February 6, 2009
Vancouver, British Columbia
Notes for an Address by the Honourable Stockwell Day, Minister of International Trade and Minister for the Asia-Pacific Gateway, to the Vancouver Board of Trade
Based on a Transcript
Thank you so much for the great attendance here and for your warm welcome.
Today, I’d like to address what’s been going on in the United States regarding its protectionist impulses. I’d like to use that as a starting point to tell you why we’re doing what we’re doing in the areas of trade. Why, philosophically, and then what, practically. I look forward to the question time and any advice that you may have for me following my remarks.
I don’t have to go into a lot of explanation to explain why trade is so important to us philosophically. Canada would not be as prosperous as it is today if we weren’t able to trade—if we weren’t able to trade freely. It’s something that we have to talk about and we have to remind our various constituent groups, no matter who they may be, that we produce, that we are wonderful at manufacturing and [producing] technology in virtually every field of human endeavour. But we produce more than we can consume in Canada.
So we have to be able to market our skills and our products. To do that we have to have freedom of trade that is as unfettered as possible. That’s why we were alarmed as we watched the voting process [on the U.S. stimulus package] in the House of Representatives. As you know, the House of Representatives—Congressmen and Congresswomen—first votes on a bill, and then the bill moves to the Senate. If it passes in both houses, [lawmakers] reconcile the two and it becomes truly an Act of Congress, because both houses have worked on it.
Then we saw the clause that [referred] to procurement and this incredible amount of money that was going to be available, $865 billion. [Canada] was going to be a part of that on the procurement side. But then to see these protectionist provisions being put in place... Well, we launched what I’ve been calling a full-bore [campaign], at every level.
Prime Minister Harper was the first world leader to speak out on the [U.S.’s] protectionist provisions. Other leaders spoke publicly three or four days later, after he did. We engaged at every level—diplomatic, political, business. The business community in Canada has been great. I was in discussions early with Tom D’Aquino [Chief Executive and President, Canadian Council of Chief Executives] and [the Honourable] Perrin Beatty [President and Chief Executive Officer, Canadian Chamber of Commerce], and we used their organizations’ contacts to communicate with the United States.
A lot of business and industry in the United States got on side in a hurry, as you saw. They made the case to their own elected people. They said, “This would be great for us in the short term here in the United States, but it’s going to kill us globally when we try to market our products.”
Our reaction was really aggressive. We didn’t want to get downright rude, and I don’t think we did. I think we kept the right diplomatic tone. But we made it very clear that we expected the United States to live up to its trade obligations—WTO, NAFTA, whatever these might be. It took around-the-clock work by many people at many levels before we finally saw a breakthrough.
The first indication that we were getting through was our meeting with the U.S. Trade Representative [Peter Allgeier] at the annual meeting of the World Economic Forum in Davos, Switzerland, last weekend. [Trade Representative Allgeier] seemed really sincere. When I was asked about the U.S. policy, I said, “I’m cautiously optimistic.” [Mr. Allgeier] seemed sincere.
In fact, the U.S. was sincere. The message was getting through, because a couple of days later, the House Majority Leader [Congressman Steny Hoyer] said, “You know what, Canada’s concerns are justified.” That was a powerful statement. Then other people in the Administration [echoed that]. Finally, three days ago, President Obama himself said that the U.S. had to resist the protectionist impulse.
I want to give you some context [for what it means] for an elected person to make that statement. The President made the statement in light of polling—which he was aware of—that showed that 84 percent of Americans said yes when they were asked if they supported the “Buy America” plan—the legislation and this protectionist activity. So when you tell 84 percent of your constituents that you’re going the other way, you’re either planning a short career in politics or you really believe that what’s best for them in the long run is that you don’t implement protectionism.
Of course, the President is a student of history, and he knows that, in 1930, when the recession was beginning to deepen, it became far worse after the U.S. enacted the Smoot-Hawley Tariff Act and protectionist walls started going up all over the world. That dragged down every economy and led to the Great Depression.
Having said all that, we still appreciate the fact that President Obama said what he did. Now there is an amendment to that particular bill that says that no clause in the bill can interfere with or in any way violate any of the United States’ agreements. So, not bad progress, but we’re not 100 percent out of the woods on this yet. We continue to work. We’re working and watching and monitoring and getting our message through.
At the very least, we want the amendment to stay intact. We don’t want to see revisionist forces within the House of Representatives and the Senate take that phrase away from us. We’re still concerned. If there are any silver linings in this cloud of synchronized global downturn, it’s that it has made free traders of pretty well everybody in the world.
We met with our WTO colleagues in industry and trade at Davos. Ideologically, there were people around the table who would normally be protectionist sharing a completely different philosophical approach to economic issues. But to a man and to a woman—100 percent around the table—they were all saying that we can’t fall back into protectionist activity. We got a renewed sense of commitment to complete the Doha Round, and we’re hoping to do that some time later in the year. We hope this is going to materialize.
That wouldn’t happen if this weren’t a time of downturn. In fact, we’re able to do some things in government now that we probably wouldn’t have been able to do if things had been going along well. For instance, there’s a positive zeal now at the federal and provincial levels to do away with any kind of clutter, red tape—anything that’s unnecessary to the regulatory process.
