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"The Canadian Advantage in the
Era of Globalization"
Notes for an address by
the
President of the Privy Council and
Minister of Intergovernmental Affairs
the Honourable Stéphane Dion
at the Globalization 2000
Symposium
Calgary, Alberta
September 25, 1999
Globalization 2000: convergence or divergence?
This is the question put to us by the organizers of today's symposium.
Globalization is a trend toward economic, social
and political integration among the different populations of the world. In
economic terms, it comprises all of the forces that tend to bring the world
toward a single market-space. One of its most easily measured effects is the
growing importance of external trade in countries' economies.
Globalization poses a number of challenges to
national governments, in terms of their ability to meet the economic and social
needs of their populations. But does it raise the question of their very
existence? Will it merge them into larger units? Or, on the contrary, will it
break them into smaller units? In light of my responsibilities for Canadian
unity, you will understand that I am approaching this issue from the angle of
the existence of countries. Your question thus becomes the following: will
market globalization increase or decrease the number of countries in the world?
Some people believe that market globalization
will lead countries to merge together, through a convergence effect, while
others predict that the same phenomenon will cause a number of countries to
break up, through an effect of divergence.
According to the first group, market
globalization entails a concentration of the economy which in turn necessitates
political concentration, and that the future belongs to supranational
organizations such as the European Union, NAFTA and the World Trade
Organization, much more than to traditional nation-states, which, having become
obsolete, should gradually cease to exist. Proponents of this theory predict
that national borders will lose all importance.
The second group predicts the rise of small
regions, more homogeneous entities that will be able to adapt flexibly and find
their specialized niche in the gigantic global market.
This debate touches Canada very closely. Some
believe that globalization is eroding Canadian sovereignty and pushing us into
the arms of the American giant (convergence effect), while others predict that
our provinces will increasingly come to act on their own, which could eventually
break up the federation, with Quebec leading the way (divergence effect).
In other words, in ten, twenty, thirty years
time, will globalization have increased or decreased the number of countries?
And will it have cost us our Canadian identity?
My sense is that market globalization will likely
have no noticeable effect on the number of countries in the world. Ten, twenty,
thirty years from now, the role of NAFTA, the European Union or the World Trade
Organization will certainly have evolved, in a way that is difficult to predict
today, but France, Germany, the United States, Mexico will still be separate
countries, with their own seat at the UN.
As for us, market globalization is not a threat
to our unity. On the contrary, it works in favour of Canadian unity. My
presentation will be in three parts. First, I will show that market
globalization has so far not created a single new country. Second, I will
measure more precisely the actual scope of this phenomenon known as
globalization: we must not let our enthusiasm for the concept exaggerate its
importance or its effects. Third, I will show how, on the whole, the issues
surrounding market globalization are a further argument in favour of Canadian
unity.
1. Market globalization has so far not
created a single new country
Quebec separatist leaders regularly point to the
growing number of countries in the world, linking the phenomenon to
globalization. For example, Jacques Parizeau stated on April 29, 1999: "One
must not be surprised by the multiplication of countries, the number of
nation-states. (...) In that sense, the debate on globalization (...) touches
directly on the concept of sovereignty." [TRANSLATION]
The world comprised 69 nation-states in 1945. It
now has 191, or 122 more. None of those 122 new nation-states was born of market
globalization.
No fewer than 93 of them are former colonies.
Decolonization stems much more from a surge in the values of equality and human
dignity than from market globalization. Other instances of decolonization may
occur in the future, as a result of the same process of political emancipation.
East Timor is one such example, a former Portuguese colony whose forced
annexation by Indonesia could soon come to an end.
Outside the decolonization process, only six
nation-states were created between 1945 and 1989: Israel, North and South Korea,
Senegal (after the disintegration of the Federation of Mali), Singapore
(expelled from the Federation of Malaysia), and Bangladesh (which seceded from
Pakistan). You'd be hard pressed to link any of those different cases to market
globalization.
Since 1990, 23 new countries have appeared, all
of them, without exception, born out of the chain of events that accompanied and
followed the disintegration of the Communist empires: the three Baltic
republics, Russia, eleven other former Soviet republics, five nation-states born
out of the former Yugoslavia, the Czech Republic, Slovakia and Eritrea (which
separated from Ethiopia following a civil war). Communism has been described as
a type of historical deep- freeze, and in that sense, these countries' accession
to independence stems from the death of a 19th century ideology. Their birth, as
well, cannot be attributed to a recent phenomenon of modernization such as
market globalization.
Some will say that the advancement of democratic
and liberal values and systems throughout the world is one of the dimensions of
this catch-all concept known as globalization. And it will be pointed out that,
since the end of the Cold War, the international community has been better
positioned to intervene for humanitarian reasons to bring peace to ethnic
conflicts within countries. But we must agree that this dimension of
globalization, which has brought down colonial and totalitarian empires, in no
way threatens the unity of countries which, like Canada, are already democratic
and liberal.
Thus, there is no historical basis to the claim
that market globalization has any effect on the number of countries. Now let's
look at the current trends.
2. The phenomenon of globalization must
not be exaggerated
We need to be wary of intellectual fads, passing
fancies for a new concept. Globalization is a real phenomenon, to be sure, but
it is not the overarching mono-causal explanation for the major trends of today
and tomorrow.
Indeed, we must not exaggerate the novelty of
this phenomenon. It comprises new dimensions, such as significant communication
technologies, but according to a number of economists, mobility of labour, goods
and capital is more restricted today than it was a century ago. The 19th century
phenomena of vast migrations to America and Australia, an almost complete
absence of passports and tariff barriers and the division of the world into
major colonial empires, led to globalization on a massive scale.
