Job One for the New Government:

Finding Canada’s Place in an Unfamiliar World

Speaking Notes for

The Honourable Perrin Beatty, P.C., O.C.

President and Chief Executive Officer

October 7, 2019

It is a pleasure to be here this morning the PAAC annual conference, and I am truly humbled to be the recipient of the 2019 Award of Distinction.

Guiding your agenda today is a question that should be topof-mind in this election year: how do we come up with intelligent approaches to a staggering array of new challenges?

My last election as a candidate was 1993, when Kim Campbell was famously reported as saying, "an election is no time to discuss serious issues”. She did not actually say what was attributed to her, but perhaps she should have.

Between now and October 21st, Canadians will be able to judge whether modern federal campaigns are occasions to discuss important issues and compare contrasting visions or are more of a spectacle of pseudo-events, mock indignation and character attacks on political opponents.

Whether the parties and the news media choose to deal seriously with them or not, Canada does face critical issues that will shape the inheritance we leave future generations.

We could quickly put together a list this afternoon. The short version would include climate change, our declining economic competitiveness, the need to build a 21st Century workforce, coping with an aging population and the inadequacy of our infrastructure, among other topics.

These are all important issues, but I believe the most pressing question for the next government is what role we want to play — in diplomacy, security and economics — in the global community.

It’s an issue where none of the parties has presented a particularly coherent vision, where the questions are confusing and the stakes are high, and where the pace of events leaves little time for thoughtful study.

The world that I came of age in, and from which Canada has benefitted so much over the past three-quarters of a century, no longer exists. The assumptions on which we base our policy, the institutions designed to preserve international order and the rules that govern international business have all morphed beyond recognition and are continuing to change at an accelerating pace.

The environment in which we operate has become infinitely more complex since my days in Cabinet. With the collapse of the Soviet Union, only one true superpower remained. The United States was by far the dominant military, diplomatic and economic power in the world. Even today, three US states -- California, Texas and New York -- each have nominal GDPs larger than Russia’s.

However, while no one country can yet match US economic, military or diplomatic power, other countries are closing the gap. China is projected to have the world’s largest GDP in coming years, and it increasingly possesses both the ability and the will to assert itself diplomatically and militarily.

Similarly, Russia has demonstrated its international ambitions by interfering in foreign elections, seizing Crimea, strengthening its relationships with a NATO partner, Turkey, and successfully intervening to support the brutal Assad regime in Syria.

Even if you discount the advances of Russia and China, the world is becoming more multipolar, straining the consensus required to resolve international issues. Countries like India and Brazil will no longer quietly follow US and European leadership.

Many of our instruments for global governance and security, including the Bretton Woods institutions, NATO and the Security Council of the United Nations, are products of the post-World War II era.

Their structures exclude many of the new players that have risen to much greater prominence in the intervening years. And new institutions like the G20 and the World Trade Organisation appear lost in a cacophony of competing voices.

Compounding this problem is the US shift away from multilateralism and even from internationalism to a grumpy, mercantilist nativism that prefers having clients to allies. The Trump Administration’s trade, security and diplomatic policies have cost its friends while empowering its strongest opponents.

As the United States pulls back from its traditional allies, it has emboldened autocrats in Russia, China, Iran, Syria, Hungary, Brazil, the Philippines, Turkey and elsewhere, creating new uncertainty and reversing the advance of liberal democracy that seemed inexorable even ten or fifteen years ago.

And the US government has turned against some of its own creations, including the World Trade Organisation. Long the primary promotor of and beneficiary from globalization, it now uses the term as a pejorative.

If job one for the next government is Canada’s role in the world, day one of job one starts in Washington, where Canada faces a sometimes hostile administration. Even before he almost served notice that he was abrogating NAFTA, the President had launched a series of trade actions against Canadian products and companies.

For many decades – and especially since the Canada-US Free Trade Agreement – Canadians believed the interests of our two countries were so symbiotic that neither would ever deliberately inflict damage on the other. That comfortable illusion ended with the President’s mid-Pacific tirade following the G7 Summit in Charlevoix.

