Mr. Chairman, committee members, thank you for this invitation to appear before the committee on trade to discuss the Canada-Korea FTA.

Before I begin my remarks, please let me recognize the new chair, MP Hoback.

I would also like to enter into the record best wishes to the former chair of this committee, MP Rob Merrifield, who retired from Parliament in September to become Alberta's representative in Washington. The Canadian Council of Chief Executives wishes Mr. Merrifield all the best in his new role and thanks him for his continued service to Canadians.

The Canadian Council of Chief Executives is a not-for-profit, non-partisan organization composed of CEOs of Canada's 150 leading enterprises. Members collectively administer $6 trillion in assets, have annual revenues in excess of $850 billion, and are responsible for the majority of Canada's exports, investment, R and D, and training.

We engage in an active program of public policy research, consultation and advocacy. The CCCE produces well-thought-out and well-founded comments from a business perspective on matters of national importance to Canada's social and economic fabric.

I'd like to table for the committee's consideration three key points concerning Canada's FTA with Korea.

Point one, the CCCE supports the rapid ratification of the free trade agreement with South Korea. The Canada-Korea FTA must be implemented on January 1, 2015. This is vital so that Canadian firms do not fall further behind U.S. competitors as the Koreans phase in tariff cuts under their various bilateral trade agreements. Canadian exports to South Korea have dropped by nearly one third since the implementation of the U.S. deal. The Canada-South Korea FTA gives our exporters a fighting chance to regain lost market share and, in doing so, to protect Canadian jobs.

I take note of the support for this agreement from the Conservative government, the New Democratic Party, and the Liberal Party of Canada. All three parties agree that increasing Canada's trade ties with Asia is necessary in order to ensure Canada's prosperity in the 21st century. As a result of this agreement, Canadian companies will enjoy enhanced opportunities to sell products and services to South Korean consumers and participate in South Korean-based supply chains.

If the EU is counted as one entity, Korea is Canada's sixth largest export market for goods and Canada's sixth largest supplier. The two nations also rank in the top 10 partners for two-way trade in services and intermediate goods trade, which is an indicator of strong activity in global value chains.

Korea has 14 companies on the 2013 global Fortune 500 list. Canada has nine. Only the United States, China, the EU, Japan, and Mexico have more trade with Canada than South Korea does.

President Park, in her state visit to Canada two weeks ago, highlighted the creative economy as a sector where she'd like to see deepened bilateral trade, including in television and video game content. Other priority sectors for growing the trade and investment relationship illustrate the diversity of trade between our two nations. Financial services, professional services such as engineering and legal services, agrifood, seafood, clean tech, energy products including LNG, forestry products, metals, aerospace, advanced manufacturing, and more are ripe for increased commercial activity and partnerships.

In the auto sector Canadian firms have tabled their concerns with this agreement. They've highlighted that the U.S.-Korea Free Trade Agreement has not resulted in the increased trade that was hoped for or expected.

The CCCE therefore recommends the development of a specific auto sector strategy for the Korean market to ensure that Canadian auto and auto parts manufacturers are positioned for success. Such a strategy could examine exports, two-way foreign direct investment, and non-tariff barriers as well as cooperation with other major auto and auto parts exporting nations that have free trade agreements with Korea, to ensure an open market for foreign products.

The second point is this.

The government and businesses must work together to implement this agreement. Cooperation among businesses, Canada's embassy in South Korea, the Canadian Trade Commissioner Service, EDC and others is critical to implementing the agreement and improving trade.

As you have already heard from Claire this morning, the United States, the European Union, and Australia have already concluded FTAs with South Korea. The lead time these nations have in their tariff reduction schedules and implementation of commitments put Canadian companies at a competitive disadvantage. The CCCE recommends the creation of an advisory committee to Minister Ed Fast on the implementation and promotion of the South Korea FTA. The largest traders and investors, including those with significant foreign affiliate presence in Korea, should be the core members of this advisory committee as they have the greatest experience in the South Korean market and manage the supply chains that could be access points for small firms.

To measure the success of the Canada-Korea FTA it's important that the starting point is well understood and we benchmark against this. Canada's imports from Korea were $7.3 billion in 2013, and it exported $3.5 billion. Korea invests more in Canada at almost $5 billion in 2013, compared to Canadian direct investment in Korea that sits at about $535 million. Foreign affiliate sales are also on the rise. Outcomes of the FTA should be measured annually with increased benchmarks such as trade, FDI in sales in South Korea by Canadian foreign affiliates, the establishment of joint ventures, and revenue from licensing agreements.

The advisory committee recommended by the CCCE, along with institutions such as the Asia Pacific Foundation led by Stewart Beck, could also contribute to promoting broader Canadian awareness and understanding of the South Korean market as well as its general conditions, including its stable democracy, its interest in a peaceful Asia region, and its highly innovative economy. As John Weekes, Canada's former ambassador to the WTO has pointed out, marketing is essential and understanding the thinking of Korean consumers is critical if the potential benefits of this FTA are to be realized.

This partnership approach in which government and business are aligned and execute on opportunities is at the core of the government's global markets action plan.

I will conclude with point number three. I reiterate the vital importance of deeper Canadian engagement with the Asia region. The South Korea FTA is a concrete step forward in government-led initiatives in this region, and the CCCE congratulates Minister Ed Fast, chief negotiator Ian Burney, and the entire trade team at DFATD for having stuck to the difficult negotiations that led to the final conclusion of this agreement. They have our huge thanks.

The agreement represents a turning point, frankly, in Canada's long-standing efforts to build closer economic ties with the Asia-Pacific region. It demonstrates to other important economies in that region that Canada is a reliable and serious partner, and it offers a base from which Canadian companies can reach out to other fast-growing markets. CCCE members are already active across Asia and want to do more business in high-growth nations from India to Indonesia. Concrete next steps could include a bilateral economic partnership agreement with Japan. Concluding the EPA with Japan should be a priority given the strong FDI relationship, Canada's need for energy resources and food, and opportunity for further trade in agricultural products and manufactured goods.

It's also our view that Canada needs a leader-to-leader strategic partnership with China, similar to what Australia has accomplished. That could lead to enhanced commerce in sectors of mutual interest. The government should also consider, as New Zealand has executed, the negotiation of a free trade agreement with China.

I'd be happy to take questions on Korea and the CCCE's broader priorities for Asia, including the Trans-Pacific Partnership, in the Q and A section, should this be of interest to committee members.

Thank you again for the opportunity to comment on this historic FTA.

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