Remarks on trade by Minister Goodale to the Kentucky Chamber of Commerce

Speech

Thank you very much Ambassador Craft and Happy New Year everyone!  Greetings and good wishes from Prime Minister Trudeau and the Government of Canada.  And my sincere appreciation to the Kentucky Chamber of Commerce for inviting me to be with you today.

I'm very glad to be spending the first few days of 2018 in the great Bluegrass State of Kentucky.  Your WEATHER certainly makes me feel very much at home—thanks for arranging that.  But more importantly, I'm honoured to be visiting the home State of the new United States Ambassador to Canada.

Ambassador Craft, congratulations on your selection.  Canada is very pleased with the President's choice for American diplomatic representation in our country.  And you are off to a great start in your new role.

Canadians were delighted to welcome you and Joe to Ottawa—and we're looking forward to our work together on trade and investment, public safety issues, defence and security, and much more.

It's important work.  Canada and the United States are partners in the most prosperous, extensive, dynamic and mutually beneficial relationship in the world.  It deserves and demands our careful attention—as allies, neighbours, friends and (in a lot of cases) family.

My mother's side of OUR family comes from Bushnell, Illinois.  The Myers family.  In our visiting back and forth, while I was preoccupied with hockey, all my US cousins were basketball fanatics.

It drove them mildly around the bend when I pointed out that basketball was actually invented by a Canadian, James Naismith from Ontario.  But they seized on that word "FROM", noting the invention of the game took place AFTER Naismith had moved FROM Canada to Springfield, Massachusetts.

This city of Lexington is great basketball country.  I know the Ambassador is a major booster of Kentucky basketball.

The Wildcats have included Canadian players on their roster for four seasons in a row, including recent NBA top-10 draft pick Jamal Murray.  And one of the Wildcats' biggest fans is Canadian entertainer Drake, who can sometimes be spotted at Rupp Arena.

Drake is also a big fan of the Toronto Raptors, who are coached by Dwane Casey who played college ball here in Kentucky in the 1970s.

All of this might be dismissed as mere trivia.  But it's really more than that.  It's a tiny fraction of the mountain of evidence that you find just about everywhere of deep, intricate interconnections between Americans and Canadians in so many dimensions of our lives—in sports, entertainment, family life, business, security, defence, diplomacy ... and our common values of freedom and democracy.

We have fought together for those values in two world wars, and in Korea, the Balkans and Afghanistan.  We are united today in our unshakeable resolve to combat the deadly scourge of global terrorism.  In a few weeks we will co-host an important international meeting in Vancouver on the threats posed by North Korea.

On the economic front, our partnership is the envy of the world.

And let me express Canadians' deep appreciation to the Kentucky Chamber of Commerce for helping to reinforce that message.  The letter that you (and more than 300 other major Chambers from across the United States) sent last October to President Trump was eloquent, powerful and compelling.

The Canada/US relationship NEEDS engaged, informed, influential advocates like you—to defend, promote and strengthen it.  Doing so is important to both our countries.

We know—on BOTH sides of our common border—there are anxieties and sensitivities about trade. If a particular industry or sector runs into difficulty, it's sometimes easy to find an excuse for that in foreign trade, in allegations of unfair competition.  There's an instinct to throw up barriers ... on both sides.

But first it's crucial to make sure all the facts and all the figures are actually correct, and where genuine unfairness is identified, to deal expeditiously with those precise instances—rather than tanking the whole relationship.  Because on both sides of the border, industries and sectors that trade internationally tend to be more efficient, more innovative, pay better wages, and achieve greater success for their communities, for their states or provinces (as the case may be), and for their country.

Between us, we have the longest, most open, unmilitarized, secure and efficient border in the history of the world.

Nearly 400,000 people move across that border every single day.

About $1.8 billion(US) in trade moves across that border every single day.

