March 26, 2009
Vancouver, British Columbia
Address by the Honourable Stockwell Day, Minister of International Trade and Minister for the Asia-Pacific Gateway to the Canada in the Global Economy Conference
Based on a Transcript
Thank you for your attendance today. You’re having a good series of discussions, I’ve heard you’ve had some great speakers, so I hope I don’t let you down in any way.
The “100 years” that you see on your advertising [refer] to the one hundred years of the department of foreign affairs [and international trade], or external affairs, as it was then called. I thought I would just say to [you], what with the department having been involved in organizing [this event], that if you read back in the [department’s] history a hundred years ago, there are some interesting historical notes.
There was a grumbling comment by one of the few—and I say few—people who worked in government in that area at the time, saying that the department was unsuitably housed above a barbershop in the Trafalgar Building at the corner of Bank and Sparks [in Ottawa]. They were grumbling about that at the time, as were the five clerks and, it says, the two female typists. I don’t know why they had to designate it was female typists; I don’t know how many male typists they had at the time. But that was the extent of the department.
And now there are 12,976 people who work for DFAIT [Foreign Affairs and International Trade Canada], with a budget of over $2 billion, 964 trade commissioners around the world and 150 trade offices. So things have expanded slightly in that period of time.
The two principal items being dealt with, in terms of external affairs, the two headline-grabbing issues, were Canadian-U.S. border relations and the seal industry. So we’ve come a long way, having resolved all of those issues. And they still are upon us today.
I’d like to comment just a bit on the global financial situation, what we are doing, and then the importance—as if I have to underline it—some of the things that we are doing related to trade and trade initiatives to help us in this particular area.
We do know—and I don’t have to go into this at length—that we are in a global financial downturn. Nobody is unaware of that these days. I was just commenting at the table here, it’s interesting with international trade, of course, you have to talk about trade and you have to do that internationally, and almost everywhere I go, any city, province, state or other country, I say, how is it going here? And they say, well, it’s down some but not as much as everywhere else. And I’ve heard that everywhere I go.
I don’t want to get to the place where they say, “This is the worst place.” Because that will be dismal. And there’s no question that it is down everywhere. I don’t know if it’s the indomitable sense of the human spirit that says, you know, things could be worse. But that is what I’m hearing just about everywhere. And there is no question about it. We are facing significant fiscal challenges, unlike those that we faced for decades, and that’s a known fact.
Canada is doing a number of things, as you know, to weather this storm, and we say with confidence—and I believe we have the facts to back it up—that we are doing better than most other places. We have been reviewed by the International Monetary Fund (IMF) and the World Bank and the Organisation for Economic Co-operation and Development (OECD) as having the most stable banking system in the world. And almost everywhere I go, when we talk about banking, that is known, people say, we understand Canada has the most stable banking system in the world. So that message has gone out, it has been picked up in the mainstream media.
What we used to be criticized for—being boring—is now kind of exciting. We are so stable. And that is exciting news, especially when it comes to the investment community.
But we can’t simply sit on the sidelines; nor have we, as a government. You’re aware, and just let me give you a thumbnail sketch, that we have been very aggressive and continue to be so on the tax side, both personal and business. [We’re] on track to be the least-taxed jurisdiction on the business side in the OECD by 2011. We are very aggressive in terms of stimulating the industries through the private sector that are in dire shape right now, in British Columbia specifically, but across Canada of course—the home-building industry—and that affects the forestry industry and so we have the home-improvement tax deductions of up to $10,000.
And the exciting thing, when you have a good program, you’ve probably seen: as retailers do their advertising, they put in their ads the government program that will encourage you to come and buy. And that saves us a lot of money in advertising those programs. But it does show that those types of incentives do motivate people.
And then on the infrastructure side we have taken, for this year alone, $12-billion worth of infrastructure projects that were going to be phased out, or phased in over the next two to three years, accelerating those [programs] to get these done as soon as possible so that we can fill up that employment vacuum that’s happening as people are being laid off. And then when it comes to credit, we know that, even though Canada’s banking system is as stable as it is, credit is going through contraction and we are aggressively—not imprudently but aggressively—using government agencies, the BDC [Business Development Bank of Canada ] and EDC [Export Development Canada], to take the necessary business risk and to have some expanded credit-making facility so that we can keep the wheels of commerce going.
And these are some of the things. The total package for this year for the Canadian economy is $29 billion, just on the so-called stimulus package. We believe that’s taking effect and that it will continue to do so. That’s the rough plan. When it comes to the types of things you’re talking about here today, we have the benefit of history on our side in that we know that if a nation or a group of nations moves toward the impulse of protectionist activity, that things in fact will only get worse.
