Trade Opportunities in North Africa, the Middle East & the Arabian Peninsula

Remarks for the Hon. David Kilgour

Secretary of State (Asia-Pacific) & MP (Edmonton-Southeast)

To the Exporters and Importers Association of Calgary Palliser Fairmont Hotel , Calgary, AB

28 November 2003

Check against delivery

Calgary is always a great place to talk about business.  It has the highest percentage of post-secondary educated residents (over 60%) in Canada.  It also has the highest per capita concentration of engineers and scientists -  twice the national average with 44 out of every 1000 Calgarians.  Half of Calgarians fall within the core working age group of 25-54 years of age, making this the highest employment-to-population ratio in Canada.   In other words, Calgary (along with Edmonton of course) is a prime example of a truly dynamic city representing the best of what modern Canada is all about.

Having just attended a conference on trade and human rights at the University of Calgary, this issues are fresh in mind and I'm ready to talk about them with you afterwards.  That said, I know your interests are in hearing about the opportunities that exist in the Middle East, the Arabian Peninsula, and North Africa and having committed to talking about this, I will use some of Gar's prepared notes.  It's not all foreign ground for me, mind you: in January 2002, when I took on the Asia-Pacific portfolio, I was actually promoting trade in Algeria, Tunisia and Libya.  The opportunities are there, and they're real.

Business Opportunities in Arabian Peninsula, the Middle East and North Africa .

These are regions we hear about in the news regularly, and the story is all too often one of conflict and difficulty. Make no mistake about it: these regions are also full of commercial potential for those committed to a long-term view.

The Arabian Peninsula, the Middle East and North Africa have resources and niche markets that many Western countries continue to pursue with great enthusiasm. From Saudi Arabia to Morocco, large consumer markets, natural resources, and high-tech development are awaiting the right partners.

As Gar has often reminded me, all countries without exception are enthusiastic about building stronger business relations with Canada. Canadian products, services and technology are highly regarded for their quality and competitive prices. 

In 2002, the Middle East and North Africa represented a $2.6 billion market for Canadian goods.  Our total bilateral trade, which reached $7 billion dollars in 2002, is a compelling testimony to the overall health of our trading relationship. 

Business As A Bridge Between Cultures

The large number of Canadians of origin in Iran, Egypt and Morocco, amongst others, gives our companies a distinct competitive advantage doing business in the region.  As Canadians import North African and Middle-Eastern products, like textile, jewellery, carpets, for instance, they are seizing the opportunity of large consumer markets. But even more than that, they are creating an environment  where North African and Middle-Eastern communities in Canada feel at home.  Business serves as a bridge between cultures.

Last fall, my colleague Secretary of State Gar Knutson, lead a successful Canadian Business Arab Council Trade and Investment Mission to the Gulf region. The mission took him to Qatar, the United Arab Emirates, Oman, Kuwait and briefly to Saudi Arabia.

Twenty - eight companies from British Columbia, Alberta, Ontario and Quebec participated in the mission, demonstrating unprecedented interest and confidence by Canadians in doing business in the Arabian Peninsula.

Let me begin a survey of these potential markets by looking at a place that many in Calgary are well familiar with: the Arabian Peninsula.

Business Opportunities in the Arabian Peninsula

This is a part of the world that has been known mainly for its oil wealth.  Canadian companies have benefited from  opportunities in that sector and are well-suited to benefit from new ones, such as how the Saudi government is pursuing diversification in the oil sector and elsewhere because of fluctuations in oil prices and a growing population.

Indeed, Canadian firms will find a fertile environment if they help these countries to adapt to the new economy. Throughout the region, there are ambitious campaigns of privatization and modernization, as well as regulatory reforms that have opened up sectors such as mining and telecommunications to foreign investors.

Several countries have started negotiations aimed at accession to the World Trade Organization. It is fitting that Qatar was the host of the 2001 round of global trade talks.

Saudi Arabia's petrochemicals industry, which uses natural gas as a raw material, is growing rapidly. This industry constitutes the cornerstone of the diversification drive that Saudi Arabia has launched to reduce the national economy's heavy reliance on oil revenues.

The Saudi government is also planning a major expansion of the Master Gas System which processes gas and pipes it from the fields to users.

This spells opportunities for Canada in engineering services, technology transfer, training and equipment sales.

There are also ambitious plans for the mining sector in Saudi Arabia, starting with the development of considerable reserves of phosphate and bauxite in the North.

In the Gulf, regional investment in the oil and gas sector will be close to US$ 60 billion over the next ten years.

Kuwait possesses approximately 10 per cent of the world's proven oil reserves and the government is discussing with foreign oil companies the development of oil fields in the northern part of the country.

In the United Arab Emirates, the value of Canadian exports continues to rise, possibly exceeding $300 million by the end of 2003. More than 100 Canadian companies are currently active in the UAE, in such sectors as construction, oil and gas, education, health, agri-food and telecommunications, with more than 6,000 Canadians currently living and working in the Emirates.

Dubai is the regional commercial services and tourism hub. With the largest free trade zone and port in the Gulf region,  Dubai is a head start in the race to find the route to prosperity beyond oil.

 Undoubtedly, we see that there is increasing diversity within these markets; oil and gas is only part of a much richer economic fabric throughout the Arabian Peninsula, the Middle East and North Africa. The region also offers Canadian exporters and importers a broad range of opportunities between countries.

Business Opportunities in Iran

I'd like to turn next to Iran. With a population of approximately 65 million, Iran is one of the largest countries in the Middle East and one of the youngest population in the world. For the last couple of years, Iran has been one of the leading market in the region.

