Canada : A Profile

CANADA- AN INTRODUCTION

Land Mass

Canada is the world's second-largest country (9 970 610 km2), surpassed only by the Russian Federation.

Capital

Ottawa, in the province of Ontario.

Provinces and Territories

Canada has 10 provinces and 3 territories, each with its own capital city (in brackets): Alberta (Edmonton); British Columbia (Victoria); Prince Edward Island (Charlottetown); Manitoba (Winnipeg); New Brunswick (Fredericton); Nova Scotia (Halifax); Nunavut (Iqaluit); Ontario (Toronto); Quebec (Quebec City); Saskatchewan (Regina); Newfoundland (St. John's); Northwest Territories (Yellowknife); and Yukon Territory (Whitehorse).

Parks and Historic Sites

Canada maintains 38 national parks, which cover about 2% of the country's landmass. Banff, located on the eastern slopes of Alberta's Rocky Mountains, is the oldest (est. 1885); Tuktut Nogait, in the Northwest Territories, was established in 1996. There are 836 national historic sites, designated in honour of people, places and events that figure in the country's history. Canada also has over 1000 provincial parks and nearly 50 territorial parks.

Time Zones

Canada has six time zones. The easternmost, in Newfoundland, is three hours and 30 minutes behind Greenwich Mean Time (GMT). The other time zones are the Atlantic, the Eastern, the Central, the Rocky Mountain and, farthest west, the Pacific, which is eight hours behind GMT.

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Canada : A Profile

National Emblem

The maple leaf has been associated with Canada for some time: in 1868, it figured in coats of arms granted to Ontario and Quebec; and in both world wars, it appeared on regimental badges. Since the 1965 introduction of the Canadian flag, the maple leaf has become the country's most important symbol.

The Canadian Flag

Several people participated in designing the Canadian flag. Jacques St. Cyr contributed the stylized maple leaf, George Bist the proportions, and Dr. Gunter Wyszechi the colouration. The final determination of all aspects of the new flag was made by a 15-member parliamentary committee, which is formally credited with the design. After lengthy debate, the new flag was adopted by Parliament. It officially became the national flag on February 15, 1965, now recognized as Canada's Flag Day.

National Anthem

O Canada was composed in 1880, with music by Calixa Lavallée and words by Judge Adolphe-Basile Routhier. In 1908, Robert Stanley Weir wrote the translation on which the present English lyric is based. On July 1, 1980, a century after being sung for the first time, O Canada was proclaimed the national anthem.

CANADA’S NATIONAL ANTHEM

O Canada! Our home and native land! True patriot love in all thy sons command. With glowing hearts we see thee rise, The True North strong and free! From far and wide, O Canada, We stand on guard for thee. God keep our land glorious and free! O Canada, we stand on guard for thee. O Canada, we stand on guard for thee.

"O CANADA" was proclaimed Canada's national anthem on July 1, 1980, a century after it was first sung on June 24, 1880. The music was composed by Calixa Lavallée, a well-known composer; French lyrics to accompany the music were written by Sir Adolphe-Basile Routhier. The song gained steadily in popularity. Many English versions have appeared over the years. The version on which the official English lyrics are based was written in 1908 by

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Canada : A Profile

Mr. Justice Robert Stanley Weir. The official English version includes changes recommended in 1968 by a Special Joint Committee of the Senate and House of Commons. The French lyrics remain unaltered.

Currency

The Canadian dollar is divided into 100 cents.

Population

As of the summer of 1996, Canada's population was over 30 million.

Main Cities

As of July 1, 1996, the leading Canadian cities are Toronto (4.44 million), Montreal (3.36 million), Vancouver (1.89 million), Ottawa-Hull, the National Capital Region (1.03 million).

Distribution of Population

A large majority of Canadians, 77 percent, live in cities and towns.

Family Size

At the time of the 1996 national census, the average family size was 3.1, including 1.2 children.

Living Standard

Canada ranks sixth in the world in standard of living (measured according to gross domestic product per capita), behind only the United States, Switzerland, Luxembourg, Germany, and Japan. Canada's rank among nations tends to rise even higher in assessments that consider GDP per capita along with other factors (e.g., life expectancy, education) that contribute to "quality of life."

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Canada : A Profile

Health Care and Social Security

Basic health care, with the exception of dental services, is free at the point of delivery. And prescription drugs are in most cases dispensed without charge to people over 65 and social aid recipients. Canada also has an extensive social security network, including an old age pension, a family allowance, unemployment insurance and welfare.

Aboriginal Peoples

In 1996, about 3% of Canadians belonged to one or more of the three Aboriginal groups recognized by the Constitution Act, 1982: North American Indian, Métis, or Inuit. Of this percentage, about 69% are North American Indian, 26% Métis, and 5% Inuit.

Religion

According to the 1991 census, more than four-fifths of Canadians are Christian, with Catholics accounting for about 47% of the population and Protestants about 36%. Other religions include Judaism, Islam, Hinduism, Sikhism and Buddhism. Some 12.5%, more than any single denomination except Roman Catholic, have no religious affiliation at all.

Languages

Canada has two official languages: English, the mother tongue of about 59% of Canadians; and French, the first language of 23% of the population. A full 18% have either more than one mother tongue or a mother tongue other than English or French, such as Chinese, Italian, German, Polish, Spanish, Portuguese, Punjabi, Ukrainian, Arabic, Dutch, Tagalog, Greek, Vietnamese, Cree, Inuktitut, or other languages.

The Official Languages Act makes French and English the official languages of Canada and provides for special measures aimed at enhancing the vitality and supporting the development of English and French linguistic minority communities. Canada's federal institutions reflect the equality of its two official languages by offering bilingual services.

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Canada : A Profile

Ethnic Origin

In 1996, about 19% of the population reported "Canadian" as their single ethnic origin, with 17% reporting British Isles-only ancestry and 9% French-only ancestry. About 10% reported a combination of British Isles, French, or Canadian origin, with another 16% reporting an ancestry of either British Isles, French or Canadian in combination with some other origin. Some 28% reported origins other than the British Isles, French or Canadian.

Main Natural Resources

The principal natural resources are natural gas, oil, gold, coal, copper, iron ore, nickel, potash, uranium and zinc, along with wood and water.

Leading Industries

These include automobile manufacturing, pulp and paper, iron and steel work, machinery and equipment manufacturing, mining, extraction of fossil fuels, forestry and agriculture.

Exports

Canada's leading exports are automobile vehicles and parts, machinery and equipment, high-technology products, oil, natural gas, metals, and forest and farm products

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Canada : A Profile

HISTORY

Aboriginal peoples are thought to have arrived from Asia thousands of years ago by way of a land bridge between Siberia and Alaska. Some of them settled in Canada, while others chose to continue to the south. When the European explorers arrived, Canada was populated by a diverse range of Aboriginal peoples who, depending on the environment, lived nomadic or settled lifestyles, were hunters, fishermen or farmers. First contacts between the native peoples and Europeans probably occurred about 1000 years ago when Icelandic Norsemen settled for a brief time on the island of Newfoundland. But it would be another 600 years before European exploration began in earnest.

First Colonial Outposts Seeking a new route to the rich markets of the Orient, French and British explorers plied the waters of North America. They constructed a number of posts -- the French mostly along the St. Lawrence River, the Great Lakes and the Mississippi River; the British around Hudson Bay and along the Atlantic coast. Although explorers such as Cabot, Cartier and Champlain never found a route to China and India, they found something just as valuable -- rich fishing grounds and teeming populations of beaver, fox and bear, all of which were valued for their fur. Permanent French and British settlement began in the early 1600s and increased throughout the century. With settlement came economic activity, but the colonies of New France and New England remained economically dependent on the fur trade and politically and militarily dependent on their mother countries. Inevitably, North America became the focal point for the bitter rivalry between England and France. After the fall of Quebec City in 1759, the Treaty of Paris assigned all French territory east of the Mississippi to Britain, except for the islands of St. Pierre and Miquelon, off the island of Newfoundland. Under British rule, the 65 000 French-speaking inhabitants of Canada had a single aim -- to retain their traditions, language and culture. Britain passed the Quebec Act (1774), which granted official recognition to French civil laws and guaranteed religious and linguistic freedoms. Large numbers of English-speaking colonists, called Loyalists because they wished to remain faithful to the British Empire, sought refuge in Canada after the United States of America won its independence in 1776. They settled mainly in the colonies of Nova Scotia and New Brunswick, and along the Great Lakes. The increase in population led to the creation in 1791 of Upper Canada (now Ontario) and Lower Canada (Quebec). Both were granted their own representative governing institutions. Rebellions in Upper and Lower Canada in 1837 and 1838 prompted the British to join the

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two colonies, forming the united Province of Canada. In 1848 the joint colony was granted responsible government except in matters of foreign affairs. Canada gained a further measure of autonomy but remained part of the British Empire.

A Country Is Born Britain's North American colonies -- Canada, Nova Scotia, New Brunswick, Prince Edward Island and Newfoundland -- grew and prospered independently. But with the emergence of a more powerful United States after the American Civil War, some politicians felt a union of the British colonies was the only way to fend off eventual annexation. On July 1, 1867, Canada East, Canada West, Nova Scotia and New Brunswick joined together under the terms of the British North America Act to become the Dominion of Canada. The government of the new country was based on the British parliamentary system, with a Governor General (the Crown's representative) and a Parliament consisting of the House of Commons and the Senate. Parliament received the power to legislate over matters of national interest (such as taxes and national defence), while the provinces were given legislative powers over matters of "particular" interest (such as property, civil rights and education).

Westward Expansion Soon after Confederation, Canada expanded into the northwest. Rupert's Land -- an area extending south and west for thousands of kilometres from Hudson Bay -- was purchased by Canada from the Hudson's Bay Company, which had been granted the vast territory by King Charles of England in 1670. Westward expansion did not happen without stress. In 1869, Louis Riel led an uprising of the Métis in an attempt to defend their ancestral rights to the land. A compromise was reached in 1870 and a new province, Manitoba, was carved from Rupert's Land. British Columbia, already a Crown colony since 1858, decided to join the Dominion in 1871 on the promise of a rail link with the rest of the country; Prince Edward Island followed suit in 1873. In 1898, the northern territory of Yukon was officially established to ensure Canadian jurisdiction over that area during the Klondike gold rush. In 1905, two new provinces were carved from Rupert's Land: Alberta and Saskatchewan; the residual land became the Northwest Territories. Newfoundland preferred to remain a British colony until 1949, when it became Canada's 10th province. The creation of new provinces coincided with an increase of immigration to Canada, particularly to the west. Immigration peaked in 1913 with 400 000 coming to Canada. During the prewar period, Canada profited from the prosperous world economy and established itself as an industrial as well as an agricultural power.

A Nation Matures Canada's substantial role in the First World War won it representation distinct from Britain in the League of Nations after the war. Its

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independent voice became more and more pronounced, and in 1931 Canada's constitutional autonomy from Britain was confirmed with the passing of the Statute of Westminster. In Canada as elsewhere, the onset of the Great Depression in 1929 brought hardship. As many as one out of every four workers was without a job and the provinces of Alberta, Saskatchewan and Manitoba were laid waste by drought. Ironically, it was the need to supply the Allied armies during the Second World War that boosted Canada out of the Depression. Since World War II, Canada's economy has continued to expand. This growth, combined with government social programs such as family allowances, old-age security, universal medicare and unemployment insurance has given Canadians a high standard of living and desirable quality of life. Noticeable changes have occurred in Canada's immigration trends. Before World War II, most immigrants came from the British Isles or eastern Europe. Since 1945, increasing numbers of southern Europeans, Asians, South Americans and people from the Caribbean islands have enriched Canada's multicultural mosaic. On the international scene, as the nation has developed and matured, so has its reputation and influence. Canada has participated in the United Nations since its inception and is the only nation to have taken part in all of the UN's major peacekeeping operations. It is also a member of the Commonwealth, la Francophonie, the Group of Seven industrialized nations, the OAS (Organization of American States) and the NATO (North Atlantic Treaty Organization) defence pact.

A New Federation in the Making The last quarter of a century has seen Canadians grapple once more with fundamental questions of national identity. Discontent among many French-speaking Quebeckers led to a referendum in that province in 1980 on whether Quebec should become more politically autonomous from Canada, but a majority voted to maintain the status quo. In 1982, the process toward major constitutional reform culminated in the signing of the Constitution Act. Under this act, the British North America Act of 1867 and its various amendments became the Constitution Act, 1867-1982. The Constitution, its Charter of Rights and Freedoms, and its general amending formula redefined the powers of governments, entrenched the equality of women and men, and advanced the rights of individuals and ethnocultural groups. Two major efforts were made to reform the constitutional system: the 1987 Meech Lake Accord - which was not implemented since it did not obtain the legislative consent of all provinces - and the 1991 Charlottetown Accord. The Charlottetown Accord would have reformed the Senate and made major changes in the Constitution. It was rejected in a national referendum held on October 26, 1992. The Parliament of Canada has since passed a bill, on February 2, 1996, guaranteeing Canada's 5 major regions that no constitutional change concerning them would be made without their unanimous consent. As well, less than a month after the Quebec sovereignty

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Canada : A Profile

referendum of October 30, 1995, the Parliament of Canada passed a resolution recognizing Quebec as a distinct society within Canada. Federal evolution is also underway in Canada's North. On April 1, 1999, the Northwest Territories was divided into two by Act of Parliament, creating a new 2 000 000 km2 territory called Nunavut ("our land" in Inuktitut, the Inuit language).

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Canada : A Profile

GEOGRAPHY

Occupying the northern half of the North American continent, Canada has a land mass of 9 970 610 km2, making it the second-largest country in the world after Russia. From east to west, Canada encompasses six time zones. Canada's motto, "From Sea to Sea," is geographically inaccurate. In addition to its coastlines on the Atlantic and Pacific, Canada has a third sea coast on the Arctic Ocean, giving it the longest coastline of any country. To the south, Canada shares an 8892 km boundary with the United States. To the north, the Arctic islands come within 800 km of the North Pole. Canada's neighbour across the Arctic Ocean is Russia. Because of the harsh northern climate, only 12 percent of the land is suitable for agriculture. Thus, most of the population of 30 million live within a few hundred kilometres of the southern border, where the climate is milder, in a long thin band stretching between the Atlantic and the Pacific oceans. If you fly over Manitoba or northern Ontario in summer, you will see more water than land: lakes, big and small, so many that they could not possibly be counted. It has been estimated that Canada has one-seventh of the world's fresh water. In addition to the Great Lakes, which it shares with the United States, Canada has many large rivers and lakes. Canada is divided into seven regions, each with a very different landscape and climate.

1. The Pacific Coast Bathed by warm, moist Pacific air currents, the British Columbia coast, indented by deep fiords and shielded from Pacific storms by Vancouver Island, has the most moderate climate of Canada's regions. Vancouver Island's west coast receives an exceptional amount of rain, giving it a temperate rain forest climate. Although it does not contain the diversity of species of a tropical rain forest, the island's west coast does have the oldest and tallest trees in Canada: Western Red Cedars 1300 years old and Douglas firs 90 m high.

2. 2. The Cordillera From British Columbia to just east of the Alberta border the land is young, with rugged mountains and high plateaus. Signs of geologically-recent volcanic activity can be seen in Garibaldi Provincial Park in southern British Columbia and at Mount Edziza in the north. The Rocky Mountains, the Coastal Mountains and other ranges, running north to south, posed major engineering problems for the builders of the transcontinental railways and highways. Canada's

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Canada : A Profile

highest peaks, however, are not in the Rockies, but in the St. Elias Mountains, an extension of the Cordillera stretching north into the Yukon and Alaska. The highest point in Canada, Mount Logan (6050 m), rises amid a huge icefield in the southwest corner of Yukon, the largest icecap south of the Arctic Circle. The British Columbia interior varies from alpine snowfields to deep valleys where desert-like conditions prevail. On the leeward side of the mountains, for example, a rain-shadow effect is created, forcing Okanagan Valley farmers to irrigate their orchards and vineyards.

3. The Prairies To drive across the Prairies is to see endless fields of wheat ripening under a sky that seems to go on forever. The plains of Alberta, Saskatchewan and Manitoba are among the richest grain-producing regions in the world. Yet, even here are surprises. If you leave the road at Brooks, Alberta, and drive north, you descend into the Red Deer River Valley. Here, in desert-like conditions, water and wind have created strange shapes in the sandstone called "hoodoos." The same forces of erosion have uncovered some of the largest concentrations of dinosaur fossils in the world.

4. The Canadian Shield A huge inland sea called Hudson Bay extends into the heart of Canada, and wrapped around this bay is a rocky region called the Canadian Shield. Canada's largest geographical feature, it stretches east to Labrador, south to Kingston on Lake Ontario and northwest as far as the Arctic Ocean. The Shield is considered to be the nucleus of the North American continent. Its gneiss and granite rocks are 3.5 billion years old, three-quarters the age of the Earth. Scraped by the advance and retreat of glaciers, the Shield has only a thin layer of soil that supports a boreal forest of spruce, fir, tamarack and pine. The region is a storehouse of minerals, including gold, silver, zinc, copper and uranium.

5. The Great Lakes-St. Lawrence Lowlands Southern Quebec and Ontario, the industrial heartland of Canada, contain Canada's two largest cities, Montreal and Toronto. In this small region, 50 percent of Canadians live and 70 percent of Canada's manufactured goods are produced. The region also has prime agricultural land, for example, the Niagara Peninsula. The large expanses of lakes Erie and Ontario extend the number of frost-free days, permitting the cultivation of grapes, peaches, pears and other fruits. The Great Lakes and St. Lawrence region is sugar maple country. In the autumn, the sugar maple leaves, Canada's national symbol, are ablaze in red, orange and gold. The sap is collected in spring and evaporated to make maple

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Canada : A Profile

syrup and sugar, a culinary delicacy first prepared and used by the Aboriginal North American peoples.

6. The Atlantic Provinces-Appalachian Region New Brunswick, Nova Scotia, Prince Edward Island and Newfoundland are the smallest Canadian provinces, and were the first to be settled by Europeans. The Grand Banks have been called the "wheat fields" of Newfoundland. This shallow continental shelf extends 400 km off the east coast, where the mixing of ocean currents has created one of the richest fishing grounds in the world. Once thought to contain a virtually inexhaustible supply of fish, the Banks are now considered a vulnerable resource that must be wisely managed. The Atlantic provinces are an extension of the Appalachians, an ancient mountain range. Much of the region has low, rugged hills and plateaus and a deeply indented coastline. Agriculture flourishes in the fertile valleys, such as the Saint John River Valley, in New Brunswick, and the Annapolis Valley, in Nova Scotia. Prince Edward Island in the Gulf of St. Lawrence has a gently rolling landscape with a rich, red soil. This fertile island is Canada's smallest province, making up a mere 0.1 percent of Canada's land mass.

7. The Arctic North of the tree-line is a land of harsh beauty. During the short summer, when daylight is nearly continuous and a profusion of flowers blooms on the tundra, the temperature can reach 30oC. Yet the winters are long, bitterly cold and dark. The Arctic is no longer an inaccessible frontier. Inuvik, in the Mackenzie delta, can be reached by road, and every community is served by air. Most have electricity, stores and health services. North of the mainland is a maze of islands separated by convoluted straits and sounds, the most famous of which link together to form the fabled Northwest Passage, the route to the Orient sought by so many early explorers.

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Canada : A Profile

Climate

Canada's climate is characterized by its diversity, as temperature and precipitation differ from region to region and from season to season. While it is true that in the extreme north temperatures climb above 0oC for only a few months a year, most Canadians live within 300 km of the country's southern border, where mild springs, hot summers and pleasantly crisp autumns prevail at least 7 months of 12.

The seasons dictate the look of the land: according to whether the natural environment is in a state of dormancy or growth, Canadians may be alpine skiing...or water skiing.

While seasonal change signals fluctuations in temperature and the number of hours of sunshine, the shifting position of air masses also plays a part. The usual air flow from west to east is disrupted in winter when cold, dry air moves down from the Arctic and in summer when warm, tropical air moves up from the southeast. Added to these factors are the effect of mountain ranges, plains and large bodies of water.

The West Coast

The coast of British Columbia has the most temperate climate in Canada, thanks to warm, moist Pacific Ocean airstreams. The province's most populous cities, Vancouver and Victoria, enjoy comfortable and relatively dry summers and mild, wet winters. Snow seldom falls in low-lying areas, and when it does, it usually melts the same day.

The Cordilleran mountain system, which includes the Coastal Range and the Rocky Mountains, blocks the warm, moist Pacific air from the interior plains of the Prairie provinces. As the moist air is forced to rise over the mountains, it cools and falls on the western slopes in heavy amounts of precipitation, as rain at lower altitudes and snow at higher ones. The valleys between the mountain ranges receive much less precipitation and experience warm, even scorching, summers.

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The Prairies

Part of the vast central plains of North America, the Canadian Prairies extend east from the Rocky Mountains to the Great Lakes. Here, cold winters and hot summers are the norm, with relatively light precipitation. For instance, in the dry southern portion of Saskatchewan, annual precipitation averages less than 300 mm. Manitoba, the wettest of the Prairie provinces, receives about 500 mm each year.

Spring rains and dry autumn conditions have helped make the Prairies one of the top grain-growing areas of the world. Farming is not without its risk, however, in the form of wind erosion, drought, thunderstorms and hailstorms and unseasonably early autumn frosts.

Among the most remarkable features of the Prairie winter is the "chinook," a warm, usually dry winter wind that affects much of southern Alberta. The chinook sweeps down from the Rocky Mountains and has been known to raise temperatures as much as 16oC in a single day.

The Great Lakes-St. Lawrence Region

More than half the Canadian population lives close to the Great Lakes or along the St. Lawrence River. Here, winter brings heavy snowfalls. Summers tend to be longer and more humid than elsewhere in Canada. Rainfall varies little year to year and is ample enough to sustain some of the best farming areas in Canada. Mean daily temperatures reach close to 20oC from mid-June to mid-September, with week-long heat waves in the 30s a not uncommon occurrence. Warm, sunny days and crisp, cool nights make the fall season popular.

Atlantic Canada

The combined influence of continental air masses with air currents off the ocean give this region one of the most rugged and most variable climates anywhere in the country. In winter, mean temperatures can vary markedly as Arctic air is replaced by maritime air from passing storms. Snowfall is relatively heavy, and fog is common in spring and early summer. The warmest

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Canada : A Profile

month is July, when mean temperatures are in the 16 to 18oC range.

The North

Spanning the entire country north of the Prairies and the populated Great Lakes-St. Lawrence Region is the boreal forest. This area is usually snow-covered more than half the year; its "summer" - the frost-free period - lasts barely two months. Precipitation is light, except along the coast of Labrador where the influence of Atlantic storms is felt.

Farther north, above the tree-line, lies the Arctic. Here, temperatures rise above freezing only a few weeks a year. Just a metre below the delicate but tenacious vegetation that grows in summer, the ground remains permanently frozen.

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Canada : A Profile

THE GOVERNMENT

Canada is a constitutional monarchy, a federal state and parliamentary democracy with two official languages and two systems of law: civil law and common law. In 1982, the Charter of Rights and Freedoms was entrenched in the Canadian Constitution. Canada's Constitution was initially a British statute, the British North America Act, 1867, and until 1982, major amendments required action by the British Parliament. Since 1982 when the Constitution was "patriated" - that is, when Canadians obtained the right to amend all parts of the Constitution in Canada - this founding statute has been known as the Constitution Act, 1867-1982.

The Monarchy From the days of French colonization and British rule to today's self-government, Canadians have lived under a monarchy. Although Canada has been a self-governing "Dominion" in the British Empire since 1867, full independence for Canada, as for all British colonies, was established only in 1931 by the Statute of Westminster. Elizabeth II, Queen of England, is also Canada's Queen and sovereign of a number of realms. In her capacity as Queen of Canada, she delegates her powers to a Canadian Governor General. Canada is thus a constitutional monarchy: the Queen rules but does not govern.

The Federal Government Canada's 33 "Fathers of Confederation" adopted a federal form of government in 1867. A federal state is one that brings together a number of different political communities under a common government for common purposes and separate regional governments for the particular needs of each region. In Canada, the responsibilities of the federal Parliament include national defence, interprovincial and international trade and commerce, the banking and monetary system, criminal law and fisheries. The courts have also awarded to the federal Parliament such powers as aeronautics, shipping, railways, telecommunications and atomic energy. The provincial legislatures are responsible for such matters as education, property and civil rights, the administration of justice, the hospital system, natural resources within their borders, social security, health and municipal institutions.

The Parliamentary System The roots of Canada's parliamentary system lie in Britain. In keeping with traditions handed down by the British Parliament, the Canadian Parliament is composed of the Queen (who is represented in

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Canada : A Profile

Canada by the Governor General), the Senate and the House of Commons. The Senate, also called the Upper House, is patterned after the British House of Lords. Its 104 members are appointed, not elected, and are divided essentially among Canada's four main regions of Ontario, Quebec, the West and the Atlantic Provinces. The Senate has the same powers as the House of Commons, with a few exceptions. The House of Commons is the major law-making body. It currently has 301 members, one from each of the 301 constituencies or electoral districts. The Canadian Constitution requires the election of a new House of Commons at least every five years. As in the United Kingdom and the United States, in Canada voters elect a single member for their electoral constituency, in one round of balloting. In each constituency, the candidate who gets the largest number of votes is elected, even if his or her vote is less than half the total. Candidates usually represent a recognized political party - although some run as independents - and the party that wins the largest number of seats ordinarily forms the government. Its leader is asked by the Governor General to become Prime Minister. The real executive authority is in the hands of the Cabinet, under the direction of the Prime Minister. In general, the Prime Minister is the leader of the party with the largest number of seats in the House of Commons and is vested with extensive powers. It is the Prime Minister who chooses the ministers from among the members of Parliament in the governing party. Strictly speaking, the Prime Minister and Cabinet are the advisers of the monarch. "De facto" power, however, lies with the Cabinet, and the Governor General acts on its advice. Cabinet develops government policy and is responsible to the House of Commons. The Government of Canada, headed by its Cabinet of some 25 ministers, performs its duties through the intermediary of the federal departments and agencies, boards, commissions and state-owned corporations.

Political Development Canada, which had been a self-governing colony in 1867, rose to the status of an independent state after its participation in World War I and achieved "de jure" independence with the Statute of Westminster in 1931. The Constitution of 1867 had one serious flaw: it contained no general formula for constitutional amendment. It was necessary to address the British Parliament in London each time the founding statute needed change. An amending formula should have been included in the Constitution at the time of the coming into force of the Statute of Westminster in 1931, but it was not until November 1981, after numerous attempts, that the federal government and the provinces (except Quebec) agreed to the amending formula that is now part of the Constitution Act, 1982. Since that time, all parts of the Constitution can be amended only in Canada. A Flexible System The Canadian constitutional system has been changed over the years, sometimes quite extensively, but always peacefully and gradually. In the 1980s and 1990s, two

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major efforts were made at reform. The 1987 Meech Lake Accord sought to bring Quebec back into Canada's constitutional family by meeting five constitutional conditions set out by Quebec. The conditions centred on provincial participation in the appointment of Supreme Court judges and senators, the Constitution's amending formula, increased powers for the provinces in immigration matters, some reduction in federal spending powers and a constitutional declaration that Quebec is a "distinct society." However, the Meech Lake Accord was not implemented because it did not obtain the legislative consent of all provinces and the federal government. In 1991-92, another round of constitutional reform was initiated, leading to the Charlottetown Accord. The Accord, which was supported by the Prime Minister, the 10 provincial premiers, the two territorial leaders and four national Aboriginal leaders, provided for a reformed Senate and changes to the division of legislative powers between the federal and provincial governments. It also supported the right of Canada's Aboriginal peoples to inherent self-government and recognized Quebec as a distinct society. The Accord, however, was rejected by Canadians in a national referendum held on October 26, 1992. The Parliament of Canada has since passed a bill, on February 2, 1996, guaranteeing Canada's 5 major regions that no constitutional change concerning them would be made without their unanimous consent. As well, less than a month after the Quebec sovereignty referendum of October 30, 1995, the Parliament of Canada passed a resolution recognizing Quebec as a distinct society. The Government of Canada is also transferring greater responsibility for some programs and services to the provinces. Examples of some of the areas in which these changes are taking place include labour-market training and mining and forestry development. Today, the parliamentary system is still the form of government that is the choice of Canadians. The federal structure, with the sharing of powers it entails, is the one formula that can take into account Canada's geographical realities, the diversity of its cultural communities and its dual legal and linguistic heritage.

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CANADA: A FLEXIBLE AND EVOLVING FEDERATION

The Fathers of Confederation chose a system of government that allows each province and territory to develop in accordance with its own characteristics and priorities while enjoying the benefits of being part of Canada.

The Constitution is the foundation of the Canadian federation. The federal system is based on flexible mechanisms that make it possible to make changes and adjustments without the need to amend this fundamental law.

Since the 1960s, a series of agreements between the Canadian and Quebec governments has enabled the province of Quebec to broaden its field of activity to areas traditionally occupied by the Government of Canada.

Since 1971, the Canadian and Quebec governments have negotiated four administrative agreements on immigration that enable Quebec to select and integrate its immigrants. Similar agreements were subsequently concluded with regard to economic development and international agreements. It was possible to achieve these agreements without amending the Constitution.

Other examples of administrative arrangements and agreements include:

- an agreement between the Government of Canada and the governments of two provinces - Quebec and New Brunswick - granted these governments the status of participating governments within La Francophonie;

- non-participation agreements allowed provincial governments to opt out of a number of federal-provincial programs and to assume the administrative and financial powers associated with these programs, while receiving equitable financial compensation from the Canadian government. A good example of this type of agreement is the Canada Pension Plan/Quebec Pension Plan;

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- in July 1994, the provinces and the Canadian government ratified a key agreement on interprovincial trade which reduces the barriers to trade between the provinces. The purpose of this agreement was to promote economic growth and job creation. Since then, the provinces and the Canadian government have been working together to improve the agreement which underlies our economic union;

- an agreement was also concluded between the Canadian government and the provinces - with the exception of Quebec - to enable residents of these provinces to file just one tax return, at the federal level. The Canadian government then turns over to each province the amounts collected on its behalf. Canada is a flexible and dynamic federation capable of adjusting and evolving to meet the changing needs of all its members.

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THE LEGAL SYSTEM

Canada is a young country, but it has a legal system rich in tradition. Common law, which is used in all provinces except Quebec, is based on principles that were developed in medieval England. The principles of Quebec's civil law date back even further, to the Roman Empire, and reflect many of the precepts of French law. These traditions form the basis of Canada's legal heritage. Over time, they have been adapted to meet Canadian needs. The courts interpret the law in a way that reflects changing conditions and circumstances.

The Canadian Constitution Canada's Constitution is the supreme law of the country, and it establishes the framework for the system of law and justice. It sets out the basic rights of individuals in Canada, and defines the nature and powers of the federal and provincial governments.

