Home The Ambassador Canada's chief representatives to the U.S. Michael Kergin Ambassador Kergin's Speeches May 11, 2004

Canada and the United States: Indispensable Neighbors

Remarks by Michael Kergin, Ambassador of Canada to the United States to the Council on World Affairs

St. Louis, Missouri
May 11, 2004

Thank you for your kind introduction. It is a great pleasure to be in St. Louis. There is something magnetic about this city; so much so, that I have been here two times in as many years.

While Missouri is a popular place these days for highly ambitious political leaders, especially in an election year, I firmly deny any political agenda of my own. Tonight you will be spared any campaign rhetoric or even promises. (Is there a difference?)

Seriously, one reason I like Missouri so much, is that it is so very important to Canada. But an important message that I would like to leave you with today is that the reverse is also true; Canada is important to Missouri.

Our ties go back a very long time – in this region, even before Meriwether Lewis and William Clark began their great expedition westward two hundred years ago, and before we ever called ourselves Missouri or Canada.

In 1673, under the authority of General Frontenac, Father Jacques Marquette and Louis Joliette set off from Quebec, the seat of New France, to explore along the northern shore of Lake Michigan, through Green Bay, up the Fox River and Lake Winnebago, and down the Wisconsin River to the Mississippi. They became the first Europeans to set foot on land that soon become home to many French farming communities -- an area known today as the state of Missouri.

Today, Canada is by far Missouri’s leading foreign market absorbing over 40% of your exports totalling $3.7 billion, more than the state’s next fourteen foreign trading partners together. Bilateral trade amounted to more than $6 billion, favouring Missouri with a healthy trade surplus of almost $1 billion.

But don’t worry -- despite this historical presence and economic dependency, Canada has no territorial ambitions!

Looking more widely, what cements the Canada-U.S. relationship, goes far beyond historical ties. We are also linked by geography, by bonds of friendship, family and commerce, and by fundamental democratic values. And we are united in the war against terrorism.

President Bush made this point not two weeks ago during a visit to Washington by Prime Minister Martin: he said on that occasion “...understands the danger of terror. He understands the opportunity of trade. And he understands that we share values that are so important, the values of freedom, human dignity.“

These similarities in outlook lend themselves to extensive collaboration in the global arena on issues as far ranging as democratic development, open markets and security.

And our cooperation is underpinned by myriad innovative agreements at the federal level, between states and provinces, and between municipalities, universities and private citizens.

That great son of Missouri, President Harry Truman, said this about our relationship: “Canada and the United States have reached the point where we no longer think of each other as foreign countries. We think of each other as friends, as peaceful and cooperative neighbours on a spacious and fruitful continent.”

Our leaders have long recognized that Canadian and American security and prosperity are bound together, both here in North America and also beyond our own shores.

Yet this has never been more evident than after 9/11. Two and a half years ago, when we awoke to the scourge of terrorism on North American soil -- the same terrorism which has wreaked devastation across the globe -- security became the greatest preoccupation of both governments.

If 9/11 taught us anything, it is that we are no longer insulated from threats that are on the other side of the globe. That is why Canada is protecting its citizens on three fronts: by confronting security threats abroad, by working with the U.S. to improve our shared border, and by taking protective measures domestically.

Measures such as freezing terrorists’ assets and introducing legislation to obstruct their fund-raising; tightening refugee regulations to ensure improved compliance and surveillance.

We have just tabled in Parliament an unprecedented National Security Policy. It details the many measures we have adopted since September 11, and what we will do further to strengthen our security capabilities, including $8 billion we are spending to fix security gaps.

Abroad, Canada and the U.S. have also worked closely to combat terrorism and our efforts are mutually reinforcing.

Canada was among the first to join the U.S.-led coalition in Afghanistan, back in early 2002, participating in special operations under U.S. command where highly sophisticated Canadian expertise made important contributions to the war against the Taliban. Ours is the only military to be completely inter-operable with yours.

