Address by Minister Fast to the 18th Annual Conference of Montreal
June 13, 2012 – Montréal, Quebec
Check Against Delivery
As many of you know, I am a lawyer by profession.
And there are three kinds of lawyers:
Those who can count. And those who can’t.
Another way to divide a group is between pessimists and optimists.
To an optimist, the glass is half full.
To the pessimist, the glass is half empty.
And the accounting department simply sees someone who has paid for a glass twice the size than was actually needed.
The pessimist sees a barn full of cattle manure.
The optimist is the Canadian entrepreneur who knows somewhere in that barn is a herd of first-class Canadian beef waiting to be exported around the world.
Of course, we need both types of people: optimists and pessimists.
Without the optimist, no one would have invented the huge planes and ocean-going vessels that carry cargo around the globe.
And without the pessimist, we wouldn’t have freight insurance.
The pessimist and the optimist would each bring a different perspective to Canada’s role as one of the great trading nations of the world.
The pessimist might say that Canada is trade-dependent. The optimist would prefer to say that we are export-oriented.
But by any nomenclature, by any standard, there is no denying that Canada’s is a trading economy. Together, imports and exports account for roughly two thirds of our national income.
Canada has no choice but to trade.
After all, in order to support the world’s 10th-largest economy with only the world’s 36th-largest population, you’ve got to be a trading nation.
Trade is our history, it’s our legacy and as much a part of the Canadian essence as hockey.
Long before the Europeans arrived, our indigenous peoples were Canada’s original traders.
First Nations traded among themselves, negotiated trade deals, established trading centres and maintained trade routes.
The initial European interest in Canada was also driven by trade:
- First came the search for spices and a route to the Orient.
- Then came the cod-fishing grounds, discovered by John Cabot and exploited by the hungry nations of the Old World.
- Next, and economically perhaps the most significant, was the 300-year-long fur trade that would become North America’s first industry and spur development of the continent.
Later, as Canada emerged as an independent nation, some of our most significant political battles and debates—indeed, some of the most fiercely contested, and most historic, Canadian elections—were fought over trade policy.
Our reliance on trade is an essential part of our history, but it is not a relic of our history. Trade as a driver of our nationhood remains vibrant, current and very real.
Einstein once wrote that, in physics, the distinction between past, present and future is “a stubbornly persistent illusion.”
That certainly reminds me of the relationship between Canada and trade. Trade is our past, our present and our future all at once.
Trade fuelled our past growth and development. Trade anchors our present economic performance. And trade certainly points the way to our future long-term prosperity.
A point of interest:
- During the first year of Canada’s existence, in 1867, we shipped $49-million-worth of exports;
- By 1952—the year of Queen Elizabeth’s accession to the throne—the nominal value of our exports had grown about a hundredfold, to more than $4 billion; and
- Today—as we celebrate the Queen’s diamond jubilee—the nominal value of our annual exports has increased more than a hundred times again, to more than $450 billion.
As I said, we are a trading nation. I dare say we are one of the great trading nations of the world.
And our principal exports are not just hockey players and cold weather, as a former Canadian prime minister once joked.
In fact, today our largest export is energy.
Canadians may not be able to recite the statistics, but they intuitively understand what trade means to their way of life.
The advantages of trade may be debated around the boardroom table and in the halls of academia, but the benefits are felt at the kitchen table.
When we trade, we become more competitive. And when we plug into competitive global value chains, prices for goods and services fall. Wages, salaries and our standard of living rise. Businesses hire more workers as their markets expand.
In addition to lower prices and a higher standard of living, trade gives Canadians greater choice and selection in the goods and services they purchase.
Responsible for one out of every five jobs in Canada, trade helps parents feed and clothe their families and make ends meet. It helps them pay for their children’s education, make their mortgage payments and save for retirement.
Trade is not just about the macro-economy of nations. Trade secures the personal economy of individual Canadian families.
Of course, it is no secret that the economy remains the primary concern of the Canadian public, and the primary focus of our government, led by Prime Minister Stephen Harper.
