June 10, 2009
Montreal, Quebec
2009/41

Based on a Transcript

Address by the Honourable Stockwell Day, Minister of International Trade and Minister for the Asia-Pacific Gateway, at the Conference of Montreal

Just in case anybody here has any doubt, economic history is very clear. What goes down comes up again. This is not the end of civilization as we know it. Things will move up and partly as a result of the initiatives already announced here.

I’d like to reflect just for a few moments using examples of what we’re doing in Canada that we believe will be a factor in moving things along for the benefit of our citizens, our workers and our business.

Over the last 15 years, people have gathered at this conference not only to toss around ideas, but also to formulate policies. The policy platforms formulated here have had positive effects. I want to thank you for the positive results.

We have a good story to tell in Canada. We’ve got a lot of good stories. When I’m speaking in foreign countries to other officials and to business people, I reflect along the lines that we’ve just heard—that the international financial community has recognized that the Canadian banking system is the most stable in the world.

The international financial community has said that Canada—because of the basic foundational principles that are in place, the fundamentals in terms of our economic policies—is among the countries best prepared to go into this type of downturn and will be the best positioned coming out of it.

I agree of course that our taxation system is and will continue to be the most competitive in the G7. Through our various credit agencies, Export Development Canada and the Business Development Bank of Canada, we also have the ability to make credit available and to facilitate financial deals and joint ventures.

I also agree with much of the sentiment that you’ve already heard this morning and that you’ll continue to hear: that a time of fiscal downturn is not the time for protectionist activity, for the building of walls. When protectionist walls are built up, economies come down.

It’s very important to create opportunities for workers and for business by opening doors to trade, not closing them. To some groups and organizations it seems almost counterintuitive to open up doors to trade in a time when things are closing down economically.

But history shows very clearly that it’s not the case. In 1930, we were in a time of global recession. A very protectionist piece of legislation—the Smoot-Hawley Act—came out of the United States. Its consequences were so abrupt that people and businesses in other countries went to their legislators and said they had to retaliate.

If they were not going to be able to ship product into the United States, then they were not going to let it ship product into theirs. The retaliatory trade actions began, and we know the result. A bad recession was tipped over the edge into a terrible time of economic depression.

I want to congratulate people like President Álvaro Uribe of Colombia for his foresightedness in realizing that a time of downturn is a time when you need to open the doors of opportunity for workers, for businesses, for investors.

That’s why we are happily pursuing a free trade agreement with Colombia. We’re pressing on and doing all we can to see it move to resolution. With all of the other things we’re doing on the economic policy front in Canada to make sure our fundamentals are strong, we are sending out a signal to the rest of the global community that we do profoundly believe one of the ways to move through this time of downturn is to open up doors.

So we are pursuing free trade agreements in a very robust and vigorous way. As a matter of fact, just before the Parliamentary session closed last December, I was responsible for half of all the legislation in the House of Commons. Now there were only two bills on the table at the time, but one of them was a trade bill, so I can say I was responsible for half.

That particular bill had to do with four jurisdictions in Europe, Norway, Iceland, Switzerland and Liechtenstein—the European Free Trade Association (EFTA). We’ve completed that agreement. We’ve done all the signing. It’s gone through our Parliament. That in and of itself is something we feel good about because increased doors of opportunity are available for our goods, products and services to go into those countries.

The agreement with EFTA serves as a bit of a lever into discussions that we have now embarked on with the EU. In a very practical way, the 27 countries of the EU, can look at these four other European jurisdictions and realize that those four countries now have a competitive advantage over the others in many product and service areas because the tariffs have been eliminated or drastically reduced.

It’s this type of thing that I believe will continue to be an incentive for other countries and that will have ultimately a benefit on the workers, on the businesses and on the investors. That’s why, Mr. President, we are so eager to continue. As you know our bill [Canada-Colombia free trade agreement] is in Parliament, and it’s getting some very healthy debate.

We just finished the debate and concluded discussions on the free trade agreement with Peru. We are involved in similar discussions with Panama. Where we don’t have at the present time an actual free trade agreement, we pursue science and technology agreements as we have recently with Brazil and other areas. It still comes back to this basic principle of opening up, sharing ideas and innovative, creative ways to do business. The ultimate benefit goes to the people in both countries.

On the EU side we have begun the discussions. Our chief negotiators have already drawn up drafts of where we should be in terms of the index itself and we are moving forward in a very significant way. I was encouraged when I was in Prague with Prime Minister Stephen Harper at the signing to begin those negotiations, to hear on both sides the will to conclude this free trade agreement in a relatively short period of time. We’re hoping within a two-year time frame, if not sooner.

Again, this sends the signals. Now is not the time to lapse into protectionist activity. I would like to reflect on the discussions that we’re having right now with our great friends to the south of the border regarding the “Buy America” legislation and the way it is rolling out.

At the meeting in November of G20 leaders in Washington, D.C., the leaders made a very important statement, one which would and should have bearing on bilateral and multilateral trade discussions like the WTO’s Doha Round—which we also want to see completed. They said there should be no adding on of protectionist activities. There should be a standstill.