Today, while U.S. troops are fighting the Taliban insurgency in the south, Canada is in command of NATO’s International Security Assistance Force (ISAF), which is based in Kabul, with over 2000 Canadian troops.

It is a dangerous yet crucial role -- giving stability and democracy a fighting chance. And the loss of Canadian lives in no way diminishes our commitment. Prime Minister Martin recently announced that Canada will continue to keep troops in Afghanistan for another year, and into the foreseeable future.

Canada’s commitment to Afghanistan includes over half a billion dollars for reconstruction and humanitarian assistance. We are helping fund the Afghan Transitional Authority, and are involved in de-mining, reconstruction, judicial reform, and elections.

Canadian Forces are still deployed in a major way in the Balkans, the Persian Gulf and Haiti. We do not foresee an early end to the kinds of security challenges we face. That is why, recently, Prime Minister Martin announced important new procurement decisions to ensure our military has the equipment it needs to get the job done.

Canada is also contributing heavily to the rehabilitation of Iraq, to the tune of $275 million dollars. While we chose to stay out of the military “coalition of the willing”, largely for lack of a Security Council mandate, Canada quickly assumed an important role in the “coalition of the giving”. Our funding is going toward humanitarian assistance, basic education, water and sanitation services, and police training. And Canada has forgiven about $750 million in Iraqi debt.

However, I would say that the area in which we have made the greatest progress in the war against terrorism has been at our shared border. And despite the new security measures required in the wake of the tragic events of September 11, our border continues to be less a dividing line between two countries than a testament to the enterprising spirit of two successful partners.

In December 2001, Canada and the U.S. signed the Smart Border Agreement as a direct result of the terrible terrorist attacks three months previously.

The agreement comprises over 30 innovative measures for improving security and efficiency, and covers everything from customs officials operating in each other’s sea ports to agreements on refugee and visa issues, from improved infrastructure at the border to increased information-sharing among law enforcement and intelligence officials operating overseas.

Excellent progress has been made by adopting a risk management approach at the border and coupling it with advanced technologies.

Risk management means that you use intelligence and shared information to reach a common understanding of who poses a risk; advanced technologies allow you to monitor electronically the low-risk users of the border so as to concentrate intensive human resources on the higher-risk candidates -- in effect: making the border more user friendly for friendly users.

This approach to a 5500-mile common border, unprecedented internationally in its scope and the use of advanced technologies, was developed by hard work, pragmatism and, above all, a sense that cooperation trumps confrontation.

A more secure and efficient border also enables us to keep up with the enormous surge in commercial traffic between Canada and the U.S.: some 80% of this $450 billion annual commerce comes by surface transport. Since the Canada-US Free Trade Agreement came into effect in 1989, trade between Canada and the U.S. has more than doubled.

Thirty-seven of 50 states call Canada their largest trading partner. Canada, with an economy somewhat less in size than the state of California, and less than a tenth the size of the U.S. economy, imports close to one fifth of all U.S. exported goods -- more than Japan, Germany, Britain, Italy, China and Hong Kong combined! The Canadian market supports 5.2 million U.S. jobs.

When we let free trade work, we put our people to work.

Canadian and U.S. companies increasingly view NAFTA as a common area. We make investment and production decisions taking advantage of the respective strengths of each one of the NAFTA partners.

Much of Canada’s trade with Missouri is in the transportation sector – one of the benefits of an integrated automotive industry.

The Canadian Air Force flies F-18 Hornets, manufactured at the Boeing facility here in St. Louis. And there is great potential for growth in “new economy” links between St. Louis and biotech clusters in Guelph, Ontario, and Regina, Saskatchewan, in Canada.

The Canada-U.S. energy trade is a good example of our integrated market. Canada is far and away the largest foreign energy supplier to the U.S.

With seemingly chronic instability in the Middle East, it should give some peace of mind to know that 85% of your natural gas imports, close to 100% of your electricity imports, and more crude and refined oil products than any other foreign supplier (including Saudi Arabia), come from your friendly neighbour next door.

To give you an example close to home, Canadian oil supplies the Conoco Phillips’ Wood River refinery which in turn uses crude to produce gas, diesel and jet fuel.

