CIAO DATE: 11/03

Canada-U.S. Relations and Globalization

Joe Clark

September 2001

The Center for Strategic and International Studies

My colleagues and I have come to Washington now, before Parliament reopens in the fall, because we are at the beginning of a major debate in Canada about the future and nature of our relationship with the United States.

There are also a number of fundamental bilateral issues at play from trade and the economy to environment and defence. Naturally, I will be discussing softwood lumber, and agricultural subsidies, and other important specific issues.

The softwood dispute risks undermining support in Canada for the principle of free trade. One of the most fundamental gains from NAFTA was to enshrine the rule of law in trade, through effective dispute resolution measures and procedures. That made it possible to establish a more far-reaching dispute settlement system in the World Trade Organization.

Without a clear set of rules, rights and obligations, Canada is at the mercy of special interest groups in the USA. In softwood lumber, the dispute has run more than 15 years.

Canadians are united in their opposition to the U.S approach on this subject. They don't understand why free trade doesn't extend to softwood lumber, when it is one of the biggest items in our cross-border trade.

Having the issue resolved impartially through the WTO dispute resolution process binding on the parties seems to be the only viable alternative. I will be making that case today to Vice-President Cheney.

Canada is the largest trading partner of the United States.

As we move forward, we have to build our own models of co-operation, models which reflect the realities of North America. For example, we should not be mesmerized or misled by Europe's move towards closer economic and monetary integration. Europe is several states, not just three. Some are small, some powerful. There is no political, military, or economic super-power remotely comparable to the USA. When power is so concentrated and disproportionate, an attempt at a European model - whether it is called a "customs union", or "harmonization" or something else - would be a code for Canada and Mexico simply accepting US requirements. That is good for none of the partners, and is unacceptable to at least two of us.

Another reality is that most of the rest of the hemisphere prefers indigenous models of co-operation, other than NAFTA, or less demanding than NAFTA. So "NAFTA Plus" is a phrase, not a plan. It could mean broadening the number of nations that adhere to a looser and more general agreement, or it could seek to deepen the level of intrusiveness and integration within NAFTA. It could do one or the other, but not both.

And, among the three sovereign nations of North America, while it may lead to discussion of important improvements in movements across borders, it cannot lead to the displacement of those borders themselves.

The option which Canada chose deliberately, 15 years ago, was a two-track strategy - free trade with the US, and trade liberalization on a global basis. They are complementary tracks, but recognizing the difference between them is as important now as ever. What Canada can't afford, on an issue as important as this, is drift.

Foreign relations are about more than cross border issues or the future of NAFTA. They are about the nature of nations - where they differ, how they change, how they can work together.

My interest in my conversations here is in understanding better where the new U.S. Administration is coming from, and sharing my own perspective from a Canadian point of view.

The context of relations between Canada and the United States has been changed by at least three major circumstances.

The first is simple technology. Things that were considered impossible - from electronic commerce to cloning - have become possible, sometimes commonplace. At the same time, we can no longer contemplate options that were based upon shutting out the world we didn't want to deal with. Negotiating a Free Trade Agreement took considerable political courage - but it wasn't that political decision which opened the world. The world was opening, and the courage came in recognizing and directing that change.

The second factor is unquestionably "globalization." The world has become more mobile, more global, and more international. We should understand that, among significant numbers of our citizens, that word global" has become almost pejorative, because it is associated with mass enterprises, which ordinary people feel they can't control. That leads increasingly to a sense of discomfort, even fear, which protestors manifest at conferences like Genoa, Quebec City and, certainly, the next G-8 summit in Alberta.

"International' is a better word, because it describes more accurately the behaviour and perspective of more people, who work in, and take account of- and see on the media - conditions in specific places that are not like home. That is a useful distinction in Canada, if not in the United States. We have never been afraid of the "international", whether that involved early participation in world wars, humanitarian involvement in the third world, or travel or trade. In fact, we could argue that while the founders of the USA sought to build a new society, tucked away in this new continent, we, from our earliest days, retained and prized links with the distant cultures we come from.

