It is a great pleasure to have the opportunity to speak to a group of Australian and Canadian businesspeople who are looking for ways to develop stronger partnerships with each other in this newly globalized world.

In fact, I had the honour to be present yesterday when several commercial deals were signed between Canadian and Australian firms, so I am very pleased that this trade mission is meeting with success.

What I think is quite exceptional is that businesses in Canada and in Australia are no longer looking at each other merely as competitors, but as potential partners.

The fact is that big players, like the U.S., Japan and the E.U. [European Union], are the real competitors in highly contested markets like Southeast Asia or even the U.S. I believe that stronger partnerships between our enterprises give each of us more leverage for growth.

This applies in several different sectors such as electric power and new energy, the environment and the new environmental industries, biotechnology and health, information and communications technologies, aerospace, agri-food, resources, construction and education, and particularly tele-education -- something both of our very large countries want to develop even further.

Australia and Canada -- Lots in Common

Our more than ample geography is not all that we have in common.

Our federal structures are very similar.

We share common political, legal and business practices. And we share a lot more. For example, we share diplomatic offices in several different spots around the world. The Canadian ambassador in Phnom Penh works out of the Australian embassy. The Australian high commission in Bridgetown is located in the Canadian chancery. The Australian embassy in Venezuela is co-located in our chancery in Caracas.

We understand and trust one another. We can trade in intellectual and cultural products as easily as we do in wine or wool or airplanes.

And, we do a lot of business together already. Canadian companies such as CAE Electronics, Nortel, McCain Foods, CanWest Global Television, Hydro Quebec, and many more have significant investments in this country. In fact, something like 160 Canadian companies have a "bricks and mortar" presence in Australia.

And, it goes both ways. Australian companies such as the Ridley Corporation, Mayne Nickless, Cash Converters, BHP Minerals, North Ltd., and several others have substantial investment in Canada.

And it is relatively easy to do business with each other -- despite the great distances.

We can also rely on one another's infrastructure, and business and other communications systems, as readily as we do our own. This is particularly important to the great numbers of small and medium-sized enterprises that play such a central role in the Canadian economy. They create the largest number of jobs, contribute most to our GDP [gross domestic product] and make up the majority of our exporters.

Canada -- A Trading Nation

Per capita, Canada is now one of the largest trading nations in the world. About 43 percent of our GDP is directly linked to trade -- that is up from 25 percent of GDP a short 10 years ago! And, this is four times more, proportionately, than the U.S., three times more, proportionately, than Japan, and more than twice that of Australia.

One in three jobs in Canada is now related to our trading activities. In fact, roughly 80 percent of the two million net new jobs in the Canadian economy since 1993 are attributable to our success in international markets. This is a good argument for continuing to increase our marketing efforts abroad -- and that is why we are here!

Well, that's at least part of the reason I've come to Australia. The other reason is to attend next week's APEC Trade Ministers meeting which, as you know, is being held this year in Darwin. I hope we will be able to make some progress on several different trade facilitation measures and many other questions of concern to Pacific Rim countries.

Of course, we APEC trade ministers think we are very important, and that the world will be watching everything we do! But, I suspect that the world will be more interested in watching the Olympic Games that you will be hosting here this summer! Olympic events are always fascinating and, on behalf of the Government of Canada, I offer my congratulations and very best wishes for success. I also want to offer congratulations and best wishes on Australia's first century as a country -- as of January 1, 2001!

And I cannot mention that without also mentioning another similarity between us, which is that we are two of the oldest members of the Commonwealth, and we both moved from colony to nationhood without a civil war or other major upheaval. There are not very many countries that can make that claim!

Canada and Australia are both what are termed "middle powers." As such, without immense economic clout, or even military might, it is in our interest to have a strong rules-based international trading system. Otherwise, we are at the mercy of the largest nations whenever they want to flex their muscles. That is why both of our countries are strong supporters of the WTO [World Trade Organization] process.

"Battle in Seattle"

But, as the so-called "Battle in Seattle" showed -- the process sometimes hits some very significant bumps! Many people seem to think that those talks failed to reach agreement on the launch of new trade negotiations because of the demonstrators out on the streets who were there to protest against globalization.

