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"Germany and Canada:
Federal loyalty in the era of globalization"
Notes for an address
by the Honourable Stéphane Dion,
President of the Privy Council and
Minister of Intergovernmental Affairs
To members of the
Atlantik-Brücke
Feldafing, Federal Republic of
Germany
October 28, 2001
Check against delivery
Because our two official languages, English and French, are a reflection of a
large part of our history, there are many among us Canadians who see Europe
through the United Kingdom and France. But, in our understanding of Europe, we
increasingly have an interest in adding its German dimension. I am
convinced of this, just as you are, members of the Atlantik-Brücke,
and this makes me very pleased to be invited here today.
The Federal Republic of Germany, the third largest economic power in the
world, the largest direct investor in the world in terms of net outflows, the
industrial economic engine of Europe, is Canada’s sixth largest trading
partner, in both trade and investment. Canada is one of the largest investors
and employers in the new Länder, especially in the railway sector, with
Bombardier in particular. Trade and investment between our two countries are in
full expansion.
At the political level, in light of the tragic events of September 11, it is
imperative that we strengthen our ties and our friendship. Chancellor
Schröder stated on October 11 that your country must henceforth, and I
quote: "assume a measure of responsibility which is in keeping with our
role as a key European and transatlantic partner, as well as that of a strong
democracy and strong economy in the heart of Europe." And he added,
"we Germans [...] now have an obligation to shoulder our new
responsibility in full."1 The Government of Canada applauds
that statement by Chancellor Schröder and sees it as yet another reason to
strengthen cooperation between our two countries.
Our exchanges are intensifying in all areas, particularly in those of the
sciences, technology, culture and education, as evidenced by the wide range of
Canadian talent that Her Excellency the Right Honourable Adrienne Clarkson,
Governor General of Canada, has brought together in the delegation accompanying
her official visit to Germany this past week.
Canada is increasingly interested in Germany, and I sense this interest is
mutual. Aside from the United States, it is in Germany that one finds the
largest academic network of full Canadian studies programs.
One of the reasons why Germany and Canada benefit from a better understanding
of each other is that our two countries have adopted a federal form of
government. This common feature shared by our two countries touches directly on
my ministerial responsibilities. As Minister of Intergovernmental Affairs, my
responsibility is to ensure the smooth functioning of the federation and to help
Prime Minister Jean Chrétien and the Government of Canada maintain the most
productive relations possible with the governments of our ten provinces and
three territories.
Germany and Canada are two modern federations which must adapt to the context
of globalization. This context has two main characteristics from the perspective
of federal governance. First, external trade is taking on increasing importance
in relation to interprovincial trade in Canada and inter-Länder trade in
Germany. Second, our countries sign international agreements that increasingly
touch on the jurisdictions of our constituent entities, in the areas of the
economy, agriculture, the environment, health, culture, and so on.
I know that this evolution has provoked debate in Germany. Adjustments have
had to be made in the relations between your federal government and the
governments of your Länder. I follow the evolution of your
federation with much interest. But I will not claim to teach you anything about
what is happening in your own country. Instead, I will present the Canadian
federation in a way which I believe will be relevant to you.
In Canada, some people had predicted that the growing importance of external
trade and international rules would exert a centrifugal pressure and that the
cohesion of our federation would be increasingly difficult to maintain.
According to these people, the federal and provincial governments would be
progressively incapable of taking joint action, while citizens would identify
themselves more and more with their respective provinces rather than with the
country as a whole.
But that is not happening. On the contrary, the omnipresence of international
issues is reminding Canadians of the importance of their national cohesion. The
Government of Canada and those of the provinces see clearly that, above and
beyond perfectly normal differences of opinion, they have an interest in
cooperating more and more, while respecting each other’s jurisdictions.
This is what I want to show you, by first outlining the differences in
context between the German federation within Europe and the Canadian federation
within the area of NAFTA. I will then discuss the solidarity among Canadians and
between our two orders of government.
1.
