Address by Minister Van Loan to Diplomatic Forum

No. 2010/75 - Charlottetown, Prince Edward Island - September 27, 2010

Check Against Delivery

I’d like to start by recognizing the work you’re doing, year in and year out, representing your countries’ interests in Ottawa and conveying Canada’s views to your own capitals.

Diplomacy matters because partnerships matter.

Especially today, as the global economy continues on the path to recovery from what’s been a very difficult period. The global economic downturn was, without a doubt, the single-greatest economic challenge the international community has faced in generations.

Our ability to move toward lasting recovery depends in great part on the partnerships we pursue.

When businesses succeed, people succeed. And businesses succeed through free and open systems of trade.

Importance of free trade

It was no accident that leaders at the G-20 Summit in Toronto this past June reiterated their commitment to free trade and fighting protectionism—essential ingredients in the recovery. After all, in a globalized world, prosperity in one country is often determined by demand in another.

History has shown, time and time again, that the path to prosperity is built through partnerships, not protectionism, and through open doors, not closed ones: 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 economic powerhouses like China and India, to the southeast Asian family of nations joining forces, to European countries opening the doors to cooperation on a scale never seen before.

Freer markets and trade provide a clear 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, covering over 85 percent of the world’s gross domestic product.

Free trade can also provide a pathway to prosperity for countries emerging through difficult periods in their histories.

Look at our recently completed free trade agreement with Colombia.

Not only does the agreement create new opportunities for Canadian businesses and producers—it also supports our Colombian partners’ efforts to break the cycle of instability and violence they’ve endured for so long.

We’re also witnessing a shift in global trade as developing economies, increasingly trade not just with developed economies, but with each other.

Recent history is filled with examples of how free and open approaches to business can help lift millions of people out of poverty, power economic growth and, ultimately, play a positive role in people’s lives.

That’s something Canada has learned first-hand over the years.

Canada as a free trade leader

With a small population, and—as I’m sure you’re discovering for yourselves—a huge and varied landmass, Canadians have always depended on selling their goods and services to their partners around the world.

Today, about one in five Canadian jobs is linked to trade. Recognizing this, we’ve long been committed free-traders.

In fact, the Fraser Institute—a Canadian think tank—recently released its Economic Freedom of the World Index, ranking countries in terms of their commitment to economic freedom.

This year’s report confirms that Canada remains one of the most economically free nations.

Our government is committed to pursuing an aggressive free trade agenda to continually expand economic freedoms here in Canada, to opening new markets for Canadian workers and to 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 the economy—by maintaining jobs and prosperity for Canadian families.

We recognize 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.

It’s driven by free trade.

We’ve enjoyed enormous success with free trade over the years, including, most significantly, with the other two North American countries.

In fact, those who continue to argue against open markets and free trade should consider North America’s success as a powerful example of the importance of free trade.

Canada’s free trade agreement with the United States in 1988 and the North American Free Trade Agreement that followed in 1994 were watersheds for Canada.

Since the North American Free Trade Agreement came into force, our 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 increased fivefold.

Just think of all the economic activity and jobs supported by this partnership in communities across all three countries.

Inspired by this great success, our government is moving forward with an ambitious trade agenda.

This spring, through the Economic Action Plan, we took an extraordinary step, making Canada a tariff-free zone for manufacturers, inputs into the manufacturing process, equipment, parts, 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 for them to get the inputs they need from around the world—and at a better price.

And we’re 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 will be able to expand into these markets more easily, on more open, secure and competitive terms of access than ever before.

And we’re not stopping there.

We are engaged in free trade negotiations with the Caribbean Community, the Dominican Republic, the Republic of Korea and Ukraine, 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 met with India’s Minister of Commerce and Industry, Anand Sharma, on Friday.

We publicly released a joint study that shows that freer trade in goods and services could increase Canada’s gross domestic product by at least US$6 billion, boost our bilateral trade with India by 50 percent, and directly benefit Canadian sectors like forestry, energy and manufacturing.

And Canada recently concluded the fourth round of negotiations with the European Union, making this 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 them by the end of 2011.

