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Chapter 1. Our Mandate and Approach

1 See Competition Review Panel for mandate.

2 See Sharpening Canada’s Competitive Edge.

Chapter 2. Creating Wealth: Competitiveness and Productivity

1 See, for example, Michael Porter, The Competitive Advantage of Nations (New York: The Free Press, 1990).

2 William W. Lewis, The Power of Productivity (Chicago: The University of Chicago Press, 2004).

3 Ibid.

Chapter 3. Globalization and the Pace of Change

1 These now account for 6.5 percent of the cost of inputs, down from 10.3 percent in 1963. Source: Aaron Sydor, "The Rise of Global Value Chains," Canada's State of Trade: Trade and Investment Update–2007 (Ottawa: Department of Foreign Affairs and International Trade, 2007), p. 69.

2 "Competition Intensity as Driver of Innovation and Productivity: A Synthesis of the Literature," CSLS Research Report 2008-03, June, prepared for the Competition Bureau (Ottawa: Centre for the Study of Living Standards); Penny Hope-Ross, "From the Vine to the Glass: Canada's Grape and Wine Industry," Ottawa: Statistics Canada, Cat. no. 11-621-MIE — No. 049, October 2006. 

3 Today, more than 20 percent of the population in developed countries is aged 60 years or over, and this proportion will grow. In less developed regions, seniors account today for just 8 percent of the population. Source: United Nations, World Population Ageing 2007.

4 FDI increased from US$13.4 billion in 1970 to US$1.3 trillion in 2006. Source: Andrew Sharpe and Meghna Banerjee, "Assessing Canada's Ability to Compete for Foreign Direct Investment," Centre for the Study of Living Standards, research paper prepared for the Competition Policy Review Panel, March 2008.

5 United Nations Conference on Trade and Development, World Investment Report 2007.

6 The total size of sovereign wealth funds has increased dramatically over the past 15 years. In 1990, sovereign funds held roughly $500 billion. However, the CSLS estimates their current total is $2 to 3 trillion and will potentially reach $10 trillion by 2012. Source: Simon Johnson, "The Rise of Sovereign Wealth Funds," Finance and Development 44 (3), September 2007.

7 Scotiabank Commodity Price Index, March 2008.

8 PriceWaterhouseCoopers, Mining Deals 2007 Annual Review.

9 See Sydor, "The Rise of Global Value Chains," op. cit.

10 The growth in intra-firm trade is a complementary phenomenon: multinational enterprises established in different international markets trade products that also comprise inputs produced in global value chains. As intra-firm trade between Ford Canada and Ford US has increased, so have the inputs of autopart firms from Canada, the US and around the globe into the traded products.

11 Naomi R. Lamoreaux, Daniel M. G. Raff, and Peter Temin, "Beyond Markets and Hierarchies: Toward a New Synthesis of American Business History," American Historical Review 108 (2): 404–433 (April 2003).

12 "How Two European Giants Keep Up with the Global Race," The Economist, 13 February, 2007.

13 Claude Turcotte, "Investissement Québec rappelle « l'urgence » d'accroître la productivité," Le Devoir, March 13, 2008.

14 The BRIC countries (Brazil, Russia, India and China) account for 40 percent of the world population with a market exceeding two billion people and 28 percent of the world economy, and growing.

15 China now comprises 6.9 percent of the total world demand for oil, 18.6 percent for aluminum and 28.5 percent for steel. See Department of Foreign Affairs and International Trade Canada, "China's Appetite for Natural Resources Continues to Grow," April 5, 2006.

16 Information and communications technologies encompass a wide variety of products and services, including computers, software, communications equipment and networks, fibre optics, interactive video, satellite infrastructure and services, radio frequency identification technology, and a growing number of complementary devices for work, education, health and entertainment.

17 International Telecommunication Union and the United Nations Conference on Trade and Development, World Information Society Report 2007, Beyond WSIS, June 2007.

18 Global System for Mobile Communication Association (GSMA) Press Release, April 16, 2008.

Chapter 4. What We Heard and What We Learned

1 From 2001 to 2006, 455 Canadian companies, worth a total of US$137 billion were acquired. Source: Andrea Mandel-Campbell, Foreign Investment Review Regimes: How Canada Stacks Up (Ottawa: Conference Board of Canada, April 2008).

2 Globe & Mail Report on Business, "Leaps of Faith," April 25, 2008; CBC News, "In Depth: Research In Motion," 24 October 2007; Barron's, "The World's Best CEO's," March 25, 2008; and Canadian Business, "Men in Motion," December 2004.

3 SECOR, "Positioning Canadian Firms in the Global Market for Corporate Control," February 2008.

4 Research findings indicate almost no change since 2001 in the 27 percent share of assets in Canada's non-financial industries under foreign control. See Statistics Canada, "Foreign Control in the Canadian Economy," The Daily, Statistics Canada, June 14, 2007.

