Address by Minister Fast to the Economic Club of Canada
November 27, 2013 - Ottawa, Ontario
Check Against Delivery
It is a real honour to speak before such an esteemed audience. In the decade since its establishment, the Economic Club has firmly positioned itself among Canada’s most respected and influential forums for discussing the most pressing issues of the day.
And, contrary to what some in the media might claim, there is no issue more pressing on the minds of Canadians and more consequential to our long-term prosperity than our economy.
Canadians are an intelligent people. They recognize that their financial security is very much influenced by the dramatic shifts taking place within the global marketplace—that what goes on beyond Canada’s borders has a direct impact on jobs, on consumer prices and on our standard of living here at home.
That’s what we witnessed writ large after the U.S. housing bubble burst and kicked off the worst global recession of this generation. That recession was so severe that it’s now referred to as the Great Recession.
As countries around the world—Canada included—introduced domestic stimulus packages to recharge their economic batteries, I was reminded, quite fittingly, of the oldest stimulus of them all: nations trading with nations.
At the time, I referred to international trade as the “new” stimulus. Of course, trade as an economic stimulus is not a new concept at all. It’s just that many have forgotten how important trade and investment are to driving growth within the global marketplace.
Once the world’s nations began reducing and eliminating their temporary stimulus packages, as they inevitably had to, some rediscovered what is arguably the most effective and sustainable tool to drive economic recovery.
And that is, of course, freer and more open trade within the global community.
History has shown that increased trade and investment are the twin engines of job creation and prosperity.
What’s more, for developing and least-developed economies, enhanced global trade opportunities represent the best way to expand the middle class, boost standards of living and lift more people out of poverty.
Trade truly is the stimulus that has stood the test of time.
In Canada, we long ago recognized this truth.
Ours is one of the great trading nations of the world. After all, in order to support the world’s 11th-largest economy with only the world’s 36th-largest population, you’ve got to trade.
Trade has fuelled our past prosperity. And it will fuel our future economic growth and development.
A robust trade environment is the legacy we leave our children. It is as much a part of the Canadian essence as our national game of hockey.
2007’s Global Commerce Strategy
To maximize the advantages and generate the many benefits of international trade, one of the first major initiatives undertaken by our government was to set out a clear plan to guide our efforts to open new markets and increase our exports.
We knew that we would have to be highly strategic in our choice of partners. If we weren’t, the kinds of economic gains we have seen under NAFTA wouldn’t be possible.
That’s why in 2007, we launched our Global Commerce Strategy—a comprehensive and, most importantly, strategic plan for expanding Canada’s trade network, strengthening our competitive position in traditional markets and extending our reach into new emerging markets.
The goal was to find ways to fortify our well-established partnerships, such as those with the U.S. and the European Union, while at the same time pursuing new areas of growth, opportunity and strategic importance.
I’m pleased to report that the Global Commerce Strategy has been a resounding success.
Since its implementation, we have concluded free trade negotiations with 37 countries—an increase of more than sevenfold. Once in force, these agreements will provide Canada with access to over half the entire global marketplace.
We have also concluded or brought into force bilateral investment treaties with 20 countries, including China, and we are in ongoing negotiations with many, many more, including India.
We have put in place new and expanded air transport agreements covering almost 80 countries, improving Canada’s connectivity with our most important trade partners around the world.
And we’ve invested and partnered wisely with the provinces, municipalities and the private sector to make Canada’s transportation linkages the gateways of choice to and from North America.
We’ve hit record levels of Canadian exports to Asia, thanks in part to our Asia-Pacific Gateway and Corridor Initiative and through our Atlantic Gateway, our exporters and investors are perfectly positioned to take advantage of preferential access to the European Union and its 500 million customers.
We’ll get to that in a moment.
However, it’s not just trade pacts and investment agreements that underpin our ambitious trade expansion efforts. We’ve also provided on-the-ground support to individual Canadian companies, support that has helped our firms gain a real foothold in international markets.
