March 27, 2009
Vancouver, British Columbia
Address by the Honourable Stockwell Day, Minister of International Trade and Minister for the Asia-Pacific Gateway, at the 2009 Pacific Gateway Forum
Based on a Transcript
Thank you, Jack [McGee] for the introduction, ladies and gentlemen for your warm welcome. I understand you’ve already seen the Minister [Kevin] Falcon video and movie show and I’ve seen it too. It’s a great pictorial, and I think it is a brilliant presentation.
The level of cooperation that we have in working with the provincial government frankly has been stellar, and it’s been the reason that we’ve been able to move more projects through and have more positive action on federal programming probably than any other province. So I commend Minister Falcon and Premier [Gordon] Campbell for being very proactive. Not without a lot of pressure from them—in a positive way of course—but it’s been a great relationship, and we look forward to it continuing.
Jack, your opening line is reflective of the comments that I’d like to make this morning, because you talk about the international reality and the global reality of some tough times. If there’s a silver lining in this dark cloud of global financial crisis that we face, it is that it’s causing people around the world to focus on protectionism and the realities and pitfalls that go along with it. And certainly we have history on our side.
I’d like to comment on the historical aspect somewhat, then give you the view from 30,000 feet, first of what we’re doing at the federal level, and then zero right in on the trade factor. And I know you want to be out of here by noon, so I’m going to try to accommodate that timeline.
I’m looking forward to disputing and disproving the maxim that “the only thing we learn from history is that we don’t learn from history.” I’m hoping that this present crisis will prove that wrong. The historical reality, of course, being that, in 1929, when the fiscal crisis began to pick up and move into swing, protectionist activity began to be the order of the day, starting with the United States. The retaliatory effects of that of course catastrophically deepened the recessionary trend that was happening at the time.
It’s of interest to me, and I share this with my American friends. I’m not saying anything out of school related to them. But, historically, as champions of entrepreneurialism, as the leaders in both the discussion and the practical reality of the philosophy of “less government involvement and more individual initiative”—philosophical positions with which I’m entirely comfortable—as aggressive as the Americans have been through their history, which has had a positive financial impact around the world, their industry people are also first, when threatened, to run to government and say: “Get involved, we need more government protection.”
And we are seeing from a couple of things that happened recently that they have probably learned and hopefully will be leaders in moving away from that trend and that tendency. I say that because when they came out with their stimulus package and the legislation that went with it, we had great concern. And it was our Prime Minister who was the first world leader to speak out publicly against it and say that we expect the United States to live up to its trade obligations and to its World Trade Organization (WTO) commitments.
And it was only a few days after that, that President [Barack] Obama followed by saying: “We will live up to our trade obligations.” And then he put action to those words by insisting that an amendment accompany the “Buy American” legislation, that amendment saying “everything in this big package of stimulus has to in fact comply with our international regulations and our international commitments.”
So that amendment was somewhat comforting, though we have to be vigilant on a daily basis to make sure the practical reality of it is consistent. And that to me shows that President Obama is indeed a student of history and understands the implications of 1929.
In 1947, there was another historical milestone: the putting together of the General Agreement on Tariffs and Trade (GATT). As you know, the GATT is regulations related to tariffs, and it morphed in 1995 into the WTO. I’m finding as international trade minister that, if you think it’s something in your own groups or committees to get agreement, try getting 150 countries or more to agree on certain trade and tariff regulations. And it really is quite an accomplishment in spite of the concerns we have about the Doha round—which are justified, we want to see it move ahead. I mean, think about this, to go from GATT to the Uruguay round to the WTO to all of this. Really it is a phenomenal achievement to get that many countries agreeing on lowering or reducing tariffs in a number of areas.
Having said that, Canada as a country, as a trading nation whose prosperity has clearly been based on its ability to take on the world as long as the playing field is level, is aggressively involved in the WTO. We want to see the completion of the so-called Doha round. But we can’t wait for that to happen and one of the strategic positions we’re taking is to be very aggressive on the free trade front. And I’ll come to that in just a second.
