Address by Minister Van Loan to Fraser Institute
No. 2010/74 - Ottawa, Ontario - September 23, 2010
Check Against Delivery
Our government places a high value on the work of organizations such as yours.
The Fraser Institute has long been at the vanguard of promoting economic freedom here in Canada.
Your annual Economic Freedom of the World Index provides insight into the architecture that helps economies grow and prosper—or not!
The report released today confirms that Canada is one of the world’s most economically free nations.
Our government is committed to pursuing an aggressive free trade agenda to continually expand economic freedoms here in Canada, opening new markets for Canadian workers and promoting free trade and investment abroad.
Our government’s commitment to free trade, open investment rules and lower taxes, all supported by our sound banking system and low debt and deficit, are key factors contributing to Canada’s recovery from the global recession.
At a time when our economic recovery is still uncertain, our government is focused on maintaining jobs and prosperity for Canadian families.
Our government knows that Canada’s long-term prosperity is driven by the creativity and ingenuity of hard-working families, entrepreneurs and small-business owners across the country.
The Index underscores the importance of giving our businesses and investors the freedom they need to underwrite our nation’s economic success and prosperity.
Earlier today, in fact, I tabled legislation in the House of Commons to implement our free trade agreement with Panama.
Canadian businesses have long called for closer ties to Panama—a country with an innovative, dynamic economy that is also a gateway to Latin America and the Caribbean.
The free trade agreement will eliminate tariffs on the vast majority of our exports to Panama—including 94 percent of current agricultural exports and 100 percent of current manufacturing export products, two cornerstones of Canada’s economy.
It will also help Canada compete with big players like the European Union and the United States, who continue to expand into the Panamanian market.
In just four years, we have signed five free trade agreements with eight countries—a track record we continue to build on.
When businesses succeed, people succeed. And businesses succeed through freedom.
Importance of economic freedom
Our government knows that, like all freedoms, economic freedoms are fragile.
And we believe that you can’t talk about economic recovery without talking about free trade.
History has shown, time and time again, that the path to prosperity is built through free trade and partnerships, not protectionism.
From the signing of the General Agreement on Tariffs and Trade 63 years ago, to the establishment of the World Trade Organization in 1995, to the rise of current powerhouse economies, to European countries opening the doors to cooperation on a scale never seen before.
Freer markets and trade are advancing the path to greater prosperity.
Consider Chile, for example, a country I recently visited.
It enjoys trade agreements with 57 countries, including Canada and the United States. These 57 countries account for over 85 percent of the world’s gross domestic product.
Free trade can also provide a pathway to prosperity for emerging economies, such as Colombia.
Our recently completed free trade agreement with Colombia will create new opportunities for Canadian businesses and producers and will also support Colombia’s efforts to break the cycle of instability and violence.
We’re witnessing a shift in global trade, as developing countries increasingly trade not just with developed economies, but also with each other.
However, a free and open system of trade is especially important here in Canada—a country whose prosperity and quality of life are dependent on trade with the world.
I’m sure you recall the fierce debates about North American free trade, and the voices from the fringe telling us that it would somehow erode our sovereignty.
Or that it meant turning our backs on domestic industries.
There are still some out there who argue against open markets and free trade. Who vote against free trade agreements.
History has proven them wrong.
Since the North American Free Trade Agreement came into force, Canada’s merchandise trade with the United States has increased by 73 percent.
Our two-way investment, even in the midst of the global economic downturn, is extraordinary, reaching $550 billion in 2009.
We’ve become integral parts of each other’s supply chains. We “make things together.”
And Canada’s trade with Mexico has gone up fivefold.
Just think of all the economic activity—and jobs supported by this activity—in communities across all three countries.
In Canada, for example, more than four million jobs have been created since the agreement came into force.
So free trade is actually giving our industries and workers the ability to compete and win around the world.
And while there will always be challenges, we’ll work through them, with our trading partners.
Look at our success in resolving the “Buy American” issue with the United States.
We took every opportunity to get our message out there that “Buy American” wasn’t just hurting Canadians, it was hurting Americans, too.
Working together, we successfully negotiated a waiver of the “Buy American” provisions in the U.S. stimulus package for key programs, and keep trade and investment flowing between our countries to stimulate job growth and economic recovery.
As you may know, we’re now facing a similar challenge with the United States with regard to water and wastewater, and yet another challenge involving manufactured goods.
And once again, we’ll be working closely with our American counterparts to resolve these issues.
As these examples demonstrate, economic freedom will always be a work in progress.
But it’s critical, especially as we work towards a global economic recovery.
Canada leading the recovery
The G-20 leaders identified free trade as a key ingredient in the global push to create a lasting, sustained recovery.
