Dinner Given by the Canada Club of London

It is a pleasure -- in advance of the G-8 in Birmingham -- to address the Canada Club.

Much has changed since the Club came into being during the first years of Canada. Yet over the decades, it has always bridged the historic richness and the modern vitality of British-Canadian relations.

It is a richness steeped in our shared history. It is a friendship forged forever in countless quiet places in Europe and Asia, where our soldiers lie side by side. Fallen heroes in the defence of freedom and democracy. It is a partnership built on decades of cooperation in the Commonwealth, at the United Nations and the G-7.

Yesterday, we celebrated an important symbol of that shared history. We were honoured by the presence of Her Majesty at the re-opening of Canada House. A Canada House restored to her former glory and equipped for the electronic age. I know you share my great happiness that -- in the heart of London -- Canada House is back!

We in Canada value our historic ties to the United Kingdom. But as I speak to you today, it is clear that these ties are taking on a renewed vitality. A renewed energy. A renewed sense of purpose. That has its roots in the surging optimism and confidence in the future that is sweeping both of our countries.

For Canada and Britain, it is truly the best of times and the best of times.

To borrow from Prime Minister Blair, the United Kingdom is no longer known more for what she once was than what she could be. Clearly, the New Britain is less focused on the glories of past centuries than on the new opportunities of the new century that is upon us.

Not long ago, Canada, too, was adrift. Caught in a downward spiral that we seemed to lack the confidence to reverse. A nation prevented by our failure to deal with the mistakes of the past from meeting the challenges of the future. A nation referred to by the Wall Street Journal as a candidate for membership in the Third World.

Today, when the international media refers to Canada, chances are it is in the words of The Financial Times, here in London, which just two days ago dubbed Canada the "Top Dog" of the G-7 and said Canada is entering a "Northern Renaissance." It's true, today, Canada is poised on a new golden age of prosperity. Once again, we are a confident, constructive player in the community of nations and the global economy.

When our government first took office four-and-a-half years ago, our deficit stood at $42 billion -- the highest in our history, and growing. Even worse, at 6 per cent of our GDP, we had the second highest deficit to GDP ratio of any G-7 nation. And we were heavily dependent on foreign borrowing to finance our debt.

Our national unemployment rate was 11.4 per cent at the beginning of 1994. Our interest rates seemed to be permanently stuck above those of our largest economic partner, the United States. In 1994, the World Economic Forum rated Canada number 16 in terms of international competitiveness, down from its number 5 position several years earlier.

But as they say, ladies and gentlemen, that was then and this is now!

Two months ago, our government delivered a balanced budget -- the first in almost 30 years -- and the only balanced budget of any G-7 nation. And we announced that the next two budgets will be balanced -- the first time a Canadian government will have accomplished three consecutive balanced budgets in almost 50 years.

Our debt to GDP ratio is on a permanent downward track. And even more, we have implemented a plan to pay down the debt -- year after year after year.

In 1997, economic growth in Canada led the G-7. And forecasters say we will lead the G-7 again in 1998. More than one million jobs have been created since our government first took office in 1993. Relatively speaking, our economy is creating more jobs than any other G-7 country. Our unemployment rate has fallen three full points, to its lowest level in almost eight years.

For the first time ever, our short and long term interest rates are lower than in the United States. In 1997, Canada was back up to 4th position in the World Economic Forum's rating of international competitiveness. And the Economist Intelligence unit now ranks Canada third of nearly 60 countries for having the best business climate for investment over the next four years. These are historic accomplishments.

And they are all the more impressive when you remember that we measure our deficit in accordance with the strictest accounting principles. Most countries -- including the UK, France and the United States -- use a different measurement, one of borrowing requirements.

If we were to use the same measurements to calculate our budget balance, we already had a surplus last year. This year we will have a surplus of $12 billion on financial requirements.

In the most practical terms, this means that the Government of Canada is no longer crowding out business on our capital markets. The days of corporate Canada having to look offshore to finance new investments are over. This, in turn, means even lower interest rates are definitely in our future.

How, you may ask, has Canada become the Comeback Kid of the industrialized world?

The answer is simple, really. There was no magic. No miracles. There was only the courage of the Canadian people. They insisted that we make the hard choices that were needed to put our fiscal house in order. To see the job through. And like so many Canadians, I cannot hide my sense of pride that Canada is back in the black.

The era of fiscal excess in Canada is over. Our government will never, ever allow the finances of our nation to get out of control again.

Our aim in cleaning up the books was to do it once and for all; so that no one will have to do it again. We will not squander the fiscal dividend that our success has made available on short-term political fixes that do not provide lasting benefits. Those days in Canada are over for good.

And it is because they are behind us forever that Canadians feel the same surge of optimism and hope that is bursting out all over the United Kingdom.