The System of Government Under Canada's federal system of government, the authority to make laws is divided between the Parliament of Canada and the provincial legislatures. The federal Parliament deals with matters that affect all of Canada, such as interprovincial trade and commerce, national defence and criminal law. As well, the federal government has responsibility for Aboriginal people and lands reserved for Aboriginal people. The provincial legislatures have the authority to make laws in such areas as education, property rights, the administration of justice, hospitals, municipalities and other local or private matters. In addition, the provinces may create local or municipal governments that can deal with matters such as parking regulations or local building standards.

The Charter of Rights and Freedoms In 1982, the Canadian Charter of Rights and Freedoms became a fundamental part of the Canadian Constitution. The Charter sets out the basic rights and liberties of each person in Canada, which must be respected by all governments. Anyone who believes these rights have been violated may apply to the courts for redress. The courts may declare any federal or provincial law to be of no force or effect where it is not consistent with the Charter. The Charter protects rights and liberties in the following areas:

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fundamental freedoms -- including freedom of expression, religion, association and peaceful assembly

democratic rights -- the right to vote in elections and to be eligible to run for public office

mobility rights -- the right to travel, live and work anywhere in Canada

language rights -- for instance, the right to receive services from the federal government in either of Canada's two official languages, English or French

equality rights -- guaranteeing protection against discrimination based on race, national or ethnic origin, religion, colour, sex, age, or mental or physical disability

legal rights -- including the rights to life, liberty and security of the person; to consult a lawyer if arrested; to stand trial within a reasonable period of time; to be presumed innocent until proven guilty; and to be protected against unreasonable searches, arbitrary imprisonment and cruel or unusual punishment

minority language education rights -- the right of Canadians who are part of the French or English minority of a province to have their children educated in their own language. The Constitution also specifically recognizes and affirms the existing Aboriginal and treaty rights of the Aboriginal peoples of Canada.

International Law Canada is also governed by the rules of international law, whether based on custom or on treaty. Many issues cannot be dealt with domestically and may require the cooperation of several governments. Some examples are transboundary pollution, fishing of straddling or migratory stocks, international money laundering, and trade issues.

Legislation and Regulation Within the limits set out by the Constitution, laws can be made or changed by means of written statutes enacted by Parliament or a provincial or territorial legislature. Any Member of Parliament or a legislature may propose a new law, but most new laws are put forward by the government in power. A proposed law must be presented for consideration by all members, who study and debate it. The proposal becomes a statute only if it is approved by the majority. Federal laws must be

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approved by both Houses of Parliament: the House of Commons and the Senate.

Common Law and Civil Law The laws that deal with private matters between individuals, such as property ownership, family responsibilities and business transactions, vary from province to province. This area of law is based on common law in nine of Canada's 10 provinces. Common law is a system based on judgments made by courts, which become "precedents" that establish the underlying principles of the law. The law in Quebec, however, is based on a written code (the Code civil), which contains general principles and rules for different types of situations. When a case is considered under civil law, the judge looks first to this written code for guidance and then to the precedents set by earlier decisions. Although the approach used in common law is different from that in civil law, the resulting decisions are often much the same.

The Courts Canada's laws are interpreted and applied by the courts, which are presided over by judges whose independence is guaranteed. Each province is responsible for establishing its own courts, which deal with matters arising under both federal and provincial law. In addition, the federal Parliament has established a number of courts of specialized jurisdiction and a general court of appeal, the Supreme Court of Canada. The court system of each province is generally divided into two levels. At the first level is the Provincial Court, which deals with most criminal offences. This level may also include Small Claims courts, which deal with private disputes involving limited sums of money, and Youth and Family courts. Judges at this level are appointed by the provinces. At the second level is the provincial Superior Court, which deals with the trial of the most serious criminal and civil cases. Above this level of court is the provincial Court of Appeal, which hears appeals from the lower courts. Judges at these levels are appointed by the federal government. The Parliament of Canada established the Federal Court to deal with claims against the federal government (as do the provincial Superior Courts). The Federal Court also deals with such matters as patents, copyright and maritime law, appeals from federal boards and tribunals, and appeals from the Tax Court of Canada, which has jurisdiction in federal revenue matters. The highest court in the country is the Supreme Court of Canada. This court hears appeals from the provincial and federal appeal courts. Its decision is always final. In addition, both the provinces and the federal government have established a number of specialized boards and tribunals that deal with such matters as broadcasting licences, safety standards and labour relations.

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Law Enforcement The Royal Canadian Mounted Police (RCMP), maintained by the federal government, is Canada's national police force. The RCMP enforces many federal statutes, with particular emphasis on criminal and narcotics laws. The RCMP is the sole police force in the Yukon and the Northwest Territories. Eight provinces employ the RCMP to carry out provincial policing responsibilities within their borders, such as highway patrol and assisting municipal police forces in the investigation of serious crimes. The provinces of Ontario and Quebec have their own police forces. Some municipalities employ a local police force. Where no municipal force exists, local services are provided by either the federal or the provincial police force.

Legal Advice The legal profession is regulated by the provincial and territorial law societies, which determine standards for admission to practise in each province and territory. All provinces and territories operate publicly funded legal aid programs, providing legal advice at little or no cost to persons of limited means. The specific requirements for using these programs differ from province to province, but in each case their purpose is the same: to ensure that everyone can have access to proper legal representation when necessary, regardless of financial circumstances.

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THE ENVIRONMENT

Canadians, have the good fortune to live in one of the best countries on earth. And one of the best things about country is its environment. Canada's environment is central to our quality of life. Our vast forests, fields and tundra, our seas and our thousands of lakes and rivers sustain health and prosperity. On June 11, 1971, Canada became the second country in the world (after France) to establish a formal ministry of environment. Environment Canada continues to actively conserve and protect our air, water, land, wildlife, and people. The federal government shares jurisdiction over the environment with the provincial and territorial governments. Collaboration between the various levels of government, therefore, is vital. In 1995, 1996 and 1997, in terms of human development, the United Nations rated Canada highest in the world. Canadians scored high on the key factors of life expectancy, which is significantly affected by environmental quality, and average income, which for one-third of our population comes from environment-related activities. In 1995, a World Bank report ranked Canada as the second-richest nation per capita. The World Bank looked at nations' resources--natural, material, and human--and ranked Canada high for its wealth of land, water, forests and minerals. Recently, Toronto was named the best international city in which to work and raise a family. Fortune magazine ranks Toronto number one on its 1996 international list of best cities, basing its assessment largely on "quality of life." Intimately connected with Toronto's quality of life is the quality of its environment--the clean streets, accessible waterfront, and green spaces from which much of the city's easygoing vitality is derived. Canada extends over almost 10 million km2 , occupying two-fifths of North America and seven per cent of the world's land mass. Forests and other wooded areas cover almost 50 per cent of Canada's land area. In fact, Canada has 10 per cent of the world's forests and significant reserves of oil, gas, coal and other minerals. Vast natural areas, especially in the tundra region and the mountains, cover 70 per cent of Canada and represent 20 per cent of the world's remaining wilderness areas (Antarctica excepted). The number, size and variety of protected areas in Canada have been growing since the beginning of the century. In 1950, protected areas totalled 2 per cent of the territory; by 1993 there were some 3,000 national sites with an environmental conservation purpose, or some 8.9 per cent (892,749km2). In terms of area protected, Canada ranks second among OECD countries. Among OECD countries, Canada has the second lowest percentage of threatened mammal species and the lowest percentage of threatened bird species. Canada has the largest navigable coastline in the world. Within Canada, the Great Lakes form

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the largest freshwater system in the world and Canada has 9 per cent of the world's renewable freshwater supply. Some 7.6 per cent of Canada's total surface area is inland water. Canada shares four of the Great Lakes with the United States. In addition to Lakes Superior and Huron, Canada's Great Bear and Great Slave Lakes are among the world's largest. Canada's Hudson's Bay lowland is the largest wetland in the world. Great Lakes Water Quality Agreements between Canada and Ontario, and with the United States, are steadily improving the environment. Continuing declines in industry discharges of pollutants and toxic substances, improved treatment of municipal wastewater, and declines in the levels of contaminants in fish and wildlife have been measured. Areas of concern such as the Toronto waterfront, Hamilton harbour and Sarnia have shown improvement. Canada has played a leading role in the international effort to prevent ozone-depleting substances from entering the atmosphere. In June 1986, Canada became the first nation to ratify the Vienna Convention for protection of the ozone layer. Canada has been ahead of schedule in phasing out substances that harm the ozone layer. In recognition of Canada's leadership role, a special international secretariat has been located in Montreal. It will administer a multi-layer fund to developing countries, helping them to phase out their use of ozone-depleting substances. Sources: OECD Environmental Performance Reviews, 1995; Report of Canada to the United Nations Commission on Sustainable Development, 1996.)

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AGRICULTURE

Agriculture has been a vital force in the Canadian economy for centuries and today remains a major contributor to Canada's trade in international markets. One of the world's leading food producers, Canada is best known for its excellent grains, oilseeds, vegetables, meats and dairy products. Canadian farming practices, fertilizer and feed technologies, equipment and management techniques all contribute to Canada's abundant production of crops and livestock. The Canadian agricultural sector provides 437,000 jobs to Canadians, who represent about 1.5 per cent of the country's total population and 3 per cent of its workforce. Another 1.5 million, or 10 per cent of the total labour force, are employed in food and beverage processing, food retail, food services, and related industries in the agri-food system. All in all, the agri-food sector generates about 8 per cent of Canada's gross domestic product (GDP).

Farmland Canada is a spectacular land of contrasts in climate, geography, and soils. It is the second-largest country in the world, occupying more than 9.9 million square kilometres, of which only 68 million hectares, or 7 per cent, are devoted to agriculture. This productive area forms a narrow band along the southern border. Canada's long winters, with sub-zero temperatures in most of the country, act as a powerful biological control because many insects and disease organisms cannot survive the intense cold. The diversity of climatic conditions and soil types splits Canada into four major agricultural regions: Atlantic, Central, Prairie, and Pacific.

The Atlantic Region The Atlantic region grows some of the finest potatoes in North America. Horticultural crops from apples to blueberries are also abundant. Most farmers grow cash crops such as fruits, vegetables and forage, as well as raising beef, swine and dairy cattle. Large and modern food-processing facilities are also located in the region. The Central Region The fertile lowlands of the St. Lawrence River, in the provinces of Ontario and Quebec, extend through Canada's most populated region. The area is a combination of modern cities and large tracts of farmland. It is the major corn-producing area of Canada and is well known for its livestock and horticultural sectors. Maple syrup and honey have long been important sidelines. Southern Ontario's mild climate offers plenty of sun and rainfall and yields excellent harvests of grapes, cherries, peaches and other fruits. Because of the large local population, the well-developed industrial base and excellent shipping

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routes to world markets, most major food-processing plants are located in the central region of Canada.

The Prairie Region The Prairie region represents 80 per cent of Canada's farmland. The winters are harsh and long, the summers hot and sunny with little rain. In spite of these conditions, modern technology has rehabilitated the southern portion into productive dryland. Only 60 years ago, high winds combined with desert-like summer heat and little rain raised dust storms that each year stripped the land of its thin, fertile topsoil. By developing a totally new farming technology, Canadians have converted such areas into some of the richest grainfields in the world, producing annually over 45 million tonnes of wheat, oats, barley, rye, canola, and flaxseed. In addition, the interior plains support some of Canada's largest herds of beef, swine and dairy cattle on 20 million hectares of rangeland and pasture.

The Pacific Region The varied climates and soils of the Pacific region allow for great diversity in livestock and crop production. Agriculture in the northeast is similar to that of the Prairies, producing grains and oilseeds, as well as a variety of root crops and forages. Ranching dominates agricultural activities of the vast interior heartland, scattered over river valleys and grassland ranges. The hot, dry climate of the southern valleys is ideal for orchards and vineyards. Tree fruits, forages, and grains are major commodities in the mountainous southeastern corner of the region. The mild, moist climate of the coast and islands supports an abundance of speciality products such as nursery, floriculture, greenhouse vegetables and berry crops. Intensive livestock, poultry and dairy production add to the strength and the stability of the agri-food sector. In addition, food and fish processing generates significant sales and employment. The Pacific region is a major port of entry and exit. Close to 30 per cent of outbound shipments are agricultural, comprising mostly prairie grains and agri-food products.

Grains and Oilseeds Wheat is Canada's most important field crop and largest agricultural export commodity. Every year, about 12 million hectares in Canada are planted with wheat to yield a crop of nearly 27 million tonnes. About 75 per cent of this crop is exported. Next to wheat, barley is Canada's most important grain crop and major coarse grain export. Barley, oats, and corn produced in Canada are used primarily as feed for livestock and poultry. Canola is an oilseed developed by Canadian scientists. Canola produces a high-quality edible oil used as salad or cooking oil, as shortening or as margarine. The high-protein canola meal, left after the oil is extracted from the crushed seed, is mixed for livestock and poultry feed. Canola and canola products are gaining popularity on international markets.

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Livestock Canada has large populations of beef cattle, dairy cattle and swine. The Canadian beef cattle population amounts to 13 million head. Canada's beef cattle are recognized for their growth and reproductive characteristics and their carcass quality. Genetic improvement of beef cattle has been accelerated in Canada in recent years through the use of artificial insemination and embryo transfer. Of the 1.3 million dairy cows in Canada, about 90 per cent are Holstein breed. About 89 per cent of Canadian dairy cows are bred with frozen semen. As a result, Canadian breeders have developed animals renowned for their milk production and longevity. The average milk production of a mature Holstein dairy cow raised under Canadian management conditions is 8,214 L per year. The Canadian swine inventory exceeds 12 million head, of which about 1.25 million are breeding stock. Bred for intensive rearing conditions, Canadian swine are noted for their leanness, hardiness and overall quality. The Canadian poultry industry is distributed across Canada in proportion to population concentration. Due to climatic conditions, poultry is almost entirely produced in indoor facilities. With a highly efficient and mechanized system, one person can operate a unit capable of producing over one million dozen eggs per year. For poultry meat, a single operator can handle 350,000 broiler chickens a year to provide 640 tonnes of meat.

Equipment Canadian farm equipment manufacturers provide a complete range of machinery for land clearing, drainage, irrigation, livestock raising and dairy production, dryland farming, grain handling, storage and processing, horticultural, and speciality crops. The industry is considered to be a world leader in dryland farming equipment, large four-wheel-drive tractors, combines and tobacco harvesting machinery, and exports over 60 per cent of its production.

Food Processing In 1995, the Canadian agri-food processing sector, contributing 2.4 per cent of GDP, was one of the top five economic sectors in terms of shipments and employment. It also represents a major market for Canada's 280,000 farms, purchasing over $26.9 billion in crops, livestock and fish each year. This, together with $4.2 billion of raw food imports such as cane sugar, soya meal and tropical foods, is converted into $53.5 billion of processed food and vegetables. Of this total, $9.2 billion is exported.

Research and Development Research and development play a critical role in maintaining Canada's competitive advantage in the global marketplace. Scientists conduct world-class research, improving the long-term competitiveness of the Canadian food and agriculture sector through the development and transfer of innovative technologies. The Canadian government operates a network of research centres and experimental farms

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in each of Canada's major agricultural ecosystems. Each centre has a specialized research focus of national importance, reflecting the industry strengths to its home region.

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CANADIAN MINING

The mining industry is an enormous and vital contributor to the Canadian economy, as the following figures make clear:

Percentage of national gross domestic product contributed by mining (4.3%)

People employed in the mining and mineral processing industries (350,000)

Average weekly earnings in the mining industry ($1051)

Percentage of total exports provided by minerals and mineral products (15.2%)

Percentage of mineral and metal production exported (80%)

World rank of Canada in exploration investment (2nd)

Number of Canadian communities for whom mining is the major source of economic activity (115)

Percentage of stocks traded on the Toronto Stock Exchange that are issued by mining companies (19%)

Such an overview, however, does not tell the whole story. Besides affecting our national livelihood, mining has a direct impact on some of the most important aspects of our everyday lives, including:

Food Mining begins at the ground level to put food on your table. Fertilizers containing phosphate, nitrogen, sulphur and potash (of which Canada is the world's largest producer) help fruits and vegetables grow. Food is preserved in cans made of tin-plated steel and prepared in stainless steel cookware. Halite, or salt, is used for seasoning. And tables are set with stainless steel cutlery and plates made from a number of different clays.

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Housing Remove mining's contribution to your home, and about the only thing you'd have left is the mortgage. Building a house would be out of the question without the tools and components made possible by mining. Foundations are made principally of minerals: limestone, sand and gravel. Clays are used to manufacture bricks and tiles. Copper pipes carry water thoughout the house. Gypsum is used in drywall. Barium, manganese, titanium pigments and talc are used to manufacture paint. Linoleum contains calcium carbonate. Lime is used in making carpets. Windows contain silica. And as the world's third-leading producer of copper--some $2.8 billion a year--Canada helps to put a lot of roofs over a lot of heads.

Protection and cultivation of the earth Metals and minerals play a key role in protecting the earth. Lime serves to treat industrial waste water and to reduce pollution; water purification systems employ manganese and activated carbon; and emissions from cars and trucks are controlled by platinum. Horticulture also makes use of mining products, and sometimes even mines themselves. Peat is used to condition soil throughout Canada; while in Manitoba, 365 metres below the earth's surface, a decommissioned zinc-copper mine provides the site for a thriving garden that produces roses, orchids, tomatoes, and a wide variety of trees and bushes.

Medicine Diaper rash is treated with ointment containing zinc. Iodine helps to disinfect cuts and scrapes. Many people rely on milk of magnesia (from magnesium) or calcium carbonate to deal with the excesses and stresses of modern life. Dentists in North America use roughly 30.7 kilograms of gold daily. And millions of people take vitamins with mineral supplements such as zinc, iron and calcium to maintain health.

Electrical power Mining is plugged into the electrical needs of Canadians. Coal and uranium provide one-third of our electrical requirements every day. We are the world's largest producer of uranium, exporting about 85 percent of what we extract to nuclear electric utility customers in Japan, Europe, and the United States. Alberta, meanwhile, which produces half the coal mined in Canada, relies on coal for 84 percent of its electric power. Copper is used in the wiring that distributes the power to our homes and offices, and bulbs contain silica.

Jewelry For generations, people have been saying it with diamonds, and making the ultimate commitment with gold. As the world's fifth leading producer of gold, Canada's mining industry has always taken its role in romance very seriously. This role may soon be expanded. If the amount spent on exploration for diamonds (now over $100 million a year) results in

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profitable finds, Canada will be in a position to become a leading international diamond producer.

Sports In years past, Canadians who strived for hockey medals did so on blades of steel. Now, on skates made of complex alloys, players pass and shoot with sticks of graphite. Young baseball players swing for the fences with aluminum bats while skateboarders soar for the skies on wheels with aluminum bearings. Golfers shave strokes with graphite drivers. At local clubs and neighbourhood courts, tennis players call on the services of graphite-fibre and aluminum racquets to drive the ball beyond the reach of opponents.

Entertainment Your television requires 35 minerals and metals to make it work. Without barite, there would be no tube. Lead is needed to manufacture the glass for the screen, while rare earths give the colours their richness. Mining strikes a vital note in the music industry as well. Vibrating magnets lend quality to the sound produced by your speakers. Aluminum is found in compact discs, while brass (a copper-zinc alloy) is used in a variety of instruments such as trumpets and trombones.

Travel Airplanes, cars, buses, trains--all rely on the metals and minerals found beneath the earth's surface. Imagine the size of your world without the cobalt used to make turbine blades in jet engines and gas turbines, or without the steel, iron, copper, zinc and aluminum used in the construction of your car. In total, more than 15 metals and minerals are found in your car alone.

Leisure Mining adds comfort to summer and makes vacations more memorable. Zinc, of which Canada is the world's largest producer, is an essential ingredient in manufacturing sunscreen and in galvanizing outdoor furniture such as beach chairs. Silver, another of Canada's important products, finds use in developing and printing photographs.

Throughout history, mining has been a creative, civilizing activity, constantly searching for new sites, new resources, and new methods of encouraging the earth to yield up its wealth. Innovation is mining's middle name; change is its stock in trade. Contrast the traditional image of pick-and-shovel miners and prospectors with the people and equipment who make up the mining industry today. A full 85 percent of today's workers, many of whom are women, already use robotics, computers, and the most up-to-date high-tech equipment. And the $1 billion a year that mining companies are now ploughing into research and development is speeding the take-up of higher technology and paying off in rising productivity. As for mining's future, the economic forces that drive the industry have always made predictions difficult,

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as any survey of mining's past years will prove. But there are two things you can depend on: it will be a continuing presence in our way of life, and it won't be standing still.

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CANADA: AN ENERGY INDUSTRY OVERVIEW

In Canada, the abundance of petroleum, uranium, coal and hydroelectric power has driven this nation's industrial development, and allowed Canadians to have one of the highest standards of living in the world. Available and affordable energy is crucial in Canada, where homes and workplaces must be regulated against temperature extremes, and goods shipped long distances. Energy production, distribution and exports account for 7.5 percent of Canada's gross domestic product (GDP), contributing $51 billion to Canada's $681.5-billion economy in 1995. The energy sector attracts $21.8 billion a year in new investment, more than one-sixth of the Canadian total.

Export power Energy is also a major contributor to Canada's balance of trade. The $15.5 billion in net energy exports accounts for 40 percent of the country's overall merchandise trade balance. Ninety percent of Canada's energy exports go to the United States.

The nuclear industry Canada is a pioneer in developing nuclear energy for peaceful uses. The industry spans the nuclear fuel cycle, from uranium mining and electricity production to decommissioning, managing nuclear fuel-waste, nuclear research and development, and applying nuclear technology in the medical field. Atomic Energy of Canada Ltd. (AECL), a federal Crown corporation, does the research, development and basic CANDU (CANada Deuterium Uranium) reactor design and engineering work. It also markets the CANDU abroad, and manages reactor-building projects.

The petroleum industry The petroleum industry plays a key role in Canada's $40.5 billion energy sector. In 1995, the production of crude oil and natural gas, the sale of refined petroleum products and pipeline transportation were together worth $23.1 billion. This represents 4.3 percent of Canada's gross domestic product and nearly 200,000 jobs. Petroleum-related industries An important secondary industry has developed around Canada's petroleum industry. For example, there are now about 1,500 small- and medium-sized enterprises, employing about 35,000 people, involved in supplying oil and gas equipment and services. In 1994, the estimated value of shipments was $5 billion. Exports accounted for nearly one-third of this amount. Advanced technologies developed by Canadian firms, often in cooperation with key customers, involve drilling, specialized recovery and product processing. Among other things, these technologies use automation

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to reduce manual labour, improve processes and performance, and enhance safety on the rig floor.

Electrical power equipment and services Similarly, an associated industry has grown around Canada's extensive electricity-generating operations. More than 300 companies manufacture equipment for hydro-, thermal- and nuclear-generating stations. Products include power transmission and distribution equipment, electrical wire and cable products, power and distribution transformers, control and protection equipment, power-conversion equipment and alternative energy systems. There is also a related services industry, including 35 consulting engineering firms. The combined output of this sector, employing 35,000 people, is $6.8 billion.

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TRANSPORTATION

Canada’s history is closely linked to the history of transportation. One need only look at a map to understand the various geographical obstacles posed by the nation’s landscape. Transportation has always played - and will continue to play - a vital role in Canada’s relationship with the land. Although it is the world’s second largest country, Canada ranks 28th in terms of population. With a population density of approximately three persons per square kilometre, Canada’s 30 million people are scattered across an area that is more than 10 million square kilometres in size, stretching 5,500 kilometres from the Atlantic Ocean to the Pacific. What Canada needs is safe, efficient, sustainable transportation by the most appropriate combination of modes - air, surface and marine. Canada’s transportation system is well-positioned to make the best use of each mode and to ensure that the balance among the modes is both economically and environmentally sustainable.

Safety and Security As a nation, Canada has an excellent aviation safety record. Despite the unprecedented growth in passenger travel in recent years, the number of aviation accidents actually declined by nearly 38 per cent between 1990 and 1997. In 1996, marine accidents were at an 18-year low. Canada recently signed a joint declaration with many other maritime nations on port state control that will tighten the enforcement of international ship standards and reduce the number of unsafe ships plying Canadian waters. Although highway traffic has doubled, Canada has seen a 50 per cent decline in traffic fatalities over the past 25 years. In fact, the figures for 1997 are the lowest since these statistics began. Railway accident rates and crossing fatalities have reached their lowest levels in a decade.

Air Transportation Canada’s aviation industry has expanded dramatically over the years. The number of registered aircraft increased by 147 per cent between 1970 and 1995 and climbed to 28,054 in 1997. The number of enplaned and deplaned passengers carried per year by commercial airlines reached an all-time high of over 78 million in 1997. Canada’s domestic routes are served by its two major carriers, Air Canada and Canadian Airlines International, and their regional affiliates, as well as by smaller independent operators that use both jet and propeller-driven equipment. In 1997, some 1,502 licensed domestic carriers provided scheduled and charter services throughout the country. Scheduled international services to and from 60 countries are provided on the basis of bilateral agreements between Canada

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and each country. The 1995 “Open Skies” agreement with the United States, for example, has provided Canadians with significantly improved access to major U.S. business destinations. New international all-cargo air services policies have recently been announced for both scheduled and chartered flights to provide shippers and air carriers with additional opportunities and more flexibility for moving cargo by air. The cornerstone of the modernization of Canada’s air transportation system is the federal government’s National Airports Policy. The policy allows for the transfer of airports to local groups that know their market and are free to run their airport like a business. Since the policy was announced in July 1994, nearly 90 airports have been transferred. In fact, 90 per cent of all commercial air travellers in Canada now use facilities that have been transferred. Since 1996, Canada’s air navigation system has been operated by Nav Canada, an independent not-for-profit corporation. Safety will continue to be regulated and monitored by Transport Canada.

Marine Transport Canada has 59,509 kilometres of coastline plus 3,000 kilometres of inland waterways (excluding island coastlines). The marine sector handles more than 200 million tonnes of cargo each year, generating over $2.5 billion in revenue annually and directly employing more than 45,000 Canadians. The Canada Marine Act, which received Royal Assent on June 11, 1998, will commercialize Canada’s public ports, enabling them to be transferred to local not-for-profit organizations. The Act also allowed for the commercialization of the St. Lawrence Seaway on October 8, 1998. The Seaway is one of the world’s largest inland waterways (3,700 kilometres), stretching from the Gulf of St. Lawrence to the western end of Lake Superior.

Road Transportation Canada has more automobiles per person than any other country in the world except the United States, with at least one automobile for every two Canadians. Today there are more than 900,000 kilometres of roads and highways; the national highway system is over 24,000 kilometres in length. Canada also boasts the longest highway in the world - the Trans-Canada Highway - and the busiest section of highway in the world - Highway 401 through the Greater Toronto Area. Intercity buses provide the most extensive public passenger services in Canada. Nearly 1,000 operators offer school bus, charter and urban transit services in more than 3,400 communities. Roads also support one of the most highly used forms of cargo transportation; in 1997, about 86 per cent of total freight surface revenues in Canada were generated by the trucking industry. An estimated 118,000 large trucks that haul freight commercially; trucking revenues and services (including for-hire, private and courier) were valued at approximately $31 billion in 1996. Technology is playing an increasingly important role in Canada’s highway system. For example, there is a pilot project in place to test

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the feasibility of allowing specially equipped trucks to cross the U.S. border without stopping; the time savings could make a significant difference to shippers, especially those hauling perishable goods.

Rail Transport Railways continue to play an important part in Canada’s transportation network. Canadian National Railway (CN) and Canadian Pacific Railway (CP) are responsible for operating most of Canada’s rail freight services. VIA Rail Canada, a federal Crown corporation, provides passenger rail service. Approximately 46 Canadian railways operate on some 50,000 route kilometres of track. In 1996, some 4 million rail passengers travelled a total of 1.46 billion passenger-kilometres. Railways account for 280 billion tonne-kilometres of freight.

Technology Canadians continue to introduce improvements across the spectrum of transportation technology. Developments also include a new commuter turbo-prop and turbo-fan aircraft, as well as a unique aircraft that can scoop up 6.6 tonnes of water from a lake in 10 seconds and drop it on a forest fire with pinpoint accuracy. Research is also being conducted into safer log trucks and airplane de-icing regulations. With the launch of the Alouette 1 in 1962, Canada became the third nation in space and has since earned an international reputation in aerospace technology with such developments as the Canadarm, which was designed for the U.S. space shuttle program and is in ongoing use. Canada is also a world leader in the development of alternative fuel sources. The Ballard fuel cell, for example, will power the cars of the future with no byproducts other than hot water; the auto industry has now invested hundreds of millions of dollars into this new venture. Equally innovative is the new “clean air truck,” which runs on natural gas with diesel pilot ignition; this truck emits 85 per cent fewer smog-producing byproducts than do regular trucks.

Sustainability About 27 per cent of Canada’s greenhouse gas emissions come from transportation sources - mostly road transportation. In 1997, Canada made a substantial commitment in Kyoto, Japan to reduce greenhouse gas emissions to six per cent below 1990 levels over the period 2008 to 2012. This presents a particular challenge for the transportation sector. To meet this challenge, federal and provincial environment ministers met and approved a process for developing a national strategy on climate change. The process called for the establishment of a number of “issue tables,” including one that will deal with transportation. Sustainability must be at the heart of any credible strategy for Canadian transportation if a prosperous national future is to be secured.

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NATIONAL CULTURAL INSTITUTIONS:

Since 1936, the Canadian Broadcasting Corporation (CBC), one of the world's foremost public broadcasting organizations, has been helping Canadians to appreciate their nation and understand the Canadian experience. It now operates two core national television networks (one in English, the other in French); four national radio networks (two French, two English); radio and television services for the North in English, French, and eight aboriginal languages; two self-supporting specialty cable television services (one English, one French); and an international shortwave radio service that broadcasts in seven languages. Working under the terms of the Broadcasting Act, the CBC provides a wide range of programming that informs and entertains Canadians from coast to coast. Its public programming enjoys a high level of approval: over half of adult Canadians listen to CBC radio and about 9 out of 10 watch CBC television.

National Film Board Created in 1939, the National Film Board of Canada (NFB) is a public agency that produces and distributes films and other audiovisual works that reflect Canada to Canadians and the rest of the world. The NFB is a centre of filmmaking and video technology as well as a storehouse for an important part of the country's audiovisual heritage. Hailed over 3,000 times at major festivals, the NFB has won nine Oscars for its productions and an honorary Oscar "in recognition of its dedicated commitment to originate artistic, creative and technological activity and excellence in every area of filmmaking." Recent NFB productions include documentaries, animation shorts, CD-ROMS and interactive videos. NFB founder John Grierson wanted to establish a national cinema that would "see Canada and see it whole: its people and its purpose." This early inspiration, through the work of the NFB, continues to consolidate the Canadian character and give shape to the national dream.

Canada Council The Canada Council is an independent, arm's-length organization created by the Parliament of Canada in 1957 to "foster and promote the study and enjoyment of, and the production of works in, the arts." To fulfill this mandate, the Council offers a broad range of grants and services to professional Canadian artists and arts organizations working in music, writing, publishing, dance, theatre, visual arts and media arts. Each year, the Council awards some 4,200 grants in all disciplines and some 10,700 payments to authors through the Public Lending Right Commission. The

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Council also administers the Killam Program of scholarly awards and prizes, and offers a number of other prestigious awards, including the Glenn Gould Prize, the Canada Council for the Arts Molson Prizes and the Governor General's Literary Awards. The Canadian Commission for UNESCO and the Public Lending Right Commission also operate under its aegis.