For example, our government has conducted a plethora of trade missions to countries specifically targeted by the Global Commerce Strategy.
We have been joined on these missions by hundreds of Canadian companies, many of them small and medium-sized enterprises, all representing sectors we have identified as strategically significant to the countries we visit.
In this way, we are ensuring that Canada’s strengths are put to the best use in the right markets.
These missions invariably lead to our businesses establishing connections and networks that flourish and become successful business outcomes.
And of course, I would be remiss if I didn’t mention Canada’s highly capable team of trade commissioners, who play an indispensible role in delivering free on-the-ground intelligence and advice to Canadians looking to penetrate new markets and team up with trusted partners.
And this help definitely pays off.
Businesses that receive assistance from Canada’s Trade Commissioner Service have an average export value 18 percent higher than comparable firms that do not use the Service. And they reach 36 percent more markets.
In the past, I’ve called the Trade Commissioner Service Canada’s best-kept secret, but the truth is, it is absolutely critical that we let our small and medium-sized businesses know about this valuable service.
To support the work of the Trade Commissioner Service, our government has opened 15 new trade offices and established 50 new trade commissioners in target markets around the world.
And you can expect more such announcements very soon.
But without a doubt, the crowning achievement of the Global Commerce Strategy is the recently announced agreement-in-principle on a trade agreement between Canada and the European Union.
The scope of this historic pact is unprecedented. It’s by far Canada’s most ambitious trade initiative and arguably the most comprehensive trade agreement the world has ever seen.
With this agreement, Canada has undoubtedly secured its status as a global trade champion.
When the deal comes into force, Canada will become the only fully developed country to have preferential access to the world’s two largest economies, namely the European Union and the United States.
Access to more than 800 million consumers in these two markets will provide Canadian businesses with an extraordinary once-in-a-generation opportunity to increase exports by leveraging our North American production platform to its maximum advantage.
What’s more, this preferential access to the European Union will provide us with first-mover advantage over the U.S., which does not yet have a trade agreement with the EU. And it positions us as an even more attractive destination for foreign investors and manufacturers, thereby creating additional jobs and opportunities for Canadians.
Ladies and gentlemen, what we have accomplished with this trade agreement sets the new standard to which all other trading nations will aspire.
Changing Global Marketplace
Setting the standard means leading the pack.
It means being nimble and adapting to changing conditions. Wayne Gretzky perhaps said it best when he explained that much of his success on the ice was simply to “skate where the puck is going, not where it’s been.”
Indeed, our government places special emphasis on anticipating where Canada needs to be in today’s ever-evolving and highly competitive economic environment. Simply put, we’re going to go where we believe the future growth will be.
Much of that growth will be in the non-traditional, so-called emerging markets, which continue to grow in number every year. Latin America, Southeast Asia and the Middle East are the regions of the world that beckon to Canada.
Couple this with a global marketplace in which the free flow of goods and services—and the proliferation of global value chains—predominates, and you will conclude that we truly are doing business within a completely new paradigm.
Without a doubt, we live in an increasingly dynamic world.
So it behooves us, as global champions of trade, to anticipate what will come next. We must evolve and we must adapt.
To extend the hockey metaphor, think of the new trade environment as similar to the two different eras in which my childhood idol, Gordie Howe, and Sidney Crosby have played hockey: the old game versus the new.
When Gordie Howe began playing hockey, they played with straight wooden sticks. The hockey pads were smaller, the game slower. Slapshots were unknown, and of course goalies played without masks.
Today, in Sidney Crosby’s era, the players are kitted out with state-of-the-art protective equipment and curved composite hockey sticks that launch wicked slapshots high into the top corner of the net.
The players are bigger, and they’re faster. We even settle tied games with shootouts these days.
The point I’m trying to make is that today hockey is a whole different game, in much the same way as the game of international trade has changed dramatically.
