June 3, 2009
Based on a Transcript
Address by the Honourable Stockwell Day, Minister of International Trade and Minister for the Asia-Pacific Gateway, at a Luncheon on the Occasion of International Trade Day
We live—it’s almost getting redundant to say this—but we live in interesting times. There’s no question about that. And with everything that’s happening to us, the question you must ask yourselves—and the question I can largely answer, as I observe you—is whether at times like these we really have options, as individuals and as organizations. We can be devastated by circumstances or we can be motivated to move on and get something done. We can be passive or we can be very proactive and get moving and find solutions. And this group of people that I see here is largely the group that has said we’re not going to accept devastation. We’re not going to accept inaction. We’re going to be proactive. We’re going to use the circumstances that we find ourselves in globally and find solutions, solutions that will endure. Because, as you know, it’s often in the difficult times and through times of adversity that we develop solutions and processes that actually make us more fit to handle the good times when they come around again.
And in case there are any doubters here in the crowd, students of human history know that what goes down comes up again. Sometimes the way—I’m not saying this pejoratively about the media—but sometimes the way we read things or the way things are presented to us, it’s as if this is the end of the world, and civilization as we know it is about to cease to exist. That is not the case.
First, let me just do an overview of where we are. I’m going to sort of give you a snapshot from 30,000 feet of where we are philosophically as a government and the tone that is set by Prime Minister Harper.
I don’t know how many of you remember back to grade five. I remember that it was the year in school that we were introduced to the concept of government and what government does. And we were taught that Canada sells furniture. Canada sells cars. Canada sells wheat. Canada sells clothes. And I began to develop this concept of, don’t we have a nice government? The government sells all these things to people all over the world and just makes the world a happy place.
And at an early age, and I think it’s unintentional, we unfortunately begin to think that government actually does all these things for us. Which, of course, as you know, if you’re struggling especially, is not the case. All those products that are being sold, that’s being done by hard-working, risk-taking, entrepreneurial, dream-possessing people: individuals, groups and organizations. It’s people who are doing that, not the government. And, if anything, governments can unintentionally impede that very process.
And so when it comes to trade, and giving you the ability to enjoy the results of your risk-taking and innovation and hard work, it’s incumbent upon government to make sure that you are as unencumbered as possible by government. I’m thinking of trade now, which not only benefits you personally and provides jobs. Good products and good services benefit the rest of the world. We know that’s how trade works.
And that’s why we are very aggressive in terms of policy on the tax side, doing all we can to make sure that you are as competitive as you can be, recognizing that we all know we need some level of taxation. But we also know that the level can get out of hand. And on the regulatory side, we all know we need some degree of regulation. We have a commitment to the safety and security of our citizens. But that can also get out of hand.
And so it’s our task as a government, along with getting feedback from you, to make sure you are as unencumbered as possible to be able to succeed in the areas in which you want to succeed. And when we do an evaluation of that, how are we doing? Or, as they say, how do you like us so far?
It’s been encouraging for me, as I travel to different places around the world, that at the start of almost every meeting with government officials or with people in the business community, I get feedback about how we’re doing. It’s good to get endorsements from third parties. It’s nice to talk about ourselves and wave our own flag, but it’s very encouraging when others are waving our flag and indicating we might be on the right track.
So, over the last few months it’s been gratifying for me to hear officials from other countries telling me, “We understand you have the most stable banking system in the world.” We know that, but it’s nice to hear. People have zeroed in on that. It’s nice to have the World Economic Forum recognize that. It’s positive to have publications like The Economist saying that we have the most competitive economy in the G7 and we will continue to be the most competitive nation among the G7 countries all the way through to 2012. Our tax plan goes that far. It’s nice to hear that and nice to have that reported internationally and independently. This is the type of feedback that we get that begins to send us a signal that maybe we’re on the right track.
And when I’m in other countries, people know that even though there’s a downturn, our banking system is the most sound in the world and we are not bailing out financial institutions. We do not have a sub-prime mortgage problem. And that didn’t just happen by accident. We took certain anticipatory steps over the last couple of years to make sure that this would be the case. But it’s also encouraging to know that some of the work that has been done—and not just by us, but also by others who have gone before us—is recognized.