Canadian Film Development Corporation (Telefilm Canada) Telefilm Canada, a crown corporation, was created by Parliament in 1967. Telefilm's role differs from that of the National Film Board in that Telefilm is a funding agency rather than a producer or distributor. It has financed some 600 feature films and 1,500 television shows and series, helping to build what is now a multibillion-dollar Canadian industry. Telefilm support has also allowed Canadian talent and culture to acquire currency abroad: At international film festivals, works backed by Telefilm Canada have won more than 1,600 prizes in some 35 countries. Of all who appreciate Telefilm's contribution, it is perhaps the audiovisual artists who best understand what it has meant to Canadian culture. Filmmaker Denys Arcand (The Decline of the American Empire) states the perspective from his province in words that hold true from Newfoundland to British Columbia: "The existence of Telefilm determined the existence of a Quebec film industry. Once again, in a province such as Quebec, if there is no Telefilm, there is no film.

" Social Sciences and Humanities Research Council of Canada (SSHRC) SSHRC is Canada's federal funding agency for university-based research and graduate training in the social sciences and humanities. Created as an independent body in 1977, SSHRC reports to Parliament through the Minister of Industry. SSHRC contributes to Canada's social and economic development through funding for research and training in fields such as health care, social and legal issues, culture and heritage, economics, and the environment. This research, besides being of academic interest, furnishes an important part of the practical knowledge required for sound decisions in matters affecting our standard of living and quality of life.

National Gallery of Canada Founded in 1880, the National Gallery of Canada holds the country's foremost collection of Canadian and European art. The present gallery building, located on Sussex Drive in Ottawa, is a formidable work of art in its own right--a magnificent structure of rose granite, towering glass, and steel enclosing over 30,000 square metres of balanced space and light. The National Gallery has always devoted itself to making Canadian art better known, sending exhibitions to museums across Canada and around the world. The Gallery's permanent collections of Canadian, Inuit, European, American, Asian, and contemporary art, together with its special

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exhibitions and creative programming, give the Canadian public wide access to art of an exceptional range and quality.

Canadian Museum of Civilization The Canadian Museum of Civilization, located across the Ottawa River from Parliament Hill, is one of the most distinguished and best equipped museums in the world. Designed by Douglas Cardinal and opened in 1989, the building is notable for its rare combination of massiveness and sweep, which serves to bring the structure into accord with both its riverbank surroundings and the flow of time depicted in its interior. With an archaeological collection dating from 1842, and a tradition of anthropological research going back to 1910, the Museum is an established centre for the study of human life in Canada. Activities are based on four general areas of research: archaeology, ethnology, folklore, and history. Now the nation's largest and most popular museum, the Canadian Museum of Civilization attracts over 1.3 million visitors a year.

Canadian War Museum Established in 1880, the Canadian War Museum is located in Ottawa at 330 Sussex Drive, next door to the National Gallery. It houses permanent and temporary exhibits about Canada's accomplishments in war and peacekeeping. Artifacts of all types and periods illustrate Canada's past military activities, from its days as a French colony to its modern missions in peacekeeping. Life-size dioramas, displays, and a magnificent collection of war art allow visitors to experience a part of Canada's military history. The museum reveals, in a way that words alone cannot, how Canadians fought and how the fighting affected Canada. More important, it stands as a memorial, and a tribute, to all Canadians who served in war and peacekeeping.

National Library of Canada The National Library of Canada, at 395 Wellington Street in Ottawa, is home to Canada's published heritage. The National Library's main role is to acquire, preserve, and promote the world's most comprehensive collection of Canadiana for all Canadians, now and in years to come. The Library holds materials such as books, periodicals, sound recordings, manuscripts, and electronic documents. Founded in 1953 as a department of the federal government, the Library now contains some three million items. Notable strengths include Canadian music, newspapers, and official government publications. The Library is also a leading centre for Canadian rare books, city directories, literary manuscripts, and literature for children and for adults.

National Archives of Canada Founded in 1872, the National Archives of Canada today contains millions of records that bring the past to life, including

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texts, photographs, films, maps, videos, books, paintings, prints, and government files. The National Archives acts as the collective memory of the nation, preserving an essential part of Canada's heritage and making it available to the public through a variety of means--publications, exhibitions, special events, and reference and researcher services. Public records also provide much of the evidence required to uphold rights, substantiate claims, and maintain justice. The National Archives is located at 395 Wellington Street in Ottawa.

National Arts Centre (NAC) The National Arts Centre, located on the banks of Ottawa's Rideau Canal, is Canada's leading bicultural theatre for the performing arts. Designed by Fred Lebensold, the triple-hexagon building contains three superb performance halls--the Opera, the Theatre, and the Studio--which together give the NAC a seating capacity of over 3600. By consistently encouraging artistic excellence, diversity, and youth, the National Arts Centre has helped to shape the careers of countless Canadian artists. The National Arts Centre gives the public year-round access to arts and entertainment, offering complete seasons of dance, English and French theatre, music and variety. Prominent attractions include Festival Canada, a summer celebration of the performing arts; and the National Arts Centre Orchestra, one of the finest ensembles of its kind in the world.

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MULTICULTURALISM ETHNIC AND RACIAL DIVERSITY IN CANADA

Multiculturalism is a fundamental characteristic of Canadian society. Our society has always been pluralist and diverse and is bound to become even more so. Already approximately two-fifths of the Canadian population has one origin other than British, French or Aboriginal.

What is Multiculturalism? In 1971, Canada became the first country in the world to adopt a multiculturalism policy. In 1986 the government passed the Employment Equity Act and in 1988 it passed the Canadian Multiculturalism Act. Founded on a long tradition of Canadian human rights legislation, the Multiculturalism Policy affirms that Canada recognizes and values its rich ethnic and racial diversity. The Canadian Multiculturalism Act gives specific direction to the federal government to work toward achieving equality in the economic, social, cultural and political life of the country. Through its multiculturalism policy, the government wants to help build a more inclusive society based on respect, equality and the full participation of all citizens, regardless of race, ethnic origin, language or religion. In a recent report of the UNESCO World Commission on Culture and Development, Canada's approach to multiculturalism was cited as a model for other countries. Canada is recognized today as a world leader in this field.

The Federal Government's Multiculturalism Program In 1997, the department of Canadian Heritage restructured the federal Multicultural Program. The renewed program works towards three main goals: Identity. Fostering a society in which people of all backgrounds feel a sense of belonging and attachment to Canada Civic Participation. Developing citizens that are actively involved in shaping the future of their various communities and their country Social Justice. Building a nation that ensures fair and equitable treatment and that respects and accommodates people of all origins

Campaigns and Promotional Activities Promotional activities seek to improve public understanding of multiculturalism and racism and to encourage informed public dialogue and action on issues related to ethnic and racial diversity in Canada.

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March 21 Campaign: "Racism: Stop It!" The March 21 Campaign is at the heart of the Multiculturalism Program's activities. This nationwide campaign is intended to make the public aware of the International Day for the Elimination of Racial Discrimination. The March 21 campaign features a broad range of activities throughout the country, involving community groups, schools, school boards, colleges, universities, private companies, parliamentarians and media.

The Mathieu Da Costa Awards In 1996, the Multiculturalism Program established the Mathieu Da Costa Awards as part of Parliament's official designation of February as Black History Month. This program encourages intercultural understanding and provides an excellent vehicle by which youth can develop an appreciation of the diversity and shared experiences that form the Canadian identity.

Multiculturalism in the Media The Broadcasting Act, passed in 1991, affirms that the Canadian broadcasting system should, through its programming and the employment opportunities it creates, serve the needs of a diverse society and reflect the multicultural and multiracial nature of Canada. The 'mainstream' media is slowly coming to reflect the diverse nature of the country. Successful television programs such as North of 60, Degrassi Junior High, Jasmine and Ces enfants d'ailleurs are eloquent examples of this trend. The Academy of Canadian Cinema and Television has a special Gemini award, called "The Canada Award/Prix Gémeaux du multiculturalisme," which is sponsored by the Multiculturalism Program. It honours excellence in mainstream television programming that best reflects the cultural diversity of Canada. Ethnic radio and television broadcasting is also thriving in Canada. Nine radio stations in five cities devote much of their programming to specific ethnic groups, notably the Italian, Ukrainian, German, Greek, Portuguese and Chinese communities. Toronto has a full-time ethnic television station which is available throughout Ontario. Three ethnic specialty television services are licensed, and more than 60 radio stations include ethnic broadcasting in their schedules. Numerous cable companies carry programming in a variety of languages on community channels. In the print media, ethnic newspapers have flourished across Canada for more than 80 years. In Toronto alone, there are more than 100 daily, weekly, monthly or quarterly ethnic-language publications. More than 40 cultures are represented in Canada's ethnic press; many of these publications are national in scope, such as the Chinese version of Maclean's magazine.

Multiculturalism and Business Canada's diversity is increasingly recognized as an asset in both the domestic and the international market, and as a major contributor to Canadian economic prosperity. The Conference

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Board of Canada has worked with other business, industry and trade associations to identify new ways for Canadian organizations to use Canada's linguistic and cultural diversity to their advantage at home and abroad. Also, the Business Development Bank of Canada consults regularly with ethnocultural business associations in major centres. Canada's multicultural nature will become even more of an asset in the emerging global economy. Canadian companies already recognize the benefits and are drawing on the cultural diversity of our work force to obtain the language and cultural skills needed to compete successfully in international markets.

Artistic and Cultural and Creative Expression Canada's arts and cultural institutions should serve the needs and reflect the contributions of artists and culture workers from diverse cultural backgrounds. Artists from all parts of the world today enrich the Canadian cultural scene. Many artists from diverse communities are not only seeking equitable access to cultural institutions which define and reflect who we are as Canadians; they are also articulating a new definition of Canadian culture, a new cultural model. A growing number of writers from various ethnocultural origins are acclaimed in Canada and abroad. Nino Ricci won the Governor General's Award for his novel The Lives of the Saints, filmmaker Mina Shum's Genie award-winning film Double Happiness had an extensive North American theatrical release and Atom Egoyan's films have received worldwide acclaim. All three artists were supported by the Multiculturalism Program in the early days of their careers. Visual artists like Ed Poitras and Stan Douglas, by representing Canada at the prestigious Venice Biennial, are expanding and redefining the perception of the Canadian artist both within and outside Canada. Multiculturalism is woven into the very fabric of Canadian life. By recognizing multiculturalism as a fundamental characteristic of Canadian identity and national heritage, Canadians of all cultural origins have the opportunity to contribute to the common goals of equality, sharing, social justice and economic prosperity.

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FRENCH LANGUAGE AND IDENTITY: A VIBRANT PRESENCE

According to the 1991 census, French is the mother tongue of 82 percent of Quebec's population and is spoken at home by 83 percent of Quebeckers. More than a million Francophones live outside Quebec.

French is spoken by 8.5 million people in Canada, 25 percent of whom live outside Quebec. Of this number, 6.6 million have French as their mother tongue.

More and more children are learning French in schools throughout Canada: enrolment in French immersion programs jumped from 40 000 in 1978 to some 313 000 in 1996.

In 1995, 2.7 million young people (54 percent of students) were studying French or English as a second language, an increase of 10 percent in 25 years.

According to the 1991 Statistics Canada census, the level of bilingualism among young Canadians aged 15 to 25 has risen from 16 percent to 23 percent in a single decade. Young Canadians in this age group are the most bilingual generation in our nation's history.

Internationally, it is estimated that some 800 million people speak English and 250 million speak French. As well, La Francophonie makes up 18 percent of the world economy and accounts for more than $100 billion in trade annually. Clearly, a knowledge of both languages provides a competitive edge in the battle to conquer new markets. As a bilingual nation, Canada has that edge.

The Official Languages Act makes French and English the official languages of Canada and provides for special measures aimed at enhancing the vitality and supporting the development of English and French linguistic minority communities. Canada's federal institutions must reflect the equality of its two official languages by offering bilingual services.

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The Constitution Act of 1982 makes French and English the official languages of Canada; the two languages have equal status in terms of their use in all the institutions of the Government of Canada.

The Société Radio-Canada (the French-language division of the Canadian Broadcasting Corporation) broadcasts programs in French across the country. In addition, since January, 1995 the Réseau de l'information (RDI) has been broadcasting French-language television news and public affairs programs 24 hours a day. Its objective is to ensure a French current affairs presence throughout the country.

The Government of Canada supports a group of television networks from Quebec and across Canada as part of an international Francophone broadcasting consortium known as TV5. Today, the Government of Canada contributes $4 million annually so that TV5 can continue to provide high-quality domestic and international Francophone broadcasting for Canadians.

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SPORTS

Think of sports in Canada and you'll likely think of hockey. Some of the world's best-known hockey players are Canadian. And hockey is by far Canada's favourite spectator sport and one of its most widely played recreational sports. But ask young Canadians to list their favourite sports activities and a much broader picture emerges. Those aged 13 to 24 cite swimming, downhill and cross-country skiing, soccer, baseball, tennis and basketball. Canadians view sports as an integral part of a well-rounded, healthy life.

Sports on Ice and Snow More than 450,000 youngsters participate in organized hockey leagues. Many more play on streets, lakes and outdoor rinks and even dream of joining the National Hockey League (NHL). The majority of the NHL players are Canadian and Canadians have fared extremely well in international amateur hockey competition: the Men's Junior National Team has won five consecutive World Junior Championships; the Men's National Team captured silver medals in the 1992 and 1994 Winter Olympic Games; and the Women's National Team has won every world championship played to date (1990, 1992, 1994, 1997), as well as the silver medal in the 1998 Winter Olympic Games. Canada's Paralympic sledge hockey team won the silver at the 1998 Paralympic Games in Nagano. Skiing is a sport that has captured the hearts of Canadians. The country boasts hundreds of ski areas, including world-renowned resorts in Banff, Alberta, and Whistler, British Columbia, as well as an abundance of cross-country ski trails. In international competition, Canadian skiers have excelled on the World Cup circuit and at the Winter Olympic Games. Canada's Paralympians are champions on the slopes. At the 1998 Paralympics in Nagano, Dan Wesley put together a top-flight performance, winning gold in the men's super G for sit skiers, and taking a bronze in downhill. Speed skating (both long-track and short-track) is where Canada truly shines. Speed skating has produced Canada's great Winter Olympian, Gaétan Boucher, the winner of two gold medals and a bronze at the 1984 Olympics. Canadian speed skaters showed their prowess at the 1994 Lillehammer Olympics, where they captured one bronze and three silver medals. They more than doubled that at the 1998 Winter Olynpic Games in Nagano with five medals in the long-track and four in short-track. Canada also excels in figure skating. A vast network of figure-skating clubs throughout the country has produced a long line of world and Olympic medalists, from Barbara Ann Scott and Elizabeth Manley to Toller Cranston and Kurt Browning. Among the latest group of Canadians to excel in international figure skating are Elvis Stojko, who won a silver medal at the

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Lillehammer Games and a gold medal at the World Championships in 1994, 1995 and 1997; and the pairs team of Shae-Lynn Bourne and Victor Kraatz, who won a bronze medals at the World Championships in both 1997 and 1998. A relatively new sport that has attracted a large following in Canada is ringette. More than 35,000 Canadian ringette competitors play on about 2,500 teams. In 1998, Team Canada and Team Finland, the world's two ringette powerhouses, toured Europe in a promotional Summit Series, playing in Finland, Sweden, Germany and France. In addition, Canada won gold medals at Nagano in two new Olympic sports: snowboarding and curling (women's). Both are enjoyed by thousands of Canadians; snowboarding is one of the fastest-growing sports in the nation, and Canada's curlers number almost 400,000. The first Paralympic Games were held in Sweden in 1976, with 12 countries competing in alpine and cross-country events. At the 1998 Winter Paralympic games in Nagano, 32 countries competed in three additional sports: sledge hockey, sledge ice racing, and biathlon. Canada has been an early and committed supporter of the Paralympics, participating since 1976. It sent 32 athletes to Nagano in 1998 and they returned with their best-ever result: 15 medals (one gold, nine silver and five bronze).

Sports Variety A variety of warm-weather sports are played in Canada. These include swimming, sailing, windsurfing, rowing, track and field, tennis, football, soccer, rugby, field hockey and golf. Swimming is not only one of the most popular recreational sports in Canada, it is also a powerhouse event for Canadian athletes in international competition. Canadians have won more than 50 Olympic medals in swimming events since the 1912 Summer Games in Stockholm and have held numerous world records. Canada's swim team ended the 1998 World Cup short-course season in spectacular fashion, winning eight medals including a gold for Jessica Deglau of Vancouver in the women's 200 m butterfly. Canada has also been a world leader in synchronized swimming since the sport began more than 50 years ago. Synchronized swimming reached full medal status at the 1988 Summer Olympic Games, where Carolyn Waldo won two gold medals for Canada. At the Barcelona games in 1992, Sylvie Fréchette was awarded the gold, while the duo of Penny and Vicky Vilagos captured the silver. At the Atlanta Games in 1996, the Canadian team won a silver medal. Rowing has also enjoyed a recent upsurge in popularity in Canada following tremendous success on the international circuit. Canada won four gold and one bronze in rowing at the 1992 Barcelona Summer Games, and followed up in the 1996 Atlanta Summer Games by winning six medals. Soccer, the world's most popular sport, is now entrenched in Canada with a large base of young competitors and a professional league. The sport of basketball, invented by Canadian James Naismith, is also very popular in Canada, with almost 650,000 participants. In addition, the sport of wheelchair basketball is one of the most

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popular sports for athletes with a disability. The Canadian Women's Team is the reigning World and Paralympic champion. In terms of spectator appeal, professional baseball and football rank with hockey at the top of the list. The annual Grey Cup game is traditionally one of the most watched sports events in Canada. Major-league baseball teams in Montreal and Toronto attract millions of spectators every season. In 1992, the Toronto Blue Jays became the first team outside the United States to win the World Series. The Blue Jays added to their fame by winning the World Series again in 1993. Baseball and softball are popular recreational sports in Canada, with countless local teams and leagues in operation in the summer and autumn. The Department of Canadian Heritage, through Sport Canada, provides funding and support to high-performance sporting excellence and fairness in sport. It contributes to the hosting of amateur competitions--international, national and interprovincial. It works with partners to support Canadian athletes and to link sport organizations at the community, provincial and national levels.

International Role With more than 60 national teams participating in international competition, Canada has a wealth of technical and administrative sport expertise that it shares with other countries through various programs and exchanges. Canada has hosted almost every major international sports competition: the Summer and Winter Olympics, Commonwealth Games, Pan-American Games, World University Games, and Special Olympics. The 1999 Pan-American Games will be taking place in Winnipeg. In 2001, Canada will host its first Jeux de la Francophonie in Ottawa-Hull.

The Future Nothing unites Canadians like sport. Over 9 million Canadians participate regularly in one or more sports at some level. More than anything else, sport reflects what Canadians value most: the pursuit of excellence, fairness and ethics, inclusion, and participation. Canada also supports international events because during such events the whole world becomes a global village, united in its love of sport and in its appreciation for the excellence of all athletes. The federal government recently announced additional funding for sport of $10 million a year over five years. These funds will directly support high-perfomance athletes, employ additional full-time coaches, and provide additional opportunities for athletes to train and compete.

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THE ARTS

Throughout the world, Canada is respected for its achievements in the arts. In music, dance, literature, theatre, cinema and visual arts Canadians are held in high regard.

Music The talents of Canadian musicians can be heard in all types of music. Bryan Adams, Céline Dion, Sarah McLachlan, Leonard Cohen, Roch Voisine and Daniel Lavoie are popular with rock fans all over the world. The group Kashtin has added Montagnais to the list of languages in which Canadians songwriters and performers can become famous. Montreal's world-renowned annual jazz festival is a must on the itinerary of all jazz fans. Such groups as UZEB have taken their place among the world's most celebrated jazz ensembles. Oscar Peterson is considered one of the all-time jazz greats, while others, such as Lorraine Desmarais, Oliver Jones, Karen Young, Michel Donato and Ed Bickert, are now building reputations for themselves. In the area of classical music, a number of Canadian cities have their own symphony orchestras and there are many smaller ensembles, such as I Musici and Tafelmusik. Under the baton of Charles Dutoit, Montreal's Symphony Orchestra has earned an impressive collection of prizes and distinctions. Among classical performers, Glen Gould is widely regarded as an innovative, musical genius. Artists such as Angela Hewitt, Ofra Harnoy, Louis Lortie and Ben Heppner have already gained international renown. Opera lovers need not look beyond Canada's borders for excellence. Maureen Forrester, Jon Vickers and Louis Quilico have left a rich legacy, while Gino Quilico, Richard Margison, and Judith Forst are extending the tradition with exciting innovations of their own. The Vancouver Opera Association, the Canadian Opera Company, L'Opéra de Montréal and others are known for the originality and quality of their performances.

Dance Three large Canadian ballet companies perform on the international circuit: the Royal Winnipeg Ballet; the Grands Ballets Canadiens; and the National Ballet of Canada. They have been the home base and stepping stone to international careers for dancers such as Karen Kain and Evelyn Hart. Fans of modern dance throughout the world are delighted by the performances of Canadian troupes that include: La La La Human Steps; the Toronto Dance Theatre; the Desrosiers Dance Theatre; and O Vertigo. Every year, a growing number of independent choreographers and dancers mount performances in Canada and abroad. Among this group of more than 150 are

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Margie Gillis, Marie Chouinard, Ginette Laurin, Judith Marcuse, Peggy Baker and Jean-Pierre Perrault.

Literature Canadian literature tells the story of Canada, in all its richness and diversity. Canadian novelists, essayists, playwrights and poets such as Gabrielle Roy, Jacques Ferron, Margaret Atwood, Robertson Davies, Alice Munro, Anne Hébert, Yves Beauchemin, Arlette Cousture, Michel Tremblay, Jacques Godbout, Hubert Aquin, Gaston Miron, Northrop Frye, Michael Ondaatje, Nancy Huston, Tomson Highway and Mordecai Richler have given voice to the deepest thoughts and feelings of Canadians.

Theatre If all the world is a stage, Canada's role on that stage is prominent and much admired. The compelling nature and high quality of Canadian theatre is recognized internationally. The Shaw and Stratford Theatre festivals are well known abroad. Quebec theatre has become increasingly popular both at home and abroad in recent years, thanks in good measure to the plays of Michel Tremblay, which have now been translated into more than 20 languages. Canadian theatre is distinguished by its innovative spirit and search for new forms. Companies such as Carbone 14, UBU and One yellow Rabbit tour the world and receive critical acclaim wherever they go. Others, like Green Thumb, Les Deux Mondes and Mermaid have channelled their energies into creating outstanding children's theatre. The Cirque du Soleil has been revolutionizing entertainment under its yellow and blue big top since 1984. Millions of people around the world have marvelled at its spectacular productions, which blend theatre, acrobatics and music.

Cinema Canadian cinema is known throughout the world for its universality and relevance. International acclaim has been received by filmmaker David Cronenberg for his film, Naked Lunch; by Denys Arcand for his films, Decline of the American Empire and Jesus of Montreal; by Atom Egoyan for The Sweet Hereafter; by producer Léa Pool for Anne Trister; and by the late Jean-Claude Lauzon for Léolo and Night Zoo. The National Film Board (NFB), and Norman McLaren, in particular, have established Canada as an artistic force in the field of animation. The NFB has been nominated for 61 Oscars and has won 10. Frederick Back's 1987 Oscar-winning animated work, The Man Who Planted Trees, is a brilliant continuation of this tradition. Computer-image animation is now providing fertile ground for the imaginations and talents of Canadian artists in this field.

Visual Arts From the landscapes of Cornelius Krieghoff and the portraits of Théophile Hamel to the multidisciplinary works of Michael Snow and the hyperrealism of Alex Colville, the tradition of visual arts in Canada is rich and

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varied. Early in this century, the Group of Seven captured the majestic Canadian landscape as never before. Here emerged a uniquely Canadian view of our land, our skies and our magical light. "Let there be room for magic, room for hope, room for imaginativeness," proclaimed Canadian painter Paul-Émile Borduas in 1948, introducing his Refus global. This manifesto, signed by 14 artists, called for the abandonment of academicism and the advent of a new social order; Borduas and his group, the Automatists, advocated non-objectivity in art. In this track, painters Alfred Pellan and Jean-Paul Riopelle moved away from figurative representation. The paintings of Jean-Paul Lemieux, on the other hand, remained faithful to figuration. During the 1960s another style, leaning toward geometrical abstraction, was introduced by Canadian artists Guido Molinari, Yves Gaucher and Claude Tousignant. In Toronto, Painters Eleven was formed by Jock MacDonald, Jack Bush, William Ronald and eight other abstract painters. More recently, artists such as Paterson Ewen, "General Idea" and Jeff Wall have drawn international attention to Canadian art. These artists use various modern techniques, such as electronics and video, to express themselves. Today, new visions are being presented by Canadian artists such as Geneviève Cadieux, Melvin Charney, Stan Douglas and Jana Sterbak. Since 1984, Canadian Inuit artists have produced a brilliant art in carvings of stone, ivory, antler and whalebone, as well as drawings, paintings and prints. Such artists as carver Karoo Ashevak, printmakers Pudlo, Parr and Jessie Oonark create works that, while they embrace the forms and techniques of the Euramerican artist, are distinctly representative of their own culture and their unique perception of the Canadian "landscape." Canada's native artists such as Haida sculptor Bill Reid and painters Alex Janvier and Norval Morrisseau reach deep into the traditions and techniques of their ancestors, while continually expanding their vision to create works that are universally compelling.

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WOMEN

Women have a long history of active involvement in all aspects of Canadian life. In 1918, after a long struggle, they won the right to vote in federal elections. In 1929, they helped overturn a previous court ruling that barred women from appointments to the Senate on the grounds that they were not "persons" within the meaning of the law. There have been remarkable changes to society and to the lives of Canadian women since then. In 1929, less than 4 percent of women worked outside the home; in 1991, 60 percent were in the labour force. In previous generations, a typical Canadian family had a father as the only breadwinner and a mother working unpaid in the home, looking after the children and shouldering the responsibility for household tasks. In 1992, only 16 percent of all Canadian families were still of this type. While the predominant family type is now the dual-earner couple, with or without children, 16 percent of families are headed by a lone female parent. Perhaps the most remarkable change in recent years has been the increased number of mothers who have young children and work outside their homes. A record 69 percent of mothers in two-parent families with children under age six are now in the paid labour force, while 47 percent of lone parent mothers with young children are in the same situation. Not surprisingly, these rapid changes in family life have focussed attention on child care and the balancing of work and family responsibilities. It is estimated that 60 percent of families with children younger than 13 need some supplemental child care while the parents are at work. The federal government provides more than $1 billion a year in support of child care through tax deductions and allowances. In the 1997 Budget, the Government of Canada allocated an additional $600 million in child benefits for low income families. All jurisdictions in Canada give women a statutory right to take maternity leave without penalty, usually for a period of 17 weeks. An additional period of 24 weeks' parental leave, which may be taken by either parent, is available to certain workers, mostly in the federal public service, banks, and transportation and communications companies. While these rights are for unpaid leave, the Employment Insurance Program provides 15 weeks of maternity benefits for mothers and 10 weeks of parental benefits for natural or adoptive parents.

Women and The Economy Women now account for 45 percent of the Canadian labour force, compared with 36 percent in 1975. In fact, women accounted for almost three-quarters of all growth in employment between 1975 and 1991. However, women still tend to be concentrated in lower-paying occupations. On the other hand, the number of women who are employed in their own businesses has increased 172 percent since 1975. Women now make up 30 percent of all self-employed persons in Canada. A wage gap

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persists between women and men in the labour force: women working full-time for a full year in 1993 earned, on average, 72 percent of what men earned. Equal pay for work of equal value laws have been in place at the federal level for more than a decade, and several provinces are also trying to integrate pay equity legislation in their jurisdictions, to which most Canadian workers are subject. The laws are based on an evaluation of jobs that takes into account the skill, effort and responsibility required to do a job, and the conditions under which the work is performed. Employers with more than 100 employees and those who want to do business with the federal government also fall under a program of employment equity. Employers are required to report annually on their progress in integrating women and other target groups into their workforces. About one-quarter of employed women work part-time. In fact, 69 percent of all part-time workers are women. There is a growing trend to part-time work in the Canadian economy, particularly in the service sector, where the majority of women work. Increasingly, in Canada as elsewhere, a "feminization of poverty" particularly affects lone female parents and their children, as well as elderly women. Women who head lone parent families are now among the poorest of the poor: almost 62 percent of families living in poverty are headed by lone female parents. Poverty rates among the elderly have been declining, thanks to government programs such as the Old Age Security benefit and the Guaranteed Income Supplement. However, elderly women, especially those who have never been in the labour force, still face economic challenges. One of the keys to women's economic equality is improved access for women and girls to education and training opportunities. Of all women aged 15 and over, 40 percent have a high school diploma or better. Over 10 percent of women hold a university degree. Women make up more than 53 percent of full-time undergraduate students at Canadian universities. Federal, provincial and territorial governments have been working together to eliminate sexual stereotyping in school curricula, textbooks and career counselling. They also encourage greater participation by women and girls in non-traditional disciplines such as mathematics, science and technology.

Women and Government Since 1985, the Charter of Rights and Freedoms, part of Canada's Constitution, has guaranteed equal rights to women and men as well as special measures to correct past discrimination on the basis of sex. Discrimination is also prohibited in the human rights acts of the federal government and all 10 provinces. Canada is also committed to several international agreements, especially the 1985 United Nations Convention on the Elimination of All Forms of Discrimination against Women, and the Nairobi Forward-Looking Strategies. Gender equality is also being sought through work with other international organizations such as the Commonwealth and the Organization for Economic Co-operation and Development (OECD).

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Women are increasingly becoming active in politics at all levels. In the 1993 federal election, 53 women were elected to the 295-seat House of Commons - the highest number in Canada's history. Women have extensive representation at the municipal level on city councils and school boards. Women as Activists The achievement of basic political rights in the early part of this century set the stage for the much larger, more organized women's movement of today. In the 1960s, individual women and women's organizations convinced the federal government to establish the Royal Commission on the Status of Women. The Commission's landmark report, published in 1970, was a blueprint for policy and legislation to ensure equality for Canadian women. There are almost 70 national women's organizations in Canada and thousands of provincial, regional and local women's groups.

Looking Ahead Progress has been made. Improved policies to help women as well as men balance their paid employment with family responsibilities and measures to address the needs of lone parent families and violence against women and children are priority issues. In just the last few years the Government of Canada has put into place new legislation on gun control, child support and prohibitions against female genital mutilation, created centres of excellence on women's health and introduced new policies on gender-sensitive medical research. The task ahead is clear: to continue initiating change and ensure that policy makers at all levels maintain their efforts to advance the situation of women on both a national and an international level.