It has helped give us the confidence to take on new challenges. To make strategic investments -- within our means -- that prepare Canadians for good jobs and higher standards of living in the 21stcentury. In fact, our top post-deficit investments have been in vehicles such as the Millennium Scholarship Fund, which will help 100,000 Canadians a year attend post-secondary institutions. And it is just one of the key investments we are making in learning.

Our new confidence has allowed us to claim a position in the forefront -- regionally and globally -- of the movement for free trade. And to renew and re-energize our partnership with the UK and beyond in the new Europe.

The partnership between our resurgent nations says a great deal about the values we share. Both of us were there in recent months when crisis loomed in the Gulf Region. And we stood to be counted without delay or apology.

As allies in two world wars, we know the horror of war, and so we have worked together tirelessly to promote peace. In war-ravaged Bosnia. In the international campaign to ban landmines. A campaign that bore fruit last December, when more than one hundred countries signed the Ottawa Treaty. And Canada strongly supports Britain in her efforts to secure passage of the landmark peace accords in Northern Ireland. We are deeply proud that one of our finest citizens, General de Chastelain, is playing a leading role in that historic process.

It is this partnership, of shared values, shared experience, and shared optimism about the new century that Prime Minister Blair and I focused on in our discussions today. It is what lay at the heart of the Joint Declaration our two countries issued a year ago. It is what the agreements we signed today are all about.

And it is told not in grand pronouncements, but in the human experiences that link our nations and our people. In the visit just two weeks ago by one of the great minds of our era, Dr. Stephen Hawking, to our exciting Neutrino experiment in Northern Ontario. A symbol of how cooperatively we are breaking new scientific barriers as we enter a new century.

It is told in the link up of our national SchoolNet program with its counterpart program here in Britain -- the National Grid for Learning. In Canada, SchoolNet is linking everyone of our more than 16,000 schools and our more than 4,000 public libraries to the Internet -- and to each other. And now, thanks to our new agreement, young people in Canada and young people here in Britain will also be able to connect to each other. To share experiences and ideas. To learn from each other. Building thousands of personal bridges of understanding and friendship across the Atlantic.

Indeed, building bridges is a good way to characterize the relationship between our two countries. Not just to each other. But to the vast communities that lie beyond. Canada as a gateway not just to North America and NAFTA, but to the growing hemispheric family -- la gran familia -- of the Americas. And Britain as the gateway to the new Europe.

Indeed, for the first six months of this year, Britain holds the Presidency of the European Union. Britain has always been a pivot for Europe -- pointing it outward to the wider world. The renewed level of interest in trans-atlantic economic partnership is evidence of this.

As many of you know, I have long been an advocate of a NAFTA-EU trade link. And I will continue to promote that idea at every opportunity I can. Canada will continue to be at the forefront of trans-atlantic trade liberalization -- just as we are in promoting free trade within the Americas and in the Asia Pacific region. At today's Canada-EU Summit, we renewed our commitment to reinvigorating our trans-atlantic relationship.

Trade is the key to economic growth and prosperity in Canada, where 40 per cent of our GDP depends on exports -- higher than any other industrialized nation.

But, beyond question, trade is also the key to greater global prosperity. To higher standards of living. To a better quality of life for people everywhere. Our country is living proof of that. And to maintain and improve the quality of life of our citizens, we need to continue to liberalize trade. Even more important, the people in other countries, poorer countries, deserve the same opportunities we have had. The opportunities for prosperity that come through the open doors of trade. That is why it is so essential that liberalized trade be the economic engine that drives the global economy of the new millennium.

This will call on our common resolve to resist the pressures of protectionism and isolationism. Pressures which throughout this century have been a recipe for poverty and stagnation.

More, it will require us to deal frankly and squarely with the challenges, uncertainties and fears that have been churned up in the wake of globalization. A fact driven home by the Asian financial crisis. Our citizens have the right to be reassured. They have legitimate concerns about change and globalization. And those concerns should be addressed.

And we must continue to work on the international level to ensure that globalization does not become a four letter word among ordinary people around the world. That it means more than mergers and balance sheets.

That is why Canada will be working within the G-8 for an international system of surveillance of national financial sectors. We began this process at the G-7 meeting I had the honour to host in Halifax in 1995. But the crisis in Asia has made it clear that more is needed. At the G-8 finance ministers meeting, Canada put forward a proposal for collaboration between international financial institutions and international regulatory bodies. We don't want a big bureaucracy. What we do want is a flexible, effective means of ensuring that the Asian crisis is not repeated. We owe that much to all our citizens.

It is an issue I intend to take up from the finance ministers at the Leaders' summit in Birmingham.

Ladies and gentlemen, my time in the United Kingdom this week offers me a chance to reflect on the Canada-UK relationship in all of its facets: past and present; political and commercial; in peace and in war. There is much to celebrate. But as I reflect on our shared history, it is the future that beckons.

Britannia has been reborn. And Canada is the Comeback Kid. We have accomplished much on our own in recent years. And there is no limit to what we can do as partners.

The spring of 1998. Truly the best of times and the best of times.