5 The number of Canada's global leading firms rose from only 15 in 1985 to 40 in March 2008. See Institute for Competitiveness and Prosperity, Report on Canada 2008: Setting our Sights on Canada's 2020 Prosperity Agenda, p. 54.

6 William Polushin, "Case Studies of Firm Improvements in Productivity and Competitiveness," research paper commissioned by Competition Policy Revew Panel, Ottawa, 2008.

7 This is discussed in Walid Hejazi, "Foreign Direct Investment and the Canadian Economy," research paper prepared for the Competition Policy Review Panel, April 2008.

8 The US accounted for 79 percent of our exports in 2007. See Export Development Corporation, "Canada Country Overview," March 2008.

9 It is estimated by Goldman Sachs that the gross domestic product of these four countries alone will be as much as half the G7 countries combined by 2025.

10 Large firms are more export intensive than smaller firms. Small firms (fewer than 50 employees) account for 72 percent of exporting firms but only 26 percent of export value. See Sydor, "The Rise of Global Value Chains," op. cit., p. 26.

11 Philippe Mercure, "Doubler les Chinois par la qualité," La Presse, March 22, 2008.

12 Bank of Canada, Noon Rate, historical data. 

13 The Conference Board recently gave Canada a "D" on innovation, ranking Canada 14th out of 17 countries. See Conference Board of Canada, How Canada Performs: A Report Card on Canada, June 2007, p. 2.

14 Canada ranked 10th of 27 OECD countries on a broad composite measure of innovative performance. See OECD, "Benchmarking Innovation Policy and Innovation Framework Conditions," January 2004.

15 Over the period 1981–2006, Canada placed 17th among the 20 OECD countries for which productivity data are available, and 6th among the G7 major industrial countries.

16 Labour productivity is defined as gross domestic product per hour worked, based on purchasing power parity. The series are extrapolated based on 1999 benchmarking estimates of the Canada–US labour productivity gap, using labour productivity indexes from Statistics Canada and US Bureau of Labor Statistics.

17 Statistics Canada, Earning and Incomes of Canadians over the Past Quarter Century, 2006 Census, May 2008, Statistics Canada Cat. no. 97-563-X.

18Over the period 2002–2006, Canada's standard of living (measured by real gross national income per capita) increased much faster (14.3 percent) than that in the US (8.1 percent). Source: Statistics Canada, ibid.

Chapter 5. How Well Is Canada Positioned to Compete to Win?

1 A study of ten industrialized countries over a ten-year period found Canada to be second only to Mexico in terms of the lowest after-tax costs of start-up and operations of a new business; see KPMG, Competitive Alternatives: KPMG's Guide to International Business Location, 2008 Study, March 27, 2008. A global business environment assessment of the best place to conduct business ranked Canada fourth out of 82 countries based on macroeconomic stability, infrastructure, labour market flexibility, quality of the workforce and policy conduciveness for businesses; see The Economist Intelligence Unit, "Business Environment Rankings," October 25, 2007. Canada was ranked 14th out of 17 countries in terms of innovation; see Conference Board, How Canada Performs, op. cit. Canada was ranked 10th out of 55 nations in terms of having an environment that can create and sustain the competitiveness of enterprises; see IMD, World Competitiveness Yearbook, 2007. Canada was ranked 21st in a survey of executives regarding where they planned to engage in direct investment in the coming year; see AT Kearney, FDI Confidence Index, 2005.

2 In February 2008, the Scotiabank Commodity Price Index reached a record high. The Agricultural Index rose over 25 percent and wheat was valued at the highest price per bushel ever recorded. Potash surged 131 percent in value since 2004. Uranium spot prices are eight times higher than in 2000 and double their previous peak in 1979–80. See Scotiabank Commodity Price Index, March 2008.

3 See Major Projects Management Office.

4 Michael Hart, "Steer or Drift? Taking Charge of Canada–US Regulatory Convergence," C. D. Howe Institute Commentary, No. 229 (Toronto, March 2006), p. 3.

5 Industry Canada, 2007 Canada's Automotive Industry, p. 5.

6 See Hart, "Steer or Drift?" op. cit., p. 2.

7 SECOR, "Positioning Canadian Firms," op. cit., p. 78.

8 See KPMG, Competitive Alternatives: KPMG's Guide to International Business Location, 2008 Study, op. cit.

9 Reuven Brenner and Gabrielle Brenner, "How to Attract, Groom and Retain Talent in Canada," research paper prepared for the Competition Policy Review Panel, March 2008.