It’s tempting to assume that this will be a one-term aberration and that things will return to normalcy after either the 2020 or 2024 Presidential elections, but we simply no longer have the luxury of quiet complacency that all will be for the best. Instead, we need to lessen our vulnerability to capricious actions by reducing our economic and diplomatic dependency.

If the illegal tariffs on Canadian steel and aluminum didn’t convince us that the US Administration won’t be governed by the agreements to which it is a party, the threat to impose punishing tariffs on Mexico to force it to change its immigration policies notwithstanding both NAFTA and USMCA should remove any doubt.

I would even argue that building a pipeline to the Atlantic that would allow all Canadians to be served by Canadian energy has become a matter of national security.

Economic and political disorder is not confined to North America. Europe is consumed by its own internal problems. The tragicomedy of Brexit threatens a constitutional showdown in Britain, while the remaining EU countries suffer from their own crises of national leadership and from the rise of ugly nationalisms that threaten to turn them into closed societies.

Even what should be an uncontentious matter like ratifying free trade with Canada is far less sure than it seemed just three or four years ago.

We are also witnessing the rise of dangerous xenophobic movements that regard engagement with the world not as an opportunity, but as a threat. They are fuelled by politicians who legitimize and exploit the worst instincts and fears of their followers. Even the President of the world’s most powerful nation sees political advantage in presenting his country as a victim of the rest of the world.

Looking beyond politics, disruptive technologies will continue to challenge the ability of traditional institutions, including governments, to respond.

We have seen how the systems behind Facebook, Amazon and Uber are reshaping global commerce and challenging some of our most basic assumptions about issues like personal privacy. They are merely harbingers of new systems that will arrive at an accelerating pace.

As has always been the case, repressive governments will take full advantage of technology to control their own citizens and project power abroad. The measures that demonstrators in Hong Kong and even their supporters in Canada feel they need to employ to avoid Beijing’s facial recognition technologies demonstrates that concern.

Our response should not be to deny our citizens the benefits of technological advance, but to work with other democracies on frameworks to mitigate technological abuses.

A final difference from how we expected the world to evolve thirty years ago is the challenge posed to western liberal values by competing systems of politics and ideology. It was possible three decades ago to believe that inside every oppressed person there was a liberal democrat struggling to get out.

The fall of the Berlin wall and the collapse of Soviet Communism seemed to symbolize exactly that. Nor did it seem unreasonable to think that bringing China into international organizations and encouraging partnerships with its government would advance human rights in that country.

After all, we reasoned, free markets function best in a society of free people; once China’s population had obtained the necessities of life, it would focus on building a quality of life. China’s willingness and ability to transform itself along western lines seems much more uncertain today.

The events of the last three decades show that, while others may want to have what we have, they may well not want to be what we are.

The forces that explicitly reject the basic tenets of western society – democracy, equality, human rights, individualism, tolerance and diversity – present a credible and, to many, an attractive alternative to a democracy they consider undisciplined, divided and weak.

So what are the assumptions on which we should found our policy? Here are some of my thoughts.

First, Canada is more alone today in the world than it has been at any previous period in our lifetimes. While the United States will continue to be our most important partner, customer and ally, we can no longer take our relationship for granted.

And the remarkable silence from other Western countries during our dispute with Saudi Arabia last year and the current tensions with China should disabuse us of the notion that we are so highly regarded in the world that others will rush to defend us.

Both Saudi Arabia and China attacked Canada because they could. They understood that other countries would not be anxious to pay a price for coming to Canada’s defence.

Second, while our role as a middle-power country gives us a platform, we can’t simply insist on getting our way in international affairs. As a result, Canada’s interest is ensuring that other countries play by the rules. That is why multilateral institutions like NATO, the United Nations and the World Trade Organisation are so important to us.