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CANADA - READY FOR THE WORLD MARKETS

The secret of success in this era of trade globalization lies in the capacity of national economies to adjust quickly so as to benefit from the new opportunities opening up on world markets. Canada holds the keys to success in the new economy: Canadian entrepreneurs are at the forefront of key industrial and technological sectors; our workers are skilled and mobile; and the Government of Canada is an important partner in securing trade opportunities and supporting R&D. Under our federal system, the Canadian economic and political union facilitates adaptation because it allows the free circulation of goods, services, technology, capital and people. The Government of Canada has undertaken to lay the foundation for an economy that is more flexible and better adapted to the challenges of the next millennium: by supporting R&D in key sectors - $2.55 billion across Canada; by investing in partnership with the private sector in key growth areas such as environmental technologies, enabling technologies and the aerospace industry to increase our market share abroad and ensure economic growth at home; by partnering with business in seeking out foreign investment in leading-edge and growth sectors through Investment Partnership Canada; by signing an interprovincial trade agreement designed to increase the free movement of goods and services within Canada; by implementing Canada Infrastructure Works, the national infrastructure program, which contributes to the successful renewal of our basic infrastructure. Team Canada trade missions led by the Prime Minister and provincial/territorial leaders have given Canadian firms the boost they need to succeed in new markets. To date, Team Canada missions have brought home more than $22 billion worth of business deals, creating or sustaining high-value-added jobs for Canadians. Various Quebec companies have also carved out an enviable place on the national and international scene. These enterprises include Bombardier, SNC-Lavalin, SoftImage, BioChem, Québécor, Cascades, Domtar Inc. and Bell Helicopter Textron Canada. A recent independent study by the consulting firm KPMG confirmed that Canada's social programs represent an important competitive edge for Canadian businesses as well. For example, employer-paid health insurance premiums in Canada amount to only 1 percent of gross pay, compared with 8.2 percent in the United States. Document ID:

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CHAPTER 2

ECONOMIC TRENDS AND OUTLOOK

The Canadian economy slowed to 2.3 percent in 1995, after growing by a six-year high of 4.1 percent in 1994. Exports of goods and services remained strong, while the domestic economy was weak.

Consumer spending was cut in half in 1995, particularly for automobiles, household goods and clothing. Demand for new and existing homes dropped substantially, and residential investment fell 15.1 percent. As a result, household borrowing for both consumer credit and mortgages declined. One of several factors accounting for sluggish spending was the aggregate level of

Canadian household debt. The ratio of consumer credit and mortgage debt to personal income -- on the rise for 11 consecutive years -- reached a historic high of 93 percent at the end of 1995. On-going employment worries and small wage gains also continue to restrain spending. Business investment in plant and equipment decelerated from a 9.4 percent gain in 1994 to 5.2 percent in 1995. The slowdown came from a 5.6 percent drop in non-residential construction, as investment in machinery and equipment rose 10.9 percent. A 12 percent gain in exports in 1995 was largely concentrated in high-tech manufactured products, but did not help pare down inventories, which rose by C$1.9 billion (approximately US$1.4 billion) to C$5.6 billion (approximately US$4.1 billion) in 1995. This inventory overhang could affect industrial employment in the short-term.

In the first quarter of 1996, the Canadian economy grew by an annualized rate of 1.2 percent. In contrast to previous quarters, external trade was a drag on the economy, while domestic demand rebounded. The latter was the result of softening credit conditions, low inflation and higher than normal government transfers to Western grain farmers. The Economic Section's forecast of the Canadian economy in 1996 calls for weak domestic demand on average, although some improvement is projected in line with ongoing low interest rates and an uptick in housing starts boosting the sale of big-ticket items such as household furniture and appliances. A slowdown in exports is forecast in line with slower growth in key export markets. The Economic Section forecasts Canadian output at around 1.7 percent for all of 1996, rising to 2.5 percent in 1997. Canada's unemployment rate, which stood at 9.4 percent in May 1996, is unlikely to decline as any rise in employment will

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most likely increase the participation rate. Inflation, 1.4 percent in May 1996, is forecast to remain in the lower end of the Bank of Canada's one to three percent target band.

Principal Growth Sectors

Growth is expected in several sectors, including wheat exports, petrochemicals, oil and gas, high-technology, biotechnology and geology. In addition, machinery and equipment investment should remain strong as ongoing upgrading of Canadian manufacturing plants and equipment continues. Services are expected to continue to grow in relative terms, with particular emphasis on tourism and transportation and storage.

Government Role in the Economy

Canada is the world's seventh-largest market economy. Production and services are predominantly privately owned and operated. However, the federal and provincial governments are significantly involved in the economy. They provide a broad regulatory framework and engage in redistribution of wealth from high-income individuals and regions, to lower-income persons and provinces. Federal government economic policies since the mid-1980s have emphasized the reduction of public sector interference in the economy and the promotion of private sector initiative and competition. Both federal and provincial governments also privatized selected Crown corporations. Nevertheless, federal government regulatory regimes affect foreign investment and also U.S. firms in the telecommunications, publishing, and financial services sector.

Balance of Payments Situation

In recent years, Canada has run a large current account deficit even though its merchandise trade is in surplus. As a traditional importer of services (especially tourism), Canada also hosts a very large amount of foreign investment on which dividends are paid, and has had to service a large foreign debt. The growth in its trade surplus has, however, brought down the current account deficit. In 1995, Canada's current account deficit dropped to C$11.2 billion (approximately US$8.2 billion) from C$22.2 billion (approximately US$16.3 billion) in 1994, and was C$7.8 billion (approximately US$5.7 billion) at a seasonally adjusted annual rate in the first quarter of 1996. At the same time, Canada's global merchandise trade surplus was C$28.4 billion (approximately US$20.9 billion) in 1995 and C$28 billion

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(approximately US$20.6 billion) at a seasonally adjusted annual rate in the first quarter of 1996. A slowdown in domestic investment (but not savings), stabilization of outflows for debt service, and the growth of the merchandise trade balance could produce a current account surplus in 1997. This turnaround is remarkable, considering that in 1993 the current account deficit equaled four percent of GDP.

The bulk of Canada's current account transactions is with the United States. Canada traditionally records a merchandise trade surplus with the United States, but generally has an offsetting non-merchandise trade deficit. Canada's bilateral investment income account, which is composed of interest and dividends, holds the single largest deficit within the non-merchandise trade component. Canada's large and growing external debt, much of which is held by U.S. residents, gives rise to an outward flow of debt service (interest) payments. At the same time, there is a large amount of U.S. foreign direct investment in Canada that results in high dividend payments by Canadian subsidiaries to their U.S. parents.

INFRASTRUCTURE SITUATION

1. Transportation Infrastructure

Canada's transportation systems are highly developed. Canada's most important means of transportation for freight and bulk goods is its railways; however, long distance trucks now carry a substantial share of all merchandise.

(a) Railways

The two great transcontinental systems, the Canadian National Railway and the Canadian Pacific Railway Company, provide most of the rail transportation. Both systems have extensive supplementary facilities for highway and waterway transport, telecommunications, and storage. Regional lines supplement the transcontinental lines.

(b) Motor Freight

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Aided by an expanding network of paved highways and deregulation, truck transport is generally competitive with rail transport. The provinces have jurisdiction over highways in Canada. Common carriers are required to obtain a license from the Department of Highways and Transport of the province in which travel occurs.

In January 1988, the Motor Vehicle Transport Act went into effect, easing entry into the Canadian market for U.S. firms. Truckers who wish to cross provincial and international borders no longer must prove that their service is consistent with public convenience and necessity. Until 1993, existing trucking companies could block new entrants. Beginning in 1993, new firms may enter the market or existing firms may expand if they are fit, willing, able, and meet basic insurance and safety requirements.

U.S. firms may ship goods of their own manufacture to destinations in Canada in their own trucks. However, they may not carry other goods, back-haul to the United States, or act in any way as a common carrier. However, some states have reciprocal arrangements with some Canadian provinces to do so.

To determine what arrangements are in effect, contact the local office of the U.S. Interstate Commerce Commission (ICC) or the appropriate Canadian provincial department or Ministry of Transportation. Where no arrangement is in effect, the trucker will be required to purchase a one-trip license at the first weigh station after crossing the border.

(c) Water Transport

Although seasonally restricted by frozen waterways, watertransport is widely used as a consequence of Canada's unique geographical position. Canada is bordered by the Atlantic and the Pacific Oceans. The St. Lawrence Seaway extends inward for more than 2,000 miles along its southern border. U.S. firms carry about 25 percent of all Canadian water-transported exports and about half of its water-transported imports.

Canada has 25 large deep-water ports and about 650 smaller ports and multipurpose government wharves on the east and west coasts, along the St. Lawrence Seaway and Great Lakes, in the Arctic, and on inland lakes and rivers. Current government plans call for the commercialization of public ports. Ports considered vital to domestic and international trade will be managed by Canada Port Authorities made up of representatives from

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industry, labor and government. Regional/local ports will be transferred to provincial/municipal governments, community organizations, private interests or other groups. Implementing legislation was introduced in the Canadian Parliament on June 11, 1996.

The leading Canadian ports, listed in approximate order of tons of cargo loaded and unloaded, are: Vancouver, British Columbia; Sept-Iles-Pointe-Noire, Quebec; Port Cartier, Quebec; Saint John, New Brunswick; Montreal, Quebec; Quebec City, Quebec; Halifax, Nova Scotia; Hamilton, Ontario; Prince Rupert, British Columbia; Port Hawkesbury, Nova Scotia; and Thunder Bay, Ontario. Container traffic can be handled at a number of these ports, including Montreal, Halifax, St. John, and Vancouver.

(d) Aviation

Air connections between the United States and Canada are extensive, with well-developed facilities for freight and passenger traffic. Air transport on U.S. carriers from the United States and Canada is provided by several companies. Domestic service is offered by a number of airlines.

On February 24, 1995 a new bilateral Air Transport Agreement was signed with Canada. The new accord immediately eliminated most restrictions on air service between the two countries and will virtually deregulate the transborder market over the next three years. While the Agreement gives Canadian airlines a head start at Toronto, Montreal and Vancouver of up t o three years to put the Canadian airline industry in a better position to meet the full force of U.S. airline competition, major new opportunities are granted U.S. carriers during this phase-in period. After the three-year phase-in period, any U.S. or Canadian airline can serve any cross-border route.

Under a bilateral agreement signed in 1974, U.S. inspection agencies (Customs and INS) operate preclearance facilities at six airports in Canada (Toronto, Vancouver, Montreal, Calgary, Edmonton and Winnipeg).

2. TELECOMMUNICATIONS INFRASTRUCTURE

Communications are highly sophisticated in Canada, comparable with those of the United States. Canada is integrated with the U.S. direct long-distance dialing system (dial 1, area code and number). All forms of communication are possible (including voice, text, data, and video), and worldwide telegraphic

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services are available. Cellular and satellite communications are also possible in Canada.

. INVESTMENT CLIMATE

With few exceptions, Canada offers foreign investors full national treatment within the context of a developed open market economy operating with democratic principles and institutions. Canada is, however, one of the few OECD countries that still has a formal investment review process, and foreign investment is prohibited or restricted in several sectors of the economy.

Canada's economic development has depended a great deal on foreign investment inflows. Four foreign-owned firms rank among the top ten firms in Canada in terms of revenue, and the Canadian government estimates that foreign investors control about one-quarter of total Canadian non-financial corporate assets. The stock of foreign direct investment in Canada in 1994 was equivalent to 20 percent of GDP. Net foreign direct inflows in 1994 amounted to roughly one percent of GDP.

Canada has no restriction on outward foreign investment, and Canadian firms have a significant presence in the United States

Since the beginning of 1994, investment relations between the United States and Canada have been governed by the NAFTA negotiated by the United States, Canada and Mexico. The FTA, which entered into force at the beginning of 1989, has been suspended as long as the two countries remain parties to the NAFTA. The NAFTA builds on the investment relationship created in the FTA. In the FTA, the United States and Canada agreed on important foreign investment principles, including right of establishment and national treatment. The FTA recognized that a hospitable and secure investment climate was indispensable if the two countries were to achieve the full benefits of reducing barriers to trade in goods and services.

The FTA established a mutually beneficial framework of investment principles sensitive to the national interests of both countries, with the objective of assuring that investment flowed freely between the two countries and that investors were treated in a fair and predictable manner.

The FTA provided higher review thresholds for U.S. investment in Canada than for other foreign investors, but it did not exempt all U.S. investment from review nor did it override specific foreign investment prohibitions, notably in

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the cultural area. The NAFTA incorporates the gains made in the FTA, expands the coverage of the Investment Chapter to several new areas and broadens the definition of investors with rights under the Agreement, and creates the right to binding investor-State dispute settlement arbitration under limited circumstances.

OPENNESS TO FOREIGN INVESTMENT

1. General Attitude

Canada has long been considered a stable and remunerative environment for foreign investment, and its economic progress has been made possible to a large extent by a sustained inflow of foreign capital. Since 1985, foreign investment policy in Canada has been guided by the Investment Canada Act which replaced the more restrictive Foreign Investment Review Act. The Investment Canada Act liberalized Canadian policy on foreign investment by recognizing that investment is central to economic growth and new employment opportunities and is the key to technological advancement. At the same time, it provided for a review of large acquisitions in Canada by non-Canadians and imposed a requirement

that they be of net benefit to Canada. For the vast majority of small acquisitions and the establishment of new businesses, non-Canadian investors need only notify the Canadian government of their investment.

While the Investment Canada Act provides the basic legal framework for foreign investment in Canada, foreign investment in specific sectors may be covered by special legislation. For example, foreign investment in the financial sector is governed by laws administered by the federal Department of Finance, and the Broadcast Act governs foreign investment in radio and television broadcasting. Under provisions of Canada's new Telecommunications Act, foreign ownership of transmission facilities is limited to 20 percent, while in the case of holding companies that wish to invest in Canadian carriers, two-thirds of the holding company's equity must be owned and controlled by Canadians.

Canada's federal system of government subjects investment to provincial as well as national jurisdiction. Provincial restrictions on foreign investment differ by province, but are largely confined to the purchase of land and to certain types of provincially regulated financial services. In addition, Provincia l

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government policies in the areas of labor relations and environmental protection, for example, can have an important impact on foreign investors.

. Investment Canada Act

Under the Investment Canada Act, the Minister of Industry is responsible for encouraging and facilitating investment and assuring that foreign investment is of net benefit to Canada. To this end, the federal department known as Industry Canada manages the foreign investment notification and review process to ensure conformity with the legislation.

What is reviewable?

Where control of a foreign investor ultimately rests in a country that is a member of the WTO, the direct acquisition of control of a Canadian business that has assets of C$160 million (approximately US$118 million) or more is a reviewable transaction. Where control of the foreign investor is ultimately in a country that is not a WTO member, the direct acquisition of control of a Canadian business that has assets greater than C$5 million (approximately US$3.6 million) is reviewable, and the indirect acquisition of control of a

Canadian business with assets greater than C$50 million (approximately US$36.7 million) is reviewable. As a result of Canada's implementation of its Uruguay Round commitments, NAFTA treatment was extended to all WTO investors in all sectors except those excluded under the NAFTA.

Acquisitions in cultural industries (i.e., publication and distribution of books, magazines, videos, music recordings, etc.) below the thresholds listed above and the establishment of new businesses in these cultural industries may be reviewable if the federal government so decides. Acquisitions in which the Canadian business is in one of three other sectors (financial services other than insurance, transportation services and uranium production) are subject to the lower thresholds regardless of the nationality of the investor.

If the transaction is not reviewable, does the government require anything from the Investor?

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Yes, in the case of a direct acquisition of a Canadian business with assets under C$160 million (approximately US$118 million) by a WTO investor, or under C$5 million (approximately US$3.6 million) in the case of a foreign, non-WTO investor, the investment is notifiable. All indirect acquisitions by WTO investors are notifiable as are indirect acquisitions by non-WTO investors where the Canadian assets to be acquired are less than C$50 million (approximately US$36.7 million).

Also notifiable is the establishment of a new business in Canada by an investor making its first investment in Canada or the establishment of a new business by an existing investor where the new business is unrelated to any existing business in Canada. In these cases, the investor must notify Industry Canada and provide some details of the investment. For convenience, investors can use a two-page Notification Form.

What is not reviewable or notifiable?

There are many types of investments to which the Investment Canada Act does not apply. For example, purchases of Canadian bonds, stocks or other investment instruments that do not involve the acquisition of control are not reviewable or notifiable, nor is the acquisition of assets that do not constitute a business. Investments in related businesses are neither reviewable nor notifiable. Thus, for example, a manufacturing business can expand a plant or a mining company can open a new mine, without either review or notification. For greater certainty, investors and others should consult Section 10 of the Investment Canada Act.

How are the thresholds set?

For WTO investors, the review threshold is adjusted annually to reflect economic growth and inflation in Canada. For non-WTO investors, the review thresholds are fixed.

On what basis are investments reviewed?

Reviewable investments are allowed to proceed if they are likely to be of net benefit to Canada. Set out below are the six factors of net benefit:

(a) the effect of the investment on the level and nature of economic activity in Canada, including the effect on employment; resource processing;

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the utilization of parts, components and services produced in Canada; and on exports from Canada;

(b) the degree and significance of participation by Canadians in the Canadian business and in any industry in Canada of which it forms a part;

(c) the effect of the investment on productivity, industrial efficiency, technological development, product innovation and product variety in Canada;

(d) the effect of the investment on competition within any industry or industries in Canada;

(e) the compatibility of the investment with national and provincial industrial, economic and cultural policies; and,

(f) the contribution of the investment to Canada's ability to compete in world markets.

Who makes the decision on whether an investment can proceed?

Industry Canada makes a recommendation to the Minister of Industry, who in turn, makes the final decision. Since the passage of the Investment Canada Act in 1985, the Canadian Government has not formally rejected any reviewable foreign investment proposal. On several occasions, the government required the foreign investor to re-work the proposal to meet Investment Canada's net benefit test. The mere existence of a review process, as well as sectoral restrictions, presumably discourages some foreign investors.

How long does the review process take?

The legislation gives the Minister an initial 45 days to make a decision. Most cases are decided within this time frame. However, there are provisions in the legislation to extend the review period.

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SPECIAL TREATMENT FOR U.S. INVESTMENT

U.S. foreign investment in Canada is subject to the Investment Canada Act, but the NAFTA further defines the investment relationship between the two countries and adopts the principle of national treatment.

The basic obligation assumed by the two countries in Chapter Eleven of the NAFTA is to ensure that future regulation of Canadian investors in the United States and of U.S. investors in Canada results in treatment no different than that extended to domestic investors within each country -- "national treatment." Both governments are completely free to regulate the ongoing operation of business enterprises in their respective jurisdictions under, for example, anti-trust law, provided they do not discriminate. This basic principle is qualified on the basis of existing practice and is translated into the following specific undertakings.

Canada retains the right to review the acquisition of firms in Canada by U.S. investors, but agreed to phase in higher threshold levels for U.S. investors. For 1992 and thereafter (adjusted for inflation), the review threshold for direct acquisitions is C$150 million (approximately US$110.3 million); the review threshold for indirect acquisitions was phased out entirely beginning in 1992.

Canada agreed to extend these review thresholds for the acquisition of service-sector firms to all signatories of the General Agreement on Trade in Services.

These undertakings are prospective; for example, they apply to future changes in laws and regulations only. Existing laws, policies and practices are "grandfathered," except where specific changes are required. The practical effect of this was to freeze the various exceptions to national treatment provided in Canadian and U.S. law (such as restrictions on foreign ownership in the communications and transportation industries). Additionally, both governments remain free to tax foreign-owned firms on a different basis than domestic firms, provided this does not result in arbitrary or unjustifiable discrimination, and to exempt the sale of Crown (government-owned) corporations from any national treatment obligations. Finally, the two governments retain some flexibility in the application of the national treatment

obligations. They need not extend identical treatment, as long as the treatment is "equivalent." The NAFTA also deals more specifically with the

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financial services sector. Chapter Fourteen of the NAFTA outlining financial services eliminates discriminatory asset and capital restrictions on U.S. bank subsidiaries in Canada. It also exempts U.S. firms and investors from the federal "10/25" rule such that they will be treated the same as Canadians. The rule continues to prevent any single non-U.S. non-resident from acquiring more than ten percent of the shares, and all such non-residents in the aggregate from acquiring more than 25 percent of the shares of a federally regulated Canadian-controlled financial institution. Both the ten percent and the 25 percent limitation were eliminated for U.S. investors as regards acquisitions of federally chartered non-bank financial institutions. Several provinces, however, including Ontario and Quebec, have similar "10/25" rules for provincially chartered trust and insurance companies which were not waived under the FTA. The ten percent limitation on any individual shareholder -- whether Canadian or foreign -- will continue to apply to investments in Canadian banks. Bilateral services trade is largely free of restrictions. The NAFTA ensures that restrictions will not be applied in the future; however, existing restrictions were not affected by the NAFTA. The services Agreement is primarily a code of principles which establishes national treatment, right of establishment, right of commercial presence, and transparency for a number of service sectors specifically enumerated in Annexes to the NAFTA. The NAFTA also pledges both parties to expand the list of covered service sectors.

The NAFTA grants U.S. firms operating from the United States national treatment for most Canadian federal procurement opportunities. However, interprovincial trade barriers exist which often exclude U.S. firms established in one Canadian province from bidding on another province's procurement

opportunities. However, as a first step in the ongoing and difficult process of reducing trade barriers within Canada, the federal, provincial and territorial governments negotiated an Internal Trade Agreement in 1994 that came into effect on July 1, 1995. The Agreement provides a framework for dealing with trade in ten specific sectors and establishes a formal process for resolving trade disputes. The structure of the Agreement was inspired by the models provided by the GATT, the FTA and the NAFTA.

Besides the areas described previously, the NAFTA includes provisions that enhance the ability of U.S. investors to enforce their rights through international arbitration; prohibit a broader range of performance requirements, including forced technology transfer; and expand coverage of the investment chapter to include portfolio and intangible investments as well as direct investment.

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OWNERSHIP RESTRICTIONS BY SECTOR

Although most sectors of the Canadian economy are open to foreign investment, there are several sectors where foreign investment is limited or prohibited. In addition, there are several sectors where private investment is not permitted at all. Two sectors subject to special investment rules of particular concern to U.S. investors are cultural industries and financial services.

(a) Cultural Industries

Canada's fear that its own cultural identity will be overwhelmed by neighboring and powerful U.S. cultural influences has resulted in restrictions on foreign investment in Canadian cultural industries. At Canada's insistence, cultural industries were exempted from the provisions of the FTA, but the United States also obtained the right to take measures of "equivalent commercial effect" against measures which would have been inconsistent with the FTA except for the cultural exemption. Both of these features were retained in the NAFTA.

Book publishing and distribution: Since 1985, foreign investment in the book publishing and distribution sector has been governed by the "Baie Comeau" policy. Under this policy, direct foreign acquisitions of Canadian-owned firms in this sector were forbidden, new foreign investment was limited to a minority

position, and foreign investors who acquired Canadian firms in the sector through an indirect acquisition were required to divest the Canadian operation to Canadian ownership within two years.

In January 1992, the Government of Canada modified the Baie Comeau policy. Now, indirectly acquired Canadian firms in the sector will not necessarily have to be spun off to Canadian ownership; the foreign owner was given the option of negotiating a transaction that is of "net benefit" to Canada, such as a commitment to publish Canadian authors. In addition, the policy now permits direct foreign acquisition of a Canadian firm in the sector, provided the firm is in financial distress and no Canadian buyers can be found. Finally, the government announced its intention to establish rules to assure that when indirectly acquired firms are divested as a result of the Baie Comeau policy, Canadians assume de facto control of the enterprise.

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Newspapers and periodicals: All investments in this sector, regardless of size, are reviewable by Investment Canada. Canadian income tax laws do not permit Canadian advertisers to claim a deduction for advertising placed in publications that do not have 75 percent Canadian ownership and 85 percent Canadian content. In 1993, the Canadian government ruled that any new foreign magazine title published in Canada would be reviewable as a new investment. Under current policy guidelines, approval would be denied. In 1995, the Canadian parliament passed legislation to place a prohibitive tax on advertising in magazines published in Canada with Canadian advertising but little Canadian editorial content -- "split-run" editions.

Television and Radio Broadcasting: Licenses will not be granted or renewed to firms that do not have at least 80 percent Canadian control, represented both by shareholding and by representation on the Board of Directors. This requirement applies retroactively.

Cable Television and Other Broadcast Services: Under current policy, in cases where a Canadian service is licensed in a format competitive with that of an authorized non-Canadian service, the CRTC can drop the non-Canadian service, if the new Canadian applicant requests it to do so. In June 1994, the CRTC de-listed a U.S. country music cable-TV service when it licensed a new Canadian specialty country music channel. While this particular case was resolved when the parties involved agreed to a commercial settlement, the U.S. government remains extremely concerned that the CRTC's competitive services policy remains in place.

Sound Recording: All investments are reviewable. Film and Video: All investments are reviewable; new investments may be subject to performance requirements.

FINANCIAL SECTOR

The banking industry in Canada is governed by the federal Bank Act, which imposes a number of limitations on foreign direct investment in this sector. The Bank Act establishes two categories of banks: Schedule I banks, in which no single investor can own more than ten percent of the shares, thus excluding the possibility of a foreign acquisition; and Schedule II banks, for which the ten percent restriction does not apply. A foreign bank wishing to conduct business in the Canadian banking industry must establish as a subsidiary (Schedule II bank); it cannot enter as a direct branch. The Bank Act also requires that any Schedule II bank in Canada with more than C$750

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million (approximately US$550 million) in capital must be "widely-held", therefore, at least 35 percent of its shares must be publicly traded on Canadian stock exchanges. The government could grant an exception to foreign-owned banks which exceed the ceiling due to internal growth. Finally, the Bank Act imposes several restrictions on investments by non-U.S. foreign banks, including an individual capital ceiling and a 12 percent market-share quota on assets.

Foreign insurance companies, unlike banks, may operate in Canada as branches.

Other Sectors

Commercial Aviation: Foreigners are limited to 25 percent ownership of Canadian air carriers. Energy and Mining: Foreigners cannot be majority owners of uranium mines.

Telecommunications: Under provisions of Canada's new Telecommunications Act, foreign ownership of Type I carriers (owners/operators of transmission facilities) is limited to 20 percent. Ownership and control rules are more flexible for holding companies that wish to invest in Canadian carriers, because of the often international nature of their operations and sources of capital. Under these rules, two-thirds of the holding company's equity must be owned and controlled by Canadians.

Fishing: Foreigners can only own 49 percent of companies that hold Canadian commercial fishing licenses. Electric Energy Generation and Distribution: In all provinces except Alberta and Nova Scotia, this is a provincial monopoly. Exceptions are being opened in some provinces to allow for private electric energy production, either through co-generation or non-utility power generation.

Health Services:Hospitals in Canada are integral parts of a public-health system administered by the provinces. Private hospitals would not be eligible to receive payments from provincial health insurance funds, and therefore would not be financially viable in most cases.

Real Estate:Prince Edward Island and Saskatchewan limit real estate sales to out-of-province parties. Privatization: Each specific privatization (at the federal and provincial levels of government) is considered on a case-by-case basis and there is no overall limitations policy with regard to foreign

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ownership. As an example, the federal Minister of Transportation has stated he does not intend to impose any limitations in the privatization of Canadian National (CN) railway.

INVESTMENT INCENTIVES

Both federal and provincial governments in Canada offer a wide array of incentives (municipalities are legally prohibited from offering tax incentives). None of the federal incentives, however, is specifically aimed at promoting or discouraging foreign investment in Canada. Rather, the incentives are designed to accomplish broader policy goals, such as research and development, investment in machinery and equipment, and promotion of regional economies. They are available to any qualified investor, Canadian or foreign, who agrees to use the funds for the stated purpose.

Provincial incentives tend to be more investor-specific and are conditioned on applying the funds to an investment in the granting province. Provincial incentives may also be restricted to firms established in the province or who agree to establish in the province.

Incentives for investment in cultural industries, at both the federal and provincial level, are generally only available to Canadian-controlled firms. Incentives may take the form of grants, loans, loan guarantees, venture capital, or tax credits. Incentive programs in Canada generally are not oriented toward the promotion of exports.

. Export/Import Policies

There is no discrimination against foreign investors in any aspect of import or export trade. Foreigners can engage in all import and export activities permitted to a Canadian national. However, permits are required for the import or export of certain commodities, including armaments and strategic goods, some agricultural products, most textile and clothing items, and oil and gas.

B. Conversion and Transfer Policies The Canadian dollar is fully convertible. Canada has no restrictions on the movement of funds into or out of the country. Banks, corporations and individuals are able to deal in foreignfunds or arrange payments in any currency they choose. An investor may liquidate his Canadian investment at any time and transfer the proceeds

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from Canada in whatever currency desired. During the life of the investment, profits, dividends and royalties may be remitted at will.

C. Expropriation and Compensation

Canadian federal and provincial laws recognize both the right of a government to expropriate private property for a public purpose, and the obligation to pay compensation. The federal government has not nationalized any foreign firm since the nationalization of the Axis property during World War II. Both the federal and provincial governments have also assumed control of private firms -- usually financially distressed ones -- after reaching agreement with the former owners.

D. Dispute Settlement

Canada is a member of the New York Convention of 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. The Canadian government has made a decision in principle to become a member of the International Center for the Settlement of Investment Disputes (ICSID). However, since the legal enforcement mechanism for ICSID would be the provincial court system, the federal government must also get agreement from all the provinces that they will respect ICSID decisions. It is unlikely that this will happen in the foreseeable future.

Canada accepts binding arbitration of investment disputes to which it is a party only when it has specifically agreed to do so through a bilateral or multilateral agreement such as a Foreign Investment Protection Agreement. The resolution of investment disputes between the United States and Canada is guided by the provisions of Chapter 11 of the NAFTA.

The NAFTA encourages parties to settle disputes through consultation or negotiation, but the NAFTA also establishes special arbitration procedures for investment disputes separate from the NAFTA's general dispute settlement provisions (Chapter 20). Under the NAFTA, a narrow range of disputes between an investor from a NAFTA country and a NAFTA government (those dealing with government monopolies and expropriation) may be settled, at the investor's option, by binding international arbitration. An investor who seeks binding arbitration in a dispute with a NAFTA party gives up his right to seek redress through the court system of the NAFTA party.

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E. Political Violence

Political violence is almost non-existent in Canada. There has been no violence directed at foreign investment in recent memory. There have been some violent incidents related to environmental disputes, but these were directed against Canadian-owned natural resource companies or against the Canadian government.

F. Performance Requirements/Incentives

Canada does not explicitly negotiate performance requirements with foreign investors. For investments subject to review, however, the investor's intentions regarding employment, resource processing, domestic content, exports, and technology development or transfer can be examined by the Canadian Government. A special duty remission scheme exists for the automotive sector that makes certain benefits contingent on trade performance. The FTA prohibits the United States or Canada from imposing export or domestic content performance requirements.

Government officials at both the federal and provincial levels expect investors who receive investment incentives to use them for the agreed purpose, but no mechanism exists for enforcing any statement made by the investor during the review process.