Chapter 7. Competitiveness Agenda: The Legal Foundations

1 The notification threshold for investors from World Trade Organization (WTO) member countries is inflation adjusted annually, and is currently set at $295 million. For non-WTO investors, the threshold is $5 million for a direct acquisition and $50 million for an indirect acquisition; the $5-million threshold will apply, however, for an indirect acquisition if the asset value of the Canadian business being acquired exceeds 50 percent of the asset value of the global transaction.

2 In 1999, responsibility for the administration of the ICA in relation to cultural businesses (music recordings, film and video, books, periodicals, magazines and newspapers) was transferred to the Minister of Canadian Heritage. The Minister of Canadian Heritage also has the authority to review cultural investments below the $5-million threshold as well as the establishment of new cultural businesses by foreign investors.

3 Of note, these disallowance rates do not reflect proposals withdrawn before a decision was rendered.

4 OECD, International Investment Perspectives 2007: Freedom of Investment in a Changing World.

5 United Nations Conference on Trade and Development, World Investment Report 2007, Annex Table B.3.

6 See Mandel-Campbell, How Canada Stacks Up, op. cit. This study compares both stated policies and actual practices related to foreign direct investment screening in France, Germany, Italy, the United Kingdom, the US and Canada across nine strategic sectors, and finds that Canada ranks third most open, being no more restrictive than Germany, France and Italy.

7 Ibid.

8 Speech by the Honourable Jim Prentice, Minister of Industry, to the Vancouver Board of Trade, October 9, 2007.

9 In the US, foreign investment is subject to the Foreign Investment and National Security Act of 2007. The Committee on Foreign Investment in the United States is made up of representatives from the Departments of Treasury, Defense, State, Homeland Security, Commerce, and Energy. The Attorney General, among others, is responsible for the administration and enforcement of this legislation.

10 Industry Canada, "Guidelines — Investment by state-owned enterprises — Net benefit assessment."  

11 J. Timothy Kennish, "Evaluation of the Operation and Effectiveness of the Investment Canada Act and Recommendations for Changes to this Legislation," research paper prepared for the Competition Policy Review Panel, March 2008.

12 Enterprise value is a measure used to evaluate the potential acquisition value of a business. It is equal to the sum of the price to be paid for the equity of an acquired business and the assumption of liabilities on its balance sheet minus its current cash assets.

13 Foreign investment involving financial institutions regulated under the Bank Act and the Insurance Companies Act is exempt from review under the ICA. The Minister of Finance has responsibility for the review and disposition of foreign investment involving federally regulated financial institutions.

14 Canada is signatory to a number of international trade and investment agreements under which it must ensure that foreign investors are treated equally and no less favourably than domestic investors. Under the WTO agreement and the NAFTA, Canada has taken reservations to preserve its ability to use the ICA to ensure that investments by non-Canadians provide net benefit to Canada.

15 See OECD, International Investment Perspectives, op. cit., pp. 19 and 20.

16 Section 14.1 (6) of the ICA defines a "cultural business" as a Canadian business that carries on any of the following activities, namely,

  1. the publication, distribution or sale of books, magazines, periodicals or newspapers in print or machine-readable form, other than the sole activity of printing or typesetting of books, magazines, periodicals or newspapers,
  2. the production, distribution, sale or exhibition of film or video recordings,
  3. the production, distribution, sale or exhibition of audio or video music recordings,
  4. the publication, distribution or sale of music in print or machine-readable form, or
  5. radio communication in which the transmissions are intended for direct reception by the general public, any radio, television and cable television broadcasting undertakings and any satellite programming and broadcast network services.

17 For a full description of Canada's foreign investment policies for cultural businesses see the Department of Canadian Heritage.

18 Submission of Torstar Corporation to the Competition Policy Review Panel, January 11, 2008.

19 Examples of company-specific statutes relating to the privatization of former Crown corporations include CN Commercialization Act, Petro-Canada Public Participation Act, Air Canada Public Participation Act, Eldorado Nuclear Limited Reorganization and Divestiture Authorization Act, and the Teleglobe Canada Reorganization and Divestiture Act.

20 National Post, "Where's Canada? Canada, with its small size, cannot be left out of open skies agreements between the US and Europe," April 9, 2008, p. FP17: interview with Pierre Jeanniot, former CEO of Air Canada and the International Air Transport Association.

21 Financial Post, "No way to run airlines," April 5, 2008: interview with Giovanni Bisignani, Chief Executive, International Air Transport Association.

22 D. G. McFetridge, "The Role of Sectoral Ownership Restrictions," research paper prepared for the Competition Policy Review Panel, March 15, 2008.

23 Submissions of Air Transport Association of Canada; Air Line Pilots Association of Canada; Joint Submission of the Aéroports de Montréal, Greater Toronto Airports Authority, and Vancouver Airport Authority; and Transat.

24 This argument was made in the submission of the Commissioner of Competition, as well as in research conducted on behalf of the Panel by McFetridge, "The Role of Sectoral Ownership Restrictions," op. cit., and by David Gillen, "Foreign Ownership Restrictions in the Canadian Aviation Industry," research paper prepared for the Competition Policy Review Panel, March 2008.

