April 27, 2006
OTTAWA, Ontario
2006/3

CHECK AGAINST DELIVERY

NOTES FOR AN ADDRESS BY

HELENA GUERGIS,

PARLIAMENTARY SECRETARY TO THE MINISTER OF

 INTERNATIONAL TRADE,

AT THE PUBLIC POLICY FORUM CONFERENCE

ON CANADA - U.S. RELATIONS

It’s a great pleasure to be here tonight to kick off this event. I’d like to congratulate the Forum for directing its energy and ideas to this important issue, at this important time.

A friendship like no other…

The Prime Minister and this government have made no secret of our commitment to improving the character of Canada-U.S. relations. The Throne Speech described the U.S. as our “best friend and largest trading partner.”

Today, we saw our friendship and our trade relationship come together in the resolution of a difficult and longstanding issue that has put enormous pressure on our nations over the years.

Since the meeting between Prime Minister [Stephen] Harper and President [George W.] Bush in Cancun, Mexico, last month, our respective governments have been in active discussions—together with industry and stakeholders—to resolve the softwood lumber dispute.

The framework announced today represents a fair and durable resolution to this issue. It’s designed to ensure U.S. market access, protect Canadian market share, and eliminate punitive duties. It will also return at least US$4 billion in duties collected by the United States. Most importantly, it will bring stability to a Canadian industry hit hard by 20 years of relentless trade action by U.S. industry.

On behalf of the Minister, I’d like to thank the negotiating teams on both sides of the border for their longstanding commitment to resolving this issue, and for securing a better deal for Canadians than what was on the table in previous rounds of negotiations. I’d also like to thank them for proving to the world that Canada and the U.S. can work through difficult issues like this, and emerge on the other side stronger—and as friends.

I use the word “friend” deliberately. Our relationship with the U.S. transcends geography and trade statistics—and encompasses our common history, our shared values, and our integrated economies.

But for a variety of reasons, our relations are too often seen in a negative light. They’re defined by differences—differences in policy, and differences in culture and society. These differences often lead to intemperate voices calling for doors to close between our nations, rather than to open. Worse, we focus on these differences at the expense of a broader view—ignoring those places where our values merge; where our shared history and commitment to democracy have made our societies among the freest, most open in the world; where our joint efforts on the international stage—in Afghanistan, and through NATO and the Organization of American States—are making the world a better, safer place; where the men and women in our embassies and missions are keeping the diplomatic links between our nations strong—and our respective national interests front-and-centre in the corridors of power in both countries; and where our economies intersect, making North America the most prosperous continent on the planet.

Clearly, our partnership with the U.S.—here in North America, and around the world—is too important, too vital, and our shared values too numerous, to let what many call the “tyranny of small differences” distort what is truly one of the world’s great partnerships.

And nowhere is this partnership clearer than in the area of trade.

…and a trading relationship like no other

Together, we share a strong belief in the power of open, market-oriented trade.

It’s a belief that made our nations active partners in the development of the global economy as we know it today—through the GATT [General Agreement on Tariffs and Trade] and later, the WTO negotiations that drive global commerce.

And it’s a belief that has built the single-largest trade relationship the world has ever seen.

It’s sometimes hard to believe that free trade between our nations is not quite two decades old.

We owe our success to a small group of forward-thinking Canadians and Americans who brought free trade to our countries—and eventually, with Mexico, to this continent.

These men and women relied, in great measure, on the trade and commercial links that existed between our countries. They saw an opportunity to build on this foundation and create a free and open marketplace that spanned the continent.

Time—and statistics—have proven them right.

Today, nearly $2 billion in goods and services crosses our border every day—along with 37,000 trucks and 300,000 people. Last year, 38 states counted Canada as their top export market. In fact, we trade more with many individual states—like Michigan, New York and California—than with entire countries like Japan, Great Britain and France.

But it’s a relationship that goes far beyond imports and exports. You also have to talk about how corporations on both sides of the border have seamlessly organized their activities. You have to talk about the staggering amounts of two-way investment that draw our countries ever-closer. You have to talk about how 34 percent of Canada-U.S. trade is ‘intra-firm,’ or within the same company. And you have to talk about how our transportation and infrastructure keep our trade flowing across our borders, and to markets around the world.

And despite impressions to the contrary, our trade relationship is 95 percent dispute-free. Believe me, this is a solid record for any bilateral relationship—all the more so for one worth billions each day.

But our great success to date begs the question—will it always be this way?

The world has changed since NAFTA came into being. We have to ensure that NAFTA stays current, and can keep Canada—and North America—competitive five or 10 years down the road.

Are we taking our close ties to the U.S. for granted?

The world is changing

We need to take this question seriously for two reasons.

The first is that the competition is out there. Consider the slew of recent free trade agreements the U.S. has signed with countries like Australia, Chile and Singapore. Consider the rising trade and investment flows between the U.S. and China—a country hot on our heels as America’s top commercial partner. And consider the rise of protectionist voices in the U.S. Congress, who would be more than happy to close doors to trade, rather than open them. Canada can no longer take its primacy with the U.S. for granted.

The second reason is the same as the first, but with a wider focus. The competition is out there—not just for Canada, but for North America.

Global value and supply chains, combined with the IT revolution and falling trade barriers, are fuelling nothing short of a revolution in global commerce. They’ve created an increasingly “borderless” world. Distances are shrinking. Borders are being erased. And countries like China, South Korea, India, Russia and Brazil are rising to the fore.

Economies large and small are joining forces to adapt to this new reality. They’re fast realizing they’re stronger and more competitive together than apart. They’re responding by drawing their economies closer together—and creating common standards, compatible regulations and integrated trade corridors.