A third factor affecting the relation between Canada and the United States has been internal change within both countries. Let me speak briefly, and selectively, of Canada. Our internal demographics have changed profoundly. Not long ago, the primary cultural roots of Canadians were in Europe, the sources of innovation and dynamic growth were in central Canada, and natural resource wealth was a mainstay of our economy. We occasionally thought ourselves capable of shutting the world out - and tried to do that through instruments like high tariffs, the Foreign Investment Review Agency, the National Energy Program, and other remnants of Canadian protectionism.

That was another time, almost another country. Now, immigration from societies that are emphatically not European, particularly from Asia, is helping transform the nature and the world-view of our domestic society. The proportion of Canadians who describe their origins as Asian in Vancouver, Toronto, Calgary, Edmonton and Montreal has reached a critical mass, which creates the self-confidence to shape culture and priorities, and not just passively receive old practices.

At the same time, the transformation of Western Canada has created a powerful source of innovation within Canada, which feels itself restrained by institutions of government designed in an earlier age. My province of Alberta has been the most dynamic source and instance of that change. The Alberta caricature is of oil wealth; the Alberta story is of extraordinary innovation and self-confidence. And now that British Columbia has a government with an overwhelming mandate and majority, and a determination to rally that province's rich resources in constructive ways, there are two powerful provinces in Western Canada, able to join their innovative instincts with the traditional sources of central Canadian power. (As the sometime Member of Parliament for Kings Hants in Nova Scotia, I can report a similar transformation in parts of Atlantic Canada, whose innovation and aggressiveness genuinely reflect a "new East"). These are all positive and exciting domestic changes, if we can harness them. But they change the image and reality of Canada -just as similar factors have changed the image and reality of the United States.

So, in that next context, what should guide Canada's international policy? Put another way, what are the interests of Canada?

Canada has a fundamental interest in economic security and growth. They are the means by which our citizens feed their families and build their dreams - and the means by which our national community pays for the priorities which define us, whether those are health care, or personal security, or support of the arts.

We have an interest in international order. We cannot plan or prosper if we are subject to the whims of either rogue states or superpowers, or if the world is threatened by anarchy, or disease, or the violence that flows inevitably from poverty and desperation.

Finally, Canada has an interest in controlling our future and our nature. Let me elaborate on that. Canada is a global player and a North American partner, and I will speak in a moment about our global role. But let me focus first on this continent and hemisphere.

The Progressive Conservative government broke years of Liberal caution and assumed Canada's full membership in the Organization of American States. We initiated the Free Trade Agreement that led to NAFTA, and did that against intense domestic opposition in Canada. That is the record. That is the past.

Looking ahead, we also know that Mexico will be a growing force in the continent. We strongly encourage Mexico's growth and development. It is good for the continent, good for Mexico, and good as a model of what trade can bring to developing nations. But we want to ensure that, as Mexico's strength gathers in North America, Canada's relative power grows too. We are conscious of - and applaud - President Bush's strong personal interest in the NAFTA partner that is Texas' neighbour. But it is in Canada's urgent interest to ensure equal attention to what Canada brings to this North American partnership.

A Canadian scholar once called Canada a "peaceable kingdom". One price we pay for that in this media-conscious country is that, while Canada is your biggest trading partner, we are rarely your biggest headache. Most American administrations pay more attention to Cuba than they do to Canada.

One very practical way to ensure that Canada's relative influence stays strong would be to restore the practice of formal, regular, "home and home" meetings between the U.S. President and the Prime Minister of Canada, twice a year, and quarterly meetings between the U.S. Secretary of State and the Canadian Foreign Minister, and the U.S. Secretary of the Treasury and the Canadian Finance Minister. That worked extremely well with earlier Republican administrations. It forced officials and leaders, on both sides, to focus regularly on Canada-US relations. It was a more reliable forum than the golf course, and a more productive atmosphere than meetings convened to resolve a crisis.