G. Right to Private Ownership a nd Establishment

Except as noted, Canadians and foreigners have the right to establish, own and dispose of business enterprises and engage in all forms of remunerative activity. In those sectors where private enterprise co-exists with public enterprise (for example, petroleum), the firms compete on a generally equal basis. The major exception is that public enterprises do not have to rely solely on self-generated funds or funds raised in the capital markets; they also have access to transfers from government budgets.

H. Protection of Property Rights

Private property rights are fully protected by Canada's legal system. Foreigners have full and fair access to Canada's legal system. Property

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rights are limited only by the rights of governments to establish monopolies and to expropriate for a public purpose.

I. Regulatory System: Laws and Procedures Canada's regulatory system is similar to that of the United States in terms of its transparency and comprehensiveness, as well as in the array of institutions involved. Proposed laws are subject to parliamentary debate and public hearings. Regulations are issued in draft form for public comment prior to implementation. The allocation of financial and real resources is generally accomplished by market forces rather than regulation. While federal and/or provincial licenses or permits may be needed to engage in economic activities, this kind of regulation is generally for prudential, statistical or tax compliance reasons rather than for resource allocation. Governments enter into the allocation of resources only in those sectors where resources are located in the public domain, such as logging on public land or commercial fishing.

Canada has an anti-trust law and an agency, the Bureau of Competition Policy, to enforce it. The Competition Tribunal, a quasi-judicial body, rules on anti-trust cases.

J. Bilateral Investment Agreements

While the terms of the FTA and the NAFTA guide investment relations between the United States and Canada, Canada has two kinds of international investment agreements with non-NAFTA parties, Foreign Investment Protection Agreements (FIPAs) and Foreign Investment Insurance Agreements (FIIAs). A FIPA is a comprehensive bilateral investment promotion and protection agreement containing, inter alia, the broad principles that should guide investment between the two partners. Canada negotiated five FIPAs under a 1988 model, with Poland, Czechoslovakia, Hungary,

USSR, and Argentina. While these agreements continue in force (for Russia only in the case of the former Soviet Union), the model was revised in 1994 to bring it into conformity with the NAFTA. Agreements under the new model have been signed with Ukraine and Latvia, and agreement has been reached with several additional countries on new FIPAs under the 1994 model, although they have not yet been signed.

FIIA is essentially an agreement that allows the Export Development Corporation (EDC) to pursue any claims arising from a Canadian investment insured by the EDC. Canada has signed 42 FIIAs, and others are awaiting

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final confirmation. Canada also has tax agreements with 55 countries, including the United States.

K. OPIC and Other Investment Insurance Programs

Overseas Private Investment Corporation (OPIC) programs are not available for U.S. investors in Canada. Canada is a signatory to the World Bank's Multilateral Investment Guarantee Agency (MIGA). The U.S. Export-Import Bank is not off-cover for Canada.

L. Labor

Labor, at all skill levels, is generall available in Canada. There are occasional reports of spot shortages of certain categories of labor. Canadian wage and benefit levels for most non-executive job categories are roughly equivalent to levels paid in the United States. Currently, provincial hourly minimum wages in Canada range from a high of C$6.70 (approximately US$5) in Ontario to a low of C$4.75 (approximately US$3.5) in Newfoundland and Prince Edward Island. The minimum wage for employees under federal jurisdiction (banking, shipping, air transport, broadcasting, railways, grain elevators and pipelines) has remained unchanged at C$4 (approximately US$3) since 1986.

As a percentage of the civilian labor force, union membership has remained fairly constant since 1985 when it stood at 29.8 percent. The figure for 1993 is 29.5 percent, significantly higher than the comparable U.S. figure of 15.8 percent, due in large part to higher unionization levels in the Canadian public sector.

Labor is strongly critical of some Canadian government policies and has focused most strongly on the FTA and the NAFTA, alleging that these Agreements jeopardize Canadian jobs and threaten the country's social programs. The labor movement in Canada is closely associated with the New Democratic Party (NDP). The NDP currently controls provincial governments in British Columbia and Saskatchewan.

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M. Foreign Trade Zones/Free Ports

Detailed information regarding foreign trade zones/free ports can be found in Chapter VI, Section J.

N. Capital Outflow Policy

As discussed in the "Transfer Policy" section, the Canadian dollar is fully convertible. The Canadian Government provides some incentives for Canadian investment in developing countries through Canadian International Development Agency programs. Canada's official export credit agency, the EDC provides OPIC-like insurance coverage for Canadian foreign investment.

O. Major Foreign Investors (Private Companies)

(Ranked by 1994 revenues in billions of Canadian dollars)

RANK NAME NATIONALITY REVENUE

1 General Motors of Canada U.S. 25.0

2 Chrysler Canada U.S. 15.8

3 IBM Canada U.S. 8.4

4 Canada Safeway U.S. 4.6

5 Amoco Canada Petroleum Co. U.S. 4.4

6 Mitsui & Company Japanese 2.8

7 Honda Canada Japanese/U.S. 2.6

8 Cargill Ltd. U.S. 2.6

9 Great A&P Tea Co. U.S. 2.5

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10 Wal-Mart Canada Inc. U.S. 2.1

11 Mobil Oil (Canada) U.S. 2.1

12 Price Costco Canada U.S. 2.0

13 Medis Health & Pharmaceutical U.S. 1.9

14 Kraft General Foods (Canada) U.S. 1.8

15 Canada Ultramar U.S. 1.7

16 General Electric U.S. 1.7

17 GE Plastics U.S. 1.6

18 McDonalds Restaurants U.S. 1.6

19 Toyota Canada Japanese 1.6

20 Procter & Gamble U.S. 1.6

Source: "Report On Business Top 1000 Companies” published July, 1995

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CHAPTER 3

TRADE REGULATIONS AND STANDARDS

A. Trade Barriers (Including Tariff Barriers, Non-Tariff Barriers and Import Taxes)

1. General Trade Barriers

As a result of the FTA, many Canadian tariffs on U.S. products have been, or will soon be, eliminated. The NAFTA removes some remaining barriers and expands specific provisions of the FTA. However, non-tariff barriers at both the federal and provincial levels continue to impede access of U.S. goods and services to Canada or retard potential export growth. The issues identified below constitute a partial list of areas which will be addressed by various offices in the Embassy in Ottawa and Departments in Washington, as well as with other Washington agencies.

(a) Standards

The FTA provided that testing facilities, inspection agencies and certification bodies of each country have access to the accreditation systems of the other country without obligation to establish facilities in the other country. While provincial practices do not fall under the FTA discipline, U.S. government agencies at the Embassy in Ottawa and in Washington will closely monitor provincial requirements and press for fair treatment of U.S. organizations.

(b) Government Procurement

The NAFTA provides even greater access to the Canadian Government procurement market through expansion of coverage to Canada's remaining federal departments, some government-owned enterprises (Crown corporations) and selected services and construction contracts. Coverage of government-owned enterprises and services and construction under the NAFTA represents the first time that such procurement will be subject to international rules of open and competitive bidding. Finally, under the NAFTA all three parties have agreed to further negotiations before the end of 1998 to expand the coverage of the agreement. This will include coverage at the sub-federal levels.

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(c) Provincial Liquor Boards

Canadian provincial government liquor boards have exclusive control over Canada's alcoholic beverage retail pricing, listing, distribution and sales. The FTA requires Canadian provinces to accord national treatment to U.S. wines and spirits in their listing policies and, with certain well-defined exceptions, their distribution practices. The United States has questioned several provinces' implementation of these obligations.

(d) Services

Exports of services constitute the fastest growing component of the U.S.-Canada bilateral trade relationship, producing a US$15.3 billion export surplus in 1994.

The NAFTA covers all service sectors unless specifically excluded, and applies guiding principles to trade in services. A party can retain an existing law, measure, or practice that does not conform to the Agreement's principles by formally lodging an exception or reservation for the measure. All federal government reservations were listed during negotiations and cannot be amended. However, states and provinces must list nonconforming measures within two years after the NAFTA's entry into force. Both the Canadian and U.S. governments will be working closely with their respective sub-federal governments to identify nonconforming measures. This "barrier inventory" exercise provides an opportunity to press for further liberalization in services.

NAFTA parties must also remove citizenship requirements affecting the licensing and practice of professionals within two years of entry into force of the Agreement. If a state or province fails to remove citizenship requirements within the allotted time frame, the other countries have the right to maintain equivalent restrictions in their own countries.

(e) "Cultural industries"

Canada maintains some restrictions on foreign investment and content in the so-called "cultural industries" and related sectors, including book and magazine publishing, broadcasting, and telecommunications. The United States objects to some of these restrictions; for example, it has complained to the WTO about Canadian policies which prohibit "split-run" editions of U.S.-based magazines. Both the FTA and NAFTA contain a "cultural exemption" clause. The United States closely monitors new laws and regulations

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affecting these sectors. See Section A. 2 (b) of this Chapter for more information on investment restrictions.

2. Investment Barriers

Under the Investment Canada Act and related Canadian regulations, Canada maintains laws and policies which restrict new or expanded foreign investment in the energy, publishing, telecommunications, transportation, film, music, broadcasting, and cable television sectors.

(a) Investment Canada Act

The Investment Canada Act requires the federal government to review proposed acquisitions by U.S. and other foreign investors to ensure "net benefit to Canada." The Act exempts from prior government approval foreign investments in new ("greenfield") businesses and smaller acquisitions -- worth less than C$5 million (approximately US$3.6 million) for direct acquisitions and C$50 million (approximately US$36.7 million) for indirect acquisitions.

Under the FTA, Canada raised the threshold level for review of direct acquisitions by U.S. investors to C$150 million (approximately US$110.3 million) on January 1, 1992, with the threshold level to be indexed for inflation in subsequent years. Under NAFTA, this threshold is further increased in line with real economic growth. Screening of indirect acquisitions by U.S. investors was phased out altogether in 1992. The thresholds for reviewing investors' acquisitions also apply to sales by U.S. investors of their Canadian investments to third-country nationals.

(b) Investments in "Cultural Industries"

The exemption from review does not apply to foreign investments to establish new businesses or acquire existing ones in "culturally sensitive sectors" such as newspapers, magazines, periodical and book publishing and distribution, film and video, audio music recordings, and music in print or machine-readable form. As a result, foreign investment in these sectors is potentially subject to review regardless of size or whether the investment is new or through direct or indirect acquisition. This protection for "cultural industries" will continue to be an issue for U.S. investors.

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In January 1992, Canada announced proposals to amend its book publishing and distribution policies. Under the new guidelines, Canadian firms that fall into foreign hands as a result of indirect acquisitions will not have to be divested to Canadian control, but the foreign investor will have to negotiate specific commitments to promote Canadian publishing if it wishes to maintain control. Foreign investors will be able to directly acquire Canadian book publishing and distribution firms under limited circumstances that also involve providing guarantees of benefits to Canada.

The Investment Canada Act also permits special policies on foreign investment in the film distribution sector. Canadian policies provide that: akeovers of Canadian-owned and controlled distribution firms will not be allowed; investment to establish new distribution firms in Canada will only be allowed for importation and distribution activities related to proprietary products; and indirect or direct takeovers of foreign distribution firms operating in Canada will be allowed only if the investor undertakes to reinvest a portion of its Canadian earnings in accordance with national and cultural policies.

The Broadcasting Act sets out the broadcasting policy for Canada, which lists among its objectives, serve to safeguard, enrich and strengthen the cultural, political, social and economic fabric of Canada. The federal regulator, the Canadian Radio-television and Telecommunications Commission (CRTC), is charged with implementing the broadcasting policy. Under current CRTC policy, in cases where a Canadian service is licensed in a format competitive with that of an authorized non-Canadian service, the Commission can drop the non-Canadian service, if the new Canadian applicant requests it to do so. In June 1994, the CRTC de-listed a U.S. country music cable-television service when it licensed a new Canadian specialty country music channel. While this particular case was resolved when the parties involved agreed to a commercial settlement, the U.S. Government remains extremely concerned that the CRTC's competitive services policy remains in place.

B. Customs Valuation

Canada has acceded to the WTO Customs Valuation Code which provides that the customs value of imported goods shall be the transaction value -- the price actually paid or payable for the goods. Under the transaction value system, the value for duty is the total payment for the goods made by the buyer to the seller. The transaction value generally will be accepted by Canada Customs if the goods are sold for export to Canada and if the price paid or payable for the goods can be determined. Under the transaction value system, the value for duty of imported goods will normally be determined from

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data submitted by the importer. However, preparation of proper documentation by the exporter significantly contributes to expeditious entry.

C. Import Licenses

There are no general licenses required for importing goods into Canada. There are, however, provisions related to a variety of prohibited, controlled and restricted goods. Additional information regarding restrictions on the importation of these types of goods is provided in section (H) of this chapter.

D. Export Controls

This section was prepared by the Economic Section of the U.S. Embassy in Ottawa using Department of State resources. Canada controls exports under authorization of the Export and Import Permits Act (EIPA), the Export Control List (ECL) and the Area Control List (ACL). The ECL is an itemized list of goods subject to export control. The ACL is a list of specific countries which require export permits for all goods (whether or not they are on the ECL).

The EIPA utilizes these lists in order to exercise export controls over natural resources to encourage further processing in Canada; to limit the export of goods in circumstances of surplus supply or depressed prices; to restrict the export of unprocessed softwood lumber; to ensure that there is an adequate supply and distribution of any article, and to enact intergo vernmental arrangements or commitments.

Military export permits are normally denied to countries or destinations representing a strategic threat to Canada or its allies, countries involved in or under imminent threat of hostilities, countries under United Nations sanction, or countries whose governments have a persistent record of serious human rights violations, unless there is no reasonable risk that the goods might be used against the civilian population.

Under a series of defense sharing agreements with the United States, the requirement for an export permit to the United States is waived for all goods included in the ECL except for goods in Groups 3 and 4, as well as some goods in Group 5. U.S.-origin goods are controlled for re-export from Canada under Item 5400 of Group 5. All U.S.-origin exported goods require permits.

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For further information see the annual "Guide to Canada's Export Controls" published by the Department of Foreign Affairs and International Trade. The Export Controls Division can be reached by phone at (613) 996-2387 or by fax at (613) 996-9933, or by mail at the address listed in Appendix E, with the addition of Export Controls Division (EPE) C-4.

E. Import/Export Documentation

A properly completed Canada Customs Invoice or its equivalent is required for all commercial shipments valued at more than C$1,200 (approximately US$880) exported to Canada. In addition to the Canada Customs Invoice, shipments must be accompanied by a completed exporters Certificate of Origin which is required in order to obtain specialized tariff treatment under the provisions of the NAFTA. For details regarding documentation requirements or to obtain s ample invoices and other forms, contact Revenue Canada (see Appendix E for contact information).

F. Temporary Entry

Revenue Canada has made specific provisions for the temporary entry of certain goods into Canada for various purposes, such as testing, demonstration, and display. Such goods may enter under an ATA (Admission Temporaire -- Temporary Admission) Carnet or under a Temporary Admission Permit (Revenue Canada, Customs and Excise Form E29B) and may require either a refundable deposit or a proportional duty deposit, depending on the appropriate classification determined by Canadian customs regulations. Firms wishing to bring machinery and equipment, display equipment, and other items covered under Canadian temporary importation regulations are advised to contact Revenue Canada well in advance of shipment or arrival in Canada.

G. Labeling, Marking Requirements

The main pieces of legislation which regulate almost all product labeling and marking in Canada include: the Consumer Packaging and Labeling Act; the Weights and Measures Act; the Textiles Labeling and Advertising Act; the

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Precious Metals Marking and Labeling Act; and the Canadian Agricultural Products Act. Canada requires bilingual labeling (English and French) for most products. Bilingual designation of the generic name on most prepackaged consumer products is required by the federal Consumer Packaging and Labeling Act. Under this Act, the following information must appear on the package/label of a prepackaged consumer good sold in Canada:

Product Identity Declaration -- describes a product's common or generic name, or its function. The declaration must be in both English and French.

Net Quantity Declaration -- should be expressed in metric units of volume, when the product is a liquid, or a gas, or is viscous; or in metric units of weight, when the product is solid; or by numerical count. Net quantity may be expressed in other established trade terms.

Dealer's Name and Principal Place of Business -- where the prepackaged product was manufactured or produced for resale. In general, a name and address sufficient for postal delivery is acceptable. This information can be in either English or French.

The agency responsible for inspection of imports into Canada, Canada Customs, also requires an indication of the country of origin, such as "Made in the USA" on several classes of imported goods and on all printed matter. Goods not properly marked cannot be released from Canada Customs until suitably marked. The goods can be marked, at the importer's expense, either on Canada Customs' premises or on the importer's own premises under the supervision of Canada Customs officials. Moreover, Canadian regulations require that declarations of net content of all packaged consumer goods be stated in metric units in both English and French, although imperial units may also be shown. Most products may be packaged in imperial-measure containers with the metric equivalents expressed on the label. However, specified metrically dimensioned packaging is required for some products, mainly foods, personal care products, and detergents. The province of Quebec requires that all products sold in that province be labeled in French and that the use of French must be given equal prominence with other languages on any packages or containers sold in Quebec stores. The Charter of the French Language requires the use of French on product labeling, warranty certificates, dire ctions for use, public signs and written advertising. Further information on French labeling requirements is available

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from the Office de la Langue Francaise (Office of the French Language, see Appendix E for contact information).

Finally, with respect to the use of environmental claims, industry is charged with ensuring that any environmental claims are accurate and in compliance with relevant legislation. In general, environmental claims that are ambiguous, vague, incomplete, misleading, or irrelevant, and that cannot be substantiated through credible information and/or test methods, should not be used. In all cases, environmental claims should indicate whether they are related to the product itself or to the product's packaging materials.

H. Prohibited Imports

The majority of U.S. products shipped to Canada enter the market free from any import restrictions. However, under the provisions of the Canadian Customs Tariff regulations, certain commodities, such as reprints of Canadian copyrighted work, and some game birds, cannot be imported. Other goods are controlled, regulated, or prohibited under legislation falling within the jurisdiction of other government departments. Examples of regulated goods include: certain food products; clothing; drug and medical devices; hazardous products; some offensive weapons and firearms; endangered species; and motor vehicles.

Other items are regulated under the Export and Import Permits Act and require an import permit or certificate to be eligible for importation into Canada. The Act lists various agricultural products, a number of clothing and textile items, and certain steel products. Goods originating in certain countries may not qualify for importation into Canada.

I. Standards

Canada's standards are not identical to those in the United States. This does not mean that Canadian standards are more or less stringent than those in the United States, merely that they are different. Like the U.S. government, the Canadian government is concerned with protecting its citizens from faulty or unsafe products. However, in delineating the precise technical specificati ons that are required to ensure safety, both countries often use slightly different standards.

Under the aegis of the Standards Council of Canada (SCC), several private standards-writing organizations administer technical codes and standards for

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areas ranging from electrical and plumbing products to health-care technology. These organizations include:

o The Canadian Standards Association (CSA)

o Underwriters Laboratories of Canada (UL)

o The Canadian General Standards Board

o The Canadian Gas Association

The Canadian federal government also has numerous commodity standards to safeguard public welfare. The standards organizations try to avoid duplication of responsibility, but there is some overlap. U.S. manufacturers and exporters should determine what standards are applicable to their products. If certification is required, it generally must be obtained before the goods are imported into Canada. The process can be time-consuming, therefore certification should be one of the first steps taken to establish an export market in Canada.

Information on which standards or organization(s) administer(s) standards applicable to the firm's product can be obtained from the SCC (see Appendix E for contact information).

Standards and the NAFTA: The basic NAFTA rule is simple -- standards must not create unnecessary barriers to trade. To reduce such barriers, the NAFTA applies basic principles to bilateral trade:

testing facilities and certification bodies are treated in a nondiscriminatory manner;

federal standards-related measures will be harmonized to the greatest extent possible; and,

greater openness will be provided in the regulatory process. Greater standards compatibility removes structural barriers to Canadian and U.S. markets and increases the competitiveness of U.S. and Canadian manufacturers. Significant progress toward greater compatibility between U.S. and Canadian technical standards is taking place under the NAFTA.

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Standards organizations in the United States and Canada continue to work cooperatively in the development of joint standards and have made progress in several areas. For example, the Air Conditioning and Refrigeration Institute and the CSA have harmonized performance standards for air conditioners and heat pumps, packaged water chillers, and water-source heat pumps. UL and CSA have established common electrical safety standards for air conditioners, heat pumps, and refrigerant motor-compressors.

Since 1992, several U.S. testing and certification organizations, most notably UL and the American Plywood Association, have received accreditation in Canada. The CSA has also officially been recognized by the U.S. Occupational Safety and Health Administration (OSHA) as a Nationally Recognized Testing Laboratory. SCC and OSHA accreditations mean U.S. manufacturers can gain product approval for both the United States and Canada from one source, thereby eliminating the time and expense of pursuing separate certification for each market. Numerous other U.S. testing and certification organizations have since received accreditation approval from the SCC.

The NAFTA strengthens FTA technical standards obligations, expands coverage to include Mexico, sets up a committee on standards-related measures, establishes an Automotive Standards Council, identifies specific products for standards harmonization efforts through the creation of subcommittees on land transportation and telecommunications standards, and on labeling of textiles and apparel goods.

J. Free Trade Zones/Warehouses

Goods may be cleared at customs ports on the border or, if intended for inland destinations, may be forwarded in bonded carriers to the port city nearest the destination at which customs examination may be made and duties and taxes paid. With the exception of one special trade zone at the Sydport Industrial Park in Cape Breton, Nova Scotia, Canada has no free ports or free trade zones. At present, there are no federal or provincial laws specifically governing the establishment and operation of such zones. Sufferance warehouses under private ownership have been established for the storage and deposit of all imports received by various transportation modes, pending customs examination and clearance. An entry for consumption or into bonded warehouse must be presented to Canada Customs within 30 days. Goods may be entered into a Canada Customs bonded warehous e without the payment of duty, but must be cleared either

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for export or Canadian consumption within two years. Extended periods are allowed, by regulation, for certain goods.

Goods taken from bonded warehouses for consumption are dutiable at rates of the Customs Tariff in effect at the time, and the value for duty purposes is the value at the time of entry for warehousing. Goods exported from bonded warehouses to third countries are subject to Canadian export regulations. Repacking and sorting can be carried out in Canada Customs' bonded warehouses with the permission of Canada Customs, but assembly or other industrial activity is prohibited.

K. Special Import Provisions

Canada's special import provisions deal with the temporary importation of goods, as described previously in this Chapter, in Section F.

L. Membership in Free Trade Arrangements

This section was prepared by the Economic Section of the U.S. Embassy in Ottawa using Department of State resources.

The FTA, implemented in 1989, created vast opportunities for U.S. exporters and investors in Canada. As a result of the FTA, trade barriers have come down, investment rules have been liberalized, and bilateral cooperation on a wide range of issues has been expanded. The FTA has since been enhanced further through the implementation of the NAFTA which took effect January 1, 1994. This historic Agreement brings Mexico into the North American free trade area and expands the scope of the FTA in some key areas.

For example, the NAFTA contains provisions relating to intellectual property, land transportation and the environment, which were not provided for in the FTA. Many of the improvements to the FTA, now reflected in the NAFTA, are the direct result of experience gained by the United States and Canada in implementing that bilateral accord. Since the FTA has served as the model for the NAFTA, many U.S. firms who are already familiar with the FTA are well-positioned to reap early benefits from the NAFTA.

Like the United States, Canada is a member of the WTO and was a founding member of its predecessor, the General Agreement on Tariffs and Trade (GATT).

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CHAPTER 4

IMPORTS AND EXPORTS

December 1999

MAJOR CANADIAN EXPORTS TO INDIA($'OOOs)

Code

  1997 1998 Jan-Sept 1999

47 Pulp of wood/of other fibrous cellulosic mat; waste etc. 56,882 68,665 57,621

48 Paper & paperboard 95,613 37,374 53,876

07 Edible vegetables & certain roots & tubers 21,422 55,329 41,161

25 Salt; sulphur; earth & stone; plastering mat; lime & cement 33,736 30,188 25,310

31 Fertilizers 2,960 7,864 24,635

84 Machinery, boilers, mechanical appliances, engines, pts 86,072 22,901 15,502

85 Electrical mchy equip parts thereof; sound recorder etc. 14,935 21,089 11,925

90 Optical, photo, cine, meas, checking, precision, etc. 12,056 12,581 11,728

72 Iron and steel 11,259 9,276 11,179

40 Rubber and articles thereof 7,540 14,493 9,762

99 Special Transaction - Trade 6,847 8,441 6,281

74 Copper and articles thereof 5,878 4,240 4,078

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63 Other made up textile articles; sets; worn clothing, etc. 4,276 3,186 1,834

39 Plastics and articles thereof 8,623 2,115 1,803

26 Ores, slag & ash 861 992 1,518

30 Pharmaceutical products 2,089 2,675 1,389

44 Wood & articles of wood; wood charcoal 2,570 2,875 1,251

29 Organic chemicals 4,521 7,682 1,196

28 Inorgn chem; compds of prec met, radioact elements etc. 2,181 3,840 1,118

98 Special Classification Provisions 4,718 2,631 1,090

62 Art of apparel & clothing access, not knitted/crocheted 543 54 884

38 Miscellaneous chemical products 1,181 1,949 880

55 Man-made staple fibres 901 1,026 556

86 Railway/tramway locomotives rolling-stock & parts; etc. -- 4,153 495

73 Articles of iron or steel 8,166 3,558 323

88 Aircraft, spacecraft, and parts thereof 681 2,471 298

87 Vehicles o/t railw/tramw roll-stock, pts & accessories 447 1,254 240

59 Impregnated, coated, cover/laminated textile fabric 1,038 476 235

76 Aluminium and articles thereof 3,514 1,227 226

49 Printed books, newspapers, pictures & other product etc. 2,780 9,206 79

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15 Animal/veg fats & oils & their cleavage products; etc. 5,405 12,257 63

10 Cereals 60,244 5,059 19

27 Mineral fuels, oils & product of their distillation; etc. 30 17,184 ---

37 Photographic or cinematographic goods 1,756 5,258 ---

  Sub-total468,562

383,569

288,565

  Total475,145

389,435

293,143

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December 1999

MAJOR CANADIAN IMPORTS FROM INDIA($'OOOs)

Code

  1997 1998 Jan-Sept 1999

61 Art of apparel & clothing access, knitted or crocheted 97,642126,568

131,729

62 Art of apparel & clothing access, not knitted/crocheted120,138

136,210

122,886

71 Natural/cultured pearls, prec stones & metals, coin, etc. 42,533 56,891 56,608

52 Cotton 54,248 67,489 54,498

72 Iron and steel 4,419 20,272 33,081

29 Organic chemicals 36,309 57,337 32,830

09 Coffee, tea, maté and spices 28,247 39,322 30,068

63 Other made up textile articles; sets; worn clothing, etc. 27,797 30,682 28,058

84 Machinery, boilers, mechanical appliances, engines, pts 47,715 28,917 19,974

03 Fish and crustacean, mollusc and other aquatic invertebrate 13,913 20,327 19,131

57 Carpets and other textile floor coverings 22,725 25,421 18,942

73 Articles of iron or steel 23,174 28,015 18,296

42 Articles of leather; saddlery/harness; travel goods etc. 23,242 24,440 18,219

85 Electrical mchy eqpt parts thereof; sound recorder etc. 18,967 25,026 17,251

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64 Footwear, gaiters and the like; parts of such articles 19,868 17,720 14,798

10 Cereals 13,643 16,611 11,379

08 Edible fruit and nuts; peel of citrus fruit or melons 7,130 5,004 11,193

94 Furniture; bedding, mattress, matt support, cushion etc. 7,425 12109 8,741

87 Vehicles o/t railw/tramw roll-stock, pts and accessories 7,411 9,930 7,771

32 Tanning/dyeing extract; tannins and derivs 8,245 9,847 7,503

51 Wool, fine/coarse animal hair, horsehair yarn and fabric 11,155 12,381 7,229

68 Art of stone, plaster, cement, asbestos, mica/sim mat 6,797 7,635 6,388

55 Man-made staple fibres 4,804 5,623 5,737

50 Silk 6,656 8,504 5,342

07 Edible vegetables and certain roots and tubers 5,430 5,291 5,317

20 Prep of vegetable, fruit, nuts or other parts of plants 3,939 6,755 5,297

12 Oil seed, oleagi fruits; miscell grain, seed, fruit etc. 2,888 5,826 4,785

26 Ores, slag and ash 1 1 4,579

74 Copper and articles thereof 3,418 5,223 4,408

46 Manufactures of straw, esparto/other plaiting mat; etc. 1,078 2,877 4,238

39 Plastics and articles thereof 2,013 2,233 4,015

21 Miscellaneous edible preparations 4,161 5,646 3,834

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30 Pharmaceutical products 1,546 4,407 3,792

95 Toys, games and sports requisites; parts and access thereof 1,941 3,014 3,347

13 Lac; gums, resins and other vegetable saps and extracts 2,877 4,494 3,319

33 Essential oils and resinoids; perf, cosmetic/toilet prep 3,580 4,613 3,255

83 Miscellaneous articles of base metal 4,921 4,761 3,183

82 Tool, implement, cutlery, spoon and fork, of base met etc. 3,139 4,134 3,029

53 Other vegetable textile fibres; paper yarn and woven fab 5,247 3,531 2,555

90 Optical, photo, cine, meas, checking, precision, etc. 1,343 1,865 2,283

40 Rubber and articles thereof 1,646 3,532 2,211

44 Wood and articles of wood; wood charcoal 3,773 2,473 2,187

25 Salt; sulphur; earth & ston; plastering mat; lime & cem 881 3,873 1,700

34 Soap, organic surface-active agents, washing prep, etc. 1,000 1,139 1,663

54 Man-made filaments 1,939 2,180 1,632

15 Animal/veg fats & oil and their cleavage products; etc. 691 1,297 1,620

76 Aluminium and articles thereof 1,012 2,556 1,465

70 Glass and glassware 1,215 1,853 1,430

96 Miscellaneous manufactured articles 1,325 1,995 1,387

98 Special Classification Provisions 1,106 548 1,354

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41 Raw hides and skins (other than furskins) and leather 2,581 1,743 1,262

28 Inorg chem; compds of prec met, radioact elements etc. 690 2,004 1,180

69 Ceramic products 1,205 712 910

38 Miscellaneous chemical products 30 846 815

49 Printed books, newspapers, pictures & other product etc. 735 1,310 777

19 Prep of cereal, flour, starch/milk; pastrycooks; prod 1,109 965 753

24 Tobacco and manufactured tobacco substitutes 7,099 4,697 132

  Sub-total730,820

890,653

771,366

  Total740,671

898,746

778,047

CANADA BUSINESS TRAVEL, ETIQUETTE & PROTOCOL TRAVEL

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CONSIDERATIONS Passport/Visa Requirements Persons who are not Canadian citizens or permanent residents of Canada may require a visa to enter Canada. The requirement for a visa also applies to visitors who are in transit through Canada. As the list of which foreign nationals require visas is subject to change, please contact local Canadian consular authorities for more information. Many travelers do not require a visa to visit Canada. These include:

Persons lawfully admitted to the United States for permanent residence who are in possession of their alien registration card (Green card) or can provide other evidence of permanent residence;

British citizens and British Overseas Citizens who are re-admissible to the United Kingdom;

Citizens of British dependent territories who derive their citizenship through birth, descent, registration or naturalization in one of the British dependent territories;

Citizens of certain countries travelling on a diplomatic passport; and

Persons holding passports or travel documents issued by the Holy See. (Visa information provided by Citizenship and Immigration Canada) Anyone with a criminal record (including a driving-while-intoxicated charge) should also contact the nearest Canadian embassy or consulate before travel. Please note that due to international concern over child abduction, single parents, grandparents or guardians traveling with children often need proof of custody or notarized letters from the other parent authorizing travel. Anyone under age 18 and traveling alone should carry a letter from his/her parent or guardian authorizing the trip.

