Cameron: A Commonwealth Trade Strategy for Canada
Speech to the Canada Commonwealth Trade Forum
Mayfield Inn and Suites
Edmonton, Alberta Ladies and gentlemen, I would be remiss not to thank the sponsors of this event for their kind invitation. In particular, I want to thank LCol. Colin Reichle, and the Edmonton Branch of the RCS for their hospitality. Although, I was born in Ontario, and have spent most of my life there, I did live six years in northeastern BC, in the Peace River region, so this is a homecoming of sorts.
The topic I have chosen for this presentation is “A Commonwealth Trade Strategy for Canada.”
Specifically, I would like to touch on three main themes – the reasons why the Commonwealth should be a focus for Canadian public and private sector interest, a list of tangible steps that both government and non-governmental actors can take toward this end, and finally, some thoughts on how a Commonwealth trade strategy can form a template for a much more robust Canadian response to the challenge of globalization.
This is not to say that many of us would not wish to see the nations of the Commonwealth come together in a free trade agreement; however, it is important not to lose sight of the things that can be done beyond mere waiting.
Luckily enough, we need not wait decades for a Commonwealth free trade agreement in order to have a Commonwealth Trade Strategy for Canada. In fact, I would argue that in an era of globalization and accelerated economic change, waiting is not an option.
I had written “The Case for Commonwealth Free Trade” for the very same reason that people such as the Commonwealth Business Council’s Mohan Kaul, leading British politician Lord Howell of Guildford, and our very own Sinclair Stevens – a former federal trade minister – have been tireless advocates of Commonwealth trade cooperation. Because it just makes sense.
Let me elaborate by giving the main reasons for pursuing a Commonwealth Trade Strategy:
First, and foremost, it is in our economic self-interest.
The world has become increasingly dominated by larger economic powers and trading blocs, such as NAFTA, the European Union, Japan, and China. Even if a nation is fortunate enough to be ‘plugged in’ to such a bloc, there are still the requisite tradeoffs, negotiations, and debates – either in NAFTA tribunals, or in the ‘green room’ discussions at World Trade Organization over fundamental trade disagreements, particularly in the area of agricultural commodities.
Consider the opinion of the National Intelligence Council of the CIA, that “the ‘arriviste’ powers – China, India, and perhaps others…have the potential to render obsolete the old categories of East and West, North and South, aligned and nonaligned, developed and developing. Traditional geographic groupings will increasingly lose salience in international relations…Competition for allegiances will be more open, less fixed than in the past.”
Even our own government has come to the same conclusion. A 2006 report from the Library of Parliament stated that “with major emerging powers forcing the pace of changes in the international system…Canada will have to develop international strategies that take this into account or risk being left marginalized, not only in relation to the United States but multilaterally as well.”
Our Commonwealth partners are not immune to these pressures either, which points to the second reason – our shared vulnerabilities in this new era.
Caribbean nations, whose textile industries were once protected by the Multi-Fiber Agreement, now must compete head-to-head with the emerging power of China. While agricultural prices may present the opportunity of enhanced earnings for local farmers and their communities, few domestic producers are in a position to capitalize on this trend. Indeed, the size of operations means that very few would have, in theory, benefited in the first place. A depressed tourism industry, post 9/11, does not give these countries many other promising alternatives.
The nations of Sub-Saharan Africa have endeavoured for quite some time to reform their economic and political systems. With the notable exception of Zimbabwe – whose situation may soon take a dramatic turn for the better - they have been making progress. Indeed, there are at least a half-dozen nations in that region that are moving toward their “millennium development” goals.
Tanzania, for example, is putting in place the means to guarantee primary level education for all its citizens. The demand placed upon the West, in return for these efforts, is the simple request of “trade, not aid.” Without the means to earn money abroad, these states will remain dependent on loans and largesse from the developed world.
Australia and New Zealand, economically successful in the world, also recognize the enormous challenge facing them. Despite what growth and efficiency they have gained from their own free trade agreement, both must grapple with the challenge of being part of a region dominated by China and Japan, and understand that the future brings hard choices. New Zealand’s recent signature of an agreement with China, in this respect, should be seen as a pragmatic response to this challenge. Whether it succeeds will be the question that all regional players will be eager to answer.