It is encouraging to hear, for instance, that other people are aware that in a time of fiscal contraction we have certain credit agencies that can facilitate financial deals and ventures—EDC [Export Development Canada] being the main one. That comes into play in a very strong way. For instance, not long ago I was in Romania. Of the four nuclear reactors it has in this one area there, two of them were built by Canada, by AECL [Atomic Energy of Canada Limited]. There is a government and a country that is struggling somewhat financially, and so it was useful for them to know that certain financial arrangements can be set up to facilitate major purchases and even areas of infrastructure.
So in the area of taxes, in the area of the regulatory regime, in the area of banking, these are policies we have established to assist you, and that is why it’s great to read from a reputable international observer that Canada is the best placed going into this downturn and will be the best placed coming out of this downturn. Not that we’re not going to be affected; we are being affected. We are seeing job losses. I don’t have to tell you, businesses are experiencing a grind. But what other country would you rather be in than Canada? We certainly haven’t got it all figured out. That’s why we have to continue to march down this road.
So those are the basic policy elements, built on where we’re coming from philosophically.
Added to that, we want to send out messages in the actions that we’re taking. And so when the Prime Minister made a clear statement last November at the G20 meetings, and again this year in London at the G20 meetings, that we do not want to see protectionist activity added to what we’re already dealing with, we don’t just say that but we demonstrate it. We demonstrate it, for instance, by removing new machinery and equipment tariffs. That’s about a $2-billion touch to our bottom line, but it makes it easier for you to import the machinery that you might need, which may or may not be available in Canada, and to export in a more competitive way, knowing that certain tariffs will be reciprocated in terms of having them lowered. So we need to and we have set certain examples.
We also need to be underlining certain things. So when we’re talking about taxes, we don’t need a message going out there that we might be raising taxes, because that is not our message.
So when we come to discussions on trade, we know that we have to be very aggressive on the advancement of trade globally. We are committed to seeing the Doha Round at the World Trade Organization move ahead, but it is stalled right now. We’re doing what we can to work with some of the parties where we think some of the stalling might be going on. But we cannot wait for the conclusion of that round, which we hope to see, while you, our traders and exporters, are facing tariffs in other countries that potentially could be lowered, making your products and services more appealing. And that’s why we’ve been very aggressive on the trade agenda. Canada is as prosperous as it is because it is a trading nation. It will continue to be a trading nation, and we have to re-emphasize that.
I’m happy to report that before the House of Commons broke for Christmas, I was responsible for introducing a piece of legislation that had to do with a free trade agreement involving Iceland, Norway, Liechtenstein and Switzerland. We’re talking about four countries, four jurisdictions with whom we have radically reduced—and in many cases eliminated—trade barriers and tariffs. Some of those tariffs were running into the hundreds of percent, making it very prohibitive for certain products and services to be sold. In and of itself, that was a good piece of legislation. I was pleased to see members of our Trade and Finance committees moving that forward. I’m thankful that the Opposition worked on that also. They saw the efficacy of doing that. That trade agreement will serve as a lever in another area, which I’ll touch on in just a second.
As well, a free trade agreement with Peru will pass third reading today in the House of Commons. A free trade deal with Colombia is taking a little bit longer to get through the House, but we’re very excited about that particular one. It will be a very significant trade deal, especially when it comes to signing on to a labour accord that forces both sides to follow the International Labour Organization regulations on everything from child labour to hours of work to health and safety. This is a unique trade agreement. The ones that have been signed with Colombia by some members of the European Community do not have the labour and the environmental accord elements that ours has. So we’re very excited about this agreement.
We are very close to signing a free trade deal with Jordan. And we are just days away, we hope, from signing a similar agreement with Panama. A week from Monday, I will be in the Caribbean, where we are moving along discussions related to a possible broader economic agreement with the Caribbean Community. As you know, the Americas are a policy focus for us.
These are areas that we are aggressively pursuing, because a time of downturn is not the time to get protectionist. If you really want to protect an industry, you open up doors of opportunity. Do you really want to protect workers? You open up the doors for their products and services. If you build up a protectionist wall, an economy will come down. This is why we’re being very aggressive on this particular agenda.
And that’s why during a trip to India not too long ago, I pursued the trade agenda, whether it was in my meeting with the Prime Minister of India [Manmohan Singh], who has since been successfully re-elected, his commerce minister [Kamal Nath] or the national security adviser [M.K. Narayanan]. Certain countries have greater sensitivities to a free trade agreement, and so we go on a sector-by-sector basis. We’ve got great opportunities in that incredible nation, which is growing at a formidable rate, and we can be there in so many ways.
