Mr. Speaker, I am pleased to participate in the discussions today of Canada's foreign policy initiated by my colleague, the Minister of Foreign Affairs.
I want to share with members today some thoughts on the role of trade in our total foreign affairs policies, sketch out possible policy directions, and encourage discussions on how we can best proceed in the future.
I am also very pleased to co-sponsor the foreign policy forum which will involve people across Canada from the private sector on March 21 and March 22. It will seek their views on public policy. I look forward to the subsequent work the parliamentary committee will undertake under the initiative of my colleague, the Minister of Foreign Affairs.
The importance of trade to the making and implementation of Canadian foreign policy has long been a central principle of our vision of international relations. Lester Pearson entitled his 1957 Nobel peace prize address "Four Faces of Peace". Significantly his first face of peace and the one about which he spoke most eloquently was trade. Mr. Pearson noted:
The higher man sets his economic goals in this age of mass democracy, the more essential it is to political stability and peace that we trade as freely as possible.
He spoke of the high political purpose of civilizing the commercial policies of governments through the reduction of trade and investment barriers.
Mr. Pearson understood that trading agreements can underpin human development, including greater respect of basic human rights, by expanding the scope of international law, by generating the growth required to sustain social development, and by making governments that have opened their markets more sensitive to the reactions of international business and other governments. An autarkic, inward looking society that depends little on trade and international investment is less likely to respond positively to concerns raised by others.
The construction of an international system of binding rights, obligations and effective enforcement in which Canada takes its place as one of the more active and creative architects helps to ensure that the rule of law prevails over the rule of unrestrained power and discriminatory fixes. The making of trade rules fits this objective very well.
Despite the disputes that arise and the range of barriers that continue to impede people everywhere from reaching their true economic and social potential, internationally agreed rules governing trade relations can be the cement that binds together the international community.
Our government has focused mainly on economic recovery and job creation. Trade directly impacts on that area.
A large part of Canada's prosperity is due to the fact that we have access to foreign markets. Our exports of goods and services account for more than a quarter of our gross domestic product.
At the beginning of the nineties that proportion was slightly less than the one recorded in Germany, about the same as the one recorded in France and in Great Britain and more than double the one existing in the United States and in Japan. Directly and indirectly, exports sustain more than 2 million jobs in Canada, and international trade will become more significant for the conservation and the creation of jobs.
Against the background of Canada's trade record and the importance to Canada of exports as well as imports, the conduct of Canada's trade relations must rest on two pillars: first, the quest for greater international security through agreed rule
making and enforcement and, second, the creation of competitively sustained jobs for Canadians, whatever the product, wherever the market.
It is now generally acknowledged that the world economy has experienced fundamental changes over the last three decades and that these changes have been primarily structural in nature. The globalization of production, the growth of knowledge based industries and the shift in wealth and power to the Asia-Pacific region all point to the rise of a new international economic order.
It is also commonly accepted that attempts on the part of national governments to shield themselves from these changes are not only illusory but fraught with danger. Admittedly this has not stopped certain governments from attempting to do just that. In the United States in some quarters the current political obsession is Japan, which enjoys a sizeable trade surplus despite or perhaps because of its current recession. Behind such cryptic phrases as fairer trade and levelling the playing field often lurk notions of replacing open rules based competition with managed trade, restrictive quotas and regulated trade balances. Likewise in Europe there are some who support the idea of a closed, self-reliant bloc. Regional liberalization and policy harmonization are certainly laudable goals when aimed at deepening Europe's commitment to freer trade. However these objectives become rather less admirable when one additional goal is to shut out global competition, especially from low cost producers in Asia or Latin America.
Fortunately or unfortunately there is no turning back the clock on globalization. Like the industrial revolution of the previous century, the kinds of changes produced by rapid technological change and by the liberalized trading system have permanently altered the economic landscape. As we saw with the former communist bloc, efforts to shut out these forces eventually collapsed, with the collapse of the Berlin wall itself, largely because these countries were being left behind in an accelerating, footloose technological race. Countries must either move rapidly to adapt to change or watch their productive capacities deteriorate and their living standards decline.