That’s a good thing. Even when it comes to environmental and other processes. If two levels of government have two processes that are virtually identical and yield the same result, why are we doing both of them? It’s time to eliminate one of the processes.
So something positive can emerge from a time like this. What are we doing in Canada to work against this—not just against inertia but against the downward momentum of this downturn? In the 20 minutes allotted to me, I don’t have enough time to talk about all of these things. But I am going to try and cover the main parts.
The first thing that we have to realize, philosophically, is who’s doing the real work here. Who really moves the economy? With all due respect to President Obama, a lot of people who voted for him thought he was just going to step into the White House and tell us something that nobody else knew, and then the world economy was going to turn around.
That was the level of expectation surrounding the President. He wasn’t giving out that message [himself], but sometimes we think it’s all about government doing it.
When I was in grade five, we were told that Canada sells cars; Canada sells shoes; Canada sells corn; Canada sells cattle; Canada sells wood products. I thought, what a nice government we have. We sell all those things. Isn’t that tremendous?
It wasn’t until I got into the business world, and my wife and I were operating a small business, that I realized that government doesn’t sell [products]. You know who sells that stuff? Hard-working, innovative, risk-taking, entrepreneurial, optimistic individuals who are willing to put it all on the line and work 18 hours a day. That’s who sells those products. It’s the job of government to make sure that the business community has as unfettered access as possible to the markets they want, anywhere in the world.
That’s the message that we have to keep reminding people about. Government doesn’t sell goods; people do.
So we are very aggressive on the trade agenda. In terms of free trade, we have a number of agreements right now. As you know, there’s the [North American] Free Trade Agreement with the United States and Mexico. We also have agreements that you may not be aware of. For instance, our agreements with Jordan and with Chile. I was responsible for half of all the legislation in the House of Commons last fall. If I left you with that, you’d think, what a powerful guy he is. Actually, there were only two bills, and I was responsible for one of them.
This legislation concerned a free trade agreement with the European Free Trade Association [EFTA]—Norway, Iceland, Switzerland and Liechtenstein. We do billions of dollars of trade [with EFTA]. We’ve got the agreement. The deal is done. It’s in the House of Commons right now, waiting to be debated and ratified.
Switzerland ratified the agreement literally the afternoon I walked into the office of the Swiss Vice President [Doris Leuthard] last Friday. The Swiss government sees the benefit of the agreement and it’s moving it through quickly. We want to move it through quickly, also. We’re using the EFTA agreement to leverage into the broader EU community and its 27 [member] countries. Prime Minister Harper was very aggressive in articulating that goal a few months ago.
I met with the Deputy Prime Minister for European Affairs [Alexandr Vondra] of the Czech Republic a few weeks ago in Prague. The Czech Republic holds the presidency of the European Union for the next six months. The Czechs are vigorous free traders. They understand what that’s all about. So they are going to be aggressive in terms of [helping us to] get our wish to officially begin discussions on an EU-Canada free trade agreement—to put that on the table in front of the European Commission.
I met with the President of the European Commission [José Manuel Barroso] in Davos last weekend, and explained very clearly that our ambition level is high. The provinces want to see this happen, so we’re moving along with what we hope Prime Minister Harper will be able to announce. I don’t want to put too much pressure or [raise] expectations, but in a few months, we hope the Prime Minister will be able to announce that we are beginning the formal pathway to a free trade agreement with the EU.
I’m not trying to raise hopes, but I think we can do that. We have a free trade agreement with Peru that is now in the House of Commons. We have another agreement we’re going to table in just a few weeks, with Colombia. We will be finished negotiations on an agreement with Panama, hopefully before May. These are just some examples.
The reason that we do this is because our competitors—our allies and competitors—are also being very aggressive on the free-trade front. You’re aware of the World Trade Organization (WTO). We’re trying to establish broad-based rules with the 152 other WTO members. That’s an exceptional process. You can imagine the scope of [negotiating] trade agreements with that many countries. We’re making progress.
Meanwhile, we can’t sit around and wait for that to happen. These rounds of agreements at the WTO sometimes take years. We have to be aggressive on the bilateral front because our competitors are doing that. The United States has implemented about 10 bilateral free trade agreements—with more on the way. Chile is involved. We have a free trade agreement with Chile, but Chile has 21 other free trade agreements concluded or in force covering 55 countries. That’s 55 countries that have a no-tariff deal with Chile. We don’t have that deal with all of those 55 countries, so when you try and sell your product in one of those countries, you may be able to do so, but you’ll face tariffs and your competitors won’t. That’s why we have to be aggressive in terms of pursuing these free-trade deals, and that’s what we’re doing.
I was in India a few weeks ago, where we’re pursuing what’s called a “more comprehensive” trade agreement. That’s the polite way of saying that the other partner isn’t quite willing to put everything on the table yet and start free-trade discussions.
But I met with the Indian Prime Minister [Manmohan Singh], the Minister of Commerce and Industry [Kamal Nath], and the Minister of Science and Technology [Kapil Sibal]. We opened new trade offices in Hyderabad and Calcutta, and we announced we’re opening a new office in Ahmedabad, Gujarat, the Indian state with the fastest-growing economy.