Within the last few weeks, Foreign Affairs Minister [Lawrence] Cannon and I both visited China. Canada already has a good basis of trade with that country. With 1.4 million people in Canada of Chinese descent, we’ve got a natural liaison. We’ve got great opportunities there. But if you haven’t been to China lately, even if you want to just go there to tour, I would really recommend you go. I still haven’t fully recovered from what I saw there in terms of growth. China is redefining growth right now. The Chinese people think they’re in a recession because this year the country’s only going to grow about 6 percent. That’s an enviable position to be in. Now, I recognize that China has huge problems and a lot of issues. But what a phenomenal country it is to see. There are 30 cities in that country that are over a million in population. And of those 30, there are many that are 8 million, 10 million, 12 million.
It is phenomenal to be in a city that you’ve never heard of before and realize it is a city of almost 10 million people. And to do a quick count, just in the downtown, of 24 cranes that are building 24 residential high-rises. And to be in another city and to be escorted up to the top of what is about to be the 10th-highest building in the world. A major international hotel will occupy floors 60 to 102. And then to be told that this building was built at the rate of one floor every two days. And this is an earthquake-proof, fabulous-looking building, right on the leading edge of technology.
These are just snapshots of a trend that is taking place. And so as I met with the various ministers there, we were able to discuss a number of the trade-related issues that we can zero in on, one by one, to expand our opportunities with China.
I mentioned to you that I’d come back to that legislation we introduced in December. Those four European countries lever us into the broader European Union, because there in the European Community we have 27 nations who now have these four neighbours who have a competitive edge when they trade with us here in Canada. Tariffs have been lowered, and in many cases totally removed. And so the very products that the people in certain of those EU countries are trying to sell into Canada are actually at a competitive disadvantage because these four countries have a free trade deal and have tariffs reduced or eliminated.
It was tremendously exciting for me to be with Prime Minister Harper in Prague just a few weeks ago, because he has been at the forefront of this agenda, and to have him sign with the EU commissioners the formal beginnings for negotiations toward a free trade deal with the EU. That was an historic event. Trade deals can go on for quite a while. The agreement I talked about earlier, with the four European nations, with EFTA [European Free Trade Association], that one’s been in the works for 10 years. We can’t wait that long for an agreement with the EU. And to hear the European commissioners say they want this to move quickly, as quickly as reasonably possible, and they’d like to see it wrapped up in two years, I mean these are great statements. If the EU agreement were in place right now, we would see an extra $12-billion worth of exports from Canada into the EU this year. These are the types of initiatives we need to keep moving.
Has our trade policy in the past, up until this downturn, been positive? Well, yes, it has. If you look at our State of Trade report, which is being released today, to see the trade figures for 2008. Looking at the BRIC nations alone, trade with Brazil was up 71 percent; Russia, up 30 percent; India, up 35 percent; China, up 10 percent—in spite of the downturn that hit us at the end of 2008. We were and we have been doing some things right, and we want to continue to see that direction maintained and even accelerated.
I’d like to also announce today at the more local level some programs that you can tap into. We have a Global Opportunities for Associations program, GOA, that’s made available to organizations like yours to get funding to promote your various organizations abroad. Some 32 organizations have already received funding under the program this year. These are the types of things we’re trying to do.
Invest Canada-Community Initiatives is another program we’re announcing funding for today. This program helps Canadian communities attract foreign investment.
And then there is the former CIDA-INC program, which many of you were familiar with. The program has been moved to DFAIT. And we’re now calling it Investment Cooperation, INC. You can go to our website today and get information on all of these programs.
All this information we will make available to you. It is for businesses who are willing to take a risk in terms of investing in a developing economy or into an emerging economy. So there is the positive by-product of not only helping your business but, in fact, helping other economies, which is what trade will do when it is happening freely around the world.
Those are some programs I’m pleased to announce today. And now that I’ve got you in such a generous mood because I’ve announced these programs, I would like to solicit your help, because in the advancement of free trade we have run into, as inevitably happens, a little problem with one of our partners to the south. And I’m not talking about Mexico...
