stood at $42 billion, or about six per cent
of GDP.
As a result
of tough fiscal measures, and lower interest
rates, our 1996-97 deficit was recently
announced at $8.9 billion -- nearly $20
billion lower than the previous year. That's
the largest year-over-year improvement in
Canadian history, and is the lowest Canadian
deficit in two decades. As a proportion
of Canada's economy, it is the lowest deficit
since 1970-71, at only 1.1 per cent of GDP.
Prime Minister Chrétien has announced
that we will eliminate the deficit entirely
by no later than 1998-99. Some say the Liberal
government will complete this year in a
fiscal surplus.
Virtuous
Circle
Canada's
sound fiscal management and lower deficit
have helped to lower interest rates, and
this too has contributed to a virtuous circle,
bringing the deficit down even further.
Our short-term rates, which have historically
been higher than in the United States, are
now two per cent lower, and even our ten-year
bond rates are lower. To reduce Canada's
vulnerability to interest rate fluctuations,
we are increasing the ratio of longer-term
fixed rate debt and have now reached our
goal of 65 per cent long-term.
This does
not -- not -- mean we plan to go back to
our old patterns of spending. The fiscal
dividend will arrive slowly, and we still
have a huge accumulated debt of about $600
billion to pay down. Our debt to GDP ratio
was 73.1 per cent last year, and we are
committed to a permanent decline of this
ratio. Not all the fiscal dividend will
go into debt reduction, but instead of spending
it away, or delivering across-the-board
tax cuts, the Chrétien government
will be providing targeted tax relief, for
example to students, persons with disabilities,
and children of low-income working families.
We will also invest strategically, through
targeted tax measures or new spending, on
core needs such as health care, education,
innovation, and the reduction of poverty.
Technology
Challenge
Growth is,
of course, central to a strong economy,
but knowledge and skills are essential to
growth. Technological change enhances growth,
but it can also enhance inequality. The
gap between rich and poor can most effectively
be reduced through the acquisition of knowledge
and skills. In that sense, the most important
infrastructure investment we can make is
the one in the skills of our people. This
applies both within Canada and globally.
Rapid technological
change and globalization are creating new
challenges, but also providing new opportunities.
Canada is striving to take the lead in a
number of new technologies to ensure a more
positive economic future. Whether in mining
or manufacturing, telecommunications or
environmental technology, innovation will
be the foundation for new jobs and a growing
economy.
I have noted
the measures Canada has taken to put its
own economic house in order and to promote
innovation at home. We would not be good
citizens of this hemisphere -- or indeed
the world -- if we did not also contribute
to the building of a knowledge infrastructure
in other countries of the Americas. Canada's
aid contribution to Peru is one of the largest
in this hemisphere. On this visit, I have
been visiting a number of our projects in
Peru that aim to promote technology transfers.
I 'll be reporting favourably on what I
have seen upon my return.
When our
heads of government meet in Santiago in
April, they will be discussing ways to build
a liberalized trading area throughout the
Americas. They will also be discussing social
development issues, such as education, human
rights and governance. Are not all these
issues interrelated? A prosperous economy
depends on investment in people, and in
fundamental democratic freedoms.
I have touched
briefly on Canada's trade relations with
Peru, on Canada's efforts to bring its own
fiscal house into order, and on our desire
to contribute to technology transfer and
the building of a knowledge infrastructure
throughout the hemisphere. I will close
my formal remarks now, and would be happy
to listen to your comments or questions
about these or other matters.
Thank you.
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