The latest data shows two-way Canada-US trade in all goods and services at some $635 billion annually, and it's roughly in balance, both ways, with the United States enjoying a small surplus of close to $8 billion.

Our two economies are highly integrated in virtually every sector.  Supply chains criss-cross the border and extend throughout our continent.  They are vital to our mutual growth and prosperity.  And they help to keep the products that we make together in North America fully competitive with the rest of the world.

Here's an interesting factoid—when the United States imports a manufactured good from Canada, it contains on average 26% US content—and much higher than that in sectors like machinery and autos.  That's how intricately we are bound together.

Your letter to the President emphasized the particular importance of these efficient, cross-border supply chains for small and medium-sized businesses in both countries, and for agriculture.  And for good, solid middle-class jobs.

Nearly 9-million American jobs depend directly on trade and investment with Canada—48 of your 50 States count Canada among their top three customers.

For Kentucky (and more than 30 other States), Canada is your NUMBER ONE customer!

You know the figures:

Two-way trade in goods between Canada and Kentucky is valued at $10.9 billion(US) per year.  And YOUR exports to us account for nearly 70% of that total—$7.5 billion(US)—that's a trade advantage in goods in your favour of more than 2-to-1.

Plus, there's another $400 million in Kentucky SERVICES exported to Canada.

Many thousands of Kentuckians enjoy a comfortable life because of a good job here that could conceivably NOT exist without those trade and investment links with Canada.

Take a company like Martinrea, for example.  It's a Canadian firm manufacturing sophisticated metal products and autoparts.  It employs 1700 people in places like Hopkinsville and Shelbyville.

And Martinrea is only one of more than a hundred Canadian companies that have chosen to build and invest in Kentucky.  Others, just in THIS one Congressional District, include CGI Consulting, Stantec Engineering, and retailers Aldo and Lululemon.

Altogether, Canadian-owned firms doing business here are responsible for 9,500 jobs state-wide.  And overall trade and investment with Canada creates employment for nearly 113,000 people in Kentucky.

The auto sector and agriculture are two big components of this prosperity.

Nearly half of Kentucky's annual sales to Canada are in high-value cars, trucks and motor vehicle parts.  Kentucky is among the Top-5 States for producing trucks and passenger vehicles.  There are four major assembly plants in this State.

So Kentucky is a major beneficiary of North America's integrated auto industry and any disruption would have serious consequences here.

In agriculture, Canada was Kentucky's top export market last year.  We bought 19% of your export sales in this sector—that just about matches Kentucky's exports to Japan and the United Kingdom combined.  Ketchup and tomato sauces were at the top of the list, right after ... alcoholic beverages.  Canadians are indeed developing a growing thirst for good Kentucky bourbon.

Following your Chamber's good example, nearly 80 US food and agricultural groups have written to Commerce Secretary Wilbur Ross to underscore the "immediate and substantial harm" that would be caused in their sector by any US withdrawal from NAFTA.

As Kentucky's own Mitch McConnell has observed, for agriculture in particular, "nothing is more important than trade."

In the absence of NAFTA, your agricultural exports would likely encounter tariffs at the Canadian border of more than 12%.  Some 50,000 US jobs would be jeopardized.  Losses affecting US agriculture could reach $13 billion.

In the auto sector, in the absence of NAFTA, tariffs would likely range from six to nine percent—and remember that autoparts criss-cross our common border multiple times during the assembly process.  The costs and losses would add up big time.

Barriers to the existing free-flow of cross-border business would be damaging to Kentucky ... and to Canada.  Independent studies suggest that, without NAFTA, trade within North America would decline by more than $120 billion(US) over the next six years.

Without a predictable, balanced, rules-based framework, it would be harder—more expensive and less profitable—for Kentuckians to do business with their largest trading partner.  There would be new risks of abrupt and arbitrary decisions, interrupting carefully laid plans.  Sure things would become risky bets.  Profits, jobs and wages would be jeopardized.

But it doesn't have to come to that.