To stay competitive, we have to keep up with rules that keep changing, overcome challenges that our predecessors never had to face and continually hone our skills to deliver a competitive advantage.
So how do we hone our skills and stay competitive? By isolating ourselves? By playing only the worst teams in the league? By pretending that we can still succeed by following the old rules?
To the contrary. What makes a player better is to play against the very best. Tough competition makes you a faster skater, a more accurate shooter, an increasingly deft stickhandler and a more disciplined player on the ice.
Similarly, international competition helps strengthen Canadian businesses by making them more productive, more innovative and more responsive to customer needs.
We know that our businesses, our entrepreneurs and our workers—with their skills, knowledge and experience—can compete against the very best in the world and win. And they have proven this time and time again.
But in a global economy that is fiercely competitive, Canada must remain nimble and agile. We must keep challenging ourselves.
To do just that, our government’s Economic Action Plan 2012 committed to building on the success of the Global Commerce Strategy by consulting extensively with Canada’s business community to identify new markets, strengths and opportunities.
These cross-country consultations included critical small and medium-sized enterprises, which are the backbone of our economy. We gained significant input and expertise from an advisory panel made up of leading business and industry leaders. These leaders included national associations such as the Canadian Council of Chief Executives, the Canadian Agri-food Trade Alliance, the Canadian Chamber of Commerce, the Canadian Federation of Independent Business, and Canadian Manufacturers & Exporters.
In fact, two of our key advisers, John Manley and Kathleen Sullivan, are here with us today.
The result is the new Global Markets Action Plan. It’s Canada’s new blueprint for creating jobs and opportunities for Canadians through international trade and investment.
Under the Global Markets Action Plan, the Government of Canada will concentrate its efforts on the markets that hold the greatest promise for Canadian business. We will do this through vigorous trade promotion and effective trade policy.
Most importantly, the focus will be on core objectives within those markets. In short, the Plan will play to our strengths and ensure that all diplomatic assets of the Government of Canada are harnessed to support the pursuit of commercial success by Canadian companies and investors.
We fully understand that when Canadian companies succeed abroad, all Canadians benefit from the jobs and opportunities that are created at home.
By concentrating on core objectives within our priority markets, the Global Markets Action Plan will also entrench the concept of economic diplomacy as the driving force behind the Government of Canada’s trade promotion activities throughout its international diplomatic network.
This new focus represents a sea change in the way Canada’s diplomatic assets are deployed around the world. We are committed to better aligning Canada’s development and trade interests to ensure that the investments we make abroad deliver maximum value to both our development partners and our Canadian investors and traders.
In so doing, we are ensuring that Canada’s long-term economic prosperity becomes one of our core foreign policy objectives.
The Global Markets Action Plan represents the evolution of Canada’s international trade priorities. It will take our pro-trade plan for jobs and growth to the next level in two main ways:
- first, by identifying and then opening up strategic market opportunities by negotiating trade and investment framework agreements with other countries; and
- second, by helping more Canadian businesses—in particular our SMEs—to successfully engage in new and expanded export activities in these strategic markets.
The Plan will target three distinct types of markets:
- emerging markets with broad Canadian interests;
- emerging markets with specific opportunities for our businesses; and
- established markets in which we will maintain Canada’s competitive advantage.
In drafting this blueprint, let me assure you, we’ve done our homework.
In addition to extensive consultations with business and industry leaders such as John and Kathleen, we’ve received input from trade associations, academia, the provinces and territories, and representatives of communities across Canada, including our key partners from the Federation of Canadian Municipalities.
In fact, some of my friends from the FCM are here today, and I understand others are currently in Europe, working hard to attract new investment to Canada.
In establishing our priority markets, we undertook economic modelling to identify the markets with high growth potential that best complement Canada’s industrial capabilities and competitive advantages.
