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Cablegate: Canada to Open New Trade Offices in China, Mexico

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UNCLAS SECTION 01 OF 03 OTTAWA 000889

SIPDIS

STATE FOR WHA/CAN, EEB, EUR, EAP
COMMERCE FOR 4320/OFFICE OF NAFTA/GWORD/TFOX
STATE PASS USTR

E.O. 12958: N/A
TAGS: ETRD ECON EINV CA EFTA CH BR IN
SUBJECT: CANADA TO OPEN NEW TRADE OFFICES IN CHINA, MEXICO
AND BRAZIL TO PROMOTE "AGGRESSIVE" TRADE POLICY

OTTAWA 00000889 001.2 OF 003


1. (U) Summary: In a June 19 speech, International Trade
Minister Emerson announced that Canada is establishing 10 new
trade offices in China, Mexico, and Brazil as part of
Canada's "aggressive" trade policy. This is in addition to
new trade offices in India and Mongolia announced in April.
The government will add staff to existing trade offices in
Brazil, Chile, China, Colombia, India and Panama. In
addition, Canada is expanding its Trade Commissioner Service
in Canada with four new satellite offices in Ontario and
British Columbia. The expansion in trade offices are part of
the Harper government's Global Commercial Strategy, which is
providing C$50 million per year to further develop Canada's
trade and investment interests at home and overseas.
Emerson's remarks laid out the basic direction of Canada's
trade policy, including NAFTA, the Asia-Pacific Gateway, the
Doha Round, and also stressed the importance of Canada's
negotiation of bilateral and regional agreements as a
complement to Doha. The speech outlined Canada's trade,
investment and civil aviation successes in Europe, Latin
America and Asia during the last year. End Summary.

2. (U) Each year Canada's International Trade Minister gives
a major speech on the occasion of International Trade Day, an
event bringing together the Canadian business community,
senior government officials, industry stakeholders and
academics to discuss issues and priorities in international
trade and economics. The speech is often the occasion for
important announcements. This year's speech by Foreign
Affairs and International Trade Minister David Emerson in
Mississauga, Ontario was no exception. (Note: At the time
of the speech, Emerson served as interim Foreign Affairs
Minister as well as International Trade Minister. On June
25, Prime Minister Harper named Emerson Foreign Affairs
Minister and gave the International Trade portfolio to
Senator Michael Fortier. No change in trade policy is
anticipated because of the change in Ministers. End Note)

3. (U) The Minister announced that new Canadian trade offices
will open in six cities across China (Chengdu, Nanjing,
Qingdao, Shenyang, Shenzhen, and Wuhan), two in Mexico
(Tijuana and Villahermosa) and two in Brazil (Porto Alegre
and Recife). These are in addition to two offices in India
(Hyderabad and Kolkata) and one in Mongolia (Ulaanbaatar)
announced in April. The government will also add new trade
staff to existing offices in Brazil, Chile, China, Colombia,
India, and Panama.

4. (U) Emerson described the Chinese cities selected as
important regional hubs and key commercial centers that offer
opportunities in education, research, transportation, tourism
and high technology. The new Mexican offices will help
Canadian firms take advantage of promising markets in
northwestern Mexico and along the Gulf of Mexico coast. The
Brazilian offices will provide a strategic link to Brazil's
Mercosur partners of Argentina, Chile, Paraguay, and Uruguay.
QMercosur partners of Argentina, Chile, Paraguay, and Uruguay.

5. (U) Comment: More generally, the location of the new
offices also reflects the Harper govrnment's foreign and
trade policy priorities: re-engagement in the Americas and
enhanced relations between Canada and emerging Asian markets,
especially in China and India. End comment.

6. (U) On the domestic front, Emerson said that Canada is
expanding its Trade Commissioner Service in Canada with four
new satellite offices in Ontario (Kitchener, Windsor, Ottawa)
and British Columbia (Victoria). Additional trade officers
will be added to existing offices. Regional or satellite
offices are usually the first point of contact for firms
wanting to link up with the Canadian Trade Commissioner
Service (TCS) worldwide network. The TCS is currently
staffed by about 900 trade commissioners working in 150
cities outside Canada and 13 Canadian cities.

7. (U) Emerson explained that Canada is expanding its
international footprint to maintain its competitive advantage

OTTAWA 00000889 002.2 OF 003


in key markets and to bolster the domestic economy and
quality of life for Canadians: "These new trade offices will
help provide (Canadian) companies with the tools they need to
access global supply chains and expand their commercial
activities." The Minister said business has been demanding
more services in growing markets abroad as well as enhanced
local service in Canada. Domestic offices "play a key role
in encouraging small and medium-sized enterprises to seek
international opportunities and succeed in new markets.
Expanding our domestic points of service means more Canadian
businesses will be active on the world stage."

