Home Border Cooperation Key Border Speeches Canadian Ambassador to the United States, Michael Kergin, to the Mid America Committee and the Canadian Club of Chicago

Canadian Ambassador to the United States, Michael Kergin, to the Mid America Committee and the Canadian Club of Chicago

"Canada and the United States:
Safeguarding security and prosperity, at home and abroad"

Chicago, Illinois
27 March 2002

Thank you very much Richard [Reising] for that kind introduction. And thank you Allan [McNally] for being such a gracious host today. You have all been very kind in making today's event possible. It is a great honour to have this opportunity to share with the Chicago community some of my thoughts on the current state of the Canada-United States partnership.

In a well-known quotation, President John F. Kennedy said of this partnership that: "We share common values from the past, a common defence line at present, and common aspirations for the future, and indeed the future of all mankind... Geography has made us neighbours. History has made us friends. Economics has made us partners. And necessity has made us allies." Kennedy's words ring as true today as they did in 1961 - and the necessity of our alliance has never been more evident.

Canada and the United States are longstanding allies in security and partners in prosperity. And yes, we are occasionally competitors. Canada reclaimed Olympic golds after a long drought in men's and women's hockey - a drought which began well before the 1961 Kennedy quote cited above, I might add!

Since September 11th, our security alliance has become more evident - this reinforcement underpins our mutual confidence that each of us has strengthened our respective countries' defences against criminal or terrorist threats. But let us not forget that it has always been our economic partnership which is the foundation of our shared prosperity. Indeed our histories are defined by cooperation, commerce and comity in the creation of wealth by our citizens.

And 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 respective democracies merely followed the people's direction and codified their comity in a series of model institutions. You all know the sectors: environment (IJC); defence (PJBD - NORAD); commerce (the FTA; and latterly, the extraordinarily successful NAFTA).

I would like to take advantage of this opportunity to discuss with you the current state of our partnership - and to bring you up to date on Canada's role in safeguarding the security and prosperity of Canadians and Americans, at home and abroad.

Let me begin with the most critical issue confronting us today: the war against terrorism. There is some extraordinary cooperation taking place between our two countries (though you might not know it from watching CNN!). I believe that our close collaboration in the security field does deserve some attention.

Canada and the United States share a continent, and we share the responsibility for keeping terrorists out of both our countries and for protecting all our citizens. Canada's response to the terrorist threat has been swift and comprehensive. I want to put to rest any misperceptions: none of the 19 hijackers involved in the September 11th tragedies was directly connected to Canada or crossed over to the USA from Canada. Following September 11th Canada invested quickly in new technologies and additional personnel to boost security. We froze terrorist assets and introduced legislation to impede terrorist fund-raising. We tightened our refugee regulations to ensure improved compliance and surveillance. Landmark legislation has provided Canada's law enforcement agencies with additional tools to shut down terrorist organizations. Our most recent federal budget contained US$ 5 billion over five years in expenditures directly associated with security and border related initiatives. If you consider that your economy is ten times larger than ours, this is the equivalent of a $50 billion investment by the U.S. government. This represents a significant strategic initiative on Canada's part to safeguard North American space, in areas such as policing and intelligence, defence and national infrastructure.

And Canadian energy resources also contribute significantly to U.S. security. Few Americans realize that Canada is the largest energy supplier to the United States - providing over 94% of natural gas imports, 100% of imported hydro-electric power - and astonishingly - more crude and refined oil products than Saudi Arabia. From a national security perspective, one cannot overstate the importance of deriving your largest source of imported energy from a friendly neighbour next door!

Canada is - and will always be - a steadfast bulwark in America's homeland defence. Overseas, Canada is an important contributor to the U.S.-led military coalition in the war against terrorism at sea, in the air and on land: a Canadian naval task group is on station in the Arabian Sea working with the U.S. Sixth Fleet; we have strategic airlift, long-range patrol, and tactical airlift detachments supporting coalition forces; and a full battalion of Canadian light infantry - the Princess Patricia's - are deployed alongside the 101st Airborne in Kandahar; most recently, Canadian special and conventional forces played a leading role in Operation Anaconda, the mission to clear Al-Qaeda and Taliban resistance from the Gardez area.

Both our countries are facing a long-term struggle against the threat of terrorism. And we are both endeavouring to ensure that this vigorous commitment to security does not close down the cherished freedoms of our societies, nor detract from the advantageous economic partnership enjoyed by Canadians and Americans.

After all, as economic and commercial partners, the linkages which exist between our two countries are second to none: 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.

Canada and the United States are each other's most important export market. Over 25% of U.S. goods exports end up in Canada. That is more than the United States exports to all of the member states of the European Union combined! This booming trade benefits Illinois enormously: nearly 40% of all your exports are destined for Canada - Motorola, Boeing and Sears are but a few examples of companies with significant cross-border interests.