That was repeated again by the G20 leaders not long after that in London. That’s why when the “Buy America” legislation first came out it was Prime Minister Harper who took the lead in saying that we would expect the United States to follow its international trade obligations and treaties.

Only a few days after that [U.S.] President [Barack] Obama acknowledged that message and said that the “Buy America” provisions would reflect the United States’ international obligations. He made sure that a clause was inserted into that particular legislation to make sure that would be so. In the workings-out of it, however, some predictable dynamics took place. The dynamics of democracy, where constituents who are concerned start to appeal, as they rightly should, to their leaders. It happens everywhere there are democracies.

The appeal they make is for legislators to protect them and to make sure that certain provisions or funds only come to them within their own countries. This is where, as legislators, we need to share with our constituent groups our concern that if we really want to protect jobs, workers and industries, we do so by opening up the doors of opportunity and not closing them.

That’s why in some of the working out of the “Buy America” provisions we are seeing the closing out of the possibility of procurement from the Canadian side to the U.S. side. I’m presenting it as a microcosm and I hope it stays that way. But as predictable, when there is protectionist activity within one country, it will expand to other countries.

So it is. Some of you may be aware of some of the recent news in Canada. At an annual meeting of our mayors and councillors from all across Canada, a resolution was presented by a small municipality and narrowly passed. The resolution states that Canada should not have or should shut out procurement from any country that’s going to try to shut out procurement to Canada.

It’s the natural response when somebody takes an action against you. It’s natural to want to retaliate, but it’s that type of retaliation that only can make the problem worse. So we’re using a number of means right now, as are other countries. There have been comments out of the European Union also on the “Buy America” provisions to raise the awareness of our American friends.

We have what we believe is one of the most enviable trade agreements in the world—with the United States and with Mexico. The EU agreement that we’re pursuing is one that is going to be just as full of opportunity. It’s a market of 500 million people. A third of the Fortune 500 companies are headquartered in the EU. An agreement would give Canadians access to that market and conversely it would give Europeans access to the North American continent. There is a market of 444 million people in Canada, the United States and Mexico.

So great opportunities are there, and we will make the case that the “Buy America” provisions must reflect what President Obama said and what G20 leaders said in Washington and in London. We must keep the doors of trade open. We must keep the doors of opportunity open. Most people will benefit in that process. More people will benefit than if those doors are closed.

This is the track we are on and I’d like to close my remarks by bringing it right down to a very human level. President Uribe, I’d like to use a real life example of something that I witnessed in your own country not long after you had ascended to the presidency.

I was in Colombia on a personal visit with my wife. We were in a city there and we weren’t going to be staying very long. We were in a tourist area. I went to a cash machine, and the machine didn’t work. I went to another one, and it didn’t work either. That happens in Canada too by the way; it’s not unique to Colombia.

As I was at the second machine, two young women came up to me. They spoke very good English. They said they were from the area. They noticed that the machine wasn’t working and said they could direct me to another one that was just outside of the tourist area, about three of four blocks away. They asked if I would I like their assistance.

Now, I’m in a strange country, though it was very friendly so it didn’t feel strange. I’m being invited to go to a bank machine outside of the normal area. I thought, well, I could probably handle myself if I had to, and they looked very sincere. So I said, “Yes please, show me. Where do I get some money here?” I wanted to encourage the economy in Colombia and stimulate it with my own stimulus package.

So they escorted me to a commercial area. There was a bank machine there. They asked me if I could read the language. I had a little bit of difficulty but they showed me, and it’s pretty basic; the word “OK” is the same in most languages. Then they stood back so I wouldn’t think they were looking at my card and my PIN. I got the cash I needed. I then thought, okay, here’s the payoff time so I peeled off a couple of bills to give them.

They said, “No, we just wanted to help you out. Can you find your way back? It’s just down the street and around the corner.” I said, “It’s fine.” As I was about to leave, they said, “You may be wondering why we did this.” My suspicious mind was, and I said, “Yes, I was wondering why you just volunteered and why you don’t even want any money for this.”

They said, “You’re not from our country. Are you American?” I thought, “Do I look American?”

I said, “Well actually, I’m Canadian.” And they said, “Okay, that’s fine. Have you visited Colombia very often?” I said, “No, it’s my first time.” They said, “You have probably heard some things about our country.” I said, “Well to be honest, I have.” They said, “You’ve probably heard some things that may not be good about some past problems we’ve had with violence and the drug trade and things like that.”

I said, “Look, to be honest, I have heard that.” They said, “We just wanted to help you out and show you how to access your money and take you back to the party with which you were so that you could understand that most people in Colombia are not like what you’ve heard. We have hopes and we have dreams and we want to make those known to other countries around the world. That’s why we did this.”

So, Mr. President, I’m not exaggerating that story at all. They were both college students in a local area and great ambassadors; unpaid, but great ambassadors. They advanced the cause and they showed me and reminded me that we need to expand these relationships, trade and otherwise, for the people themselves, so they can pursue their hopes and dreams and realize the great opportunities that are out there.

Thank you so much to each of you for being a part of that.