No. 2010/31 - Washington, D.C. - May 18, 2010
Check Against Delivery
Your chamber has done an excellent job of attracting a wide range of influential speakers today to talk about future directions for global trade. It’s a great pleasure for me to contribute to these discussions.
In fact, the preceding session was particularly relevant to Canada.
Our government believes that opening doors for our businesses in global markets is the key to economic recovery. To that end, we have embarked on an ambitious free trade agenda that includes negotiations with countries in South America, with the European Union and with such crucially important markets as India.
Recently, we introduced legislation to implement already-signed free trade agreements with Jordan and Colombia, and we are also engaged in free trade discussions with CARICOM [the Caribbean Community].
Just four days ago, I joined Panama’s Minister of Commerce and Industry [Roberto] Henríquez to sign our free trade agreement with Panama, a strategically positioned emerging economy and a gateway to the Americas and the Caribbean.
We have also recently concluded the third round of negotiations with the European Union. These negotiations are currently ahead of schedule, as both parties recognize the opportunities waiting for businesses and workers on both sides of the Atlantic.
Our government knows the benefits of free trade with key markets. The North American Free Trade Agreement has brought tremendous opportunities to Canadian businesses and Canadian workers.
The Canada-US trade relationship, especially, has flourished since the signing of the free trade agreement between our countries.
Canada-United States trade
The United States has always been a beacon of freedom and democracy. It’s also been a great defender and promoter of economic liberty—a living example of the power of free and open markets to create jobs, spark prosperity and improve people’s lives.
And there’s no greater demonstration of this than America’s trade partnership with Canada, the largest trade partnership the world has ever seen.
Last year, even in the midst of the global economic downturn, more than US$1.4 billion in goods and services crossed our border each day. Canada imported nearly three times more merchandise from the United States than from China. And we’re the top merchandise export destination for 34 American states.
Our two-way investment is also extraordinary, reaching more than $550 billion in 2009.
We’re also integral parts of each other’s supply chains. Many Canadian production hubs are actually closer to major American markets than U.S. production sites. Of Canada’s 20 largest cities, 17 are within a 90-minute drive of the border.
The free trade agreement between our countries has allowed businesses on both sides of the border to take full advantage of our geographic proximity, our cultural connection and our people-to-people ties. In fact, in many sectors, the bulk of Canadian exports are actually inputs into American production chains. In other words, we’re “making things together” for the global marketplace.
Jobs, prosperity and opportunity on both sides of the border depend on this relationship—more than 8 million jobs in the United States alone.
Look also at the benefits for Canada of being partners with Mexico in the North American Free Trade Agreement. In 2008, 15 years after the Agreement was signed, Canada’s merchandise trade with the United States had tripled; with Mexico, it had quintupled.
Just think of all the economic activity and jobs supported by this trade in all three countries. In Canada, over that same period of time, more than 4 million jobs had been created.
You simply cannot talk about economic strength in Canada or the United States without talking about our trade relationship. That is why now more than ever, as nations around the world try to emerge from the global economic downturn, it is important that we—as governments, as stakeholders and as citizens—remain continuously vigilant against legislation and regulation that would weaken our trade partnership.
Look at the “Buy American” provisions in the U.S. Recovery Act [American Recovery and Reinvestment Act of 2009] that threatened the integrated supply chains that we’ve created together over the decades.
Organizations on both sides of the border, including the U.S. Chamber of Commerce, fought hard against these provisions, rightly arguing that the doors of opportunity must be kept open for both countries during this time of fragile economic recovery.
And together, driven by the same spirit of partnership that has been the hallmark of Canada-U.S. relations for so many years, we were able to overcome the first hurdle. We negotiated an exemption from many of the Buy American provisions, and we’re now discussing a more comprehensive bilateral procurement agreement for the longer term, one that holds the potential to benefit both countries. We can also point to our ongoing efforts to create a border that works—one that’s secure but also keeps our trade flowing.
We think that our partnership is too important—to both countries—to allow problems to grow. In fact, U.S. Trade Representative Ron Kirk and I recently agreed to hold regular at-least-twice-yearly trade summits to resolve problems faster and strengthen our trade partnership in other areas quickly and effectively.
