Home Border Cooperation Key Border Speeches Canadian Ambassador to the United States, Michael Kergin, to the Joint Industry Group 2002 annual meeting, in Washington D.C.

Canadian Ambassador to the United States, Michael Kergin, to the Joint Industry Group 2002 annual meeting, in Washington D.C.

Washington, D.C.
5 March, 2002

Thank you very much for that warm welcome. And thank you for inviting me to this very distinguished gathering.

The Canadian Embassy in Washington has worked on many advocacy issues common to members of the joint industry group - in particular those related to cross-border trade. We are always keen to hear your views, and follow your impressive advocacy efforts with strong interest.

You know, we Canadians are very proud of our Olympic gold in ice hockey. After all, 50 years is a long drought!

Both the women's and men's finals were great contests between North Americans, between family, if you will. The men's, in particular, was a clean, good game where the contestants genuinely congratulated each other after the final buzzer.

I believe that it was symbolic of the relationship between our two countries: tough rivalry while the game is being played but a recognition that the fundamental respect and friendship between us are more important than the game itself.

Yes, we have some trade disputes - but the basic strengths of our relations greatly outweigh the irritations of commercial competition which affect less than 5% of our trade.

My brief remarks today are on the state of the Canada-U.S. economic relationship following September 11th.

And I want to focus in particular on what these events mean for business interests like yours which rely on the efficient management of the Canada-U.S. border.

This is an issue that I have been working pretty aggressively in Washington since well before September 11th.

We have made some good progress with the Bush Administration - as I will explain - but I feel there is a real partnership to be exploited with the business community... on both sides of the border.

My only regret is that I didn't have a chance to enlist Canadian figure skaters Salé and Pelletier - in support of my border propaganda, given the media coverage they have enjoyed in this country.

Those two could have those trucks and passenger cars moving at warp speed between Detroit and Windsor!

Canada and the United States have for many years been valuable partners in prosperity - our shared histories are defined by our cooperation, commerce and comity in the creation of wealth by the citizens of our two countries.

And what is unique to both our countries is that it is the people who have made the difference.

From the 19th and 20th centuries the Canada - U.S. relationship has been driven bottom up by neighbours, family and friends on both sides of the border.

Our democratic governments merely followed the people's direction and codified their cooperation in a series of model agreements and institutions in such sectors as: environment (IJC); defence (PJBD - NORAD); the FTA; and latterly, the extraordinarily successful NAFTA.

Let me begin, however, on the subject of North American security - because without a mutual confidence that we can assure our common space against criminal or terrorist threats, our economic partnership would be gravely undermined.

There is a very positive story here - one which merits some detailed examination, as it re-enforces our tremendous economic linkages.

The Canadian government's response to the terrorist threat has been swift and comprehensive. Shortly after the tragic events of September 11th, Prime Minister Chrétien established a new cabinet committee on anti-terrorism chaired by our Foreign Minister, John Manley.

In the following weeks Canada invested in new technologies and additional personnel to boost security. We froze terrorist assets and introduced legislation to impede terrorist fund-raising.

Landmark legislation has sharpened the teeth of Canada's law enforcement agencies with additional tools to shut down terrorist organizations.

The most recent federal budget, approved before Christmas, contained US$ 5 billion over five years in expenditures directly associated with security and border-related initiatives - a significant strategic investment on Canada's part in safeguarding North American space, in areas such as policing and intelligence, defence and critical infrastructure, and, of special interest, customs and immigration services.

In fact, if you calculate Canadian GNP as one tenth that of the U.S., this would represent $50 billion comparatively in U.S. terms. A healthy chunk of change.

And armed RCMP officers are now present on many Canadian flights - in particular those destined for the United States.

Taken together, these measures constitute an important message from Canada to the American people: Canada is - and will always be - a steadfast bulwark in America's homeland defence.

Why would we not be - living next to the most successful country in the world?

It is in both countries' interests to succeed in the war against terrorism; it is in both our interests to cooperate in protecting the citizens of our countries; and it is in both our interests to ensure that these efforts do not detract from our economic partnership.

So how do Canada-U.S. bilateral relations fit into this new environment? For me - indeed for all Canadians - this is a crucial question.

My assessment is that these terrible events have not changed in any way the fundamental commonalities binding our two countries.

Canada and the United States continue to share the largest trading relationship in the world. And we were dramatically awakened to the vulnerability of this trade by the massive delays and line-ups at the border on September 12.

One and a half billion dollars worth of business crosses the Canada-United States border every single day - by far the world's largest and most comprehensive trade and economic partnership.

We are each other's most important export market. Over 25% of U.S. goods exports end up in Canada. That's more than the United States exports to all of the member states of the European Union combined.

