(Policy papers 2012-2013)

Success for Canada in the international sphere starts at home, where we can build on the strengths of our land, our people, and our economy. In negotiations abroad to rebalance trade flows, our stance must be a principled one. Good partners for Canada are those who see a deal with us as more than a means of entering the much more desirable U.S. market. Canada should help build global rules and institutions in critical areas, such as the monetary and financial system. In international development assistance, we are not doing as much as we can afford to.

Le succès du Canada dans la sphère mondiale commence ici, où nous pouvons bâtir sur les forces de notre terre, de nos habitants et de notre économie. A l’étranger, lors de négociations pour le rééquilibrage des flux commerciaux, nous devons avoir des principes. Les bons partenaires pour le Canada sont ceux qui voient dans un accord avec nous plus qu’une façon d’entrer dans le marché bien plus convoité des Etats-Unis. Le Canada devrait aider à élaborer des règles et des institutions mondiales dans des endroits critiques tel que le système monétaire et financier. En ce qui concerne l’aide internationale au développement, nous n’en faisons pas autant que nous pourrions nous permettre.

 

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Canada is well equipped to achieve a respected global position, because we can excel in all the crucial areas that determine national power and global influence in the 21st century: social stability, access to safe and green sources of energy, clean air and water, and good health care and education systems. A nation’s power and influence will also increasingly depend on its diversity of population, as it absorbs new people and cultures and creates a huge pool of human talent, firmly networked into the international community.

Canada could not be described any better. More and more Canadians are global citizens — Canadians without borders — exploring the world or staying connected to their countries of origin more instantly, easily, and inexpensively than ever before. A recent study shows that nearly three-quarters of Canadians have travelled outside Canada and the U.S.; half are tightly connected with one or more foreign countries and 80% report following international events closely. Canada provides a safe haven and a stable base that permits new Canadians to build business and commercial links to their home countries and nurture global networks that are enormously valuable economically, socially, and politically. We should encourage these networks and the associated employment opportunities for all Canadians.

We can build on these strengths of our land and our people to grow our economy and trade relationships. Although managing our economic and diplomatic relations with the United States will remain the primary focus of Canada’s attention, the emerging economies such as China, India, Brazil, and South Korea are rising rapidly in priority. They and others want our natural resources. Canada needs a careful strategy that leverages our resource base to secure better access for our exporters and investors to markets currently enjoying high levels of growth, thereby supporting innovation at home. A leveraging strategy is particularly necessary since the conventional rules for trade and investment with the largely state-controlled emerging economies do not apply.

The most recent round of multilateral trade talks (the Doha Round) collapsed partly because it drifted into irrelevance as food prices soared and no progress was being made on agricultural tariffs. Since then Canada’s focus, perhaps understandably, has been on concluding as many bilateral free trade arrangements as possible. Indeed, 70% of Canada’s trade is now subject to free trade deals. But doing deals just to raise our total is not good governance or in the national interest. Deals worth signing will bring in not just goods and services but also students seeking higher education and employers willing to locate in Canada for the long term, especially to establish domestically based, globally active businesses producing high-value products for the Canadian and world markets.

Surprisingly, despite many ongoing bilateral negotiations, we still have no free trade deals with Asia. Canadian businesses need the help of government-to-government trade deals to expand their ability to market Canadian goods to the fast-growing emerging economies, especially in East and South Asia. We have been negotiating a deal with Singapore since 2001 with no results. Recently in Thailand, our prime minister ignored trade expansion to focus only on fighting human trafficking, terrorism, and transnational crimes. Canada will be spending $12 million in Southeast Asia to fund police officers.

We need to be more aggressive in establishing links so that Canada is more than just a convenient place for businesses to locate in order to supply the U.S. market. In particular we must put a great deal of effort into free trade with China. China has an almost three-to-one advantage in trade flows: Chinese exports to Canada in 2011 consisted of $48.1 billion in mainly manufactured goods, compared with Canada’s exports of $17 billion primarily in natural resources. Canada has a lot to gain from obtaining access to China’s protected agricultural and services sectors, especially financial services, professional and business services, and telecommunications. China is making deals with New Zealand and Australia to open up these sectors. There is no reason why Canada cannot join this list.