And strangely—it’s counter-intuitive—for people in business, often the first opportunity they’ll try and take in a time of economic downturn is to go to the government and say, “Protect me. Build a wall so that I don’t have to face competition.” But we know from 1929 very clearly what happened as trade walls were built up: economies came crashing down. We know that is not the way to go.
And I sometimes chide my American friends by saying, “You are the champions of entrepreneurialism. You are the champions of freedom of enterprise and keeping government out of our lives or keeping it to a minimum. But when times get tough, you’re also seen to be the experts in running to government and saying, ‘Protect us, build some walls.’” And thankfully, Prime Minister Stephen Harper has shown leadership, led the charge against that at the G20 meetings in November in Washington.
The [G20] declaration came out very clearly, [stating] to all those countries, [do not engage in] any expansion of protectionist activity. And again it was Prime Minister Harper who was the first world leader to stand up with a very clear articulation when the “buy America” package was coming out of the United States, with [its] very worrisome protectionist language. The Prime Minister spoke out very clearly and said we expect the United States to live up to its trade obligations. Thankfully, President Obama followed that message with his visit here to Canada by [discussing], and then putting into legislation, an amendment to their legislation saying anything in the stimulus package has to respect trade agreements and trade obligations.
And so there’s a constant pressure—and I say this to those of you here in the business community—please do not come to us as elected people and ask us to protect you unnecessarily. There are times where quite rightly we have dispute mechanisms where products may be dumped in or there may be some unfair practice going on. But what is happening around the world, certainly in democracies, is businesses are rushing to their elected people and saying you must protect us.
And of course we want to be sensitive to our constituents and you may get what you ask for, and if those type of protectionist walls come up, business is going to go down. And so we’re asking people to think and look in the long term. That’s why we’re taking some of the initiatives that we’re taking on the trade side. In 1947, following what happened in 1929, the General Agreement on Tariffs and Trade [GATT] was [launched], as you know. The GATT discussions and [subsequent] agreements that morphed into the World Trade Organization in 1995 have given us, with all of their challenges and imperfections, some great opportunities for people to understand the importance of not being protectionist.
That’s why we embrace our NAFTA agreement with the United States and Mexico, and that’s why if we have a model within trade, or international trade, right now, the thing I’m reminding our officials and Canadians about is “trade deals are us.” It’s something I want to make sure that we understand, that, especially in a downturn, we don’t give in to the impulse of becoming protectionist. As a matter of fact, it’s at times like this where you know we can take [Charles] Dickens’s phrase and say, it’s the best [of] times and the worst of times. This is a very challenging financial time. But it’s a great time to make the argument that, now more than ever, we have to open doors of opportunity.
And that’s why, in the House of Commons right now, we’re very close to completing a European Free Trade Agreement with certain European countries. This isn’t the EU, but an agreement with Norway and Iceland and Switzerland and Liechtenstein. It’s in third reading now in the House of Commons. The agreement will knock out tariffs that in some cases were as high as the 40 percent range, depending on the particular sector. That will not only give us great opportunity with those countries, but it’s our lever into the European market. And I was happy to announce a little while ago that we have completed the so-called scoping exercise with the EU and we’re looking forward to the Prime Minister being able to sign very soon the official acknowledgment that formal free trade negotiation discussions will begin with the EU. We’re very excited about that: 27 more countries coming into the free trade family.
Now, that’s not going to take place overnight, and it’s going to be challenging, and there are issues, and among those 27 countries there’s a mixture of feeling and sentiment and excitement about whether they want more free trade agreements. But the EU itself as a body is acknowledging that we need to get into these discussions, and I’m very excited about that.
Today, I made an announcement, and we had a news conference early this morning, that we tabled in the House of Commons free trade agreements with the countries of Colombia and Peru, along with the implementation legislation. This again will open up great opportunities for us.
What’s interesting with those particular agreements is that other countries have signed free trade agreements with Colombia and with Peru. These agreements are important certainly to Canada, but in B.C., for instance, opening the markets, taking the tariffs off paper products, we’re at a time where our forestry industry is being hit significantly. Tariffs coming off those products makes them more competitive. Machinery that we ship to countries with emerging economies like Colombia’s, where infrastructure and the growing needs of infrastructure are a big deal, the type of machinery used for extraction in the mining sector, the potential of the tariff being removed from those is great with these free trade agreements. And also our agriculture products.
