Canada, China and the Asia-Pacific Gateway
Speech to the Dawa Business Forum
Richmond, B.C.
March 24.2007

(Check Against Delivery)

Thank you for your introduction, and thank you for the opportunity to meet with the Dawa Business Forum.   

Your work has been vital in helping Canada build solid connections to China.  

China is a key market and important trading partner for Canada.   

We have a strong relationship, built on numerous historical, geographic and cultural links that have developed over the years.   

And our government is committed to ensuring that our bilateral relationship continues to flourish.  

Everyone in this room knows that China, as an emerging economic giant in the Asia-Pacific, presents a lot of opportunities for Canada.   

Our government wants to capitalize on these opportunities.  

Our government recognizes we will only succeed if we build a strong economy that cannot only compete in the 21^st century, but that is equipped to lead in the 21^st century. 

That’s what Advantage Canada, which the Minister of Finance presented earlier this winter is all about: a plan to give Canada and Canadians the key advantages to be able to compete effectively and attract foreign direct investment. 

Advantage Canada focuses on creating five key advantages:

• a tax advantage, by reducing taxes for all Canadians and establishing the lowest tax rate on new business investment in the G7;
• a fiscal advantage, by eliminating Canada’s total government net debt in less than a generation and returning the interest savings back to Canadians as part of out Tax Back Guarantee;
• an entrepreneurial advantage, by reducing unnecessary regulation and red tape and increasing competition in the Canadian marketplace;
• a knowledge advantage, by creating the best-educated, most-skilled and most flexible workforce in the world; and
• an infrastructure advantage, by building modern, world-class infrastructure that ensures a seamless flow of people, goods and services over our roads and bridges and through our ports, gateways and public transit networks.

I can assure you Advantage Canada will not become another document sitting on a shelf collecting dust.  

On Monday my colleague, the Minister of Finance, handed down our government’s second budget and it begins delivering our vision.  

Budget 2007 is about achieving our country’s full potential and showing a modern, ambitious and energetic Canada to the world. 

It is a balanced budget that builds from a solid foundation:

• our fiscal fundamentals are the strongest in the G7;

• our unemployment rate is the lowest in 30 years, with more Canadians working than ever before; and

• our debt burden is the lowest in the G7 with an additional debt reduction of $9 billion this year.

And I am happy to say that Budget 2007, which was released earlier this week, includes a strategy that will help us to make that connection to Asia.  

Budget 2007 is a budget for all Canadians, and a great budget for BC.   

It is a balanced budget that cuts taxes for working families, invests in important priorities for Canadians like heath care, the environment, infrastructure, and moves to restore fiscal balance.  

The budget also includes $60 million for a Global Commerce Strategy so the government can put more resources into markets like China.   

This will likely include opening new offices or adding staff in Asian markets, starting with China and India. 

We also got a big boost in the budget for BC and the Pacific Gateway.   

We have committed $1 billion to the Gateway, with an additional $410 million in funding under Budget 2007.   

We also unveiled a new suite of programs totalling $33 billion to deliver an unprecedented level of federal investment in municipal, provincial and national infrastructure, including in transportation.   

And I want to make one very important point.  The recent Budget not only increased funding for the Asia-Pacific Gateway, but it also recognized that the Gateway is not just a BC project, but a national initiative that benefits all Canadians.   

The Gateway will help connect Canada to Asia.    

Trade Minister David Emerson and I were recently in China on a trade mission.  Everywhere we went, we repeated a message that I also repeat again and again here in Canada: we have a wonderful opportunity to build ties between two great trading nations, in part, because of the strong cultural and business ties we have established over generations. 

When I come to the Dawa Business Forum, it becomes very clear how strong those links are, and how they provide a powerful advantage as we build our trade ties with the Chinese market.  China is Canada’s second-largest trading partner ¾ second only to the United States.  

Last year there was $42 billion in two-way trade between our countries. 

Now is the time to take our economic relationship to the next level.   

It was a message that was very well received in China.   

At our roundtable discussions with Chinese government and business representatives, we wanted to hear from the Chinese participants about what they felt needed to be done to move our trading relationship forward.   

One way to strengthen our commercial relationship is through the Asia-Pacific Gateway and Corridor Initiative.   

Canada is well positioned to take advantage of the growth of the Chinese economy.  

With our participation in NAFTA, Canada is highly integrated within the North American market.   

Canada has another geographic advantage ¾ our proximity to the Chinese markets.   

The West Coast ports of Canada are three days closer to Shanghai and Hong Kong than U.S. ports such as Los Angeles. 

This means that a freighter can make an extra trans-Pacific voyage in the course of a year.  

We need to capitalize on this geographic advantage, but the B.C. ports currently have only nine per cent of the market share of trans-Pacific trade going through West Coast ports. Compare that to Washington and Oregon, which share 19 per cent of the traffic.  

We can do better. We will do better. That was the message we took to China. 

Our Chinese hosts were very interested in our thoughts on how to build a trans-Pacific transportation corridor. 

We all want to see both the emerging countries and North America become part of an efficient and mutually beneficial global supply chain.  

And to do this, we seek ways to link the heartland of Asia more closely with the heartland of North America. 

Certainly China is taking major steps.  

I was very impressed by the Yangshan Deepwater Port. As many of you know, it is located on a cluster of partially inhabited islands in Hanzhou Bay, south of Shanghai.  

