Address by International Trade Minister Chrystia Freeland at a Canadian Council for the Americas event on "Canada and the Pacific Alliance"

Speech

June 17, 2016 – Toronto, Ontario

Check against delivery. This speech has been translated in accordance with the official languages policy and edited for posting and distribution in accordance with the Government of Canada’s communications policy.

I would like to acknowledge that we're on the traditional land of the Mississaugas of the New Credit First Nation.

We are a trading nation. International trade is very important for the Canadian economy. Trade means that businesses can create more good-paying jobs and that middle-class families are stronger, more prosperous and more numerous.

We really are a trading nation, and that is a core belief and a core policy foundation for our country. The Pacific Alliance is an important part of that. But before talking about the Pacific Alliance specifically and how it fits into Canada's trade strategy, and, I hope, into specific opportunities for people in this room if they're the people who you employ, I want to talk a little bit about trade and Canada in a global context.

My starting point in thinking about our trade policy and trade in the world is to recognize that we are living in a very difficult time for global trade. I think we are living in – you know, Ken [Frankel, President of the Canadian Council for the Americas] referred to people building walls, and the Canadian approach is to build bridges. It's really true. And I think it's really important for us to take seriously the fact that I think we are living today in the most protectionist moment internationally and in many parts of the world, in many influential parts of the world, particularly in western industrialized democracies, I think in my lifetime. And this is a very, very powerful wave, and it's not just about protectionism. It’s very much part of the tremendous hostility in many countries to immigrants.

For me, what we're seeing is a very broad attack on what you might call the open society, an attack on the idea that we want to build bridges, that we want to be plugged in economically to the world and to other countries, that we want our borders to be open to trade and to people. That's a core Canadian value, to be an open society. It's really what our country is founded on. And so this is something that I think Canada must and can be in a position to importantly push back against. We are, at our very, very core, a trading nation. And we are, at our very, very core, an immigrant nation.

But I think that, notwithstanding the strength of these values in Canada; notwithstanding the fact that so far we seem to be largely immune to these really angry waves of protectionism, I think it's really important for us as Canadians to take them seriously, to understand that what is happening in the world is real and it's powerful, and that we as Canadians are not magically immune. You know, there's not something in our air, in our water that means this can't happen to us. And there's certainly nothing that means that we are not dangerously affected by the trends we're seeing, the protectionist trends in other parts of the world.

I think it's also very important for us, even as we need to stand strongly and publicly internationally in opposition to this protectionist, building-walls way, for us to understand – to not be dismissive of it, to understand that these very, very powerful sentiments, which may even have claimed the life of a Member of Parliament in Britain this week, are based on feelings and indeed circumstances in many parts of the western industrialized world which are real. And this is not some kind of a fantasy. Something very real is going on. A lot of people are very, very worried, they're very angry, and they're seizing these ideas as a way to express that anger.

What I think is happening is we're living in a time of tremendous and powerful economic forces transforming the world. And Klaus Schwab at the World Economic Forum likes to talk about this as the fourth Industrial Revolution. I think that's a good way of describing it. What we all see and know, what a lot of people, you know, focus on, do as their jobs, is work with these incredibly powerful facets of the technology revolution and globalization, which I believe really are transforming our world, our country, our lives, our jobs as profoundly as previous waves of the Industrial Revolution have done.

The result is tremendous opportunity for a lot of people, but also anxiety, confusion, fear of the new, and a very real economic fear of falling apart. A lot of people feel that, are deeply worried about it for themselves, for their children. Now, the last time we had this kind of tremendous transformation, in the 19th century, one of the central public reactions was the Luddites. People went out there and broke up the new mechanical devices. We don't really seem to be experiencing a new wave of rage against the machines. Maybe it's because we all love our iPhones, or, in my case – I was going to bring it up to the podium, but I forgot my two BlackBerrys. Because I am Canada's Trade Minister. I champion Canadian companies. I use Canadian products proudly.

No, we love the specific things that the technology revolution is giving us as people too much, so that hasn't been, this time around, the target of public anger. What we're seeing instead emerging as the target of public anger, the convenient target of public anger, is the other, the thing which is coming from the outside, whether it is the immigrant or the foreign company, the foreign goods, the idea of trade policy. And so the sentiments, the anger focused on these two things, very much including trade, is disproportionately strong because it's a target for all of these tremendously powerful anxieties about the big, transformative economic forces of our time.