I don’t have to tell you that the global economy remains fragile. Canadians, like their counterparts in other countries, are concerned for their jobs and their children’s future.
Nevertheless, we’ve made steady and encouraging progress.
Canada’s economy continued to grow during the first quarter of 2012.
In fact, net job creation in March and April was the best two-month job gain in more than 30 years.
We’ve seen a net increase of almost 760,000 new jobs since 2009. Ninety percent of those are full-time jobs.
These are all welcome signs that Canada is on the right track.
But more needs to be done.
Canada is not immune to global economic turbulence; and too many Canadians are still looking for work.
Although Canada’s exports are rebounding, they have still not fully recovered to their pre-recession peak.
We need to complete the economic recovery. We need to keep creating new jobs and protecting existing ones. And we need to help families whose budgets are stretched.
So, how do we go about doing this?
Let me begin by suggesting that we must deepen and broaden our access to dynamic and high-growth markets around the world.
Our government continues its aggressive implementation of Canada’s Economic Action Plan—a pro-jobs, pro-growth, pro-trade agenda for prosperity.
A key part of our Economic Action Plan is the most ambitious trade expansion in Canada’s history.
Our pro-trade leadership has already made Canada one of the most open and globally engaged economies in the world.
- In six years we’ve concluded free-trade agreements with nine countries, and we’re negotiating with many, many more;
- We’ve also concluded foreign investment promotion and protection agreements with 11 countries, including China, and we’re in active negotiations with 14 others;
- Prime Minister Harper stands tall on the world stage by championing open markets and consistently opposing protectionism and trade-restrictive measures.
But friends, it is not enough to merely profess faith in free markets and the removal of trade barriers. We must back up our words with concrete actions.
- Since 2009, our government has eliminated more than 1,800 tariffs, including all tariffs on imported machinery, equipment and manufacturing inputs. As a result, Canada is now the first tariff-free manufacturing zone in the G-20.
- We have removed the monopoly power of the Canadian Wheat Board, providing marketing freedom to Canada’s grain producers.
- We have moved to allow more competition in our telecommunications sector, and increased our duty-free thresholds to respond to the needs of returning Canadian travellers.
- And last, but not least, we’ve introduced a new copyright law that is modern, flexible and in line with current international standards to ensure that we protect Canada’s innovators and creators.
Thanks to these actions and our government’s free-trade leadership, Canadian workers and businesses now enjoy preferred access and a real competitive edge in more markets around the world than at any other time in Canada’s history.
And our efforts have just begun.
Our pro-trade plan actively pursues new trade and investment opportunities in the largest, most dynamic and fastest-growing economies of the world.
Where are we pursuing new and expanded trade opportunities?
Perhaps the better question is: Where aren’t we?
Canada is an Atlantic nation. We are a Pacific nation. And we’re also an Arctic nation.
But closest to home, we are a North American nation.
The North American Free Trade Agreement, initiated a generation ago by a visionary government despite vehement opposition from anti-trade forces, has benefited Canada enormously.
The United States will always be Canada’s largest and most important trading partner, and NAFTA will continue to be a significant driver of Canada’s long-term prosperity.
Yet NAFTA is only the first step to greater prosperity through open trade across the Americas.
As U.S. President Ronald Reagan predicted when he spoke to Canada’s Parliament a quarter-century ago, and I quote:
We can look forward to the day when the free flow of trade, from the southern reaches of Tierra del Fuego to the northern outposts of the Arctic Circle, unites the people of the Western hemisphere in a bond of mutually beneficial exchange, when all borders become what the U.S.-Canadian border so long has been: a meeting place, rather than a dividing line.
It is in this spirit that our government has concluded free trade agreements with Colombia, Peru, Honduras and Panama, and is modernizing agreements with Chile and Costa Rica.
And we have launched exploratory discussions toward a deeper trade relationship with South America’s largest common market, Mercosur, which unites more than 250 million consumers in Argentina, Brazil, Paraguay and Uruguay.