Canadian investment in Illinois is also increasing, with companies such as "Canadian National", "IPSCO", "Aux Sable" and "Alliance Pipeline" leading the way. There are also investments that flow northerly - from "ADM" and "BP-Amoco" among many others.

In fact, investing in Canada has never made more sense. A study released last month by the internationally recognized accounting firm KPMG compares business costs in North America, Europe and Japan. It named Canada the number one most cost-effective country in which to do business. And the Canadian economy is well placed to weather the current economic challenges: our financial heath is sound due to balanced budgets and debt repayment; personal and corporate income taxes are falling; in fact, by 2005 firms in Canada will have a 5.4% corporate income tax rate advantage over U.S. firms.

A healthy business climate is one key to the success of the Canada-U.S. commercial relationship. Our innovative approach to trade agreements is another. Together we have reduced the number of barriers to trade between our countries and pioneered innovative international trading arrangements.

Our agreements have served as working models for other nations' agreements and for regional and multilateral trade negotiations.

Two-way trade between Canada and the United States has doubled since the signing of our bilateral free trade agreement in 1989 - and has grown by 74% since NAFTA, which came into effect in 1994. Together we must ensure that these benefits continue to flow. And the government of Canada has an important message for our neighbours in this regard: our mutual interests - on this continent and globally - are best served by free trade in a rules-based system.

Canada has a lot invested in a predictable trading system based on free market principles. That is why Canadians could not understand when last Friday the U.S. Commerce Department imposed a 30% tax on imports of Canadian softwood lumber - an essential element of the home building industry in the United States. This decision, which I can only qualify as protectionist, will add more than $1000 to the average price of a home in the United States. According to the Wall Street Journal, this risks preventing 300,000 American families from qualifying for mortgages. Not good for your economy; bad for ours when, unable to compete against a high tariff, our lumber workers get laid off. Poor economics for both of us because this U.S. government action handicaps the large integrated Canada-U.S. lumber companies in their connection for enhanced global market share - to the benefit of Russian and Scandinavian producers!

As the North American economy weathers this challenging period, we must be careful not to succumb to short term protectionist interests - wherever they may be.

Make no mistake: these occasional disputes are serious enough, and they are very important to different communities in both our countries. But we need to keep them in perspective. We must remember that as big as they are, they touch only a fraction of our total trade. We must not lose sight of the forest for the trees - or in this case the softwood!

And there are other challenges requiring our attention and cooperation. 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%. Production facilities are integrated on both sides of the border. 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 infrastructure. If we impede our border trade, it is our competitors in Europe and Asia who will gain internationally... 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. As Canada's ambassador in Washington, I find myself at the centre of efforts to safeguard this economic partnership in the wake of September 11th. I consider it my responsibility to ensure that interrogation points at the border don't post dollar signs in the boardroom.

The value of goods crossing one single bridge - the Ambassador Bridge which links Detroit to Ontario - is greater than all U.S. exports to Japan, your second largest trading partner.

And that is why it is so important to ensure that cross-border traffic at these bridges, at the border, continues to flow smoothly. It is very much in your interest that the mutually beneficial economic relationship between Illinois and Canada is not disrupted.

Thirty-seven states of the union count Canada as their top export destination, but most Americans more distant from the border are unaware of how big a role Canada plays in their states' economies. These Americans are not aware how a border for the 21st century, which optimizes the access of goods, services and people while safeguarding security, can bring great benefits to their everyday lives.

Concerning the intelligent management of our common border, I'm very confident that we are on the right track. The Director of U.S. Homeland Security, Governor Tom Ridge and Canada's Deputy Prime Minister, John Manley are making tremendous progress on an agreement to create a "smart border for the 21st century between the United States and Canada."

As a result, both countries are addressing security risks collaboratively; and we will do so while expediting the legitimate flow of people and goods across the Canada-U.S. border. In short, we will make the border more user friendly for friendly users. (It is gratifying to see that many of the techniques developed in the Canada-U.S. approach are now being introduced to the U.S.-Mexico border following President Bush's visit to Monterrey last week.)

In the end, the Canada-U.S. border - my border - has evolved beyond bricks, mortar and pavement - it is indeed more a statement of values than a quantitative unit. And so it is especially important to ensure that our approach and attitudes continue to reflect this 21st century reality.

In conclusion, I have conveyed to you today some observations on the state and direction of Canada-U.S. relations. 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 key economic partner for continental prosperity. Our interests are shared; our objectives are the same; and the future of our great partnership is more promising than ever.

I would be happy to answer any questions you may have, and would welcome a discussion on these or any other issues.

Thank you.