I don't see it that way at all! I firmly believe that even without the demonstrators, those talks would have failed -- and for the most traditional reasons -- clashes between North and South, and differences between governments on what they perceived to be best for their own citizens in an international agreement on trade.

It should be remembered that we also failed in Geneva in 1982 to launch new trade talks. But we were able to launch them in 1986. We failed in Brussels in 1990 to conclude the same Uruguay Round talks, but we ended up concluding them a couple of years later.

So, there is nothing new in international trade talks being delayed and I remain confident that talks will eventually get underway. We are certainly very busy working to help ensure that happens.

Internationalization and Globalization are Different Phenomena

I think the protests in Seattle were misdirected, largely because there is a great deal of confusion between internationalization and globalization. These are two very different phenomena.

To me, the new era of globalization -- which has only been around for ten or fifteen years -- has two births -- one economic and one political.

Economically, its birth was the day in the mid-80s that we connected electronically the three major stock exchanges of the world -- Tokyo, London and New York.

Politically, its birth was the day that the Berlin Wall fell in November 1989.

Globalization is radically different from and even contradictory to the more traditional phenomenon of internationalization that dates back several millenniums. What happens at the WTO has very little to do with globalization. To me, what the WTO discussions are all about is internationalization -- states dealing with other states and governments dealing with other governments -- making agreements to co-operate on everything from trade to reducing tensions and conflict around the world.

Internationalization Affirmed the Role of States

Following World War II, Western governments decided that by making countries more interdependent, we had more chance of making sure that peace would last. Economic growth and economic development were also part of the plan of internationalization.

Internationalization, then, is governments deciding to get together and negotiate between themselves some facilitation and accommodation between each other. The very word says it -- "inter nation" -- which means between nations, between countries.

The very term recognizes and affirms the existence of borders. It also recognizes the legitimate authority of the government to carry out those negotiations, and the authority of each government, within its own borders, to implement international agreements.

It is a vertical form of management. It looks like any organization chart of any company. At the top are the presidents or prime ministers, and then there are the elected representatives, the Supreme Courts, the state and provincial governments, and so on right down to the individual citizen.

Globalization is Qualitatively Different

Globalization is of a qualitatively different order. Whereas internationalization is vertical, globalization is horizontal. Globalization is about the elimination of borders. It ignores political and economic borders just as fast as new technological developments will allow. It also challenges, rather than affirms, the role of government, even to the point of questioning whether the state has any role in it.

Globalization is the result of advances, mostly in the areas of information technologies, trade liberalization and deregulation. So, globalization ignores not only economic but also political borders. In this new era, corporations integrate functions from one space and one country to another, independently of borders. They operate as if borders do not exist.

To me, globalization is the triumph of horizontal management, of horizontal power, against the vertical power of the state on a given territory, and these are very, very different forces.

Seattle -- Collision Between Two Worlds

Even if Seattle failed within the conference hall, as I said, and not because of the demonstrators, this does not diminish the fact that many of the concerns that were expressed in Seattle were legitimate.

I view what happened in Seattle as a collision between two worlds that are now juxtaposed on the global scene around the world. First, there is the world of the international order that was reflected by 135 trade ministers meeting inside.

And then there was another world outside -- one that most people saw for the first time in Seattle. It was a very bizarre sort of world -- a world of an infinite number of participants, not at all well codified, not at all predictable, going in all kinds of directions. In comparison to the world characterized as the international order, I could refer to this world as the "global disorder."

Globalization is Not Just About Corporations

Globalization is not merely a corporate phenomenon. Greenpeace is just as well connected around the world as IBM or Microsoft -- and they use the same communications tools to stay in touch and organize themselves as the biggest transnational corporations.

Indeed, many of the people outside on the streets of Seattle belong to transnational organizations, most of which are gaining a lot of power and a lot of influence throughout the world. And, like the transnational corporation, they operate as if there were no borders.

It is what I call the multicentric world. It has a lot of different centres and then goes in all kinds of directions. But that is indeed the real world of globalization. I don't want to give the impression that I think this new multicentric world is all bad -- not at all.

Much of it is very good. For example, the aid provided by NGOs [non-governmental organizations] to people in need, wherever they may be in the world, surpasses the assistance provided to those people through the entire network of UN institutions, excluding the World Bank and the International Monetary Fund [IMF]. And, the growth of NGOs in the environmental field is amazing.