We agree that economic recovery, for both countries, depends on working together and keeping the doors of opportunity open on both sides. But we also think that this lesson has a global relevance, beyond North America.
Canada as a free trade leader
Partnerships, not protectionism, hold the key to lasting economic recovery. The world economy is simply too integrated and too interconnected to close doors to commercial cooperation.
In this interconnected global marketplace, Canada has emerged as a leader, both in terms of the environment for investments that our government’s leadership has created and in the actions we’ve taken to encourage free trade and further integration of our economies.
For example, unilaterally, without negotiations or reciprocity, our government eliminated tariffs on imported equipment and machinery. We created the first “tariff-free zone” for manufacturing imports in the G20. Now, our manufacturers can more easily buy the machinery and equipment they need from other countries, including the United States, to become more productive and competitive in the global market. It’s a good example of how a free, open approach to trade can help spur export activity.
And it is an example of Canada’s belief that removing barriers to trade, rather than imposing protectionist restrictions, is the key to economic success and future prosperity.
We have approached other key sectors of our economy from the same perspective. The result has been Canada’s leading position as a first-class destination for investment, a place of growth and a place of opportunity.
Canada is a country that offers:
- an open and attractive free-enterprise environment;
- the strongest fiscal position in the G7;
- low corporate taxes—on track to being the lowest in the G7;
- the fastest economic growth in the G7 according to the International Monetary Fund;
- a skilled workforce, with the highest proportion of post-secondary graduates among countries of the Organisation for Economic Co?operation and Development;
- a very supportive environment for innovation, with generous tax incentives for research and development;
- a strong commitment to the rule of law; and
- a high quality of life.
Despite the global economic downturn, Canada did not experience any bank failures. No major Canadian bank required a bailout. Our banking sector is responsibly managed as a result of balanced regulations. It has performed well despite the global financial crisis.
At a time when banks in other countries were making high risk investments Canada’s banks were adhering to higher standards for investment and risk, outlined by our regulations.
This is one reason that Canada does not support the introduction of a global financial levy or tax to pay for the bailouts used in other countries. Levying such a tax would punish our financial sector for good performance. Our banks acted responsibly to avoid toxic assets throughout the recession. It makes no sense to impose a punitive tax on them now, a tax that would be unfair to the consumers who would ultimately foot the bill.
We prefer to remain focused on the financial reforms agreed to by the G20 as a means of achieving high capital, liquidity and leverage standards for global institutions.
Like our commitment to free trade, Canada’s commitment to a stable, well-regulated financial system is attracting attention from partners in Europe and around the world.
But we also know that any effort that brings more business to Canada can also have a positive impact on trade flows throughout North America. It will increase business activity. And it will make our continental commercial platform more competitive and attractive to global businesses and investment.
By increasing global trade, we create more opportunities for businesses and investors here in North America and around the world. And that holds great potential for us all.
Conclusion: Economic recovery through increased global trade
Canada believes that these challenging, uncertain economic times call for more trade partnerships, not fewer.
Over the years, the U.S. Chamber of Commerce has been at the forefront of fighting protectionism—or the “new isolationism.” And you’ve been a steady champion of efforts to open more doors to trade and investment activity.
Like you, Canada is eager for heightened engagement at the World Trade Organization, which is the next topic being discussed today. But we also recognize that countries around the world can, and should, be looking for every opportunity to spur job creation and spark economic activity.
Here in North America, our success has taught us that a free and open approach to trade is the single best way to create jobs, opportunities and prosperity in the global economy. Free trade has made all of us more prosperous and more competitive.
It’s a lesson that we hope to underscore when Canada hosts the upcoming G20 Summit. Fighting protectionism and keeping the doors open to trade and investment will be at the core of our message to the G20 members.
And we’ll certainly rely on people like you to carry this message forward. Let’s work together to create more successes. And let’s help people from around the world move toward a lasting, sustainable economic recovery in the years ahead.
Thank you.