And as the rise of other countries challenges US ascendency, leadership means being pragmatic and recognizing that Canada, which is only a tenth of our neighbour’s size, will not automatically receive a place at the table either because of our contribution in World War II or because of our intrinsic niceness. We will need to fight for that seat and demonstrate why we deserve it, as Canada’s uphill struggle to win election to the UN Security Council demonstrates. A starting point should be to give a clear explanation of what we hope to achieve if we are accepted.

Third, our actions need to be guided by a sense of modesty, or at least by realism. We should avoid seeing ourselves as a moral superpower, allowing others to do the heavy lifting while affording them the benefit of our judgment of what they are doing wrong. Yes, we should continue to speak clearly and work tirelessly in defence of human rights throughout the world, but we should avoid, for example, the naïve belief that China will change its domestic policies to secure a trade agreement with a country whose population is modestly larger than Shanghai’s.

We need to engage all other countries, including those whose systems of government we find oppressive, just as we engaged with the Soviet Union at the height of the cold war, but we should do so with clear eyes, with a focused view of Canada’s interests and with an understanding that the game won’t be won in the first period.

Fourth, we may be the world’s second largest country by geography, but we are number thirty-nine by population, possessing one-half of one percent of the world’s population. This means that we need allies.

Our new partnerships should be with countries that share our values and interests and that are not so large that they believe they can go it alone. For me, the starting point is the other industrialised democracies, including the countries of the European Union and Scandinavia, Japan, Australia, New Zealand, Mexico, South Korea and Chile, to mention a few.

Canada’s role should be what we have historically done very well: to convene, to present innovative ideas and to build consensus. Recognising that we are not a military or industrial giant is not the same as believing that we don’t have a central role to play. Much of our success over the years is derived from the fact that we come to the table with clean hands, that we don’t seek to dominate others and that we believe in genuine partnership.

Whoever is Prime Minister after the federal election will face an early test at the Asia-Pacific Economic Cooperation Summit in Chile in November. I don’t think our counterparts will expect the Prime Minister to arrive with a fully-developed strategy, but the world is evolving at a breathtaking pace. It will not wait for us to catch up.

Our aspirations need to be reflect our capabilities. We do not have unlimited resources and friends. This is an important point because Canadians need to know why our international engagement is so important for their pocketbooks.

Too often foreign policy or the international development aid we provide are perceived as esoteric or as costly vanity projects. We need to pick the areas where our engagement advances Canadian interests and explain to Canadians how what we do benefits them.

Nor should we be shy about promoting Canada’s commercial interests. Canada, as a trade-dependent nation,should act like one.

Our success in international markets requires a rules-based global trading system overseen by a reformed and renewed World Trade Organization, in addition to our bilateral trade agreements and membership in other global standard setting bodies.

We must also identify Canada’s comparative advantages, and how we can best promote them. I would put forth four sectors as a start: agriculture and natural resources, financial services, infrastructure and the intangibles economy.

This latter area is of growing importance. We have already moved into the digitalized economy and Canada has strengths that can be leveraged in areas like artificial intelligence. For example, the Japanese tech giant, Fujitsu, recently selected Canada as the site for its global AI hub. That is a major vote of confidence.

The next issue is what tactics we should use to support our interests.

Our NAFTA, CETA and CPTPP memberships give us privileged access to key international markets. No doubt we should be looking at others as well, but any new negotiations should be based on commercial considerations, not photoops.

We need to focus on where we can achieve the greatest benefit for Canada and resolve barriers to our companies’ market access in areas like agriculture, industrial subsidies and digital trade.

And while trade agreements open doors into international markets, we need to concentrate much more on how to get Canadian businesses through them. Many of the companies you will eventually to go to work for, and who are members of the Canadian Chamber of Commerce, frequently tell us about the difficulties they encounter in trying to use our country’s trade agreements.

Closer collaboration between government and business is also a crucial ingredient for our country’s success.

