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"CANADIAN UNITY: AN ASSET FOR OUR EXPORTERS"

NOTES FOR AN ADDRESS TO
THE SAINT-LAURENT CHAMBER OF COMMERCE

MARCH 30, 1999

It has now been three years and five days that I have had the honour of representing our riding of Saint-Laurent-Cartierville in the House of Commons. I owe that honour to the confidence the voters of Saint-Laurent-Cartierville have placed in me on two occasions, through majorities... clear majorities.

Representing Saint-Laurent-Cartierville, working with all of you to improve the quality of life in our riding, is an ongoing inspiration for me in my main duty within the Government, which is to improve the Canadian federation and to strengthen Canadian unity.

Indeed, it is a great opportunity for a minister with weighty responsibilities relating to Canadian unity to be the Member of Parliament for Saint-Laurent-Cartierville. This is partly because of the name of the riding, "Saint-Laurent" and "Cartier", both evoking the birth of Canada.... but mostly because the three main challenges facing my riding are also, I believe, the three main challenges facing my country: cultural diversity, social justice, and economic progress.

Cultural diversity. We have in Saint-Laurent-Cartierville a very diverse population in terms of language, ethnicity, culture and religion. These different populations work together for the community, their representatives work side by side in the municipal team of Mayor Bernard Paquet, and this mini-United Nations can be seen hard at work within the business community. This is something that strikes me every time I visit one of our businesses.

On a larger scale, Canada as a whole is experiencing the same intercultural challenge as Saint-Laurent. If I had enough time, I would show what a strength it is for our country to have its two official languages and a population of diverse origins, and how important a role Canada plays in promoting cultural diversity in the world.

Social justice. Saint-Laurent-Cartierville is facing social challenges linked to the risk of developing a two-tier economy. Saint-Laurent has 95,000 jobs for some 74,000 residents, but it also has between 10% and 12% unemployment, and, according to figures from the municipality, 14% of its population lives below the poverty line. Canada as a whole is facing the same types of social challenges. Our governments must work together to improve Canada’s social safety net and Canadians’ participation in the economy. If I had enough time, I would explain how the recent social union agreement has the potential to be a lever for greater social justice and equal opportunity in Canada.

Economic progress. But today, I want to talk to you about economic progress, here, before the Saint-Laurent business community. Our city is an economic success story, a real made-in-Quebec Silicon Valley, where a large portion of our knowledge economy is concentrated. And our country, Canada, is also an indisputable economic success, and I don’t really think you need much convincing of that. Among you, I am speaking to the converted. I know that, with a few exceptions, perhaps, the Saint-Laurent business community sees Quebec’s being a part of Canada as a solid economic asset.

Despite the obvious economic advantages of a united Canada, you sometimes hear arguments to the contrary. One argument making the rounds in some circles is that the advent of free trade and, more broadly, market globalization, makes the Canadian federation unnecessary, and even harmful, to Quebec in economic terms. I will show that the opposite is true: the more important the opening of markets and international agreements are to our economy and our quality of life in general, the more crucial it is that we be able to count on a united Canada.

I will demonstrate this by focussing on what is by far the most important issue for our external trade, the U.S. market, because I know how much all of you would like to further penetrate that market. I’m going to show how much Canadian unity has helped us throughout our history to open up the U.S. market, and how much that will hold true in the future as well. I will also underline the importance of the Canadian market for Quebec’s economic success.

The argument I am responding to, which I’m sure you have heard many times before, goes as follows. The Canadian federation, with its east-west geography, runs counter to and hinders the development of the natural business axis for Quebec, which runs north-south. The current political structure, which is east-west, contradicts natural economic logic, which is north-south. Moreover, the advent of North American free trade has exacerbated that contradiction to the point where it has become untenable, and thus, to liberate the Quebec economy, we have to get it out of the economic straitjacket of the Canadian federation.