So this is serious. How should we respond? I think there are three ways that we, as Canadians, and we, as the government, need to respond to this. The first is to do our work very carefully at home, to work hard to prevent here at home those anxieties, that populist rage, that we see in so many other countries that share our values and even our standard of living, to prevent that from happening here. How do we do that? I strongly believe the way we do that is by working tremendously hard to shore up our middle class and the people who are working hard to join it. We need to do that because it's the right thing to do, but we also need to do that because that is the only way we maintain domestic support in Canada for an open society, including open trade. That was the core of our election promise, and it's been at the heart of some of the first steps that we've taken in government. That's why you've seen us act quickly to introduce the middle-class tax cut, act quickly to beef up the Canada Child Benefit, particularly for our country's very poorest children, who now receive what is effectively a guaranteed annual income. It's why my colleague Bill Morneau and the Prime Minister are working so hard to increase pension benefits. It's so important to ensure that people in Canada – in the middle, at the bottom – feel secure and supported – as secure and supported as possible in this time of dramatic change so that we, as a country, can be open to it and we can take advantage of it.

The second thing that I think we must do, and is at the core of my own work as Trade Minister, is develop – and this is a project I would like to enlist the help of everyone in this room on – develop, express, and articulate what I like to call a progressive trade agenda. It is absolutely essential for us to both talk about trade but also do trade in a way that the majority of Canadians can see and feel and believe works for them. I have confidence – and I haven't done a poll, but I feel pretty confident that in this room, I'm speaking to the converted. I'm speaking to a group of people who understand, and not just as a matter of your businesses, but as a matter of deep intellectual conviction, and as a matter of your values, believe very much in free trade, in Canada as an open economy.

But let me tell you: not all people in the western industrialized world, and not even all Canadians, share those views. I did a town hall at the Rotman School of Management, hardly a kind of hostile-to-the-market environment, on Wednesday night on the TPP [Trans-Pacific Partnership]. And this sort of very profound anxiety about how the world is changing, about people at the middle and the bottom falling behind, was expressed with incredible passion and authenticity and concern. And so what we really need to do is work on developing a trade policy which does trade for everybody.

So what does a progressive trade agenda look like? I think first of all it needs to emphasize, again both as a matter of how we talk about it but also as a matter of how we do it, the opportunities for small and medium-sized companies. We have to talk about and ensure, certainly as trade ministers, that we do trade in a way that creates those opportunities right away. And the great thing about the 21st century is that's really possible. And it's possible in a way that has not been the case ever before. Talking about small and medium-sized businesses having access to global trade can sound incredibly abstract. And so when I talk about it, I always like to think about my own father.

I'm from Peace River, Alberta. That's where my great-grandfather started a homestead, and that's where my dad, even as we speak, is farming right now. He is incredibly excited because this winter, he bought a brand new seed drill manufactured in Regina, Saskatchewan, where there are two rival companies, I think founded by rival brothers who split up, who compete to make the best seed drills in the world, and these are really something remarkable. They cost a quarter of a million bucks. My dad says driving the seed drill is the best experience of his entire life, including his two wedding nights.

I told Gerry Ritz that story. He said it's only because your dad is getting older. My dad is 72. He's forgotten what the nights were actually like.

But anyway, so there's my dad. He's a farmer, he grows primarily canola, a little bit of wheat, little bit of barley, depending on the year. And this year he's very excited because he is growing a variety of canola developed by Canadian scientists that produces an oil that can be heated to a very, very high temperature, higher than ever before. And this Canada has designed specifically for the Japanese market. And my dad and his neighbours are all aware of that. They're aware of the Japanese market. They're aware of the price premium they get for growing this particular variety. So these are small business guys. I can assure you they have never been to the top floors of Bay Street high rises, but they are totally plugged in, totally aware. These are small Canadian business people who are very connected.