The attention that NGOs pay to global problems extends beyond environmental issues to the survival of indigenous peoples, social justice, human rights and the economy. As we know, the NGOs have some harsh judgements about world debt, trade and the legitimacy of the role of the banks in international development. In a number of fields, the bargaining power of the biggest NGOs can have an impact on a state's actions.

So, the world of globalization has created, or at least greatly empowered, the very players who are attacking globalization. And they emerged in Seattle for the first time in a very forceful way. The irony is that they came to decry the very movement that brought them there!

And with the juxtaposition of these two worlds, we have a very complex consideration of allegiances. The world of the state is based on the exclusivity of its citizens' allegiances, and depends on its capacity to act while fully engaging a given number of individuals.

The multicentric world is based, on the contrary, on a network of allegiances that are not at all well codified, whose nature and intensity depend on the free will of the players concerned.

When these two worlds met in Seattle they didn't like one another very much. And I don't think they understood one another at all! The predictable outcome was, and remains, considerable tension, which I believe we will be living with well into this century.

Of course, governments will have to deal with it, but this tension is not exclusively between governments. It also involves competing sectors of society, industries, and entire socio-political, cultural, ethnic and economic blocs, as well as traditional nation- states.

Too many people think globalization is a policy that governments have dreamed up, and they don't understand that this is something that we, too, are confronted with. And, it is not something that is being imposed by corporations or big business, because many of them are also finding it very tough to deal with.

It used to be that multinationals had to repeat all the functions in every country with big, heavy corporate structures. Nonetheless, they were very big and very comfortable in the old international order. But today, they are being replaced by global corporations that integrate functions horizontally, across borders, wherever they find it most attractive -- and most profitable -- to develop.

So the multinational, too, is being challenged by globalization. It is being replaced by the far more flexible global company. And the multinational is beginning to look like a dinosaur now. And that's the different kind of world in which we are living.

Political Renewal

In my opinion, far from representing the final collapse of a trade-negotiating process -- which will continue no matter what everyone says -- Seattle is probably the starting point for a process of political renewal.

In Seattle, we were reminded that the purpose of economic activity is to improve people's lives. Political leaders were sent back to do their homework with instructions to be true to the humanistic values that the West strives so hard to promote. And what we saw at work was another way of doing things whose effectiveness is now beyond question.

It was also the demonstration of the differences in reaction time between governments and globalized organizations. We're slow, they're fast!

We have to consult with our citizens, we have to get elected, we have to ensure that programs and policies are democratic and democratically applied. We have charters of human rights, we have to consult with regional groups in every country, we have to consult with ethnic communities and we have to see what the judges will think. It takes us an eternity.

Meanwhile, globalized organizations can operate much more quickly because they don't have what could be called the "encumbrances of statehood" -- the need to be responsible to all its citizens more or less equally. This phenomenon, wherein the powers of democratic states is diminished while the power of horizontal, globalized (but non-democratic) organizations is on the ascendance, is known as the "democratic deficit."

What this analysis leads us to is the recognition that we, as governments, will have to reinvent ourselves if we want to be effective. We must, ourselves, use the new technologies to conduct politics and political consultation better and faster.

The Challenge of Exclusion

One of the first challenges -- and perhaps the biggest public policy challenge facing governments around the world today -- is dealing with globalization's most notorious spin-off effect -- exclusion. I believe we must develop creative ways to more effectively respond to this troubling phenomenon.

To understand the problem of exclusion, we have to understand how it differs from problems faced in the past. The basic thrust of globalization was moving from industrial capitalism to financial capitalism.

Industrial capitalism has certainly brought humanity to the highest level of economic, social and cultural development we've ever seen. It has brought us unheard-of prosperity which most societies have learned to redistribute fairly effectively. But industrial capitalism has also brought with it exploitation, which, I am sure, requires no definition.

Globalization, on the other hand, has brought with it the first generation of financial capitalism, where we create wealth very, very differently. In financial capitalism, you don't need as many people to create wealth. As a result, some people end up being excluded altogether.

What's the difference between exploitation and exclusion?

The critical difference is that when you're exploited, your labour and muscle are still needed by the industrial capitalist system. As such, you can organize, argue for your rights, get a union to fight for you, or get better labour laws by voting for this party or that party.

