Madam Speaker, I would like to thank the hon. member for Lac-Saint-Jean for raising this issue, which is of the utmost importance to all Canadians. Increasingly, the world's economy is becoming a global one. International trade is increasing in a phenomenal manner.
Never in the history of the world has foreign investment been so important, nor has it ever moved as quickly as during the 1990s. Canada being a small country with an open economy, a significant percentage of which is trade-related, it is obviously affected by this economic and financial change.
Globalization poses many challenges, one of which the hon. member rightly knows, and that is the government's capacity to promote social cohesion. Social cohesion has been a research priority of the government for some time, consistent with the need to understand well the changing world around us.
A great deal of research on this issue has already been published by the policy research initiative, PRI, a network of government departments and Canadian academics established by the government in 1996 to identify and address issues likely to affect Canadian society in the near future.
Globalization offers great opportunities for growth and prosperity for smaller economies like Canada's. They will be given access to domestic markets much larger than their own, providing a level of prosperity through export that is not attainable without trade. At the same time consumers gain access to goods and services from around the world at a lower cost than would otherwise be possible. Canada is a leader in international trade and prospers because of it. Our outward orientation as measured by two way trade and investment flows has risen dramatically.
In addition, Canada exports as well as imports large amounts of capital. For instance, in 1998 the inward and outward foreign direct investment stocks accounted for 24.2% and 26.8% of Canadian GDP respectively, a significant increase from levels only 10 years earlier. Canadians benefit from this increased capital movement as capital exports allow Canadians to get the highest returns on their investments while capital imports provide employment and fuller use of our resources.
In particular, our trade and economic integration with the United States, our largest trading partner by far, has increased dramatically. Net exports to the United States have made a very important contribution to the near 3% average annual real output growth and the over 1.3 million jobs created in Canada in the last five years. Furthermore, our continued strong trade performance is one reason the International Monetary Fund expects Canada to lead in employment growth and to have the second fastest output growth in the G-7 in 1999 and 2000.
Yet at the same time the rapidity of technological change is bringing people from all parts of the globe closer together, so much so that the competition for markets, for material and human resources and for activities relating to innovation and technology will be more and more keen.
Consequently, in order to reap the potential benefits of these new technologies and of trade in general, businesses and governments will need to be extremely competitive and to handle the challenges of the intense international competition and the pressures in favour of structural adjustment in the right way.
International harmonization of trade related policies is a key element in facilitating fair competition and promoting highly competitive and well managed firms. It underpins economic integration and helps to establish the framework needed for expanding economic relations and increased commercial opportunities.
Harmonization of policies that affect trade can be of great benefit to Canada as it promotes fairer competition and contributes to increased competitiveness in industry and greater access to foreign markets. However, pressure to harmonize policies in these areas also raises concerns about government autonomy in areas of social policy. Or, stated another way, there are some who fear that the only way we can remain competitive with countries such as the U.S. is to accept U.S. style social policies and inequalities.
Canada has continued to maintain social policies that are substantially different from those of our largest trading partner. Canada has invested more than a century in building a social infrastructure that today is considered among the best in the world. The system of social support includes universal medicare, more generous safety nets and job training support than those available in the U.S.
By protecting and improving our social programs we may attract foreign investment, not drive it away. The relatively lower cost of the Canadian medicare system in particular and features of the unemployment insurance system, together with Canada's supportive system of social services and well run cities and municipalities, have historically been a locational competitive advantage for Canada. Thus, if pressure to harmonize social policies exist, it may be on other countries to match those of Canada.
This is not to say that Canada does not face some serious structural challenges. However, it does suggest that if we approach these challenges with imagination and vision we can ensure that global economic integration does not mean sacrificing what it means to be Canadian. Developing this vision is a responsibility that the government takes very seriously.
That is why the policy research initiative, PRI, was launched in 1996 by the government. The initiative brings together over 30 federal departments and agencies, as well as a number of leading Canadian academics.
As a result, the PRI has provided parliament and Canadians in general with informed advice on a large number of multi-faceted questions, in detailed reports, public reports and minutes of meetings, all of which are available to the public via the Internet, as well as to all hon. members of this House.
Two key issues the PRI is currently looking at relating to globalization and social cohesion are what will be the effects of pressures toward regulatory convergence over time, specifically how will this affect such issues as tax and environmental policy, health care and pensions, and how the FTA and NAFTA has affected Canadian autonomy and sovereignty in particular with respect to policy making capacity.
The analysis of the impact of globalization on social cohesion has been further strengthened by the work of the social cohesion network, one of four networks established under the PRI umbrella. This virtual network of electronically linked researchers was set up to assess the state of social cohesion in Canada. This social cohesion network has found that a certain measure of social cohesion is conducive to investment, both foreign and domestic. It has also found that social cohesion can increase productivity.
The PRI has therefore established that the combined effects of globalization and our social cohesion might have a somewhat positive impact on Canada.
The PRI work is shedding light on how government can support social cohesion. In the context of the global knowledge based economy, government increasingly must make a strong effort to explain its new role as facilitator and as an enabling partner with other sectors of society and to act as a non-financial broker of ideas and unifying national projects.
Based on the evidence to date and with the continuing work, I do not believe that a standing committee on globalization, government autonomy and social cohesion is required at this time. The all party parliamentary business committee, the subcommittee of the Standing Committee on Procedures and House Affairs, determined that this motion should be non-votable.
I applaud the member for Lac-Saint-Jean.
He was elected at the same time I was. I congratulate him on his motion.
It is because of the reasons I have stated. Although this initiative is very important and I congratulate him, I would ask that the House not support this motion being votable.