The German and Canadian federations in the face of globalization: some
differences in context
Your model of federalism is much more integrated than ours. Indeed, it is
often difficult to separate the responsibilities of your federal government from
those of your Länder. In Canada, the division of powers is generally
clearer. This is due to two factors. First, whereas your Basic Law provides
for no fewer than 26 concurrent jurisdictions and seven other areas in which
your federal parliament can enact framework laws requiring the Länder to
pass compatible legislation, our Constitution makes provision for only three
concurrent jurisdictions, two of which have federal paramountcy, immigration and
agriculture, and one has provincial paramountcy, old age pensions. Second, our
Constitution does not provide for the equivalent of your Bundesrat, that
is, for a chamber of provincial governments. The latter have no institutional
presence in the Canadian Parliament.
As a result, our provinces have much larger exclusive jurisdictions than
those of your Länder; the latter, however, have a much stronger
influence over the federal parliament, and thus over the actions of the federal
government. Your federal model is that of the fusion of powers: your Länder
are strong within federal institutions; our model is that of a
distribution of powers: our provinces are strong in relation to the
federal government and they are very protective of their legislative, budgetary
and fiscal autonomy. The contrast between the two models becomes evident in
different ways:
- At the legislative level: Normally, our provinces implement
their own legislation, not federal laws over which they actually have no
direct influence. In your country, a large part of the activities of the Länder
consists in applying federal laws. Your Länder administer these
laws, which they have helped to shape through the Bundesrat.
- At the budgetary level: The cash transfers that our provinces
receive from the federal government are subject to very few conditions,
fewer than in your country and much fewer than in the United States.
- At the fiscal level: Whereas our provinces have full leeway in
determining their tax revenue, this is not the case for your Länder.
The tax bases, tax rates and revenue share attributed to the Länder,
the municipalities and the federal government are all established by federal
legislation. That legislation, however, is passed with the consent of the Bundesrat.
In Canada, the absence of a parliamentary forum that would institutionalize
the relations between the two orders of government means that federal-provincial
cooperation is conducted almost exclusively by the executive branches: the first
ministers and the federal and provincial ministers meet regularly to coordinate
their actions. They consult and inform one another of legislative or other
initiatives they intend to take.
Our two models of federalism are reflected in our respective political
cultures. Thus, your party system is relatively similar for the two orders of
government, whereas political life is much more compartmentalized in Canada. The
federal liberal party and the provincial liberal party of Quebec, for example,
although they are allies, have no organizational link between them. Similarly,
your centralized union system would be completely unthinkable for us. It would
be inconceivable in Canada for the status and working conditions of our
provincial and municipal employees to have to comply with rules set by federal
framework laws.
Just as your model of federalism is more integrated than ours, the immediate
international context in which you operate is as well. Whereas NAFTA is a trade
agreement without a parliament, without a cabinet, without a central bank or
common currency, the European Commission’s regulatory power applicable to
European Union countries is in some ways more extensive than that of Canada’s
federal government applicable to the provinces. That tells you how different the
context is.
North America is not Europe and will not become so, despite what some people
in our country may think. The context is too different. The main difference lies
in the clout of the United States. It makes up 68% of the North American
population, and 86% of its economy. In comparison, Germany, the largest member
country of the European Union, makes up 22% of its population and 25% of its
economy. As you well know, the European Union could not function with the
institutions it has if one of its members was itself bigger than all the others
combined.
Germans are reflecting on the ongoing construction of Europe in a context in
which "federalization" is one of the options being examined, and that
does not undermine their German identity. And we, Canadians, want to work
together with the United States without disappearing into the American melting
pot. We are intensifying trade with our other NAFTA partner, Mexico, and are
actively working to make the Free Trade Area of the Americas a reality.
2. Solidarity among Canadians
Even though NAFTA entails a level of integration much less extensive than the
European Union, the fact remains that North American free trade has helped
to develop our external trade considerably. In 1990, Canada’s exports to the
rest of the world were equivalent to 22% of its GDP. In 2000, they stood at
40%. The volume of imports saw similar growth.
Let us take the case of our most populous and most industrialized province,
Ontario. In 1981, Ontario’s exports to the other provinces slightly
outstripped its exports abroad. As of 1994, its international exports were
twice as large as its provincial exports.
So our trade is more and more externally oriented, essentially toward the
United States. As I have mentioned, some people think that this structural
change in our economy undermines the cohesion of our federation.