The phenomenon of exclusion is far more radical than the phenomenon of exploitation. When you are excluded, you have no one to fight with, and no one to bargain with. You are on the sidelines altogether, ignored and forgotten.

So, we must work together to avoid the creation of a permanent class of "excluded persons" in our societies. I think this may be the biggest challenge facing governments in the next years.

We must also fight exclusion at the international level, because we should not forget that exclusion can affect not just individuals but also whole societies, and this can have disastrous consequences for all of us in the longer term.

Aside from the obvious and, I believe, compelling moral imperative, there is sound economic logic for trying to fight exclusion. If, because of our great progress, we allow people to be excluded, who will buy our products? How will we generate more and more wealth and prosperity for ourselves if we have fewer and fewer people to purchase our products and services?

We talk about carrying out sustainable development that will protect our environment for future generations. We also need to talk about building economies and societies that will themselves allow for the sustainable development of our own populations.

Education is Key to Success in Fight Against Exclusion

That is why I believe that education, which is the basis of all human development and at the foundation of the battle against exclusion, becomes of paramount importance.

Fortunately, today's advanced technologies make it possible to substantially enhance the power of education and bring it to more people than ever before in history. In other words, for although the new technologies can generate exclusion, they can also combat it.

This is a happy paradox whose full potential must be tapped by the political level in every country. We need to empower people to equip them with the skills and the knowledge necessary to remain part of the economic and social mainstream.

New Ethic Needed -- Women Will Play Leading Role

I also believe that women will be central to many of the solutions that we will come up with to deal with the new phenomenon of globalization. I say that because I believe there is now a new sense of responsibility developing what, in feminist literature, they call the ethic of care.

And I believe this means we are moving beyond the ethic of justice -- which has been with us since the Enlightenment -- into a new ethic of care.

We used to think that justice was the pinnacle for every society to reach for -- that every individual was treated equally under the law. But, in this new age of globalization -- when states don't make all the rules and all the laws under which their own citizens live -- there is a need to expand our concern for equal treatment under the law within a given state into a broader and wider concern for the well-being of people everywhere.

I am very optimistic that this will happen. It may not be governments themselves who lead the way in every case, but I believe governments, of necessity, must play a critical role in the development of a new ethic of care.

Future of WTO

I am also very optimistic that we will be getting into another round of trade negotiations through the WTO -- perhaps not next week or next month -- but those talks will take place.

We must and we will continue to have a rules-based international trading system that evolves to meet the changing needs of individuals and businesses in all WTO countries -- including Australia and Canada. I should add that soon the WTO will also include China. Indeed, this will be a very significant development for the beginning of the 21st century!

It will also be a very significant development for you here in Australia, given your proximity to this giant new economy emerging in Asia. In fact, many Canadian companies are locating themselves in Australia, not only to get into your domestic markets, but also as a launching point for their wider penetration of the Asia-Pacific market.

We think this is one of the most significant benefits that Canada and Australia have to offer each other -- regional bases and launch points for the exploration of each other's neighbouring markets.

For Australian firms, an establishment in Canada puts them into the greatest unified free trade area in the world, with an affluent population now approaching 400 million and a combined GDP of 11 trillion dollars, roughly equivalent to that of Western Europe!

The reason Australian companies should locate in Canada is that our business costs are much lower than those of the United States. This was borne out in an independent study by the international accounting firm KPMG, who did a comparative study on the typical costs of doing business in the G-7 countries plus Austria.

We were delighted that the report concluded that, across the nine mainstream industrial sectors which it examined, business costs in Canada are consistently among the lowest, while in leading-edge, high value-added sectors such as software, the Canadian advantage is even more significant. So, I want you to know you have an open invitation!

Closing -- Working Together Will Benefit Both Countries

In closing, I want to say that I believe we can and we must continue to work together, not as competitors in every area, but as partners. I believe we will all do more business if we work together and use each other's strengths and each other's expertise to develop the new markets and the new opportunities that exist in almost every part of the globe.

Our two governments need to continue to work closely together to help ensure that WTO negotiations do get back on track, and do result in a stronger rules based international trading system.

Our common heritage, our common values and our common goals have made us friends. I sincerely hope that over the coming years we will build even stronger partnerships that will further cement that friendship.

Thank you.

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