The above argument has been best expressed by Mr. Bernard Landry, Quebec’s Deputy Premier and Minister of State for the Economy and Finance, who put it in an historical context. According to Mr. Landry, the Canadian government has practised protectionist economic policies from the beginning of Confederation that have cut us Quebecers off [TRANSLATION] "from our north-south ties that are so in keeping with good sense and geography." The federal government’s National Policy, Mr. Landry added, cost Quebec [TRANSLATION] "millions of jobs, not to mention the exodus of a monstrous portion of our population. Laurier wanted to change that in 1911: he was defeated." (Response to Alain Dubuc, La Presse, July 4, 1998).

So, the Canadian federation has cut us off from the U.S. market? On the contrary, it is the Canadian federation that has enabled us to overcome U.S. protectionism without being absorbed by the United States and suffering the fate of Francophones in Maine or Louisiana.

Let’s look at the history of our trade with the U.S. United Canada concluded a reciprocity agreement with the United States as early as 1854, but the U.S. rescinded the agreement in 1866. Fortunately, in the absence of satisfactory access to the American market, one of the benefits of Confederation in 1867 was to strengthen trade considerably along an east-west axis.

Since Canada’s repeated efforts to negotiate a new reciprocity agreement with the U.S. in the years following Confederation were unsuccessful, the National Policy was introduced in 1879 to help the development of a Canadian manufacturing industry. Despite what Mr. Landry would have you believe, that policy contributed to the rapid economic growth experienced by Quebec and Ontario up until the First World War.

The National Policy was clearly not the origin of [TRANSLATION] "the exodus of a monstrous portion of our population." Out-migration to the U.S. had begun as early as the mid-19th century, sparked by a growing scarcity of good farmland in the St. Lawrence Valley.

Furthermore, Quebec industrialists and trade unions were ardent supporters of the National Policy. Laurier was defeated in 1911 in part because of protectionist pressures from the manufacturing industries in Quebec and Ontario, which opposed the reciprocity treaty that the U.S. had just proposed to Canada, and which Laurier wanted to sign.

In the end, the fact that the reciprocity treaty did not go through had little effect on our access to the U.S. market. Starting in 1913, changes to U.S. trade policy and the introduction of a tariff more advantageous for Canadian products enabled Canada to enjoy advantages very similar to those it would have obtained through the 1911 treaty.

In 1935, Canada signed a treaty with the U.S. that was much broader in scope than the treaty proposed in 1911. Indeed, this treaty granted Canada most-favoured-nation treatment. In other words, the U.S. made a commitment not to treat Canada any less favourably than any other country. The scope of this treaty was expanded in 1938 through clarifications to the interpretation of the wording and additional tariff concessions.

The Government of Canada’s active participation in the creation of the GATT in 1947 and all trade liberalization rounds in the past 50 years, culminating in the creation of the WTO in 1995, has gone a long way to open access to the U.S. market. In addition, we have seen the Auto Pact in 1965, not to mention the Canada-U.S. Free Trade Agreement in 1989 and NAFTA in 1994.

Now more than ever, the United States is our biggest trading partner. In 1988, 74% of Canada’s external trade in goods was with the U.S. In 1998, it was 85%. For Quebec, that figure was 84% in 1998.

Then as now, and perhaps even more now than then, the Canadian federation is a formidable asset to further open the U.S. market, a market which now accounts for close to

$300 billion a year in exports of Canadian goods and services, and to resist U.S. protectionism.

Canada is deploying vast resources to make its voice heard in the U.S. In addition to our embassy in Washington, which is our largest embassy in the world and the third largest foreign embassy in Washington, we have 14 consulates and trade offices (New York, Los Angeles, Detroit, Chicago, Minneapolis, Boston, Atlanta, Buffalo, Seattle, Dallas, Miami, Princeton, San Francisco and San Jose). Staff in these locations total approximately 700 people. For you, as businesspeople in Saint-Laurent, this means that commercial officers, investment consuls, lawyers specializing in commercial law, and science and technology advisors, are there to serve you. Their mission is threefold: to promote your commercial interests, attract investors to Canada, and open up new business opportunities for you in the United States. They work closely on the ground with Quebec’s General Delegation in New-York, its trade branches in Atlanta, Chicago, Boston and Los Angeles, and its Tourism Bureau in Washington.