25 Areva SA participates in the Canadian industry on an exemption basis as well as in joint ventures with Cameco. Other foreign investors in Canada include Japanese, South Korean and other French interests.

26 Governance of Cameco is subject to the Eldorado Nuclear Limited Reorganization and Divestiture Authorization Act.

27 In 2000, legislation came into force, the Nuclear Safety and Control Act, replacing the former Atomic Energy Control Act, establishing the Canadian Nuclear Safety Commission.

28 Dennis Browne, "Uranium: Controls on Foreign Ownership and National Security," research paper prepared for the Competition Policy Review Panel, March 2008, p. 15.

29 Canadian-designed CANDU reactors do not require enriched uranium fuel, and the Canadian nuclear industry has developed the capacity to supply all fuel requirements for these reactors. However, 95 percent of the world's reactors, as well as the new Advanced CANDU Reactor, require enriched uranium fuel.

30 These multilateral discussions take place in the context of the Nuclear Suppliers Group, which represents 45 countries involved in the development of export control guidelines for nuclear material, equipment and technology.

31 Telecommunications carriers are regulated under the Telecommunications Act and largely through the Canadian Radio-television and Telecommunications Commission (CRTC). Companies that distribute or broadcast programming to Canadians through cable, satellite or other specified means (but not the Internet) are regulated under the Broadcasting Act. They obtain from the CRTC a licence to undertake activities that are known as Broadcasting Distribution Undertakings or BDUs. BDUs include cable services, direct-to-home (DTH) satellite services and multi-point distribution systems.

32 Telecommunications Act (1993, c. 38) subsection 7(d).

33 Broadcasting Act (1991, c. 11) subsection 3(a).

34 Hank Intven and Stephen Rawson, CRTC approves Sale of BCE, March 27, 2008.  Intven and Rawson also note that voting rights cannot be cumulated between two companies to total more than 46.7 percent.

35 See, for example, Steven Globerman, "Implications of Foreign Ownership Restrictions for the Canadian Economy: A Sectoral Analysis" (Ottawa: Industry Canada, 1999), pp. 3–4.

36 McFetridge, "The Role of Sectoral Ownership Restrictions," op. cit.

37 For example, Rogers Communications Inc. stated in its submission that current foreign investment rules remain appropriate and have not had negative impacts on Canada's competitiveness and productivity; see submission of Rogers Communications Inc. to the Competition Policy Review Panel, January 11, 2008, p. 5. TELUS supported the elimination of current foreign investment rules on both telecommunications and broadcasting in part because they limit the formation of joint venture initiatives with foreign firms and impede technology transfers and other unique partnerships, mechanisms through which domestic firms become more innovative and competitive internationally; see submission of TELUS to the Competition Policy Review Panel, January 18, 2008, p. 8.

38 Order Issuing a Direction to the CRTC on Implementing the Canadian Telecommunications Policy Objectives, SOR/2006-355; Canada Gazette, Vol. 140, No. 26, December 27, 2006.

39 Government Opts for More Competition in the Wireless Sector, Industry Canada News Release, November 28, 2007. In June 2007, the Minister of Industry announced a new Spectrum Policy Framework for Canada, concluding that "Market forces should be relied upon to the maximum extent feasible." See Canada Gazette Notice DGTP-001-07 — New Spectrum Policy Framework for Canada, June 2007.

40 The Telecommunications Policy Review Panel was appointed by the Ministry of Industry in April 2005 and issued Telecommunications Policy Review Panel Final Report 2006 in March 2006. Panel members were Gerri Sinclair (chair), Hank Intven and André Tremblay. 

41 TPRP, Final Report, op. cit., p.14.

42 Ibid., Afterword, p. 11–26.

43 Broadcasting distribution undertakings or BDUs generally encompass cable television, satellite television services, and multi-point distribution systems.

44 Memo provided to the Competition Policy Review Panel by the Department of Finance, March 17, 2008.

45 The submission of the Canadian Bankers Association to the Competition Policy Review Panel at p. 4 cites World Economic Forum Global Competitiveness Reports 1997–2007 among other reports. See also Jason Allen and Walter Engert, "Efficiency and Competition in Canadian Banking," Bank of Canada Review, Summer 2007, pp. 33–45. The authors conclude that the Canadian banking industry is competitive.

46 John F. Chant, "Foreign Direct Investment in Canadian Banking: Is There a Case for Special Treatment?" paper presented at the Carleton University Centre for Trade Policy and Law Conference on Canada's Foreign Investment Policies — A Time for Review? Ottawa, December 6, 2007.