We’ve seen it in Europe, with the creation of the EU. We’re seeing the beginnings of it in Central and South America.

And we’re certainly seeing it in Asia, with the ASEAN [Association of Southeast Asian Nations] and APEC [Asia-Pacific Economic Cooperation] nations, as well as a number of bilateral free-trade agreements between Asian countries.

Asia’s rise as an increasingly integrated region also means that our sectors are up against sophisticated manufacturing capabilities and cheap labour markets, which are beckoning foreign companies and giving Asia a foothold in a number of industries.

The implications for North America are obvious. We’re being challenged to adapt to this new borderless world to stay competitive.

For Canada, and for our partners in the U.S. and Mexico, the choice is clear.

Are we going to compete as three nations to be the “location of choice” for business activities?

Or are there steps we can take to bring our economies closer together to meet the competitiveness challenge?

Making North America more competitive

In fact, continental competitiveness was a major focus of discussion at the recent meeting Minister Emerson had with his NAFTA colleagues in Mexico. They agreed to take a look at how sectors can work more closely together, and how our nations can remove barriers to integrated supply chains.

It was also a topic at recent [Cancun] Trilateral Summit, where our three leaders agreed to begin exploring ideas to make North America more competitive.

Ideas like bringing certain sectors in our countries closer together, in a more integrated, borderless framework. This means having key sectors—such as automobiles and steel, for instance—work together, across borders, to identify ways to boost North America’s share of the global market.

We can also take steps to bring our investment and regulatory regimes closer together.

And we should be working more collaboratively on research and development, science and technology and intellectual property protection—essential components in fostering a North American knowledge economy that can compete with the best the world has to offer.

We also need to better understand how North American supply chains benefit our businesses around the world. This means being more aggressive in linking our transportation system on this continent. The Pacific Gateway is a good example. It holds great potential to become a linchpin in North America’s transportation system—running from the ports of Prince Rupert and Vancouver, down to California and Mexico, connecting North America to Asia in a new, exciting way.

We also need to accept security as a fact of life. A competitive North American market can be a secure North American market. Security and prosperity can go hand-in-hand, which is why we’re committed to making progress on the SPP [Security and Prosperity Partnership] announced in March 2005.

We need to be clear. We’re not talking about creating “Fortress North America.” We’re not trying to keep the world out. Instead, we’re talking about creating an effective North American hub, a collective magnet—one that’s open for global business, and able to compete with the best the world has to offer.

We need to be equally clear that we’re not talking about somehow compromising our sovereignty.

A fundamental truth about Canada-U.S. relations: Canada has gained greatly from free and open trade with the United States.

I’m of the view that closer economic interdependence with the U.S. has led—and will continue to lead—to a more prosperous Canada. And a prosperous domestic economy will help us strengthen our sovereignty and national character—not erode them.

In other words, strengthening the links between our economies will ensure that the agreements we negotiate advance and defend Canada’s interests, and that we direct our own future, in our own best interests, as a strong and prosperous economy.

As part of a strong and competitive economic region and as a forceful voice on the world stage, Canada will ensure that it remains one of the world’s top economies by pushing for an open, rules-based trading system.

Disagree without being disagreeable

Which brings me to another essential quality in any friendship—friends can disagree.

The border is perhaps the best example. We agree on the need for a secure border. And we’re looking at a number of ways to ease the impact of the Congress-approved WHTI [Western Hemisphere Travel Initiative], and ensure that cross border traffic flows are as efficient as possible. [Canadian] Ambassador [to the U.S.] Michael Wilson stressed the need for a "smart border, not a thick one." This government will continue to work closely with our American colleagues to ensure that this goal is met.

Clearly, issues like this test our friendship. They increase pressure, on both sides of the border, to close doors to trade, rather than open them.

But as today’s softwood lumber announcement proves, we can resist this pressure. We can disagree without being disagreeable. And above all, we can work through issues like this, and emerge on the other side the stronger for it—not only as neighbours in the world’s largest free trade area, not only as one another’s most important trade partners, but as friends.

Conclusion

So as you tackle the big questions tomorrow, try and remember the qualities of friendship that bind our nations together.

Friends cooperate. Canada and the U.S. have a long history of working together on the world stage to make the world a better and safer place.

Friends build things together. Together, we’ve created the largest free-trade area in the world, one that provides a platform to make our countries—and our continent—more competitive in the years ahead.

And although friends sometimes disagree, they also work through their problems, as we did with softwood lumber and as we’ll do with any other issues that require a respectful, businesslike dialogue with our American partners. We won’t let our differences carry the day.

Clearly, this is a crucial era in our relationship. The realities of global commerce have presented us with a clear choice—status quo, or something more. To me, the path is obvious—when the world moves forward, you move with it.

Tonight, I’ve outlined a path forward, a vision of better Canada-U.S. relations in the context of a more competitive North America.

The challenge for us is to summon the same resolve that first spurred Canada-U.S. free trade into being—and the same commitment to partnership that binds our nations together on the world stage—and to bring our relationship, and North American competitiveness, to a new level.

It will take energy and imagination—from the public and private sectors, on both sides of the border. And it will take political will—from the Prime Minister and the President, down through every level of our respective administrations.

I don’t have all the answers. But I think it’s time we started asking the questions.

Gatherings like this are a great place to start. I’m confident that together, we can seize this great opportunity to bring our friendship to the next level, to help our nations—and our continent—face the competitive challenges of 21st century, and to ensure that generations of Canadians and Americans enjoy the benefits of one of the most productive and lasting friendships the world has ever seen.

Thank you.