Mr. Chair, and the critic, Mr. Davies, this is really a new and unmined area, especially when we tie it to trade. You're quite right. Right from 1947, we didn't build into any world trade agreement the management of currencies. It was kind of there. We knew through the financing of trade that money and levels of the exchange rate were important but not important enough to put it into a trade agreement, or we couldn't agree on that. That continues to this day, and this is why the Canadian government, for example, is still reluctant to have anything about exchange rates.
Going back to your question to my colleague, one reason small business has been unable to get involved in international trade, any more than it has been able to, is that they can't afford the risk of moving exchange rates. Big firms can hedge, and it's big firms that do most of the international trade, as you said. Smaller firms, SMEs, can't afford to predict the exchange rate, and the buy and sell exchange rate, looking ahead. This is a major factor in affecting the success or lack of success of small business.
To answer your question directly, I think in a trade agreement we probably cannot do what we wouldn't encourage American congressmen or others to do; that is, to tell anybody, including us, what exchange rate we should have, or what the Chinese should have, etc. We should, on the other hand—and there are other parts of our international economic policy—push our federal Department of Finance and the bank to begin working much more actively on redesigning the international financial system.
Mr. Chairman, as I mentioned to this committee in December, each week there's more value traded in financial assets than there is per year of trade in goods and services. The financial system has overwhelmed the trade system, and we're suffering from it to some extent. The Canadian dollar is no longer totally based on how well or poorly we're trading. It's based on the flow of financial assets coming into and leaving Canada. It's a whole new area to get at.
I don't have a direct answer, except to say that the financial system is an area this government is working through on its own, through the Federal Reserve, through the G-20, and through the G-7, where the former Minister of Finance was so strong and so interested. That's where we have to focus on because the bottom line is that it's disrupting the trade system, and hurting small and medium-sized business in particular.