Finance Committee on Oct. 26th, 2010

[Ted Menzies, Conservative, Macleod, AB]

Thank you, Chair.

Going back a little bit to some of the language coming out of Korea last weekend, if I may, there was once again a coordinated effort to make sure that we protect against protectionism. Defend against protectionism is maybe a better way to term it. There are some troubling things. We're suggesting we're going to refrain from competitive devaluation, and how that impacts.... We're a trading nation, and we're trying to expand trade as fast as we can, although we can't seem to get trade negotiations off the floor of the House of Commons. We think it's pretty important to do this.

Trade deficits were a big issue, I'm sure. Correct me if I'm wrong, but the information I received today is that for every one dollar of U.S. goods that are purchased in China, there are $3.90 worth of Chinese goods purchased in the United States. Is that troubling, as to the trade deficits that will create more protectionism?

[Mark Carney]

Certainly the commitments you referenced, although they're cast in the negative, are important: resisting competitive devaluation, refraining from protectionist measures. As I indicated earlier, what is important is that those commitments are respected. It's good to have them. They need to be respected. It is somewhat encouraging to have some of the elements around the currency side.

Are the scale of the trade and broader current account imbalances troubling? Yes, they are. I mean, these are the global imbalances that have potential to return to unsustainable levels as the recovery progresses, ultimately with the potential to undermine the pace of the recovery at a global level, and that will have direct implications for Canada.

We are working very hard. Mr. Macklem referenced earlier the Toronto framework and the elements of that. We need to see that implemented. We need to see it expanded to include structural policies. We need to finish the financial reforms. We ultimately need to see that enhanced level of flexibility of currencies, this movement toward market-based exchange rates in major emerging markets.

All of that said, there will always be imbalances. We're a trading nation. We understand that. We moved from having a 2%-plus current account surplus going into this recession to a similarly sized deficit, a slightly larger deficit on the current account now. That's appropriate, given the global outlook and given the relative strength of our economy. But what's important is that others are showing similar flexibility, so that over time that can reverse itself in a natural order of comparative advantage.

[The Chair, Conservative, James Rajotte]

Okay, thank you. I'm sorry, I have to cut you off, Mr. Menzies.

Mr. Carney, Mr. Macklem, thank you so much for being with us here. I hope you enjoyed our discussion, a very lively discussion. If there's anything further you wish the committee to consider, please feel free to send it at any time.

Colleagues, thank you.

The meeting is adjourned.