October 17, 2005

Agreements in Action

Making business investment work under NAFTA, TIEA and an expanding European Union

The views expressed in this presentation are those of SECOR Consulting and do not necessarily reflect those views held by CERT, the Government of Canada and any of the companies mentioned in this document

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Getting to the Promise: Agreements in Action

Multinational trade and investment deals are just the starting point for governments and businesses

The agreements have to live up to their promise

Increased regional prosperity—the top floor of the benefits tower

Living up to the promise from a business perspective

Examples of multinational investments that work and don’t work and why

Living up to the promise a point for public policy

An example from NAFTA on what can happen after the starting point

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Regional Prosperity

The top floor of the agreement benefits towerBut by no means the most important floor

Peace among nations

Human rights & social Justice

Economic & market opportunities

Cultural preservation

Public policy coordination & integration

Regional Prosperity

All the other benefits I have missed

Reduced intraregional disparityThe EU started building at the base

NAFTA started with the market

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Business Investment Perspective

The trade & investment agreement’s themselves do not guarantee successful multinational investments

Bombardier Transport—Adtrans Success comes from doing much more than changing the signs on the

factories Maturity to realize who had acquired whom You have to integrate the back office and shared services too

Alcan—Aluswuisse—Pechiny National culture is one thing, but business culture is another thing all

together Reconciling two different approaches to the same market

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More Business Investments

Some examples of the dangers inherent in investing

Tembec Inc The labour founded, union friendly forestry giant that managed to find a

hostile union through a multinational investment

Aer Rianta’s ride back to the Dublin Airport Authority Aer Rianta built a multinational airport & terminal management company But underperformed back home and got into trouble with the Irish

government

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Public Policy Perspective

The terms of a trade and investment agreement do not perfectly predict the reality of living with the deal

An example: NAFTA and Canada-US lumber trade dispute Forestry policies differ between the two countries

The US believes this gives Canadians an unfair advantage so have kept high tariffs on Canadian wood coming into American markets

Though Canada has won on all NAFTA dispute panels, the US lumber lobby and US government will not concede

Policy recommendations & business lessons If you want to maintain different public policy regimes, negotiate upfront Selective applications of agreements costs some sectors dearly Beware of winning at all costs

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Conclusions

As the EU expands, TIEA comes alive and we work hard to keep the full force of NAFTA active…

…Remember that the deals themselves are not the ticket to prosperity it is the application of the deal that counts

Businesses need to look after the details of being or selling multinationaly

Governments need to treat trade & investment deals as living agreements