Home The Ambassador Canada's chief representatives to the U.S. Michael Kergin Ambassador Kergin's Speeches December 9, 2004

Canada and the United States: Engaging the new Administration -- where do we go from here?

Remarks by Michael Kergin, Ambassador of Canada to the United States to the The Vancouver Board of Trade

Vancouver, British Columbia
December 9, 2004

The first Bush Administration was faced with 9/11, an economic downturn, and profound differences of opinion over social policy issues. These challenges remain in the second term but the work continues. Our joint security and prosperity remain the highest national priorities for Canada and the U.S. With inauguration of the new Administration around the corner, Ambassador Michael Kergin offers an insider's perspective on Canadian plans to engage the U.S. on key issues such as trade disputes, border management, NAFTA, and international uncertainty.

Thank you for your kind introduction.

I am delighted to be here in Vancouver today. My own background is rooted in Western Canada. Indeed, my grandfather, W.T. Kergin, arrived in Port Harding in 1898 as a Missionary doctor. He then set up practice in Prince Rupert at the turn of the century, living there most of his life until he died in 1960 at his summer place near Nanaimo.

His son, Bill, practised general medicine in Rupert all his life and died on Salt Spring Island in 1972. My Aunt Margaret, after living in China from 1936 to 1951, returned to New Westminster residing there until her death in 1985.

And, I spent many happy summers with my Grandfather in Prince Rupert and on Vancouver Island.

So British Columbia remains my nostalgic Canadian home.

It is a particular honour for me, therefore, to address members of the Vancouver Board of Trade. Your organization is one of the oldest and most active trade associations in Western Canada with international affiliations reaching across the globe.

Vous augmentez votre rayon d'action pour profiter de nouveaux débouchés, en y employant de bonnes idées, du bon sens et de la confiance. La Chambre de commerce de Vancouver est un modèle pour l'ensemble des relations entre le Canada et les États-Unis.

You are broadening your reach to take advantage of new opportunities – And employing good ideas, common sense and trust. The Vancouver Board of Trade truly is a model for the broader Canada-U.S. relationship.

The state of the Canada-U.S. relationship is solid. As President Bush said in Halifax last week: "The United States and Canada are bound by history and geography and trade and by our deepest convictions. With so much in common and so much at stake, we cannot be divided. I realize, and many American's realize, that it's not always easy to sleep next to the elephant. As a member of Canada's parliament said in the 1960s, the United States is our friend, whether we like it or not and when all is said and done, we are friends, and we like it."

The first Bush Administration was faced with the tragedy of 9/11, engaged in two wars, and endured an economic downturn. While the residue of these challenges remain for the duration of the second term -- the combination of winning the election, the popular vote, and majorities in both the House and Senate puts the President in a strong position to move his agenda forward.

On the foreign policy front, the President will continue to pursue vigorously the war on terrorism and seek to contain the spread of nuclear weapons technologies, especially in Iran and Korea.

At home, the President's agenda is likely to include all or some of extensive social security and tort reform, making his tax cut permanent, and simplifying the tax code, including moving toward consumption based taxes.

The President is also likely to continue a free trade agenda, including efforts to have Congress renew Trade Promotion Authority, that is, fast track authority to rapidly approve bilateral free trade agreements.

Much of this he will need to accomplish in the next 18 months before the midterm Congressional elections of 2006 and his resultant lame duck period.

Importantly for Canada, this administration will continue to work with us to try and lower the transaction costs of cross border business so as to find ways to take advantage of North American economies of scale and complementarities.

On bilateral issues, with the President secure politically and inauguration just around the corner, there is no time like the present to ensure that Canadian interests are put front and centre by aggressively re-engaging the new faces of the Administration at all levels of government.

Importantly for Canada, this Administration will continue to work with us to try and lower the transaction costs of cross border business so as to find ways to take advantage of North American economies of scale and complementarities.

You are all aware that the U.S. is Canada's largest trading partner -- we export more to Home Depot than we do to France. The U.S. is the destination of nearly 70 percent of exports from British Columbia. And this trade is a two way street -- trade equals jobs on both sides of the border.

With this rapid expansion of trade over the last decade, Canadian and U.S. companies are approaching North America as a single market, benefiting from the respective strengths of each country. And businesses on both sides of the border have prospered with this integration. Nevertheless, we continue to have our trade challenges.

Canada has done very well in the litigation in this, the fourth, round of the softwood lumber dispute in the past two decades and a bit. On September 10, the U.S. International Trade Commission reluctantly found that the U.S. lumber industry was not injured by imports from Canada. Without an injury, or threat-of-injury, finding by the ITC, both the antidumping and countervailing duty orders must be terminated and all duties refunded.

If this decision stands, the fourth round of litigation will end in complete victory for Canada. However, the U.S. has recently launched an Extraordinary Challenge and, while we are confident of our case, there is no guarantee that Canada will emerge victorious from this latest legal assault.

No matter how well we do in litigation, we need to recognize the continued relevance of bilateral negotiations which make up the other half of the two-track approach which the Federal Government, in close cooperation with the provinces and the industry, has followed throughout.

The reason for this is simple -- U.S. trade law, as does Canadian trade law, favours the domestic industry. The U.S. lumber industry continues to enjoy strong support in Congress. One does not need psychic powers to predict the real risk of a fifth, costly, round of litigation if Canadian and U.S. parties fail to reach a negotiated settlement. Whether we succeed in negotiating a long-term, policy-based resolution or not, it is vital that Canada's lumber-producing provinces maintain their commitment to market based principles.

In another economic dispute with our southern neighbour, slow progress on the long border closure has been extremely difficult for the Canadian beef industry. In my view, unless resolved soon, this risks having a corrosive effect on the interdependence of the larger Canadian-U.S. economic relationship.