Britain’s relationship with its EU partners appears to be a source of endless debate and discussion. Topics ranging from usage of the Euro, to the Common Agricultural Policy, to the infamous rebate question seem to dominate the reportage on Brussels. As with our own experiences with NAFTA, no trade agreement is devoid of controversy, but the quality and quantity of debate is such that the UK will need to resolve the nature of its relationship with Europe in terms not of economics, but of politics.
Then, of course, there is the position of India, whose economy is growing at a rate exceeded only by China’s. It possesses all of the necessary attributes to match, or exceed, its Asian neighbour, save one. The investment banking firm Goldman Sachs estimated that capital inflows into China were two and a half times greater than into India, despite India’s democratic political system, a more transparent capital market, a more advanced legal system, and a banking sector with fewer bad, or underperforming, loans.
The third reason, and for many of us the most compelling, is the scope of opportunity that the Commonwealth market represents.
53 nations, one-third of humanity, forty percent of the membership of the World Trade Organization, nearly one-quarter of the world’s economic activity, and representation in virtually every international organization in existence today. These are points well known to those who follow the affairs of the Commonwealth closely, including those of you here, but they are important enough to bear repeating.
What also bears repeating are the intangibles - a common language of business, education, and scientific research, legal and political structures inspired by English common law, and the Westminster Parliamentary model of government. In truth, the Commonwealth Secretariat counts 83 separate organizations that comprise the ‘Commonwealth family’, whose activities range from policy research to education, to communications and the media, to healthcare. This, of course, does not include every initiative in every jurisdiction, not does it include the work from within the Secretariat itself.
These are not insignificant points of commonality.
Research done by Sarianna Lundan and Geoffrey Jones on behalf of the Commonwealth Secretariat in 1997 had detected evidence of a “Commonwealth Effect” in trade relations. That is, even without formal free trade agreements, Commonwealth economies are naturally drawn together for many of the reasons I just cited. The Commonwealth Business Council estimates that these shared attributes cut the cost of doing business by more than ten per cent compared to dealings with non-Commonwealth nations.
Jeffrey Frankel of Harvard University, in 2000, asserted that the impact of these attributes on bi-national trade can be as powerful as the advantages of sharing a border, or signing a free trade deal. Let me explain – the ‘Commonwealth Effect’ has the same potential impact on trade between Canada and Britain as physically eliminating the ocean it takes so many hours to fly over to get to. It also gives countries like Australia, Canada, and the UK the same trade advantages as France and Germany enjoy with one another in the European Union - even without the existence of a formal treaty.
Savita Bailur of the Commonwealth Policy Studies Unit, suggested that “the Commonwealth can indeed be thought of as a de facto trade and investment network.”
That ‘de facto trade and investment network’, at this very moment, has a combined GDP close to that of the United States; it has thirteen of the world’s fastest growing economies; and is home to corporations whose financial assets rival that of the US and the EU.
Let us translate this propensity to its full potential. Canada’s per capita GDP sits at roughly US$34,000. If the Commonwealth were to develop to such an extent as to raise its per capita GDP to only US$21,000, its combined economic output would be valued in excess of US$45 trillion. That is more than the equivalent of adding the economies of the United States and the European Union together – and doubling it.
No one can legitimately assert that this level of integration and growth would be easy to achieve, but if the current Commonwealth economy is over $10 trillion, and the full potential of economic cooperation would grow it to in excess of $45 trillion, that does leave an enormous amount of achievable growth within that range. Every level in between represents enhanced economic growth for Canada and for her Commonwealth partners.
I am going to ask you to just take a moment to contemplate what these numbers mean. Yes, it is about more for Canada, but it means even more for people who are in more desperate need than any of us. It means taking some of the poorest people on this planet and bringing them to a world much closer to our own.
Without an increase in living standards, many nations, including those within the Commonwealth family, will not be able to muster the resources to improve healthcare and education, to invest in infrastructure projects that guarantee clean water and electricity. And do not think for a moment that a nation that is unable to deliver on these priorities is one that can ensure democracy, human rights, and the rule of law for its citizens.
