To the Annual Meeting of the Council of State Governments

This could not be more fitting. You come from a great country that helped invent modern federalism. The framers of the United States Constitution didn't call their political essays The Federalist for nothing. To protect liberty, your framers divided powers between the Federal and State Governments so that "ambition be made to counteract ambition".

For over sixty years your organization has stood as a guardian of American federalism. You represent State governments in the United States. You are unique in that you bring together both the Executive and Legislative branches. You are also bipartisan.

In Canada, our federalism was not, like yours, forged in the crucible of revolution. We have evolved differently. Canada brings together two great linguistic communities, English and French, each fed by the cultures of many lands. No doubt you will have noticed by now that the vast majority of people in this, the beautiful city of Québec, speak French! During your stay here, you will be benefiting from the warm, generous hospitality and joie de vivre of the people of my own home province. I am proud to call myself Québécois and Canadien.

Québécois have always believed in the need for a strong provincial government to protect the French language and culture. They also know the role that the federal government plays in protecting and promoting this language, which is also my own, across Canada.

Canada's founding fathers believed passionately in a system of government that would preserve and promote our necessary diversity and our unity. I believe passionately in this as well.

President Clinton recently stated that it is not a coincidence that the three countries of North America are all federations. In talking about Canada, he said: "The partnership you have built between people of diverse backgrounds and governments at all levels is what this conference is about -- and, ultimately, what democracy must be about, as people all over the world move around more, mix with each other more, live in close proximity more."

President Clinton was speaking at a major conference on federalism held right here in Canada and in the province of Québec. On that occasion, he also said: "In the United States, we have valued our relationship with a strong and united Canada. We look to you; we learn from you."

Let me let you in on a little secret. We, in Canada, also learn from the United States. Even if we don't always agree with what you are doing. U.S. States are famous for being the laboratories of democracy envisaged by the framers of the US Constitution. For over sixty years, the Council of State Governments has played a key role in identifying and spreading knowledge about best practices among U.S. States and in building State leadership.

Your meeting here is, in many ways, historic. I am pleased that the National Assembly of Québec has taken the initiative to better introduce your important organisation to all Canadian provinces and to the Canadian public at large. Québec is the only Canadian province so far to have joined your organisation as an International Partner. However, both Québec and Nova Scotia are members of your Eastern Regional Conference. Other Canadian provinces are also participating in your work. I am pleased to see that Ministers from Alberta, Saskatchewan, Ontario, Nova Scotia, and Newfoundland are here as well. Our provinces are often on the cutting edge of national policy and I encourage all Canadian provinces to deepen their relations with your organisation.

This brings me to the second reason I am particularly pleased that you have chosen Canada and the province of Québec for your meeting. Quite simply, Canada and the United States are each other's closest friend and ally. President John F. Kennedy said: "Geography made us neighbours. History has made us friends. Economics has made us partners and necessity has made us allies."

Let me remind you of some of the underpinnings of this amazing relationship.

Trade flows between Canada and the United States are the largest in the world. Canada and the United States exchange over $1 billion dollars per day. That's U.S. dollars. In 1998, U.S. transactions with Canada were almost 50 per cent more than its second largest trading relationship with Japan.

Exports to Canada account for almost one-quarter of all U.S. exports of goods to the world. In 1998, Canada's purchases of U.S. merchandise amounted to about $5,166 per person. The United States bought approximately $650 per capita. In fact, the Canadian province of Ontario alone purchased more U.S. goods than did Japan. Canada bought more U.S. goods than all 15 countries of the European Union and Latin America combined. And the benefits to the United States are spread widely. Forty U.S. States and Puerto Rico have Canada as their leading export market.

Free Trade Agreements have benefited both of us. The U.S.-Canada Current Account is nearly in balance. U.S.-Canada Trade has doubled under the Canada-U.S. Free Trade Agreement and NAFTA. The FTA which liberalized trade between Canada and the United States went into effect in 1989. Between 1988 and 1993, two-way trade increased by one-third. The agreement was expanded in 1994 with Mexico joining the partnership under the NAFTA. Two-way trade between Canada and the U.S. has continued to prosper, growing by another third between 1994 and 1998.