Now if I can just step back and give you the quick view, the synopsis in terms of our overall economic comprehensive package—which we used to call a budget—I need to stay on message on this, but it is indeed an overall economic comprehensive package. I’m very excited about it, because in some ways it has taken the backdrop of what we’re facing internationally to give force to what we always instinctively, philosophically and, I hope, historically have believed: that certain things will enhance the ability of producers, innovators and workers to effectively market, or at least have the doors open for them to effectively market, their goods and services.
When we were in school, we were told certain things, and the terminology was not as accurate as it should have been. Let me describe this. As we studied things called history and geography, we were told: “Canada sells cars. Canada sells agriculture products. Canada sells clothing. Canada sells televisions.”
And we had this sense; we grew up and as citizens we carried this sense that Canada does this. In other words, it’s like the government does this. And I in grade 5 had this notion: “Don’t we have a nice government. It sells cars to people and it sells clothes to people, and it sells food to people. We have such a nice government.”
In fact, you know as business-oriented people, it is hard-working, risk-taking, entrepreneurial individuals and organizations that do those things. And we as government have to make sure we’re doing everything we can to make sure that the decisions you want to take, in terms of exporting or not, will be made at least without the clutter and the unnecessary hindrances, and with a level field. If you’re making a decision about whether you want to do business in the United States or in fact Asia, you can make those decisions with as little hindrance as possible. Some things in life are necessary, unfortunately: taxes, regulations. But governments can become excessive in those things and make it more difficult for you, the entrepreneurial, hard-driving, risk-taking individuals and businesses, to do what you need to do.
That’s why in terms of our overall comprehensive economic package, we’ve done a number of things. We have made a commitment that taxes on a permanent basis will remain as low as they are, and we have a commitment year-to-year to take them lower, both on the personal side and on the business and corporate side. We are on track to be the most tax-competitive nation in the OECD [Organisation for Economic Co-operation and Development] by 2011. So these are messages that we want to send out in the clearest of fashions. We think, and especially in this particular economic time, that this message needs to resonate and to be heard around the world.
For those of you first of all who are thinking of continuing in business—and I hope you are—and for those who are thinking of doing business in Canada, we have to repeat that message constantly, because in a democracy you are allowed to have competing voices on the political scene. There are competing voices out there.
There are voices that are saying, for instance, that we should have a carbon tax or that we should consider raising the GST. And those people have the right of course to articulate what their parties would do. That’s why we continue to repeat our tax message. We want to send it out very strongly so people will know what they’ll be facing in the future as they make important business decisions.
We’ve done a number of things on the incentive side using the tax system. For instance, a program that says anybody who wants to do home improvements or home renovations up to the amount of $10,000 will get a tax credit for doing them, because we’re in a time, obviously, where the home-building industry and our lumber industry are in severe crisis. And so we do some things to give incentives to people to keep thinking about investing in their own homes and keep those industries going.
On the infrastructure side, we took what was a $33-billion plan over seven years, and we have accelerated that over the next two years because we want to get those projects moving. We’ve introduced a new phrase now, and you hear it almost jokingly referring to almost anything. “Shovel-ready” has been sort of introduced into our lexicon of activity. If something is good, it’s got to be shovel-ready, or nobody is going to be interested in it. But in fact, the impact on our employment sector of accelerating these projects will be significant in a time when the unemployment rate is going up.
We are known around the world as having the most stable banking system. And as I travel and meet with people around the world on various trade issues, this message has really resonated because the international mainstream media have picked it up. Almost everywhere I go, somewhere in the conversation, people say, “We understand you have the most stable banking system.” That didn’t happen by accident; certain provisions were put in place to make sure that it became a reality. So the banking system that we have, Canadians used to call it “boring.” Well, boring is the new exciting. And we’re quite pleased to have that out there.
That brings us to where I’m involved in terms of international trade. Our perspective is that we have to do everything as a government—and this is what I said at the start of my remarks—to be aggressive in opening doors and making sure the playing field is as level as possible. That’s why, some months ago, we tabled a free trade agreement, which is almost at completion (it’s in third reading now), with the European Free Trade Association, which consists of Norway, Iceland, Switzerland and Liechtenstein—four countries with whom we are right in the final stages now of having an FTA.