The central lesson of globalization for Canada is that we can only achieve economic growth through an open, outward looking trade policy. In the current domestic economic climate characterized by accumulating private and public sector debt, high rates of taxation and anaemic consumption, there is no wellspring of demand waiting to be unleashed by the right macroeconomic fix. Any meaningful domestic growth strategy must almost by definition be export led. Only by targeting new and additional markets, by assisting our firms to be competitive in those markets and by creating an open, outward oriented economic base both for domestic and foreign businesses, will the government have any realistic hope of securing long term growth and job creation.
At the same time we must focus not just on how much Canada exports but on what Canada exports, the type of markets we pursue, the delivery systems were provide and, perhaps most important, the productive climate we foster at home will in many ways shape the kind of Canadian economy which evolves in the years ahead.
We must also recognize that in a world of rapid and complex change where international institutions are struggling to keep up, where other countries are employing a wide range of instruments to gain advantage in the global marketplace and where Canada is but a middle power, we need to be more focused, more single minded in the pursuit of our policy objectives.
It has been suggested that political diplomacy is giving way to economic diplomacy. If Canada is to remain a significant player in an international arena characterized primarily by the interplay of economic forces, we must define a more strategic, less universal niche in the affairs of the international community. More than ever trade policy is about positioning Canada in the global economy so that we attract the high value added, high technology industries and jobs of the future.
The key to developing an effective trade strategy for Canada is to begin to identify more precisely our national priorities, both regionally and sectorally, based on a much clearer assessment of where our economic interests lie. In practical terms this means working directly with our key export sectors to develop a more focused, more agile policy agenda which is concerned less with trade instruments or the institutional frameworks than with trade objectives. It means using all the policy tools at our disposal, multilateral, regional and bilateral, to achieve clearly set out national priorities. In an ideal world, trade liberalization would occur multilaterally on the broadest possible range of fronts. Unfortunately we are dealing with an imperfect, changing world and we must be prepared to wield a whole array of trade policy instruments if we want to reach our market access goals.
Although time does not allow me today to examine in detail the policy directions in the trade area for Canada in the decades ahead, I want to set forth what should be our three objectives.
First, we must define our priorities more clearly based on a rigorous assessment of where Canada's competitive advantages lie. It remains true that Europe is still central for many Canadian exports and an important source of investment capital.
We shall continue to attend to the trans-Atlantic market very carefully.
The United States market and the successful management of our trade relations with our neighbour remain fundamental to Canada's economic prosperity.
Nonetheless, the highest growth rate, the most exciting new market opportunities are in the western hemisphere, in Latin America and more especially westward across the Pacific to Asia.
Moreover, it is with many of these emerging markets that Canadian exports will enjoy a strong comparative advantage and major growth opportunities in the years ahead, much stronger than we enjoy in the markets of Europe or even in the United States.
How can we secure further access to traditional markets while actively expanding our economic links with high growth markets overseas? The central focus remains the multilateral trade framework which provides the foundation upon which our trade policy is constructed. For this reason we are committed to promoting an early start to the work of the new world trade organization. Called into being by the recent Uruguay round of the GATT, it is largely a Canadian proposal that completes the post war trade and payment system in the best traditions of Canadian foreign policy.
We shall actively encourage the international community to elaborate more fully a forward looking work program that reflects Canadian interests as well as the new trade issues, especially trade in the environment and the possibility of replacing anti-dumping regimes with competition policy, that have arisen through greater global integration.
We will also actively encourage means by which the new world trade organization, the World Bank and the IMF can co-ordinate their efforts to reach mutually reinforcing policy objectives. We shall actively encourage the prompt accession of China, Taiwan and Russia to the new world trade organization with all its rights and obligations.
The fact remains that Canada's most critical economic relationship is with the United States, the destination of over 70 per cent of our exports, and indeed with North America as a whole.
To manage this relationship Canada has a more comprehensive rules based framework in the recently proclaimed North American Free Trade Agreement.
The government's commitment to strengthening this framework is underscored by our successful efforts to establish NAFTA working groups that will strive to reform practices related to the inappropriate use of anti-dumping and countervailing duties.
NAFTA can provide a complementary tool for expanding opportunities for Canadian exports only if it remains fundamentally open to the world economy. What we do not want to see is a NAFTA which turns inward on itself, devolving into a form of continentalist, protectionist block.
For this reason we must focus our attention on the accession issue and underscore its importance as a means of strengthening trade and investment relations not only within our hemisphere but indeed across the Pacific for those Asian countries ready for a comprehensive economic partnership.
The new world trade organization and NAFTA are not the only tools available to Canada to expand our trade relations beyond North America.