Canadian businesses are among our country’s biggest brand ambassadors abroad. Think about Scotiabank in Latin America, or Manulife in Asia. Roots has more bricks and mortars locations in Taiwan than they do Canada, and TD Bank has more branches in the US than Canada.

Businesses can also play a key role by promoting Canadian objectives in fora like the G7, G20, and OECD. Each of these groups has business advisory bodies that provide a platform for Canadian companies. The government should work closely with the private sector to coordinate Canadian priorities rather than having us row in separate directions.

Increasingly, in an era where trust in institutions is in steep decline, both the customers of businesses and their employees want to feel that the companies with which they have a relationship look well beyond the balance sheet. This principle is particularly important for young people, whose skills and whose growing impact in the marketplace are becoming essential for businesses to succeed.

Businesses leadership needs to be much more than self serving virtue-signalling, or merely ticking a box on a corporate social responsibility checklist. Business leaders need to understand that an authentic commitment to putting back into society is vital to their relationships with customers and the communities in which they operate.

Governments around the world act with good intentions in trying to solve today’s problems. However, progress is slow, and their track record shows a gap that needs to be bridged. The comparative agility of the private sector means it can act with greater speed and flexibility.

I think this is perhaps nowhere more true than on the issue of climate change. We already see the increasing frequency of extreme weather events and climate-related dislocation, all linked to increasing greenhouse gas emissions.

The demonstrations across Canada and around the world ten days ago demonstrate that for billions of people the need to confront climate change has transformed from being an issue to be debated to being a value to be lived. They are frustrated by the inability of existing institutions, including both government and business, to solve the problem.

For our part, businesses need to demonstrate that we are an essential part of the solution.

Whether we win the fight against climate change will not be decided in Canada, but in the countries that are by far the most significant contributors to greenhouse gasses. However, we need to do our part as well if we want to have any credibility in persuading them to change their practices. It will not come without sacrifice. That’s why we need to have an open, honest and respectful dialogue about the options open to us, the costs of each, and how those costs will be borne. That is yet another discussion that we are unfortunately not having during the current election.

Today, we are not on track to meet our current commitments, let alone the more aggressive targets being promised during the campaign. Achieving those commitments will require both individuals and institutions to make changes. Here, again, business has a responsibility to provide leadership, including through the development of new technologies and practices that will allow us both to meet the rising global demand for energy and to reduce emissions.

What is not often reported is that Canadian businesses are in many ways in the vanguard of climate action. Last week, for example, I attended the National Resources Summit in Calgary where MEG Energy and Canadian Natural Resources Ltd. committed their companies to achieving net zero greenhouse gas emissions.

Similarly, last month Canada’s largest energy company, Suncor Energy, announced a new $1.4-billion power cogeneration plant to be built near Fort McMurray, Alberta. This new plant will allow Suncor to replace the intensely carbon-emitting coke-fired boilers it uses to power its oilsands-mining operations with cleaner-burning natural gas, reducing greenhouse gas emissions by 2.5 megatons. That’s equivalent to taking over half a million automobiles off the road. It’s an example of how the business community can lead the way.

So that is my assessment of how the world has changed while we’ve been focused on other things and some thoughts about what we need to do to find our way in international affairs.

The problems Canada and the world face today are daunting, and principled, visionary leaders are in short supply. It would be very easy to simply descend into despair about our ability to overcome them. Yet, this is far from the first time that we have had to confront threats that seemed existential. In the last century alone, we were forced to deal with a global depression, pandemics, two world wars, and a protracted struggle between nuclear-armed superpowers with the capacity to destroy every living organism on Earth.

History provides no guarantees of our future success, but it does demonstrate that the gravest challenges often produce the most transformative leaders.

For all of our problems, we Canadians remain the most fortunate people on the planet. The challenge now is to ensure that our leaders have the vision, the principle and the strength of purpose to achieve that potential both here at home and in our relations with the rest of the world.

PAAC Ontario Letter to Commissioner Wake - Interpretation Bulletin.pdf
October 7, 2019

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