Canada and the United States invest in each other's future. The U.S. is the largest foreign source of investment for Canada and Canada is the fifth largest source of foreign capital for the United States.

Like the United States, we are enjoying a strong economy and have both put our fiscal houses in order. Without our bilateral and multilateral trade agreements, I doubt this would ever have happened.

But dollars and cents don't tell the whole story. We are neighbours and friends. Last year, Canadians and Americans crossed the longest undefended border in the world almost 200 million times. And although there are definite differences in our national characters, we share a bond forged from working together to build a better world. Canadians and Americans fought side-by-side in both world wars. We stood together in NATO to end the Cold War. Today we continue to work together: in Bosnia, in Kosovo, and on Iraq. Together we are advancing democracy and human rights in Haiti, the Middle East and other parts of the world. We are partners in the defence of the North America through NORAD.

Our two countries share a border that rolls for thousands of miles across the mountains and plains, and rivers and lakes of this vast continent. Together we have woven a fabric of hundreds of treaties, arrangements and understandings on many levels to manage this magnificent environmental and economic trust. We have the world's most comprehensive relationship.

Just think of the Great Lakes. As you may know, together our two countries co-manage a remarkable proportion of the world's fresh water, half of it in the Great Lakes. We have just celebrated the 25th anniversary of the Canada-U.S. Water Quality Agreement. In the 1970's some scientists were declaring Lake Erie officially dead. Since then, our two countries have worked together to restore and protect the Lakes. Much remains to be done. But Lake waters are now much cleaner than they were.

You, Governors and State legislators, like our Premiers and our Provincial legislators are critical to the maintenance of the excellent relations between our two countries.

In such a comprehensive relationship, we cannot always see eye-to-eye. That is why it is important for the lines of communication to be open. I encourage you to seek opportunities to meet with your Canadian counterparts. I know you will find that many of the issues that occupy your time and attention have a direct corresponding issue here. In particular, I urge those of you who don't already have Canada as their largest trading partner to find out what you are missing by leading trade missions to our country.

My main message to you is obviously that Canada and the United States have everything to gain by working together. This is true for trade, it is true for the environment. And you, governors and state legislators, are exceptionally important to keeping our mutually beneficial partnership, in these areas, healthy and growing.

I want to close by highlighting the critical importance of U.S. leadership in the world.

The United States was the master-builder of the post-war international trading system. The fashioning of the architecture of international cooperation was a momentous achievement. It is the cornerstone of decades of unprecedented prosperity and security that we have enjoyed.

We need only look back to the period before World War II to be reminded of the dangers of moving in the opposite direction. A protectionist tide in Europe and North America, symbolized by the Smoot-Hawley tariffs in your country, drove the World into the Great Depression of the 1930s.

We must be vigilant to avoid the tragic errors of the past. We watch with concern here in Canada certain voices in your country urge a Fortress America approach to the 21st century. Others – and not only in your country – are excessively suspicious of the open multilateral system that we have built together. Trade agreements matter. Arms control agreements matter. Climate change matters. I urge you to make your voices heard in support of American leadership in the world. Canadians will be at your side.

The challenge for both our countries is to lay the groundwork for growth, prosperity, and stability in the next century. No one can predict exactly how the rapid changes in the world play out. But the increasingly borderless global economy has the potential to raise living standards dramatically not only in our two countries, but everywhere.

And we will have an opportunity to continue meeting that challenge right here in Quebec City. Which, I am pleased to announce today will host the third Summit of the Americas – the first of the new millennium - from April 20 to 22, 2001.

As we approach the new millennium, let us recognize that we are very lucky to have each other as neighbours. We Canadians know this. I am sure you do as well.

President Reagan said in this very city some 14 years ago that: "We're more than friends and neighbours and allies; we are kin, who together have built the most productive relationship between any two countries in the world today."

Our special relationship will continue to offer tremendous opportunities. Not just for growth and prosperity. But, more importantly, to build the kind of world we can be proud to pass on to future generations.