8. (U) In his speech, Emerson also outlined the milestones
Canada reached in trade, investment and civil aviation during
the last year in Europe, Latin America and Asia. He
described how the government has vastly increased bilateral
trade ties with Canada's global partners in line with its
Global Commerce Strategy. Earlier this year, Canada signed a
new free trade agreement (FTA) with the European Free Trade
Association (EFTA) countries of Iceland, Liechtenstein,
Norway and Switzerland. In addition, Canada signed an FTA
with Peru and concluded negotiations with Colombia. The
government is continuing negotiations with South Korea, the
Caribbean Community, the Dominican Republic, Jordan,
Singapore and the Central American Four of El Salvador,
Guatemala, Honduras, and Nicaragua, while looking to possible
new initiatives with countries such as Panama.

9. (U) Emerson said that Canada has concluded negotiations of
foreign investment promotion and protection agreements with
India and Jordan, and negotiations with several other
countries are underway. Canada also concluded new air
agreements with Jordan, Iceland, New Zealand, Singapore,
Mexico, Barbados, the Philippines and Panama, and launched
negotiations with the EU for a comprehensive open skies
agreement that would govern air services between Canada and
all 27 EU countries. Emerson said that Canada has expanded
its work with China and India through existing science and
technology agreements. Earlier in June, Canada took an
important step to deepen and broaden its commercial and
economic relations with France with the signature of a
Canada-France Joint Action Plan.

10. (U) In reviewing the recent accomplishments, Emerson told
his audience that "We know that trade follows investment.
With all these bilateral arrangements, Canada is attaining a
stronger position to climb global value chains, increase
inward and outward investment, gain preferential market
access for Canadian firms and, ultimately, generate
prosperity at home and abroad."

11. (U) No doubt in response to recent statements in the U.S.
political campaign, the Minister stressed that "in today's
global economy, NAFTA needs to be a platform for all North
America's business -- Canadian, American, and Mexican - to
reach out to the world's markets." He saw NAFTA as a
powerful tool that enables North American workers to take on
Qpowerful tool that enables North American workers to take on
intensifying global competition: "NAFTA is not the problem.
NAFTA is part of the solution." He also advocated
collaboration to develop a smooth, efficient Canada-U.S.
border "to bring our sectors together by removing red tape,
improving transportation and logistics and sharing our
commercial strengths."

12. (U) However, Emerson acknowledged that his country should
diversify its trade and investment patterns beyond North
America. In particular, he praised Canada's Asia-Pacific
Gateway and Corridor Initiative as a "visionary" effort to
create a globally competitive transportation system linking
the heartland of North America and Asia through integrating
ports, airports, roads, railways and border services. These
remarks came as no surprise since Emerson served as Minister
for the Pacific Gateway in addition to his other
responsibilities.


OTTAWA 00000889 003.2 OF 003


13. (U) Emerson said that WTO remains the foundation of
Ottawa's efforts to negotiate away remaining barriers in
international markets: "Canada continues to be an active and
vocal supporter of the Doha round of negotiations." Failing
a deal by the end of 2008, "we run the risk of a potentially
lengthy freeze in the negotiations." The Minister said that
Canada is ready to do its part for a successful deal, but a
success depends on the "meaningful engagement and
contributions of all WTO members, including large developing
countries."

14. (U) Since there is uncertainty in the "broad and
ambitious" Doha process, and for "offensive and defensive
reasons," Emerson said Canada now recognizes the importance
of negotiating bilateral and regional agreements as a
"complement" to Doha. He recalled that last year he said
Canada was falling behind its trading partners such as the
U.S., the EU, Mexico, Australia and Chile, among others, in
signing bilateral trade deals which put Canadian companies at
a competitive disadvantage in key markets. That was why
Canada recently accelerated its activity to reach its own
bilateral and regional trade deals.

15. (U) International Trade Day was also marked by the
release of the latest versions of two annual publications:
Canada's State of Trade: Trade and Investment Update 2008,
which reviews Canada's performance in international trade and
investment in 2007, and Canada's International Market Access
Report 2008. The Trade and Investment Update said that
despite the appreciation of the Canadian dollar and slowing
U.S. growth, Canada's exports of goods and services increased
by 1.9 percent to a record C$532.7 billion. Its imports of
goods and services advanced 3.2% to C$502.5 billion. The
report also noted that Canadian exporters are diversifying.
Goods and services exports to the EU grew by 17.6 percent,
while those to markets outside of the U.S., the EU and Japan
grew by 13.3 percent. China replaced Japan as the third most
important market for Canadian merchandise exports. The U.S.
remains Canada's largest trading partner.

Visit Canada,s Economy and Environment Forum at
http://www.intelink.gov/communities/state/can ada

WILKINS

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