Building up Commonwealth trade means more opportunities for them, more geopolitical stability for us, and increased wealth for all concerned.But moving our trading relationships within this framework of nations is as easy as it is imperative.
The strategy, therefore, is simply this. Let us make practical use of the great opportunity that we already possess – this membership in such a valuable and vibrant community of nations.
Saying that, however, is the easy part. In “The Wizard of Oz”, Dorothy may have always possessed the ability to go home, but she needed someone to point out the fact that he had to click her heels and repeat her mantra that there’s no place like home.
A strategy needs a plan, with set policies and established, measurable goals. And since this talk is billed as such, I would like to move to my second theme and outline what I believe to be concrete measures for creating a ‘Commonwealth Trade Strategy for Canada.’
First, we need to do more than pay lip-service to our Commonwealth membership, and that starts at the top. Just as the federal government names a junior minister to serve as a Secretary of State for la francophonie, Ottawa should create a similar Secretary of State for Commonwealth Affairs – someone who can act as a bridge between the appropriate line Ministries, such as Foreign Affairs, International Trade, and International Cooperation. They can be tasked with the responsibility of acting as a contact point for Commonwealth missions to Canada, for the Commonwealth Secretariat, and the Commonwealth Business Council.
Whether it is preparations for upcoming CHOGMs, or assisting larger departments with trade missions and technical support to Commonwealth states, having a seat at the Cabinet table serves both a practical and symbolic purpose.
The federal government should also consider an enhanced investment in the Commonwealth Secretariat. Britain remains the largest contributor to the Secretariat, and yet its support amounts to the equivalent of 20 pence per UK citizen. Canada, the second-largest benefactor, by contrast, spends $18.17 million supporting the Commonwealth Secretariat and the Commonwealth Fund for Technical Cooperation, or 5 cents per Canadian per year.
Think about it. Membership in a group that represents 1 out of every 3 human beings, responsible for almost one-quarter of the world’s economic output, and we deem it so important to our future that our government gives it a nickel a year on your behalf.
Increasing our financial support, first and foremost, assists the Secretariat in its important work – which largely runs commensurate with Canada’s strategic interests. It also sends a signal to other Commonwealth nations that we place great value in the relationship. This, in turn, can help our bilateral relations considerably. From a practical standpoint, our contribution, when pooled together with those of other Commonwealth states, can have an impact multiplied beyond the individual member amount.
Provincial governments, of course, can take on a positive role. In fact, one would argue that they have done so already. It was reported some time ago, in the Australian press, that Manitoba’s Gary Doer and the Premier of Western Australia, Mike Rann, are to be co-hosts of a summit of Australian and Canadian first ministers in Adelaide this year. Trade and economic cooperation figure prominently on their proposed agenda.
Those are tangible things that governments can do to create the conditions for such a Commonwealth Trade Strategy. Individuals, as well as the private sector, must also embrace this challenge.
Chambers of Commerce between Commonwealth nations would do well to form a working association of networks. Earlier, we heard from a representative of the Indo-Canadian Chamber of Commerce. If one were to pool the resources and energies of that organization with those representing Australia, New Zealand, the UK, South Africa, Singapore, and the various other member states represented by similar bodies – either under the banner of a federation, or of a specific campaign – it would form both a vital resource to private sector partners, but also an effective lobby to governments as well.
As an anecdote, I must make mention of Mr. Andy Merchant, who plays a leadership role not only with the RCS Toronto Branch and the Commonwealth Advantage program, but also with the Canada Pakistan Business Council. Through him and his multiple roles, there have been tangible investments by Canadian companies in Pakistan, and, yes, by Pakistan-based companies in Canada.
In an era of globalization and increasing competition to attain market share, I would submit to you that a winning strategy for Canadian business in these markets is to be a “Commonwealth business”.
Imagine, for example, a “Buy Commonwealth” program where product labeling, advertising campaigns, and messaging promoted the shared identity of this organization. More specifically, it could be a branding effort that includes displaying Commonwealth logos on packaging and corporate communications, the displaying of Commonwealth flags at corporate facilities and retail locations, or the sponsorship and participation in Commonwealth trade fairs and exhibitions.