And the other story that I like to tell to show how really small and medium-sized businesses can get plugged in, and our trade policy needs to be focused on this, is a great conversation I had with Tobi Lütke, the founder of Shopify, that great Canadian tech success story. And he said to me that his company was a year old before he had his first Canadian customer. So think about that. Globalization was not an afterthought for him; it was how he started. So it is very real to say Canadian companies, you know, even if they're just a 72-year-old guy in northern Alberta farming with the help of one person – that would be my dad – they can be part of the global economy, or a brilliant, young immigrant from Germany in Ottawa who is just starting something up, can immediately go global. We have to focus on that.

The second thing that I think we really need to do in our trade policy is put front and centre what you might call social objectives. I was really glad to hear Ken [Frankel] emphasizing, in talking about the Pacific Alliance and our paths for working together, CSR [corporate social responsibility]. This can't be an afterthought. It has to be at the centre of what we do. And I know Canadian companies are real leaders in that space, especially Ken [Frankel] talked about the extractive sector, and the Americas are especially there. But we really have to put indigenous people, women, the environment, labour – that has to be not something that we just put in our PR, in our press releases, or in our corporate reports. I used to be a journalist. We can kind of tell when it's just an add-on. It has to be at the centre of our business strategies. And for us, as a government, it has to be at the centre of how we do trade.

And it is possible to do that. Something that I'm very excited about is the changes that we've made, our government, to the investment chapter of CETA [the Comprehensive Economic and Trade Agreement], our trade agreement with the European Union. These changes have been politically important. Prior to our making these changes, support for CETA in the centre-left in Europe, which is essential to have CETA ratification in the European Parliament, and support for CETA in countries like Germany and France, was uncertain. Now that we've made those changes, the progressive leadership, progressive politicians of those countries are squarely behind it. And what those changes have done is bring the investment chapter back to its core, initial idea.

The reason we have investment chapters in trade agreements is because of legitimate concerns. And, you know, Jonathan [Hausman, Vice President of Alternative Investments and Global Tactical Asset Allocation at the Ontario Teachers’ Pension Plan] pointed out that he and I first met in Russia, so let me assure you I am familiar in practice with legitimate concerns that foreign investors can have about being discriminated against because they are foreign. That is a real thing. I have seen it and smelled it very much up close. So that element of non-discrimination, that's why we have investment chapters. But it is not to constrain the right of governments to regulate. And our investment agreement with the EU really underscores, underlines, and guarantees the state's right to regulate more strongly than in any previous investment chapter. That's important. That's a hugely important step in reassuring civil society that trade really is for everyone.

The other changes we've made are to the process of arbitration. And again, here we have made it more open. We have made it more transparent. That is so important. And this is relevant to the third way that I think Canada can and must work to secure the open society, to fight for open trade, to fight this wave of protectionism, and that is to be looking for allies around the world, and really to be a leading voice in this effort. We are doing that, and some of the changes that we've made with CETA, because they're such concrete evidence of the direction we're going, are really bringing people on side. So specifically with our Pacific Alliance partners, we have initiated, very much at their request, discussions around these ideas with both Chile and Mexico. And they're very interested in working with us on articulating this kind of agenda because they very much share our concerns about rising protectionism, both potentially at home and internationally.

So that brings me to our broader relationship, the broader importance of the Pacific Alliance. When I was in Mexico City last week signing this Strategic Partnership Agreement – and Ken [Frankel] is really right to underscore this is a big deal for Canada. There are four Pacific Alliance countries. We are the first country in the world that they chose to be their strategic partner. This is a formal agreement. The foreign and trade ministers of all the countries were present there for the signing. And they are such important and valuable allies for us for a few reasons. First of all, exactly as Ken [Frankel] described, these are four countries that have come together because, in the very difficult political world of Latin America, each of those countries has made the decision – these are decisions now that have endured changes of government, as, I believe, does Canada's commitment to the open society endure changes of government. Tthey have chosen the open society and the open economy. They believe more trade, more open borders amongst themselves and with the world will make their people more prosperous. And they're right.