47 Submission of the Canadian Bankers Association to the Competition Policy Review Panel, p. 20.

48 Fortune 500 Companies Global Edition 2007, World's Largest Companies.

49 Canadian Bankers Association, loc. cit.

50 Royal Commission on the Economic Union and Development Prospects for Canada, Summary of Conclusions and Recommendations, Ottawa, p. 19.

51 For example, see Report of the Standing Committee on Industry, Science and Technology, A Plan to Modernize Canada's Competition Regime, April 2002, and OECD, Canada — Report on Competition Law and Institutions, 2004.

52 This view has been expressed since the Economic Council's Interim Report on Competition Policy (Ottawa: Queen's Printer, 1969). See also, for example, Michal S. Gal, "Market Conditions under a Magnifying Glass: General Prescriptions for Optimal Competition Policy for Small Market Economies," New York University Centre for Law and Business, Working Paper no. 01-004.

53 The Competition Tribunal is a quasi-judicial tribunal made up of judges appointed from the Federal Court and lay members. It adjudicates civil matters under the Competition Act. Prosecutions of criminal Competition Act matters are undertaken by the Director of Public Prosecutions before the courts.

54 Commissioner of Competition, Competition Bureau, "A Synthesis and Review of Recent Reform Proposals Regarding Canada's Competition Act," research paper prepared for the Competition Policy Review Panel, March 31, 2008.

55 Financial Post Crosbie: Mergers & Acquisitions in Canada is the database of record for M&A transactions in Canada. 

56 The utility of this approach has been illustrated in the recent clearance by the US Department of Justice of the XM Satellite and Sirius merger, Statement of the Department of Justice Antitrust Division on its Decision to Close its Investigation of XM Radio Satellite Holdings Inc.'s Merger with Sirius Satellite Radio Inc.

57 On March 3, 2008, the Minister of Justice appointed Brian Gover as an expert to review the Competition Bureau's use of court orders to obtain documents, testimony and written returns of information and to report to the Commissioner of Competition and the Deputy Minister of Justice with recommendations within three months. See Competition Bureau, Information Notice, "Expert Appointed to Advise on Section 11 Process."

58 The US law and practice pertaining to merging parties legally closing a merger transaction following the expiration of the relevant waiting period is not markedly different from its Canadian counterparts. But, while the jurisdiction to challenge a transaction is not barred beyond a specific time period in the US, in practice, the federal US competition authorities endeavour to inform merging parties with respect to competition concerns prior to the end of the waiting period and almost never concern themselves further about a merger, once its review process is completed without challenging the transaction. EU law under Council Regulation (EC) No 139/2004, Article 6(1)(c) is more definitive in terms of requiring the European Commission to decide on the legality of a merger at the end of their review process.

59 In more than 20 years of formal merger review, Competition Bureau has never challenged a merger transaction within the existing three-year time period following an initial determination that the transaction did not raise competition concerns.

60 The Panel did not consider the false and misleading advertising and marketing practices provision of the Competition Act.

61 In addition to the Panel's consultations, where many stakeholders recommended decriminalization of these provisions, there have been a number of other reports recommending decriminalization of some or all of the pricing provisions, including: Consultative Panel Report on Amendments to the Competition Act in 1996; Anthony VanDuzer and Gilles Paquet, Anticompetitive Pricing Practices under the Competition Act, Theory, Law and Practice (1999) and again in the 2002 Standing Committee on Industry, Science and Technology Report, A Plan to Modernize Canada's Competition Regime.

62 The Supreme Court of the United States recently rejected the per se illegality of resale price maintenance in Leegin Creative Leather Products, Inc. v. PSKS, Inc., 127 S. Ct. 2705 (2007).

63 A number of experts have noted the large number of guilty pleas and significant fines the government has secured over the past decade under the existing conspiracy provisions as an argument for retaining the existing law. Statistics compiled by the Competition Bureau have shown that in 23 contested proceedings under this section conducted since 1980, the Crown has failed to secure a conviction in all but three cases. Moreover, in the period between 1993 and 2001, 88 percent of the fines imposed under the conspiracy provision received were as a result of guilty pleas in international cartel cases where the Canadian resolution was preceded by or contemporary with resolutions in other jurisdictions.

64 These complications arise largely from the requirement under Canadian law to establish that an agreement prevents or lessens competition unduly before it can be considered a criminal offence. It is the combination of market power and behaviour likely to injure competition that makes a lessening of competition undue. The determinants of market power include such factors as market shares, the number of competitors and the concentration of competition, barriers to entry, geographical distribution of buyers and sellers, product differentiation, and countervailing power on the part of customers, among other factors. This tends to increase the quantity and quality of evidence required to establish an offence to the criminal standard of proof, thereby resulting in longer, more complex investigations and prosecutions in Canada compared with other industrialized countries.