It was a couple of months ago now that the United States announced its “Buy America” program. When we saw it, we had some real concerns. The Prime Minister was the first world leader to stand up publicly and very clearly say to the United States that it must live up to its international trade obligations. And just a few days after that, President [Barack] Obama said the United States would live up to our international trade obligations. As a matter of fact, he made sure that sentiment was inserted into the bill. And we were asked at the time: does this make everything okay? Is this going to fix any potential problems? We were careful and diplomatic, and we said we’d watch and see. We appreciate President Obama and the things he said and did, but now we’ll watch.
Some of the fears have materialized, in that as the “Buy America” legislation hit the congressional process, there have been some very protectionist items inserted into that bill, which are resulting in Canadian companies and service providers not being able to bid on certain projects at the municipal and the state levels.
We are hitting this on a number of levels: at the diplomatic level through our embassy, through our ambassador and through the various avenues in which we have contact there. We are hitting it at the government level, myself with the U.S. Trade Representative [Ambassador Ron Kirk], the Secretary of Commerce [Gary Locke] and others. We are working with business organizations. Perrin [Beatty, President and CEO of the Canadian Chamber of Commerce] has been engaged on this. A number of you have been engaged in getting business organizations, especially those with U.S. ties, to speak to the process in the United States. Because protectionist trade action will almost always invite reaction. And that’s something we don’t want to see.
I met with the chairman of the Ways and Means Committee, Chairman [Charles] Rangel. We went over some of these issues. I will tell you that on some of the issues I raised, he himself was unaware of some of the unintended consequences of the protectionist activity. He was open enough to say, prepare a package and show us, and maybe we can work something out. And we are in the process of doing that. I have an invitation from him to speak to the Ways and Means Committee, which I gather is somewhat rare, but I’m going to take that. We are hitting this on a number of different levels and we’re hitting it aggressively.
I said to him, and to my other counterparts, that what we don’t want to see is retaliatory trade action. In 1930, as you know, when the world was moving into a recessionist cycle, it was a U.S. bill, the Smoot-Hawley Act—which was severely protectionist—that triggered similar actions in other countries. Because all of us, as politicians, when there are situations like that, what happens? If there’s a protectionist piece of legislation in another country, then our constituents come to us and they say, “Hey, no fair. If they’re going to do it, then we need to do it.” I’ve compared protectionism to standing in a room and pulling the pin out of a grenade. Everybody gets hurt. But the inevitability of it is something we’re trying to avoid.
And now we have a situation where at the annual meeting of the Federation of Canadian Municipalities (and I’ll be speaking to this group on Friday) there will be a resolution on the table—supported by, I think it’s up to six municipalities right now—saying that for any country that goes into protectionist activity at the municipal level, we should do the same and shut them out from trade back to Canada. They didn’t mention the United States by name, but we know what it is. And I understand that reaction. I’m also very concerned about that reaction, because the best solution would be to have this recognized not just at the executive level in the United States but right at the level where things have broken down, and that’s at the congressional level. And we’re going to aggressively continue to pursue that.
We need your help—and some of you are already engaged on this—in communicating with your American counterparts. We’re working with provinces on this. Premiers are speaking out on it. We’re speaking to governors. There are 37 states in the U.S. that absolutely depend on free trade with Canada. We have a fantastic trade agreement with the United States. It’s the envy of the world. We are not saying that this is a fault of the agreement. It’s a misunderstanding on the part of some of those on the legislative side in the U.S. who think they’re protecting their workers when in fact they’re putting them at risk.
These, ladies and gentlemen, are some of the issues that we are dealing with. I wanted to give you a snapshot of some of these areas. I wanted to let you understand where we’re coming from philosophically, where we’re coming from legislatively and on the policy side, and what we’re doing on the action side.
Because the global situation right now certainly presents some challenges. And it’s absolutely essential that we work together to reach solutions and advance our goals. When there’s a fiscal crisis it is so very important to open doors of opportunity, not close them. Because when you start to close doors, you find you have even bigger problems.
We have to work together to see the situation get better, not get worse. And I’m convinced we will, because I know something of your proactive nature, I know how you can be innovative, I know what you have done in your businesses to make not just your businesses better but literally to make a better world. In the days ahead we’re going to be advertising this message: that Canada is the place to be, that Canada is stable when it comes to investment, that Canada is very competitive when it comes to taxes, that Canada has an educated workforce. We’re going to be advertising on your behalf to help pave the way and move things forward.
Thank you so much for being a part of this. Thank you for keeping Canada strong and productive and prosperous.
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