The second reason they're such great partners for us is that belief in free trade, in an open economy, is very much anchored in a commitment to getting better and better when it comes to democracy and inclusive prosperity at home. They have different and difficult starting points, but these are countries that are really working hard to move in that direction. And the final thing is they are as worried, maybe more worried, than we are about this powerful wave of protectionism around the world. When they hear people talking about building walls, that concerns them deeply and rightly, and they are relieved, grateful, and welcoming of a Canada which is reaching across the North American continent to extend a hand in friendship and to say, We are your allies in this effort. It's hard for me to convey how warm the welcome to Canada was in Mexico City, and how much these countries are looking for our friendship, our support, even our leadership on this issue.

So that's why, as a government, we've been devoting time and effort to this region. It's why I was in Mexico City just last Wednesday. It's why last month I was in Peru. It's why our government has focused so much on the Mexican relationship, and we're absolutely delighted that we will have a state visit from the Mexican President at the end of this month, and that we will host a NALS [North American Leaders’ Summit] summit. It's why the Chilean Foreign and Trade Minister, who happens to be an old friend of mine – he's a fellow former writer and a sort of progressive intellectual – told me how much he is looking forward to your participation and Canada's participation at the Pacific Alliance Summit at the end of this month. He did warn me. He said it's happening in an extremely beautiful place, but it's very far to the south, and this is their winter. So he said it could be quite cold, so pack your fleeces, everyone who's going.

I finally want to say to everyone here, and specifically about the Pacific Alliance, thank you for your leadership. One of the things that have been a huge source of pleasure for me as your Trade Minister has been, when I have travelled to countries of the Pacific Alliance, I am greeted warmly because they love Canada. But why I am also greeted with particular warmth is because the experience these countries have had of Canadian investment and Canadian businesses has been spectacular. I was told in Mexico by my friend that Canadian miners, who account for 75 percent of foreign investment in the mining industry in Mexico, set such a high standard that he talks to Mexican companies in the mining sector about what the Canadians do. And he says, You guys need to learn from them.

In particular, he said a thing that our companies are good at is actually talking to their workers, and actually asking them, you know, what kind of a house would you like to live in. And so they came up with the not-so-surprising realization that people living in a remote village would prefer to live in a house with a yard rather than an apartment building. And these are real things, right? I grew up on a farm. My dad, when he sees apartments, he can't believe people want to live in sky cages. And so actually talking to your workers is such an important example, and it's so great that that's how the Mexican government sees the Canadians coming in.

I heard very similar stories in Peru. And when I was in Peru last month, I was there at the APEC [Asia-Pacific Economic Cooperation] Summit. The Peruvians obviously were the hosts, and they will be our hosts in November. The main presentation that Magali Silva, the Trade Minister, made on behalf of the whole summit was of a project led by Canadian business people, funded by the Canadian government, helping their small, indigenous enterprises through the Internet to connect with international buyers. And one of the interesting things that they learned in this project was it's not just about teaching some great weaver in the Andes how to have a website, or building it for them. It's actually about making the connection because they need to talk to the buyer from Holt Renfrew and learn, Is this a year when you should be making stuff that's orange, or should you be making stuff that's green. It really matters. And it's a small thing. And it can mean a two-, three-, four-fold increase in sales. And that again was a Canadian initiative. I was so proud. All the other ministers were looking at me, patting me on the back. And so we're doing great work, and it is great work which is led by a business engagement which opens the doors for Canada more generally. And I really believe it's absolutely in the spirit of open society and open trade. And I really believe that we, as Canadians, with a really strong partnership between government, business, and civil society, can remain an open society at home and be a very, very powerful and welcome voice for it around the world.

I'm going to conclude with one final thought, which is to say particularly to everyone here who works for a company that is involved in international trade: I work for you, the Prime Minister works for you, and all of my Ambassadors who are here work for you. The Prime Minister and I are very aware of our job as Canadian government officials to be out there batting for brand Canada and batting for specific companies. It's something I love to do. You guys are so great, it's actually a pleasure. So don't be shy. Please get in touch with my Department. If you have a specific deal you want us to help you on, let us know. We will do it with great pride and great pleasure. And put my Ambassadors to work. They know that a core part of their mission is to be helping you to get to do deals around the world. We know that that is what creates great middle-class jobs here in Canada, and we know we're not the guys who do it, you are, but we can help. Thank you very much.


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