In contrast, the first half of the 20th century
was a period of economic fragmentation, marked by two world wars and the Great
Depression. Today, after five decades of market liberalization, we have barely
achieved the degree of economic globalization that existed a hundred years ago.
We thus need to put what we are currently experiencing into perspective.
Of course today's phenomenon of globalization is
very real. It is characterized, among other things, as I have said, by the
increasing proportion of external trade in countries' economies, by the enhanced
role of international organizations, and by the scope of international
agreements. But it would be a gross exaggeration to imagine that this expansion
of the international economy is such that it will make national borders
disappear and make them obsolete.
Let us look at our own case, Canada. While it is
true that our trade with the United States is growing more quickly than our own
interprovincial trade, this is because our domestic economy is already highly
integrated. The Canadian economic space is much more than a free trade
arrangement.
I am sure you are familiar with the work of John
F. Helliwell (How Much Do National Borders Matter?, Brookings Institution,
Washington, 1998). He has calculated that the flow of goods between provinces is
12 times greater than that between Canada and the US, once you take into account
factors such as size and distance. And that flow is 40 times greater for trade
in services.
This high level of integration of the Canadian
economy is not mere chance. It stems from our sharing political and legal
institutions, a common currency, harmonized economic and social policies, and
from the fact that we are united by a national solidarity, all elements that are
missing in our relationship with the United States.
Yes, borders still matter. In one sense, we can
even say that the issues surrounding market globalization make it more necessary
than ever to maintain a strong national cohesion within each country. Mutual
assistance among fellow citizens and national solidarity are not obsolete
assets; indeed, the very opposite is true. I would like to illustrate that point
by again using the example of our own country, Canada.
3. The advantages of Canadian unity in
the era of globalization
In our own case, market globalization is
expressed essentially through a greater openness to the American market. More
than ever before, the United States is our main trading partner. In 1988, 74% of
Canada's external trade in goods was with the US. In 1998, it had increased to
85%.
Today like yesterday, and perhaps even more than
yesterday, the Canadian federation is a tremendous asset for further opening the
American market, and for resisting US protectionism. In 1998, our exports of
goods and services to the US was estimated at around $297 billion.
I could mention the tremendous means Canada
deploys to make its voice heard in the United State: our embassy (which is the
third largest embassy in Washington) and our 14 consulates and trade offices. We
need the professionalism of these diplomats, trade and investment officers,
lawyers specialized in commercial law and science and technology advisors,
because they are the ones who in large part advance our interests in the host of
centres of influence in the Unites States: the business community, the White
House, the House of Representatives, the Senate, and not to mention the states.
But what is most important is that these
impressive resources are being deployed by a country that the United States
knows and respects. While the American market is vital to us, the Canadian
market is also very important to the US. Canada is its largest trading partner,
far ahead of Japan and almost equal with all the European Union countries
combined. We may be only 30 million Canadians, but those 30 million traded
around $1.25 billion in goods and services with 272 million Americans every day
in 1998. It is a trading relationship that is unique in the world, and that
allows us to exert a strong influence on our big southern neighbour when
necessary.
But there's more. Canada is an ally to be
reckoned with in terms both of trade policy and of foreign policy in general.
The US authorities know full well that few countries are as influential in so
many international forums as Canada.
We have, and will continue to have, our
difficulties with certain forms of US protectionism. But our main asset for
breaking into the US market is our unity. Trying to do so in disorder and
division would weaken us dangerously.
Conclusion
I hope that I have demonstrated three things
today. First, market globalization has so far not created any new countries.
Second, this phenomenon is not significant enough to render national borders
useless in the future. Third, the challenges surrounding market globalization
instead have the effect of encouraging countries to strengthen their internal
cohesion.
I have placed special emphasis on the ties
between Canada and the United States in this era of globalization. But when I
look beyond the United States to our relations with other parts of the world, I
am just as optimistic about the future of our country.
I have said that there are few countries better
positioned than ours to succeed in this global world. Canada is a country that
is respected, that has an excellent reputation, a country that has successfully
combined cohesion as a whole with great diversity: the strength of provinces and
territories that complement one another, two official languages that are
international languages and two legal systems, civil law and common law, which
allow us to speak the legal language of the vast majority of countries, a
geographic position that puts us at the gateway to the Americas, Europe and
Asia, and a multicultural population that gives us a foothold on every
continent. There is no doubt that we have made our diversity into a strength
that we will need more than ever before.
Canada is a decentralized federation which
provides each of its provinces with maximum flexibility to optimize its assets,
but it provides us at the same time with a cohesion, an exceptional capacity to
pursue common objectives, both at home and abroad, strengthened by the diversity
of our experiences.
Speaking of experience, Canada has it in spades,
when it comes to globalization. It did not wait for globalization to become
fashionable before it started taking an interest in it. Since the end of the
Second World War, it has played a key international role in the creation of
institutions that provide an effective framework for globalization. Such
examples include the International Monetary Fund and the GATT, which became the
World Trade Organization in 1995. One could also mention other examples such as
the World Health Organization, whose first director general was a Canadian. When
we speak of globalization, we, Canadians, are like fish in water.
In the face of our powerful neighbour to the
south, which is increasingly our largest trading partner, we need to rely on a
united Canada. At a time when international agreements are affecting our lives
more and more, we need to be able to count on our country's prestige and
influence. To take on the challenges of the new economy, solidarity among all
Canadians is more essential than ever.
This is what Canada is all about: a synergy of
cultures which yields excellent results. And that's why Canada works so well. It
is this optimism in and enthusiasm for the future of our country that I wanted
to convey to you as you study the phenomenon of globalization. I thank you for
giving me this opportunity.
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