We also can’t forget that during the first half century of Canada’s existence, Europe—and in particular the U.K.—was our primary export market.
And today, we are looking at Europe with a fresh set of eyes. By the end of this year, we hope to conclude negotiations for a free-trade agreement with the European Union.
This is, by far, the most comprehensive trade initiative in our nation’s history, with the potential to be broader in scope and to produce even more benefits to Canadians, than the historic NAFTA.
At more than $17 trillion, the integrated economy of the European Union is the largest in the world. It is home to 500 million consumers.
A Canada-EU trade agreement is expected to produce enormous benefits to Canadian workers and their families, in every region of our country. The benefits include:
- a 20-percent boost in bilateral trade; and
- a $12-billion annual boost to Canada’s economy.
That would be the equivalent of a $1,000 increase in the average Canadian family’s annual income—or 80,000 new jobs.
Canadian author Frances Shelley Wees once quipped, “Canada is bounded on the West by the East.”
Perhaps more than ever before in Canada’s history, we are looking west to what the Old World used to call the East, namely to Asia.
We continue to strengthen ties with China, now Canada’s second-largest trading partner.
China is expected to overtake the United States to become the world’s largest economy by as early as the year 2020.
Earlier this year, our government concluded a foreign investment promotion and protection agreement with China that will ensure investor confidence through stable, transparent and predictable investment and dispute-resolution rules.
And any day now, I expect to receive the report of the Canada-China Economic Partnership Working Group on areas where our two economies are complementary and where our trade relationship can be deepened.
This work is bearing fruit.
Last year alone, Canadian exports to China increased an impressive 27 percent.
In fact, in one year alone our bilateral trade increased from $58 billion to $65 billion.
Underpinning the Canada-China partnership are strong people-to-people ties.
Every aspect of our country—including business, the arts, literature, science, politics and philanthropy—is blessed and enriched by the contribution of 1.4 million Canadians of Chinese origin.
Strong people-to-people links, in the form of nearly one million Canadians, are also fuelling our growing trade with India.
Negotiations for a Canada-India free trade agreement are now in the fifth round, and we expect them to be completed by the end of next year.
Free trade with this emerging power could boost Canada’s economy by $6 billion a year.
That would translate to almost 40,000 new jobs across the country and a $500 boost to the average Canadian family’s annual income.
We are also taking other aggressive steps to create jobs and economic benefits here at home by boosting trade and expanding investment opportunities in Asia:
- We’ve commenced free trade negotiations with Japan, the world’s third largest economy.
- We’re engaged in exploratory discussions on trade with Thailand.
- We’ve also signed new air transport agreements with six Asia-Pacific countries.
As a further step, Canada has applied to join the Trans-Pacific Partnership negotiations. This initiative is consistent with our active, ongoing and growing presence and interest in the Asia-Pacific region. The good news for Canadian businesses and workers is that all TPP members have welcomed Canada’s interest, and momentum is building in support of our entry into the talks.
We’re also investing heavily in the infrastructure that supports the Asia-Pacific gateway.
Canada is positioned to be the gateway of choice between Asia and North America. In fact, our west coast ports of Vancouver and Prince Rupert are more than two days closer to Asian markets than any others on the continent.
That is why the federal, provincial and municipal governments, along with the private sector, are investing $3.5 billion in critical transportation and port infrastructure in order to build upon these natural geographical advantages.
Meanwhile, Canada wants to deepen its commercial presence in Africa.
Africa’s present and future economic growth rates—among the highest in the world—offer opportunities for Canadian businesses and workers alike.
Led by the mining sector, Canadian companies are creating jobs and prosperity throughout Africa. This demonstrates the win-win nature of deeper trade: it raises the standards of living both of Canadians and of the citizens of our many trading partners around the world.
Many more Canadian businesses—in areas as diverse as telecommunications, agriculture, energy, transportation, infrastructure, natural resources and education—are coming to realize the opportunities present in Africa.
We are currently negotiating a free trade agreement with Morocco, our first with an African country.