Health No vaccination certificates are required unless arriving from an infected area. Canada has no special health risks. Standards of community health and sanitation are comparable to those in the United States. Competent doctors, dentists, and specialists of all types are available. Doctors and hospitals may expect immediate payment in cash for health services. Medical insurance is not always valid outside a traveler’s home country; visitors have found that, in some cases, supplemental medical insurance with specific overseas coverage has proven to be useful. Health care professionals in Quebec may only speak French. As recommended vaccinations, food and water precautions, and geographic specific diseases, are subject to change,

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check with the World Health Organization (WHO) or the International Travelers Hotline of the U.S. Center for Disease Control and Prevention (CDCP) for the most up to date information. A visit to your doctor, who should also be able to advise you on vaccinations, is recommended prior to travelling.

Currency/Foreign Exchange Travelers may enter or leave Canada with any amount of Canadian notes and coins, and any amount of foreign currency, traveler's checks, letters of credit or any other negotiable instruments. Major credit cards (American Express, Visa, MasterCard, and Diner’s Club) are widely accepted in Canada. Exchange and banking facilities are readily available in Canada. Money conversion procedures are simple, and some establishments in Canada will accept U.S. currency. Converting major world currencies is a simple process at most banks. Climate/Packing for the Trip Canada has a climate that can generally be described as cool temperate. Temperatures in this vast country vary from frigid to mild, with long and extremely cold winters in the arctic north, moderate seasons in the mountainous southwest, and prolonged cold winters in the remainder of the country. Average January temperatures in urbanized portions of Canada vary from 37 degrees Fahrenheit in Vancouver to 12 degrees in Quebec and Ottawa. July temperatures range from an average of 70 degrees in Toronto to 62 in Calgary. Business travelers arriving in Canada during the harsh winter months should come prepared with a heavy overcoat, gloves and boots. During summer months, visitors should bring lightweight and medium-weight fall clothing, as cool days are not uncommon even during the warmest months of the year. Rain gear is also a necessity in Canada, particularly in Vancouver and other parts of British Columbia. A conservative business wardrobe is perfectly acceptable in Canada. The electric current in Canada is the same as in the United States -- 110v, 60 cycle, three-phase AC.

Language Canada has two official languages, English and French. Except for some parts of Quebec and the Maritime Provinces, English is the dominant language.

Time Zone Canada has seven time zones:

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Pacific Time is 3 hours behind Eastern Standard Time.

Mountain Time is 2 hours behind Eastern Standard Time.

Central Time (Regina) is the same as Eastern Standard Time throughout the year.

Central Time (Winnipeg) is 1 hour behind Eastern Standard Time.

Eastern Time is the same as U.S. Eastern Standard Time.

Atlantic Time is 1 hour ahead of Eastern Standard Time.

Newfoundland Time is 1½ hours ahead of Eastern Standard Time. Daylight Savings Time is from April 4 to October 30.

TRANSPORTATION & CUSTOMS

Transportation - Except in remote northern regions, Canada possesses an advanced air transportation system with extensive connections to the world's major traffic points, well served by major international air carriers. Customs - Visitors to Canada may bring certain personal goods into Canada duty and tax-free, provided that all such items are declared to Canada Customs upon arrival and are not subject to restriction. People entering Canada must declare what they are bringing in beyond allowable limits and, upon request, open packing cases or baggage and take out items for inspection by customs. The import of foreign currency is unrestricted and the amounts declared upon entry may be re-exported. It is an offence to take alcohol across a provincial boundary. Revenue Canada has made specific provisions for the temporary entry of certain goods into Canada for various purposes, such as testing, demonstration, and display. Such goods may enter under an ATA (Admission Temporaire -- Temporary Admission) Carnet or under a Temporary Admission Permit (Revenue Canada, Customs and Excise Form E29B) and may require either a refundable deposit or a proportional duty deposit, depending on the appropriate classification determined by Canadian customs regulations. Firms wishing to bring machinery and equipment, display equipment, and other items covered under Canadian temporary importation regulations are advised to contact Revenue Canada well in advance of shipment or arrival in Canada.

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Accommodations Hotels in Canada are comparable to those in the United States in terms of quality, reservation procedures and service; many of the larger international hotel chains are well established in Canada and are connected to U.S. and international reservation systems.

Accommodation Taxes - Accommodation is subject to the national goods and services tax (GST) of 7 percent plus the applicable provincial sales tax (PST), which varies, in those provinces which tax accommodation; in Nova Scotia, Newfoundland/Labrador and New Brunswick, a combined 15 percent harmonized sales tax (HST) is levied on accommodation. Visitors to Canada who stay less than one month in any particular hotel (or other paid accommodation) may be eligible for a refund of the GST and PST (or HST). Each receipt for accommodation must total a minimum of C$50 before taxes, and total pre-tax accommodation plus exported purchases must reach C$200 to obtain a tax rebate. The receipt must also indicate how many nights were spent at each location. Some hotel services (telephone calls, room service, etc.) are not eligible for a rebate, but under some packages (room plus meals, for example) the tax on the full package price is rebatable. Rental of a campsite, houseboat, tent or travel trailer does not qualify for a rebate, nor do time-share purchases.

Getting Around Domestic airfares per mile in Canada are generally higher than U.S. fares, and distances between population centers are considerably greater. Likewise, a good highway system (with somewhat less emphasis on interstate roads) exists within 200 miles of the U.S. border and supports extensive truck, bus and automobile traffic. Canada also has an extensive railway system connecting the country from east to west. All large cities have a public transit system, generally buses. The operation of public transport is frequently subsidized by provincial and local governments, making most fares reasonable. In spite of extensive public transport arrangements, Canada is as much an automobile society as is the United States. Left-hand-drive vehicles are standard; traffic moves on the right side of the road. International highway symbols are used in Canada, and distances are in the metric (or metric and miles) system. Seat belts and infant/child seat restraints are mandatory in all Canadian provinces. Fines are imposed for non-use of seat belts and child restraints. Some foreign driver's licenses are valid in Canada, though proof of auto insurance is also required. Driving under the influence of alcohol (DWI) is a serious offense. Penalties are heavy, and any prior conviction (no matter how long ago or how minor the infraction) is grounds for exclusion from Canada. A waiver of exclusion may be obtained from Canadian Consulates, but requires several weeks. It is illegal to take automobile radar detectors into Quebec, Ontario, Manitoba or the Yukon and Northwest Territories. The police will confiscate radar detectors, whether in use or not, and impose fines

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up to US$1000. Winter travel can be dangerous due to heavy snowfalls that make road conditions difficult. Holiday periods can also be dangerous because of increased traffic. Travelers should be cautious of deer and elk when driving at night in rural areas.

Communications Canada is integrated with the U.S. direct-dial long-distance telephone system (they share the same country code and toll calls are treated in many ways as national long-distance calls rather than as international calls). All forms of communication and transmission are possible, including voice, text, data, and video, and worldwide telecommunications services are available. Mail service within and from Canada is generally good, but can be slow. All first-class mail in Canada is airmail within the country, and is provided at no extra cost. Additional postal services are available in Canada, including priority mail and private courier services.

Information Sources The Canadian Broadcasting Corporation (CBC) operates two national television networks, one in English broadcasting on two channels (regular programming and all news on cable) and one in French also broadcasting on two channels (regular programming and all news on cable). A second national television network (CTV) is private and operates two English channels (regular programming and all news on cable). A third private network (Global Television) operates in the heavily populated area of Southern Ontario and some areas of Western Canada, some areas of Atlantic Canada and in Quebec. There are fifteen independent television stations in Canada.

Cable television use in Canada is highly developed with over 90 percent of the country's population hooked into a cable television system. The Canadian Radio-television and Telecommunications Commission (CRTC) regulates broadcasting and cable television.

The province of Quebec maintains its own TV and radio broadcasting service, offering news, educational programming and entertainment in French. French language programming can be found throughout Canada, including in the majority of English speaking regions.

In the area of print media, there are more than 107 daily newspapers published in Canada. Over 85 percent are English and approximately ten percent are French. A few daily newspapers are published in languages other than English or French. Canada's two largest daily national business newspapers are the Globe and Mail and The Financial Post.

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BANKING & BUSINESS HOURS

Banks are open 9:30 AM to 5:00 PM, Monday through Thursday; 9:30 AM to 6:00 PM on Friday. Some banks are open Saturday from 10:00 AM to 3:00 PM. Business hours are generally from 9:00 AM to 5:00 PM.

SHOPPING

Visitors to Canada may receive rebates for the GST and PST (or the HST if applicable) paid on goods purchased if they are taken out of the country within 60 days of their delivery to the purchaser. A form (GST 176 E) must be filed with Revenue Canada to receive the rebate. For details, contact Revenue Canada and ask about the Visitor Rebate Program; explanatory booklets (which include the required form) are available at border crossings, airports and visitor/tourist bureaus.

The total sale amount on each receipt for eligible exported goods that visitors submit to claim a GST rebate must be at least C$50 before taxes; the pre-tax sum of all purchases (including accommodation) must reach at least C$200.

There are also duty-free shops in provinces which border the U.S.; those shops not located in airports can process a refund even if the purchase was made elsewhere, as long as the original receipts and the goods are both available for examination; if the goods have already been exported, proof of export is required. A photo identification is also necessary. Up to C$500 can be claimed back in GST, HST and PST.

The following are not eligible for sales tax rebates:

Meals and beverages, including alcoholic beverages

Tobacco

Transportation, including automobile rental, repairs, fuel and parking fees

Personal services: dry cleaning, entertainment, etc.

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Professional services: wedding/funeral arrangements, etc.

Dining & Entertainment The larger Canadian cities offer a wide range of restaurants and cuisines. There is a more pronounced French influence in Quebec, and the Pacific coast city of Vancouver is now home to Asian immigrants of many countries who have brought their native cuisines with them.

BUSINESS ETIQUETTE & PROTOCOL

The Canadian economy is highly developed, giving Canadians one of the highest standards of living in the world. Manufacturing is concentrated in transportation and communications equipment, engineering, steel, and consumer goods. Most manufacturing is concentrated in Ontario and Quebec. Primary industries built on Canada's abundant natural resources remain an important part of the economy and a major source of exports. The Canadian economy is closely linked by trade and investment with other countries, especially the United States. Business customs in Canada closely mirror those of the United States. This is not to say, however, that doing business in Canada is exactly the same as doing business in the United States. Business travelers to Canada should be sensitive to cultural and language differences and allow adequate time for the development of personal contacts in business dealings. Canada is a bilingual country with two official languages, English and French. English is the language spoken in the geographical majority of the country. It is also the generally accepted language of business. French is spoken primarily in Quebec and is the official language of that province. The province of New Brunswick is a bilingual province with the largest French speaking population outside of Quebec. Canadian businessmen, in general, tend to be more formal and conservative than their American counterparts. Some sociologists have traced this phenomenon to the historical origins of the two countries; whereas the United States was born of settlers who fought for and won their independence from Great Britain, Canada was largely populated by Crown Loyalists. To this day, the theorists contend, the Canadian business culture thus tends to be more hierarchical, less open to entrepreneurship and risk-taking, and less driven by short-term achievement. Business practices in the country, while similar to those in the United States (with the notable exception of the province of Quebec), are probably more like those of the British: conservative, understated attire; strict adherence to protocol (e.g., use of titles in all correspondence, punctuality, letters of introduction/use of intermediaries); conducting all business affairs -- including negotiations -- with a certain reserve are all advisable for the foreign visitor. Below are some suggested rules of etiquette and protocol to be observed:

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Avoid conveying an attitude that suggests that Canadians are just like Americans. While it is fair to say that there are more similarities than differences between the two, remember that Canadians are proud of their country and their distinct heritage. Assuming that Canadians are "just like Americans" is not only erroneous, but can be a significant irritant to Canadian citizens.

In conversation, keep in mind that the word Eskimo is offensive to some; use the term "Inuit" instead. Likewise, aboriginal Canadians are usually referred to as aboriginals or as First Nations. Relations between First Nation groups and federal and provincial governments have been strained in the 1990s, and several violent (though infrequent) confrontations have erupted.

Also, do not refer to French-speaking Canadians as French-Canadians. If the subject of separatism or partition of Quebec comes up, try not to take sides.

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CHAPTER 5

CANADA

DIRECT MARKETING

OVERVIEW

The Canadian mail-order industry consists of approximately 660 firms, which, combined, satisfy 83.4 percent of Canada's total market demand. Canadian mail-order consumers exhibit similar preferences to the mail-order customers in the United States. As a result, companies with a good U.S. client base can expect to do well in the Canadian market. While the figures in this report are based on actual sales and imported goods, many of the products listed for sale in Canadian mail-order catalogs are U.S.-made products. These products are imported by mail-order catalog houses for shipment to their Canadian clients.

While the figures in this report are conservative, and track closely with proven growth rates over the last several years, some industry specialists predict that the market size of this industry will triple by the end of the 1990s to US$6.6 billion.

PRODUCT DESCRIPTION

This analysis examines the market for mail-order sales in Canada. It includes the sale of a full range of consumer products, from apparel to household appliances to hobby supplies.

PLEASE NOTE: Information contained in this report relies heavily on sources that may or may not include various Canadian government agencies, opinions of industry experts and unofficial U.S. Embassy estimates.

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MARKET HIGHLIGHTS & BEST PROSPECTS

Market Profile

Growth in Canadian demand for mail-order purchases can be attributed to a rise in consumer confidence and powerful secular trends, such as demographic and work place shifts. With technology broadening the reach and increasing the operating efficiencies of mail-order firms, the convenience of mail order catalog shopping has become a pleasant and productive experience compared to a hectic retail buying experience.

Also influencing the growth in Canadian demand for mail-order purchases is the number of smaller catalog companies entering the market. Until recently, only large national Canadian catalogs have been the major players in the industry. Recently, smaller, product-specific companies have made headway into the Canadian market.

Best Sales Prospects The following section describes products which represent the best sales prospects for mail-order sales to Canada. These products have experienced steady growth since 1994, and this growth is expected to continue during the forecast period:

Women's apparel

Men's apparel

Computers and computer supplies

CDs

Tapes and books

Collectibles

Outdoor & recreation equipment

Art work

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Seeds and plants The success of mail-order sales of women's and men's apparel is due to their status as fashion items. Canadian consumers are willing to pay more for the quality and variety of garments afforded through mail-order catalogs, especially if the garments are distinct or unique and sold under a renowned label. Since flexible return policies and speedy delivery times have partially solved the problem of getting a correctly fitted garment, growth in mail-order apparel sales has been facilitated. Computer hardware and software sales through mail-order catalogs have benefited from the exploding array of products that are sometimes only available via catalogs. Additionally, the improving acceptance and effectiveness of toll-free product support lines -- both voice and on-line -- are making purchases of computers and computer supplies by mail-order much more feasible. Best prospect products for mail-order sales growth possess one or more of the following

Easy to put through the mail (either small enough or light enough);

Good remote product support;

Unavailability or lack of variety of product through traditional retail outlets;

Fashion or unique items where labels add high percentage to product's value; and/or

Cheaper than comparable products available through existing channels. .

COMPETITIVE ANALYSIS: Domestic Production

Canadian-based mail-order companies supply the bulk of mail-order sales in Canada. Industry sources predict Canadian mail-order catalog firms will continue to maintain at least an 80 percent share of domestic market demand through 1998-1999.

Canada - Direct Marketing Nationwide, Canada has an estimated 660 mail-order firms which can be divided into the following three segments:

Small Consumer -- Catalog firms that mail to fewer than 100,000 households per year, primarily to consumers.

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Large Consumer -- Catalog firms that mail to 100,000 households or more annually, primarily to consumers.

Business-to-Business -- Catalog firms that primarily target business customers. The Canadian mail-order market has historically been dominated by large, national Canadian consumer catalog firms. U.S. Market Position and Share U.S. companies supply the majority of mail-order imports to the Canadian market, and American mail-order catalog companies are expected to increase their market share at a real annual rate of five percent through the late 1990s. U.S. mail-order firms have done extremely well in supplying the Canadian market in the apparel products sector, where few Canadian firms compete. U.S. firms such as Lands' End, L.L. Bean, J. Crew and others have an advantage over Canadian firms, which are typically smaller, not as technologically advanced, and not as well marketed. The success of large U.S. apparel mail-order firms has encouraged a number of other specialty mail-order catalog firms to enter the market. Among recent U.S. entrants to the Canadian market are those specializing in computers and computer supplies, general merchandise, gifts, and furniture. U.S. mail-order firms supply under 25 percent of Canadian market demand for mail-order items, but they are well positioned to increase their market share. U.S. mail-order firms operate highly automated inventory management, list management, and order taking/processing systems. Such technological intensity allows U.S. firms to maintain low overhead expenses, competitive prices, and high product sales and turnover rates. These and other factors, including geographic proximity and cultural similarities make U.S. mail-order firms strong competitors not only for Canadian mail-order firms, but also for other forms of retailers in Canada. U.S. firms have the potential to achieve significant market share through their technological edge and other advantages that ensure quality, timely delivery, low costs, and improved customer service. U.S. mail-order firms will continue to be in a competitive position, selling to Canadian consumers because of the North American Free Trade Agreement (NAFTA). Other Imports Canadian consumers receive mail-order catalogs from around the world, but mail-order catalogs from businesses outside Canada or the U.S. account for less than three percent of the total market. The largest source of third-country mail-order catalogs is the United Kingdom with two percent of the market, followed by Hong Kong with 0.5 percent. However, the share of Canada's import market held by third-country competitors is growing.

Competitive Factors The Canadian mail-order industry is rapidly becoming more customer-oriented. Canadian mail-order firms use better, more accurate mailing lists, and reduce the size and/or number of pages in catalogs in

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response to consumers' environmental concerns. Additionally, most mail-order firms (92 percent) now offer toll-free numbers for customer orders. Central to the competitiveness of U.S. firms in Canada is their ability to recognize and address the fact that Canadian consumers demand high-quality products and services. When surveyed, Canadian consumers cited high-quality products, toll-free numbers, speedy delivery, and easy-to-complete forms as very important when purchasing from mail-order firms. It is also critical that U.S. firms clearly understand Canada Customs requirements, the Canadian tax structure and the Canadian postal system. The Canadian Direct Marketing Association reports that Canadians do not want to deal with customs and duty hassles, hidden delivery charges, or long waits for merchandise delivery. Further, when Canadians need to return an item, they want the process to be as simple as possible. Given the relatively under-developed nature of the Canadian mail-order market, the close proximity of the United States to Canada, consumer similarities between Canada and the United States, the ability of U.S. firms to use technology to offer quality goods at competitive prices and NAFTA benefits, U.S. mail-order firms are well positioned to increase their share of mail-order sales to Canada. END-USER ANALYSIS Mail-order activity in Canada ranges from rural communities to urban centers and from the smallest households to the biggest corporate offices. The primary end-users of mail-order catalogs in Canada, however, are rural and urban households. According to industry experts, fewer mail-order catalogs enter a typical Canadian household than U.S. household, but Canadians respond to mail order catalogs at rates exceeding those of their U.S. counterparts. Figures from Kubas Consultants indicate that 44 percent of Canadian consumers have ordered goods from a mail-order catalog at least once. More women (53 percent) than men (35 percent) use mail-order catalogs, while younger Canadians are more likely to use mail-order catalogs than older consumers. Households, with large incomes between C$30,000 and C$50,000 are more likely than households with smaller incomes to use mail-order catalogs. Approximately 40 percent of Canada's population is of French, British or Irish ancestry. Twenty percent of the population is defined as being of "multiple origin". The remaining 40 percent of the population is mainly of German, Italian, Ukrainian, Chinese, Dutch, native North American, Polish or Scandinavian descent. Because Canadian ethnicity is so diverse, direct marketing strategies should reflect multi cultural aspect of Canadian life in order to maximize potential sales opportunities. Industry sources report that apparel catalogs are the most well-received mail-order catalog. U.S. mail-order apparel catalogs have a strong presence in middle to upper-income Canadian homes because domestic competition is minimal from Canadian mail-order companies. Computers and computer supplies, purchased through mail-order catalogs, are rapidly gaining popularity as an increasing number of Canadians buy new computers or upgrade their current systems. Canada Post reports that although Canadians are heavily exposed to, and influenced

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by, U.S. media, Canadians continue to show distinct preferences. Canadians consumers are much more conservative and cautious buyers than their counterparts in the United States. In the past, mail order shopping has been the subject of considerable skepticism among Canadians. This attitude is changing as a result of infomercials from U.S. television which are succeeding in making Canadians more comfortable with mail order shopping. Additionally, Canadians place high priorities on price and product quality. Canadians are loyal repeat customers once their trust is gained by a mail-order firm.

MARKET ACCESS & REGULATIONS

Taxes Most products entering Canada are subject to the federal Goods and Services Tax (GST), a value-added tax levied at every stage of production and sales. Direct marketing firms that conduct more than C$30,000 per annum in sales must register with Revenue Canada. Revenue Canada issues a GST number which is used to collect the tax from customers (the GST number must be included on all invoices). With few exceptions, Canada’s provinces also apply Provincial Sales Taxes (PST). Companies can apply for a vendor permit and collect the PST from the consumer directly. In some cases, a single Harmonized Sales Tax (HST) is paid; the HST is in effect a merger of the GST and appropriate PST for the province which subscribe to the HST system. Most goods shipped to Canada are subject to duties and GST. An exemption from duties and taxes exists for any package valued at less than C$20. Any goods valued at more than C$20 that arrive in Canada will undergo customs clearance procedures. A C$5 handling fee is assessed on parcels mailed to Canadian customers via parcel post, and when duties and taxes are not collected in advance by suppliers. If non-resident mail-order suppliers use private courier firms, or bulk shipping by freight forwarders, the fee is not applied. In such cases, the cost of clearing the goods through Canada Customs will continue to be the responsibility of the mail-order firm shipping the merchandise.

Labeling and Packaging The main laws regulating most product labeling and marking in Canada include:The Consumer Packaging and Labeling Act; The Weights and Measures Act;The Textiles Labeling and Advertising Act; The Precious Metals Marking and Labeling Act; andThe Canadian Agricultural Products Act. Canada requires bilingual labeling (English and French) for most products. Bilingual designation of the generic name on most prepackaged consumer products is required by the federal Consumer Packaging and Labeling Act. Under this Act, the following information must appear on the package/label of a prepackaged consumer good sold in Canada:

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Product Identity Declaration - Describes a product's common or generic name, or its function. The declaration must be in both English and French. Net Quantity Declaration - Should be expressed in metric units of volume, when the product is a liquid, a gas, or is viscous; or in metric units of weight, when the product is solid; or by numerical count. Net quantity may be expressed in other established trade terms. Dealer's Name and Principal Place of Business - Where the prepackaged product was manufactured or produced for resale. In general, a name and address sufficient for postal delivery is acceptable. This information can be in either English or French. Country of Origin - The agency responsible for inspection of imports into Canada, Canada Customs, also requires an indication of the country of origin, such as "Made in XXXX", on several classes of imported goods and on all printed matter. Goods not properly marked cannot be released from Canada Customs until suitably marked. The goods can be marked, at the importer's expense, either on Canada Customs' premises or on the importer's own premises under the supervision of Canada Customs officials. Moreover, Canadian regulations require that declarations of net content of all packaged consumer goods be stated in metric units in both English and French, although imperial units may also be shown. Most products may be packaged in imperial-measure containers with the metric equivalents expressed on the label.

Distribution/Business Practices Large Canadian mail-order firms use their own warehouses and distribution centers to fill orders, while most smaller firms use their existing office/retail sites as distribution centers. Less than five percent of small Canadian mail-order firms use outside operations for distribution purposes. Most Canadian catalog firms ship via Canada Post's surface delivery method. The second-most common means of shipping is surface delivery using a private courier. Canadian mail-order firms primarily charge for shipping and handling based on the value of the total order. Individual charges per item is another method used by mail-order firms. Few Canadian mail-order firms "drop-ship" merchandise to consumers directly from manufacturers. Distribution Under NAFTA - The implementation of the NAFTA has greatly increased trade activity between Canada and the United States. Economic and geographic barriers to trade are disappearing at a rapid rate. In the United States, intense competition and deregulation of the communications and transportation industries has led to lower distribution and transportation costs for U.S. suppliers. Mailing Lists Canada has approximately 2,000 commercial lists available to mail order firms. Commercial lists can be either consumer or business lists. The average consumer list consists of 50,000 names, and the average business list contains 30,000 names. The vast majority of lists are available on a rental basis. Lists can be "cut" into various sections. These can include such variables as gender, geography, language, or purchasing patterns.

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CANADA POST CORPORATION

The Canada Post Corporation is the country’s postal service. The corporation offers a wide-range of services for the delivery of envelope mail and packages within Canada. For more information on the services offered by the Canada Post Corporation, contact them directly.

In Canada, the Postal Code alternates between alphabetic and numeric characters. The first character of the Postal Code is a letter which identifies a province or region within a province, the second digit is always a number and indicates whether the mail is destined for an urban or rural location. The third character specifies the location even more precisely, and the last three characters provide the most specific destination identification.

The Canadian Postal Code system facilitates the use of census-based targeting programs. Postal Codes can be correlated to census data and specific behavior information and Mail-order companies can use this information to correlate purchasing data and consumer behavior.

SPECIAL CONSIDERATIONS IN MARKETING TO CHILDREN

The largest marketing association in Canada recently announced new directives, which took effect in April 1999, for its members who engage in marketing to children. The Canadian Marketing Association (CMA) has amended its mandatory Code of Ethics to better guide its members and protect the interests of children, who are beginning to enter relationships with information-based marketers through the internet and other interactive technologies.

The Canadian Marketing Association is the largest association in Canada for information-based marketers. Its 750 corporate members are responsible for approximately US$9 billion in sales through information-based marketing each year. Members include Canada's major financial institutions, publishers, cataloguers, music, book and video clubs, charitable organization, relationship marketers and those engaged in electronic commerce and multimedia marketing. These amendments were developed after the CMA consulted with many member companies, international partners and advocacy groups who have expertise in children's issues.

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FINANCING

The majority of goods purchased through mail order have been paid for by credit card. The use of credit cards facilitates immediate purchase and delivery of goods across the Canadian border.

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CHAPTER 6

CANADA TRADE OVERVIEW Canada is the world's seventh-largest market economy, and is positioned to lead the Organization for Economic Cooperation and Development (OECD) in economic output in 1999, with projected growth of about three percent. Prices for most goods and services are established by the market. The most important exceptions are government services, services provided by regulated public service monopolies, most medical services, and supply-managed agricultural products (eggs, poultry and dairy products). Business opportunities in Canada fall within virtually the full spectrum of industry and agricultural sectors, and in virtually every business activity. More specifically, however, the five top best prospect sectors for the near term include the following: computers and peripherals; computer software; telecommunications equipment; automotive parts and service equipment; and building products. There is also strong demand for value-added food products. Leading imports in the late 1990s have included motor vehicles and parts, industrial machinery, crude petroleum, chemicals, agricultural machinery. Generally, Canadians have strong national pride, and will often favor Canadian products, especially if they offer similar features at a similar cost. This is particularly true for any government procurement, local or federal, where not covered under the rules of either World Trade Organization (WTO) or bilateral/multilateral free trade agreements. Nevertheless, competition in Canada is generally fair. Trade with the United States The U.S.-Canada trading relationship is the largest in the world. Approximately 80 percent of Canada's merchandise exports are destined for the United States, while merchandise imports from the U.S. comprise 77 percent of the total; other major exporters to Canada are from the European Union (EU; 8.7 percent) and Japan (3.1 percent). Since the implementation of the North American Free Trade Agreement (NAFTA) in 1994, U.S. exports to Canada have increased by over 40 percent. Almost one-third of U.S.-Canadian trade is in the automotive sector. Under the 1965 U.S.-Canada Automotive Agreement (Auto Pact), which provided for free trade in cars, trucks, and auto parts, two-way trade in automotive products rose from US$715 million in 1964 to US$104.6 billion in 1996.

sector. Under the 1965 U.S.-Canada Automotive Agreement (Auto Pact), which provided for free trade in cars, trucks, and auto parts, two-way trade in automotive products rose from US$715 million in 1964 to US$104.6 billion in 1996.

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TRADE AGREEMENTS Canada passed implementing legislation for the Uruguay Round agreement under the General Agreement on Tariffs and Trade (GATT), and joined the World Trade Organization as a founding member. Canada is also expanding its economic ties across the Pacific through membership in the Asia-Pacific Economic Cooperation (APEC) forum. Canada has been exploring the possibility of a free trade agreement with the South American trading bloc Mercosur (Argentina, Brazil, Paraguay and Uruguay), whether or not the U.S. decides to participate as well. This incremental approach may be a fall-back position in case negotiations for a Free Trade Area of the Americas (FTAA) takes longer to create than expected. North America Free Trade Agreement The 1989 bilateral U.S.-Canada Free Trade Agreement (FTA) has since been enhanced and expanded through the implementation of the North America Free Trade Agreement (NAFTA), which took effect in 1994. This historic agreement brought Mexico into the free trade area and expands the scope of the FTA in some key functional areas; for example, the NAFTA contains provisions relating to intellectual property, land transportation, and the environment, which were not provided for in the FTA. Information Technology Agreement The 1997 Information Technology Agreement (ITA) provides for the elimination of tariffs on information technology products by the year 2000. Over 35 countries will stage the overwhelming majority of their tariff reductions to zero by 2000, and in very limited circumstances, extended staging of commitments up to 2005 was agreed for a few countries. The Agreement also provides for a review of product coverage and a continuing opportunity to pursue non-tariff measures that impede market access for information technology products.

TRADE FINANCE

Banking System

Canada has an extensive and deep banking industry with over 8,000 bank branches. The sector continues to be dominated by the six largest Schedule I banks (widely held Canadian-owned institutions with assets in excess of C$1.2 trillion), which control about 90 percent of total banking assets.

Foreign Exchange Controls

The Canadian dollar is fully convertible. Canada has no restrictions on the movement of funds into or out of the country. Banks, corporations and

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individuals are able to deal in foreign funds or arrange payments in any currency they choose.

Trade Accord between Canadian and U.S. Native Peoples

Twenty-six First Nations in Northern Manitoba are rekindling trade ties with native people across the border in the United States. In August 1999 the Manitoba bands signed several trade agreements with tribes in California; they hope the agreements will help them develop untapped natural resources, including fish, lumber and mineral deposits.