Once an agreement is in place, Canada would have a trade deal with both the United States and the European Union, the world’s two largest economies—an enormous competitive advantage for Canada.

Our government is committed to giving our businesses every competitive advantage in world markets. And we’re committed to helping countries like the ones you represent access Canada’s many business advantages:

  • our open and attractive free-enterprise environment—the Economist Intelligence Unit ranked Canada as the best place to do business in the G-7 this year and over the next four years;
  • the strongest fiscal position in the G-7;
  • low corporate taxes—Canada is on track to having the lowest overall corporate tax rate in the G-7 by 2012;
  • the fastest economic growth in the G-7 in 2010, according to the International Monetary Fund and the Organisation for Economic Co-operation and Development (OECD);
  • our position as the first tariff-free zone in the G-20 for imports of equipment and machinery;
  • a skilled workforce, with the second-highest proportion of post-secondary graduates among OECD countries;
  • a vibrant environment for innovation, with one of the most advantageous research and development tax-incentive programs in the industrialized world;
  • a strong commitment to good governance and the rule of law; and
  • a high quality of life.

We’re taking every opportunity to tell our global partners about these advantages, and I do hope that you’re taking every opportunity to discover them for yourselves.

As we build these trade and investment links, we’re counting on the support of Canada’s trade commissioners. As I said earlier, Canada understands the great value of diplomacy, including on the commercial side.

It’s essential to have qualified people, strategically positioned around the world, to help our businesses and investors expand their markets. That’s what our trade commissioners are doing, across Canada and in our offices in more than 150 countries around the world.

We’re also opening additional trade offices in places like China, India, Mongolia and Brazil, as well as more regional offices across Canada. By providing market intelligence, advice and a point of contact, they’re playing a vital role in helping Canada create new opportunities.

We certainly rely on our trade commissioners here on Prince Edward Island.

They work closely with a range of partners, including the provincial government, to organize trade missions around the world, particularly to the United States, Europe, and Central and South America.

Our trade commissioners are also a good point of contact for businesses in your countries, too. So, please, continue encouraging your businesses and investors to get in touch with our trade commissioners posted abroad, so they can discover how Canada can fit into their own business plans.

Together, we are helping Canadian businesses and communities build links to the global economy.

For example, through our Invest Canada-Community Initiatives program we’re supporting local organizations across the country as they work to attract, retain and expand foreign direct investment in their communities.

One recipient in this province, for example, is the City of Summerside. It is receiving over $24,000 to help them attract more foreign investment.

Innovation is another focus. We’re committed to helping our researchers and innovators connect with global partners and investors.

Our Going Global Innovation program, for example, has helped a P.E.I. company join forces with the Hong Kong University of Science and Technology on a project to study epilepsy in animals.

And we’re one of many supporters of the University of Prince Edward Island’s National Biotechnology Week, which drew a number of international venture capitalists.

As your countries surely know, innovation is a critical component of a competitive economy.

Canada’s government understands this, and we’re taking steps to help our innovators succeed at a global level.

But making these kinds of commercial connections requires not just a national, but a global commitment.

Which brings me to your role in sparking new partnerships with Canada in the years ahead.

Making the case for freer trade

The global diplomatic community has an essential part to play in making the case for freer global trade, including with Canada.

In your day-to-day work, your meetings, networking events and in your contacts with your capitals and Canada’s business and government community, we’re counting on you to help us spread the message that free trade is an essential ingredient in the global economic recovery. Diplomats know better than most the importance of global cooperation.

We need to continue building a broad, international base of support for free trade.

Because as our countries forge more links with our global partners, we continue to hear voices from the fringe, opposing free trade and preferring to isolate their industries from global competition.

This is not our government’s approach. I can tell you that Canada went through this debate in the 1980s, first with our free trade agreement with the United States, then, afterwards, when we joined with the United States and Mexico to negotiate North American free trade.

Many of you probably heard the same voices in your countries.

But history has shown that free trade benefits people and communities. It creates jobs and opportunities. And it provides a platform for success for developed countries and developing ones.

So let’s continue working together to open doors among our economies, create new jobs and support Canada’s recovery from the global economic recession.

Let’s find new ways to prosper and thrive together.

Thank you.