This is not so. Canadians’ solidarity with one another is just as strong
now as it has ever been. Polls indicate that, year after year, some 80% of
Canadians say they are very attached to their country. No decline can be
observed on this front.
Of our ten provinces, Ontario has reported the largest increase in its
international exports in relation to its GDP in the past two decades. But this
development of external trade has in no way dampened Ontarians’ feeling of
belonging to Canada. The polls confirm it: Ontarians are the most likely to
identify themselves as citizens of Canada rather than citizens of their
province. After Alberta, it is in Ontario that the prospect of annexation with
the United States encounters the most widespread opposition.
As you probably know, the current government of Quebec is secessionist. One
of its favourite arguments is that globalization makes the Canadian federation
useless and even harmful to Quebec. But Quebecers are not accepting that
argument. In a recent poll2, they were asked which of the two
following statements they agreed with more: "A united Canada would be
better able to face the challenges of globalization" or "A sovereign
Quebec would be better able to protect itself from the challenges of
globalization." Nearly two thirds of the respondents (64%) chose the first
statement, and only 23% the second. In fact, an increasing majority of Quebecers
want Quebec to remain a province of Canada and are turning away from the
secessionist project.
Another sign of the good health of Canadian solidarity is the equalization
program, through which the Government of Canada transfers money to the less
wealthy provinces, that is, those whose revenue-raising capacity is below the
national average. As in Germany, this tangible demonstration of federal
solidarity is entrenched in the Constitution. However, transfers under the
Canadian equalization program come solely from the federal government. The less
wealthy provinces do not receive money directly from the wealthier ones, unlike
what happens here in Germany among the Länder. It is Canada’s federal
government that ensures that no province has a fiscal capacity substantially
lower than the national average. Currently, the program makes it possible to
maintain all the provinces above 95% of the average fiscal capacity.
Canada’s equalization program is worth quite a lot of money: year after
year, it amounts to a little over 1% of our GDP. It accounts for a growing
proportion of federal program spending: 9% compared with around 7% ten years
ago. Three of the ten provinces receive no equalization payments: Alberta,
Ontario and British Columbia. The taxpayers in these provinces finance a very
large part of the equalization payments made by the federal government. Those
three provinces alone contain 61% of Canada’s population, which corresponds
essentially to the demographic proportion (66%) of the five Länder that
directly finance the lion’s share of equalization payments in your federation.
Naturally, equalization payments occasion some debate. In your country, that
debate has been exacerbated by the extensive financial transfers needed to turn
around the economy of the eastern Länder, and no doubt because of
Germany’s contribution to financing Europe, which also requires an appreciable
financial effort. But equalization is a regular subject of discussion in Canada
as well. Some economists claim that the equalization-receiving provinces are
maintained in an unhealthy dependency that is detrimental to sound economic
management. Some recipient provinces would like to see the program enriched, or
to have some of their revenues excluded from the calculation of equalization
payments.
Nevertheless, political parties of all stripes and Canadians in every region
of the country support this principle of redistribution between the wealthier
and the less wealthy provinces. All the polls confirm it.
In short, solidarity among Canadians is alive and well. What about among
their governments?
3. Solidarity among the governments of the Canadian federation:
the example of international relations
Our provinces, like your Länder, want to develop their own strategies
to break into international markets more effectively. Like them, our provinces
want to clarify their role on the international scene, where agreements are
negotiated which increasingly touch their jurisdictions directly. And as in your
country again, our federal government, while wanting to help the provinces draw
on their full potential, ensures the maintenance of the overall cohesion of the
country’s foreign policy. It is obvious that a country which no longer has a
coherent foreign policy no longer has a foreign policy at all. The process of
developing our international trade policy is occasionally a source of
intergovernmental tension, a dynamic which you would recognize within German
borders and in the European context.
The cooperation needed between the federal government and the provincial
governments on the international scene is reflected in constitutional
principles. While the federal government is the only one able to ratify legally
binding treaties in international law, it cannot force the provinces to
implement them within their fields of jurisdiction. For this reason, before
signing such agreements, the federal government has every interest in closely
consulting the provinces. It spares no effort to improve the quality and
effectiveness of those consultations.