However, the challenge is this: Colombia, for instance, has already signed free trade deals with some other countries. That means right now, as I speak to you, producers, entrepreneurs, workers in those countries have a competitive edge over Canada with countries like Colombia and Peru because tariffs have been removed. We want to make sure not only that we have a level playing field but that we’re not operating on a playing field that is not level.
[What may be] interesting to you is the fact that we have the most robust and aggressive labour and environmental accords that we have ever had with any free trade agreement, with these two in particular with Colombia and Peru. And the European countries that have recently signed an agreement with Colombia, for instance, do not have the labour and the environmental components that we do. These are world-leading, trendsetting agreements that are going to be beneficial to both countries.
Next week I will be in China, and we are looking at the ongoing expansion of our trade activity there. I’ll be announcing the opening of six more trade offices in China. I’ll be meeting with key industry people and also the necessary individuals at the political levels to expand our great opportunities—build on the existing base, but expand and go beyond even what we have now.
In December, I was in India. Or was it January? It’s all a blur. But we had some very important meetings there. I met with Prime Minister Manmohan Singh, I met with the Minister of Commerce and Industry [Kamal Nath], the National Security Advisor [M. K. Narayanan] and other ministers and governors. We had individuals representing Canada’s nuclear industry. As you know, India’s economy has been moving ahead so aggressively. The expansion of the middle class in India up to the point of this downturn has been very, very positive, and of course their energy needs are leaping up exponentially and they want to move to clean energy. They are looking at building anywhere from 25 to 35 nuclear reactors within the next 12 years. That is huge and a great opportunity for Canada, and we’ve got doors opened up for our nuclear industry there.
In terms of infrastructure, wherever you have an emerging economy, the infrastructure needs are huge and Canada, with it’s sophisticated capabilities in road-building, bridge-building, just-about-anything-building, great opportunities there not only for our products, but our services, everything from engineering services to accounting and financial services.
This is the journey that we are on; this is the trend line that we are following. We also have a clear policy to focus on the Americas and make sure we’re engaged there. I was in meetings this week with the Deputy Prime Minister and Minister of Foreign Affairs and Foreign Trade of Jamaica [Kenneth Baugh], and we are looking at the CARICOM [Caribbean Community ] countries. We have now a significant interest on their part. I’ll be meeting with their trade ministers to expand the trade opportunities and the free trade capabilities there.
When we talk about free trade, it’s not just about elimination of tariffs. It’s also about harmonization when it comes to the regulatory side, on the labour side, on the environmental side, science and technology agreements, research and development. It’s a full array, a package of goods, a bundle, a toolbox—whatever you want to call it—to make sure that at every level we can think of we are expanding the opportunities.
We have to do this, we must do this at the present time and we are doing it. We will continue to reap the benefits of it. We need the input from you, certainly from the diplomatic community, but from the business community to be coming forward and saying, here are some areas we need to be focusing on, here are the type of fiscal arrangements that open up opportunities for us. We need to be fully tuned in by you, the business community, to make these happen.
The final point that I’d like to close on is that the lower mainland in British Columbia is a gateway, because we significantly are, and that’s a message that we have been taking, that we’ll continue to take, especially to the Asian community. Now that message obviously has been heard, because here in the Vancouver port area alone, some 2.8 million TEUs [twenty-foot equivalent units] or container loads went through here in 2008. That was a record year. The full capacity is 3.1 million, so it was near capacity up until the downturn. The message obviously is getting through. But we are expanding.
As you know, we have made a commitment of over $2 billion for full integration of shipping, rail and road services. So we can underline this message we take to the Asian business community when they’re looking at shipping. It’s actually more advantageous for them to ship. They want to get into the North American market, [through] the Vancouver port or Prince Rupert, the best, or the deepest seaport, ocean port in the world. There can be an advantage, if they’re shipping on an integrated rail and line system, for instance out of Prince Rupert down into the major markets through Chicago or into Memphis, which is about a hundred hours once they offload, and wait times are usually no more than 24 hours in the markets in the inter-modal areas when they land.
But to be able to get those goods within a hundred hours into those major markets at a saving—from where they leave Asia to here to get to their final destination—of anywhere from four to seven days, that’s a tremendous advantage that we have and we continue to market that aggressively. Which is why we’ve put such a significant amount of dollars into the systems, and you hear almost weekly we’re making announcements about a different road system, another rail system that’s tying in and integrating into this overall process.
So, folks, we haven’t got it all figured out 100 percent. We still need your help and your input, and we always will. But we are on the right track with the packages that we’ve made available on the stimulus side, with what we’re doing on trade, with pushing on to get the message out about what Canada and Canadians have to offer. We will continue to get this job done, and thank you for being willing partners and helping us to do that.
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