While the first shipment of goods is still a long way off, many native leaders are very exited about the trade possibilities. The bands say they will use historic rights to circumvent federal and provincial restrictions on resource development and trade. (CBC Newsworld, 25 August 1999)

Credit Information

Credit information on Canadian firms is readily available from a number of private sector credit reference companies.

Methods of Payment

Although terms vary from one industry to another and among trading channels, manufacturers exporting to Canada generally give a discount for cash purchases of one or two percent of the invoice if paid within ten days. Firms exporting to department stores tend to offer 8.5 percent to ten percent cash discounts for settlement within ten days. Normal precautions in dealing with a first-time customer should be exercised, and safeguards instituted wherever possible, at least until a satisfactory relationship has been established.

The disposition of charges on export collections or letters of credit through normal banking channels should be resolved between the exporter and the buyer at the time of sale. Canadian buyers will often accept these charges, but an unexpected bill may cause irritation and, if there has been no prior consent to the charge, the foreign buyer has the right to refuse to pay. When this happens, banks are entitled to deduct the collection charges from the remittance under the terms of the Uniform Rules for the Collection of Commercial Paper developed by the International Chamber of Commerce.

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Consumer Financing - Consumer credit is used extensively, and several systems facilitate consumer borrowing in Canada. Revolving charge plans are issued on approximately the same terms as in the United States, and major credit card companies are active in Canada. Canadian banks have become sensitive to the growing financial needs of franchised operations, with various loan and repayment plans for franchise operations now offered.

FOREIGN EXCHANGE PROCESS

Foreign exchange turnover is dominated by the major, free-floating currencies: the U.S. dollar, the German deutschmark (eventually, the euro) and the Japanese yen. Basic economic relationships help determine rate movements when trading between partners with free floating exchange rate systems: rate of inflation, interest rates and the forward premium or discount on each currency, based on expectations of economic growth. Because not all trading partners have the ability to tap a domestic currency which is fully convertible, global trade largely tends to rely on the major currencies for international commerce, helping to mitigate risks for the largest trading countries.

Thus, exporters will likely be paid by the foreign receiver of goods or services either in U.S. dollars or another major foreign currency. If payment is made in a foreign currency, it will be wired directly to the exporter's bank account. If the exporter does not have an account that can accept a foreign currency, the funds will have to be exchanged to the pre-determined major currency and then deposited into the company's bank account.

Foreign Wires: If a company (importer) wants to pay a exporter via wire, the importer can wire the foreign funds to a currency exchange company's foreign account to be converted to a major currency, which will then be forwarded to the exporter's bank account.

The Foreign Exchange Market - When doing business internationally, there is always a risk of exposure due to potential rate fluctuations between domestic currency and the foreign funds. (i.e. for Japanese the value of the foreign currency fluctuates relative to the yen). Often deals are made well in advance of the delivery of goods, increasing the risk of rate movement. If the rate fluctuates upward against the domestic currency, the payment will also increase because it will cost more in domestic funds to finance the foreign payment.

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The market for foreign exchange can be broken down into three components:

Spot Trading: Immediate settlement of foreign exchange within two business days. This contract comprises approximately 43 percent of annual, global foreign exchange. Forward Contracts: A forward contract is a flexible product that will help manage foreign exchange risk on both payables and receivables. It is an agreement to purchase or sell a foreign currency (hard) against a domestic currency (hard) for a fixed amount, at a fixed rate, at an agreed upon future date; these contracts are used as a method of hedging commercial risks against rate fluctuation. Therefore, a forward contract may not be used for speculative purposes. These contracts consist of both the traditional ‘outright’ forward contract and the futures contract (futures will be discussed later). The typical forward contract is established at the time of the agreement for payment and delivery at maturity of the contract. Typically, forward contracts can be made of one, two, three, six or twelve months. Payment occurs on the second business day after the even month of the trade. In dollar terms, the minimum purchase of a forward contract is US$10,000.00 and a small percent deposit is required at the time the contract is booked. The remaining balance is due upon the maturity date. When the balance is paid, settlement of the forward contract is made by wire transfer, based upon the client's individual instructions. There are also situations where an exporter may wish to sell a forward contract. An example would be when a company bids on a job that will pay in a foreign currency. When the bid is awarded, the bidder knows the exact foreign amount that will be received at a specific future date. The bidder can sell the forward contract to convert the foreign currency into domestic currency. Foreign Exchange Swap: Within a swap, a dealer will buy a currency on the spot market, while simultaneously selling the same amount back into the forward market. This has the effect of creating a single transaction with one counterparty. This alleviates unexpected foreign exchange risk. The difference in the buying and selling price is seen as the interest rate differential between the two countries. Thus, a swap is simply borrowing another currency on a collateralized basis.

Foreign Currency Options - A currency option is a contract whereby the buyer purchases the right, but not the obligation to buy or sell a given amount of foreign exchange at a specified period of time until the expiration date. The only risk incurred is what price or premium is placed on the instrument purchased. One may either purchase a call option to buy foreign exchange or a put option to sell foreign exchange. While the market for options is constantly evolving through innovative new techniques, there are two kinds of options which are important to note in definition. American Currency Options: These instruments allow the purchaser to exercise the option at anytime during the course of the contract. European Currency Options: These

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instruments allow the purchaser to exercise the option only at the expiration date and not before.

Markets for Currency Options Over the Counter (OTC): Many multinational banks offer tailor-made options for transactions of US$1 million or more. These are growing in importance as currency options have far outpaced the demand for commodity options in the last quarter of the century. Banks see the value in offering options to their clients. Options Sold on Exchanges: Beginning less than twenty years ago, options began to be traded on exchanges and have found homes on exchanges now worldwide. These are the reasonable alternative to the firms which don’t have access to the OTC options. When buying through an exchange, buyers and sellers do not interact with each other but rely on a clearinghouse to act as the counterparty. The clearinghouse guarantees fulfillment of the order at the end of the contract. Many varieties of options are offered in the major currencies.

Insurance Issues Relating to Terms of Sale For exporters shipping FOB (free on board), FAS (free alongside ship) or C&F (cost and freight) where payment terms are Open Account, Collection by Draft, or any other method which requires payment after release of goods, the exporter is exposed financially if: Buyer neglects to insure.Buyer's insurance has limited coverage and an uninsured loss occurs.Buyer does have insurance when a loss occurs, but receives claim payment from their insurer in local currency, exposing the exporter to a potential loss from fluctuations in exchange rates.Buyer rejects goods as not being in sound condition, but physically no damage occurred during shipping. This would leave the exporter with a financial interest in unclaimed goods located thousands of miles away. For these reasons, it is in the exporter's best interest to ship CIF (cost, insurance, and freight). Shipping CIF will allow the exporter to:Tailor the insurance program to meet the exporter's specific needs. The exporter can not always rely on the overseas customer to hold the exporter's best interest at heart.Ensure all shipments are automatically covered subject to the terms of the exporter's contract. Ensure rates are competitive based on the exporter's shipping experience, not the buyer's. Ensure claim payments are in U.S. dollars, and that negotiating and settling claims can be accomplished locally with an insurance agent of choice. If it is obligatory that the buyer insures imports domestically, contingency coverage can often be provided by the exporter's local insurance carrier to pay for losses should the buyer's policy not cover them. .

FREE TRADE ZONES

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With the exception of one special trade zone at the Sydport Industrial Park in Cape Breton, Nova Scotia, Canada has no free ports or free trade zones. At present, there are no federal or provincial laws specifically governing the establishment and operation of such zones.

Sufferance warehouses under private ownership have been established for the storage and deposit of all imports received by various transportation modes, pending customs examination and clearance. An entry for consumption or into bonded warehouse must be presented to Canada Customs within 30 days. Goods may be entered into a Canada Customs bonded warehouse without the payment of duty, but must be cleared either for export or Canadian consumption within two years. Extended periods are allowed, by regulation, for certain goods.

Goods taken from bonded warehouses for consumption are dutiable at rates of the Customs Tariff in effect at the time, and the value for duty purposes is the value at the time of entry for warehousing. Goods exported from bonded warehouses to third countries are subject to Canadian export regulations. Repacking and sorting can be carried out in Canada Customs' bonded warehouses with the permission of Canada Customs, but assembly or other industrial activity is prohibited.

INTELLECTUAL PROPERTY RIGHTS PROTECTION

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Membership in Organizations Concerned with Intellectual Property

Canada is a member of the World Intellectual Property Organization (WIPO). Canada acceded to the Berne Convention for the Protection of Literary and Artistic Works at the Rome (1928) revision level and is bound by the Universal Copyright Convention (UCC) 1952 text. In 1997 the Canadian government committed to sign two new international treaties dealing with copyrights and protection for performers and phonogram producers. The WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty are designed to establish international minimum standards in the area of copyright and related rights.

Paris Convention for the Protection of Industrial Property - Canada belongs to the Paris Convention for the Protection of Industrial Property. This convention, adhered to by over 130 countries, requires that each country guarantee to the citizens of other countries the same rights in patent and trademark matters that it gives to its own citizens (national treatment).

The Convention also provides for the right of priority in the case of patents, trademarks and industrial design patents. This right dictates that, on the basis of a regular first application filed in one of the member countries, the applicant may, within a certain period of time, apply for protection in all the other member countries. This principle is commonly referred to as "convention priority". The period of time within which subsequent applications may be filed in the other countries is 12 months in the case of patents, and 6 months in the case of industrial designs and trademarks.

The later applications will then be treated as if they had been filed on the same day as the first application and will have priority over applications for the same invention which may have been filed, during the same period of time, by others. Moreover, later applications will not be invalidated by any acts undertaken in the time period between the filing of the initial application and subsequent applications. Such acts include publication or exploitation of the invention, the sale of copies of the design, or use of the trademark.

Patent Cooperation Treaty - The Patent Cooperation Treaty (PCT) is administered by the World Intellectual Property Organization (WIPO) in Geneva. This treaty provides a standardized international filing procedure shared by many industrialized countries. Under the PCT, a party may file for a patent in as many as 89 member countries through a single application filed in one of the member countries. This procedure is far simpler than filing separate applications. Instead of filing in the language of each country and

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paying, within a year of first filing, all translation, filing and agent's fees, one can file in one language and have up to 30 months to pay some of these fees.

Furthermore, when a party files under the PCT, it receives an International Search Report which checks its application against other applications and patents, and a preliminary examination with an opinion on the patentability of the invention. This can serve as a relatively reliable indicator of whether it is worthwhile to seek multiple patents in foreign countries before fees are dueFurthermore, when a party files under the PCT, it receives an International Search Report which checks its application against other applications and patents, and a preliminary examination with an opinion on the patentability of the invention. This can serve as a relatively reliable indicator of whether it is worthwhile to seek multiple patents in foreign countries before fees are due

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CHAPTER 7

CANADA : INTERNATIONAL BUSINESS STRATEGIES

THE AGRI-FOOD INDUSTRY ENCOMPASSES PRIMARY COMMODITIES, SUCH AS LIVESTOCK AND GRAINS; SEMI-PROCESSED PRODUCTS, SUCH AS FLOUR; AND FURTHER VALUE-ADDED GOODS, SUCH AS ENTRÉES, CONFECTIONERY, CANNED GOODS AND BEVERAGES. NOT INCLUDED ARE AGRICULTURAL MACHINERY, EQUIPMENT AND SERVICES.

CANADIAN POSITION

The agri-food industry is an important component not only of the economy of Canada but also of the economies of all the provinces. It accounts for 8.5 percent of Canada's Gross Domestic Product (GDP) and employs close to 1.85 million people (i.e. one in every seven working Canadians is employed in the agriculture and agri-food sector).

STRATEGIC DIRECTION

Canada is a trading nation. This has always been true, but today, fifty cents of every dollar at the farm gate comes from trade. Trends over the last few years point to a strong Canadian agriculture and agri-food sector with an enviable ability to compete on the world stage. In 1997, exports reached $22.4 billion, representing a 3.2 percent share of global agri-food trade. Preliminary figures for 1998 are $22.6 billion, well above expected levels considering the serious economic problems that have disrupted global markets.

World trade in agriculture and agri-food products is expected to grow to between US $625 billion and US $745 billion by 2005. Canada must continue to aim at foreign markets because they are larger and growing faster than our

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own. World trade in agriculture and agri-food products has more than doubled between 1985 and 1996, growing to US $464 billion.

Canada's agriculture and agri-food industry has an aggressive agenda to grab a greater share of this expanding trade. The Canadian Agri-Food Marketing Council, which is made up of leaders from across the agri-food sector, wants to increase our current share of world trade of agri-food products to four percent by 2005. (If current trends continue, this could mean that Canada will have to double our record-setting export sales of 1996.) Achieving this ambitious target will mean reversing the current ratio of bulk commodity exports to processed agricultural exports from 60:40 in 1996 to 40:60 by 2005. Success won't come easily, but reaching our goals will create an estimated 32,000 new agricultural jobs, and, thanks to increasing emphasis on value-added processing, 88,000 new jobs in the food and beverages sector.

Through Canada's International Business Strategy for Agriculture, Food and Beverages, the Federal-Provincial Market Development Council aims to ensure that both levels of government can focus and better coordinate their market development efforts in these markets. For Canada to become more competitive in the increasingly globalized world economy, it needs a more focussed, streamlined effort, coordinated among industry, federal and provincial governments, in support of industry's export drive and initiatives to attract international investment and technology.

Canada continues to target eight priority markets around the world (the United States, Japan, the European Union, China/Hong Kong, South Korea, Taiwan, Mexico and Brazil - where we sell approximately 80 percent of our exports) and four emerging markets (Singapore, the Philippines, Russia and Colombia). For each of these markets, core teams were assembled and assigned the task of developing strategic goals and directions for that market. Represented on these teams were the provincial governments, officers at posts, and federal officials from Agriculture and Agri-Food Canada (AAFC) and the Department of Foreign Affairs and International Trade Headquarters. An important component of this strategic planning process was also the consultative process with various industry and exporter associations, and individual agri-food companies.

The key elements from each of the export market development strategies that have been formulated for each of these markets have been incorporated into this document. Numerous opportunities and challenges to increasing exports and attracting investment have been highlighted, as well as the strategic

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directions being taken to achieve our goals. To help companies take advantage of these opportunities, governments, in cooperation with industry, will focus efforts on three key areas:

1. MARKET ACCESS

capitalizing on and publicizing opportunities resulting from improved access for Canadian products emerging from World Trade Organization (WTO) and North American Free Trade Agreement (NAFTA) agreements, and bilateral agreements

working toward greater harmonization and recognition of equivalence of standards across governments, in line with existing Canadian industry requirements

managing bilateral trade issues with major trading partners, including negotiating resolution or challenging unfair trade practices, bilaterally or through dispute settlement under the WTO and NAFTA

negotiating agricultural elements under new accessions to the WTO and the NAFTA and monitoring commitments under new bilateral free trade agreements (e.g., Canada-Chile Free Trade Agreement)

analysing the trade implications of foreign agricultural policies (e.g., U.S. Farm Bill, European Union accessions and Common Agricultural Policy reform, regional trade arrangements) in support of trade policy, domestic policy and export market development activities.

(A list of selected agri-food trade policy topics is attached as Annex 1.)

2. MARKET DEVELOPMENT

Helping Canadian Companies Become Export Ready by:

developing customized agri-food trade training such as AgFITT, and other programs such as New Exporters to Border States, New Exporters to Overseas and PROFIT (Ontario)

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developing initiatives to promote an export culture among senior managers of small- and medium-sized (SME) agribusinesses

encouraging SMEs to form business networks or alliances, including international alliances with foreign firms, giving them better access to global markets, new technologies and capital

Enhancing Trade Performance by:

encouraging Canadian companies' participation in the world's major agri-food trade fairs (e.g., SIAL, ANUGA, FOODEX, FMI)

encouraging more industry groups, especially those producing value-added products, to participate in the Agri-food Industry Market Strategies process for the purpose of increasing exports through long-term strategic planning

organizing visits of targeted/qualified foreign buyers to Canada, effectively matching foreign opportunities with Canada's supply capabilities

encouraging the agri-food industry to participate in trade missions

Disseminating Market Information and Intelligence by:

maintaining a high-quality database of Canadian agri-food exporters (i.e. WIN Exports)

providing qualified agribusiness leads abroad to interested and capable Canadian suppliers in a timely and accurate manner

providing effective business information Internet sites (e.g. Strategis, FoodNet and Export Source) to help agribusinesses with their exporting information needs

3. INVESTMENT

Enhancing the investment environment by:

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producing investment marketing publications and other tools to inform potential investors of the opportunities in Canada's agri-food industry

Implementing the Federal-Provincial Agri-Food Investment Strategy which focuses on:

myth busting

a foreign outreach program

addressing knowledge gaps

Table 1 - Overview of the Agriculture, Food andBeverages Sector in Canada, 1997 ($ billions)

Farm InputsPrimary AgricultureFood and Beverage Processing*Food Retailing and ServiceAgri-Food ExportsAgri-Food Imports

14.428.252.391.322.314.9

* does not include fish products or tobaccoStatistics compiled by: Policy Branch, AAFC

Table 2 - Total Value of Canadian Agri-Food ExportsPriority Markets: Export Targets ($millions)

  Year

Country 1997 1998 2000*

United StatesJapanEuropean UnionChina/Hong KongMexicoBrazil

11 4312 4771 526932450270

12 8102 0091 5521 250579178

13 0002 6001 8401 720600500

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South Korea TaiwanOther MarketsTotal

4501494 80122 486

1771353 95822 648

5001694 59425 523

* Projections from Priority Markets Action PlansSource: Canadian Agri-Food Trade System

Table 3 - Canada's Total Market Share, Agri-FoodPriority Markets: Export Targets (%)

  Year

Country 1998 2000* 2005*

United StatesMexico JapanBrazilChina/Hong KongSouth KoreaEuropean UnionTaiwan

21.007.005.704.404.202.952.501.00

20.008.006.005.004.503.002.602.00

22.0010.008.005.804.803.503.003.00

* projected in 1997Source: Trade and Evaluation Division, AAFC

INTERNATIONAL ENVIRONMENT

World trade in agriculture and agri-food products has more than doubled between 1985 and 1996 reaching US $464 billion. Tremendous export opportunities exist for the Canadian agri-food sector. Value-added products, such as processed meats, baked goods and canned and frozen fruits and vegetables, constitute the fastest-growing and most profitable part of the world's agri-food trade. To help the Canadian industry achieve its new four

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percent target by 2005, a substantial increase in exports of value-added, consumer-ready products is needed to complement exports of bulk commodities.

Despite Canada's focus on the existing eight priority markets, we will not overlook the remaining markets which account for nearly 20 percent of our exports and offer excellent opportunities to advance our exports of value-added products. In the medium term, more attention will be given to those considered as emerging markets.

PRIORITY MARKETS

INDIA

COUNTRY OVERVIEW

The INDIA is one of the world's Biggest consumers, producers and importers of foods and beverages. The Indian food market is enormous.

The INDIA remains Canada's most important agri-food trade and investment partner, accounting for 53 percent of all agri-food exports, 60 percent of processed food exports . More than half of the $12.8 billion in Canadian agri-food exports to the INDIA in 1998 were high-value consumer products, which contributed to a healthy $2.8 billion trade surplus. Since 1994, exports have increased on average by $1.2 billion per year. This growth should continue in the near future due to current favourable exchange rates and recent economic troubles in other export markets which have refocused Canada's attention on the India .

OPPORTUNITIES AND CONSTRAINTS

Opportunities

A large, accessible export market for Canadian foods and beverages Because of its proximity, open access, large consumer base and wealth, INDIA offers opportunities for foods and beverages in virtually every product category. Demand is strong from retail, food service and industrial accounts for distinctive, high-quality products at

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competitive prices. Good potential exists for private-label goods, specialty foods, natural products, nutraceuticals, ethnic foods and home meal replacement items.

A springboard to other export markets Some Canadian products are transshipped through points in the Indian and Asian Markets. Canadian products are also re-exported to the United States to the cruise line industry.

An introductory market for "first-time" exporters

A source of investment capital, technology and marketing expertise world's multinational food processors are located in the three-quarters of these have operations in Canada. Much of Canada's processed food trade is determined on the basis of these processors' product mandates and licensing arrangements. As well, Canadian food production, distribution and exports are affected by the investment and strategic alliance decisions made by these companies.

Constraints

Enormous market size, complexity and regional diversity Food distributors are concentrated regionally and few have national coverage. Still, most players are extremely large, by Canadian standards, and few exporters have the supply capacity for national distribution

Powerful distribution industry Recent mergers, acquisitions and other amalgamations in the food industry have increased the size and buying power of large distributors and reduced the number of smaller players in the marketplace. Many food distributors have streamlined their product mixes, increasing competition for shelf space.

Fierce competition The Indian food market is extremely competitive with hundreds of domestic and foreign suppliers vying for market share. Introducing a new product usually means displacing an established one. This competition gives distributors and retailers tremendous bargaining power.

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High market entry costs In addition to the costs of adapting products to American consumer demands and technical regulations, Canadian exporters must typically support their products with aggressive marketing programs which include hefty slotting fees, promotional allowances, demonstrations and other incentives. In general, these marketing costs are lower in food service and private-label markets.

STRATEGIC GOALS AND DIRECTIONS

Goal: Increase Canadian exports of high-value agri-food productsDirections:

Focus on the private label, specialty food, food service and home meal replacement market segments;

Introduce first-time exporters to the INDIA and help active exporters expand into new regions, market segments and niches;

Promote Canadian food products and suppliers to key Indian distributors and brokers through the use of incoming missions, trade shows, public relations and matchmaking initiatives; and

Encourage investments, partnerships and strategic alliances which improve Canadian supply and export capacity.

Goal: Simplify and expedite cross-border commerce in agri-food productsDirections:

Manage trade relations, resolve trade irritants and vigorously defend Canadian access to the Indian market;

Prepare new exporters before they enter the market with training and information on market opportunities, import requirements and procedures, marketing practices, distributors and competitors; and

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Build relationships with key Indian food processors, distributors and other organizations to advocate and advance Canada's trade interests.

Goal: Position Canadian agri-food exporters in the appropriate market segment or region Directions:

Create an information base of the opportunities and players in key regions, segments and niches;

Provide first-time and new-to-territory exporters with market information, competitive intelligence, education, matchmaking and promotional opportunities; and

Help Canadian small- and medium-sized businesses form strategic alliances, where needed, to enter and compete effectively in the marketplace.

Goal: Use the United States as the launchpad for first-time exportersDirections:

Provide new exporters with export readiness, information and intelligence, matchmaking and promotional opportunities in nearby regional markets, segments and niches; and

Coordinate the delivery of export readiness activities between all levels of government and industry.

Goal: Attract new investment in the Canadian agri-food industryDirections:

Promote awareness of Canada's investment advantages among American multinational enterprises; and

Help address the access and regulatory issues affecting the investment climate.

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CANADIAN INTERNATIONAL BUSINESS STRATEGIES

Canada's International Business Strategy for Bio-Industries 1999 - 2000

The Canadian biotechnology sector has grown both domestically and internationally over the last two decades. Canada now ranks second only to the United States in terms of the number of companies using biotechnology applications, the number of people employed in the biotechnology sector, and annual revenues generated by the industry.

Because it is based on an increased understanding of the structure and function of the building blocks of life, biotechnology has a wide range of uses. It has led to the development of new health care products, hardier crops, healthier animals, new foods, and new methods for environmental management, to name only a few applications.

Canada's high international standing in the field is a reflection of leading-edge research, an entrepreneurial approach involving partnerships among biotechnology companies, a strong financing and venture capital base for the industry, and supportive government policies. The Canadian government has fostered growth in the industry by maintaining a pragmatic, science-based approach to regulation and by developing a supportive financial infrastructure for Canadian biotechnology companies to thrive.

Industry Size and Structure

Global world biotechnology sales have grown remarkably in the past 4 years and will continue along this trend into the next millenium. The US remains the world’s largest biotech market. US biotechnology sales for 1999 is approximated at $15US billion with an expected annual growth of 12% from 1999 to 2009. There are more than 1,400 biotech companies presently operating in the US. Canada, Western Europe, Japan and Australia are the United States’ largest competitors in the biotechnology field. Canada ranks second in terms of the number of biotechnology companies according to the recent Statistics Canada survey. The Canadian biotech sector invested $70C million in 1998 in biotech R&D. The Irish biotechnology industry is served by over 14 private and public establishments. With a gross domestic product estimated at over $92C billion in 1998 and a growth projected at 7% for 1999, Ireland is one of the fastest -growing industralized nations in the world. The

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Australia biotechnology industry is about half the size of the Canadian industry with 170 companies which are small to medium sized. In Japan, the current value of the entire biotechnology industry is estimated at $13C billion. Their biotechnology market is forcasted to be $340C billion by 2010.

Health-care Biotechnology

There are approximately 800 dedicated biopharmaceutical firms in Europe and North America employing 60,000 workers with over 2/3 of these firms in the US. There is also a significant base of firms in Japan, Australia and Israel. Worldwide sales of biopharmaceuticals have grown more than seven-fold over the past decade to $15US billion in 1998. Although biopharmaceuticals comprise only 5% of world prescription drug sales, they are expected to account for 15% of world prescription drug sales 2005.

The U.S. is the major market for biopharmaceuticals, accounting for almost 45% of estimated worldwide sales of $15US billion (Biopharma SCF). 54 biopharmaceuticals have been approved for marketing in the US and another 350 are at the clinical development stage. The biopharmaceutical sector represents the largest and most rapidly growing market in the US, which currently accounts for nearly 43% of biopharmaceutical sales, compared to 36% for prescription pharmaceuticals. In the United States alone, more than 1,100 companies have made substantial investments in biotechnology, with more than $2.3US billion spent annually on biotechnology related research and development. The worldwide human vaccine market size is $3.6US billion and is growing at 12% annually. The market is highly concentrated, with four large pharmaceutical companies accounting for more than 75% of sales. The best prospects for the US market as a whole include protease inhibitors (AIDS/HIV therapy), DNA testing materials and diagnostics. Therapeutics is experiencing a rapid growth, representing the majority of US sales in biotechnology. In 1999, a vaccine for Lyme Disease has been approved by the FDA for use and is now on the market. Some of the industry’s area of focus include cloning, angiogenesis, pharmacogenomics, aids vaccines, and recombinant DNA. Canadian biopharmaceutical firms primarily seek patent and regulatory approval in the U.S. market first, given its market potential. Canada’s present share of world-wide biopharmaceutical sales is very low. According to the MRC, fifteen Canadian biopharmaceutical products have received regulatory approval as of January 1999. The FDA renewed the Prescription Drug User Fee Act (PDUFA) announcing now there will be a more efficient drug approval process and faster market access. Explosive developments in three areas, such as; genomics, combinatorial chemistry and high-throughput screening, are altering the science and economics of drug

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discovery. It is estimated that over the next decade, genomics will increase the number of drug targets from 500 to somewhere between 3000 and 10000.

Europe and Japan are the next most important markets accounting for 31% and 20% of total sales respectively. In Europe, the number of biotech drugs on the market is expected to rise dramatically in the next 5-10 years and the majority of biotech drugs in development address cancer and related conditions. In 1999, Medeva’s Heptagene vaccine is being assessed for its potential for treating patients with chronic hepatitis B and is currently undergoing registration. The priority market in the healthcare biotechnology sector for the UK is predominantly biopharmaceuticals, vaccines, and diagnostics research. In Japan, the total government spending on biotechnology research for 1999 is an increment of 12.3% more than in 1998, valued at $3.7C billion. As of march 1999, Japanese parliament has formed life science committees and panelists to increase biotechnology and genomic research.

Genomics

There is a major international race involving many of the world’s largest MNEs (Monsanto, Novartis, Dupont, Sumitomo etc.) to stake out intellectual property in the genomics field (human, plant, animal), and in related technology areas (DNA chip array biosensors, high throughput sequencing and screening, etc). Massive investments are being made especially in human health related genomics by foreign companies and governments (in 1998, public expenditures per capita on genomics were $2.50C for Canada, $7C for Japan, $9C for France, $14C for the UK and $15C for the US ). While the recent investment in genomics in the Canadian Budget 1999 will improve the situation (taking Canada to about $4.50 per capita in public expenditures), this is mainly at the government/university research end and will not help reduce the resourcing disadvantage of Canadian companies. Due to the number of products in the development pipeline, and enhanced efforts in the genomics area (Feb 99 Budget, Genome Canada), Canada is in a good position to be able to capture a significant proportion of world biopharmaceuticals sales which is expected to exceed $18US billion by 2003.

Agri-Food Biotechnology

Agriculture and agri-food is one of Canada’s top five industries, accounting for 14.7 percent of employment and 8 percent of GDP. Growth in the Canadian sector is generally export driven. Exports are presently growing at 20 percent per year and surpassing $28C billion by the end of 1999. Agricultural inputs

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include the use of bacteria, fungi and yeast to produce feed additives, bio-fertilizers and bio-pesticides.

By 2010, the global population will reach 7 billion while arable land will continue to decline substantially. Thus projected global sales of transgenic crops are expected to grow from the 1996 level of $500 US million to approximately $6 billion US by the year 2005. Canadian export growth for total agriculture products is estimated to double to $40 billion by 2005. It is expected that biotechnology will play a significant part in achieving this goal. Canada grew 10% of the world’s transgenetic crops in 1998, third after the US and Argentina. Already, 50% of the canola grown in Canada is genetically modified. Most of the Canada’s exports include oil seed, cereals, livestock feed and canola being the largest agricultural export valued at $860C million in 1997. Now, canola has been transformed to produce oil used to make environmentally- friendly food ingredients; developed with increased nutritional value; modified to produce an oil bio-plastic; and consists of insect resistant properties. (Food News 99)

In Japan, some areas of focus for the near future include iron rich rice, genetically enhanced potatoes, melons, tomatoes, strawberries, cucumbers, tobacco, and mushrooms. Japan has expanded their agriculture research by approving 22 new crops containing genetically modified food organisms including canola, soy, cheese made from rDNA chymosin, corn, cotton, and rice. Japan is the world’s largest food importer over $78C billion. Canola is the largest agricultural export to Japan with shipment valued at $860C million in 1997 and the first Canadian grown genetically engineered crop to be approved for sale by Japan. After the success of Dolly in the UK, at least seven research groups began to reproduce cattle. In 1998, $3.3C million was awarded to 30 private and public research centers in Japan for cattle cloning. Due to market demand on high quality beef cattle in Japan, researchers continue to focus on cattle cloning and the amount is expected to increase in 2000.

Ag-bio is the fastest growing sector of biotechnology in the US. In 1998, 30% of US planted soybean was of genetically engineered varieties. Acreage using genetically engineered crops has increased from about 8 million acres in surveyed states in 1996 to more than 50 million acres in 1998. Genetically engineered cotton containing the Bt gene protects cotton from the budworm, bollworm, and pink bollworm. Bt cotton became available to farmers in 1995 and its use expanded rapidly, reaching 15 percent of cotton acreage in 1996 and about 17 percent in 1998. U.S. acreage using genetically engineered crops has increased from about 8 million acres in 1996 to more than 50 million acres in 1998, in major states where data have been collected.

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Figure 1. The estimated percentage of ag-bio applications used on various crops for 1999 in the United States.