Canada believes that NAFTA has, by and large, generated fair and balanced benefits on both sides of the border, and we should work to keep it that way.

We want to build on what has already been achieved.  Where updates are necessary and improvements can be gained, we are ready and willing to make them—to benefit all NAFTA partners, creating good, middle-class jobs in all three countries.  As Vice-President Pence has said, we need to make it a "win-win-win".

By your letter to the President, it's clear you share that approach.

Negotiations continue.  Some progress has been made, but the stakes are extremely high and we're entering a critical phase.

I urge you to renew and amplify your message—to promote the exemplary, lucrative, sustainable and vital economic relationship between Canada and Kentucky ... and to avoid a trade disruption or roll-back that would hurt Kentucky's economy and cost many middle-class jobs.

Yes, let's modernize NAFTA.  Let's better align it with new realities in trade and investment.  But let's get to an outcome that moves us all forward, not backward or sideways.  As you said in your letter, first and foremost, let's do no harm.

While trade and NAFTA dominate the public agenda these days between our two countries, there are a host of other issues that we grapple with regularly—especially in my realm of public safety and national security.

I enjoyed a great working relationship with General John Kelly when he headed the DHS.  That very much continued under Acting Secretary Elaine Duke.  And I'm looking forward to another strong partnership with new Secretary Kirstjen Nielsen—we expect to be meeting in the next few days.

Over the past several months, there have been numerous practical illustrations where effective cross-border collaboration among our agencies has contributed in a major way to safety and security in both our countries.  And beyond our bilateral relationship, we work closely together through the G7 group of security Ministers, Interpol, NATO and the Five-Eyes security alliance that also involves the UK, Australia and New Zealand.

We are enhancing our mutual effectiveness in information sharing.  We are implementing a new Entry/Exit data sharing system to better identify who is staying and who is leaving our respective countries.  We are pursuing new border technologies to better cope with issues like opioids and human smuggling.

We are pressing Internet Service Providers to become more effective in combatting terror and hate on the World Wide Web. And we are both upgrading our capabilities to defend our vital digital networks, information systems and critical infrastructure against hostile cyber attacks—whether from foreign militaries or organized crime or even just the weekend hacker-geek down in the basement in his underwear.  Cyber security has emerged as a leading priority.

So there is a lot of good work underway between us.

General Kelly commented several times that as a common priority we should strive to make the Canada/US border "thinner"—that is, strong and secure, but efficient and expeditious for legitimate trade and travel.  In the spirit of NAFTA—improving the lives and livelihoods of millions of Americans and Canadians—that is a goal we all embrace.

As one practical illustration, we are working together to expand pre-clearance operations at the border—so more travellers can successfully complete all necessary customs and immigration procedures BEFORE the leave, rather than after they arrive.

Pre-clearance in air travel from Canada to the US has existed since 1952.  It now serves about 12 million air passengers every year, departing from eight major Canadian airports.  It enables direct flights to American destinations that would otherwise be able to handle only domestic traffic.

Thanks to pre-clearance, Toronto's Pearson Airport has become the 4th largest port of AIR entry into the United States—after JFK, Miami and LAX.

So, building on a good thing, we have negotiated an expansion of pre-clearance—to cover more airports and other modes of transportation too, and to allow for traffic moving also in the opposite direction, from south to north.

The necessary legislation has been enacted in both countries.

And our next step, as signalled by Prime Minister Trudeau and President Trump, is to devise an effective pre-clearance system for moving CARGO safely, efficiently and expeditiously between our two countries.

Ladies and gentlemen, you have been very generous with your time this morning.  Thank you for your welcome to Kentucky.

And thank you for treating your Number One Export Customer to such warm hospitality—despite the weather.

In trade, investment, business, jobs and mutual prosperity, Canada and Kentucky are the closest of friends and partners.

We look forward to working with you to maintain the international commercial framework that makes our common success the inspiring success that it has become.

Thank you.



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