And Canada is an important destination for U.S. investment.

Why is that?

Well, a healthy Canadian business climate for a start. A study released last month by the well-known firm KPMG named Canada the number one most cost-effective country in which to do business.

Aside from savings in labour, energy, transportation, land and construction costs, Canada also provides an inviting and familiar place for Americans to do business. Our corporate tax rates are lower than in the U.S.! And we are working on lowering income taxes!

The government's financial health is sound, due to balanced budgets and debt repayment; in fact, Canada's debt levels are falling at the steepest pace in the G-7; inflation is low and stable; and interest rates are at a 40-year low.

Before September 11th, many of us laboured hard to reduce the cross-border cost of doing business.

Average non-tariff border costs represent approximately 5% of the final invoice price of a given product. And I understand that more trade-sensitive industries calculate the cost as high as 10-13%.

Many of our two countries' production facilities are integrated. And global competition is tougher than ever.

We must reduce cross-border transaction costs - by these I mean artificial tariff rates, undue delays in delivery schedules and outdated border infra-structure. If we impede our border trade, it is our competitors in Europe and Asia who will gain global market share...at North American expense!

So a cheaper and more secure border is essential to our economic well-being. The border our two countries share should no longer be a line which business views as an obstacle.

To the contrary - with the appropriate safeguards provided by information technologies, the border should be a facilitative element of the supply and assembly chain.

One need only look at our automotive and auto supply industry as an example of the highly integrated nature of our economies and the importance of an efficient border.

According to a recent industry study, a typical North American assembly plant revenue generation is approximately $1.5 million per hour. One lost hour of assembly output due to a parts shortage can cost approximately $60,000 per hour in lost profits. That is a tax on business that nobody can afford!

I'm therefore pleased to report today that both Canadian and U.S. governments are committed to a smart border: that means, "more user-friendly to friendly users."

The Director of Homeland Security, Governor Tom Ridge, and Deputy Prime Minister John Manley have launched a process that seeks to revolutionize border management.

Their goal is to adopt measures to ensure the secure flow of goods across your northern border, and to announce these undertakings by the time President Bush meets Prime Minister Chrétien at the G-8 summit in Alberta this June.

These discussions are founded on some very key elements -

• the concept of our border can be redefined. The "border" we share is now a line of defence much further out than our shores.
• sound risk management principles using tracking technologies can fast-track and even preclear low-risk people and goods.
• we can establish complementary systems for commercial processing, including audit-based programs.
• we can partner with industry to enhance security.
• and we should pursue efforts such as preclearance of goods and passengers at our shared border not for commercial reasons - but for security reasons.

The benefits are obvious:

• scarce security resources are devoted to where they are needed: the dubious users;
• reliable users will fast-track through designated lanes and so maintain their just-in-time delivery schedules;
• and we reduce pollution from trucks idling in the midst of border communities.

Another initiative - announced by Commissioner Bonner just recently - is a joint target and analysis unit for marine in-transit containers arriving at Canadian and U.S. seaports.

By ensuring good port inspections, aided by reliable pre-arrival information, container traffic can be sealed and shipped directly and quickly throughout North America without subsequent border delays.

These are indeed new and exciting times. And our efforts on these issues are more important than ever before. We must turn the challenges of 9/11 into an opportunity!

As Canada's Ambassador in Washington, I am well placed to pursue this agenda in both our capitals. But I cannot do it alone.

Your views on border management resonate from Washington to Ottawa.

In 1994 many of you gave your crucial support for NAFTA. And the border requires the same leadership now. Border users - some of whom are in this room - can make the case for better border management - they must be the champions who carry the border needs to the Administration and Congress.

I know that your voices will be heard in Washington. They must also be heard in areas further removed from the border.

For example, 38 states of the union count Canada as their top export destination, and these Americans are unaware of how big a role Canada plays in their states' economies.

They are not always aware how a border for the 21st century, which optimizes the access of goods, services and people while safeguarding our North American homeland, can bring great benefits to their everyday lives.

In the end, our common border has become much more than just bricks, mortar and pavement:

More than a quantitative unit, it is a statement of values; it is a key component of our North American security; and it is crucial to both countries' economic well-being.

In conclusion, I have shared with you some observations and assessments of the state and direction of Canada-U.S. relations in the wake of the September 11th tragedies.

I have described Canada as a steadfast bulwark in defending the North American homeland; as a stalwart ally in the global war against terrorism; and as a partner committed to North American prosperity. Our interests are shared; our objectives are clear; and the future of our great partnership is more promising than ever.

As users of a Canada-U.S. border for the 21st century, you can make a difference in achieving this dual reality, security and fluidity at the border.

Thank you.