65 See, for example, the submissions to the Competition Policy Review Panel of the American Bar Association, Bell Canada, Canadian Bar Association, Canadian Chamber of Commerce, Canadian Manufacturers and Exporters, Competition Bureau, Insurance Bureau of Canada and Lang Michner LLP.

66 The legal term per se, in the context of a conspiracy, means that the act of a defined anti-competitive agreement is presumed to be illegal without the necessity of proving its effect on a market.

Chapter 8. Competitiveness Agenda: Public Policy Priorities for Action

1 OECD data cited in Andrew Sharpe, "Assessing Canada's Ability to Compete for Foreign Direct Investment," research paper prepared for the Competition Policy Review Panel, March 31, 2008.

2 Finance Canada, "Strong Leadership. A Better Canada," Economic Statement, October 30, 2007, p. 10. 

3 Institute for Competitiveness and Prosperity, Report on Canada 2008, op. cit., p. 43.

4 Aled ab Iowerth and Jeff Danforth, "Is Investment Not Sensitive to Its User Cost: The Macro Evidence Revisited," Department of Finance, Working Paper 2004-05.

5 2008 Ontario Budget, Growing a Stronger Ontario, p. 141.

6 Finance Canada, Advantage Canada: Building a Strong Economy for Canadians, November 23, 2006, p. 76. Quebec and three Atlantic provinces have harmonized their retail sales tax regimes with the federal GST. All other provinces continue to impose a separate sales tax at the retail level only, with the exception of Alberta, which does not have a provincial sales tax. The three territories of Canada (Yukon, Northwest Territories and Nunavut) do not have territorial sales taxes. The Government of Quebec administers both the federal GST and the provincial Quebec Sales Tax.

7 Department of Finance, "Finance Minister Finalizes Advisory Panel on Canada's System of International Taxation," News Release, December 11, 2007. The Advisory Panel on Canada's System of International Taxation's consultation paper Enhancing Canada’s International Tax Advantage was released on April 25, 2008.

8 OECD, Education at a Glance, 2007, Table A1.3a. 

9 Ibid., Chart C3.3. Canada had the eighth-highest share of international tertiary enrolled students among OECD and partner economies.

10See Ibid. and Canadian Council on Learning, "Raising the Score: Promoting Adult Literacy in Canada," September 29, 2005. OECD Table C5.1a indicates that, in 2003, only 25 percent of Canadians undertook non-formal, job-related continuous education and training, compared with 40 percent of Swedes, 39 percent of Danes, 37 percent of Americans and 36 percent of Finns.

11 Institute for Competitiveness and Prosperity, Report on Canada 2008, op. cit., pp. 48–49.

12 Foreign Credentials Referral Office, "Frequently Asked Questions."  

13 See Statistics Canada, Immigration in Canada: A Portrait of the Foreign-born Population, 2006 Census, Catalogue no. 97-557-XIE, especially the section on "Immigration: Driver of population growth," p. 7.

14 Statistics Canada, " 2006 Census: Earnings, Income and Shelter Costs," The Daily, May 1, 2008.

15 Michael Bloom and Michael Grant, Brain Gain: The Economic Benefits of Recognizing Learning and Learning Credentials in Canada (Ottawa: Conference Board of Canada, 2001). 

16 See Naomi Alboim and Elizabeth MacIsaac, "Making the Connections: Ottawa's Role in Immigrant Employment," IRPP Choices 13 (3), May 2007. See also initiatives by the Toronto Region Immigrant Employment Council (TRIEC) to profile Canadian organizations that excel at integrating immigrants into their workforces.

17 Citizenship and Immigration Canada, "True or False?"

18 Citizenship and Immigration Canada, "Statistical Information: Applications Processed at Canadian Visa Offices — All applications for permanent residents" and Statistical Information: Applications Processed at Canadian Visa Offices — Skilled workers — federal.”

19 Finance Canada, Budget Plan 2008, op. cit., pp. 116–117.

20 Microsoft News Release, "Microsoft Expanding Canadian Operations in Greater Vancouver Area," July 5, 2007.

21 Based on data from Statistics Canada's Business Register.

22 Institute for Competitiveness and Prosperity, "Assessing the Economic Impact of Head Offices in City Region," research paper prepared for the Competition Policy Review Panel, March 2008.

23 Desmond Beckstead and W. Mark Brown, Head Office Employment in Canada, 1999 to 2005, Statistics Canada Cat. no. 11-624-MIE, July 2006, p. 4.

24 United Nations Conference on Trade and Development, Press Release, July 21, 2003.

25 Richard L. Florida, The Rise of the Creative Class (New York: Basic Books, 2002).

26 Casey G. Vander Ploeg, Big Cities and the Census: The Growing Importance of Big Cities on the Demographic Landscape(Canada West Foundation, January 2008), p. 4.

