Where Canada’s Interests Lie: An Assessment of the April 2005 International Policy Statement

June 28, 2005

Following is an edited transcript of remarks by David Stewart-Patterson, Executive Vice President of the Canadian Council of Chief Executives (CCCE), to the House of Commons Standing Committee on Foreign Affairs and International Trade on June 28, 2005. The committee was holding hearings on the International Policy Statement that was released by the Government of Canada in April 2005.

The Canadian Council of Chief Executives supports the broad thrust of the International Policy Statement – both its overall strategic direction and its effort to develop a coherent framework across the full range of the country’s activities in trade and investment promotion, diplomacy, development and defence. The critical question for us is whether the government is prepared to act on this blueprint and make the policy and fiscal decisions that are going to be required if we are going to deliver on the policy statement’s goal of having Canada make a real difference in the world.

To illustrate the kinds of challenges I see, let me just touch on five topics: multilateral trade and investment, international development, global security, the North American Security and Prosperity Partnership and, finally, Canadian competitiveness within a transforming global economy.

On the trade and investment side, I think it is safe to say that only a multilateral, rules-based system can provide the security and predictability Canadian companies need in order to flourish in the global marketplace. In other words, progress in the Doha Round of World Trade Organization (WTO) negotiations really matters to Canada.

Our direct national interest in a strong multilateral framework has made Canada a leader over the years in encouraging a strong multilateral framework. But frankly, our stature in this regard in recent years has been fading. If we want to do our share to break the current log-jam at the WTO, we have to be prepared to give a little as well as to seek what is in our interest.

Given the slow pace of progress we are seeing at the WTO, we also need to keep on exploring other options, whether in regional trade agreements, trade investment agreements, or bilateral discussions with a variety of our partners around the world, not only because those agreements themselves can be important for us, but because that is one way for Canada to set an example and to spur progress in the broader multilateral arena.

On the international development front, I would like to make a couple of points. The first is that I would support the approach taken in the International Policy Statement of focusing Canada’s development aid on a much smaller group of partner countries. The fact is that Canada cannot solve all of the world’s problems. What we can do is to make sure that we have the greatest possible impact on people’s lives for every dollar we spend. I believe we will have more impact if we tackle the many obstacles to development within a given country in a coherent and strategic way instead of simply sprinkling our money around the world in all directions.

As the International Policy Statement makes clear, focusing our efforts is not an excuse for spending less. Quite the contrary, it is clear that Canada is committed to expanding its development efforts substantially.

I know the government is currently under a great deal of pressure internationally to make a formal commitment to a timetable for pushing the aid budget to 0.7% of Gross Domestic Product (GDP). This is a commitment, I believe, that should not be made in haste. Rather, it requires an extensive and fully informed public debate about the necessary trade-offs and consequences.

One reason, of course, is the huge fiscal impact such a commitment would have. The numbers that are being discussed here are on the same order of magnitude as last year’s “deal for a decade” on health care. Assuming the government could find another $40 billion or so down the road through some combination of economic growth, spending cuts in other areas, or higher taxes, would Canadians in fact choose more for foreign aid over other domestic priorities, such as more for health care? We need to have that discussion, I believe.

More to the point, throwing money at the world’s least-developed countries 10 years down the road is not what they need most. If we really cared about advancing the cause of people in the world’s least-developed countries, we would not be talking, first and foremost, about budget allocations, and especially allocations that are years down the road. Rather, we should be talking about how Canada and other industrialized countries should throw open their borders to the agricultural products that provide a living to millions of the most impoverished people in the developing world. What farmers in the developing world need most right now is not aid projects, not infrastructure, but simply markets for what they grow. And we have to be prepared to face that if we really care about making a difference in the world for those who need it most.

Obviously this kind of path requires a lot more political courage than promising billions of tax dollars at some far-off future date, but it is what would enable Canada to do the most right now, if we so choose.

Turning to global peace and security, I think the defence paper is perhaps the most detailed and substantive element within the International Policy Statement. The fact is that Canada has a very real and compelling interest in contributing to global security – one that goes well beyond our traditional activities in areas such as peacekeeping. International terrorism has become a potent threat to the open global flows of people and of goods on which Canada’s prosperity as a trading nation depends.

Once again, though, there is no escaping the reality that defence is expensive. The equipment, the manpower, the training, the logistical support for extended overseas deployment – all of these will require major fiscal commitments going well beyond those that have been made to date.

With reference to North America, for the past three years our Council has argued that the issues of security and of prosperity have become inextricably linked – not only globally, but also and especially within North America. We therefore were very pleased when the leaders of Canada, the United States, and Mexico signed the Security and Prosperity Partnership of North America during the March 23 summit in Texas.

Yesterday saw an important announcement by key ministers from each country, demonstrating real progress in defining and moving forward on a comprehensive trilateral agenda. Many of the individual initiatives being pursued under this agenda could be described as simply incremental progress, but I think if you look at the action plan that is being laid out, it is clear that the decision of the leaders to articulate a vision and to impose a tight deadline has had a huge impact on broadening and deepening the agenda and accelerating progress. We think that is a very positive move.

Let me conclude by linking the International Policy Statement to domestic policy, and in particular the need for Canada to become more competitive within the global marketplace. This morning the CCCE launched a major new competitiveness initiative we are calling Canada First! Taking the Lead in a Transforming Global Economy.

Our central concern here is the extent to which issues of long-term national strategy have been overtaken in recent months by short-term politics. Now, I understand the realities of a minority Parliament – the give and take that is involved, the unpredictability that is inevitable. But as a country, we simply cannot afford to take our eye off the ball for long. We need to keep thinking about the big picture.

The International Policy Statement, in my view, is an example of the kind of strategic thinking we need. But to be effective, thinking also has to lead to action. As I have described already in my initial comments, the kinds of actions needed are going to require some tough choices in terms of policy and in terms of budgetary allocations, and within a minority Parliament, that is going to require some discussion – some good give and take, some exchanges among the parties.

In launching Canada First!, we have suggested that the federal government is not devoting nearly enough attention to policy and fiscal choices that are going to drive Canada’s competitiveness, productivity, and economic growth within a transforming global economy. I would add, in the context of your discussions this morning, that trade and investment, diplomacy, international development, and defence are core responsibilities of the federal government, yet despite the important goals laid out in the International Policy Statement, the vast majority of new federal funding appears to be going to areas that, while very important to Canadians, lie largely in provincial jurisdiction.

The International Policy Statement, I would suggest, makes clear where Canada’s interests lie. Now the federal government needs to put its money where its mouth is.