We’ve taken a hard look at what Canadian companies can offer to different parts of the world, with an eye to ensuring that Canada is branded to its greatest advantage in the markets that hold the most promise for our competencies and expertise.
Call to Action
However, government can only do so much. We can provide our exporters, importers and investors with the modern, cutting-edge tools they need to be successful as they compete in a fiercely competitive marketplace.
But at the end of the day, it’s Canadian businesses—especially our SMEs—that must seize the new opportunities that await.
For as Wayne Gretzky said, you miss 100 percent of the shots you don’t take.
And it’s true. While we’ve taken some good shots and converted them into goals and wins, we need to take even more and make sure we get them on net.
That’s why we made sure that Canada’s SME community was consulted so thoroughly. And we’re grateful that groups like the Canadian Federation of Independent Business have supported our efforts to grow the number of SMEs looking to expand their reach into global markets.
There certainly is room to grow. In a country of more than a million SMEs, just one in 30 is exporting. And the vast majority export only as far as our closest geographic neighbour to the south.
That’s why, under the Global Markets Action Plan, we’re setting clear targets to grow Canada’s SME footprint in emerging markets.
Peter Hall, Vice-President and Chief Economist at Export Development Canada, is with us today and has crunched the numbers that are part of our new plan.
Now that international trade activity is beginning to once again reflect pre-recession levels, we believe SMEs are poised to significantly grow their presence in key emerging markets.
Currently, of the 1 in 30 SMEs that export at all, only 29 percent are active in emerging markets.
Under our plan, we believe we can grow that number to 50 percent over the next five years.
This would increase Canada’s SME footprint in emerging markets by 10,000 businesses, from 11,000 to 21,000.
Doing so will create over 40,000 net new Canadian jobs.
These numbers are credible and achievable, and I know that our SME community is eminently capable of rising to that challenge.
Now, some have suggested that the reason so few Canadian SMEs export is that we Canadians are an overly cautious lot. And that may be true. I also know that breaking into international markets—especially those outside of North America—can be a daunting proposition.
What I’m asking our SMEs to do is not to throw caution to the wind. Rather, what I’m asking you to do is to:
- explore the host of exciting export opportunities around the globe;
- carefully measure the risks;
- take advantage of the remarkable suite of trade tools that your government has made available; and then
- boldly take the first step out of your comfort zone. You might be surprised at the success that awaits you.
And just to provide some additional encouragement, know that, time and time again, Canadians have proved and continue to prove that we can compete with the very best in the world, and win.
Yet there are those who still believe we should reject any notion of a competitive Canadian spirit.
That we should stay out of the corners, pass but not shoot the puck, play exclusively defence and take on only the weakest of teams.
Ladies and gentlemen, I’m reminded of a quote from about 40 years ago, when one of my predecessors half-jokingly observed that “Canadians don’t export. We permit others to import from us.”
While he spoke tongue-in-cheek, the message was clear: Canadian companies aren’t as aggressive as they might be in seizing export opportunities.
That’s what this call to action is about. That’s what the Global Markets Action Plan is about.
And the success of the Global Markets Action Plan will be defined not only by the number of new Canadian companies that begin to export but by the number and quality of jobs that our plan will help create.
We can’t say we’ve won the game unless we keep score, and under this plan, we’ve set very clear goals by which our success can be judged.
Let me conclude by saying that history has shown us that there are no bounds to human ingenuity or our capacity for progress.
Our government understands this, and with this new trade plan, we’re leading by example as we pursue a freer and more open global marketplace.
When it comes to securing Canada’s prosperity for generations to come, our government is focused. We have a balanced plan of attack and we’re now squarely on the offence.
But trade, like hockey, is a team game. We can’t win unless everyone plays their part in executing a game plan that adapts as the game is played. I invite you to join our championship-bound team and bring home our own Stanley Cup. It may be the most exciting adventure you’ll ever experience.
Thank you for your kind attention this morning.
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