Canada's most important international relation is with the United States. That is the result of economics, geography and choice. The factor of choice is important. Were we free to re-draw the world's map, we would not place ourselves next door to Britain, nor to France, nor even to Papua New Guinea. Our countries have more in common than a continent. While we sometimes pursue the values in different ways, our societies both believe in human equality more than Europe does, more in freedom than Asia does. We are self-consciously democratic, and see ourselves more as nations of the future than the past.

But if this is our most important international relation, it is not our only one. We are a global player, reflecting values similar to yours, but maintaining a perspective that is not tinctured by the ego of a superpower, and earning respect and trust in quarters where the US might generate envy or fear.

So Canada's global role is important to more than us. This is a partnership to strengthen, and the challenge is to determine how we do that in a real world where the US has immense and growing power, and where globalization diminishes the traditional sovereignty of nations like Canada.

A large part of the response to that challenge must come from Canada. I will keep Canada's domestic arguments at home. But you should know that I came back into public life because I believe Mr. Chrétien's government has made a dangerous practice of ducking the tough decisions, which would renew Canada's reputation as a global influence. At our best, Canadian government took risks to oppose Suez, to propose peacekeeping, to fight apartheid, to move American hostages out of Iran, to initiate treaties on Free Trade and Acid Rain. None of that has happened in the last nine years, in part because the Opposition to Canada's governing party has been so divided, but also because Mr. Chrétien's government has no will to lead. While CNN didn't notice, the most telling moment in our electoral debates, last fall, was when I asked Mr. Chrétien to name a single major accomplishment he could claim after two terms as Prime Minister of a majority government, and he could not name one.

Canada is the smaller partner in this relation, so a heavy burden of initiative rests with us, as it did on trade and acid rain. But Canada's capacity to play a constructive global role, in co-operation with the United States, obviously depends heavily upon American attitudes. I have had the privilege of working, government to government, with Presidents Jimmy Carter, Ronald Reagan and George Bush. To reveal an open secret, public opinion in Canada was often harsh on President Reagan. The Trudeau government had serious disagreements with that Administration. We came to office then determined, in outspoken Canadian fashion, to change inwardness in Canada that, in other countries, might be called "isolationism" and to "give the United States the benefit of the doubt." That led to one of the most creative periods of Canadian-American, co-operation in recent history, with both Presidents Reagan and Bush. We negotiated and signed a Free Trade Agreement that set the pace for the world. We signed an historic environmental Treaty on Acid Rain. We worked together as democracies in the Americas, and on reshaping relations with Eastern and Central Europe after the collapse of the Berlin Wall, and in ensuring that the action against Saddam Hussein occurred under the auspices of the United Nations.

Old models changed. New ideas emerged. Canada and the United States established a creative partnership in shaping that change. Often our perspectives and experience were different. That made us better partners. I come to Washington believing we can do that again, in a time and a world when the changes are even more profound.

There are critical issues where Canadian views and those of the Administration appear to diverge.

We have always placed the highest priority on having relations among states governed by a rules-based system. If reliable rules are necessary within nations, so are they among them. As a country that is not a superpower, but is unquestionably a democracy, a market economy, and a developed nation, we believe the world needs rules and institutions that are respected by both the stronger and the weaker.

The present Bush administration has declined to support international agreements, which it did not believe to be in the interest of the United States. That is giving rise to new concerns about how seriously the U.S. values the process of multilateral diplomacy and negotiation. I have worked with members of this Administration in other incarnations, and found them to be innovative and very conscious of the unusual role of the United States in the world. I assume they have alternatives to the systems they find unsuitable, and I look forward to learning more about those alternatives.