We are negotiating a free trade agreement with India, and we have finally joined the talks for a Trans-Pacific Partnership (TPP) of the United States, Australia, New Zealand, Chile, Peru, Malaysia, Vietnam, Singapore, and Brunei. To get results, however, our national leadership must vigorously test whether provinces are really interested in advancing economic union[8] here at home: interprovincial compromises are necessary in order to expand international economic opportunities. And increasingly, taking advantage of trading opportunities means that Canada will have to get serious about climate change[12] policies. Our support of North American airlines in their opposition to the European Union’s Aviation Emissions Scheme, which requires airlines to account for carbon emissions, has only further complicated the Canada-EU negotiations.

As we integrate into the economic, social, and political global networks of the 21st century, it is important for Canada to play a leading role in shaping global governance[15]. At the United Nations, for example, where Canada once had a sterling reputation, parochialism replaced principle in our infamous vote to block the addition of asbestos to the list of hazardous chemicals, for the sake of a few jobs at the Jeffrey mine, in Asbestos, Quebec, that could easily have been transferred to another industry. This and other embarrassments, such as having nothing constructive to say in climate change negotiations, have devalued Canada and the Canadian perspective on the international stage.

The 2008 stock market crash and worldwide credit freeze put an end to American dominance of the postwar international economic order and undermined the U.S. dollar as the world’s reserve currency. For decades no one seriously questioned the value of the American dollar, and the U.S. was able to consume much more than it produced. Americans borrowed to the max to buy shares, flat-screen TVs, and homes. When the bubble finally burst, Americans lost most of their credibility in the international financial sector. The U.S. used to lecture the rest of the world about getting its economic house in order by imitating the American way: deregulation, privatization, freeing market forces, reducing deficits, lowering taxes. Few countries, especially those that suffered the indignities of the U.S.-inspired conditions for financial assistance imposed by the International Monetary Fund (IMF) during the 1990s financial crisis, now consider the American financial system and deregulation to be a model to follow.

Canada should play an active role in encouraging the international community to come together to design a regime to reflect the new power realities. In the IMF, for example, China holds only 3.8% of the voting rights despite the fact that it is the world’s third-largest economy, while the U.S. has nearly 17% and a veto over all significant IMF decisions. At the very least, a large and dynamic economy like China must be allocated more voting weight in the IMF, to go along with a substantial increase in its contribution to the IMF’s capital base. Bringing China’s new wealth into global institutions will help the IMF react much more quickly and effectively in future emergencies than it has done in the eurozone crisis.

Canada should also join like-minded nations in Europe like France and Germany in promoting and implementing an international financial transactions tax (popularly known as the “Tobin tax”). As in current discussions within the European Union, the tax could apply to all transactions between financial institutions (including hedge funds) involving stocks, bonds and derivatives, and would be payable by both the seller and buyer. To be most successful, the tax needs sufficiently broad acceptance in the international community to minimize speculative electronic traders seeking out non-participating jurisdictions to avoid the tax. The financial transactions tax was initially proposed in the 1970s as an efficient way to raise substantial funds for international development. Now, the tax is also viewed as a useful step to force the financial world to contribute to the costs created by the financial crisis of 2008 and its aftermath.

Like all liberal democracies, big and small, Canada needs to participate in a wide range of networks and international agreements to produce effective cooperative action on global problems of mass poverty, energy security, regional militarization, pandemics, and climate change. Mass poverty is the greatest moral challenge and dilemma of our time. In the near future, hundreds of millions of young people around the world will find very few employment opportunities, except in the informal economy, because they lack education and skills. They are living in crowded megacities, where they will be attractive recruits for radical groups, alienated from the global economic, social, and political system. These groups look at the U.S. and see only Guantanamo Bay and Abu Ghraib.

The international community must be fully engaged in supporting initiatives such as the Millennium Development Goals, established in 2000. At the very least, Canada must increase foreign aid. Development assistance should be a flexible instrument of foreign policy, targeted to wherever we can make a demonstrable difference to those in need. We must bring hope and an expectation of progress to developing societies so that despair and anger do not send more of the masses into the arms of extremists.

At the same time as we ramp up our efforts to lift up our global neighbours, we must deal firmly with the corrupt self-interested regimes that rule by fear in too many developing areas of the world, siphoning off funds intended to advance social and economic development. They are guilty of manufacturing poverty, alienation, and anger for their own political ends.

Some wonder whether there’s enough money in all the world to end poverty. But according to Global Financial Integrity, a watchdog organization, poor countries lose more than $1 trillion in illicit financial flows a year to tax-free offshore banks in such places as Luxembourg, Singapore, and the Virgin Islands. This is 10 times the amount of all countries’ foreign aid combined, and at least four times the amount that experts have calculated would eliminate poverty. What we lack as an international community is will, not wealth.