We’re now very close to concluding a nuclear cooperation agreement with India. India’s economy is expanding so incredibly, they’re doing such a good job of it, and obviously their energy needs are high. They don’t want to be polluters and so, within the next 20 years, they’ll be building nuclear facilities that produce clean energy. Canada has a great reputation. We need to have Canada at the table, and I had representatives from the nuclear industry with me and we met again with the Indian Prime Minister and the National Security Adviser [M. K. Narayanan] and some of the key trade people. We made great progress.
Where we can’t get a full-fledged free trade agreement, we’ll proceed on a sector-by-sector basis, and that’s what we’re doing with India. We’re also in very early discussions with China. I’m not saying we are embarking on a free trade agreement with China. We’re not close to that, but we’re having good discussions on what sectors we can work with in order to facilitate trade for your purposes.
I could talk more about other countries with which we’re engaged at that level, but that gives you an idea of what we’re doing with free trade. Along with free trade, we use science and technology agreements to open doors with other countries. We signed one such agreement [Science, Technology and Innovation Cooperation Agreement] with Brazil last November. The agreement starts a process whereby both countries pool some money, and then we take offers on joint-venture opportunities in the area of science and technology that businesses in both countries can participate in. We do the same thing with research and development agreements.
Around the world—I don’t have to tell you this—credit is getting harder to get. [In response] we’ve expanded the capacity of Export Development Canada (EDC). We’ve raised the limits at which EDC can make credit and credit insurance available. We don’t want somebody’s order stuck in a container somewhere on a dock because their credit is being pulled back and they can’t get insurance for the payload.
So we are expanding our credit lines. Still, responsible credit risk has to be applied, but we’re expanding in that area also. And then for your purposes, as you saw in our comprehensive economic action plan—it used to be called a budget, but it’s not called that anymore; it is a comprehensive economic action plan because it’s an expanded attempt to help us through this downturn—we did a number of things on the tax side in terms of reducing machinery and equipment taxes. We did this unilaterally, saying to other countries, we’re knocking those off; we’re taking those down. This will help you when you’re looking at increasing productivity, bringing in machinery and equipment.
Canada is still on track to have the lowest corporate taxes in the G7 by 2012. We’re increasing [our commitments] in terms of retraining and education. What I’m saying here is that at every level imaginable, we are evening out the playing field, making things available to you that are consistent with our trade agreements so we can’t be accused of being offside of any of those. So when you decide what you’re going to do with your hard-earned time and money, it’ll be up to you whether your product sells, or whether your service sells, or whether your technology sells. At least you won’t be unnecessarily hindered by government [impediments]. We’re trying to keep the playing field clear, and we do think that it’s going to work and enhance things.
That’s a thumbnail sketch of where we are in terms of overall strategy. I should also touch on air-service agreements. We have open-sky [agreements] with 41 countries right now, and are pursuing further agreements. Of course, their benefits are obvious. They bring trade in and out. They bring people in and out.
We are also expediting our visa services.
Take India, for instance. When I was in India, my colleague, the Minister of Immigration [Jason Kenney], was also there. Depending what company you’re working for, as long as you have [the right] security clearance, there’s a 24-hour turn-around time for obtaining a visa—for business people as well as students. So we’re pulling out all the stops to have things move as aggressively as they can.
[And that brings me back to] the area of air-service agreements. They also allow for more consumer choice. Broader consumer choice makes everybody more competitive, refines the service, raises the level of service and creates a better world for everyone.
I’d like to say that we—the government—came up with the ideas for all these things we’re doing. No, these initiatives largely come from you. The Vancouver Board of Trade is always aggressive and out there on the front lines, [coming] to us with suggestions to make things better. I want to thank you for that.
I want to thank the business people in this room and everywhere in Canada who are still willing to be risk-takers, hard-working and innovative. You who still believe and have faith in what you can do. We have faith in what you can do also.
I’ll just close by reminding people—this is another thing that we need to continue to get out there, this part of this message—
Folks, business cycles move up and they move down. Quite rightly, the media has to cover what’s going on globally in this financial downturn. But I’d like to mention to our friends in the media that it’s also okay to talk about the good things that are happening.
We’re not saying to the broad [journalistic] community, don’t report the negative stuff. Of course not. But there are good things happening. I was talking to a good friend at Ernst and Young. Deals are being made. Businesses are expanding.
People say to me, well, why don’t you talk more positively about it? Honestly, in this particular climate, if, as an elected person, you even suggest there might be something positive going on, you’re called uncaring and out of touch. But it’s a risk we take.
For the record, this could be one of the worst economic times [we’ve experienced] in years, [and it could continue] in the years ahead. For the record, I understand that, but there are also some good things happening. Cycles move down and cycles move up. This is not the end of civilization as we know it. We are going to come through this particular downturn in the economy.
Because of the types of initiatives we put in place thanks to your advice, economic advisors around the world have said that Canada will be one of those countries that weather the storm. We’re going to be hit—we are being hit—and we may be hit even worse, but we are weathering the storm and will weather it better than most countries.
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