I want also to explore the Administration's attitude towards arms control. As a country that, decades ago, decided deliberately not to pursue our capacity to develop nuclear weapons, Canada believes in the importance of arms control to the maintenance of international stability. I am encouraged by the apparent willingness of Presidents Bush and Putin of Russia to discuss the impacts of any Missile Defence system on the bilateral ABM treaty or other arms control measures. Again, I look forward to hearing more about the Bush Administration's views on this question, and on the proposal they are now calling Missile Defence.

The leadership of the United States has been critical to the development of the present body of international rules and institutions. It was the United States that seized the initiative with the Marshall Plan after the war. It was the United States that led in the creation of the Bretton Woods institutions. It was the United States that led in the creation of the GATT, now the World Trade Organization. It was the United States, which drove the original human rights declaration. It is also the United States, which has been crucial to much of the peace and security and other multilateral superstructure we have today.

Quite apart from that impressive history, there are two inescapable realities today.

The first is that the rest of the world can negotiate without the United States - but the results of those negotiations will not be nearly as effective if the United States stands outside. The second reality is that, powerful though the US might be alone, it can achieve more of its goals, more completely, if it works to make those acceptable to other nations.

In a world of constant and dramatic change, no one should be wedded to the status quo - least of all a nation that prosecuted a Revolution to change old ways that didn't work. If President Bush and his colleagues have improvements and alternatives to put forward - for example, alternatives to Kyoto, or a more reliable way to resolve disagreements over softwood lumber and subsidies to agriculture - Canadians will consider them seriously.

Indeed, if that spirit of innovation is as strong with this Administration as I believe it is, there are other international issues where we need to work together to change old ways that don't work.

One of the most compelling of those is the continuing poverty and desperation in developing countries, who should be benefiting more from the advantages of globalization. That is more than a humanitarian issue. The developed world needs the willing co-operation of developing countries if we seek seriously to mobilize and extend the positive forces of global growth. We need that co-operation to achieve an expanded and acceptable set of new trading rules. We need to help generate the prosperity that will bring the populations of developing countries a constructive sense of hope instead of angry desperation. That is a promising opportunity for the kind of creative and constructive partnership between Canada and the United States, which was the case a decade ago.

A similar opportunity exists respecting citizens and organizations that are seriously interested in human rights, the environment, and other issues that are affected by globalization. At Seattle, at Genoa, at Quebec City, those groups were arrayed on one side of the fence, and heads of government on the other. These citizens - this "civil society" - are profoundly different from the small and anarchic group of radicals who will seek to disrupt all forms of international co-operation. But one of the principal aims of the disrupters is to recruit and radicalize much more moderate people, whose motives are sincere, whose concerns are real, and who feel excluded from decision-making now. We need to make those more moderate members of "civil society" feel part of shaping the modem world.

Canada and the United States are exemplars of democracy. We believe in the right to dissent. We understand that real debate produces better decisions. We should be leading the way in finding new forms to draw upon the knowledge and perspectives of people who are troubled by some of the side effects of globalization.

One of the most important issues facing the international community is the upcoming new round of multilateral trade negotiations under the WTO. That will seek to determine future rules underpinning trade in goods and services. It will deal with such issues as intellectual property rights and obligations, trade and environment, trade and human rights. A successful launch of the next round is critical to future world economic growth and prosperity for both developed and developing countries. It should not be beyond our joint capacity to design an approach that will effectively address some of the concerns that were on the other side of the fence at Quebec and Genoa.

This will only happen however if the United States accords top priority to securing the necessary Trade Promotion Authority.

My argument, in summary, is that Canada and the United States share a continent. But we also share a wider world. The scope for building on the effectiveness of our partnership is immense. It is as important now as it was when we broke new ground together on free trade, and acid rain, and co-operation in the Americas. For us, it is not a question of surviving globalization, but of shaping it, in ways that make these inevitable trends more acceptable, and more valuable, to more of the world.

Thank you.