Let me give just two examples to show how important a strong Canadian voice in Washington is for you. When the U.S. Congress passed the Helms-Burton Act, which allowed the U.S. to levy penalties against Canadian firms doing business in Cuba, Canada, through our embassy in Washington, used all its clout to thwart this extra-territorial application of U.S. law. Just imagine for a moment the threat that the generalization of such a principle of extra-territoriality would pose for the business climate throughout the world!

When that same U.S. Congress decided to pass legislation requiring all travellers crossing the U.S. border to obtain a visa, in order to crack down on illegal immigration from Mexico, our embassy undertook unprecedented lobbying efforts to get Congress to back down. Just imagine for a moment the nightmare that such a measure would create for us Canadians, who last year made more than 42 million visits to the U.S. in business or pleasure travel!

The purpose of these examples of strong action by our embassy in Washington is not to criticize the U.S. government, but rather to show how important it is for Canada to promote its interests to the host of political players south of our border who sometimes underestimate the scope of their decisions: the White House, the House of Representatives, the Senate, not to mention the individual states.

All these resources, which are at your disposal as Canadians, Quebecers and businesspeople, are paid for by all Canadian taxpayers, thus yielding us Quebecers, like other Canadians, substantial economies of scale. They are initiated by a country that the U.S. knows and respects. The U.S. market is essential to us, but the Canadian market is also very important to the United States. Canada is its biggest trading partner, far ahead of Japan and almost as important as the whole of the European Union. We are only 29 million Canadians, to be sure, but that means 29 million Canadians who export to 272 million Americans close to a billion dollars of goods and services every day. Last year, the two countries traded C$564 billion in goods and services. This trading relationship is unique in the world, and allows us to exert a strong influence on our giant neighbour to the south, when necessary.

For the U.S., Canada is an ally to be reckoned with both in terms of trade policy and foreign policy in general. American authorities are well aware that few countries wield as much clout as Canada in so many international forums: the G8, the International Monetary Fund, the Commonwealth, the Francophonie, Asia-Pacific Economic Cooperation, the World Trade Organization, the Organisation for Economic Co-operation and Development, the Organization of American States, the Organization for Security and Co-operation in Europe, the World Bank, the North Atlantic Treaty Organization, the United Nations Security Council, the Trade Ministers’ Quadrilateral, the European Bank for Reconstruction and Development, the Inter-American Development Bank, and many more.

We have and will continue to have our difficulties with U.S. protectionism. But our greatest asset for accessing the U.S. market is our unity. Trying to get through that door in disorder, in division, dangerously saps our strength. The U.S. authorities have indicated that, if Quebec became an independent country, "there wouldn’t be automatic accession to NAFTA" for Quebec. (Mike McCurry, White House spokesperson, October 25, 1995.) No one should want to give the U.S. Congress an opportunity to renegotiate NAFTA with a separated and weakened Quebec.

Now that we've looked at the assets a united Canada enjoys for promoting our political, economic and trade interests in the United States, let me make a few comments about the importance for Quebec of its special economic relationship with the rest of Canada. I was surprised by the recent comments by the Premier of Quebec in an interview with Le Figaro newspaper to the effect that "Quebec's economic future lies with the United States and Europe" (Le Figaro, March 16, 1999). Such a statement is indicative of a lack of understanding of the mechanisms at work in the Canadian economic space, and seems to point to a desire by the Parti québécois leadership to minimize continually the extent to which Quebec's economy is integrated into the Canadian federation.

It is true that our trade with the U.S. is growing more rapidly than that with the rest of Canada, but this is because our economy is already very integrated into the Canadian economy as a whole. We have much more than a new free trade within the Canadian economic space.

In 1997, Quebec companies sold more than $27.5 billion of goods in other Canadian provinces -- six times more than Quebec's exports to the European Union. The flow of goods between provinces is 12 times greater than that between Canada and the U.S., once the factors of size and distance are taken into account, and the flow of services is 40 times greater. (John F. Helliwell, "How much do national borders matter?", Brookings Institution, Washington, 1998)

This strong integration into the Canadian economy is not the result of happenstance. It is the result of Quebec's sharing with the rest of Canada political and legal institutions, a common currency, harmonized economic and social policies and national solidarity, elements that are

missing from the relationship that Quebec maintains with the United States and without which we would lose a large part of our access to the Canadian market. And so while Canadian unity is necessary to expand our north-south trade, it is no less essential to our east-west trade.