Year two of Canada’s Economic Action Plan included measures to maintain and create jobs, reduce taxes, build infrastructure and invest in skills and training for long-term prosperity.
The government set out a three-point plan to balance the budget once again.
1: Following through on an exit strategy;
2. Limiting the growth of program spending; and
3. Reviewing government administrative costs.
We’re on the right track.
Our deficit is expected to be cut in half next year and to be almost completely eliminated by 2014-15.
The International Monetary Fund projects that Canada will be the first G-7 country to return to balanced budgets.
Our government is taking steps to ensure that Canada emerges from the downturn in better fiscal shape than nearly every other industrialized country.
In fact, the government’s initiatives have propelled Canada to becoming the first G-7 country to return to its pre-crisis level of real gross domestic product. This happened in the second quarter, and it’s a great achievement.
But Canada isn’t just a leader in the recovery. We’re also a leader in breaking down barriers to trade.
Here in Canada, free trade is a critical driver of our recovery efforts.
We’re moving forward on an ambitious free trade agenda to create more jobs and prosperity for Canadians—and to move our economy further along the path to lasting recovery.
Canada as a free trade leader
This spring, through our Economic Action Plan, we took an extraordinary step, making Canada a free trade zone for manufacturers, inputs into the manufacturing process, equipment parts and machinery and materials.
Our government implemented this policy to help Canadian manufacturers increase their productivity and to stimulate jobs and growth in our economy.
We did this unilaterally, without expectation of reciprocity.
This decision will make Canada the first tariff-free zone for manufacturers in the G-20.
More importantly, it will help our manufacturers become more competitive, by making it easier to get the inputs they need from around the world—and at a better price.
And we are continuing to build on our free trade track record.
Our government is moving forward at an aggressive pace at the bilateral and regional levels.
In less than four years, our government has concluded new free trade agreements with Colombia, Peru, Jordan, Panama and the European Free Trade Association states of Iceland, Liechtenstein, Norway and Switzerland.
These are significant victories for Canadian businesses, which can now expand into these markets more easily, on freer, more competitive terms of access than ever before.
Take the Canada-Peru Free Trade Agreement, for example.
It’s great news for Canadian businesses in a number of sectors, including manufacturing, agriculture and the extractive industry, looking to expand their presence in an exciting, rapidly expanding global market.
The same could be said about our free trade agreement with the European Free Trade Association. Our food and clothing sectors, for example, stand to benefit greatly from the lifting of tariffs.
And we’re not stopping there.
We are engaged in free trade negotiations with the Caribbean Community, the Dominican Republic, as well as four countries in Central America—El Salvador, Guatemala, Honduras and Nicaragua.
At the same time, we’re in exploratory discussions on a comprehensive economic partnership with India, one of the world’s largest economies.
In fact, I am looking forward to meeting with Anand Sharma, India’s Minister of Commerce and Industry, to discuss how we will move the Canada-India trade relationship forward.
And we recently concluded the fourth round of negotiations with the European Union—the most significant Canadian trade initiative since the North American Free Trade Agreement.
These negotiations hold great potential to help create jobs and prosperity on both sides of the Atlantic.
One study predicted that an agreement could boost Canada’s trade with the European Union by $38 billion within seven years of implementation.
We’re very encouraged by our progress so far, and we hope to conclude negotiations by the end of 2011.
Once an agreement is in place, Canada will be the only country in the world to have a free trade deal with both the United States and the European Union, the world’s two largest economies—an enormous competitive advantage.
Our government is committed to giving Canadian businesses every competitive advantage in world markets.
I’ll be working closely with departmental officials—and our partners around the world—to bring these negotiations to a conclusion and create new trade opportunities for Canada in the years ahead.
But government alone isn’t enough.
We need your help to create the potential benefits that free trade agreements can offer.
Continuing the fight for economic freedom
We need to continue building a broad base of support for the importance of a competitive, globally engaged Canadian economy of the future.
There are those who oppose our free trade efforts using the same tired arguments.
Our government is confident that Canadian businesses, investors, entrepreneurs, innovators and workers can compete with and win against the best in the global market.
We’re committed to giving them the freedom and opportunity they need to compete in markets around the world.
Canada has learned—as have our global competitors, developed and developing alike—that commercial cooperation, along with the rules and enforcement mechanisms that go along with it, can benefit us all.
And we’ve learned that we can never consider our job “done” when it comes to creating a free and open environment in which our businesses and workers can thrive.
As I said at the outset, economic freedom—like all freedoms—is worth fighting for.
I know that your organization will continue to be at the vanguard of this debate.
So let’s work together to continue convincing Canadians—including all levels of government—of the importance of economic freedom, including through free trade.
Let’s continue developing a strong, dynamic and globally engaged business sector that can help Canadians compete and win in the global economy.
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