New Policies for a New Century After the NAFTA and the WTO Where do we go from here?

June 5, 1999

Let me begin my brief remarks with a salute.

A salute to Presidents Reagan and Bush for their leadership and vision in advancing the cause of free trade in North America and the hemisphere. We are delighted that President Bush is here with us today as convinced as ever of the importance of trade liberalization to the advancement of global economic prosperity.

A salute to the Mexican leadership — political and private sector — for boldly reversing history and for opening the Mexican economy to North America and the world. No single Mexican more clearly represents this spirit of opening — of apertura — than my friend Jamie Serra who is with us today.

A salute to Brian Mulroney who pursued the goal of free trade in Canada with extraordinary courage and conviction and who won a decisive mandate from the people of Canada in the election of 1988 — signaling a mammoth transition in the economic history of Canada. To the former Prime Minister who also is with us today I would say this. I have no doubt that in time historians will be much more appreciative of your efforts and of your contributions than have been some of your contemporaries.

And finally, a salute to the business leadership of Canada who in the early 1980s abandoned a century of opposition to free trade, who articulated a vision of Canadian and global competitiveness that is very much with us today, and who in those early days provided the necessary encouragement to politicians and officials alike to think the unthinkable and, in Donald Macdonald’s own words, to "make the leap of faith".

My task this afternoon is to look ahead and to offer some thoughts on where we go from here. I will couch my remarks in a double context — the first, global, the second with a focus on Canada.

The global picture is deeply disturbing to me. Contrary to what some of the speakers have said at this conference, the global economy is far from healthy. Japan, the world’s second largest economy, is still mired in recession. A serious recovery in Asia will be impossible without Japan’s return to good health.

European growth is lacklustre with the German economy lagging badly and the Italian economy in recession. Russia is in chaos and facing an uncertain future. In Latin America, the jury is still out on Brazil, and the prospects for the continent are far from rosy.

The super-charged United States economy continues to offer up stunning performance but there are serious dangers lurking. The savings rate of Americans is in negative territory, the trade deficit is exploding and the stock market continues to defy gravity.

Against this backdrop, we are seeing a backlash against globalization and with it a dangerous escalation of protectionism. Global trade volumes reflect this malaise. In 1997, we saw ten percent growth. In 1998, growth dropped to less than 3.5 percent.

For all these reasons, the world needs now and for the 21st century a powerful re-affirmation of rules-based market policies throughout individual economies. The world also needs urgently a revival of the principles of open trade. This means moving ahead quickly with the next round of World Trade Organization negotiations and with reforms to the WTO itself.

The agenda must be an ambitious one and must include further reductions to tariffs on industrial goods; it must address non-tariff measures; curb the abuse of anti-dumping, countervail and safeguard actions; extend the coverage of the rules on trade in services; open up agriculture to free trade; expand the rules to adequately reflect the importance of intellectual property, e-commerce and the Internet; move forward with investment liberalization; and explore ways to ensure that trade respects environmental, labour and human rights issues.

In addition and extremely important, in my view, the WTO must ensure that its rulings are implemented and enforced and that private restraints such as cartels, refusals to deal and other unfair business practices are dealt with. The WTO itself must play a much more effective role in integrating and co-ordinating the international monetary and trading systems. It must be truly representative of the global economic community. In this regard, every effort should be made to have major players such as China join at an early date and play a responsible role.

The agenda I have described is ambitious. Its execution is urgent. Urgent, because without significant action, the world could easily lapse from financial crisis to trade crisis and to a new and dangerous global disorder. At the kick-off of the next round in Seattle in November, the WTO would do well to set its sites on a three year action plan and to the achievement of early and significant results. Business will not wait while the politicians squabble. Nor will the world.

Finally, the member countries of the WTO must choose a new Director-General and quickly! The continuing vacuum in the leadership of this all important global institution is intolerable.

Let me turn now to Canada. Canadian economic performance in a number of key areas has been quite outstanding. The federal government and most provincial governments are running fiscal surpluses, inflation has been virtually eradicated, our export performance has been stellar and, contrary to conventional wisdom, the productivity improvements in larger Canadian firms have been healthy. The World Economic Forum ranks Canada as the fifth most competitive economy in the world.

There is not the slightest doubt in my mind that the Canada-United States Free Trade Agreement has been a powerful catalyst in improving our economic performance. This morning, you heard a number of my CEO colleagues from the aerospace, transportation, power, information technology and telecom businesses attest to this fact.

But Canada does continue to face some serious impediments to fully unleashing the potential of the Canadian economy. High levels of taxation, public debt and unemployment, and shortfalls in overall productivity and innovation are the key impediments, and we must waste no time in addressing them. Canadian business leaders are determined to do their part and this is why my own organization, the Business Council on National Issues, recently launched the Canada Global Leadership Initiative.

In pursuing remedies to the weaknesses in Canadian economic performance, trade strategy must continue to be an important card. The attainment of an effective set of global rules under the umbrella of the WTO must be our top priority. Under that umbrella, we must continue to reach out aggressively for strategic markets in Europe, Japan, China and Latin America.

The other dominant priority on the trade strategy front must be the United States. Here we must make fresh efforts to engage Americans in a common cause. For starters, we must seek every opportunity to eliminate impediments at the border; but in addition, we should consider moving beyond the NAFTA rules to common standards; to non discrimination in government procurement; to further liberalization in services; and yes, even to common rules about competition and subsidies.

The effect of such a move would be to bolster Canadian growth, productivity, innovation and investment.

Some of you may be startled that I am suggesting a bilateral initiative here rather than a NAFTA negotiation. If a trilateral negotiation were feasible, I would be the first to support it. But given widespread skepticism about the NAFTA in the United States and Mexico, I fear that the appetite for such a negotiation involving the three countries would be very difficult to develop — particularly in the United States.

Canada should take the lead just as we did in the formative stages of the process leading to the Canada-United States Free Trade Agreement. First we must build a consensus for such an initiative in Canada, and then we must convince the Americans of the wisdom of such a course of action.

As Canada prepares to enter the 21st century, the opportunities are extraordinary. Two factors will be critical to achieving our full potential — a strong and effective, rules-based global trading system, and an even more open, two-way economic relationship between Canada and the United States.

Thomas d’Aquino is President and Chief Executive of the Business Council on National Issues (BCNI), an organization composed of 150 chief executives of major enterprises in Canada. Formed in 1976, the Business Council is the senior voice of Canadian business on public policy issues in Canada and internationally. A non-partisan and not-for-profit organization, member companies administer in excess of $1.9 trillion in assets, and have a yearly turnover of approximately $600 billion.

Mr. d’Aquino is a native of British Columbia. He was educated at the Universities of British Columbia, Queen’s and London (University College and the London School of Economics). He holds B.A., LL.B., and LL.M. degrees, and an Honorary Degree of Doctor of Laws from Queen’s University.

His career combines experience in government, business, and law. He has served as Special Assistant to the Prime Minister of Canada; worked with an international management consulting firm in London and Paris focussing on strategic business problems; served as Special Counsel to a leading Canadian law firm on international trade problems; and, as Adjunct Professor of Law, lectured on the law of international business transactions, trade and the regulation of multinational enterprise.

Mr. d’Aquino serves on a number of boards and advisory committees in Canada and abroad. He is the author of numerous publications, a regular commentator on radio and television, and a frequent speaker on platforms in Canada, the United States, Europe, Latin America, Japan and the Pacific Rim.

He currently chairs the Canada Global Leadership Initiative, a major undertaking of the Business Council on National Issues aimed at advancing policies that would make Canada the best place to live, to work, to invest and to grow.