MONTREAL: North America can restore its manufacturing prowess and expand employment by innovating and developing value-added goods, Industry Minister Christian Paradis said.

“We are not going to compete with emerging economies on wages or in the assembly of low-cost, low-skill goods,” Paradis said in a speech to a cross-border manufacturing summit presented by the National Association of Manufacturers (NAM) and Canadian Manufacturers & Exporters (CME).

“Rather, we will compete by increasing productivity, by developing more value-added products and services, and by being the first to tap into new niche markets.”

After bearing more than its fair share of the pain, manufacturing in Canada and the US face considerable structural challenges, the minister said.

The answer lies in leveraging the business know-how and research and development to become even more competitive and commercialize innovation, he said.

“Indeed, innovation lies at the heart of our economic future. It drives greater productivity and greater competitiveness – something that we need to strengthen here in Canada.”

Canada lags other countries on productivity.

That’s why Paradis said hes waiting for an independent panel of experts appointed last October to report its recommendations in a few weeks on its review of all federal support for research.

Governments can help by offering incentives and investing strategically, but ultimately it will be up to companies to commit to spending on innovations, he said.

Paradis said the Conservative government has helped by eliminating tariffs on all manufacturing imports and on machinery and equipment, and allowing accelerated capital cost allowances for clean energy.

It also cut $60 billion worth of taxes, and plans to reduce the federal corporate tax rate to 15 per cent by January 2012 from 18% in 2010 to 16.5% in 2011.

By contrast, the US corporate tax rate is about 34%.

The US should emulate by the Canadian governments efforts, said NAM president Jay Timmons.

“From our side of the border, were really looking (with) envy at Canada as the Canadian government looks for ways to reduce the cost of manufacturing through the corporate tax rate,” Timmons told the conference in Montreal.

He said US has the worlds second-highest corporate rate after Japan, helping to make it more expensive to do business in the US than among any of its major trading partners.

“The United States has allowed its leadership and its economic might in the manufacturing sector to slip,” Timmons said.

He said the electoral process leading to next years US presidential election is causing a fresh focus on cutting taxes.

CME president Jayson Myers said manufacturers on both sides of the border face other common issues and opportunities.

One of the biggest challenges is unprecedented global competition, but manufacturing in the long term brings solutions for some of the most challenging social issues, Myers said.

“We have a lot of priorities in common and I think our approaches should be much more in common as well.”

One of the issues being discussed at the summit is proposed border changes to speed up the flow of goods while preserving security.

Paradis later said the goal is to balance concerns about privacy with removing border irritants.

“What we want to achieve is a good business. We want to provide economic growth in North America, but its a matter of balance,” he said.

© 2011 The Canadian Press