Canadian unity is more than an economic and financial advantage. It is a great human project, universal in scope, that we Quebecers want to pursue ever further with our fellow citizens throughout Canada.

In the same way, the topic I have talked about in particular today, our relations with the United States, is not just an economic issue. As everyone knows, it is a cultural issue as well.

But I wanted to respond today to an argument currently in fashion that, contrary to all the evidence, would have us believe that Canada, with its east-west geography, is hindering the north-south economic development of Quebec.

This argument, as I believe I have demonstrated, is erroneous. It doesn’t stand up to an examination of history. Nor does it stand up to the challenges of the future.

In the face of the powerful United States, which is increasingly our main trading partner, we need to be able to count on a united Canada. At a time when international agreements are increasingly affecting our lives, we need to be able to count on our country’s prestige and influence. In the face of the challenges of the new economy, the solidarity between Quebecers and other Canadians is more necessary than ever, as Pierre Pettigrew noted in a recent book.

Canada consists of two official languages, which are international languages; provinces with complementary economic assets; two legal systems, civil law and common law, which enable us to speak the legal language of 80% of the countries in the world; a diverse population from every corner of the globe; and a geography that opens the doorways to the Americas, Europe and Asia. There is no doubt that we have been able to make our diversity into a strength that we will need more than ever.

But this opinion is not shared by Messrs Landry and Bouchard. Mr. Landry made a statement of incredible intolerance on October 7, 1998: [TRANSLATION] "Even federalist businesspeople in Quebec will readily admit that, in any international economic negotiations, their interests would obviously be better served if they were represented by Gérald Tremblay or yours truly than by John Manley or Sergio Marchi." As for Mr. Bouchard, he repeated just recently that an Ontarian such as Sheila Copps could not contribute to the representation of the cultural interests of Quebecers.

Rather than disqualifying colleagues because they are Ontarians, the Premier of Quebec and his Minister of Finance would do better to appreciate what those three Ontarians have done for the cultural and economic development of Quebec. In the same way, Ontarians, like all of our fellow citizens in the other provinces and territories, can appreciate what three Quebecers have accomplished in leading our efforts to put Canada’s financial house in order. I am speaking of Jean Chrétien, Paul Martin and Marcel Massé.

This is what Canada is all about: a synergy of cultures that yields excellent results. And that’s what makes Canada work.

The spokespersons of the independence movement have announced that they will spend this year renewing their thinking on the why and the how of Quebec’s secession from Canada. They have said that the challenges of globalization will be at the heart of their reflection. Well, we’re ready to debate that, just as I have done here today. In point of fact, globalization makes Canadian unity, Canadians’ sense of community, Canadian solidarity, more necessary than ever. Other Canadians need Quebecers, just as we Quebecers need them to take on these new challenges.

Access to the U.S. market remains for us by far the most crucial of those global challenges, which is why I have made it the focus of my speech today. But there are many other challenges, including our ability to obtain victories within the World Trade Organization, such as its recent decision in favour of Bombardier against its Brazilian competitor. Bombardier is far more important to Quebec’s economy than Catalonia.

Speaking of Catalonia, another challenge is that of cultural diversity. Canada obtained full protection for cultural industries in the General Agreement on Trade in Services, the Canada-U.S. Free Trade Agreement, the North American Free Trade Agreement, and the Canada-Chile Free Trade Agreement. Those same efforts were pursued, together with the provincial governments, during the negotiations on the Multilateral Investment Agreement.

When our Premier of Quebec states that "if you want to get something done, do it yourself", I agree. We are doing it ourselves, because we are Canada, we Quebecers, just like other Canadians. Our country, Canada, gives us substantial clout on the international scene because we have built this country together with our fellow Canadians. We have every right and every interest in continuing to enjoy all the advantages it gives us.

Market globalization is another argument in favour of a united Canada. This is what I wanted to say before one of the business communities that is the most bilingual, the most multicultural, the most open to the world: none other than the business community of Saint-Laurent, so profoundly Quebecer and so profoundly Canadian.

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