And we’re also negotiating foreign investment promotion and protection agreements with countries such as Cameroon, Côte d’Ivoire, Ghana, Tanzania, Zambia, Benin and Burkina Faso.
These are the elements of our aggressive, ambitious, pro-trade plan.
And they reflect our belief that trade—freer and more open trade—is the new stimulus that will lead the global economic recovery.
While we have come far, there is more work to do. And key challenges remain.
In the moments that remain, allow me to sketch out five of these challenges.
First, we must always remember that, while Canada is a trading nation, trade is not the sum total of our character and identity.
Trade is just the means to a greater end, that end being greater prosperity, security and opportunities for the entire global family.
Canada is more than just an economy: we are a nation. A nation with a proud history of leadership, international citizenship and contribution to the global community.
All of us, including our Canadian companies that do business abroad, carry that responsibility.
And let me assure you, deeper trade with Canada’s international partners advances our goals.
It is a win-win compact.
For our part, Canadians enjoy jobs, prosperity and consumer benefits.
At the same time, increased trade with the least developed and developing economies raises people out of poverty, providing an environment within which Canada can promote democracy and freedom and invite those countries into the family of nations that robustly defend human rights at home and abroad.
In short, trade allows us to champion Canadian values.
Second, seizing these economic opportunities takes work.
And work we have.
In our first six years, we signed free trade agreements with three times as many countries as the previous government did in twice the time.
And we’re currently in negotiations with five times as many countries as those with whom we’ve already signed.
Yes, trade has driven Canadian prosperity—but we cannot rest on our laurels. We cannot be complacent.
You will recall that trade was a prime casualty of the global recession of 2008 and 2009.
Ten years ago, exports were responsible for almost half our GDP. Today, they account for only one third.
That’s the challenge that spurs us to be the most active pro-trade government in Canadian history.
Third, success and prosperity require that we stand firm in the face of the vocal, vehement and well organized anti-trade opposition.
A moment ago I mentioned the complacent: those too willing to rest on Canada’s trading history.
The greater threat is posed by the deniers: deniers of our history. Deniers of the benefits of trade. Those who wilfully ignore the fact that trade is the foundation of Canadian prosperity.
Every agreement to expand and increase Canada’s trade—every single one—has been actively opposed by Canada’s free trade deniers.
Fear mongering and falsehood are their tools.
They used them in a vain attempt to block the Canada-U.S. Free Trade Agreement.
They did it with NAFTA. And now they’re doing it again in our negotiations with the EU.
Don’t let the rhetoric fool you. When our opponents say “fair trade,” it’s code language for “no trade.”
Because at its very heart, the anti-trade opposition lacks faith that Canada can succeed in the global economy.
They represent a Canada that cowers in the face of competition. A Canada that lacks confidence.
Their insecurity makes them turn inward.
Friends, our government rejects that defeatism. We look beyond our borders for new horizons, because we believe that Canadians can compete with the very best in the world—and win!
As a hockey nation, we know there is only one path to success.
How do we hone our skills? By isolating ourselves? By playing only the worst teams in the league?
On the contrary, what makes a better player is playing against the very best. Tough competition makes you a faster skater, a more accurate shooter, and more disciplined on the ice.
Similarly, international competition helps strengthen Canadian businesses—making them more productive, more innovative and more responsive to customer needs.
As I just noted, we believe that our businesses, our entrepreneurs and our workers—with their skills, knowledge and experience—can compete with the very best in the world and win.
We know that trade offers economic development, improved living standards, and the emergence of democracy, freedom and prosperity to billions around the globe.
Economic engagement paves the way to prosperity. Isolation does not.
Fourth, a new understanding of trade recognizes that imports are every bit as important as exports in driving national prosperity.
The old math, the old paradigm of “imports bad, exports good” represents an archaic view of a new world that is driven by complex, sophisticated 21st-century global value chains.
In today’s global economy, it usually takes more than just two to trade.
Global supply-and-value chains frequently span the globe. And, increasingly, trade is in intermediary goods, not finished products.