That will be good in and of itself, because it will take down tariff walls that have made our goods—the goods you might want to ship into those countries—less competitive. Because within the European community, those particular goods don’t have tariffs associated with them. So right off the bat, you’re stuck with being in an uncompetitive situation. We are just about to have that agreement ratified in Parliament.
As you may have seen announced a couple of weeks ago, we have completed what’s called a scoping exercise with the broader EU community, and we now have it before the European Commission to formally start negotiations on a free trade agreement with the entire EU. We hope to see that announced within a month or so by the time the Prime Minister goes to Prague for some meetings there. That will be very exciting if we can get those discussions going.
We also tabled in the House of Commons yesterday two more free trade agreements: one with Colombia, one with Peru. And we have actually finished the agreements with those countries. They are signed and sealed, but now to deliver them, they have to have parliamentary approval. We hope that that will move quickly.
Again, the impetus there is that these are good deals for us, very good deals for British Columbia. A number of products that we ship now, in markets in which we compete such as agricultural products, forestry products—especially paper-related—we have those trade deals going now. We have deals being made, but we are at a competitive disadvantage.
Colombia, for instance, has signed free trade agreements with some European countries. And so right away, right now, literally as we speak, certain paper products, machinery and equipment and agricultural products are being sold by European businesses to Colombia without the prohibitive tariff rates that we face. So there is pressure to do this and to get this done.
And when we talk about free trade agreements, we don’t talk just about the businesses. Businesses hire people. So this is important for employment in Canada; this is important for workers.
In the context of free trade agreements, there are ways in which we can start the free trade discussion with other countries by talking about and introducing other things. For instance, when I was in Brazil in November, we entered into certain science and technology agreements. If you don’t have a full free trade agreement, you can start opening those doors by having science and technology agreements, and that’s what we’ve done. We had a number of other meetings to begin to get the discussion going.
In a little over a week, I’ll be in China. I’ll be announcing the opening of six new trade offices and broadening our trade relations there. I met with my Chinese counterpart in November. We’ll be meeting again in China, and we’re looking forward to that relationship expanding and becoming broader and even stronger than it is now.
Similarly, I was in India recently with members of key industries, in which we have some great history, to expand our opportunities in India. And we have a policy focus on the Americas, which is why the Prime Minister started off a great round of meetings a year ago with the leaders of a number of the CARICOM [Caribbean Community] countries, saying free trade agreements would bring tremendous benefits both to their emerging economies and to our developed economy, offering opportunities on all sides of our borders.
So these are the strategic approaches that we’re taking. We are making headway and making gains. And I just close with this thought: the backdrop of this is other governments and other political parties around the world, regardless of where they have been philosophically, are starting to realize that if you build trade walls up, in fact your economies will come down. There are still those even in Canada who are opposed to free trade agreements, strictly from an ideological point of view.
And so what we’re doing is trying to reach across these political divides and have people realize, with all due respect to philosophical positions, even on economic issues, that if you want to protect an industry, if you want to protect a sector, you do that not by closing out competition, but in fact by opening up doors to opportunities.
And the final thing in terms of what we are doing from a government perspective, especially related to our Asia-Pacific opportunities, is we have created, as you know—and with much help from right here in this room—the Asia-Pacific Gateway and Corridor. We have now invested over $2.5 billion in terms of the infrastructure alone on this gateway, making sure that from a shipping perspective, rail and road are integrated—and not just in B.C., some of this has flowed through into Alberta, Saskatchewan, even to Manitoba.
We can send the message that people wanting to ship their product from Asia to here using either the Vancouver port system or Prince Rupert have some key strategic advantages. Because of our integrated rail and road lines, from the time those containers arrive, let’s say in Prince Rupert, that product can be landing in Chicago and Memphis within 100 hours. And the reduced sailing time from Asia to here can save anywhere from four to seven days. You know what the magnitude and scale of that reality is when people are shipping their product.
Those are some of the things that we are doing. We’re looking forward to advice from you on these issues, because the goal is to have you be as productive and as profitable as you can so that you can see your business increase, remain viable, provide jobs and investment and opportunity for Canadians.
Thank you very much.
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