Unlike Canadian ports, Yangshan has no direct rail connections. It is connected to a shore-based terminal by a 32 km bridge. 

The current capacity of this port is about three million Twenty-Foot Equivalent Units per year, and it is operating at maximum capacity. 

But the Chinese are expanding this port phase-by-phase, and it is designed to eventually support 20 million TEUs a year.  

Think about that for a moment. Think of the volume of Chinese freight we carry today; now multiply it by a factor of nearly seven.  

That’s the scale of the opportunity we want to seize.  

And our trade mission sent a very clear message to our Chinese colleagues: Canada is building a transportation system capable of seizing that opportunity. 

Minister Emerson and I met with Mr. Li Ka Shing, Chairman of Cheung Kong Holdings, who was very keen to talk about the potential in BC, particularly in Prince Rupert.   

We also met with Mr. Li Shenglin, China’s Minister of Communications.   

We signed a Memorandum of Understanding that will open the door to cooperation with China’s Ministry of Communications which has responsibility for transportation infrastructure. 

Minister Shenglin was very enthusiastic about our gateway approach, because China faces similar problems of planning and congestion.  

We think there is a lot of room for cooperation between our two countries in such areas as research, technical exchanges, and gateway development. 

He suggested that China send a study group to Canada to learn about our gateway and corridor system.  

Clearly, we are doing something right.   

What has created this unprecedented spirit of cooperation and collaboration?  

It is all focused around a program we launched last year aimed specifically at making Canada’s West Coast ports Asia’s preferred gateway to North America ¾ not just a gateway to British Columbia; not just to Canada; but to the heartland of North America. 

Here in B.C., we’ve been talking about the Gateway for 20 years.  

Many of the stakeholders have been working together for more than a decade to develop a gateway strategy. 

But with the phenomenal growth of Chinese trade, it became very clear that we had to move fast to get in the game right now.  

That’s why Canada’s New Government has committed one billion dollars for the Asia-Pacific Gateway and Corridor Initiative.  

We have allocated $321 million immediately for infrastructure, security and private sector opportunities, and we are fast tracking the remaining funds.  

We are spending billions on infrastructure to improve the trade flow to Asia.  

But infrastructure investments are not enough. We need to improve the investment climate, so that private sector stakeholders feel confident in making their own capital investments.   

We need governance structures capable of responding to the challenges that a major North American gateway will present.  

We need to coordinate port activities more effectively in the Lower Mainland.  

We need to renew and update a wide range of policies and programs that have an impact on the effectiveness of the Gateway. 

We need to work together ¾ all stakeholders.  

When it comes to the Gateway and Corridor Initiative, this includes the private sector, the port authorities, and both the provincial and federal governments.  

And this is where I am very optimistic that we are on the right track.  

Certainly, the trade mission to China showed that we are doing this right. 

On our trade mission, the Canadian delegates presented a united front.  

We all believe that Canada’s West Coast can become the gateway to China for the North American interior.   

The Chinese were impressed by the way in which we all worked together to promote the gateway and corridor.  

The Shanghai Port Authority, for example, was very impressed with our gateway and corridor model, and noted that Canada is the first country to bring and introduce representatives from all segments of the supply chain.   

We even had U.S. cities endorsing Canadian gateways.  

Memphis, Tennessee, submitted a five-minute video promoting Vancouver, Prince Rupert and Halifax.   

The cohesion in our trade mission showed the Chinese that we are competing with U.S. West Coast ports, and not against one another.  

We can grow the trade pie for Canada, and everyone will get a bigger piece.   

The Chinese were not the only ones who were impressed by the united front of the Canadian delegation.  

The Canadian participants were amazed at the unprecedented alignment of all key players.   

As a result, the Chinese were able to see the Canadian delegation as one unit.  

In this way, we gave tangible evidence of how we can contribute as a supply chain ¾ cooperating as a team.   

Our mission provided the Chinese with greater awareness of opportunities to do business with Canada.  

We found that the Chinese like doing business with Canadians.  

There are many opportunities for Canada-China cooperation, and they are ready to spend money on capital projects. 

But we have challenges ahead. We have their attention, but we haven’t yet won their business. 

We need to do better, and we will do better with a coherent strategy to realize the potential for the Gateway.  

Minister Emerson understands this. The Prime Minister understands this.  

And I’m sure you understand it too. 

We all want Canada to be a trade partner that can provide a sophisticated, reliable, cost-effective and far-reaching transportation network for its products.   

Canada is that partner.  

And our Pacific Gateway and Corridor Initiative will make us the gateway to the heartland of North America.  

Our goal is to ensure that the Canadian portion of a global supply chain is reliable, competitive and efficient. 

In the months ahead, you will see more announcements involving the Asia-Pacific Gateway and Corridor Initiative.  

We are fast-tracking decisions. We are moving ahead on policies and programs.  

We will act now, when there is a need for more capacity to handle the growing volume of trade. 

And I hope that your companies will help us move ahead on this initiative.  

We can build a more efficient trade gateway and corridor, but we rely upon the business community to make sure it is put to the best possible use. 

I hope you will join with us in promoting our west coast ports as a gateway to all of North America. 

In your business and family contacts with China, you can play your part in helping attract business, investment and traffic to our ports, our gateway. 

Vancouver and the entire province of British Columbia stands at the threshold of a new era of prestige and achievement. 

Let’s all work to make that happen.  

Let’s all benefit from the extraordinary growth of trade from China. 

Thank you.