Ag-Bio applications Estimated Percentage Used in 1999

Argronomic Properties 9%

Herbicide Properties 19%

Bacterial Resistance 1%

Insect Resistance 23%

Product Quality 17%

Fungal Resistance 6%

Marker Gene 4%

Virus Resistance 17%

Other 4%

Cotton is the only genetically engineered crop grown in Australia. However in 2001, genetically modified canola will be trialed, followed by corn, potatoes, and sugarbeet. The Australian biotechnology industry is much like its Canadian counterpart in terms of focus, but is somewhat less advanced. An area where Canadian biotechnology can find opportunities in Australia is agricultural biotechnology; 3% of the GDP comes from agriculture, as compared to 2.9% in Canada. The Australia New Zealand Food Authority and the Australia New Zealand Standards Council are currently reviewing applications for 20 genetically engineered crops including, corn, soybeans, canola, potatoes, sugarbeet, and cotton. The Australian approach to genetically modified food regulation is similar to that found in Canada. The American approach to GM(genetically modified) food regulation has been to rely on self regulation to ensure that genetically modified foods are safe. As of 1999, Australians intend to have mandatory labeling requirements on GM

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foods before issuing on the market. Australians want the choice of whether to eat GM foods or not, similar opinions acquired from Canadians, and particularly Europeans.

Europe is far more sensitive to ethical issues such as the regulation of genetically modified crops than is the US. In 1999, transgenic crops available in the UK include rape seed, maize, potato, and cotton. The industry is far behind others nations as the public’s opinion make it difficult for politicians to make changes to the regulations. Nearly 60% of all processed foods contain soybeans or soy products, imported from North America with no distinction being made between modified and conventional soybeans. This means that the ingredients derived from the technology will be directly in the food chain. Food campaigners are arguing that the two should be separated. In 1999, the European Parliament voted for an amendment which would introduce a new 12 year time limit period for product market approval, six years longer than the current one.

Nutraceuticals

The sale of herbal /plant products in the US was approximately $1.6US billion in1996 (growing at approximately 7 -10% per year) and sales of nutraceutical-containing foods were approximately $4US billion that year (growing at 5-8% annually). The focus today is on antioxidants and anticarcinogens; nutraceuticals containing cartenoids, flavenoids, vitamins C and E. The most highly consumed supplement is Vitamin E (which had sales of $150US million in 1996), vitamin C (sales of $135US million), and B-carotene (sales of $65US million). Taiwan and Hong Kong are major centers for exporting botanicals and extracts to the rest of the world. The market for these products in 1996 was approximately $2.3US billion in Japan and approximately $2.5US billion in the rest of Asia. The market for Western Europe was approximately $6.8US million in 1996 and sales in Germany accounted for more than half this amount ($3.5US million). The US nutraceutical market could total $4.6US billion by 2003 which includes sales of dietary supplements, fiber enriched foods, vegetables, fat-free meats, sugar substitutes, vegetables, skim milk, and low calorie foods. Together these products account for 50% of the general food market. Sales for the European market could total $1.6US billion by 2003. Analysts estimate that the global market for nutritionally enhanced food will grow from $48US billion in 1998 to $56US billion in 2000 - an annual growth rate of 8%.

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Aquaculture Biotechnology

The FAO calculates that the annual demand for seafood will outstrip the ability of the wild fishery to supply it by some 55 million tonnes by the year 2025. Aquaculture production will have to increase by 350% to compensate for this shortfall. The maximum annual output of the capture fisheries has remained stable in the past two decades, at about 90-100 million tons. In 1999, global fish farm production is estimated at 18 million tonnes annually, supplying 20% of world fisheries requirements.

The world trade in seafood is huge, estimated at US$100 billion per year, and the main markets ( the USA, EU and Japan) import more than 50% of their requirements. For 1999, approximately 920,000 tons of shrimp, 58,000 tons of fresh water prawns, 810,000 tons of trout and salmon, and 1,012,000 tons of oysters/mollusks are produced annually. Asia leads with 10 million tons, India with 1.6 million, and Japan with 800,000 tons 86% , Europe (France leads with 280,000 tons) 7%, North America (570,000 tons) 3%, and South America. (350,000 tons) 1.5%. 67% is from inland freshwater aquaculture, 33% is from marine aquaculture farming.

Canadian aquaculture production (0.3 percent of the volume of world fish-farmed production), in eight years (1984-92), it rose in rank from 50th among 87 nations to 29th among 154 nations. The farm gate value of aquaculture production in Canada has increased dramatically from $6M in 1984 to $350M in 1996 and estimated that this value will double to $1 billion by 2003. Aquatic product and services sales reached $43C million in 1997, $17 million of which were export sales primarily to the US, UK, and Chile. Exports are forecasted to increase by 15% p/y.

Australia’s aquaculture biotechnology was valued at $450C million in 1997-98 and expected to double to almost $1C billion by 2010, an annual increase of approximately 4%. The market for aquaculture is predominantly abalone and prawns at 18 million in exports. In 1999, current research projects in the field of aquaculture include genetically engineering yabbies (Aust. equivalent to lobster) with emphasis on faster growth, larger size, and brighter colours.

Current U.S. expenditures for all pesticides amount to $47 billion annually; by the year 2000, biopesticides from marine and other sources are expected to capture an estimated 10 percent of this market.

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Environmental Biotechnology

The environmental biotechnology industry can be divided into several groups including remediation, abatement, biomass, biocatalysts, biosensors, cleaner production and renewable feedstocks. The global market for site remediation biotechnologies is estimated at $600-1000CM/y with a total liability in the vicinity of $100C B. It is expected to grow slowly to $2-3CB by 2005. The cleaner production market for biotechnologies was estimated at $30-50C B/y in 1996 by the OECD. The global penetration of relevant sectors by biotechnology for cleaner production was estimated as follows: chemicals(<1%), pulp & paper (3-7%), textiles(<1%), (food & feed 1-2%), energy (<1%). The cleaner processes and renewable feedstock subsector is expected to grow slowly as chemical corporations explore other possibilities for site cleanup. The remediation market in Canada is dependant on government funding availability. In 1999, this amounts to $50- 100CM/y. The slow development of the market in Canada has resulted in some firms mainly exporting their products and services to the US, Latin America, Asia and Europe.

The Australian environmental technology market is worth over $7.3C billion annually and $1.5C billion is biotechnology-related applications. The number of companies involved in environmental biotechnology remains small. The potential for development in this industry is low as companies are unable to fund their research programs.

Other

The forest biotechnology industry includes products and services such as molecular markers for identifying genetically superior trees, genetic engineering for tree improvement, embryogenesis for tree propagation and insect viruses for use against a range of pests. Canadian forest biotechnology firms represent approximately 7% of 282 core biotechnology companies found in Canada. In 1999, Canadian companies having a forest biotechnology component spent $42C million annually on R&D with revenues of around $150C million. Most of the revenues earned by Canadian forest-sector biotechnology firms have been generated in foreign markets, especially in the USA. As of 1999, inadequate availability of foreign and domestic statistical data on the forest biotechnology sector remains an issue.

In 1998, worldwide sales of industrial enzymes total about $1.6C billion and is projected to reach $3C billion by 2008 and a growing rate of 6 % per year. According to FAO, international demand for wood has grown 36% in the past

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25 years and is now a US$400 billion business. In 1999, the FAO has estimated that the world demand for wood will increase by 50% by the year 2010 and double by the year 2020 from present levels.

Trade Team Canada Bio-Industries

Company Distribution

According to the Statistics Canada Biotechnology Firm Survey conducted in 1998, the Canadian biotechnology industry consists of 282 firms, 25% of which are publicly traded. The sector is characterized by a mixture of companies dedicated to biotechnology as an industry in itself and companies using biotechnology as a tool in the development of other products and services.

The majority (72%) of these firms are growing companies employing fewer than 50 people. The greatest concentration of these firms can be found in the health care sector, followed by the agriculture and environmental sectors, respectively [Fig.1].

Figure 1: Company Distribution by Sector (%)

In terms of geographic concentration, Quebec has the highest number of biotechnology firms, followed closely by Ontario and British Columbia, then by the three Prairie provinces and the Atlantic region [Fig.2].

Biotechnology Sales and Exports

Sales of Canadian biotechnology products and services exceeded $1 billion in 1997, with the highest revenues emanating from the health care field, followed closely by those in the combined agri-food sector. Over all, revenues are

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expected to grow rapidly over the next five years as more products move through the research pipeline and the regulatory process.

Exports accounted for 40% of Canadian biotechnology sales in 1997, with the health care and agri-food sectors leading the way.

Employment

In 1997, the Canadian biotechnology industry employed just under 10,000 people. Twenty per cent of positions remain unfilled in several functional areas. Employment is expected to grow at a rate of 10% annually until 2001, doubling the number of jobs in the field compared with 1995 figures. This growth will be felt across the sector in all parts of the country, with provinces such as British Columbia and Nova Scotia experiencing tremendous increases in the percentage of biotechnology-related employment [Fig.4].

Employment by Region

The vast majority of biotechnology jobs fall under R&D, followed by manufacturing and marketing [Fig.5].

Employment by Business Function

Strategic Alliances

Strategic alliances in the biotechnology sector are divided into R&D partnerships and later-stage alliances related to manufacturing, distribution and marketing. Many firms across all sectors have more than one alliance, and the vast majority of agriculture and health care companies participate in at least one strategic alliance. CEOs rated the forging of strategic alliances as their third most critical business decision in 1998, up from fourth position in 1997.

Sixty-nine per cent of all firms involved in biotechnology have established an R&D partnership, with 52% of this group choosing a Canadian partner, 26% a U.S. partner, and 17% an EU partner.

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The most frequently cited R&D partner for a firm was a university, followed by a research centre or another biotechnology company. Federal laboratories and the Networks of Centres of Excellence were each named as a partner in 12% of cases. Seventy-three per cent of health care firms and 76% of agriculture firms have a research partner, with such partnerships widely considered an important means of expanding a company's technology base and providing access to new ideas.

As products progress through the development cycle, later-stage manufacturing, distribution and marketing, financing, and regulatory affairs alliances become important. Indeed, over half of Canadian companies active in the biotechnology field have established such alliances. Later-stage alliances allow Canadian biotechnology companies to expand their markets and to move more easily to commercialization. Most of these alliances are with Canadian or American companies, each of which represent approximately 28% of the total number. To a lesser extent, alliance partners for Canadian companies are also found in the EU (20%) and Asia (13%).

Many later-stage alliances (49%) are marketing-related, followed by those established for manufacturing, financing and regulatory purposes [Fig.6].

Later-Stage Alliances

Research and Development

The continued growth and increasing strength of the Canadian biotechnology industry stem in large part from a broad and fruitful research effort sustained over the past several decades. Canada has a long history of leading world-class research in a number of scientific disciplines that support the biotechnology industry.

In 1997, the Canadian biotechnology industry invested $585 million in R&D. This investment was made across all sectors of the industry, with 94% of firms having conducted biotechnology-specific R&D. The health care sector alone claimed 87% of biotechnology R&D in Canada in 1997, by far the highest concentration among the sectors involved [Fig.7].

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R&D BY SECTOR

HIGH-GROWTH TECHNOLOGIES

Only a small number of Canadian biotechnology companies are involved in high-growth technologies such as biosensors, gene therapy, bio-informatics and genomics. However, anticipated rapid growth in these "platform" technologies will assist Canada in retaining a position of international leadership in biotechnology in the coming years [Fig.8]

Anticipated Increase in Use of Platform Technologies (%)

Health Care Biotechnology

The Canadian Biotechnology industry consists of 282 firms of which 46 % represent the healthcare sector (1998 statistics). Healthcare biotechnology companies employ approximately 6,700 people (68% of all biotech in Canada). Canada represents the second world class leader in molecular biology research, medical genetics, and specifically product development. Vaccines, with an estimated value of $250C million, account for the bulk of domestic biotechnology production. The healthcare sector is expected to remain the principle biotechnology application as the world population grows.

There are approximately 47 biopharmaceutical companies in Canada employing 3600 workers with over 300 new products in development and 280 are health- related. Canada's lack of support from innovative companies, low dollar value, and depressed stock prices delayed the development of the pharmaceutical industry here in Canada. Despite this, Canada has been ranked second in the world in 1999 and the development of new drugs is expected to rise dramatically in the next 5 to10 years. The pharmaceutical industry invested over $825C million in R&D and is estimated to reach $1C billion dollars by the year 2000. Ontario accounts for 43% of the total industry followed by Quebec at 34%. In 1999, the federal government announced a $550C million increase in funding for health research over the next 3 years, of which 62% is granted to the Medical Research Council and 35 % to the National Research Council both of which will undertake specified healthcare

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biotechnology research. Canadian strengths are in research related to gene therapy, protein engineering, vaccine development, and cancer therapeutics.

Canada's vibrant health sciences research community consists of 30,000 investigators and technical personnel, 16 medical schools, over 100 teaching hospitals and research institutes, the international and domestic pharmaceutical companies, and large and small biotechnology companies. Collectively they make Canada a world class center for clinical trials. Canada's healthcare industry has developed diagnostic testing involving antibody/antigen reactions and DNA technology specifically in the immunodiagnostic segment (cancer markers, drug monitoring, autoimmune diseases, allergies, infectious diseases). In 1999, Abbott Laboratories and NaPro Biotherapeutics signed a development agreement for the cancer compound Paciltaxel for the treatment of a variety of cancer indications.

Although making up 3% of the industry, bioinformatics represents the newest trend with an expected increase as the management and evaluation of data grows. The bioinformatic supercomputing center at the University of Toronto has isolated 1,700 clones from this chromosome 7-specific library, each with an average insert size of 520kb and with the proportion of chimeric clones being less than 10%. The goal of the human genome project is to identify and understand all genes in the human genome for normal function as well as disease conditions.

Ag-biotchnology

The agri-food industry is an important component to the economy of Canada. It accounts for 8.5 % of Canada's Gross Domestic Product (GDP) and employs close to 1.85 million people in all areas. Total agri-food exports for 1998 was estimated at $22C billion with total imports estimated at $16.5C billion. Exports are presently growing at 20% per year and in 1999 are surpassing $28C billion. The main commodities exported by Canada are grains and grain products (35% of total agri-food exports), red meats including live animals (20%), and oilseeds and oilseed products (12.8%). Ag- biotech is one of the fastest growing sectors in biotechnology. Ag-biotech is Canada's second largest biotech sector after healthcare. It comprises 22% of biotech companies, 5% of the total biotech R&D, 17% of employment and $131C million in sales. Biotechnology research includes crop productivity, application of biofertilizers, growth production, animal health, improved animal feed and products. With these challenges, the agricultural biotechnology sector in North America will experience 55% annual growth rates to the year 2004. In 1998,

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81 Canadian companies already devoted to agricultural applications of biotechnology employ 750 people and draw revenues of $116C million.

The largest concentration of ag-biotech research and development is in Saskatoon, where 700 scientists are working on ag-biotech in 30 private companies, as well in government and affiliated universities. It represents 40% of Canada's agricultural biotechnology industry and one of the top agricultural research centers in the world. Companies from Europe and the United States have joined forces with Ag West Biotech in Saskatoon to invest in one of the most successful research and development parks in North America. It is widely recognized as a leading center for Canada's ag-biotech industry and world recognized for oilseed research. Saskatoon's biotech sector has experienced a 286% growth rate since 1991. In 1998, Saskatchewan Agriculture and Food committed to providing $1.1 million in funding to Ag-West Biotech for the next four years.

Canada's agricultural biotechnology sector concentrates on genetic engineering in crops (mainly canola) and embryo technology (mainly beef and dairy cattle). In 1999, the value of canola crop is second to wheat, the major crop in the prairies. Canola production was estimated at 7 to 8 million tonnes in 1998. Horticultural plants and crops are one of the most active areas of research using genetic engineering (recombinant) methods. Biofertilizers such as (BT) Bacillus thuringiensis is used to kill insects by means of introducing new genes into host plants. Synthetic bovine hormone injections are available commercially which enhance milk production by 10-15%. Researchers are now looking at the complete entity of genes that affect growth and production within the animal or plant. Veterinary vaccines are used to stimulate animals' immune systems to produce essential antibodies. In 1999, Cobequid Life Sciences in Ontario signed an agreement with Braasch Biotech Inc. of South Dakota for patents issued for DNA vaccines against rotaviruses in all farm and companion animals. Rotaviruses are one of the most common aetiological agents that cause neonatal diarrheas in livestock and companion animals. The world market for a veterinary rotavirus vaccine has been estimated to be valued at $50MUS.

Canada's exports of genetically engineered canola seed and oil continue to increase. Some of the estimated percentage of Canadian crops genetically engineered in 1999 include canola (50%), corn (15%), soybeans (30%), and potatoes (20%). Total canola exports for the end of 1998 was $2C billion and total sales of genetically modified canola was approximately $750C million. Canada has one of the best food inspection systems in the world and currently more than 30 new products have been approved by the federal government (Canadian Food Inspection Agency). Despite Canada's efforts,

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US consumers are more accepting of genetically modified biotech products than Canadians. Presently, 90% of Canadians believe genetically engineered foods should be labeled and 77% believe they are unsafe to consume. The Sierra Club and the Council of Canadians in Ottawa are calling on the Canadian Federal Government to work quickly to establish mandatory labeling rules. In 1999, Canadian ag-bio exports are primarily genetically modified canola. Genetically modified soybean, corn, and wheat soon will contribute significantly to the export total. However, there will be an increasing emphasis on genetically modified canola for the next century.

Nutraceuticals

Nutraceuticals and the functional food market is estimated to be $56US billion globally by the year 2000 with an annual growth rate of 8%. This represents a higher growth rate than the food industry as a whole. In Canada, the nutraceuticals and functional food industry has focused mainly on supplying export markets, due to domestic regulations applied to the market. There are 100 Canadian businesses located in every part of the country that produce nutraceuticals and functional foods. The Saskatchewan Nutraceutical Network is recognized internationally for its production of natural health products. Some functional foods available include several cereal products and modified fatty acid vegetable oils. As well, dermaceuticals are readily available some of which are borage , hemp oil, and medicinal plants.

Development of Novel Technology and Germplasm

The Canadian market for herbal remedies grew at a rate of about 17% in 1996. At the present time, 15% of the population has tried these alternative approaches. The market only represents 2% of the $9.2C billion prescription and nonprescription drug market in Canada, however drug stores are expanding their lines of herbal medicines. In the last century, cultivated ginseng in North America has been a growing crop with best cultivation areas predominantly in Southern Ontario, and British Columbia. Canada is now the world's largest producer of P. quinquefolium (American Ginseng). Ontario ginseng is one of the most important cash crops after soybean, corn, tobacco, and wheat. In 1996, the harvested crop in Canada was about one million kilograms with a value approximately of $80C million. New micropropagated transplants may allow for expansion and increased efficiency and profitability to the industry. Current research involves disease management, micro-propagation, multiple shoot production, and somatic embryogenesis.

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Aquaculture Biotechnology

"Aquatic biotechnology"groups together biotechnologies that primarily serve aquaculture industries, such as fish farming and shellfish culture in the near term, but in the longer term will include a wide range of potential industrial outputs, such as aquatic bioremediation services, bio-processing of aquatic materials, marine pharmaceuticals, aquatic plant production and other applications.

The farm-gate value of aquaculture production in Canada has increased dramatically (nearly 50- fold) from $6CM in 1984 to $ 350C M in 1996, representing production of over 70,000 tonnes and about 24% of the total landed value of the Canadian fisheries sector. It is estimated that this value can be more than double to $1 billion by 2003, through the application of aquatic biotechnology, and by addressing the institutional barriers and biological and other problems facing the sector. The aquaculture industry currently employs more than 5,000 people in both the production and service subsectors. Ninety percent of those employed are located in rural communities.

Aquatic biotechnology is small relative to output of the aquaculture industry, but it is essential to its viability and growth. Aquatic biotechnology product and service sales reached $43C million in 1997, $17C million of which were export sales (Stats Can report) primarily to markets in the United States, Chile, and UK. Exports are forecasted to increase by 15% p.a to meet the growing food requirements and to alleviate the decline of the wild fisheries. But this increase is unlikely to occur unless aquaculture, as a receptor industry, increases substantially towards it full potential. Twenty five percent of aquatic biotech firms are large, and over 90% are privately held. Forty percent of the aquatic biotech firms are located on the east coast, 30% located on the west coast and the remainder in central Canada.

Presently, aquatic biotechnology includes research in areas such as fish health (vaccines and diagnostics), broodstock development, environmental services, shellfish production, marine plant processing technologies and marine based nutraceuticals. The Canadian aquatic biotechnology industry is world-reknowned for broodstock development, health management, environmental management, quality control, and research & development. Additional research in species and serotype-specific vaccines are being developed against parasites that commonly affect marine organisms using techniques of modern biotechnology. Canadian production of vaccines for 1998 is approximately $5C million and is estimated to increase consistently for

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the next few years. The micro injection of growth hormone genes into fertilized salmon eggs has proven effective in accelerating growth by 30-60%. The market value of transgenic salmon is estimated 2000 tonnes for 2001. Presently the market value for transgenic fish in general is approximately several thousand tonnes. It is estimated at a value of $500 thousand for 2001 with a rapid increase in the following few years. In addition, scientists at DFO West Vancouver laboratory developed a DNA probe to determine the genetic sex of salmon without killing them. Microtek has patented and is licensing this probe to Chinook Salmon farmers in Canada and abroad.

Environmental Biotechnology

Canadian annual growth from 1996 to 2000 in environmental markets is estimated at a 3% - 5% growth rate p.a . Although the US remains the most accessible market for Canada and represents a destination for 80% of the industry's exports, there is a growing demand to foreign countries such as Mexico with specific interest to incinerators, and filtering machineries for water and gas. The demand requires technology advancements in areas such as water treatment (removal of heavy metals), air control (reduction of pollutants), soil bioremediation, recycling, climate control and treatment of solid wastes. Bioremediation involves the use of living organisms to reduce or eliminate environmental hazards in soil and water resulting from the accumulation of toxic chemicals. The remediation market is largely defined by the amount the resource governments are prepared to devote to cleanup of contaminated sites. In 1999, this amounts to $50-100M/y and will remain static for the next few years. The majority of firms dealing with the bioremediation of hydrocarbon-contaminated soils are located on Western Canada situated nearby petrochemical companies, and wastewater treatment firms are located mainly in Quebec and Ontario. In 1997, Trojan Inc. located in Ontario was ranked the world's leading supplier of ultraviolet systems purifying effluents in wastewater treatment plants with gross sales totaling $51.1 million in 1997. Ontario companies account for about 45 % of the industry revenues.

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OTHER

The forest biotechnology sector represents 7% of the 282 core biotechnology companies. In general, Canadian companies having a forest biotechnology component spent $42C million annually on R&D with revenues of around $150C million. Provinces and markets are increasingly limiting the use of tradional chemicals due to health, safety, and environmental concerns. Bacillus thuriengensus, a biopesticide, is the major biopesticide used in Canadian forests with annual sales estimated at $40C million per year in North America. This represents less than 1% of $5C billion potential market worldwide.

Recent applications include tissue culture, molecular genetics, pathology, and ecophysiology assessment. The Forest Biotechnology Center in British Colombia is developing clonal propagation systems for conifers using somatic embryogenesis. To date, greater than 5,000 lines representing 15 conifer species (spruce, pine and Douglas-fir) have been stored via cryopreservation. As well, techniques to identify improved genetic sources, optimal nursery culture protocol and enhanced forest regeneration practices are advancing the development of superior plants and trees by genetically enhancing plant cell composition and structure. This makes possible genetically enhanced trees and plants with qualities such as pulp density, fibre strength, cellulose content, and lignin content. .

In the mining sector, biotechnology has applications in leaching metals from low grade deposits of gold, silver and copper. This extraction method is called bio-oxidation. Bio-oxidation has potential in Canada to exploit low grade resources in an environmental sensitive way. With technology advancements, as many as 10 new mineral deposits could be exploited by this method within the next 10 years.

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INTRODUCTION

OVERVIEW OF THE HEALTH SECTOR

The global market for health products and services is enormous - estimated at more than $2 trillion dollars annually, and Canadian suppliers are working to capture a larger share. We measure our international health industries business opportunities in three sectors: Medical Devices, Pharmaceuticals and Health Services. In all three areas, Canadian healthcare managers are working hard to make their systems more effective, less costly, less institutional and more community based. There are increasing global prospects for new and innovative private sector initiatives that help Canadians and populations worldwide to stay healthy. The rapidly emerging Canadian health industries are dynamic, progressive and knowledge based, producing exportable processes, products, services and expertise that are ready for the international marketplace.

A GROWING GLOBAL MARKET

Significant new factors are shaping health keeping and health care at home and abroad:

Demographic factors include increases in population and urbanization in developing countries, an emerging middle class in newly-industrialized countries, and aging populations in developed countries.

Disease patterns are changing because of adverse environmental impacts, longer life spans, and the presence of new, virulent and drug-resistant diseases.

Individuals, health insurance companies, and governments are placing growing emphasis on ‘wellness’ models, preventive medicine, health education and self-managed health regimes.

Cost containment in industrialized countries requires new tools, systems and methods for health care delivery.

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Increasingly, advanced information and communication technologies are prominent in the research, development and delivery of health products and services.

Some health research and development areas, especially in genetics, biotechnology and information systems, present great domestic and export opportunities for Canadian industries, which already occupy an enviable position in the global marketplace.

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CANADIAN PRIVATE SECTOR STRENGTHS

The Medical Device Industry

The Canadian medical devices sector is made up of firms that provide a wide range of products used for diagnosis and treatment of ailments, including: medical, surgical, and dental equipment; furniture; supplies and consumables; orthopaedic appliances; prosthetics; electromedical equipment; as well as diagnostic kits, reagents and equipment.

The Pharmaceuticals Industry

The Canadian pharmaceutical industry is comprised of three key segments: the subsidiaries of multinational brand-name drug producers, many with research and product mandates, as well as Canadian-owned generic drug companies; a dynamic and growing small and medium-sized biopharmaceutical industry; and, contract research organizations, Canadian universities and academic centres which play a pivotal role in the research activities of the industry.

The Health Services Industry

The Canadian health services sector is composed primarily of SMEs providing services in Canada and abroad and can be broken down into eight general categories as follows: telehealth/health telematics/health informatics; contract research organizations; health administration and consultants; institution and facilities management; continuing medical, nursing and allied health education and training; architectural and design services; clinical services, and health insurance.

SUPPORTING PRIVATE SECTOR INITIATIVES

Health industries is a key knowledge-based sector that is a strategic driver in the global economy. Capturing its market potential - and profiting from it - is primarily the responsibility of private companies. But governments have an important role to play in creating a favourable business climate at home, in managing the Canadian regulatory regime, and in supporting international

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business development. The federal government's role in health care also involves the setting and administering of national principles or standards for the health care system (Canada Health Act), health protection, disease prevention, and population health promotion.

Financial and policy support provided by governments is critical to the growth of Canada’s health industries. Support mechanisms include the funding of basic research, ensuring a steady supply of highly trained human resources, and providing financial assistance for research infrastructure, start-ups and innovation. Governments’ sharing of risk is especially important where market entry is difficult and costly, as it is in the highly-regulated health industries sector.

Improving access to world markets is an important role for the federal government. The implementation of the North American Free Trade Agreement and agreements under the World Trade Organization, as well as the Free Trade Agreement of the Americas under negotiation, have contributed to significant reductions in tariffs. However many non-tariff barriers still exist. Factors that impact on market access include patent policy, regulatory review processes, Mutual Recognition Agreements (MRAs), and the use of "managed care" instruments such as formularies, procurement and utilization policies by health care managers in the public and private sectors.

Canada currently chairs the Global Harmonization Task Force which is working toward the international harmonization of regulatory systems for medical devices. The Task Force is presently comprised of government representatives from Canada, the United States, the European Union, Japan and Australia. Global harmonization will serve to support the eventual development of MRAs between member countries to increase global trade cooperation, and help Canadian medical device companies to sell more competitively in the international marketplace without suffering the financial losses associated with long delays for regulatory approval.

The federal government is a leader in bringing together sectoral stakeholders to focus international business development efforts in this key economic segment. As resources are reduced, there is a growing need to coordinate the efforts of all parties involved in trade development, including Industry Canada, Dept. of Foreign Affairs and International Trade, Health Canada, Agriculture and Agri-Food Canada, provincial governments (both health and industrial development departments), industry associations and companies.

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Examples of federal government involvement in trade development and promotion include:

supporting Canadian subsidiaries in the pharmaceutical industry who seek world product mandates and access to world-scale distribution systems;

identifying opportunities for generic drug manufacturers to perform contract manufacturing;

assisting small and medium-sized Canadian medical device and services companies, as well as generic drug manufacturers, to develop international marketing skills and partnerships/alliances that will improve their ability to penetrate foreign markets;

providing firms with up-to-date information on the opportunities and challenges that exist in external markets.

The federal government also plays a very important role by pursuing the harmonization of regulations, since these impact directly on the international competitiveness of Canada’s health industries. Canada is currently negotiating with Japan, Europe, Australia and the United States on a common set of regulatory standards for medical equipment. Global harmonization will serve to support the eventual development of Mutual Recognition Agreements between member countries which will facilitate market access and increase global trade cooperation. As a result Canadian medical device companies will better be able to compete in the international marketplace without suffering the financial losses associated with long delays for regulatory approval.

Provincial governments also have an important role to play in international business development in the health industries sector. Their procurement policies often determine “first market” or “first use” of new products and services. Many provincial governments have active research and development programs, and support research infrastructure. Provincial industrial development programs have been used to promote “clusters” of health industries activities, e.g. biopharmaceuticals in Quebec. Many provincial governments (e.g. Ontario, Manitoba and Nova Scotia) are strong supporters of export initiatives. All provincial governments are represented on Trade Team Canada Health Industries.

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A VISION FOR THE NEXT MILLENNIUM

Canadian based health industries companies bring unique comparative advantages and competitive values to the international marketplace. Promoting these companies as global healthkeepers, which are positioned to meet the challenges of the 21st century, is the underlying theme that drives this international business strategy.

Quality health care is now the number one concern of Canadians. Health care is regarded as a basic right and the health system is valued highly. Canadians identify strongly with our health system because it exemplifies many of the shared values of modern Canadian society, such as equity, fairness, compassion, and respect for the fundamental dignity of all.

A strong Canadian health sector contributes to the health and well-being of Canadians, as well as health consumers around the world. At the same time, the development of the Canadian health sector as a knowledge-based industry is creating jobs and growth in the Canadian economy. The Canadian private sector plays an important role in the day-to-day delivery and maintenance of our world-class health care system.

The 1999 Speech from the Throne emphasised a renewed commitment by the federal government to improve Canada’s knowledge infrastructure by introducing the legislation necessary to create the Canadian Institutes of Health Research. To further improve the potential for advanced research in Canada, Granting Councils will receive more support, and international research collaboration will be fostered in universities and institutes to expand Canadian expertise in particular areas, such as genomics.

The Speech also includes measures to increase trade promotion in strategic sectors with high export potential, which include biotechnology and health. With its partners, the federal government will support the testing of innovations in integrated service delivery, in areas such as home care and pharmacare.

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