What Canada imports from another country today will very often be incorporated into the product we export to a third country tomorrow. And, by accessing the inherently competitive nature of these supply chains, we make our own finished products more competitive and attractive to buyers at home and around the world.
In turn, we improve our standard of living and drive long-term prosperity for Canadians.
Pascal Lamy, Director-General of the World Trade Organization, has explained the new reality in these words:
Nowadays, we need increasingly to import in order to be able to export. Hence, putting in place protectionist measures to restrict imports means shooting oneself in the foot, for trade protectionism brings a risk of handicapping domestic firms, displacing them from the global value chains, rather than providing a competitive advantage.
The protectionists aren’t just wrong. Their prescription is harmful.
On the other hand, freer and more open trade is the new stimulus which will drive our economic growth for years to come.
Our NAFTA experience bears this out.
After NAFTA was implemented and tariffs were reduced or eliminated, wages in Canada increased by approximately 5 percent.
Manufacturing output increased by 34 percent.
The productivity of both import and export businesses increased by more than 14 percent.
As Mr. Lamy has been saying, global value chains are forcing us to re-write the story of trade:
“[I]mports matter as much as exports … [and] both imports and exports contribute to job creation and to growth.”
Fifth, as government does its part to negotiate open access and a level playing field, Canadian businesses must rise to take up the new opportunities.
To start, we need your engagement and input. This year we’ll be consulting on the next phase of Canada’s Global Commerce Strategy. I welcome your ideas, your advice, and your guidance as we renew this vital strategy.
And there is more. About 40 years ago, one of my predecessors half-jokingly observed that “Canadians don’t export. We permit others to import from us.”
While he spoke tongue in cheek, the message was clear: Canadian companies could be more assertive and, indeed, aggressive in seizing export opportunities.
Of 2.3 million business establishments in Canada, just 2 percent are exporting establishments.
And 3 percent of those 2 percent (that’s less than 1,500 of the 2.3 million) were responsible for 82 percent of all Canada’s exports.
Our government’s Trade Commissioner Service offers expert advice and problem-solving skills to anyone who wants to export, or partner or invest abroad.
We’re there to help.
But rising to the challenge, and seizing these opportunities, are steps you must take for yourself.
Drawing his inspiration from the final chapter of Michael Hart’s book, A Trading Nation, McGill University’s William Polushin makes a provocative observation:
“It is not enough that Canada is a trading nation. We must also become a nation of traders.”
Now, I realize that the hour is late, but don’t worry: My goal is to stop talking before you stop listening.
Canadians know that we are blessed to live in the greatest place on earth.
Yet we don’t always appreciate our responsibility to respond to the great natural blessings that have been showered upon us.
This year, Canadians are observing the bicentennial of the War of 1812, which secured for us our independence as a country.
We’re also approaching the 150th anniversary of Confederation.
It’s too easy to look upon those events as achievements forged in another age by characters in history books.
The Canadians who built the railroad, or opened the North, or settled new communities, or launched new industries … they were other people, long ago.
The men and women who made Canada great in the past are gone, and it’s their legacy we enjoy.
But each generation of Canadians is called to do the same.
Called, as ordinary people, living ordinary lives, to demonstrate the integrity and vision, the industry and the courage, that will ensure that Canada remains extraordinary.
We do not just live with and reflect upon the history of our country.
We are actually writing the next chapter of an extraordinary story, one which will be read and learned from by succeeding generations of curious, yet proud, ambitious Canadians.
And a permanent storyline within that history will be what we have done to leverage our natural and human resources to drive Canada’s prosperity well into the future.
The truth is, we are one of the great trading nations of the world.
But, as history has shown us, a trading nation needs champions of trade.
People like you, who know how to measure and take risks; who venture beyond what others might have considered normal; who seize opportunity when it comes knocking, and achieve extraordinary results for themselves, their companies and their country.
This trade business is quite the adventure we’ve embarked on, and I, for one, am very much looking forward to that challenge. Won’t you join me on that great adventure?
Thank you very much.
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