27 Statistics Canada, Immigration in Canada, op. cit., p. 5.

28 Beckstead and Brown, Head Office Employment in Canada, op. cit.

29 Enid Slack, "Are Ontario Cities at a Competitive Disadvantage Compared to US Cities?" report prepared for the Institute for Competitiveness and Prosperity, June 2003, p. 12.

30 Harry H. Kitchen and Enid Slack, "New Finance Options for Municipal Governments," Canadian Tax Journal 51 (2003): 2216–2275.

31 Conference Board of Canada, Mission Possible: Successful Canadian Cities (Ottawa: January 2007), p. 8.

32 TD Bank Financial Group, Mind the Gap: Finding the Money to Upgrade Canada's Aging Public Infrastructure, May 2004, p. 4.

33 Infrastructure Canada, Building Canada: Modern Infrastructure for a Strong Canada, 2007.

34 Industry Canada, Key Small Business Statistics, January 2008, p. 3.

35 Business Development Bank of Canada, Entrepreneurial Insight Newsletter, February 2008, p. 5.

36 Industry Canada, Key Small Business Statistics, op. cit., p. 7.

37 Ibid., pp. 12–13.

38 Business Development Bank of Canada, Entrepreneurial Insight, op. cit., p. 7.

39 Industry Canada, Growing Small Businesses, February 1994.

40 Finance Canada, Budget Plan 2008, op. cit., p. 124.

41 As the report went to press, the fiduciary duties of directors of a Canada Business Corporations Act corporation in relation to the sale of a corporation by way of plan of arrangement were under consideration by the Supreme Court of Canada, which had agreed to hear, but had not yet disposed of, an appeal from the May 21, 2008, decision of the Quebec Court of Appeal in litigation arising from the proposed leveraged buyout of BCE Inc.

42 SECOR, "Positioning Canadian Firms," op. cit.

43 See Agreement on Internal Trade website.

44 Certified General Accountants, personal communications, March 25, 2008; and Association of Chartered Certified Accountants, submission to the Competition Policy Review Panel, January 2008.

45 See European Commission, The EU Single Market: Fewer Barriers, More Opportunities website.

46 See Improving Internal Trade: A Bold Approach, proposal of a coalition of leading Canadian business groups.

47 Council of the Federation, "Premiers Move to Strengthen Trade," press release, January 28, 2008.

48 Barbara Stymiest, CEO of TSX Group, Speech to B.C. and Yukon Chamber of Mines, January 23, 2002, as cited by Department of Finance, "Selection of Statements on Securities Regulation in Canada." 

49 International Monetary Fund, Canada: Financial System Stability Assessment — Update, February 2008, p. 33.

50 Finance Canada, "Government of Canada Appoints Expert Panel to Review Securities Regulation," press release, February 21, 2008.

51 Canadian Environmental Assessment Agency, "Cabinet Directive on Implementing the Canadian Environmental Assessment Act," November 22, 2005.

52 Government of British Columbia, Environmental Assessment Act, Prescribed Time Limits Regulation, effective December 30, 2002.

53 See Major Projects Management Office website.

54 As quoted in Hart, "Steer of Drift?" op. cit., p. 5.

55 Statistics Canada, "International Travel Account," The Daily, February 28, 2008; and unpublished Transport Canada statistics.

56 The Economist, "A Fence in the North, Too," February 28, 2008.

57 Danielle Goldfarb, "Is Just-In-Case Replacing Just-In-Time? How Cross-Border Trading Behaviour Has Changed Since 9/11," Conference Board of Canada Briefing, June 2007.

58 The SPP was launched by Canada, the US and Mexico in March 2005. The SPP facilitates dialogue, priority setting, collaboration and action on issues affecting the security, prosperity and quality of life of all North Americans. It addresses issues such as border facilitation, the environment, food and product safety, and improving North American competitiveness. In Canada, the Minister of Industry leads SPP initiatives, and also oversees work on priorities identified under the "Prosperity" pillar of the SPP. The Minister works closely with the Minister of Public Safety (responsible for leading the agenda of the "Security" pillar), the Minister of Foreign Affairs, as well as ministers of other departments who lead on specific initiatives. See Security and Prosperity Partnership of North America website. 

59 Transport Canada, National Policy Framework for Strategic Gateways and Trade Corridors, 2007, p. 7.  

60 Canadian Chamber of Commerce and US Chamber of Commerce, Finding the Balance: Reducing Border Costs While Strengthening Security, February 2008.

61 Department of Foreign Affairs and International Trade, Canada's State of Trade, Trade and Investment Update, 2007.

62 Indeed CDIA flows were greater than FDI flows by 1995. Diversification is considerable.

63 Submission of the Canadian Manufacturers and Exporters to the Competition Policy Review Panel, pp. 4–5.

64 See Foreign Affairs and International Affairs Canada, "A Global Commerce Strategy for Securing Canada's Growth and Prosperity."