In addition, the Government of Canada helps the provincial governments in
many ways to raise their profile abroad in their jurisdictions and in such a way
that contributes to the strengthening of the federation. The network of Canadian
diplomatic missions is regularly used to organize trade missions led by
provincial premiers or ministers. The Government of Canada supports provincial
governments’ efforts to open up foreign offices or offers them the opportunity
to integrate their representatives within a Canadian mission. In fact,
negotiations are underway to house provincial representatives from two provinces
within the Munich consulate. Canada’s provinces have some 50 of these
representation units in some 40 countries. The Government of Quebec alone
has 35 offices in 24 countries. In 1998, it spent "more and [had]
a larger international staff than all 50 U.S. states combined."3
One of the gems is the Quebec Government Office in Munich, which allows
Quebec and Bavaria to maintain close and productive relations.
Representatives of provincial governments are also part of Canadian
delegations in international fora, as was the case at the recent conferences on
climate change in the Hague and Bonn. And the Council of [provincial] Ministers
of Education represents Canada with international organizations.
There is also the Team Canada concept, developed by Prime Minister Jean
Chrétien in 1994. A Team Canada mission is led by the Prime Minister of Canada
and brings together the premiers of the provinces and territories and a
delegation of businesspeople. These missions travel to one country or one region
in the world to promote Canadian exports from all the provinces and territories.
Since 1994, seven of these missions have visited various regions of the world,
mainly in Asia and Latin America. Other Team Canada missions are in the planning
stages and some, eventually, will target countries on this side of the Atlantic.
I could say much more about federal-provincial cooperation on foreign policy,
but I think I have highlighted the fundamental aspect: it is perfectly
desirable that all governments of the Canadian federation, over and above the
inevitable tensions, pursue the same objective in international policy, that of
cohesion of the whole based on the full potential of a diversified country able
to speak with a credible and convincing voice abroad.
Conclusion
While in no way minimizing the contrast between our two federations, or
between the two contexts in which we are evolving, NAFTA and the European Union,
I have depicted a reality that leads to debate in our country, a reality which I
believe is familiar to you: federal cohesion in the era of globalization. I have
sought to show that the centrifugal forces that may have arisen from the boom in
external trade and the omnipresence of international issues have in no way
lessened the cohesion of the Canadian people and its federation.
Indeed, I would say the very opposite is true. Canadians increasingly feel
that their unity is a strength. They clearly see that Canada is a country that
is respected, with an excellent reputation, a country that has been able to
combine cohesion of the whole and great diversity: provinces and territories
with complementary strengths, two official languages that are international
languages, two legal systems, civil law and common law, that enable us to speak
the legal language of the vast majority of countries, a geographic location that
gives us a window on the Americas, Europe and Asia, a multicultural population
that opens doors for us in every continent. We have undeniably made our
diversity a strength that we will need to rely on more and more.
As you can see, I am optimistic about the future of my country. But our
success will depend on us, Canadians, especially on our capacity to put into
practice the principle of federal loyalty that has been the subject of my speech
today, a principle eloquently expressed by your Federal Constitutional Court:
"The constitutional principle of federalism applying in the
federal state therefore places a legal obligation on the Federation and all
of its constituent states to be ‘pro-federal’ in their behavior, that is
to say, all members of the constitutional ‘alliance’ are required to
cooperate with one another in a manner compatible with the nature of that
alliance and to contribute to its consolidation and to the protection of its
interests and the well-considered interests of its members."4
[translation]
Federal loyalty invites every partner of the Federation to work, at home as
abroad, to strengthen the constitutional alliance and to promote the interests
of all, not just one’s own. This is a key to success at this dawn of a new
century. This principle of federal loyalty is not only German, it is universal,
it is valid for all the federations of the world. I hope for Canadians that all
the governments of our federation fully adhere to it. And I also see in this
principle the proof that Canada benefits from understanding Germany. Long live
our two federations.
Notes
- Policy Statement made by Mr. Gerhard Schröder,
Chancellor of the Federal Republic of Germany, to the German Bundestag,
October 11, 2001.
- CROP, March 2001.
- Earl H. Fry, The Expanding role of State and
Local Governments in U.S. Foreign Affairs, Council of Foreign
Relations Press, New York, 1998, 141 pages, p. 77.
- BVerfGE 1, 299 (315). A 1954 decision of the
German Federal Constitutional Court.
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