Iran's economy is also going through a liberalisation process. This positive development indicates a recognition that trade, transfer of technology and foreign investment are essential to the long term economic interests of the country.

As a result, Iran is offering significant market opportunities for Canadian goods and services, particularly in the following sectors:

• Oil and gas equipment and services, where Iran, one of the largest oil producer in the world, continues to look for foreign partners.

• Agriculture, where Canadian dry-land agriculture methods are particularly appropriate.

• Numerous other sectors, such as information technologies and telecommunications, power generation, environment and mining. 

Business missions from Iran are visiting Canada on a regular basis, for diverse sectors. This shows the high interest Iranians have towards Canadian products and technologies. I would encourage you to consider the Iranian market for your future export expansion plans.

Business Opportunities in Israel

Israel is another key market for Canada in the region.

With the signature six years ago of the Canada-Israel Free Trade Agreement (CIFTA) and the presence of direct air links, our bilateral trade has almost doubled to reach a level of more than $1 billion a year.

In 2002, Israel ranked 27th as a Canadian export destination. While we have also signed a separate Memorandum of Understanding with the Palestinians, the Free Trade Agreement also applies to the West Bank and Gaza, thus allowing goods of Palestinian origin to enter Canada duty free.

What characterizes the trade between Canada and Israel is the high value-added nature of the products being traded. Interestingly, despite the difficult situation that exists in this region, our exports and imports continue to be very significant.

This demonstrates the solidity and the diversity of our bilateral trade with Israel and the strength of our bilateral relations.

Collaboration between Canadian and Israeli firms is also growing. For example:

• Joint venture partners Nexen Inc. and OPTI Canada Inc., the Canadian subsidiary of the Israeli company Ormat Industries, have received approval from the Alberta Energy and Utilities Board and legislative assent from the Province of Alberta to proceed with the Long Lake oil sands project. The project is valued at $3 billion.

• In July 2003, it was announced that Nortel won a $278 million tender to supply the Israeli company Partner with a 3G wireless network, the first of its kind in Israel. 

Business Opportunities in Egypt

Another market to which Canadian companies should pay more attention is Egypt. With a population of more than 70 million people, Egypt is a giant in the region and Canada's home to a large and energetic Egyptian-Canadian community, estimated at about 300,000.

Egypt is working to expand its basic infrastructure and is opening up its economy, providing significant opportunities for Canada in the transportation, energy, telecommunications and agri-food sectors.   This year Agriculture & Agrifood Canada selected Egypt as one of their four top emerging markets worldwide.

Lebanon, Syria, Jordan

In addition to these larger markets, countries such as Lebanon, Syria and Jordan also offer specific niche opportunities for the export of goods and services.

For example, Saskatchewan Potash Corporation is currently negotiating a significant acquisition which will make it a very important player in Jordan.

Syria has begun a program of economic liberalization which President Bashar Assad sees as essential to revitalize the economy. Opportunities exist for modernizing the transport and communication sector and in the oil and gas sector.  For example, Petro Canada through its acquisition of the company Viba oil and gaz is now producing over 100,000 barrels of oil per day in Syria. The first ever Syrian business mission visited Montreal, Ottawa and Toronto in May 2002, also a sign of the new mood in that country.

Lebanon, with whom we have special links because of the large Lebanese-Canadian community across the country, is well known to many of you and also offers good opportunities for Canadian entrepreneurs.

Business opportunities in North Africa

Last but not least, let me look briefly at North Africa.

Algeria

Algeria is the largest country in Africa as well as our leading trading partner in all of Africa and the Middle East. In 2002, Canadian exports and exports totaled more than $2 billion. 

The petrochemical industry and its support industries have long been the mainstay of the Algerian economy, which now offers new opportunities for Canadian trade, investment, joint ventures, and technology transfer as the country undertakes an ambitious campaign of privatization and regulatory reforms.

Libya

Libya is a new market for Canadian companies, and one of growing importance since the suspension of UN sanctions in 1999.  Canadian exports to Libya have more than doubled in 2002, to reach almost $48 million, and we look forward to continued growth and diversification in our commercial exchanges with Libya.

There are opportunities in all sectors, as Libya imports to meet most of its consumer demand for food and consumer goods. Libya presents particularly good opportunities in the oil sector, agriculture, electronic equipment and construction as it seeks to upgrade its infrastructure.  Such companies as SNC Lavalin and Petro-Canada have led the way for Canadian companies, and the challenge now is to expand Canadian presence in the market.

Many Canadian firms have shown the way to success in North Africa, the Middle East and the Arabian Peninsula. I have discussed with you today only a few examples that demonstrate how these regions represent a unique opportunity for Canadian companies. As we have seen, there is profitable business to be done in these countries and across a great variety of sectors.

Finally, a brief word about our Department's Trade Commissioner Service.  These are Canada's eyes and ears on the ground, who are there to help you know your markets better. They are one of the most valuable assets that the Canadian government has to offer to the private business sector.

Hopefully, these remarks have encouraged about the markets in the Maghreb and the Middle East.  I couldn't leave without pitching Asia as well.  What most don't realise is that Asia's economic crisis is over.  Current growth is unparalleled.  Asia-Pacific remains our second largest trading partner.  Since 1970, our exports there have grown an average of eleven percent a year. For over a decade, our trans-Pacific trade has exceeded our trans-Atlantic trade. Investment links in both directions have grown significantly.   And I'd encourage everyone to consider Asia when you're looking at new markets.

Thank you.  I look forward to your questions.

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