65 FIPAs and BITs are international treaties, usually negotiated bilaterally, based on standard FTA provisions such as national treatment and most favoured nation status. Canada's FIPAs A "model" is based on NAFTA's Chapter 11, as is that of the US.

66 Submission of the Canadian Chamber of Commerce to the Competition Policy Review Panel, p. 11.

67 Submission of the C. D. Howe Institute to the Competition Policy Review Panel, January 11, 2008.

68 External Advisory Committee on Smart Regulation, Smart Regulation: A Regulatory Strategy for Canada: Executive Summary, Report to the Government of Canada, September 2004.

69 See the Security and Prosperity Partnership of North America website.

70 See Industry Canada, "2008 Progress Report on the Paperwork Burden Reduction Initiative."

71Under the new Cabinet Directive on Streamlining Regulation departments and agencies are to evaluate regulatory programs against the following criteria: inputs (e.g., resources, mandate and enabling authorities), activities, effectiveness, ultimate outcomes of the regulatory program, and the extent to which the program contributed to the achievement of reported results; value for money (e.g., relevance, efficiency and cost-effectiveness); and governance, decision making and accountability processes, service standards, and service delivery mechanisms. Regulatory frameworks are to be examined with a focus on the effectiveness of the current regulation in meeting the policy objective, the current instrument selection, level of intervention and degree of prescriptiveness; clarity and accessibility of the regulation to users; and the overall impact on competitiveness, including trade, investment and innovation. See "Regulatory Analysis."

72 The Major Projects Management Office became operational on February 26, 2008. It should be noted that the Office initiative does not apply to projects north of the 60th parallel. See Major Projects Management Office website.

73 See Community of Federal Regulators, Business Plan 2007–2010, April 10, 2007.

74 An Expert Panel on Commercialization reported to the federal government on April 24, 2006. The report compiled a series of recommendations with a view to enhancing the transformation of knowledge and technology into new goods, processes or services to satisfy market demands. See People and Excellence: The Heart of Successful Commercialization, report to the Government of the Expert Panel on Commercialization, Joseph L. Rotman (chair). 

75 Canada also stands top in the G7 in federal spending on higher education expenditures on research and development (HERD).

76 Canada also ranked 15 out of 30 on BERD as a percentage of value-added by industry. On this measure, Canada's score has declined from 1.76 percent in 2001 to 1.39 percent in 2005. The OECD average is between 2.15 percent and 2.21 percent in this period. The US figure is between 2.66 percent and 2.83 percent in this period.

77 See Andrea Bassanini and Stefano Scarpetta, "The Driving Forces of Economic Growth: Panel Data Evidence for the OECD Countries," OECD Economic Studies (Paris, OECD, 2001), No. 33, 2001/II; and Dominique Guellec and Bruno van Pottelsberghe de la Potterie, "The Impact of Public R&D Expenditure on Business R&D," Economics of Innovation and New Technology 12 (3): 225–243, January 2003.

78 SR&ED provided over $4 billion in tax assistance in 2007; see Finance Canada, Budget Plan 2008, op. cit., chapter 3.

79 This estimate does not tell the whole story. The figure does not include counterfeit and pirated products consumed domestically, nor does it include the significant volume of pirated digital products that are being distributed via the Internet. If these items were added, the total magnitude could well be several hundred billion dollars higher." OECD, "The Economic Impact of Counterfeiting and Piracy: Results of Phase I," 2007.

80 See, for example, the links between Cégeps and SMEs encouraged through "centre collégiaux de transfert technologique des cégeps du Québec" (CCTT). See the CCTT mandate. See also Denis Lord, "La recherché et le développement au service des PME," Le Devoir, January 26, 2008.

Chapter 9. Driving Change: A Canadian Competitiveness Council

1 Daniel A. Crane, "Report on Best Competition Advocacy Practices," research paper prepared for the Competition Policy Review Panel, March 7, 2008.

2 National Competition Council website.

3 The Competition Bureau's formal advocacy powers are limited. Section 125 of the Competition Act empowers the Commissioner of Competition to appear before federal boards, commissions and tribunals to make submissions in respect of competition. The Commissioner requires the permission of provincial boards, commissions and tribunals to engage in the same type of advocacy activity under section 126 of the Act. Our view is that the Commissioner of Competition should continue to exercise the powers under sections 125 and 126, unless and until such powers are fully exercised by the proposed Council. As mentioned elsewhere, the Competition Bureau has conducted market studies on an informal basis where it relies upon the cooperation of market participants and public sources for information.

4 Crane, op. cit., p. 20, writes: "There is considerable value in having an external public advocate focusing solely on competition policy. History has shown that competition values are often sacrificed to other well-intentioned policies if competition lacks a single-minded and independent champion."

5 Ibid., p. 22.