Another approach can be to explore the prospects for negotiating a range of bilateral trade arrangements with selected high growth economies overseas. Such a policy would in no way compromise our existing and vital relationship with the United States. The goal is not to increase Canada's independence through a rekindled third option. Such independence even if it were economically desirable is largely illusory in an increasingly interdependent world.
On the contrary, Canada's role in the FTA and now in NAFTA should be translated into a competitive advantage by encouraging greater economies of scale, by facilitating mutual beneficial sourcing and networks and by helping Canadians to build globally competitive industries. It is essential that we view our North American base not as a buffer against international competition but as a springboard to a rapidly expanding global economy.
Trade agreements open doors. Our trade development activities help companies walk through them. In the emerging economies of the Asia-Pacific region or Latin America the goal of establishing an institutional foothold in those markets and constructing strong business links or alliances is at least as important as formalizing market access agreements.
As the second part of our strategic approach to trade policy we must also devise ways to target government programs and resources more effectively to assist Canadian companies to reach into key markets.
Of particular concern to the government is the role of small and medium sized enterprises which have the potential to be the growth engines of the future but often lack the critical mass, the financial resources or the technical expertise to penetrate foreign markets. Building stronger linkages with the private sector, improving the delivery of market information, better co-ordinating government programs, both federal and provincial and further leveraging domestic financial resources are issues now on the table.
The main objective is not to encourage government to be better at exporting but to encourage the business sector to be more aggressive, more outward looking global traders.
Are there ways of redesigning our trade development institutions and activities so that we bring a more co-ordinated approach to the design, the allocation and implementation of our limited resources? Should we consider working with the provinces and industry to be the linchpins of effective export strategies by adopting a more market driven approach to trade development, one which sees government as an export facilitator rather than an export leader? We can use market signals to set our real trade priorities.
Last, we must foster a domestic economic environment conducive to export led growth. It has become commonplace to observe that the boundary between national issues and international issues is becoming blurred in the same way the distinction between domestic policy instruments and trade policy instruments is in many instances meaningless. Regulatory and tax policies that unnecessarily inhibit export sectors must be revisited. Regimes and restrictions that block constructive international investment must also be re-examined. As the world economy becomes increasingly open, Canada will inevitably be exposed to greater and more fluid investments.
We need to ensure that Canada can attract the kind of high quality foreign investment that will allow us to take advantage of technology transfers to sources from global markets and to remain at the hub of international linkages and alliances. The basic objective of our policy is to further Canada's national economic interests at a time when these interests show a far greater constancy than the increasingly complex and competitive world with which we grapple. We can do a much better job of ensuring that these interests are translated into bold policy objectives and clear priorities.
To that end we intend to ensure that the government's own house is in order with regard to international business development support. Upon entering office we found duplication, overlap and sometimes confused mandates that hindered the efforts of our exporters to compete abroad. We intend to correct this and to build a single integrated program that addresses issues such as the timeliness and dissemination of market intelligence, the need to reform the mechanisms now in place that provide export financing, and the promotion of mutually beneficial science and technology co-operation between Canadian and foreign companies.
We have to find ways of doing things better, both because good fiscal accountability demands it and because budgetary realities oblige us all to act responsibly as well as creatively.
Moreover, we intend to develop this program through a much closer and more active partnership with the provincial governments and with the private sector.
This process and the foreign policy consultations now launched will assist us in identifying the appropriate tools and strengthening program delivery. During the course of 1994 I shall announce the concrete results emerging from the consultations in which we are now engaged.
We must ensure that the greater co-ordination of all Canadian foreign policy tools to underpin our interests abroad are respecting the fact that these interests will always be varied. I want to reassure this House that the government will vigorously defend the market access achieved through negotiations and realized in practise through the efforts of our export community. We shall not hesitate to challenge other nations when they do not live up to their international trade and economic obligations, threatening Canadian interests and Canadian jobs as a result.
This is, after all, the whole point of international rule making. We shall be active bilaterally and we shall use the dispute settlement provisions in our international trade agreements to defend the interests of all Canadians.
Today's debate marks early in our mandate a period of reflection and discussion about the direction of Canada's foreign policy in a new and more competitive world in which trade and economic issues will be at the centre of the stage as never before. I am convinced that by working through these issues together we shall emerge with a clearer sense of purpose and a direction abroad that can only benefit the prosperity of all regions of Canada.