Prior to the discovery of a case of BSE in Alberta in May of last year, followed by a single case in Washington State later that year, the North American beef industry was fully integrated, thereby benefiting from the efficiencies of complementarity and comparative advantage.

As a result of delays in re-opening the border, Canadian industry and government have reached a "tipping point" where decisions taken now will impact the entire North American livestock and meat industry: the industry has already begun to fundamentally restructure in order to reduce its previous reliance on live animal exports to the U.S. (for example, increasing domestic slaughter capacity); the Canadian government may need to adopt more strict regulatory measures than the U.S. in order to permit Canadian producers to penetrate new markets in Asia and beyond.

The announcement a few weeks ago that the formal Rule permitting process to allow access for Canadian cattle has been initiated by the Administration is a positive development -- it is hoped that this will begin the final step in re-establishing by next Spring an integrated North American beef industry. We will keep pressing our American friends hard on this issue!

Disputes such as softwood and BSE garner much attention. And while I do not in any way wish to diminish the gravity of our trade disputes, I should point out that they generally represent a small proportion -- less than 3% in dollar terms of the overall commercial activity between our two countries. It is precisely because they are anomalies and hurt specific sectors so hard that they garner so much attention.

Nous avons célébré cette année le 10^ede l'ALENA. Le succès de l'ALENA a transformé notre paysage économique plus que nous n'aurions pu l'imaginer. La prospérité économique du Canada va continuer de se définir par rapport aux succès que nous remporterons dans un marché nord-américain de plus en plus intégré et qui fonctionnera bien.

The importance of "branding" Canada as a security partner is vital. In my view, we have stepped up to that plate.

In many respects, the terrorism attacks of 9/11 have, in fact, drawn Canada and the U.S. even closer. We are partners in the war against terrorism both within North America and abroad. Our military contributions in Afghanistan have further cemented the strong ties between the Canadian and U.S. armed forces. Just as our peacekeeping and policing contributions in Haiti have reinforced our shared regional policy objectives in that part of the hemisphere.

Our partnership in the defence of North America is a model, starting with our joint participation in NORAD. Within NORAD a Binational planning group is developing coordinated contingency plans to respond to possible crisis scenarios, including terrorist attacks and natural disasters.

Our border security priorities include the ongoing implementation and development of the Smart Border Action Plan, signed by Canada and the U.S. in December 2001. We are deploying biometrics on passports; further streamlining our refugee determination process; and together seeking opportunities to apply the principles of the Smart Borders approach to Mexico and more widely on an international basis.

NEXUS and FAST, the Canada-U.S. programs for low-risk, pre-approved travellers and commercial goods, are now up and running at over 10 high volume border crossings. We also have 23 Integrated Border Enforcement Teams, made up of Canadian and U.S. law enforcement representatives, in 15 geographic regions across the land border.

And, you should be aware that the IBETs concept, as it is known, was invented right here in BC at the border with Washington State!

Tighter security is not the only motivation behind the smart border: done right, it will also improve efficiency, reduce delays, and lower transaction costs.

Here on the West Coast, we need not look far for some excellent examples of corporate leadership seeking both to enhance security and accelerate product handling. The Port of Vancouver remains a highly competitive seaport, generating 62,000.

The Port has taken a leadership role on many fronts. For example, it was one of three ports which allowed U.S. and Canadian Customs inspectors on site to target high risk containers approaching North American shores.

Why was that a smart move? Because the growth in global trade will come from the Pacific Rim. A lot of that trade will move by sea containers. And a significant portion of those containers will move through Vancouver in transit into the heartland of the U.S. via CN and CP rail cars and by road via the Pacific Highway to points south and east.

The Vancouver Airport, home to one of seven U.S. Preclearance operations in Canada, has also aggressively contributed to the region's economic engine. It is here that Canada will pilot NEXUS Air program that will expedite the arrival of enrolled, pre-screened travellers -- a welcome relief for any business traveller in today's hectic air travel environment.

These are just some of the examples of how Canada "gets it". These steps have not been easy or cheap. But each of these programs is part of a larger strategy to make our common border more user friendly to friendly users, thereby enhancing North America's competitive advantage vis à vis the rest of the world.

These bold moves are already strengthening our capacity to engage in what we diplomats call advocacy. A more popular term, of course, is lobbying.

I would conclude by predicting that the medium term outlook of Canada-U.S. relations is positive. We will get our lumber and beef moving more freely in the next four to six months. We will continue to improve border security and, absent another 9/11 style attack, enhance our access -- provided we invest sufficiently and rapidly in transborder infrastructure.

I am confident also that the three North American Governments will effectively use the current political window to deepen and broaden the achievement reached under NAFTA. The three amigos must capitalize on their economic complementarities in order to compete efficiently in the global marketplace.

Otherwise Asia, led by Chinese dynamism, and the EU, soon to recover from the absorption of new Members from Eastern Europe, will begin to pose a serious threat to our global market-share. Like the proverbial cyclist, we North Americans must continue to pedal and progress or we risk falling over, bicycle and all.

This, then, is the challenge which lies ahead of us as we approach the inauguration of President Bush's second term in office. Impelled by geography, economics, security and a common love for democratic values, we Canadians have little alternative but to develop even further our North American partnership. To do otherwise would be to miss an historic opportunity with the risk of isolating ourselves behind a border increasingly impeded by security measures.

Prime Minister Martin stated in his toast to President Bush at the official dinner last week at Ottawa's Museum of Civilization: "The border we share has not been a barrier, and it must never become one. It is a reflection of our historic friendship and a gateway to our future prosperity. Its openness speaks to the trust and the goodwill we have forged as people and as nations."

I, for one, expect that this trust and goodwill will continue to endure between our two countries.

Thank you. Merci.