Indeed, measured by Btu’s, the U.S. Embassy in Ottawa has calculated that Canada provides one third of all energy imported into the U.S

Market integration has helped our industries become more profitable through economies of scale and through the law of comparative advantage. But integration is not without its challenges.

Last August we saw blackouts beginning in Ohio roll north into Ontario and east into New York causing over a billion dollars in lost production.

There is another example of national significance: the Canada-U.S. beef industry has been highly integrated for well over 10 years. Last summer, in Canada, a case of BSE was discovered, followed last December by a case of BSE found in Washington State.

By working cooperatively together and adopting a strictly science-based approach -- not one based on the politics of protectionism -- we can ensure the safety of North American beef. We will also be able to re-open our common export markets, especially those in Asia where consumers understand that North American beef is just that - North American.

In addition to easing economic integration, NAFTA has also made all of us more competitive. We have had to make ourselves leaders in innovation and magnets for investment and talent.

Canada has taken a number of steps over the last 10 years to make that possible. We started by bringing our own financial house in order -- chronic deficits have become sustained surpluses and debt has been placed on a downward track.

In fact, Canada was the only G-7 country to record a surplus in 2002 and 2003. According to the OECD, Canada is projected to be the only G-7 country to record a budget surplus in 2004 and 2005. Also, Canada’s total government debt burden declined to an estimated 35 percent of GDP in 2003 and according to the OECD, it is expected to be the lowest in the G-7 in 2004.

(Some things are different north of the border!)

Thanks to fiscal discipline, the government was able to implement the largest corporate tax cut in Canadian history and to create a growing tax advantage for Canadian businesses that will foster economic growth and job creation.

The average corporate tax rate in Canada is now below the average U.S. tax rate and, if both countries stay on their current courses, it will be more than 6 percentage points lower than the U.S. rate by 2008.

Canada invests heavily in education and innovation, and has become a pivotal player in many sectors of the new economy: the high-tech sector, biotechnology, multimedia and fuel cell technologies.

These changes occurred under the careful stewardship of Paul Martin when he was our Finance Minister. Today, as our new Prime Minister, he has made it clear that Canada will continue to reduce debt, increase our competitiveness and focus on developing Canada’s new economy.

American, European and Asian investors share my conviction that Canada is an attractive place to invest. This reflects their confidence in our competitive economy, skilled workforce, first-class infrastructure and cost competitiveness.

And because of the absolutely integrated nature of the economies of our two countries, Canadian competitiveness does not threaten U.S. employment. In fact, the U.S. is running a healthy surplus with Canada in trade in services, meaning that we Canadians have more to fear from outsourcing to the U.S. than the reverse.

Prime Minister Martin recognizes the importance of the Canada-U.S. relationship, and has made it a central priority. He created a new cabinet committee on Canada-U.S. relations, which he chairs personally . He has appointed a parliamentary secretary to focus exclusively on our relationship.

And Canada is expanding its network of consulates throughout the U.S., adding some 9 consulates over the next twelve months. In St. Louis, we will be looking for an honorary consul in the next year.

To summarize: my message today has been to illustrate that the Canada-U.S. partnership is essential to our mutual security and prosperity.

We are fighting terrorism together on foreign shores and on our own. And we have developed innovative procedures to make our border at once more safe and efficient.

We initiated the Free Trade Agreement between Canada and the U.S., and then had the good sense to extend it to Mexico in the form of NAFTA. These free trade agreements have surpassed our expectations in every respect.

And to better our quality of life, we have jointly safeguarded our shared environment for almost a century. And we are pleased to work in partnership with the state of Missouri in protecting and conserving our precious migratory waterfowl; and in common cause against ill-conceived water projects in North Dakota, such as the Garrison Diversion Project and the Devil’s Lake outlet.

To be sure, Canadians and americans will remain indispensable neighbours in the manner that President Truman described. And in so doing, I believe, will continue to provide an example to every country and a pattern for the future of the world.

Thank you.