Globalization brings new opportunities, but also new challenges. For every attempt to open new markets, there can be a reaction that seeks protectionist actions and local preferences.
The Commonwealth brand is important in that it transcends national boundaries, and can be a leveler of corporate identities. A Canadian company in Bangalore, or an Indian company in Mississauga simply become Commonwealth companies in Commonwealth jurisdictions. Also, the brand speaks to the values of the Commonwealth – of international cooperation that reflects the values of democracy, freedom, development, and respect for peoples and states. Every bit of positive work that the Secretariat, and organizations like this does, becomes an enhancement to any marketing campaign that makes the Commonwealth its focus.
Lastly, I had mentioned that we should see a Commonwealth trade strategy in the context of a more robust Canadian response to the developing nature of the global economy.
Canada, of course, is an important part of this network of nations we call the Commonwealth, but we are also a pivotal part of its French counterpart, the OIF – known to most of you as la francophonie. We are also, after the United States, the largest economic power in the Western Hemisphere, and a member of the Organization of American States, the OAS.
Consider each of these transnational networks as spheres of influence and interest. Some nations, such as the United States, or many of the member states of CARICOM, are present in two of these spheres. This provides them with an access and influence that may go beyond their base of national power – both politically and economically.
Canada, however, is unique in its position. It is the only nation present within all three of these spheres. Just as important, as a member of the G7, it is in a position to capitalize on its status.
By building an effective trade strategy for the Commonwealth, we will have given depth and structure to one of these geopolitical spheres. More importantly, we will have developed a field-tested template for our dealings within la francophonie, as well as in the Americas. Successful in developing a ‘Commonwealth Trade Strategy for Canada’ will have accomplished something that, in terms of the global economy, is nothing short of being a ‘game-changer.’
In a world increasingly dominated by powerful economic blocs, Canada can ensure her position, and her prosperity, by being the nexus point of theses spheres that, combined, account for half of humanity, and more than half of the world’s economic output.
So we have clear motivation, and we have limitless opportunities. The only question that remains is do we have the will?
The answer to that question should depend on whether we see the opportunities inherent in a new trading regime, or we are sufficiently concerned about the challenges we face if the status quo is left unchanged.
Such a strategy challenges us to conceptualize a major shift in geopolitics, and all of the consequences that could stem from it. People may be dissatisfied with the status quo, but stick with it in the stubborn belief that it is better to stick with the devil you know.
More importantly, however, it forces all of us to come to terms with something that we really do not like to talk about much – the dreaded “e” word – Empire. I am not saying that a degree of humility on the part of some, or vindication on the part of others is well deserved. What I am saying is that the value of the past is to learn from it, not live in it.
Ask anyone under the age of thirty about what nation they associate with the term ‘imperialism’ and you will probably not hear Britain even mentioned.
We know American hegemony, and the rise of China; we know that the world has changed, and that physical distance matters little in an age of instant communication and global commerce. We also know that the Commonwealth has been a successful and respectful forum for nations - large and small, rich and poor - to meet as friends, colleagues and equals.
The Empire is not coming back. What remains, though - a common language, a common legal and political heritage, and a half-century of successful cooperation – is more than enough for a new relationship, not of domination or exploitation, but of shared values, interests and positive expectations.
It may very well be that we cannot see our future until we are able to reconcile the past. We may shy away from partnering with each other because of this guilt, and because we do not partner with each other, millions of citizens in the Commonwealth will continue to live in poverty with diminished possibilities.
Nurturing our Commonwealth ties is a relevant and worthwhile endeavour. It is not simply about the ancient symbols of the Monarchy, nor is it about some long held romanticized notion of Empire. Rather, it represents one of our best hopes at guaranteeing the prosperity we have today, and expanding its promise both here and abroad. Certainly, this organization can pride itself in helping establish a more modern and relevant attitude here in Canada.
I am one of an increasing number of people who sincerely believe that strengthening the economic ties within the Commonwealth is a logical and pragmatic way of building a better life for Canadians and the other peoples of the Commonwealth, a more inclusive model for globalization, and a much more prosperous, and safe, world.
All we need is a plan, and the will to see it through.